Indiana utility delays plan to retire coal units as feds investigate solar tariff claims

An Indiana utility that has been an industry leader in its move away from coal said it won’t be able to meet initial goals for some plants to end the use of coal by next year.

A federal investigation into imported solar panel equipment is to blame, the utility says.

Northern Indiana Public Service Company, under parent organization NiSource, announced a 6- to 18-month delay in solar projects originally slated for completion in 2022 and 2023.

The delay comes after the U.S. Department of Commerce began an investigation following a petition regarding solar cells assembled in Malaysia, Thailand, Vietnam and Cambodia using parts from China.

California-based Auxin Solar filed the petition in February claiming Chinese companies are using third-party countries to circumvent established trade practices.

An Auxin Solar spokesperson did not immediately respond to interview requests from IndyStar.

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NIPSCO, which serves more than 821,000 natural gas customers and 468,000 electric customers, announced in 2018 plans to move away from coal-fired electricity generation entirely by 2028. NiSource spokesperson Nick Meyer confirmed in a recent email those plans are still in place.

“Essentially, we don’t believe it changes our plans to be 100% coal-free by 2026-2028, but we do expect delays between now and then with the solar projects we’ve announced,” Meyer wrote.

The federal investigation created uncertainty and delays to the solar market, a NiSource report released in May says.

“In connection with these delays, the company now expects to retire Schahfer Generating Station's remaining two coal units by the end of 2025,” the report says. “However, NiSource continues to expect that Michigan City Generating Station will retire on schedule between 2026-2028.”

NIPSO originally planned to retire the remaining two Schahfer units "no later than 2023," a 2019 document says.

Danielle McGrath, president of the Indiana Energy Association, wrote in an email that “Our companies are working with renewable generation developers to better understand potential impacts on timing.”

The U.S. has had tariffs on solar cells imported from China since 2012, creating a shift in manufacturing coming from a handful of Southeast Asian companies, said Ben Inskeep with Citizens Action Coalition. The group is an Indiana consumer and environmental advocacy organization.

There is a potential that tariffs will be applied to panels coming from the countries listed in Auxin’s petition, he said, meaning there could be large retroactive tariffs on anything shipped after the petition and before the official investigation began.

“As result, panels have not been shipped to the U.S. from (those countries) while the investigation is ongoing,” Inskeep said. “It’s created massive chaos across the industry and delayed hundreds if not thousands of projects.”

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While it’s not stopped all solar generation projects in the U.S., there is short-term uncertainty about how much those retroactive tariffs would cost and how far back they will go, he said.

A group of 22 U.S. Senators sent a letter to President Joe Biden on May 1 asking the administration to “swiftly review” the case and expedite any determinations.

“Initiation of the investigation is already negatively impacting the U.S. solar industry, and the longer this situation persists, the more acute the damage will be,” the letter says.

A NIPSCO coal-fired unit in Michigan City, pictured in this January 2021 photo, is set to retire by 2028 as the utility transitions its coal operations to renewable solar energy.
A NIPSCO coal-fired unit in Michigan City, pictured in this January 2021 photo, is set to retire by 2028 as the utility transitions its coal operations to renewable solar energy.

The letter suggests utility companies may face additional costs due to any new tariffs and eventually will pass them on to customers.

“This would needlessly increase energy costs at a time when consumers are already facing rising prices and high costs of living,” the letter says.

Solar generation costs have declined in the past 10 or 15 years, Inskeep said, while volatility remains in the fossil fuel markets. The delay NIPSCO faces could also mean a delay in consumers seeing cost-savings on their utility bills, he said.

NiSource, in a 2018 document, said the transition away from coal to solar would "save electric customers an estimated $4 billion over the long-term."

The good news, Inskeep said, is the investigation is not changing the overall trajectory of the transition to renewable energy generation.

“Coal generation is definitely the least environmentally friendly generation,” Inskeep said. “It’s disheartening to see that generation being used now for an extra couple years. There is going to be an impact, and we’re hoping the (Department of Commerce) will quickly move to resolve this.”

Karl Schneider is an IndyStar environment reporter. You can reach him at Follow him on Twitter @karlstartswithk

IndyStar's environmental reporting project is made possible through the generous support of the nonprofit Nina Mason Pulliam Charitable Trust.

This article originally appeared on Indianapolis Star: NIPSCO's planned move from coal to solar delayed for 2 plants