NEWS RELEASE                                                                                                    FEBRUARY 2013

Coal-fired Power Plant Retirements will be Significant but Not a Dominant Factor in Future Capital Expenditures 

Hundreds of coal-fired power plants have been or are going to be retired. The peak year will be 2015 when just fewer than 70 units are slated for retirement or switch to natural gas. McIlvaine tracks each retirement initiative along with upgrade expenditures at each plant in the Utility Environmental Upgrade Tracking System.

 

The power plants planning to retire in 2015 are mostly more than 50 years old. Some will be 65 years old by the 2015 retirement date. Most are small with some as small as 25 MW. The average is less than 200 MW. The total capacity being retired in 2015 (the peak year) is less than five percent of the total coal-fired capacity in the U.S.

While all the power plants listed have announced plans to retire or switch to gas, there are still some potential routes whereby these plants could again burn coal. NRG Energy has committed to burning natural gas at one of the Big Cajun plants. But the best hedge may be to just use natural gas in the existing coal-fired boiler rather than build the gas turbine to replace it. It is an inefficient way to use natural gas, but if the gas use will only be for a few years, then it can be an attractive alternative.

Another option is to build the gas turbine but mothball the existing plant in case it is needed in the future. After the experience a decade ago where natural gas prices rose quickly to levels which made electricity generation from gas highly unprofitable, most utilities want to retain a balanced mix of fuel sources.

For more information on: Utility Environmental Upgrade Tracking System, click on:  http://home.mcilvainecompany.com/index.php/component/content/article?id=72