Indiana natural gas plant repowering marks shift from coal to gas, renewables

New York (Platts)--14 May 2018 632 pm EDT/2232 GMT

The startup of Indianapolis Power & Light Company's Eagle Valley combined-cycle natural gas plant marks a shift toward gas as the utility's largest power generation source, replacing coal, the company said Monday.

"Our future is focused on accelerating cleaner, smarter and affordable options for our customers and we are proud of the efforts we've made over the last few years to significantly reduce our dependence on coal and focus toward a more balanced energy mix," Craig Jackson, IPL president and CEO, said in a statement. IPL is a subsidiary of Arlington, Virginia-based AES.

The 671 MW CCGT gas plant, about 30 miles southwest of downtown Indianapolis, began commercial operation April 28, IPL said. The new power station reduces the rate of "most emissions" by 98% compared to the six coal- and oil-fired units it replaced at the site. The old generating equipment and water intake structures were "rendered inoperable" for safety reasons, Claire Dalton, IPL spokeswoman, said in an email Monday.

Eagle Valley will sell power into the Midcontinent Independent System Operator's wholesale energy and capacity markets. IPL's request to invest more than $600 million in the plant was approved by the Indiana Utility Regulatory Commission in 2014, and the company has a pending regulatory rate review at the IURC to place the Eagle Valley plant into the rate base, Dalton said. The gas plant can access "low-cost fuel" from the Rockies Express Pipeline and Texas Gas interstate pipelines, the statement said.

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An ongoing shift away from coal toward gas and renewable energy sources is taking place at the corporate and state level. IPL's power generation mix, which in 2007 consisted of 79% coal, 14% gas and 7% oil, is projected in 2018 to reach 45% gas, 44% coal, 8% wind, 2% solar and only 1% oil, according to the company's website.

AES is following a similar path as it looks to diversify its power generation portfolio and reduce greenhouse gas emissions. "We are reshaping the portfolio to deliver attractive returns and reduce carbon emissions," Andres Gluski, the company's president and CEO, said during a February 27 earnings call. "We are establishing a goal to reduce carbon intensity, or tons of carbon dioxide/MWh, by 50% from 2016 to 2030," he said. Although one of the top 10 coal-producing states in the US, Indiana has been shifting its power generation mix more toward gas in recent years as well. Although about 70% of the state's power was generated by coal in 2017, the share of net generation from gas more than doubled from three years earlier to about 20%, according to the US Energy Information Administration.

In 2017, 60% of Indiana's 200 MW of incremental generation capacity was powered by renewable sources, with the other 40% powered by gas, according to EIA. And IPL projects its power generation mix will transition to 38% gas, 31% wind and 26% coal by 2036, with the remainder supplied by 4% solar and 1% oil.

IPL has also added advanced battery-based storage to its fleet to increase efficiency and support the "ongoing integration of renewable generation resources," it said in the statement. Parent AES recently launched an energy storage joint venture with Siemens called Fluence that plans to install a 100 MW electric battery storage unit with a four-hour duration in Southern California in the first half of 2021.

The goal for Fluence is to "consolidate its position" in the "high-growth battery storage market" that it says it expects to grow tenfold in five years, the company said during the February earnings call. AES' projection is for 28 GW of installed battery storage capacity by 2022.

--Jared Anderson,

--Edited by Joe Fisher,

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