Earl Watkins explains how this energy cooperative is partnering with other utilities to enhance reliability and keep costs low.

Coal may be the cheapest source of energy in the United States, but environmental concerns over the burning of fossil fuels have prompted power utilities to dig up some new ideas. As a result, higher-priced ethanol and bio-diesel fuel have become increasingly popular over the past several years. The energy industry is left with cost on one end of the scale and environmental concerns on the other.

Sunflower Electric Power Corporation, a consumer-owned nonprofit utility in Hays, Kan., owned by six rural electric cooperatives, has found a way to balance the scale.

According to Earl Watkins, president and CEO, during the late 1990s and early 2000s, energy markets across the country were blossoming, and as Sunflower evaluated its assets, it began seeking opportunities in alternative energy. Its 10,000-acre Holcomb site is not only large enough to accommodate the existing 360-megawatt coal plant, but also an ethanol plant, a bio-diesel plant, a dairy farm, an anaerobic digester, and an algae reactor. “We realized we could integrate what would otherwise be standalone systems into a mall concept,” said Watkins.

Earl Watkins

“These types of facilities can operate independently, but when you turn the waste streams of one into an input stream for another, all participants experience significant cost savings. An ethanol plant, for instance, could benefit from an anaerobic digester, use the starch from an algae reactor, and send its distiller grain to a dairy farm—all on the same site.”

Watkins explained that Sunflower is excited to bring an algae reactor on site as it will use the flue gas from the coal facility, which is rich in CO2 and contains SOx and NOx, to facilitate the growth of algae, which can double in mass every three days under the right conditions. Not only would the algae consume the CO2 from the flue gas, but it would yield oil for an on-site bio-diesel plant, starch for an ethanol plant, and proteins for a dairy farm. “The hope is to reduce costs overall and meet pressing environmental challenges.”

At present, Sunflower has identified participants for each function of the energy mall and is in the process of negotiating final terms and conditions. It also has engineers scouring blueprints looking for any and all opportunities to turn waste outputs into energy inputs. The ethanol and bio-diesel facilities are expected to break ground toward the end of the year, and this summer will be spent identifying varieties of algae (there are more than 4,000) that will produce the desired results. “We are far enough along to be convinced this concept will be successful,” said Watkins.

According to the CEO, all of Sunflower’s efforts point back to its mission statement, which is to provide reliable energy to members at the lowest possible cost while demonstrating sound business practices. He explained that Sunflower serves more than 32,000 farmers, 45,000 individuals who live below the federal poverty level, and 68,000 seniors. It is well aware that some customers may miss a meal if they are charged even $10 more than expected. “We do whatever we can to strengthen the economy, lower costs, and enhance reliability, and we look to our bio-energy center as a way to meet that goal.”

Balanced portfolio
The past few years have been busy for Sun-flower’s 335 employees. On April 1, 2007, Aquila, a Kansas City, Mo.-based electric and natural gas distribution company, completed the sale of its Kansas electric properties to Mid-Kansas Electric Company (MKEC), which is also owned by Sunflower’s member cooperatives. The purchase doubled Sunflower’s assets and will allow the company to increase reliability and provide lower-cost services to its members.

Sunflower also invested in the soon-to-be-built Smoky Hill Wind Farm in Ellsworth, Kan. Construction of the facility will begin this summer, and it is expected to be fully operational by the end of the year. Sunflower will purchase 50 megawatts of the electricity produced at Smoky Hill, as well as 50 megawatts from the Gray County Wind Farm in Montezuma, Kan.

“Based on the size of our network and the diversity of our load, 100 megawatts of wind power will be economically advantageous, or at least neutral, and will provide us with an additional resource. Having a portfolio that balances base-load, intermediate, and renewable resources makes good business sense,” said Watkins.

At the end of 2007, Sunflower will be responsible for 100 megawatts of wind power; 535 megawatts of coal-fired generation; and 616 megawatts of gas-fired generation from stations in Liberal, Garden City, Dodge City, Great Bend, and Clifton, Kansas. The company also owns about 2,300 miles of high-voltage transmission cables.

Productive partnerships
In 2006, Sunflower shut down its Holcomb station for 56 days to perform a head-to-toe renovation. Holcomb has been running steadily since August of 1983, aside from typical two- to three-week scheduled shut downs in the spring to prepare to meet the energy demands of a scalding Midwestern summer. During the prolonged shut down, Sunflower replaced all analog controls with digital, re-wound the generator (a task that needs to be performed every 10 to 20 years), and either upgraded or replaced many major plant components.

But the Holcomb station is seeing more than just renovations. Last year, Sunflower saw an opportunity to partner with Tri-State Generation and Transmission Association of Westminster, Colo.; Golden Spread Electric Cooperative of Amarillo, Texas; and Midwest Energy of Hays, Kansas to build two additional 700-megawatt coal-burning units at Holcomb Station. Construction of the first unit, which will be jointly owned by Golden Spread, Tri-State, and Sunflower, is expected to begin in early 2008. Watkins explained that Golden Spread will own 400 megawatts of the plant’s output, while Sunflower and Midwest Energy will own 125 megawatts and 75 megawatts, respectively. Tri-State will own 100 megawatts, as well as the second unit, which is expected to come online in 2013.

Keeping his eye on the company’s mission as though it is the North Star, Watkins stated, “The expansion of Holcomb Station is in response to growing energy needs among electric cooperatives in Kansas and neighboring states. The expansion not only reinforces the region’s power supply needs, but also provides a solid tax and employment base for the citizens of Western and Central Kansas.”