Interior Alaska electric cooperative moves to shutter troubled coal plant and pursue construction of large wind farm

An Interior Alaska electric cooperative is planning to retire one of its two coal plants and seek proposals to build a large-scale wind farm, while also upgrading its battery storage system and coming up with an agreement to purchase more natural gas-fueled power from Southcentral Alaska.

On Monday, the board of the Golden Valley Electric Association — the main Interior electric cooperative that serves 100,000 residents in communities from Healy to Fairbanks and Delta Junction — voted to develop a plan to close one of its two coal plants located in Healy by the end of 2024.

The board faced a decision over whether to shutter an older coal plant, Healy Unit 1, or add roughly $26 million in pollution control equipment by the end of 2024, as outlined in a 2012 consent decree with the U.S. Environmental Protection Agency.

The board decided to add those pollution controls, but they also made a move to close a separate coal plant, the adjacent Healy Unit 2, after a consultant hired by the cooperative said that would be an economically feasible option.

Ultimately, the board approved a plan to:

• Install pollution controls on the cooperative’s older, smaller coal plant, Healy Unit 1.

• Develop a plan for the retirement of the newer, larger coal plant, Healy Unit 2, by Dec. 31, 2024.

• Solicit proposals for a large-scale wind project purchase agreement in 60 to 90 days.

• Purchase and install a new 46-megawatt battery storage system.

• Secure a purchase agreement with one or more Southcentral utilities, gas producers or suppliers for 30 to 50 megawatts of additional energy.

“It’s really a vision for where Golden Valley is going in the future,” said Tom DeLong, the board’s chair.

Monday’s decision was a big change in direction for the cooperative, he said. While it may have seemed surprising to close the newer of the two coal plants, Healy Unit 2 wasn’t functional, while DeLong described Unit 1 as the “little plant that could.”

“The decision regarding Unit 2 was unanimous and everyone knew we had to do it because the economics just speak for themselves,” DeLong said.

Healy Unit 2, a $300 million experimental plant built by the Alaska Industrial Development and Export Authority in the ‘90s with the U.S. Department of Energy, “has been plagued with legal issues and operational issues,” DeLong said.

“Unit 2 was a tough plant to start with,” DeLong said. “It was a rough birth and a rough childhood and a disgraceful older age.”

At 62 megawatts, Healy Unit 2 is the largest coal plant in the state, but it doesn’t operate at that rate, Golden Valley Electric spokesperson Meadow Bailey said. Last year, the plant “averaged much lower production than it was built for,” she said.

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And while the cooperative has worked for years to increase its reliability, Healy Unit 2 has had to come offline for repairs prompting the need to replace its power with electricity from more expensive sources like oil, Bailey said.

Going forward, most of the electricity previously generated by the coal plant will be replaced with power from natural gas produced in Southcentral Alaska, Bailey said. And with the future wind and battery sources, the cooperative will not have to rely on expensive diesel generation, Bailey said.

Prior to the Monday night meeting, the cooperative’s board, employees and consultants spent 18 months looking at their generation sources.

In a presentation to the board, consultant Mike Hubbard with the Financial Engineering Company presented scenarios for retiring one, both or neither plant, and what to replace them with. He said it was more economic to retire Healy Unit 2 with less risk than retiring both. And Hubbard said adding wind power was beneficial both environmentally and economically.

Several people testified during the meeting, including representatives from two nearby gold mines who said their energy prices were high and that they also support reducing emissions. Some testified against retiring a plant, including those who cited concern for the community of Healy and employment there.

“Just keep into account that not only is it going to affect the employees at the power plant, it’s also going to probably affect the employees at the coal mine, as well, because that’s quite a bit of coal that they would not have to be giving to us. This is going to affect all the contractors, this is gonna affect just more than the town of Healy, and I just want you consider that,” said Christi Killian, who identified as a control room operator qualified to run both Healy Unit 1 and 2.

Others also spoke about the importance of reducing carbon emissions and concern over climate change. Several people underscored the importance of jobs and training opportunities for those in Healy impacted by the potential closure.

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“This is a really difficult decision to make,” said Bailey, with Golden Valley Electric. “We have employees and we have a community that operates around Healy Unit 1 and 2. So anything that we do that affects those plants, we recognize also affects our employees there and that community.”

The board also instructed Golden Valley Electric to focus on opportunities for employees, including jobs within the cooperative, additional training, skill building or other transitional services, Bailey said.

Jessica Gerard, executive director of the Fairbanks Climate Action Coalition, characterized the decision as a “really big win for us” because it was not only a step toward closing a coal plant, but also an investment in renewable energy production and storage.

“The people that made this happen, as far as FCAC is concerned, (are) the member owners that have been engaged with GVEA for years testifying and encouraging their shift to renewable energy,” Gerard said.

It’s a consequential decision for Interior Alaska, said Philip Wight, an energy and environmental historian and assistant professor of history and Arctic Studies at the University of Alaska Fairbanks. He also works with the Alaska Public Interest Research Group, but said he didn’t do any paid formal advocacy on the Healy issue.

Wight said that often when renewables are brought online, people think they’ll end up paying more. But the Monday decision was both a low-cost and low-carbon scenario, he said.

“There was not a tradeoff here between spending more money and saving carbon, it was a win-win for both economics and the environment,” Wight said.

And, he said, it wasn’t just a decision about one piece of power generation. Instead, the cooperative unveiled multiple scenarios that would diversify power generation away from coal, including a large new battery and more wind energy, as well as a goal to purchase power from Southcentral, which is a step toward integrating power along the Railbelt.

“This is arguably one of the most consequential decisions GVEA has ever made as an electric utility,” Wight said.