Repowering in a competitive power market -- opportunities, roadblocks and incentives
- Energy Ventures Analysis, Inc., Arlington, VA (United States)
Utility deregulation should lead to lower power prices and reserve margins which will likely discourage repowering investment. Production costs savings alone are insufficient to justify repowering. However, as the current excess generating capacity is adsorbed, power prices should rise to support new capacity expansion. These prices should be sufficient to support repowering investment that will offer greater returns than greenfield project alternatives. Gas repowering projects have been the preferred resource option for utility additions of combined cycle capacity. These projects can take full advantage of an under-utilized asset and convert it into a low cost gas-fired option at a fraction of greenfield costs. Coal repowering projects have not been as attractive an investment because of their greater capital investment requirements and the higher internal system value of the unimproved unit. Several utilities have pursued business opportunities from selling older existing capacity to third parties to generate revenues or shift risks. However, with deregulation, many 3rd party ownership advantages associated with being an exempt wholesale generator or qualifying facility will be diminished. With deregulation, technology risks will fall increasingly on project developers. These risks can provide an opportunity for those parties willing to accept the risk while also increasing the economic penalties. Environmental benefits of repowering will remain an increasingly attractive benefit for repowering. Use of a current permitted facility can accelerate permitting and provide less strict environmental requirements.
- OSTI ID:
- 376129
- Report Number(s):
- CONF-960426--
- Country of Publication:
- United States
- Language:
- English
Similar Records
Clean coal technologies in repowering applications
Opputunities for heat rate improvement through repowering