TL/DR –
Sen. Jon Tester has sought clarification on the effects of the EPA’s Mercury Air Toxic Standards (MATS) rule on Colstrip 3 & 4 and Montana consumers. Using Xcel Energy’s closure of its 680-MW Sherco unit and the subsequent replacement with solar generation and long-duration energy storage as a comparison, the article suggests that this transition could be a viable option for the Colstrip units. It also explores the potential savings from transitioning to solar energy, the financial benefits from federal tax credits under the Inflation Reduction Act, as well as the long-term compliance benefits of the MATS rule, suggesting similar measures could mitigate financial and job concerns at Colstrip.
EPA’s Mercury Air Toxic Standards (MATS) Rule’s Impact on Montana
Sen. Jon Tester sought clarification on the EPA’s Mercury Air Toxic Standards (MATS) rule’s effect on Colstrip 3 & 4 and Montana consumers. Colstrip units 3 and 4 each have a coal-fired generating capacity of 740 megawatts (MWs).
The Transition from Coal to Solar Energy
For comparison, consider the 680-MW Xcel Energy Sherco unit that closed in 2023. By 2025, Xcel is expected to replace the coal-fired capacity with a 710-MW solar generation in Becker, Minnesota, supplementing the 460-MWs currently under construction with an additional 250-MW array.
Innovative Energy Storage Solutions
Additionally, Xcel is trialing Form Energy’s Long Duration Energy Storage (LDES) iron-air battery, capable of storing ten megawatts for up to 100 hours. This storage capacity outmatches the 4-hour duration of current lithium-ion batteries used for grid storage.
Challenges in MATS Compliance
Xcel has transitioned the Sherco and two other coal-fired units without layoffs, but NorthWestern is resistant, suggesting that MATS compliance cost of $350+ million may lead to job cuts and premature plant closures.
Solar Energy’s Economic and Environmental Benefits
Sherco’s 720-megawatt solar/battery capacity will provide enough electricity for 150,000+ homes annually, without fuel costs. Xcel plans to leverage federal tax credits from the Inflation Reduction Act (IRA) on Sherco Solar’s energy production to help customers save money.
Sherco’s Solar/Battery Project Financing
Biden’s IRA federal tax credits will cover 60% of Sherco’s $1,055,000,000 solar/battery project, leaving a non-tax credit cost of $422,000,000. Sherco’s solar project is projected to generate $350,000,000 in local economic benefits, equivalent to the estimated cost of MATS-required pollution control at Colstrip.
Cost-Benefit Analysis of Solar Energy
Considering the fuel and pollution control costs of $0.043/kWh, a 671-MW solar array could save sufficient funds to cover the remaining $72,000,000 in cost-benefit analysis. A similar IRA funded project could alleviate financial and job concerns at Colstrip.
Strategic Location for Solar Arrays
Solar arrays, adjacent to Sherco’s existing facilities, utilize current grid connections, providing the most cost-effective power. Similar strategic locations could be considered for Colstrip, given adequate time to comply with MATS.
EPA MATS Rule’s Flexibility
The EPA MATS rule includes implementation “flexibilities” for power plants. The rule allows units that stop burning coal by 2034 to continue meeting existing requirements. This gives NorthWestern six more years to comply than the previous standards, and two more than the 2032 that Tester queried.
Support for Inflation Reduction Act
Tester was the only Montana Congressional vote for the Inflation Reduction Act, supporting the direct payments to churches, schools, and local governments in lieu of tax credits. The IRA also addresses complex health, climate, and pollution challenges.
A Sustainable Future for Montana
The goal is for Xcel to meet customers’ energy needs while retiring its remaining coal units in 2030, without layoffs. Exploring flexibility in making the IRA work for Montana, a 2032 or 2034 Colstrip closure with minimal additional MATS pollution control spending is a reasonable goal, rather than NorthWestern’s proposed 2042 closure. A resolution with both EPA and NorthWestern is anticipated.
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