The roughly 150,000 North Dakota and Minnesota customers who rely on the Square Butte Electric Cooperative and Minnkota Power Cooperative for power from the aging, coal-fired Milton R. Young Unit 2 facility already are paying more for electricity than they should. Project Tundra, a plan to retrofit the 43-year-old power plant with unproven carbon capture and storage technology, likely will add much more to their bills.
The retrofit has an initial price tag of between $1 billion and $1.6 billion. The project would be twice the size of the Petra Nova plant in Texas, one of only two carbon capture storage facilities at coal-fired plants in the world. The Texas plant was built for $1 billion and was mothballed in May because it wasn’t cost-efficient .
The idea behind the retrofit is that the carbon dioxide emitted by the plant would be captured and stored. It also could be sold for use in enhanced oil recovery operations. Minnkota would earn tax credits for storing the CO 2, and it could then sell those credits to an investor, offsetting the costs of construction. In addition, Minnkota believes it will be able to take advantage of lessons learned from other carbon capture projects to reduce costs.
It’s an attractive theory, but that’s all it is now—a theory. Minnkota isn’t likely to learn much from the Petra Nova plant because it uses different technology. Instead of using the Mitsubishi-based technology from the Texas plant, Minnkota plans to use technology developed by Fluor that’s never been used at a commercial plant. First-of-a-kind, commercial-scale projects are known for being finished late and over budget, often by significant amounts.
There’s also the question of the plant’s age. Older plants tend to be less efficient. As they age, they tend to generate less power. When they generate less power, they generate less CO 2—good news for the environment, but bad news if you’re trying to make money by storing or selling CO 2.
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Finally, economics argues against Project Tundra. The retrofit would preserve high-cost coal as the primary fuel for the Young plant. Low oil prices make it unlikely that the two cooperatives will make money selling carbon dioxide for EOR operations. If the cooperatives move instead to buy electricity from the Midcontinent Independent System Operator, a nonprofit organization that delivers power to 15 U.S. states and Manitoba, they can take advantage of low natural gas prices and cheap renewable power.
The Young plant’s operators have said they’re not going to proceed with the overhaul of the plant if it substantially increases electric rates. But Minnkota is already using $26.7 million in federal funds to start the project, a sign that the Project Tundra train is pulling away from the station. It’s time to consider better alternatives—such as renewable energy purchased from MISO—that get North Dakota consumers to a place where power is cheap, clean and reliable.
Wamsted is an analyst and editor at the Institute for Energy Economics and Financial Analysis, an independent non-partisan think tank that monitors the energy transition. Schlissel is IEEFA’s director of resource planning analysis.
This column does not necessarily reflect the opinion of The Forum's editorial board nor Forum ownership.
