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After promising a shift from fossil fuels, Omaha utility plans more gas plants

Downtown Omaha, Nebraska. Photo Credit: Pat Hawks / Flickr / Creative Commons

The Nebraska utility is moving quickly on two new natural gas plants while plans for solar generation lag behind. 

Nebraska’s second-largest utility last fall embarked on an initiative, dubbed Power with Purpose, that company leaders say will hasten the utility’s shift away from fossil fuels. However, fast-moving plans to develop two new natural gas plants have some questioning whether the utility is overcommitting to fossil fuel infrastructure as costs for renewable energy continue to fall.

At their September meeting, members of the board of directors of the Omaha Public Power District, or OPPD, heard about two locations in the Omaha area where the utility intends to develop a total of 500 to 600 megawatts of natural gas capacity. While this fossil-fueled “backup” generation is moving ahead, plans to develop between 400 and 600 megawatts of solar generation are lagging behind.

“They’re building gas plants before they even know where the solar arrays will be,” said David Corbin, a customer who is active with the local Sierra Club and regularly attends OPPD board meetings. “We don’t think they need to move this fast.”

He also questioned the decision to invest about $650 million in plants that typically have a 30-year lifespan, given that the utility has committed to achieving “net zero carbon” by 2050.

“If they have to build one [gas plant], we’re not going to try to stop them,” he said. “But then, they need to look into storage.”

Power with Purpose came along at a transitional moment for the utility, when a newly elected crop of clean energy supporters joined the board. The plan was well underway when the new board members took office.

“Power with Purpose was really staff-driven and the board was not involved,” said Liz Veazey, a member of the Sierra Club who has closely followed changes in the utility’s generation mix. “The staff said, ‘There are no options, we have to do this now.’ They really pushed through that plan. It was really difficult for the board.”

Customers also largely were left out of the process, according to Veazey.

“The public only knew about it for a month from when it was proposed to when it was approved. There was no discussion or analysis. I would have liked more analysis about what else they could have done.”

When it approved the gas and solar projects last November, the board gave staff members permission “to negotiate and enter into procurement contracts to determine the exact size, scale and location of generation assets,” according to company spokesperson Jodi Baker.

Several board members asked in recent days about the status of Power with Purpose expressed satisfaction with progress to date and confidence that the solar generation will come together soon. The utility has issued a request for proposals for solar generation and is studying the responses.

The utility has made efforts to site some solar generation. It bought the land rights to 1,200 acres in suburban Sarpy County, but ran into resistance from the county government. The county board of commissioners passed an ordinance in June capping solar installations at 1 MW and requiring developers to hold a public hearing before obtaining a special-use permit.

Consequently, Baker said the company has “paused” efforts to develop an array in Sarpy County, but continues to look for locations in or near the 13 counties it serves. It has always intended to divide solar generation among several locations, she said.

She said that the siting process differs for gas-fired plants versus solar arrays. OPPD picks locations for gas plants; it collaborates with developers to identify suitable solar sites.

‘The whole system needs to be re-engineered’

While some clean energy proponents don’t deny the need for something to provide power when the sun’s not shining, they contend that OPPD hasn’t looked hard enough for a source other than natural gas.

John Pollack, a retired meteorologist who closely follows the utility, agrees that meeting immediate energy needs will require some additional natural gas. However, he favors “a minimum investment in natural gas and a maximum investment in figuring out how to restructure the grid to make renewables achieve their capacity. The whole system needs to be re-engineered. We don’t get there by investing a lot in natural gas.”

Veazey said the utility “did not fully consider other options, like storage. Energy experts are now saying storage is on par with gas.”

One challenge with storage — and wind and solar — Baker said, is that they don’t carry the same weight as fossil-fueled generation in the Southwest Power Pool market, which OPPD is a member of. Utilities in the pool are required to provide enough capacity to meet 112% of their peak demand.

Chris Haley, a planning specialist with the Southwest Power Pool, explained that while 1 megawatt of natural gas is counted as just slightly under 1 megawatt of capacity available to the grid, solar and wind generation might score at half that amount or, in the case of wind, even substantially less. The credit is based on the extent to which new generation coincides with the demand for power. 

A utility could meet its capacity obligation with renewables or storage, Haley said, but it would need to develop more of that type of generation than it would if using natural gas fuel.

The formula for awarding credit for storage, now being revised, recognizes only storage that can provide power for at least four hours.

The World Resources Institute, which has done extensive analysis of the changing economics of gas-powered electricity, concluded in a 2019 study that combinations of renewables, storage and demand-side management are cheaper than 95% of combined-cycle capacity and 60% of combustion turbine capacity. A recent update of that study, incorporating the latest costs for renewables and storage, suggests that “most proposed gas plants that do get built will face stranded cost risks within 10 years of construction,” according to an institute blog post published on Sept. 30.

Mark Dyson, a principal with the institute who has focused on the changing nature of the grid, said in the near future, it will “no longer be cost-effective to run [a gas plant] if renewables continue to fall [in price] the way they have.”

Baker said OPPD has looked broadly for the best way to compensate for solar’s limitations.

“We continually evaluate the technical feasibility and cost-effectiveness of power technologies,” including storage, energy efficiency and demand-response strategies. She said batteries were rejected because they still cost too much and don’t provide needed “multi-day resiliency.”

However, the utility does foresee likely incorporating them at some point, and soon will launch an experiment that it hopes will reveal how battery storage will impact its system. The utility won a $600,000 grant earlier this year from the Nebraska Environmental Trust and will purchase a battery with about 1 MW of capacity and watch how charging and discharging cycles impact its ability to charge.

But if gas plants come before storage, and even before solar, Pollack said, “It will easily become a crutch if the solar can’t move forward at the pace they expect. They will already have the gas, and it’s the path of least resistance.”

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