167. Shifting from Coal to Gas: One Co-op’s Award-Winning Journey

In 2018, Cooperative Energy, a generation and transmission co-op headquartered in Hattiesburg, Mississippi, had an issue to deal with. Several years earlier, it had joined the Midcontinent Independent System Operator (MISO), giving the power provider access to a competitive market. However, Cooperative Energy’s R.D. Morrow Sr. Generating Station, a 400-MW two-unit coal-fired facility that had opened about 40 years earlier, was not being dispatched as the co-op would have liked. In fact, the facility’s capacity factor in those days was running at only about 3%. “We could not compete in the MISO market due to the cost of the unit, the lack of flexibility, [and] startup time—when you’re bidding the unit into a day-ahead market, a 42-hour startup time is not a good place to be,” Mark Smith, senior vice president of Power Generation with Cooperative Energy, explained as a guest on The POWER Podcast. Smith continued: “We had high transportation costs. Our coal came in by rail and the route from the mine to the plant was roughly 440 miles one way. So, the transportation cost was excessive. Environmental regulations—the goal post seems to keep moving and things keep ratcheting down—we didn’t know where we were heading. At the point that we did decommission, we were well within compliance, but the future was uncertain. It was going to require a lot of capital investment in the coal unit.” With that as a backdrop, Cooperative Energy made the decision to build a new gas-fired unit to take the place of the coal units. Cooperative Energy took a somewhat unconventional approach for the project, utilizing many of its own people to manage the job, rather than opting for a turnkey EPC (engineering, procurement, and construction) contractor. “There were several reasons for us to choose what we call the multi-contract approach, as opposed to utilizing an EPC contractor,” Trey Cannon, director of Generation Projects with Cooperative Energy, said on the podcast. “Probably the one that was most important to us is just having that full transparency and full control of the entire project, including technology selections and equipment procurement, selection of construction contractors, and things of that nature,” Cannon explained. There was also a cost savings involved. “We estimated that we probably saved at least 15% on the total budget by utilizing the self-build self-manage approach,” said Cannon. The results were phenomenal. The project finished well ahead of schedule and well under budget. Yet, Cannon admitted that a lot of the savings was due to circumstances. “The market conditions and the timing of the project couldn’t have been better,” he said. The market for power plants in 2018 was down, so Cooperative Energy was able to get very competitive pricing on the gas turbine and a lot of other equipment. As construction work kicked into full swing in 2020, the market took another dip with COVID and other factors pushing projects to the back burner. Cooperative Energy, however, pressed on and was able to cherry pick the best contractors and the best workers. To underscore how the project benefited from the quality of personnel it was able to attract, Smith noted, “The weld rejection rate for our mechanical contractor was 0.41%, which was remarkable.” Today, the repowered Morrow plant is the heavy-load-carrying unit in Cooperative Energy’s fleet. “Since we went commercial, I think we’re carrying a 90-plus-percent capacity factor on the unit,” said Cannon. “If it’s not the most-efficient plant in MISO South, it’s very close,” added Smith. “And, needless to say, if the unit is available—we’re not in a planned outage—it’s operating and it’s typically baseloaded. In MISO, the name of the game is flexibility, efficiency, and reliability. The Morrow repower has checked all of those boxes for us and has Cooperative Energy in a great position for many years to come.”