Dive Brief:

• Private equity firm Middle River Power has dropped its bid to purchase the Navajo Generating Station (NGS) in Arizona, saying "recent developments" in that state and California would have made it difficult to find a buyer for the plant's output.
• Middle River's decision, first reported by Bloomberg Environment, puts the massive coal-fired plant in danger of closing at the end of next year, unless a new buyer is found.
• Middle River had said it was considering several operational changes in order to run NGS at a profit, including running at 44% of its capacity. While the company did not specify what developments had led to its change of heart, coal facilities continue to close as they become less economical than cheap natural gas and renewables.

Dive Insight:

A number of groups — including the Trump administration — want the Navajo plant to stay open, but there are no takers yet for the power it produces.

Central Arizona Water Conservation District, which currently buys the Navajo plant's output, wants to replace that energy with renewables. Several state initiatives are driving other consumers to buy electricity from sources with lower greenhouse gas emissions. California seeks to use 100% carbon free energy by 2045, and voters in Arizona will consider a 50% renewables standard in November.

On the other side is Peabody Coal, which supplies the plant with its fuel; the Department of Interior, which owns a 25% share of NGS; and the Navajo Nation, which derives a significant portion of its budgets from plant lease payments and relies on the plant for employment.

At one time the plant was expected to continue operating until 2044.

"Unfortunately, recent developments in California and Arizona will create additional challenges for baseload power plants, and it has not been possible to secure from counterparties commitments to purchase a sufficient amount of power generated from Navajo Generating Station to enable a workable operating paradigm,” Middle River Power wrote to Bloomberg.

The 2,250 MW coal-fired plant in Page, Ariz., is the largest coal-fired facility west of the Mississippi. While the federal government has been working to keep coal plants from closing — and has put specific effort into NGS because of the DOI's ownership interest — it appears to be losing the fight against cheaper natural gas and renewables.

Yesterday, a subsidiary of NiSource announced a plan to shut down the majority of its coal generation within five years, and to stop burning coal entirely within the next decade. Four units at its R.M. Schahfer Generating Station would be retired no later than 2023, while a single unit at Michigan City Generating Station would retire by 2028.

In total, the 1,800 MW capacity of those five units in Indiana is still significantly smaller than the Navajo station.