Great River Energy’s massive North Dakota coal power plant — once slated for closure — will be sold to a North Dakota operator that will in turn sell coal-fired electricity back to Great River.
Affiliates of Bismarck-based Rainbow Energy Marketing have reached agreements to buy the Coal Creek power plant and Great River’s power line to the Twin Cities, the companies announced Wednesday. The price was not disclosed.
Rainbow will operate Coal Creek, which is near Underwood N.D., as a merchant power plant, selling electricity into wholesale markets. Maple Grove-based Great River, which provides power to about 700,000 Minnesotans, will be one of Rainbow’s customers.
“Purchasing energy and capacity from Rainbow was not in our original plan, but it will serve as a reliable steppingstone in our power supply transition,” Great River CEO David Saggau said in a press statement.
Great River, a wholesale power cooperative that supplies 28 retail electricity co-ops, announced in May 2020 it would close Coal Creek early in 2022, saying the plant was losing money. At the time, the company’s CEO said he couldn’t even sell the plant for $1.
The buyer, though, will be operating Coal Creek under a different business model with less overhead costs than Great River.
“I wanted a business plan in place that would actually make money, and that’s what I have,” Stacy Tschider, Rainbow Energy’s president, told reporters Wednesday at a press conference.
Great River’s decision to close Coal Creek was the key part of its pivot away from coal. The company plans to move further into wind power and convert a smaller North Dakota coal-fired plant to natural gas.
As part of its new strategy, Great River would also increase its purchases in the wholesale electricity market (which could entail power generated from many sources, including fossil fuels).
Under the deal announced Wednesday, Great River would buy power from Rainbow Energy Marketing for 10 years.
In the early part of that contract, power flowing from Coal Creek to the Twin Cities would take up most of the space on the 436-mile HVDC power line, Tschider said.
But over the length of the 10-year deal, Great River’s purchases will diminish and renewable power will take up more space on the power line, he said. “We will put renewables on that HVDC line.”
While clean energy and environmental advocates in Minnesota applauded Great River’s original coal closure announcement, in North Dakota it was seen as a big economic blow. The plant employs 240 people and an adjacent coal mine that supplies it has well over 400 workers.
The state has since been working to facilitate a deal for Coal Creek, which at 1,145 megawatts is one of the largest power plants in the region. The state’s legislature passed a host of coal-power friendly bills this spring, including for tax breaks and financial aid.
Still, Tschider told reporters Wednesday that “we are not receiving any money from the state of North Dakota.”
Terms of the deal were not disclosed, though it will still need regulatory approval. As expected, the installation of carbon capture equipment and technology at Great River is a key part of Rainbow Energy’s plans.
“Carbon capture is going to be vital to this project,” Tschider said. Rainbow expects that equipping Coal Creek for carbon capture would cost $1.5 billion. Federal tax credits for carbon capture will be critical for the project.
“I’m not looking to prop up coal just to prop up coal, but to take it to the next level,” Tschider said, referring to carbon capture. Rainbow plans to have carbon capture in place within five years at Coal Creek.
Carbon dioxide can be captured through an industrial process and stored in underground rock formations. Still, carbon capture is a relatively nascent technology that’s economically challenging; it’s seen its share of failures.
Rainbow has never owned a power plant before, but Tschider said the company has managed them. It markets electricity throughout the United States and in Canada and Mexico.
Rainbow is part of Bismarck-based United Energy, whose businesses also involve oil production and oil and natural gas trading.