NRG to close Delaware’s last coal-fired plant in 2022
DAGSBORO — NRG Energy plans on closing its last coal-fired power plant on Delaware’s Indian River come June 2022, leaving its roughly 50 employees seeking new positions but also possibly opening an opportunity for future offshore wind projects.
The 410-megawatt Indian River Generating Station is one of three coal plants NRG will retire next year, including two other facilities in Illinois, NRG Executive Vice President of Operations Christopher Moser told investors on June 17.
Together, the three plants represent 55% of NRG’s remaining coal capacity. The Indian River plant generated enough power for roughly 388,000 homes.
“Closing these plants was a difficult but necessary decision in light of the low market prices,” NRG spokesman Dave Schrader said.
The 2022-2023 energy auction from regional power grid operator PJM recorded a low clearing price of $50 per megawatt day, the lowest since 2013-2014. The capacity price recorded at the 2021-2022 auction was $140 per megawatt day.
PJM accounts for the 64% drop in energy capacity price to a lower load forecast and reserve requirement lowering the amount of capacity needed. Another factor was lower estimated costs for building new generators across the country.
NRG purchased the Indian River plant from Delmarva Power in 2001, after Delmarva Power developed the site in the mid-1950s and operated with two coal-fired units. The plant likely shipped coal from Pennsylvania. By the 1980s, Delmarva Power doubled the unit numbers. But in the new millennium, NRG oversaw closing down the units, starting in 2010, leaving the final unit running today.
In 2009, NRG invested $360 million to upgrade the plant to meet higher emission standards. Other improvements included the installation of a scrubber and selective catalytic reduction system to further reduce emissions in 2011.
In the years since, alternative energy sources, such as cheaper natural gas fracked in Pennsylvania and piped across the Delmarva peninsula and solar panel fields cropping up around the state, have grown in usage, further depressing energy prices.
Recently, there has been a push for development of offshore windmill farms. NRG supported a bid for the proposed Bluewater Wind project in Delaware that ultimately was scuttled in 2011 after local opposition. Today, there are at least 11 offshore wind projects proposed or permitted off the East Coast.
“The coal plant is the last major emission source in Delaware, so this will help the state reach its goal of carbon dioxide reductions,” said Jeremy Firestone, director of the University of Delaware’s Center for Research in Wind. “Delaware is not diverse in its energy, and we’ve got the smallest total energy production of any state in America.”
NRG will provide transition assistance and severance in accordance with company policies and applicable collective bargaining agreements. The energy company will also engage in Effects Bargaining with union leadership for represented employees at the impacted sites, Schrader said.
“NRG is committed to providing preferential consideration to qualified internal employees who apply for any openings at other NRG locations,” he added.
But Firestone noted that even though there are immediate implications to the state’s job base, there is an opportunity for offshore wind to once again capitalize.
“It does free up transmission capacity on the interconnection, which NRG already had access to. If we’re looking to build offshore wind and the transmission options are constrained, this may help,” Firestone said. “It’s time for Delaware to get off the bleachers and on the playing field when it comes to offshore wind.”
Other offshore wind developers are noticing the changing tide and signing deals with owners of former coal power plants. In May, Mayflower Wind inked a deal with Anbaric Development Partners to use the transmission assets at a decommissioned coal plant in Somerset, Mass.
The Skipjack Wind Farm developer Ørsted tentatively planned for an interconnection site in the Fenwick Island State Park, until it was scrapped last year. Although no decisions have been made, the company said it was exploring locations in Bethany Beach or in the Cedar Neck as of July 2020.
When contacted by the Delaware Business Times about whether the Indian River facility would be a feasible option, Ørsted Mid-Atlantic Market Manager Brady Walker said the company was weighing options for operations.
“Ørsted is currently evaluating critical components of the Skipjack Wind Farm such as cable landfall and interconnection location. Ørsted looks forward to continuing discussions about cable landfall and interconnection and receiving feedback directly from communities and stakeholders,” he said.