Colorado’s second-largest utility submits plans for next 10 to 20 years in state’s first carbon-constrained utility planning process
by Allen Best
Tri-State Generation and Transmission submitted plans to Colorado regulators this week that describe how the utility, the state’s second largest, plans to shift from a coal-heavy power-generation portfolio to one dominated by renewables during the next 10 years.
It’s a house with the blueprints still incomplete but with the potential for some oh-wow features. That could take some time.
The preferred scenario identified by Tri-State in the filing with the Colorado Public Utilities Commission calls for new 1,850 megawatts of additional renewable generation in the next several years to augment the existing 2,000 megawatts of renewable generating capacity. It also envisions 200 megawatts of energy storage.
Tri-State also intends to retire the 1,283-megawatt Craig Generating Station. There, it operates three units, two in conjunction with other utilities. It was ordered by the Air Quality Control Commission in November to close the final unit by the end of 2028. The first unit is to close in 2025. All of this will move Tri-State along toward its commitment to Colorado of 80% carbon reduction from its electricity delivered within Colorado by 2030. Two other utilities, Colorado Springs Utilities and Platte River Power Authority, have also voluntarily agreed to the commitment, and Xcel Energy is bound by law to the 80% reduction.
But there’s also much uncertainty about the path forward for Tri-State, which delivers power to 17 member electrical cooperatives in Colorado and well as 25 cooperatives in three adjoining states. Those member cooperatives deliver electricity in 56 of Colorado’s 64 counties.
One major question involves what Tri-State will do about its imported power from coal plants in Arizona and Wyoming. It likely cannot hit the 2030 carbon-dioxide reduction targets to which it voluntarily committed in November without minimizing that coal-based production.
In its 2,886-page filing, Tri-State say it plans to engage in discussions with the Salt River Project, a utility in Arizona and other parties involved in the 417-megawatt Springerville 3 unit. Tri-State leases the unit.
Laramie River Station is another question mark. Tri-State’s preferred plan calls for retirement of the coal plant at Wheatland, Wyo., in 2033. However, there has been “no agreement in place” with co-owners of the plant, of which Tri-State owns 461 megawatts of capacity.
Also uncertain is the growth rate. Tri-State assumes a growth rate of 1.5% per year in electrical demand, but that may be less if some members leave Tri-State. Brighton-based United Power and Durango-based La Plata Electric, which together represent more than 20% of electrical demand supplied by Tri-State to its members, have taken legal action to get out. What could also shift demand is how environmental regulations influence the rate of oil-and-gas extraction, a major user of electricity. Long-term impacts of covid also remain uncertain.
As it integrates higher levels of renewables, Tri-State sees natural gas as a backup plan. But that’s not a given.
“Tri-State would prefer to delay irreversible resource decisions as long as possible, particularly related to capital intensive options,” said the filing. “The next 12 to 24 months will be particularly informative in regards to Tri-State’s projected system load. Additionally, Tri-State would prefer to allow additional time for technology to advance non-carbon dioxide emitting dispatchable options that will potentially be more cost-competitive with thermal resources in the future.”
Fossil fuel-generated electricity, both from coal and natural gas, requires water to produce steam.
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Duane Highley, chief executive, in a statement issued in conjunction with the filing of the electric resource plan, also stressed the preliminary nature of the filing.
“Our preferred scenario identifies potential resource options, including battery storage and natural gas generation, but we do not have to commit to a path at this time,” Highley said. “There will be time for emerging technologies to become competitive before we have to make acquisition decisions.”
In October, Highley said existing battery technology is insufficient to meet Tri-State’s needs as it closes its coal plants between 2025 and 2030. He cited the example of weather – as had occurred several days before – that caused wind turbines to ice up, stopping production. Lithium-ion batteries store energy for four hours, but Tri-State and other utilities need storage for at least several days.
“We are looking at what is happening with hydrogen. We have 3 to 4 years before we have to make that decision and start committing money,” Highley said at a Switch Colorado forum.
Highley has also emphasized need for a regional transmission organization with day-ahead scheduling, to help pool renewable resources across a broad area, much larger than Colorado. He has pushed for expansion of the Arkansas-based Southwest Power Pool’s RTO integration into the Rocky Mountain states.
“To achieve the high levels of renewable integration in our electric resource plan filing, it will be necessary for Tri-State to participate in an RTO in the West,” he said in the press release.
If only a few steps behind Xcel Energy in its shift from coal, Tri-State stubbornly resisted change for many years. Highley arrived at Tri-State in 2019, charged with the task of turning the big ship. There’s still much skepticism among some members about the pace of change. This skepticism was reflected in quotes from a release from the Western Clean Energy Campaign.
“It’s encouraging to see Tri-State responding to some of the priorities of its members,” said Pinewood Springs resident Rebecca Henderson, who gets her power from Tri-State member co-op Poudre Valley Rural Electric Association.
“We’ve been waiting a long time for Tri-State to move more aggressively into clean energy. But it’s still troubling to see that it refuses to let go of coal and gas, which will force us to pay far more for our electricity than customers of other utilities that are transitioning to wind, solar and storage more quickly.”
Tom Darin, the western regional representative for the American Wind Energy Association, had a different take during a recent webinar.
“This is not the Tri-State of 5 years ago or 10 years ago,” he said in introducing Zach Pierce, the energy and climate advisor to Colorado Gov. Jared Polis. He attributed the shift to the Polis administration.
This is the first time Tri-State, Colorado’s second largest utility, has submitted electric generating plans to state regulators. The submission was mandated by a 2019 law. Xcel Energy, the state’s largest utility, will similarly file a resource plan in March.
Erin Overturf, deputy director of the Clean Energy Program for Western Resource Advocates, points out that these resource plans will be the first to be filed in Colorado within the carbon-constrained framework adopted by Colorado in 2019.
Those carbon constraints include evaluating projects through the lens of the social cost of carbon. It was $46 per ton of carbon dioxide emissions in 2019 but which has been adjusted upward to reflect inflation. It is estimated to reach almost $68 per short ton by 2030 and $99 by 2040.
This new framework combined with the approach of using requests-for-proposal from energy companies for most new resource acquisitions could very well result in some very innovative projects and approaches in Colorado.
“I expect we will see some innovative projects being bid into these upcoming electric resource planning cycles,” she says. “And, similar to Xcel’s 2016 resource plan, some may be surprised to see new clean technologies emerging as cost-effective. With strong resource planning rules as the foundation, Colorado has set itself up for success.”
Xcel’s request for proposals yielded jaw-dropping prices for wind, solar and storage projects in 2017. Those projects are now being executed, mostly in the Pueblo area, in anticipation of closing of two coal-burning Comanche units in the next several years.
“Our resource planning process is really notable in the way that it harnesses competition to drive results for customers, and you saw that in the (Xcel Energy) Colorado Energy Plan.”
In 2021 and 2022, said Overturf, she expects something similar that “will cause me to go, ‘Oh wow!’”
Top photo: Kit Carson Wind Power has 51 megawatts of capacity available to Tri-State Generation and Transmission. Photo/Tri-State
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