POWER September 2016 - 64

COAL FLEET
Table 2. Estimated power plant closure announcements, decommissioning
projects, and sales since 2000. Source: TRC, based on EIA data
Ownership structure
Investor-owned utilities
Independent power producers
Muni/Co-op
Current totals
option for Genco owners because it allows them
to monetize an asset and mitigate risk going
forward. Often, these sites are " upside down, "
meaning the costs of decommissioning, remediation,
and restoration exceed the asset value.
Owner-Controlled Decommissioning.
In some cases, Gencos may not be able to
sell a site, and they may not want to give up
a site that may be useful for new generation
or transmission. In these cases, they may opt
to decommission aging plants to reduce risk,
monetize salvage and scrap, and prepare a
site for future Genco use. They would reduce
their carrying costs for taxes and security,
and reduce the risk of an accident or environmental
incident. In some markets, these projects
can be cash positive. With this option, it
is more likely that Gencos would have to pay
decommissioning costs out of pocket.
Closures
105
31
18
154
Decommissioned sites
24
2
8
34
Sold as is
10
6
16
No Action. Gencos have made the no action
decision on the majority of closed power
plants nationwide. Management is reluctant to
act because of costs, risk, and the attitude that
" we're not in the real estate business. " Economic
drivers are unknown until some engineering
and real estate studies are performed.
There are no federal or state requirements to
decommission or sell these facilities, so they
sit idle. As the number of closed plants grows,
this issue will become more visible, especially
to local communities.
Be Prepared
American Gencos have been closing and decommissioning
power plants for more than a century.
Only about 20% of the power plants recently
slated for closure have been decommissioned to
date (Table 2). That means there is a lot of work
ahead to reposition these sites for beneficial use
as industrial or commercial facilities.
Florida Power & Light (FPL) has successfully
completed decommissioning of
several steam turbine sites and replacement
with combined cycle gas turbines. FPL has
improved their heat rate and cost structure
dramatically.
Con Edison has sold several sites in New
York City (NYC) for redevelopment as mixed
use projects. The company sold these sites for
significant value and shared decommissioning
costs with the purchaser. Con Edison also
replaced lost capacity with combined cycle
technology at a nearby site. Initial development
includes a NYC public school and 800 units of
high-rise residences. This process began in 2000,
new power capacity was completed in 2005, decommissioning
was completed in 2008, and new
development was completed in 2014.
Gencos have options for units facing retirement,
but they need a playbook to define
and evaluate alternatives. The right strategy,
executed well, can be very powerful for both
the owner and the local community. Unfortunately
the wrong strategy, even if it is executed
well, can hurt for a long time. ■
-Ed Malley (EMalley@trcsolutions.com)
is vice president of TRC.
Platts World
Electric Power
Plants Database
Need a global inventory of electric power generating
units? Platts World Electric Power Plants Database
contains design specications for more than
200,000 plants of all sizes, technologies, fuels
and operating status owned and/or operated by
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Visit www.udidata.com for more information.
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