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Released June 30, 2017 | SUGAR LAND
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Written by John Egan for Industrial Info Resources (Sugar Land, Texas)--Falling windpower prices, flat customer load growth and rising customer participation in energy-efficiency programs convinced Kansas City Power & Light Company (KCP&L) (Kansas City, Missouri), a unit of Great Plains Energy Incorporated (NYSE:GXP) (Kansas City), to retire six older and smaller generators sooner than it had anticipated. Five of the six generators burn coal, and all six began operating in the 1960s, the utility said June 4. In all, the utility will be retiring about 900 megawatts (MW) of generating capacity.
These five units will be retired by yearend 2018:
In 2015, KCP&L said it planned to stop burning coal at Lake Road Unit 6, Sibley units 1 and 2 and Montrose units 2 and 3 sometime between 2016 and 2021. But if left open the potential that some of the units would be converted to burn natural gas. In the end, only the Lake Road unit was converted. For more on that, see May 27, 2015, article - KCP&L to End Coal Use at Six Generating Units.
"When these power plants started operation more than 50 years ago, coal was the primary means of producing energy," Terry Bassham, president and chief executive of Great Plains Energy and KCP&L, said in a June 4 statement. "Today, as part of our diverse portfolio, we have cleaner ways to generate the energy our customers need."
"After considering many options, it is clear that retiring units at Montrose, Lake Road and Sibley is the most cost-effective way to meet our customers' energy needs as we continue to move to a more sustainable energy future," he continued.
Bassham's statement said the following industry trends contributed to the decision to close the six units:
Osborn, developed by NextEra Energy Resources LLC (Juno Beach, Florida), a unit of NextEra Energy (NYSE:NEE) (Juno Beach, Florida), is a 200-MW facility that began operating in late 2016. It is located in DeKalb County, Missouri. Rock Creek, a 300-MW windfarm, is being developed by Enel Green Power North America. It is scheduled to begin operating later this year. That facility is located in Atchison County, Missouri.
By the end of 2017, when Rock Creek is operating, the utility's renewable generation portfolio will exceed 1,450 MW, or more than 20% of the utility's overall generating capacity needs, KCP&L projected.
Bassham also noted KCP&L "has the largest per capita energy efficiency portfolio of any investor-owned utility in the region. By retiring these plants, KCP&L is taking another step forward in our plan to provide cleaner, cost-effective energy to our customers."
KCP&L's efforts to merge with Westar Energy Incorporated (NYSE:WR) (Topeka, Kansas) were rebuffed by Kansas regulators in April, but both utilities said they are investigating different terms for a deal.
"KCP&L's decision to close these six units sooner than expected is another sign of how rapidly the electric power business is changing," commented Britt Burt, Industrial Info's vice president of research for the Global Power Industry. "Wind generation costs continue to decline, which is challenging some long-held assumptions about the costs to generate electricity from different fuels."
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, five offices in North America and 10 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities. Follow IIR on: Facebook - Twitter - LinkedIn. For more information on our coverage, send inquiries to info@industrialinfo.com or visit us online at http://www.industrialinfo.com.
These five units will be retired by yearend 2018:
- Units 1, 2 and 3 of the Sibley Power Station. Unit 1 has 48 MW of capacity; Unit 2 has 51 MW of generating capacity; and Unit 3 has 364 MW of generating capacity.
- Units 2 and 3 of the Montrose Power Station. Unit 2 has 164 MW of generating capacity; Unit 3 has 176 MW of generating capacity.
In 2015, KCP&L said it planned to stop burning coal at Lake Road Unit 6, Sibley units 1 and 2 and Montrose units 2 and 3 sometime between 2016 and 2021. But if left open the potential that some of the units would be converted to burn natural gas. In the end, only the Lake Road unit was converted. For more on that, see May 27, 2015, article - KCP&L to End Coal Use at Six Generating Units.
"When these power plants started operation more than 50 years ago, coal was the primary means of producing energy," Terry Bassham, president and chief executive of Great Plains Energy and KCP&L, said in a June 4 statement. "Today, as part of our diverse portfolio, we have cleaner ways to generate the energy our customers need."
"After considering many options, it is clear that retiring units at Montrose, Lake Road and Sibley is the most cost-effective way to meet our customers' energy needs as we continue to move to a more sustainable energy future," he continued.
Bassham's statement said the following industry trends contributed to the decision to close the six units:
- Reduction in wholesale electricity market prices. The value of energy produced by these plants has dropped in recent years, primarily driven by new wind generation and lower natural gas prices.
- Near-term capacity needs. KCP&L does not anticipate needing new capacity for many years, with expected relatively flat long-term peak load growth. In addition, the amount of reserve-generating capacity the company is required to carry has been reduced.
- Plant age. The impacted units are older, with all beginning service in the 1960s. Making costly investments in the units does not make financial sense when compared to other generation sources.
- Expected environmental compliance costs. It is not economic to retrofit these plants with the controls necessary to meet expected environmental requirements.
Osborn, developed by NextEra Energy Resources LLC (Juno Beach, Florida), a unit of NextEra Energy (NYSE:NEE) (Juno Beach, Florida), is a 200-MW facility that began operating in late 2016. It is located in DeKalb County, Missouri. Rock Creek, a 300-MW windfarm, is being developed by Enel Green Power North America. It is scheduled to begin operating later this year. That facility is located in Atchison County, Missouri.
By the end of 2017, when Rock Creek is operating, the utility's renewable generation portfolio will exceed 1,450 MW, or more than 20% of the utility's overall generating capacity needs, KCP&L projected.
Bassham also noted KCP&L "has the largest per capita energy efficiency portfolio of any investor-owned utility in the region. By retiring these plants, KCP&L is taking another step forward in our plan to provide cleaner, cost-effective energy to our customers."
KCP&L's efforts to merge with Westar Energy Incorporated (NYSE:WR) (Topeka, Kansas) were rebuffed by Kansas regulators in April, but both utilities said they are investigating different terms for a deal.
"KCP&L's decision to close these six units sooner than expected is another sign of how rapidly the electric power business is changing," commented Britt Burt, Industrial Info's vice president of research for the Global Power Industry. "Wind generation costs continue to decline, which is challenging some long-held assumptions about the costs to generate electricity from different fuels."
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, five offices in North America and 10 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities. Follow IIR on: Facebook - Twitter - LinkedIn. For more information on our coverage, send inquiries to info@industrialinfo.com or visit us online at http://www.industrialinfo.com.
