Minnkota Power Cooperative received approval of a $100 million loan to help advance its Project Tundra carbon capture initiative at the Milton R. Young Station.
The loan was authorized by the North Dakota Industrial Commission on May 23 and will be an important component of the project’s capital financing strategy. The funding is made available through the state’s new Clean Sustainable Energy Authority (CSEA) and will be furnished by the Bank of North Dakota.
“On behalf of Minnkota, I would like to thank the state of North Dakota for its strong support of Project Tundra and its visionary leadership in developing programs to help us advance transformational energy technologies,” said Mac McLennan, Minnkota president and CEO. “Securing this loan shows the investment community that we have the close partnerships in place to make this project a reality.”
Minnkota plans to turn its focus to financing efforts in the coming months following completion of Project Tundra’s final engineering and design work. The $1.45 billion project will primarily be funded through federal 45Q tax credits, which provide $50 per ton of CO2 stored. Due to Minnkota’s not-for-profit status, partnerships with tax-equity investors will be necessary to utilize the credits. About 4 million metric tons of CO2 are planned to be permanently stored each year.
The loan was endorsed through a competitive process managed by the CSEA. Project Tundra is in an advanced stage of development, which includes having the largest fully permitted CO2 storage facility in the United States and one of only three Monitoring, Reporting and Verification (MRV) plans for CO2 storage approved by the Environmental Protection Agency. The project’s unique attributes include capturing CO2 from both power generating units at the Young Station and utilizing two formations to permanently store the CO2 underground.
“As we see a growing number of concerns around grid reliability, it is more important than ever to find ways to preserve dependable and resilient power generation assets, like the Young Station,” McLennan said. “It’s also important for us to make progress toward environmental goals and lower our emissions profile. We believe Project Tundra provides a path forward for Minnkota to meet both of these goals in a way that can be replicated around the state and around the world.”
Minnkota anticipates making a decision on whether to move forward with construction of Project Tundra near the end of 2022. If the project does not move forward, the $100 million loan would be returned to the state, where it could be used for other technology development opportunities.