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AES Indiana takes next step to stop using coal, convert to natural gas by 2026

AES Indiana’s Petersburg Generating Station in Petersburg, Ind., has been burning coal since the 1960s but plans to shutter all of its coal firing units by 2026. (Provided Photo/Robert Zullo/States Newsroom)

INDIANAPOLIS (Indiana Capital Chronicle) — AES Indiana — one of the state’s largest utilities — is moving forward with its plan to stop using coal by 2026 and triple its renewables portfolio by 2027.

The company announced Tuesday the next step in a plan to transition its two remaining coal-burning units to run on natural gas. Those are located on the White River near Petersburg in Pike County.

If approved by the Indiana Utility Regulatory Commission (IURC), AES Indiana would be on its way to becoming the first Hoosier investor-owned electric utility to stop burning coal, according to Indiana Utility Report.

The utility, which provides electricity to the Indianapolis area, has already filed a request that is now pending with the IURC.

AES Indiana officials said the plan “to deliver cleaner, more efficient and cost-effective energy solutions” will save customers $280 million over 20 years by avoiding coal-related costs. CO2 emissions could additionally see a reduction of 70% by 2030, compared to 2018 levels.

The project is expected to be completed in 2026.

“Over the past decade, how we serve our customers has evolved due to factors like new technology, the aging of our current facilities, environmental regulations and economic conditions,” AES Indiana President Brandi Davis-Handy said in a statement. “Repowering our Petersburg Generating Station aligns with our state’s all-of-the-above energy policy while allowing us to continue our 50+ year commitment to Pike County.”

The utility’s most recent integrated resource plan (IRP), submitted to the IURC in December 2022, included the coal-to-natural gas conversion of the Petersburg units. 

Testimony filed by the company indicates the utility generates 31% of its energy from coal and 51% from natural gas. In its short-term project action plan, AES Indiana expects that natural gas will account for approximately 70% of its resource mix once the Petersburg conversion is complete.

In place of the coal units will be 25 to 30 gigawatts of solar, wind and energy storage. Across its portion of the grid, AES Indiana plans to add up to 1,300 megawatts of renewables by 2027.

As part of that ongoing effort, the company acquired the Hoosier Wind project earlier this month — a 106 megawatt wind farm in Benton County. AES Indiana has received IURC approval for a proposed 200 megawatt, four-hour standalone battery energy storage system, as well.

In Petersburg, the utility intends to stagger the unit outages to continue serving customers during conversion, according to testimony submitted as part of AES Indiana’s petition.

The company said Petersburg’s first unit will be converted first, with the outage beginning in February 2026 and commercial operation starting in June 2026. Once that’s complete, the second unit will begin conversion with a commercial operation slated for December 2026.

Through a competitive bid process, Akron-based Babcock & Wilcox Company was selected to complete the conversion project. Midwestern Gas Transmission Company, headquartered in Tulsa, will construct a one-mile natural gas lateral pipeline to provide service to the converted units, according to the petition.

AES Indiana officials said employees who currently work at its coal units in Petersburg will be retained. The company also reported that the upcoming projects could create 400 construction jobs and deliver about $125,000 annually in local economic impact.

The move makes AES Indiana among the first utilities to seek approval of a coal-to-natural gas conversion under the state’s updated clean energy project statute, according to the Indiana Utility Report.

In 2023, state lawmakers amended the code to include such projects. House Enrolled Act 1421 additionally established a 240-day timeframe for an IURC decision on a petition like that filed by AES Indiana. 

According to its latest filings, the company has proposed a late-July evidentiary hearing before the IURC and requested an order from the commission by Oct. 30.

This story was updated to reflect proper attribution to the Indiana Utility Report.