The Kentucky Public Service Commission (KPSC) order allows LG&E and KU to build an approximately 640 MW combined-cycle plant at its Mill Creek facility, add 240 MW of company-owned solar, secure power purchase agreements for nearly 650 MW of additional solar, construct 125 MW of battery storage and implement more than a dozen new energy efficiency programs.

Regulators did not approve all of the coal retirements sought by LG&E and KU, however. The 600 MW approved for retirement represent Mill Creek coal-fired Units 1 and 2, which went into service in 1972 and 1974, respectively. The state’s public service commission deferred LG&E/KU’s proposed retirement of the larger coal-fired Ghent Unit 2 and Brown Unit 3.

Electric utilities in Kentucky are now required to receive approval from state regulators if they want to retire fossil-fired generating units. The new requirement stems from a state law passed earlier in 2023.

LG&E/KU hoped to retire Mill Creek 1 by 2024, Mill Creek 2 by 2027, Ghent 2 by 2028 and Brown 3 in 2028.

LG&E/KU had argued that proposed amendments to the U. S. Environmental Protection Agency’s (EPA) Good Neighbor Plan, if enacted, would effectively require non-SCR (Selective Catalytic Reduction) equipped coal units to cease operating or operate only at very minimal levels during each year’s ozone season beginning in 2026.

Mill Creek 1, Mill Creek 2 and Ghent 2 are not currently equipped with SCR. LG&E/KU argued operating Mill Creek 1 beyond 2024 would require [Effluent Limitations Guidelines] retrofits, while operation beyond 2027 would require a cooling tower, and operation beyond 2027 in ozone season would require the addition of an SCR due to the Good Neighbor Plan.

LG&E/KU argued that it was also economical to retire Mill Creek 2 and Ghent 2 rather than equipping them with SCR or operating the plants only outside of the ozone season.

LG&E/KU proposed retiring Brown 3, citing $26 million in major maintenance required in 2027. LG&E/KU argued this work would not be cost-effective “given the overall inefficiency of the unit.”

But the commission’s decision reflected a cautious approach. KPSC said by not making so many generation decisions on a “single, contentious load forecast” it hoped to mitigate the risk of overbuilding to the detriment of customers’ rates or underbuilding to the detriment of Kentucky’s energy adequacy.

The commission argued there was not as immediate a need to take action on Ghent 2 and Brown 3, but expects the status of those units to come up again soon when LG&E/KU have a better idea of what the EPA emission rules will look like and when they will be implemented. The Good Neighbor plan is currently stayed in Kentucky while circuit judges proceed with litigation.

“The Commission believes that it would be possible for LG&E/KU to reliably serve load with Ghent 2 and Brown 3 while they wait for more certainty with respect to the Good Neighbor Plan and other environmental regulations,” the order reads.

KPSC also denied the companies’ request to build a second combined-cycle gas plant at this time, finding that construction of a second unit should be deferred to provide for an in-service date in 2030, rather than 2028 as the companies had proposed.

Retirements of Ghent Unit 2 and Brown Unit 3, as well as construction of a second combined-cycle gas plant, would require future commission approval.

PPL said the level of expected investment is consistent with the originally proposed generation replacement plan, which projected $2.1 billion of investment overall, including $1.6 billion through 2026.

The expected investment includes additional costs related to the construction of the approved combined-cycle natural gas plant and investments needed to continue to safely operate and maintain Ghent Unit 2 and Brown Unit 3 and comply with environmental regulations.

The project is funded primarily by a $5.8 million grant from the Department of Energy and involves Louisville Gas & Electric and Kentucky Utility’s Cane Run Generating Station in Louisville. 

The research also involves EPRI and the University of Kentucky (UK). Engineering, construction and project management company Bechtel and the University of Michigan are also participating.

The 640 MW generating unit, known as CR7, has been in operation since 2015. The current project entails a FEED study to evaluate the feasibility and rough cost to pilot and deploy the University of Kentucky-developed carbon-capture technology on CR7 to capture at least 95% of carbon dioxide from gases exiting the unit’s stacks.

The university’s research has focused on demonstrating breakthroughs in process intensification, two-stage solvent regeneration, heat integration, and advanced solvent development. It said that using this approach to lower both capital and operating expenses, the cost of electricity with CO2 capture may be reduced by 47% from the standard reference case of $67/tonne CO2, to $35/tonne CO2.

CR7 uses a Siemens SGT6- 5000Fee (efficiency enhanced) gas turbine technology, and was the first-of-its-kind deployment.

CR7 could be a model for other combined cycle power plants in the Midwest and Midsouth where geographical storage for carbon dioxide is limited. Results of the CR7 project are expected to yield information relevant to retrofitting a carbon-capture process on other NGCC units.

The study is expected to lay the groundwork for a full-scale, 10 MW to 20 MW carbon capture sequestration pilot unit at Cane Run.

The FEED study will take place through mid-2024 and involves pre-FEED research by the University of Kentucky focused on the project scope and design; the FEED itself conducted by Bechtel; commercial, environmental and economic assessments performed by EPRI; and a life-cycle assessment performed by the University of Michigan.

CR7 was built as a joint venture between PCL Industrial Construction Co. and Black & Veatch’s wholly-owned subsidiary, Overland Contracting.