FAIRMONT - Fairmont Energy Station is progressing quickly. By the end of the year, the 25-megawatt natural gas-fired plant should be up and running, using a relatively clean-burning energy source, particularly compared to its coal counterparts.
Leadership from Southern Minnesota Municipal Power Agency visited Fairmont on Tuesday to give an update to the city's public utilities commission.
The project is a $30 million investment by SMMPA, an agency that sells power and provides energy services to its 18 member municipalities. SMMPA purchased the site in 2011 from the city of Fairmont for $500,000.
BIG JOB — A worker kneels on the floor of the engine room at Fairmont Energy Station, a 25 megawatt facility owned by Southern Minnesota Municipal Power Agency. The plant is expected to be up and running by the end of this year.
According to Mark Mitchell, director of operations and chief operating officer, SMMPA initially wanted to double the production capacity of the plant. The site was grandfathered in at 25 megawatts, and upgrading to 50 megawatts would have required a $10 million investment in transmission upgrades.
The agency would do several things different if given the choice, but the industry is highly regulated for environmental and safety purposes. Regardless of the subject Tuesday, from Fairmont Energy Station, to renewable energy, to the Sherco 3 coal plant, government mandates was a repeated sticking point.
Sherco 3 has been producing power since 1987, and it's the newest coal-fired plant in Minnesota and one of the newest in the Upper Midwest, said Dave Geschwind, SMMPA's executive director and chief executive officer.
"If you believe there will be any coal-fired plants in the future, I think this will be one of them," he said.
Other plants have been shut down due to emissions, but Sherco has controls in place to manage biohazards such as mercury and sulfur dioxide. For carbon dioxide emissions, however, there is no technical solution, Geschwind said.
Thus the spark-ignited engines at Fairmont Energy Station, which are drawing attention from other energy providers that need to improve their emissions output.
"Our goal is to use technology that will successfully compete in the market and run," Geschwind said.
The high cost of using renewable energy, such as wind, solar and hydropower, goes against that goal, but again, government regulations by the state demand at least 12 percent of SMMPA's power come from such sources.
"It's more expensive than the market, no doubt about it," Geschwind said, creating an additional cost of $1 million to $2 million per month.
Despite those costs and a catastrophic accident at the Sherco 3 plant, SMMPA's reserve funds are in good shape, and its wholesale rates are competitive.
Looking forward, one future challenge the agency will face is helping its members lower their usage.
"We have to show a 1.5 percent customer savings each year; that's our government-mandated goal, and it's going to get harder and harder," Geschwind said.
The agency also will be required to increase its renewable energy output in coming years, which has many in the power industry concerned. Beyond issues with reliability, the maintenance of wind turbines makes the energy source unaffordable, according to Geschwind.
"With the anti-coal sentiment, higher rates are inevitable, right?" said Fairmont public utility commissioner Bill Supulla.
Geschwind confirmed his query, particularly when government subsidies for renewable energy disappear.
Commissioner Jeff Ziemer asked about the feasibility of a waste-to-energy plant, but according to Fairmont city administrator Mike Humpal, research has shown it wouldn't work for Fairmont.
A study indicated there is enough waste to produce just under 10 megawatts - not enough to begin to cover the costs of building the facility.
"There's quite a bit of competition for that waste stream," Humpal said.
More information about SMMPA is available online at www.saveenergyinmycommunity.com