Dive Brief:

• Mississippi Power plans to retire the majority of its fossil steam fleet, the utility announced in a Friday filing of its 2021 integrated resource plan (IRP).
• The retirements would shut down 976 MW of its nearly 1.5 GW of gas and coal steam units. The Mississippi Public Service Commission identified that 950 MW of coal- or gas-fired steam turbines were uneconomic and not needed for grid reliability and asked the utility to shutter the units by the end of 2027.
• The utility would retain more efficient fossil fuel resources that were more economic to dispatch over gas or coal steam units in 2020. Natural gas combined-cycle units became a larger portion of the utility's energy production amid lower gas prices and declining load growth in recent years, the utility wrote in its IRP.

Dive Insight:

This was the first time Mississippi Power modeled solar and battery options into its models as part of a generic expansion plan, the utility wrote, and it included high electrification of transportation as well as high adoption of demand-side management and distributed energy resource alternatives into its modeling scenarios.

The utility modeled scenarios that assumed increasing prices on greenhouse gas emissions and a carbon dioxide intensity scenario that would impose a shrinking annual cap on emissions.

But the utility's modeling of 10 scenarios assuming increased electrification, higher levels of DER, and some form of carbon reduction policy would apply to resource changes in 2031 and beyond, while its more immediate plans would retire nearly 1 GW of extra fossil fuel resources by the end of 2027.

Mississippi Power said the fossil steam units it plans to retire at Plant Watson, Greene County and Plant Daniel represented 24% of utility generation in 2020.

The staggered retirements would allow the Southern Co. subsidiary to address the local economic and employment impacts of retiring the units, as the Mississippi Public Service Commission directed in a Dec. 17, 2020, order.

The utility would keep Watson Unit 5, a gas steam unit with 516 MW in generation capacity. The 2021 IRP scenarios concluded it had a higher economic value than the Daniel coal unit, "primarily due to continued declines in long-term natural gas price forecasts."

Plant Daniel, a hybrid power plant with over 500 MW of coal capacity and over 1,100 MW of combined-cycle gas capacity, exemplifies how combined-cycle gas turbines have outperformed coal generation, according to the 2020 operating activity of its units: 

The combined-cycle units are more efficient and use a lower heat rate.

In its own analysis on Plant Daniel operation costs, based on Mississippi Power's data, the Sierra Club found the coal units were projected to lose about $40 million per year. The Sierra Club advocated for the early retirement of the units and other fossil fueled surplus capacity in March comments it filed with regulators.

Mississippi Power currently owns 50% of the Plant Daniel units. The utility expects to divide ownership of the two units with Gulf Power before 2024, putting the utility on track to retire either Plant Daniel Unit 1 or 2.