November 2, 2017 Read More →

On the Blogs: ‘Teenage’ Coal Plants Are Being Retired Too

Coal Wire:

Whether in Italy, the US or the Netherlands, the trend to the retirement of teenaged coal plants — or even younger in the case of one of Luminant’s Sandow units — is something new. In the space of a month, three separate announcements have slated 6600 MW of young coal plants to be closed long before their technical life is over.

Where once the life of a coal plant of 40 years or more was determined by what physical shape the plant was in, political and economic factors are fast emerging as the key determinants of how long they will run.

Two of the key drivers for long plant life — a stable pro-coal political climate and favourable economics — are evaporating fast. The politics of climate change are shifting, often across the political spectrum, with support for phasing out coal plants growing rapidly. The plummeting cost of renewable generation is making running existing coal plants ever more marginal.

A series of announcements over the last few weeks suggests that the storyline that only old coal power plants are being closed down is rapidly becoming redundant as plants that are barely teenagers are being targeted for closure.

Last week the Italian Government announced it will close all 8980 megawatts (MW) of its coal power plant capacity by 2025. The government’s new energy strategy is not due to be publicly released until November 7, so it is still possible the devil may be in the detail. However, with nearly all of the plants reliant on imported coal, Italy’s decision is yet another hit for thermal coal exporters.

While Italy’s announcement is big news in itself, even more remarkable is that the 1980 MW Torrevaldaliga Nord power station in Rome province, the three units of which were only commissioned in 2009 and 2010, will be closed before it has even been running for 16 years.

Earlier this year Climate Analytics, a consultancy firm, put together a list of the top 20 plants in the European Union that would have to close to have a chance of meeting the Paris Agreement climate targets. Climate Analytics suggested that, at best, the Torrevaldaliga Nord power station might be closed by 2029 and, at worst — under a “business as usual” scenario — by 2061.

Another plant on Climate Analytics’ high priority list for shutting down is Enel’s coal-fired 2640 MW Brindisi Sud power station, which was commissioned between 1991 and 1993. However, the consultancy expected that the plant would operate until sometime between 2028 and 2044. Now the plant will be closed before it makes it to 35 years old.

While the life span of coal plants varies, well-maintained plants are commonly expected to last for at least 40 years and — with major upgrades — can even stagger on until they are well over 50 years old. The Hazelwood plant in Australia, which closed earlier this year, was 52 at the time it was shut down. According to CoalSwarm’s global coal plant database, the average age of US coal plants at the time of retirement is 53 years. In India, the Central Electricity Authority expects key coal plant components to last for just 25 to 30 years.

While the norm may have been for coal plants to run for decades longer than their original design life, that may be changing rapidly.

Two weeks ago, the Texas-based utility Luminant announced that it plans to close its 1182 MW Sandow plant in mid-January 2018, after Alcoa paid out the remainder of its power purchase agreement.

The plant, which comprises two operating units, originally supplied electricity for Alcoa’s Rockdale aluminium smelter under a binding contract which was set to run until 2038. However, after the closure of the smelter in 2008, Alcoa sold power into the deregulated Texas market. When new renewable and gas generation came onstream, this became a losing strategy.

Luminant stated rather euphemistically that the Sandow plant was “economically challenged.”

To break its contract, Alcoa agreed to pay Luminant US$237 million and transfer 30,000 hectares of land to compensate the utility for lost income.

Even so, it was a good deal for Alcoa. In announcing the settlement, Alcoa stated it would be US$60–70 million a year better-off after closing the plant.

More: Rejected teenagers: the trend of closing young coal plants

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