Minnesota Power partners in $700 million gas-fired plant in Wisconsin

Minnesota Power and La Crosse, Wis.-based Dairyland Power Cooperative will build a $700 million gas-fired power plant in Superior, Wis., while the Duluth-based utility also announced it would buy power from a big new wind farm in southwestern Minnesota.

For Minnesota Power, the Thursday announcements are part of a long-term drive to diversify beyond coal, its primary power source. Such efforts have become common in the electricity industry in recent years as utilities look toward cheaper and more environmentally friendly power sources than coal.

Minnesota Power and Dairyland will create a joint venture to build the 525- to 550-megawatt Superior power plant, which is expected to open in 2025 pending regulatory approval. Minnesota Power would take 250 megawatts of the plant's output. (A megawatt is 1 million watts).

The plant would create about 260 construction jobs and employ 25 workers full-time.

Dairyland is a wholesale cooperative that generates electricity for retail co-ops and municipalities, primarily in northwestern Wisconsin, but also in southeastern Minnesota and parts of Iowa and Illinois. Minnesota Power is the state's second-largest investor-owned utility with 145,000 customers in northeastern and central Minnesota.

Allete, Minnesota Power's Duluth-based parent corporation, also owns Superior Water, Light & Power, the Wisconsin city's main utility.

Minnesota Power unveiled a major new wind power initiative: a 20-year agreement to purchase power produced by the 250-megawatt Nobles 2 project in Nobles County. The wind farm, being developed by Omaha-based Tenaska and scheduled to open in 2019, will bring Minnesota Power's total wind power capacity to 870 megawatts.

Minnesota Power also Thursday announced it would add 10 megawatts of solar capacity through a 25-year power purchase agreement with a national solar developer. That project will be located near Royalton in central Minnesota. Minnesota Power opened its first solar venture last fall, a 10-megawatt plant at Camp Ripley.

With the new wind and solar projects, Minnesota Power plans to boost renewable power generation from about 30 percent of its portfolio now to 44 percent by 2025. Currently, the majority of Minnesota Power's electricity generation comes from coal, particularly its 958-megawatt complex in Cohasset on the Iron Range.

Midwest utilities are increasingly switching from coal generation to a mix of natural gas and wind. Gas is cheaper than coal and emits about half the greenhouse gases. Also, gas plants are often more flexible than coal plants; production can be more easily ramped up or down depending on how much wind or solar energy is flowing onto the grid.

Xcel Energy plans to build a 786-megawatt, gas-fired generator in Becker, Minn., to partly replace power that will be lost when the company shutters its two big coal-fired plants there in the mid-2020s. Meanwhile, Detroit Lakes, Minn.-based Otter Tail Power plans to build a $165 million, 250-megawatt natural gas-fired power plant in eastern South Dakota.

The new Superior power plant will be a "combined cycle," using gas and steam turbines to produce electricity more efficiently than with just gas alone.

Mike Hughlett • 612-673-7003