Intermountain Power Project’s switch from coal to hydrogen could power rural Utah job growth

In 2020, American coal production was at its lowest since 1965.

Steve Griffin | The Salt Lake Tribune The Intermountain Power Plant near Delta, Utah Friday April 12, 2013.

Utah’s largest coal-fired power plant is headed to early retirement in 2025, but the Intermountain Power Project’s transition to natural gas and hydrogen could offset associated job losses suffered by the state’s flagging coal industry if it kickstarts a green-energy revolution in Utah.

That’s according to a new report by the Utah Foundation exploring the economic impact of the Intermountain Power Authority’s (IPA) plan, dubbed IPP Renewed, to move its 40-year-old Millard County plant away from the fossil fuel most closely associated with climate change.

“The days of coal-fueled electricity generation in Utah are fading away. This brings economic challenges, but it also offers opportunities to pivot to a promising new future for affected communities,” states the report, which was commissioned by the Intermountain Power Authority. “The IPP Renewed construction project will provide billions of dollars in direct investment and hundreds of construction jobs over several years.”

Since the early-1980s, the 1,800-megawatt power plant has burned up to 4 million tons of coal a year, but its heyday is long past as its customers scrambled to wean themselves from coal. Last year, the plant burned only 3.1 million tons, the lowest amount in the plant’s history, according to IPA’s annual report.

Coal plant retirements are a trend across the nation as it looks to renewables and other cleaner energy sources to satisfy its appetite for electricity. U.S. coal production last year dropped to its lowest level since 1965.

“This coal transition is hitting communities right between the eyes and it hurts,” said Peter Reichard, president of the Utah Foundation, a Salt Lake City-based nonprofit research organization. “As a state, we need to take steps to soften the blow and let them know there is brighter future on the horizon.”

The Intermountain plant serves a handful of rural power cooperatives around Utah, but California utilities have historically purchased 98% of the output under contracts that expire in 2027.

That power is carried 450 miles on a direct current line across Nevada and southern California to the Adelanto station, where it is distributed to Pasadena, Glendale and several other cities served by the Los Angeles Department of Water and Power. Under California law, these power providers’ future contracts must look to fuel sources other than coal as part of that state’s emission-reduction targets for greenhouse gases.

So IPA must either adapt to the needs of its customers or get out of business, according to Reichard, a co-author on the new report with Christopher Collard. Rather than simply replace one fossil fuel for a less-carbon-intensive one, IPA is getting into the renewable energy business by leveraging another resource: location. The plant is close to subterranean salt domes engineered for storing compressed gasses and refined liquid fuels, open land with great potential for wind and solar projects and underutilized transmission capacity.

“IPP’s unique location, physical facilities, trained workforce and even the geology beneath the Project make it the ideal location for scaling up technologies such as green hydrogen production and storage,” states the Intermountain Power Authority’s 2020 annual report.

At its startup, IPP Renewed is to burn a gas mixture containing 30% hydrogen. That would expand to 100% by 2045.

Wind and solar installation would power a process called electrolysis, which uses an electrical current to separate water into its constituent elements of oxygen and hydrogen, which would be stored in salt caverns that have been hollowed out on nearby state trust lands.

The hydrogen would be mixed with natural gas piped in from the Kern River transmission line and combusted in a combined-cycle generator. Turning that hydrogen back into electricity will release no carbon and the primary emission will be water vapor.

The process for producing hydrogen from water is an old technology, but one that can be adapted for harnessing renewable energy, according to Sarah Wright, executive director of Utah Clean Energy, a nonprofit dedicated to renewables.

“The IPP location is blessed with perfect geology for storing something like the hydrogen gas that is created,” she said. “I can’t say 100% this is going to work, but what I can say is that this is the type of thinking and the type of project that we need to see as we decarbonize our systems. There is no one right solution, but for every different location, you have different opportunities. And so I am excited about what can happen at this facility.”

About $2 billion will be spent on the project, with construction slated to begin next year and continue through 2026. This work will support 450 construction jobs on average each year during that period, accounting for 10% of Millard County’s employment, according to the Utah Foundation report.

The plant will result in annual tax receipts between $18 to 27 million. IPA plans to pull off the project without seeking any local or state financial incentives.

IPP currently consumes about a quarter of the coal produced in Utah mines.

“Unless these coal mines can find a way to export a comparative amount of coal, the closure of the coal-fueled power plant will have substantial impact throughout Utah’s coal extraction communities,” the report says. “However, the longer-term economic impacts on the energy hub at full potential remain to be seen.”

According to IPA’s annual report, at 840 megawatts, the new gas-powered plant’s capacity will be far smaller than the current plant’s output, and it will generate much less power than the 2,400 megawatts the current power line to southern California can carry.

“This will result in unused capacity on the transmission lines that could perhaps be filled through other electricity generation projects,” Utah Foundation report says. “It is expected that much of this new electricity generation would be renewable sources such as wind and solar.”

Already, the line carries 300 megawatts of wind-generated power and many additional renewable energy projects are under development, looking for access to the more than 1,000 megawatts of transmission capacity that will remain after the coal generators are retired, according to IPA’s 2020 annual report.

The rebuilt plant will employ 120 workers, less than the number who work at the IPP plant now. The Utah Foundation report acknowledges operations at the new plant alone will have a smaller economic footprint than the coal plant, whose footprint falls to zero after 2027 no matter what.

IPP Renewed’s larger impact could come with its role promoting the infrastructure and investment that could spur a boom in renewable energy in Beaver and Millard counties, covering a region of Utah in need of new economic opportunities.

“Our economy is turning away from coal-fired power,” Reichard said. “That means we will have to find new means of stimulating local economies touched by the change. The IPP Renewed project is emblematic of that transition, with significant impacts both in the near future and over the longer term.”