To call the last two years in the U.S. electric generating sector “turbulent” is to put it mildly. Since the beginning of 2015, more than 135 U.S. power plants with a total capacity of over 18,000 megawatts have been shut down, typically coal- and oil-fired generators put out of business by cheap natural gas and heavy environmental compliance costs but also some no-longer-economic nuclear stations as well.
Finding new uses for old power plants come with challenges, but they also afford big opportunities. While there are often issues of environmental remediation and asbestos removal, many generating stations were sited on rivers and harbors in order to facilitate fuel deliveries, and can represent “prime waterfront land” when cleaned up and reused.
Here at TRC, we’ve consulted with owners of more than 30 power plant sites in recent years, and that experience has shown us the importance of approaching the whole process with a playbook–a plan that asks and answers the right questions to help owners and stakeholders make the best decisions. We recently got a chance to present some of what we’ve learned to several hundred participants at the PowerGen conference in Orlando in mid-December.
We define the overall universe of potential outcomes for power plants that have reached the end of their useful life or become economically non-viable with what we call the Four R’s: retire, retrofit, replace, or redevelop. To determine whether it makes sense to mothball a plant, re-power it (with typically natural gas replacing coal or bunker oil as the fuel source), build a replacement plant on the site, or raze it and sell the land, three of the most important questions we ask are:
Many power plants were built to effectively last forever by utilities who never expected them to close–and in many cases, that actually increases their value for re-use. Here in TRC’s home state of Massachusetts, for example, Exelon recently sold the New Boston Station, known locally as the South Boston Edison plant, and its 15 acres for $24.25 million to Hilco Redevelopment Partners and its partner, Redgate. The plant complex includes an 1892 brick and marble building with Beaux Arts flourishes and soaring arched windows that’s likely to become an acclaimed architectural centerpiece in a new housing/office/retail/restaurants complex with a marina. It’s a deal that also unburdens Exelon of a unit that rarely got called to run in New England’s competitive electric markets, and also potential environmental cleanup and liability issues.
power plant deal will turn out to be the kind of win-win-win that the South
Boston Edison plant will be for the developers, the community, and the plant
owner. But when you approach deciding the fate of a power plant and its
location with the right playbook, you can greatly improve the odds of a