Steel city swaps coal for solar

Source: Benjamin Storrow, E&E News reporter • Posted: Tuesday, August 21, 2018

Coal has powered the steel mills of Pueblo, Colo., since the days of John D. Rockefeller Sr.

Now, Pueblo steel will be forged by the sun.

Evraz North America PLC announced last week that it has reached an agreement with Xcel Energy Inc., Colorado’s largest utility, to build a 240-megawatt solar farm next to its mill in southern Colorado.

The deal, which is subject to approval by Colorado regulators, is part of Xcel’s wider transition from coal to renewables. The Minneapolis-based utility is closing the two coal-fired units at Comanche Generating Station, which were built in part to power Evraz’s operations.

“We saw a great opportunity to retain a valued customer, assist in its expansion in one of southern Colorado’s premier communities, and increase use of cleaner energy,” said Alice Jackson, president of Xcel’s Colorado division. “Working together, we found an innovative approach to expanding renewable energy that benefits not only Evraz, but all our customers.”

The agreement is notable on several levels. The solar farm, which will be owned by Evraz and built on its 1,600-acre property outside the southern Colorado city, would be the 13th-largest solar project in the country.

It also continues the trend of corporate renewable buys. Corporate America has already set a record for solar and wind deals this year, signing agreements to purchase 3.57 gigawatts of renewables, according to the Rocky Mountain Institute, a think tank that supports a transition to clean energy. The previous record was 3.12 gigawatts in 2015.

Even by those standards, the Evraz deal is unique on two fronts. First, it illustrates a growing taste for renewables among manufacturers. Ford Motor Co. and General Motors Co. have both signed deals to buy renewables in recent years.

Second, unlike many corporate renewable contracts, where power is dispatched into the grid while companies collect the renewable energy credits generated by solar and wind projects, Evraz’s solar farm will directly power its mill. The agreement with Xcel will allow the company to sell surplus power back to the grid.

The Chicago-based steelmaker said the solar farm is essential to its long-term future in Pueblo, where steelmaking dates back to Rockefeller’s Colorado Fuel and Iron Co. Evraz has openly contemplated expanding its operations elsewhere at the expense of its Colorado mill.

The solar deal would ensure continued investment in Pueblo, the company said, offering long-term price certainty on its electricity supply and enabling the steelmaker to pursue an $80 million upgrade of its facilities. Electricity is the company’s second-largest cost after personnel, according to Evraz filings with state regulators.

“The Evraz North America team is very excited at the opportunity to be a forerunner in the use of renewable energy to make the most advanced steel for rail, seamless pipe, and wire rod” said Conrad Winkler, president and CEO of Evraz North America. “Achieving long-term price certainty on energy is a key first ingredient for considering further investments.”

The proposed agreement will now go to the Colorado Public Utilities Commission for review, as part of Xcel’s wider proposal to transition away from coal.

Xcel’s plans call for replacing 660 MW of coal capacity with 1,100 MW of wind, 700 MW of solar and 275 MW of energy storage. The utility estimates that the plan will save Colorado consumers more than $200 million. A decision is expected by Sept. 4.