To Parity and Beyond: Renewables Move Into the Midwest

“Parity” is a term followers of renewable-energy technology have used for years to describe that moment when the cost for electricity generated from wind, solar and other alternative energy sources falls to the level of power generated with coal and natural gas. That moment has apparently arrived in Northern Indiana. Northern Indiana Public Service Co. (NIPSCO), Indiana’s second largest electric utility, has announced a plan to shutter its five existing coal units within 10 years—four of them by 2023—and replace the lost capacity almost entirely with a mix of wind, solar and battery storage.

The utility, which serves 457,000 customers, outlined this effort in its latest proposed Integrated Resource Plan (IRP), now under consideration by the state’s Utility Regulatory Commission. The plan includes shutting down the four coal-generation units at its R.M. Schahfer Generating Station by 2023 and its Michigan City Generating Station by 2028. These five units represent 1,800 megawatts (MW) of generation capacity. As a result, the company will go from 65 percent coal generation today to 15 percent in 2023 and will be coal-free in just a decade.

The company’s stated reason for this move is, simply, cost. At least in Northern Indiana, it is shown a mix of solar, wind and storage can compete—and win—against a fuel source once seen as the nation’s cheapest. Violet Sistovaris, NIPSCO president, made this clear in comments accompanying the proposed IRP’s release.

“Technology and market changes continue to transform the energy industry, opening more competitive options, and it’s the primary driver of the changes being considered for our system,” she said. “Retiring our aging coal fleet sooner will cost substantially less, compared to our original plans for extending retirements over a longer duration.”

Of course, this economics-driven proposal will mean significant reductions in the region’s carbon emissions, along with its bottom-line benefits. The Schahfer plant, alone, produced more than 8.2 million pounds of carbon dioxide in 2014, landing it in a list of the nation’s 100 worst polluters assembled by the Center for Public Integrity in 2016. Closing these plants will transform NIPSCO into a green-energy leader.

It’s significant that this move is happening in Indiana. As recently as 2016, 71 percent of the state’s electricity was generated using coal, according to the U.S. Energy Information Administration (EIA), putting the state among the top five most dependent on the fossil fuel. (For comparison, coal generated only 30.4 percent of U.S. electricity, overall, in 2016.) Duke Energy, Indiana’s largest utility, remains highly invested in coal generation, operating at least four coal plants in the state, totaling more than 5,100 MW, according the company’s website.

NIPSCO’s generating portfolio was due for an upgrade, regardless of fuel source. Its Bailly station, which was shut down in May, was 50 years old. The four units at the Schahfer station date back to 1976, and the Michigan City plant was commissioned in 1974. The company considered transitioning at least a few of the generators to burn natural gas, but said in its proposal that long-term costs still would be higher than the suggested move to renewables.

The IRP is bullish on solar. Utility-scale photovoltaic installations are picking up the bulk of capacity currently provided by the aging coal plants. The plan outlines a preferred resource mix, including 1,100 MW of new solar, 160 MW of new wind energy, 125 MW from demand-side management (DSM) programs and 50 MW of purchases from the markets run by the Midwest Independent System Operator. An additional 300 MW of solar and 114 MW of DSM contributions would be added by 2028 when the Michigan City plant would cease operations.

NIPSCO had started moving aggressively away from coal with its 2016 IRP, in which it committed to retiring half of its coal plants, including Bailly and two of the four units at Schahfer. However, the company still anticipated replacing this new IRP. As recently as December 2017, state regulators approved a $400 million plan to install pollution controls at Michigan City and Schahfer, as well as at Bailly. However, the company instead shut down the Bailly plant.

For the time being, NIPSCO might be an outlier in its wholesale move toward renewables. While much of Duke’s fleet of coal plants is also aging, the company is investing in new pollution controls rather than replacement options to keep power flowing through its wires. It has attempted to develop cleaner-burning coal generation with its Edwardsport plant, commissioned in 2013, with mixed success. The plant uses advanced technology that turns coal into a gas to fuel combustion turbines in a process designed to capture the majority of its carbon emissions. Originally estimated at $1.9 billion, the plant’s costs ended up reaching $3.4 billion and has been hit with millions more in unanticipated operations and maintenance expenses since.

About the Author

Chuck Ross

Freelance Writer

Chuck Ross has covered building and energy technologies and electric-utility business issues for a range of industry publications and websites for more than 25 years. Contact him at chuck@chuck-ross.com.

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