Power Plant Demolition Business: Modest Today, Bigger Tomorrow

Written by John Egan for Industrial Info Resources (Sugar Land, Texas)--Decommissioning and demolishing fossil-fueled power plants owned by power companies in the U.S. is a somewhat modest business today, but it likely will become a much larger business in the coming years, as scores of power plants that have been mothballed, shuttered or closed in recent years are torn down.

In the U.S., Industrial Info is tracking about 41 active demolition projects for Power Industry plants that burned coal, fuel oil or natural gas. The value of these projects is about $746 million. Measured on a dollar basis, the greatest amount of work will take place at power stations in the Great Lakes, Midwest and Mid-Atlantic regions. Most demolition projects are valued at between $20 million and $30 million, though a few are as high as $40 million, and a handful are less than $5 million.

Click on the image at right to see a chart with the top five regions for Power Industry demolition projects.

But the 41 demolition projects in the Power Industry are only a small part of a much larger story. Industrial Info also is tracking an additional 130 fossil-fueled power plants that have ceased operation over the last three years but have not been demolished.

"We don't expect all owners of power plants will decommission and demolish all the plants that have ceased operation over the last three years," said Britt Burt, Industrial Info's vice president of global research for the Power Industry. "Some might have been mothballed temporarily for economic reasons, and some of those facilities may be pulled out of mothballs when the economics are right. Sometimes a plant that has been decommissioned can be brought back online. The specifics vary from one situation to another. Sometimes, asset owners take years to decide to demolish a plant after it is closed."

"That said," he continued, "we do expect a significant percentage of the fossil-fueled power plants that have ceased operation in recent years to eventually be demolished. Typically, the plants that stopped operating were older, smaller and less-economic facilities that were rendered uneconomic by market forces, such as inexpensive natural gas, as well as regulation, including the Mercury and Air Toxics Standards (MATS)."

"Most utilities have complied with MATS, which in many instances involved closing older, smaller, less-economic plants where installation of emissions control equipment didn't make economic sense," Burt noted. "Whether it makes sense to pull some of those plants out of retirement depends, to some degree, on still-unfolding litigation over MATS."

In April 2017, a group of states and the Trump administration asked the U.S. District Court for the D.C. Circuit for more time to decide whether MATS needed to be changed, eliminated or left as is. The court agreed to indefinitely postpone the proceedings. One year later, according to an April 19, 2018, report in Greenwire, the Environmental Protection Agency's senior air official said the agency still hasn't decided what to do about MATS. The rule was finalized in 2011, but it has gone through a series of legal challenges since then.

Some utilities and merchant generation companies may be holding off decisions whether to demolish their fossil-fueled power plants that are no longer operating until the MATS litigation is settled once and for all.

"I don't want to try to read the D.C. Circuit Court's mind, but we think most of the fossil-fueled power plants that have ceased operation over the last few years eventually will be demolished," Burt said. "That might not happen this year or next, but we feel confident most of those non-operating fossil-fueled power plants aren't going to come back online."

Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, six offices in North America and 12 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle™, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities. Follow IIR on: Facebook - Twitter - LinkedIn. For more information on our coverage, send inquiries to info@industrialinfo.com or visit us online at http://www.industrialinfo.com.