Omaha project gives idea about IPL new generation costs
A recently approved natural gas new generation equipment project by the Omaha Public Power District (OPPD) provides some insight into potential costs for a new IPL power generation project.
In October, OPPD announced a contract for the design and construction of two new natural gas generation facilities - Standing Bear Lake Station, a 150 MW facility and Turtle Creek Station, a 450 MW facility.
Through a public records request, Indy Energy obtained overall cost information for the two projects - $240 million for Standing Bear Lake and $362 million for Turtle Creek. (See the excerpt of the OPPD letter below)
The Standing Bear Lake Station is slightly larger than plans for 99 MW of new IPL generation equipment. The Standing Bear project uses one of the technologies specified in the IPL generation proposals which are due Dec. 17th.
Nine Wärtsilä 18V50DF reciprocating internal combustion engines will power the 150 MW Standing Bear Lake Station.
IPL proposal costs may differ slightly from the Standing Bear project, but project costs indicate the new IPL generation facilities could easily cost $140 million or more.
OPPD undertook its projects because OPPD anticipates new industrial demand, due in part to construction of new large data centers for FaceBook (a $400 million expansion) and $600 million for Google. Both are located in Papillion, NE.
While the new generation projects may be similar, OPPD and IPL are operationally different.
OPP is the 12th largest public power company in the U.S. with over 390,000 electric customers, over 2,691 MW of generating capacity and $1.1 billion in operating revenue. See the OPPD Quick Facts. IPL is a smaller operation with only 58,000 customers, $138 million in operating revenue and 382 MW of capacity.
If approved, the new IPL generation equipment likely will be the city's largest capital investment ever and require a significant electrical rate increase to finance the equipment investment.
IPL already has extensive debt obligations for the purchase of coal power under long-term contracts (Nebraska City 2 and Iatan 2). Those obligations include over $290 million in debt. In addition, IPL currently has over $200 million in other IPL city-issued debt.
The IPL debt includes about $80 million still outstanding on the 2012 purchase of a 12.3% interest in the Dogwood natural gas plant in Pleasant Hill, Mo.
The actual costs of the new generation equipment still remain to be determined. It depends on several factors including actual proposals and the size of the proposed new generation. Proposals providing between 45 and 99 MW will be considered. Used or refurbished equipment will also be considered.
The city retains the option to reject all proposals, award no contract or make multiple contract awards or replacing some (rather than all) of the six existing combustion turbines which have a combined generating capacity of 99 MW.
The new IPL generation equipment is projected to run 30% of time. The OPPD projects are expected to run 15% of time. The OPPD media release states:
"Both of these (Standing Bear Lake and Turtle Creek) plants are peaking stations, which means they will only run as needed, per market conditions (estimated at less than 15% of the time)."
The new IPL generation facilities would be located on the Little Blue Valley Power Plant property located on east Truman Rd. The old Blue Valley power plant stopped operations the summer of 2020.
The RFP seeks proposals for either an aeroderivative combustion turbine or reciprocating engines. The generation technologies were recently described by IPL director Jim Nail in a presentation to the Public Utilities Advisory Board. Here are pages from his presentation explaining different generation technologies.
The city would own the generation equipment.
This would be a major city decision for IPL which serves 57,000 customers and will have long-term financial and environmental consequences.
IPL would own and operate carbon-based generation equipment for upwards of 30 years in the highly volatile and uncertain energy industry.
The city made similar long-term energy bets when it signed 40-year purchase power agreements for coal-based power generated at Iatan 2 and Nebraska City 2 power plants in 2009 and 2010 respectively. Those contracts, which expire in 2049 and 2050 respectively, constitute long-term city liabilities.