Issues

Coal: Baseload Generation

Baseload Generation: Coal vs. Wind

The baseload on an electric grid is the minimum level of demand on an electrical grid over a period of time, essentially the amount of electricity used by consumers every day. When describing baseload generation, the industry generally refers to power plants capable of delivering power 24 hours a day, seven days a week. In North Dakota that power is provided by seven generating stations that burn lignite coal. The Garrison Dam also provides a minimum level of baseload generation, as do nuclear power plants in Minnesota and other locations in the Midwest. 

Historically, most or all of baseload demand was met with baseload power plants, but with increasing levels of intermittent renewables like wind and solar, maintaining stability on the electric grid has become more challenging. The addition of more intermittent sources has caused concern about the reliability of the grid during periods of peak power demand on hot summer days or brutally cold winter nights. Nowhere has this risk been more obvious than California, which experienced rolling blackouts in the summer of 2020 in the midst of scorching hot weather and numerous wildfires. Several factors contributed to the power shortage, including heavy demand, unplanned outages at some natural gas power plants and limited options for importing power from neighboring states, but the predominant reason was the state’s over-reliance on solar and wind generation.

Similar concerns are being raised in North Dakota as more and more wind generation is constructed in the state. Because wind power is “free” once plants are constructed, operators can bid their electricity into regional power markets at very low prices, even negative at times thanks to federal tax subsidies provided to wind power companies. The result is that wind generation is always at the front of the line when power is dispatched by regional transmission organizations, meaning coal-fired plants are not able to operate at maximum efficiency because the power they produce is not always needed. This scenario has created financial difficulty for plant owners because they are not able to sell as much power, and must reduce profit margins in order to compete with the subsidized renewable generation. 

This market distortion prompted Great River Energy (GRE), an electric cooperative headquartered in Maple Grove, Minnesota, to announce plans to shut down Coal Creek Station, the largest coal-fired power plant in North Dakota. The plant, located midway between Underwood and Washburn, features two units with a total generation capacity of more than 1,100 megawatts. The electricity is delivered to GRE member cooperatives over a high voltage direct current (DC) transmission line that runs 436 miles to Minnesota. The plant’s lignite supply comes from the adjacent Falkirk Coal Mine operated by North American Coal Corporation. Collectively, the mine and plant provide about 700 jobs to the local economy. In announcing plans to shut down the plant at the end of 2022, GRE said it would replace the lost generation with 800 megawatts of wind generation. 

Other coal plant operators have publicly indicated their facilities are also operating under financial strain. The response of local governments in the coal-producing counties has further heightened the tension between the coal industry and wind farm operators. The McLean County Commission enacted zoning changes that require a one-mile setback from the Missouri River, Lake Sakakawea and Lake Audubon for electric transmission lines that would deliver power from wind farms to the DC line. The Mercer County Commission approved a resolution placing a two-year moratorium on new wind farm development, pending additional details about its impact to the coal economy which generates significant tax revenue to support the county, cities and schools. Mercer County imposed the moratorium in response to plans by Alberta-based Capitol Power to develop the Garrison Butte wind farm north of Hazen near the shore of Lake Sakakawea. The company indicated it had 100% of long-term land leases executed for the 151.8 megawatt wind farm, which would be spread over a 22,000 acre site.

Actions of the two counties have produced a lot of conversation about the respective benefits of coal vs. wind. Threats to reliability due to the intermittent nature of wind, and limits to available transmission capacity are key parts of the discussion. Coal-fired generation once dominated the energy mix in the Northern Plains and throughout the Midwest, but now represents less than half the available generating capacity. Political pressure and competition from cheap natural gas and wind generation will likely force additional coal plants to shut down. As more and more coal units are forced to shut down, grid reliability becomes a concern because a larger percentage of its generating capacity is intermittent. 

John Weeda, director of the ND Transmission Authority, cautioned state legislators to be wary of becoming dependent on renewable generation to power the grid. "Major change is coming, but I think we have to be careful about calling zero-cost energy going into the market our lowest-cost option, because there are other costs that we're going to start experiencing," Weeda said. "Pretty soon you're up into that 30-some percent range (of wind) where complexity starts to hit, and we're on the leading edge in North Dakota with all the renewable generation we have."

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Issue Updates

1/8/21 - Gov Promotes Growth in State-of-the-State; Coal Support Emphasized
Burgum said his administration is working hard to find a market-based economic path forward for Coal Creek Station, the planned closing of which was announced last May. He cited Lt. Gov. Sanford’s "tenacious and effective leadership" in pursuit of a new owner for the 1,100 megawatt facility. Burgum said research into capturing carbon dioxide emissions offers great promise in the state.

1/1/21 - Legislative Leaders Support Coal; Saving Coal Creek a Top Priority
The majority leaders of the North Dakota House and Senate both have coal near the top of their list of priorities heading into the 2021 Legislature.

12/18/20 - Lignite Council Offers New Teaching Tool
The COVID-19 pandemic forced the Lignite Energy Council to cancel its annual Teacher's Seminar this past year, but that didn't stop the LEC from expanding its efforts to teach adults and kids about the importance of the coal industry.

12/11/20 - Lignite Council Seeks Coal Funding Options
North Dakota needs to begin exploring ways to finance "large projects" that could potentially transform the lignite industry and the state's economy.

12/11/20 - Bohrer: MISO Taking a Look at Grid Resiliency
The resiliency provided by baseload coal-fired generation is still undervalued in electric markets, but the president of the Lignite Energy Council believes that may be about to change.

11/27/20 - NDIC: Address the Carbon Image Problem – Commission Approved Lignite Education Plan
The North Dakota Industrial Commission approved a grant request this week that will extend the Lignite Energy Council's education program another two years, but also urged the council to consider other avenues to influence young people's perception of the coal industry.

Resources and References


Media Coverage

Wall Street’s climate concerns create cloud of financial uncertainty for ND coal country
1/15/21 -
Marked for closure, North Dakota’s biggest coal-fired power plant looks for a new tech lifeline
1/10/21 -
Several companies weighing Coal Creek purchase
10/7/20 -
Search for a new Coal Creek owner continues, co-op CEO says
10/1/20 -
County Planning and Zoning, landowners debate the length of wind farm permit
9/30/20 -
Today's coal power isn't the same as yesterday's
9/16/20 -
What happens when coal leaves the North Dakota landscape?
9/8/20 -
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