EDGELEY, N.D. — A North Dakota farmer-legislator fears that the 2021 session could be a turning point that harms the future of value-added agricultural enterprises — ethanol, soybean and biodiesel.
State Rep. Mike Brandenburg, R-Edgeley, North Dakota’s farm and agricultural processing future hinges on one thing — wind.
Brandenburg, in the House of Representatives since 1997, says zoning moratoria on Great River Energy’s wind power development in McLean, Mercer and Oliver counties could have big impacts for agriculture’s future. He warns that what he considers a futile effort to retain coal jobs in five counties will drive power companies like GRE and Xcel Energy out of the state, forfeiting future agricultural interests in the other 48 counties in the state.
He said GRE effectively will decommission electrical transmission on high-voltage direct current lines. In the past year alone, GRE already moved 1,150 megawatts to Minnesota, South Dakota and Iowa.
“I think the ag community needs to realize we’re in a serious situation right now, and I don’t think they realize it,” Brandenburg said, in an interview at his farm, just prior to the legislative session.
Brandenburg said he’s asked to talk with Gov. Doug Burgum about his concerns over coal but hasn’t received responses to text messages. (This, despite the fact that Burgum endorsed his four-year re-election term in 2020.)
Mike Nowatzki, spokesman for the governor, when asked for an interview, responded with a two-paragraph email statement that the Burgum administration is “committed to an all-of-the-above energy approach and continues to collaborate with various stakeholders to ensure a path forward for coal, wind and other forms of energy production.” Nowatzki added, “Lt. Gov. Brent Sanford, who has led the administration’s efforts on Coal Creek Station, has been in communication with Rep. Brandenburg on these issues on multiple occasions.”
About 80% of the state’s energy sector is in petroleum, but coal is significant. In 2007, the state’s lignite coal industry boasted of a resource 25 billion tons of coal, enough to last 800 years at the rate of 30 million tons of production per year.
Brandenburg said coal advocates are “fighting for their lives," talking to the governor about how to retail coal. The Lignite Energy Council argues that wind power is unfairly subsidized by a federal production tax credit that suppresses its cost to “negative” level. They contend a credit for wind is far greater than the so-called “45Q” incentives to capture CO2 from existing coal-fired plants. That credit “does not suppress the cost of producing power from a coal-based power plant," the council says, on its website.
Brandenburg said the biggest problem for coal is that it costs $35 per ton to produce. The cost of wind is $25 per ton and natural gas is $18 per ton. “There isn’t even a bank that’ll give you money to borrow for coal,” Brandenburg said. “You have a lot of banks that are looking at investing in renewables. That’s just a fact of life.”
The environmentally-focused Obama administration initiated carbon emission policies that were followed by aggressive targets to move Minnesota consumers to ramp up to 100% renewables by 2050.
“The only thing the Trump administration did was gave (coal) time,” he said. “The CO2 emissions are not going to go away. The differential in costs isn’t going away. Over 100 coal plants closed down during the Obama and Trump administrations. They converted most of them to natural gas.”
North Dakota’s oil industry is far larger than its coal industry. Oil production creates natural gas in increasing amounts. Some of the excess natural gas must be “flared,” or burned off into the atmosphere — a waste of money and harmful to the environment.
Coal’s slowing ‘mo’
In May 2020, GRE announced it would shutter its massive Coal Creek Station units in 2022 and 2023. David Saggau, chief executive officer, announced that Coal Creek lost $179 million for 2019. They said it was for sale for $1 and didn’t get a buyer.
Brandenburg said some believe a subsequent owner — perhaps the state — could convert one of its units to natural gas, or possibly both. This could provide a heat source for Blue Flint Ethanol Bio-refinery at Underwood, N.D. GRE is majority owner of that plant.
Brandenburg said he thinks legislators may want to subsidize the coal plants, but he thinks that’s too expensive. He’s seen estimates that subsidies likely would be $50 to $100 million for only part of the plant — a figure that would compete with education, flood control and other state priorities.
Other coal plants — Basin Electric, BNI Energy, Inc., and Minnkota — would likely ask for comparable subsidies, he said. Other companies in North Dakota now are quietly building capacity in places other than North Dakota.
“They’re not saying a word. And one day, there’s going to be a sign at the (power) plant that says, ‘No job here.’ And what are you going to do? It’s gone.”
(Separately, in July 2020, the North Dakota Agricultural Products Utilization Council awarded $155,000 for a research and feasibility study for using biomass as a fuel and power source for the ethanol plant.)
Brandenburg fears that coal proponents will push legislation to pressure the power companies to take a percentage — possibly 30% or 40% — of coal-generated power as a condition for putting up new wind and other renewable generation capacity in the state. No bills yet were introduced on the topic at press time.
Renewable or nothing
With plans dashed to invest $1.2 billion in wind production in coal country, and by moving out of state, North Dakota effectively lost — lost — 1,150 megawatts of interconnection to the high-voltage transmission system to other states.
“It’s gone,” Brandenburg said.
The MISO transmission levels are “grandfathered” at current levels here. Brandenburg said GRE and Xcel shift their generating allocation elsewhere they would need to apply for "new" generator authority on the North Dakota line. That would take time and would involve paying for new, expensive MISO system upgrades in Missouri, Kansas and Nebraska, while grandfathered generators would not.
Curiously, instead of building in coal country, GRE and Xcel are moving some of its wind and solar power development into Brandenburg’s backyard in south-central North Dakota.
A project being developed would be about 2,000 megawatts and involve $1.5 billion, Brandenburg said. In conjunction with this, two wind farm developers — NextEra Energy Resources and Invenergy Renewables — are approaching landowners (including the Brandenburgs) to make deals for land and access. Brandenburg such a project would involve installing a $300 million “DC inverter” to gain access to the high-voltage transmission line. It could involve solar power, as well as battery storage.
(NextEra is the renewable branch of Florida Power and Light, which is the fossil fuel side of the company and has 30,000 megawatts from Florida to Texas. In 2004, NextEra put up the first wind project in North Dakota at Edgeley-Kulm, which has five or six employees.)
The Brandenburg family has not had contracts with wind power companies in the past but said wind power has added to the county's and landowners get paid for the use of their land.
Brandenburg said it’s significant that GRE is majority owner of two corn ethanol plants under the Midwest AgEnergy umbrella —Blue Flint Ethanol Bio-refinery at Underwood, N.D., ($175 million in 2007) and Dakota Spirit Bio-refinery at Spiritwood, N.D. ($225 million in 2015.) The ethanol plants have used excess steam power generated from GRE’s coal electric generation to improve the “carbon score” for ethanol produced at both plants, giving it an advantage in the marketplace, especially in environmentally motivated markets like California.
Brandenburg said GRE and Xcel told him they are somehow involved in a potential soybean crushing plant at Spiritwood, N.D. Such a plant would grind soybeans, then send oil to the Marathon Oil biodiesel refinery in Dickinson, N.D. Companies have not publicly revealed who is in the effort, in what roles.
On Jan. 4, Connie Ova, chief executive officer of the Jamestown/Stutsman Development Corp., was quoted saying “Company X” had decided not make any announcements until May 1 about a soybean plant at the Spiritwood Energy Park. The North Dakota Legislature is set to adjourn April 28, 2021.
Nancy Johnson, executive director of the North Dakota Soybean Growers, said energy issues are very “complex” and she has not had “any indication” from “anyone involved in the crush plant” that there concerns about coal versus wind. In fact, said she only knows “rumors” about who “Company X” actually is.
Brandenburg said it's time to speak up.
“People say, ‘We don’t want wind,’” Brandenburg said. “Then we might just as well say we don’t want an ethanol plant in (Underwood); we don’t want a soybean plant in Spiritwood. And we don’t want a biodiesel plant in Dickinson."
He said some of the same companies with stakes in the wind energy also are heavily involved in current and future ag processing enterprises.
“Do you want to see these renewables happen in your state? Do you want to see agriculture have a soybean plant that brings you 50 cents a bushel more? Do you want to see ethanol plants that bring you 50 cents a bushel more for agriculture? This state still runs on ag. A lot of people forget in politics that this state is an agricultural state.”