An investment in clean energy is paying off for the city of Holland and its residents.
The community’s Holland Energy Park (HEP) is retiring $91 million of debt this year, during only its fourth year of operation. Plans call for paying an additional $40 million over the next two years, completely retiring the debt in a total of nine years since it was issued in 2014.
Dave Koster is the general manager of the Holland BPW.
The $240 million power generation facility was financed with $160 million of debt and $80 million of reserves. Originally, the Holland Board of Public Works planned to service the bonds for 25 years. Retiring the debt early will save tens of millions of dollars in interest. The reduced cost results in a proposed rate decrease of about 10% for Holland BPW electric customers.
“We seek to provide low-cost, reliable, environmentally sustainable energy solutions that enhance the quality of life and economic prosperity. Holland Energy Park continues to deliver on that promise,” says Dave Koster, Holland BPW general manager.
Excess capacity sold
HEP is a combined-cycle power plant that produces electricity using natural gas. The plant has strengthened the community-owned electric utility since it came online in 2017. HEP provides Holland BPW with more electricity than is needed, allowing excess capacity to be sold to other providers in Michigan.
The Holland Energy Park that opened in 2017.
In 2018, Holland BPW was able to reduce electric rates by an average of 6% for customers. This year, Holland BPW electric customers will receive another rate reduction, the second reduction in three years. Also, the wholesale revenue made possible by HEP has allowed the Holland BPW to increase its annual contribution to the city of Holland from $6.6 million to $8 million.
“As a community-owned, not-for-profit entity, Holland BPW turns each dollar our customers spend into the services provided for them,” says Koster. “When we are able to experience lower costs, those are passed through in the form of rate decreases. Since Holland Energy Park began operation in 2017, our electric customers have only seen a lowering of rates.”
Holland BPW’s electric rates rank among the lowest in Michigan. This year’s proposed rate decrease, which averages 10% across all customer classes, will save the average residential customer about $60 on their annual energy charges. If approved by City Council in May, the new rates will go into effect on July 1.
A variety of benefits
Building Holland Energy Park was a big community decision. Now, the community is in a position to be paid back for this choice. Holland Energy Park is repaying in a variety of ways: economically, environmentally, and socially.
Holland BPW built the Holland Energy Plant for $240 million.
Rate decreases and the increased contribution to the city’s general fund demonstrate the economic payback. The average Holland BPW residential customer now enjoys nearly a 40% — or $35 — per month rate advantage to the investor-owned utilities in Michigan.
HEP has been an asset in supporting the local economy, according to Lakeshore Advantage President Jennifer Owens.
A massive community decision
“Building the Holland Energy Park so that we could generate our own baseline power was a massive community decision made thoughtfully about 10 years ago, with sustainability and the future of the community in mind,” says Owens. “Manufacturing — which employs one in three residents in Allegan and Ottawa counties — requires big energy use. Lower rates and lower emissions benefit all customers and are additional reasons companies and individuals choose to locate along West Michigan’s Lakeshore.”
Since the Holland Energy Park opened in 2017, Holland BPW electric rates have decreased.
Environmental paybacks are proven through reduced carbon dioxide (CO2) emissions. HEP, along with investments in renewable energy sources, reduced CO2 emissions from Holland BPW’s portfolio by 46%. Additionally, HEP has virtually eliminated emissions of sulfur dioxide, lead, and mercury from power generation sources in our community.
HEP is the source of the heated water that flows through Holland’s renowned snowmelt. The system is engineered to efficiently reuse excess heat created during power generation. Warm water cycles from HEP through 190 miles of tubing located beneath the streets and sidewalks of Downtown Holland, returning to HEP’s cooling towers. HEP increased the potential capacity of the downtown snowmelt to five times its original size. The snowmelt now covers 5 miles of walkable routes with room to grow.
Enhanced city gateway
The community also called for HEP to be a gateway into the city of Holland. The architecture and design enhance the eastern connection to downtown along Chicago Drive and 8th Street. Inside HEP is Energy Alley, an educational hands-on museum that augments tour experiences. Tours are currently paused due to the pandemic. However, the nature trail welcomes pedestrians to enjoy the natural landscape and provides a close-up look at the exterior of HEP.
Sustainability was a strong theme that shone through the community engagement process that resulted in Holland Energy Park, known as the P21 Decision. Holland BPW learned what having choices in energy sources means to the community. While HEP is an important capacity resource, Holland BPW continually develops a robust energy portfolio.
New investments focus on renewable resources. Holland BPW has a partnership with other municipal electric providers through the Michigan Public Power Agency (MPPA). Through partnerships, Holland BPW is able to participate in projects that make a much greater impact than the utility could accomplish on its own.