Lease renewed for coal-fired plant on Navajo lands through 2019
A Northern Arizona coal-fired power plant partially owned by the federal government and critical to tribal economies in the West will survive for another two years, but its uncertain future underscores the deep challenges facing aging coal facilities nationwide.
The Navajo Nation this week approved a lease extension for the Salt River Project-Navajo Generating Station (NGS) through 2019, temporarily heading off a catastrophic closure that would have left hundreds without jobs and almost certainly would’ve led to the shuttering of Peabody Energy’s nearby Kayenta Mine that supplies the facility.
The Bureau of Reclamation owns a 24 percent stake in the 2,250-megawatt project that sits on Navajo land in Northern Arizona, giving the federal government deep interest in finding a resolution — especially in light of President Trump’s vow to rescue the U.S. coal industry and prevent mines and coal-fired plants from closing.
That promise, however, will be difficult to keep moving forward. Coal industry leaders say many plants are nearing the end of their life span, with the average age of a coal-fired facility being about 40 years old. NGS was opened in 1976, and the utilities that own and operate the plant say they’ll bail after the 2019 lease extension ends — an increasingly common decision among utilities.
Natural gas and renewable energy facilities are much younger, according to industry and federal data, and constructing new plants that burn natural gas or harness wind and solar power is much cheaper than new coal plants, which require expensive emissions-control technology.
That’s left the sector fighting to keep aging facilities up and running as long as possible.
“It’s very difficult to build a new coal plant for two reasons. One is how much it costs, and two is the resistance to building a new coal plant” due to environmental concerns, said Pail Bailey, president and CEO of the American Coalition for Clean Coal Electricity. “It’s very hard to build a new coal plant. … You can build a new gas plant cheaper and faster than you can build a new coal plant.”
In the case of NGS, administration officials recognized the importance of keeping the facility up and running, both for its importance to the shortterm future of the coal industry and its impacts on local tribal economies. The lease extension will stave off financial devastation for the Hopi Tribe, which gets about 80 percent of its annual budget from Kayenta Mine royalties.
“Since the first weeks of the Trump administration, one of Interior’s top priorities has been to roll up our sleeves with diverse stakeholders in search of an economic path forward to extend NGS and Kayenta Mine operations after 2019. Operating NGS and the Kayenta Mine through 2019 is the first step to meet this priority,” Interior Secretary Ryan Zinke said in a statement Tuesday night. “This Navajo Nation Council’s endorsement of a new lease gives NGS and Kayenta Mine workers a fighting chance and gives Navajo and Hopi economies a moment to regroup for the work ahead.”
But the lease extension could be just a temporary reprieve. The utilities that own the other 76 percent of the plant — such as Salt River Project, which operates the facility and has been deeply involved in negotiations with the Navajo Nation — aren’t interested in a long-term future with NGS.
Those utilities announced earlier this year they’d pull out of the project after 2019, citing the economic challenges of continuing to operate the plant. It’s unclear whether another utility will step in to buy the plant after 2019, or if the federal government could take the unprecedented step of fully owning such a facility, or if it will close entirely.