Monday, March 13, 2017

Kentucky joint action agency adding renewables

Kentucky joint action agency adding renewables
Platts Megawatt Daily
March 13, 2017

A Kentucky joint action agency formed less than two years ago is looking to build upon its roughly 300-MW generation portfolio by adding 50 MW of renewable energy to the mix by the time a longstanding wholesale power arrangement with Kentucky Utilities ends in May 2019.

So far, the 10-city Kentucky Municipal Energy Agency has signed power purchase agreements for
mostly coal-fired generation with Big Rivers Electric, Dynegy and the Paducah Power System.

The Dynegy power will come from the Houston-based merchant generator's 1,100-MW Joppa baseload plant in far southern Illinois. Joppa was one of five power plants totaling 4,100 MW acquired by
Dynegy from St. Louis-based Ameren in 2013, as part of the latter's exit from the competitive power business.

Terry Naulty, KyMEA's treasurer who doubles as general manager of Owensboro Municipal Utilities, said in a Friday interview the joint action agency hopes to use wind or solar energy to balance out its heavy fossil fuels portfolio.

Member cities "want to evaluate whether or not there's a cost effective way to integrate renewables into the supply portolio," he said.

KyMEA issues RFP for renewables
To that end, KyMEA, in the heart of a traditional coal-producing state where coal still is used to generate more than 80% of its electricity, has released a formal request for proposals for 50 MW to 250 MW of renewables. However, it is likely to buy only 50 MW for now. The deadline to submit proposals is 2 pm ET on April 12. The solicitation seeks renewable capacity and energy resources for as long as 20 years.

In addition to Owensboro, the commonwealth's third-largest city behind Louisville and Lexington, KyMEA members include the cities of Barbourville, Bardwell, Benham, Corbin, Falmouth, Frankfort, Madisonville, Paris and Providence. With the exception of Owensboro, all are full-requirements members of the group.

The cities agreed several years ago to terminate the KU contract after the parties were unable to reach an agreement on an extension. KU, the state's largest electric utility, is a sister utility to Louisville Gas
& Electric, and both are owned by Pennsylvania's PPL. For now at least, Owensboro is a self-supporting member, operating the 425-MW Elmer Smith coal-fired generating station.

OMU's board of directors is expected to decide on Tuesday whether to keep running Smith as a coal plant for longer than the next two years. One of the plant's two units already is ticketed for retirement following the summer of 2019.

Sierra Club wants coal burning to stop
The muni is considering several options, including closing the second unit in 2022 or 2023, constructing gas-fired generation or adding renewables.

The Sierra Club is pushing the city to halt coal burning altogether at Smith by early next decade and use renewables to replace it. "We've got to help convince them it would be a financially wise thing to do," Aloma Dew, a Sierra Club member from Owensboro, said in a Friday interview.

But, "I don't feel real optimistic," she acknowledged. "Right now, gas is so cheap and they think it's going to be that way forever." That kind of thinking is not good for the state, she said. "Kentucky gets left behind on a lot of things because we're so hesitant to change."

Dew, nevertheless, applauded KyMEA's decision to incorporate more renewables in its portfolio.

Naulty said he does not know what the OMU board will decide on Smith.

KyMEA's business model, meanwhile, appears to be gaining popularity with other Kentucky cities and public power agencies. "We have been approached by several other public power entities to talk about synergies with KyMEA," he said, adding no final agreements have been reached.

— Bob Matyi

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