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Grand Haven, Michigan, to burn less coal at Sims plant this year before retirement in 2020

Highlights

Plant burned 130,000 st of NAPP coal last year

Cheap natural gas has dried up Sims' power market

Louisville, Kentucky — The Grand Haven, Michigan, Board of Light and Power expects to burn about 20% less coal in its 70.5-MW J.B. Sims power plant this year compared with 2018, as the 36-year-old facility approaches a June 1, 2020, retirement date, according to general manager Dave Walters.

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Walters told S&P Global Platts in an interview that Sims consumed approximately 130,000 st of Northern Appalachian coal last year, but probably will be in the range of 100,000 st to 120,000 st in 2019 as plant operations begin to wind down.

Grand Haven officials recently decided to shutter Sims next year for economic reasons. The city only needs about half of the plant's output to serve native load customers and traditionally has sold the surplus power into the wholesale market. But that market has dried up for Sims as the plant has been unable to compete with lower-cost natural gas, Walters said.

The city buys its coal from C. Reiss Coal Company and it is delivered to a dock on Lake Michigan.

"We've got seven months or so of coal sitting on the dock," he said. As a result, the utility is exercising caution in operating Sims, not wanting to overtax the facility and possibly cause it to break down. "We're not running the plant too hard right now," Walters added.

Grand Haven, on the eastern shore of Lake Michigan, considered a life-extension project for Sims, but was advised by Black & Veatch the city would need to invest about $35 million "to keep it running for the next five years," Walters noted.

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Without the off-system power sales to provide the city with additional revenue to help defray operating costs, the decision to close the plant was fairly easy.

It remains unclear what will replace Sims. However, Burns & McDonnell recently recommended the construction of a 35- to 40-MW natural gas-fired reciprocal engine, or RICE, plant. Such a facility would cost an estimated $40 million-$45 million and be in commercial operation in June 2023, three years after Sims retires.

Walters said that means Grand Haven probably would have to buy short-term capacity and energy, possibly through the Michigan Public Power Agency, of which it is a member, during the transition period.

A final decision on Sims' replacement is expected by city officials late this year.

-- Bob Matyi, newsdesk@spglobal.com

-- Edited by Annie Siebert, newsdesk@spglobal.com