NorthWestern Energy contracts for new natural gas plant, battery storage and hydroelectricity

In a series of new contracts announced this week, NorthWestern Energy acquired 325 MW of new dispatchable capacity resources: a 175 MW natural gas plant, an agreement to purchase capacity from a 50 MW battery storage project, and 100 MW of mostly hydroelectric resources.

“This resource portfolio addresses a key portion of our immediate need for generation capacity while also allowing us to make progress toward our goal of an energy supply portfolio in Montana that reduces the carbon intensity of our electric generation by 90% by 2045,” Bob Rowe, NorthWestern Energy CEO, said.

These major capacity injections were meant to counter what the company has described as a capacity deficit, decrease its risk from market volatility and potential lack of availability, and offer increased reliability for customers in Montana. They followed a competitive solicitation process that spanned 2020. As a result of the agreements, NorthWestern Energy will shore up more than half of the deficit in its supply portfolio.

Selected projects include the Laurel Generating Station, a natural gas plant in Laurel, Mont., that will be owned by NorthWestern Energy itself. The hydroelectric additions will come from Powerex Corp. through a five-year power purchase agreement. The energy storage addition is pending but would derive its 50 MW of storage from lithium-ion technology.

“The energy storage project will provide the opportunity to store some excess energy from the grid to use when customer demand is high,” Bleau LaFave, NorthWestern energy director of long-term resources, said. “Today, NorthWestern Energy most frequently has excess energy on the grid from wind resources. Now we will have the opportunity to store a portion of that excess energy to improve matching the generation with customer demand and higher market pricing.”

If approved, the Laurel Generating Station could be in operation by 2024. It would utilize low emissions Caterpillar RICE units in operations to maximize flexibility and power regulation. The energy storage project would last 20 years, with operations to begin by the end of 2023. Likewise, the predominantly hydroelectric injection of power will likely begin by 2023.

All of these, the company has said, will become more important as regional coal plants and other capacity resources shut down. In NorthWestern’s estimation, this has compromised reliability during high demand times, such as extreme weather events. Both the natural gas plant and energy storage project are subject to approval by the Montana Public Service Commission, which NorthWestern expects to pursue next month. That process should last approximately nine months.