Clean Energy Projects at Fossil Sites Lured by Fast-Lane Reviews

Electric utilities and clean energy developers are increasingly considering a quicker way to lower carbon emissions: plugging in new power at closing or underutilized fossil fuel power plant sites.

Xcel Energy Inc. is planning to build the Upper Midwest’s biggest solar farm and will use existing grid interconnection points at a coal plant slated to close this decade. AES Corp. is replacing retiring coal plant units in Indiana with a mix of solar, batteries, and natural gas. The Tennessee Valley Authority is looking at the same mix of power and batteries to replace many of its former coal plant sites.

“It’s not a want—it’s a need,” said Eric Cherniss, founder of Elevate Renewables, a Boston-based company with a pipeline of 5,000 megawatts of energy storage systems at existing natural gas plants across the country.

“You have a power plant that provides a reliable service that can go offline for a variety of reasons, and you need to be able to replace them in an expedited fashion,” Cherniss said. “Otherwise, you run the risk of larger reliability issues. And it helps solve the problem that people are having, which is bringing the new generation online faster.”

A Massive Opportunity

The opportunity, sometimes called clean repowering, comes as energy companies shutter coal plants to meet grid decarbonization goals.

But new renewable energy sites can face many years of permitting and siting delays. Grid operators that must study proposed projects are overwhelmed with applications from renewable developers—in places like California, the mid-Atlantic, and the Midwest, operators have halted new requests or are working to overhaul the study process.

Grid authorities in most of the country offer quicker timelines—as little as six months—for projects seeking to add generation where interconnection infrastructure and rights already exist. In addition, new federal tax incentives and a $250 billion loan program created by the Inflation Reduction Act of 2022 are combining to boost repowering projects.

This combination makes repowering effectively a fast lane to bring new energy resources online, said Christian Fong, a senior associate with RMI, a sustainability research organization.

As much as 250 gigawatts of new clean energy—roughly 20% of existing US-installed power plant capacity—could access the grid at existing points, according to reports published this year by RMI. In addition to replacing generators with new forms of energy, utilities can install more capacity at natural gas plants that only run a fraction of the time during hours of peak demand, Fong said.

“We’re starting to see a lot of these companies say, yeah, we don’t want to retire these plants because of reliability concerns and load growth,” said Fong, who manned RMI’s booth with repowering data during a conference of state utility regulators in Washington in February that drew about 2,000 attendees.

“We view clean repowering as this win-win situation,” allowing utilities to replace retiring generation while lowering emissions, he said.

Money and Incentives

The Energy Department is seeing a surge in interest from utilities in its Energy Infrastructure Reinvestment program, said Jigar Shah, director of the DOE’s Loan Programs Office. The department made its first announcement from that program last month: a $1.5 billion conditional commitment to help Holtec International Corp. restart a nuclear plant in Michigan.

The department’s loan office doesn’t comment on specific pending loan applications. Rising interest could be reflected in pending applications that have risen to 203 applicants requesting $262 billion in February, up from 189 applicants requesting $175 billion in November, according to the office.

“Thinking about taking existing infrastructure, existing interconnection, existing water rights, and using them for purposes that are consistent with the energy transition, you can imagine there’s a huge opportunity given how many coal plants have shut down, how many existing infrastructure pieces are sitting around,” Shah said.

Requests to switch generators or to add new resources to existing sites have grown on the grid run by Midcontinent Independent System Operator (MISO), the regional transmission organization that coordinates the flow of electricity to 45 million people across 15 US states and the Canadian province of Manitoba.

Thirty-eight projects totaling more than 7.6 gigawatts have been completed or are applying for generator replacement in the MISO region, according to the grid operator’s data as of Feb. 1. About two-thirds of the active or completed projects’ capacity involves solar, batteries, or some combination of the two—while the rest involve natural gas-fired power plants, MISO data show.

Another four battery projects totaling 107 megawatts have been added to existing generation through the surplus interconnection process, while 37 wind, solar, and battery projects totaling 3,225 megawatts are active, the MISO data show.

Xcel Energy plans to build a 710-megawatt solar farm adjacent to the Sherburne County Generating Station in Minnesota. The solar plant would replace the capacity of the first of the plant’s three coal-fired units, with the other two slated to close in 2026 and 2030. The utility has three years following the closure of power units to bring new resources online and reuse the plant’s grid interconnection rights, according to MISO rules.

“Reusing the existing interconnection rights at our retiring coal facilities is a crucial part of bringing new resources online in a cost-effective manner,” said Kevin Coss, a spokesperson for the utility. “It helps us avoid the upgrade costs of entering the queue with the regional transmission organizations in our service areas to obtain new interconnection rights and also avoid the potential for delays in obtaining those interconnection rights.”

Tapping Pipelines

Some environmental groups have criticized utilities for building new natural gas plants at former coal sites, arguing zero-carbon renewables should be the priority instead of locking in fossil fuels.

“Given all these alternatives that are already available, growing in their adoption, and declining in costs, many new gas plants will prove to be economically unwise,” Fong of RMI said. “Utilities and regulators should be wary to put these costs on the backs of ratepayers without a full examination of the cleaner and cheaper alternatives.”

Utilities say natural gas is needed to provide power to the grid when the sun isn’t shining and wind isn’t blowing and point out natural gas burns cleaner than coal.

AES Indiana is assessing existing sites in its territory to meet its goal of growing its renewable energy from 400 megawatts currently in operation to 2,200 megawatts by 2027. But it’s also assessing coal plants’ proximity to existing gas pipelines, said John Bigalbal, chief operating officer of US generation for AES Corp.

“What drives this thing is the reliability aspect,” Bigalbal said.

The capacity of the second unit of the Petersburg Generating Station is being replaced by a nearby solar-and-battery project and another 200-megawatt energy storage system.

To replace the third and fourth coal units, the company is building a natural gas plant.

“You have an exciting interconnect, you have a site, you have an existing substation already built, and a switchyard,” Bigalbal said. “So repowering or adding something like batteries to this site is a pretty ideal situation.”