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The Navajo Generating Station Coal Plant Officially Powers Down. 

Will Renewables Replace It?

One of the nation’s largest coal plants permanently powered down this week after the owners determined it would be uneconomical to continue operating the facility as natural gas and renewable energy prices continue to drop.

The Navajo Generating Station (NGS) officially shut off at 12:09 p.m. on November 18 when long-time employee Fred Larson opened the Unit 2 breakers, according to the plant operator, Arizona utility Salt River Project (SRP).  The plant had been operating since the mid-1970s on land leased from the Navajo Nation, located east of Page, Arizona.

The closure raises questions about the future of SRP’s energy mix and the extent to which renewables will meet the utility’s energy needs. It also presents a new set of challenges and opportunities for the Navajo Nation, which hosted the coal plant for more than 40 years and relied on it for revenue. When the decision to close NGS was made two years ago, over 500 employees were working at the plant — more than 90 percent of whom are Navajo.

The head of SRP framed the closure as a difficult but necessary decision based on “shifting economics” within the energy industry.

“NGS will always be remembered as a coal-fired workhorse whose employees made it one of the safest and most reliable power plants in the nation,” said SRP CEO and General Manager Mike Hummel.

In 2017, the owners of NGS decided to shutter the 2,250-megawatt coal plant after its lease with the Navajo Nation was scheduled to expire in late December.

SALT RIVER PROJECT – SRP owns 42.9 percent of NGS, with another 24.3 percent owned by the U.S. Bureau of Reclamation. Other partial owners include Arizona Public Service, NV Energy and Tucson Electric Power.

Over the next three years, contractors will carry out demolition and reclamation duties at the NGS site as they have at many other coal plant sites across the country. The U.S. Energy Information Administration found that between 2010 and the first quarter of 2019, U.S. power companies announced the retirement of more than 546 coal-fired power units, totaling roughly 102 gigawatts of generating capacity. An additional 17 gigawatts of coal-fired capacity is expected to retire by 2025.

Natural gas and a massive solar-charged battery

According to an SRP spokesperson, the public power entity is primarily replacing its share of NGS’ generating capacity with natural gas from the Mesquite and Gila River power plants as well as some additional new solar resources.

Last week, ahead of the Navajo coal plant retirement, SRP announced the purchase of two new solar and battery storage plants, making it one of the largest investors in energy storage in the country.

The Sonoran Energy Center will comprise a 250-megawatt solar array coupled with a 1-gigawatt-hour energy storage system located in Arizona’s Little Rainbow Valley. The Storey Energy Center will be an approximately 88-megawatt solar and energy storage system, located south of Coolidge.

“These integrated solar and storage plants will allow SRP to meet its summer peak demand, reduce carbon emissions, and provide clean energy to our customers while optimizing energy output using state-of-the-art battery technology,” Hummel said in a statement.

The projects were chosen as part of a recent “all-source” solicitation for 600 megawatts of capacity that will help SRP hit its goal of adding 1,000 megawatts of new solar to its system by 2025 and meet customer needs going forward.

Both plants are scheduled to come online by June 2023 and will be owned and operated by subsidiaries of NextEra Energy Resources.

SRP, which is governed by its own elected board, has been criticized for not moving as fast as other Arizona utilities in adopting renewable energy resources. Recent announcements mark a shift in focus. Executives announced last year that SRP would add more solar and batteries to its grid in an effort to save money and reduce reliance on natural gas. At the time it had only 200 megawatts of solar power.

SRP also has a goal to reduce the amount of carbon emissions it generates per megawatt-hour by more than 60 percent by 2035 and by 90 percent in 2050.

Still, natural gas will make up the bulk of the missing capacity from the retired Navajo Generating Station. SRP purchased one block of the Gila River Power Station in 2016 and two 550-megawatt natural-gas generating units at Gila Station in 2017. The Mesquite plant purchase was made in 2012.

The good news for renewables is that SRP currently has a significant amount of baseload capacity available to help the grid remain reliable, which means that it can add a lot more solar before it starts to face some of the long-term problems utilities face when adopting a large amount of renewables, according Colin Smith, a senior analyst at Wood Mackenzie Power & Renewables.

“SRP absolutely will be able to add more solar to the grid without disrupting their overall generation load,” he said.

“The biggest question, I think, is about lost jobs,” Smith added. “Solar, realistically, is only going to provide some short-term construction jobs as opposed to long-term jobs for engineers and people working at the coal plant.”

The human cost

The jobs impact from the NGS closure will disproportionately affect members of the Navajo Nation, who made up the vast majority of the coal plant’s workforce.

Clean energy entrepreneur Brett Isaac, who is Navajo and whose family still lives in the territory, is hopeful that renewable energy development will be able to create significant opportunities and lasting impact for his community.

A founder of Navajo Power, a Public Benefit Corporation developing clean energy projects on tribal lands, Isaac said he and his team are taking an inclusive approach to energy planning and designing their projects to generate long-term revenue streams for the tribe.

The two-year-old company is currently focused on deploying solar projects larger than 100 megawatts but over time plans to build a robust distributed energy business, which is more labor-intensive. The Navajo Power team believes it could develop up to 10 gigawatts of renewable energy on the Navajo Nation in Arizona and New Mexico, which would be a boon for the community and support a shift to new technology jobs.

Navajo Power has already secured land for its projects and is working to complete environmental reviews and establish offtake agreements for the large solar projects it plans to build. But the process of building support has been a challenge.

Convincing utilities, corporations and states that used to buy power from the Navajo Nation to sign new offtake agreements for projects located on tribal lands has been tough in the wake of the NGS closure. Engendering confidence within the Navajo Nation has been difficult as well.

Dealings with the “energy [industry have] been traumatic [for] indigenous communities,” said Isaac. “We don’t want to replicate things that have happened in the past [so] they lose their faith in the industry and…[become] resistant to the transition.”

He noted that the NGS coal plant closure has had a “human cost.” It took more than a year for NGS owners to finalize negotiations around closing the plant, putting plant workers and their families in a prolonged state of limbo.

In addition to employment issues, operating budgets for the Navajo Nation and the Hopi Tribe have relied on royalties from the Generating Station and from coal mines on their lands.

The Kayenta Coal Mine, which rolled its last trainload of coal to NGS in late August, used to purchase $9.9 million worth of electricity each year from the Navajo Tribal Utility Authority. The same month, the Peabody-owned mine laid off the last 265 of its workers, many of them members of the Hopi and Navajo tribes.

The transition

SRP and other NGS owners took several steps to limit the impact on tribal communities, according to SRP spokesperson Scott Harelson.

On the job front, SRP offered all 433 regular employees the opportunity to “redeploy” at other SRP facilities; nearly 300 accepted. SRP and other stakeholders in Arizona are also supporting a Re-Employment Center that will offer career training, certification programs and other job-seeker assistance.

In addition, the owners signed a 35-year extension lease with the Navajo Nation for plant retirement activities after 2019 and long-term monitoring. Arrangements were also made to allow for the ongoing operation of the transmission system on the Navajo Nation.

“Under the extension lease, the NGS owners will make lease payments totaling approximately $110 million to the Navajo Nation,” according to SRP.

The Navajo Nation will also take ownership of the remaining NGS assets, including a warehouse, lake pump system and railroad. The closure agreement also gave the tribe rights to transmission capacity at NGS. SRP said a federal government pledge to provide 500 megawatts of transmission capacity from the NGS system is valued at more than $80 million.

But according to Isaac, the Navajo Nation is still recovering decades’ worth of decisions that limited economic development and revenue generation in the region. Unemployment rates remain high, and roughly 15,000 homes on the Navajo Nation still don’t have power.

“And yet they have big 500-kilovolt power lines running over their homes,” he said.

A community-backed move to renewables

Attitudes around energy are shifting on the Navajo Nation. Communities that once opposed renewable energy development, viewing it as a threat to their coal jobs, now understand that alternative energy resources present new opportunities in a shifting energy landscape.

SRP is already working with the Navajo Nation to develop renewable energy on Navajo land and has partnered with the Navajo Tribal Utility Authority on the Kayenta I and Kayenta II solar power plants — the first large-scale solar projects in the territory — totaling approximately 60 megawatts of capacity.

Meanwhile, Navajo grassroots groups are tracking progress on the coal plant cleanup effort and continuing to urge Navajo Nation leaders to move away from the polluting resource. Navajo Nation President Jonathan Nez appears to be heeding those calls.

Last Friday, the president refused to financially back bonds needed by the tribal energy company Navajo Transitional Energy Co. for three newly acquired coal mines located outside the reservation. Nez said the company was not transparent in its dealings and that the deal would put the tribe in a tricky financial position in the wake of coal plant closures and mining company bankruptcies.

The following day, Nez visited Navajo Power’s clean energy site and pledged to help the company get permits for its projects and find an offtaker for the power they generate.

“The leader appreciated that Navajo Power went through getting the proper consents from the community…and [is] going about it in a way that’s not trying to overstep or create conflict,” said Isaac.

While clean-energy advocates are looking to write a new chapter for Arizona following the NGS shutdown, there are some things they can learn from coal’s legacy, he added.

“Coal miners and plant operators have pride in what they’re doing,” Isaac said. “Solar can learn from that and create champions within the community — only this time, they can own the process while contributing to a cleaner environment.”