A year ago, PowerSouth CEO Gary Smith was meeting with stakeholders to discuss his utility’s need to expand generation capacity to meet the expected increase in energy demands.

At the time, all options were on the table, including construction of a coal or gas-fueled generation plant, wind, nuclear, or purchasing additional capacity from other suppliers.

This week, PowerSouth Energy Cooperative announced it has signed a purchased power agreement with Yellow Pine Energy Company, LLC, in what PowerSouth spokesman Mark Ingram said is one of several moves the company will make to increase capacity.

“We have decided to forego the idea of a coal-fired power plant,” he said. “Instead, we are diversifying so our costs won’t be as volatile.”

The diversification will include energy from renewable resources, along with some additional capacity from nuclear and some from natural gas. The commitment to purchase from Yellow Pine diversifies PowerSouth’s renewable energy portfolio, Ingram said.

PowerSouth joins 36 other cooperatives and municipal electric companies in Georgia, Alabama and Florida in agreeing to purchase power from a planned 100-megawatt biomass-fired power plant near Fort Gaines, Ga. The contracts are for an initial term of 30 years, with options to extend the term to 40 years. All the plant’s output is committed, as are all of the renewable energy credits.

Yellow Pine plans to sell electricity generated from environmentally friendly wood waste. The material will come from timber harvesting residuals and the collection of non-commercial tree species’ tree-thinnings, lumber scraps and wood waste reclaimed from landfills, according to published reports. Construction on the facility is slated to begin this summer.

Yellow Pine is owned and managed by Summit Energy Partners, LLC; Merrimac Associates, Inc., a power plant engineering firm; and Morris Energy Group, LLC, which owns and operates 700 megawatts of electric generation. The company plans to build its 100 megawatt biomass-fired power plant on a former industrial site about eight miles south of Fort Gaines, Ga., on the Chattahoochee River. The plant has been under development for three years and has received its zoning and special use authorizations and filed various permit applications with government entities.

PowerSouth’s vice president of power supply, Damon Morgan, said, “Participation in this project affords PowerSouth and our members an opportunity to add renewable energy to our generation mix at an affordable cost, while avoiding the operational and construction risks involved with a project of this magnitude. We are committed to expanding our renewable portfolio while continuing to provide affordable, reliable energy to our members.”

Ingram said PowerSouth also expects to expand its generation capacity in McIntosh, Ala., where it has a compressed air energy storage (CAES) unit and twin gas-fired combustion turbines.

PowerSouth serves the wholesale energy needs of 16 electric cooperatives and four municipal electric systems in Alabama and northwest Florida, including the city of Andalusia and Covington Electric Cooperative.