The City's Electric Utility is responsible for providing electricity to approximately 28,000 customers within a fixed electric service territory. To do so, the utility operates a power plant containing two natural gas-fired steam boilers and two combustion turbines to provide capacity and to generate electricity.
It is anticipated that the City of Ames Electric Utility's average peak demand will continue to increase, as more electricity is demanded for new construction, developments intensify in the City's core, and vehicles and appliances convert from using fossil fuels to electricity. Current projections anticipate demand to grow 1% per year. Therefore, the Utility must continue to plan for installing or purchasing additional capacity.
The Utility's two primary generating assets, Unit 7 (33 MW) and Unit 8 (65 MW), are critical to meeting the City's generating capacity obligations. Both units are also advanced in age and are susceptible to increasing reliability issues. If one or both of these units were unable to operate, the Utility would need to either: 1) purchase replacement capacity through the regional grid auction, 2) purchase replacement capacity from another utility using a firm Power Purchase Agreement, or 3) construct replacement generating capacity. With increasing electrical demand across the regional grid, more utilities are short of capacity, resulting in higher prices. Additionally, few projects exist to obtain replacement capacity from another utility on a firm basis through a Power Purchase Agreement. Therefore, City Council and Staff have concluded that the most viable path forward is to construct replacement generating capacity.
The project is currently in the engineering and pre-construction phase. Recent progress includes:
Site Survey & Prep: Preliminary surveys are underway to determine the engineering needed to support the new generating station. Demolition of retired coal equipment will follow.
Expert Partnership: Sargent & Lundy has been contracted to lead facility design and equipment procurement. The general arrangement is being finalized and the detailed design is being stated.
Procurement: Bids for the new generation equipment and generator step-up transformer were received in May of 2026 and will be extensively reviewed before a selection is made.
Major Costs Associated with the Project:
One of the three core principles of the project study was rates. By building on the site of the former coal yard, the City is saving significant money on infrastructure and grid interconnection costs to keep the transition as cost-effective as possible. Rate increases will be necessary, but are expected to stay below the target annual inflation rate.
The lead times of key components heavily impact the operation date. With the current demand for data centers, generating equipment is posting lead times of 5+ years. The utility industry is faced with demand pressure around the nation and the need for the generating engines is high.
Based on a study with HDR Engineering, RICE units were the clear winner for reliability and rates. They offer much faster start-up times than combined-cycle plants and are more efficient at varying loads, making them the perfect partner for a grid that uses a lot of renewable energy.
The burning of refuse derived fuel or garbage will cease in July of 2027. The new units will burn on natural gas and fuel oil. These units will be 30% more efficient than our existing generation process and reduce our carbon footprint by 20%.
While the City is committed to renewable energy, sources like wind and solar are intermittent. Ames Municipal Energy Center will provide dispatchable power, meaning it can be turned on the moment the wind stops blowing or demand spikes, ensuring your lights stay on regardless of the weather.
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