BISMARCK — A North Dakota-based energy company reached an agreement Wednesday, June 30, to buy the state's largest coal-fired power plant in a much-anticipated move expected to rescue the facility from shutting down.

The sale of Coal Creek Station to affiliates of Rainbow Energy Marketing Corp. comes after the 1,150-megawatt power plant in McLean County became a weighty financial burden for its longtime owner, Minnesota-based Great River Energy, which announced plans to close the facility last spring and replace much of its generation with wind farms.

Rainbow Energy Marketing President Stacy Tschider told reporters Wednesday that his company expects to finalize its purchase later this year. He did not disclose the terms of the agreement.

The economics of the coal industry have faced mounting pressure in recent years from cheap natural gas and ascendant renewable energy sources like wind power, and Great River Energy noted in a statement last October that it was prepared to sell Coal Creek Station for as little as a dollar after the plant lost $170 million on energy sales in 2019.

But government and industry officials in North Dakota have made saving Coal Creek Station a top priority, and the sale follows a legislative session in which state lawmakers passed a historic slate of bills to boost coal — an effort aimed in part at preserving the McLean County plant. Among the proposals passed was a five-year coal industry tax break totaling more than $100 million.

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A dragline excavator is seen in May 2020 at the Falkirk Mine near Underwood, N.D. Michael Vosburg / Forum Photo Editor
A dragline excavator is seen in May 2020 at the Falkirk Mine near Underwood, N.D. Michael Vosburg / Forum Photo Editor

The agreement reached Wednesday would preserve hundreds of jobs associated with the operation. Coal Creek itself employs around 250 people, while the attached Falkirk Mine, operated by North American Coal, supports several hundred more jobs.

Rainbow Energy's plans for Coal Creek hinge on an ambitious carbon capture and storage proposal, which Tschider called "vital" to the 42-year-old plant's life going forward. A process of storing harmful greenhouse gas emissions and trapping them underground, carbon capture is an expensive emerging technology that North Dakota leaders hope can make coal cleaner and more economic for the long-term. The state already has several high-profile carbon capture projects in early development stages, most notably the $1 billion Project Tundra attached to another central North Dakota coal plant.

"We're not smarter than GRE, we just have other revenue sources," said Tschider, adding later, "I'm not just looking to prop up coal. I'm looking to take coal to the next level."

Rainbow Energy Marketing Corporation President Stacy Tschider
Rainbow Energy Marketing Corporation President Stacy TschiderProvided, Rainbow Energy Marketing

An energy trading company, Rainbow Energy purchases surplus electricity off of the electrical grid and sells it to other companies in markets around North America. The company has never operated a power plant before, though Tschider told reporters that it has managed them. Rainbow Energy is a subsidiary of the Bismarck-based conglomerate United Energy, which is involved in oil and gas exploration in North Dakota.

Though Tschider acknowledged the steep headwinds that have faced coal, he said federal tax credits for carbon capture will help to reverse Coal Creek's financial direction. He estimated the costs of retrofitting Coal Creek's twin units for carbon capture at $1.5 billion and said the plant has already secured 45,000 acres for underground storage. Tschider said he expects carbon capture to begin at the facility within the next five years.

In a statement, Rainbow Energy said another subsidiary, Nexus Line, will acquire the power plant's transmission line, which delivers electricity from central North Dakota to the Twin Cities in Minnesota. Under the new deal, Great River Energy would buy electricity from Rainbow Energy for 10 years.

“Purchasing energy and capacity from Rainbow was not in our original plan, but it will serve as a reliable steppingstone in our power supply transition,” Great River Energy CEO David Saggau said in a statement. "We are excited for what the future holds for the communities surrounding Coal Creek Station, which have been very supportive of the plant."

The announcement Wednesday was also broadly celebrated among North Dakota leaders, many of whom took an active role in promoting the plant's sale.

Coal Creek Station power plant near Underwood, N.D. Special to The Forum
Coal Creek Station power plant near Underwood, N.D. Special to The Forum

“This is a great day for North Dakota, a big win for U.S. energy security and reliability, and a huge sigh of relief for the residents of McLean County, Underwood and surrounding communities in coal country who depend on the jobs and economic activity generated by Coal Creek and the nearby Falkirk Mine,” said Gov. Doug Burgum in a statement that noted the slate of coal-boosting bills he signed this legislative session.

Although North Dakota leaders have gone to great lengths to keep the plant running, environmental groups have advocated for the plant's decommissioning and warned that the state may be sinking its resources into a vanishing industry.

Scott Skokos, director of the conservationist Dakota Resource Council, questioned the expertise and capacity at Rainbow Energy to operate a utility-scale power plant like Coal Creek.

"They sold it to a company that's never operated generation. This is completely out of their wheelhouse," he said. Skokos added that outstanding questions around carbon capture technology will likely mean that Rainbow Energy's purchase offers only a short-term solution for the hundreds of plant workers. "This just seems like a complete Hail Mary," he said.

After the announcement that Great River Energy planned to shut down Coal Creek Station and replace its generation with cheaper natural gas and renewable energy, several of North Dakota's coal country county's passed moratoriums and zoning ordinances blocking new wind power production in the area.

But Rainbow Energy said on Wednesday that continued operations of Coal Creek would come with some new generation from renewable resources in the area. The operations of carbon capture and sequestration at the facility would remove some electricity load from the power lines, freeing up space for new wind development in the area.

McLean County Attorney Ladd Erickson, who advocated for the zoning ordinances and moratoriums last summer, said he is calling for the counties to drop their anti-wind ordinances upon the sale of Coal Creek Station.

"It's gonna be nice to be able to breathe again. And sleep," Erickson said. "The sooner we can get the counties out of this energy stuff the better. We're not qualified to be in the middle of this, but we were forced, I felt, to get into it."

Readers can reach reporter Adam Willis, a Report for America corps member, at awillis@forumcomm.com.