The new economics of power generation

Long before a cooperative member pays a power bill, electricity produced at power plants and wind farms is sold into a market. The price generators are paid for the electricity they produce is determined by many factors, including demand for electricity and production costs at generation facilities.

Electricity generated by wind farms has no fuel costs, which can significantly reduce the value of energy on windy days. Natural gas-powered generation enjoys such affordable fuel at the present time that it can be dispatched into the regional market for bargain prices. The ability of natural gas power plants to adjust their output according to market signals also makes it a fitting complement to wind energy.

“Today’s electricity market values flexibility,” said Great River Energy Vice President and Chief Market Officer Jon Brekke.  “We are finding ways to improve our flexibility to follow market indications.”

In late March, Great River Energy changed the way its Stanton Station power plant is dispatched in the regional electricity market. The cooperative changed the central North Dakota plant’s status to “economic dispatch.” That means Stanton Station will not operate unless market revenue covers the variable cost of operation and the cost of re-starting the plant.

“This change signals a new mindset for our generation resources and the men and women who operate them,” said Great River Energy Vice President and Chief Generation Officer Rick Lancaster. “Rather than running the plant around the clock, we are responding appropriately to market signals.”

Evolution of generation in progress
Adjusting the dispatch of power plants is just the latest strategy Great River Energy has adopted to improve the way it generates electricity.

Last year, the cooperative exited a contract for half the output of a Wisconsin coal plant. In 2014, Great River Energy started up an efficient combined heat and power plant that meets the new carbon dioxide emission limits proposed in the Clean Power Plan.

A recent evaluation of solar electricity alternatives resulted in Great River Energy starting construction on a 13 acre, 2.3-megawatt solar array in Rockford, Minn., the output of which will be dedicated to Great River Energy member cooperative Wright-Hennepin Cooperative Electric Association.

The cooperative has also sought ways to improve operations at its existing generation facilities.

“Making our plants more efficient is a great way to reduce carbon dioxide emissions,” said Lancaster.  “We did this in a big way when our engineers invented and then installed DryFiningTM technology, our patented method of drying coal and reducing emissions of mercury, nitrogen oxides, sulfur dioxide and carbon dioxide.”

DryFining technology increased Coal Creek Station’s efficiency by four percent and reduced carbon dioxide emissions by the same percentage.