Largest behind-the-meter solar project in U.S. provides cost edge for steel mill expansion
by Allen Best
What might be called the world’s first solar-powered steel mill will be moving forward.
EVRAZ North America plans construction of a long-rail mill at its Rocky Mountain Steel operation in Pueblo, Colo. This decision allows execution of an agreement reached in September 2019 for a 240-megawatt solar facility located on 1,500 acres of land at the steel mill.
It will be the largest on-site solar facility in the United States dedicated to a single customer. Another way of saying it is that it will be the largest behind-the-meter solar project in the nation.
The solar production from the project, called Bighorn Solar, will offset about 90% of the annual electricity demand from the mill.
Lightsource BP will finance, build, own and operate the project and sell all the electricity generated by the 700,000 solar panels to Xcel Energy under a 20-year power-purchase agreement. Lightsource says it is investing $250 million in the solar project.
Kevin B. Smith, chief executive of the Americas for Lightsource BP, said he expects construction to start in October. Commercial operations will begin by the end of 2021. He rates the solar resource at Pueblo as 8 on a scale of 10.
Several states had been vying for the long-rail mill, which will be able to produce rails up to 100 meters long, or about as long as a football field with its end zones, for use in heavy-haul and high-speed railways. The mill uses recycled steel from old cars and other sources. The new mill is to have a production capacity of 670,000 short tons, according to a 2019 release.
The Pueblo Chieftain and other Pueblo media reported the decision to go forward on Thursday evening, citing a report from the Pueblo Economic Development Corp.
The price of the solar energy was crucial to the decision for the siting in Pueblo, says Lightsource BP’s Smith.
“The long-rail mill is a go on the basis of the EVRAZ-Xcel Energy long term electricity agreement for cost-effective electricity,” Smith said in an email interview. “Xcel was able to provide that cost-effective pricing on the basis of the Lightsource BP solar project on the EVRAZ site, which provides cost effective energy to Xcel under a 20-year contract.”
That was also the message from Skip Herald, chief executive of EVRAZ North America in a 2019 release. “This long-term agreement is key to our investment in Colorado’s new sustainable economy,” he said.
Pueblo sweetened the pot, giving EVRAZ an incentive package reported to be worth $100 million, a portion of it to be used for environmental clean up of the site. In turn, EVRAZ needed to commit to keeping 1,000 employees, KOAA News reported in 2019. The new mill was expected to produce 1,000 new jobs that will pay between $60,000 and $65,000.
The solar farm will also help Xcel achieve 55% renewable penetration in its Colorado electrical supply by 2026. By then, two of the three coal-fired Comanche units that serve as a backdrop for the steel mill will have been retired. The new solar farm will surpass in size and production the nearby 156-megawatt Comanche solar project, which currently is the largest solar production facility east of the Rocky Mountains.
Colorado Gov. Jared Polis issued a statement Thursday evening saying that he’s “thrilled that the steel mill’s new expansion has passed this important milestone. Pueblo workers have been making the world’s best steel for nearly 140 years, and with this addition, Pueblo’s next generation of steelworkers can count on good-paying jobs well into the future.”
The new steel mill was still tentative in September 2019 when Polis and various other dignitaries gathered on an asphalt parking lot on the perimeters of the steel mill to announce the solar deal.
With the early-autumn sun beating down, Pueblo Mayor Nick Gradisar spoke, saying that people had come to Pueblo from all over the world to make the stele that created the American West. For nearly 100 yeas, he said, the mill was the largest employer in the state of Colorado. His family, he said, was part of that story, his grandfather arrived from Slovenia in 1910 and worked at the steel mill for 50 years, while his father worked there for 30 years. (See video here).
Alice Jackson, chief executive of Public Service Co. of Colorado, the Xcel subsidiary, pointed to three years of negotiations that weren’t always easy but lauded the result as “perfective marriage of a variety of parties coming together” to show the world how to use renewable energy.
U.S. Senator Cory Gardner emphasized the combination of recyclable—the mill uses 1.2 million tons of material a year, he said—and renewable energy.
During his turn at the lectern, Polis, who had announced his candidacy for governor the prior year at a coffee shop in downtown Pueblo called Solar Roasters, emphasized the competitive edge that renewable energy provides.
“For those who wonder what a renewable energy future will look like, this is a great example of what that future will look like: low-cost energy for a manufacturing company that will stay in Pueblo and grow jobs for Pueblo residents,” he said.
Polis also pointed to symbolism on the Pueblo skyline, the smoke stacks of the Comanche power plants in the background. The steel mill—which once burned prodigious amounts of coal, with smudges of that past still evident—was the impetus for construction of the Comanche power station in the early 1970s. Now, as two of those three coal-burning units will be retired within a few years, another shift is underway.
“By working together to make change work for us, rather than against us, we can lead boldly in the future, create good jobs, create low-cost energy and cleaner air and do our part on climate,” he said.
Herald, the chief executive of EVRAZ, said his company will be making the “greenest steel products in the world.” It is a change, he said, that amazes him. “Just imagine recycled scrap metal being melted into new steel just a few hundred yards from where we stand in the electric arc furnace powered by the sun,” he said.
It is, he added, “one of the most amazing feats I’ve seen in my 40 years” in the steel industry.
This is from Big Pivots. Go HERE to be put on the mailing list.