The Grand River Dam Authority is planning to purchase an estimated $410-million natural gas-fired combustion turbine and generator project to replace the last coal-fired generation unit at the Grand River Energy Center in Choteau.

At the monthly GRDA Board of Directors meeting on Wednesday in Langley, the board unanimously approved entering into a $136-million contract with Mitsubishi Power America for the purchase of a 420-megawatt generating unit and a $75-million, 12-year service agreement with Mitsubishi. 

The offer from Mitsubishi Power also includes options, not included in Wednesday’s approved contract, for Mitsubishi Power to upgrade the unit to allow for a hydrogen-natural gas fuel mix in the future. 

The contracts are still pending final approval from the GRDA CEO and general counsel.

The new natural gas-fired unit will replace the Energy Center’s Unit 2, a 492-megawatt coal-fired generator that came online in 1985. The coal-fired generator had several issues over the years, including a fire in 2016 that caused between $80 million and $200 million in damage.

The increasing regulatory requirements on coal-fired plants, including limits on emissions of the greenhouse gas carbon dioxide and coal-ash waste disposal are driving up costs, said Robert Ladd, vice president of generation operation at GRDA.

The old coal-fired unit would likely not be able to meet new federal requirements that are nearing finalization for Oklahoma  power plants on nitrous oxides, the chemicals partially responsible for smog and acid rain. An updated scrubber, a device that reduces emission pollutants, on Unit 2 would likely cost more than $250 million.

Finally, Unit 2 is considered “uninsurable,” Ladd said.

“There’s a lot of risk in that operation and it continues to be uninsurable today,” Ladd said. “It’s exposed to the highest degree of regulatory uncertainty, lacks the operational flexibility that’s needed for the market, has the highest expense across all of our GRDA-owned fleet, and also carries the most inherent risk, operational and financial.”

According to slides presented at Wednesday’s meeting, the new generation unit is expected to be installed just east of the Grand River Energy Center’s Unit 3, a combined cycle natural gas-fired generator that went online in 2017. 

The $465 million combined cycle natural gas-fired Unit 3 came online in 2017, and was considered one of the most advanced generators of its kind.

Construction on the Unit 4 project is expected to begin in January 2024, and is expected to be up and running by April 2026.

As part of the deal with Mitsubishi Power, workers would also provide upgrades to Unit 3, allowing it to get an additional 13 to 14 megawatts of power, Ladd said. 

The new unit would be a simple-cycle unit, meaning it takes only minutes to fire up and begin generating electricity, Ladd said, compared to Unit 3, which can take hours to get fully up and running.

GRDA President and CEO Dan Sullivan said he has already had meetings with bond underwriters for the project. Many of the details are still being worked out, he said, but he hopes to have a deal in place by December.

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