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In Memoriam: Plants That Said Goodbye in 2020

Before we let 2020 escape our minds completely, we wanted to look back at the power plants that generated their final electrons in 2020. About 14 GW of capacity was retired in 2020, with, as expected, the bulk of that coming in the form of coal retirements. However, as we will see, the closing of one plant’s doors opens up opportunity for others.

Below is a summary of the plants that were retired in 2020. While coal units dominated the overall retirements, the table at the top of the graphic shows some noticeable exceptions in the largest plants that shuttered.

The reasons for these retirements are multifold. Environmental targets can make thermal generation at some plants impractical or too costly to achieve. Additionally, the proliferation of near-zero marginal cost generation from wind and solar reduces the need for baseload generation. In a similar vein, with cheaper generation in each balancing authorities’ supply stack comes lower overall energy prices, challenging plant margins. This last reason was cited in the closure of AEP’s Oklaunion coal plant in Wilbarger, TX which closed in September of 2020.

Below is data gathered from BTU’s power analytics platform, Power View, regarding the Oklaunion plant. On the top left is Oklaunion’s hourly generation averaged monthly. The graphic in the top right is the real time market LMP and settlement price for Oklaunion. The settlement price includes ERCOT’s scarcity pricing adder that kicks in when reserves drop below a given level.

The final two graphics below show BTU’s estimates of Oklaunion’s energy revenue net of fuel costs and variable operations and maintenance. Here, a strong summer 2018 and an astronomic August 2019 are the exceptions to an anemic five-year span. And the pie chart shows that over the last six years half of the plants cumulative revenue (net of variable costs) was made in August of 2019, when energy prices hit ERCOT’s $9,000/MW cap.

With the loss of Oklaunion’s generation, new opportunities for interconnections at local substations become available. The following shows a map of select substations within the immediate area of the Oklaunion plant. Multiple projects, with over 2.3 GW of new generation capacity, are now vying for interconnection in the area. The largest project, a potential gas conversion of the Oklaunion plant, along with a SPP solar and wind project are proposing to interconnect 1.1 GW of capacity directly at the Oklaunion substation. The table below outlines projects currently proposed to interconnect near the recently retired plant.

As old generating assets retire across the US, the opportunities to develop new generation resources utilizing existing infrastructure may emerge as highlighted in the example above. BTU Analytics Power View platform brings all this disparate data together to help our clients gain a deeper understanding of where existing assets are retiring, where new projects have been proposed, and the potential bottlenecks to transmission capacity.

To see BTU’s approach to risking projects across the US or to access our database of existing, planned, or retired plants, as well as substations, transmission lines, and pricing, set up a one-on-one call with a member of our power team.

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Matthew Hoza is the Head of US Power Markets for FactSet. Currently he is leading the team responsible for the development of FactSet’s suite of power market data and analysis solutions.

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