Are utilities missing out on the opportunity to use old coal sites for solar?
Turning coal site liabilities into solar assets may be an idea whose time has come
Utilities could turn liabilities into assets by building solar arrays where burning coal has left a site unsuitable for other purposes — but only a few forward-looking utilities are even exploring the possibility.
Unused coal sites make up a small portion of the 450,000+ U.S. brownfields, where expansion, redevelopment or reuse is complicated by hazardous substances, pollutants or contaminants. But a coal site is a liability for its utility or independent power producer (IPP) owner. It offers no benefits and imposes maintenance costs that burden ratepayers and shareholders.
Two small utilities, one in Florida and another in Massachusetts, have turned financial burdens into financial opportunities, and other utilities may benefit by looking at what they've done.
Coal waste sites serve no purpose, require maintenance, and have been the source of toxic leaks that damaged the local ecology. Repurposed into solar generating stations, such sites offer utilities cost-effective resource mix diversity and a new way to meet customer demand as well as emission reduction and renewable goals.
The numbers suggest there is good reason to think about the coal-to-solar possibility.
From 2008 to 2016, nearly 35% of U.S. coal generation capacity was shut down, converted to another purpose, or scheduled for one or the other, according to the Union of Concerned Scientists (UCS).
The barrier to redevelopment at many of the sites is coal ash. There are at least 1,424 coal waste disposal sites with nearly 1,100 ash ponds, according to the Sierra Club.
A Tennessee Valley Authority study found closure-in-place costs $3.5 million for a 22-acre pond and up to $200 million for a 350-acre site, according to a 2017 report. Excavation and removal of waste can increase costs 270% to 2,200%, the report added.
The 2002 Small Business Liability Relief and Brownfields Revitalization Act laid out the Environmental Protection Agency's (EPA) best practices for brownfields. Remediated and repurposed brownfield sites have leveraged $16.11 for every taxpayer dollar spent, led to more than 97,000 jobs, and increased residential property values 5% to 15.2%, EPA's website reports.
The agency's project tracker shows only two coal-to-solar projects. But the Holyoke Gas and Electric (HG&E) 5.76 MW solar and 3 MW/6MWh battery storage project in Massachusetts and the Orlando Utilities Commission (OUC) 13 MW array in Florida suggest utilities with unremediated and unrepurposed coal sites might want to consider the possibility.
Greenwood Energy CEO Jonathan Cole said OUC responded to customers' demand with a proposal to build the solar project on OUC Energy Center acreage previously used for coal ash storage. Greenwood was selected as owner-developer when the proposal ran into difficulties with financing.
“It was not financeable before we were brought in,” Cole said. “We modified the power purchase agreement (PPA) to allow the federal investment tax credits to go to Greenwood Energy, as owner, instead of to OUC, which, as a public entity, had no use for the tax credits.”
The undisclosed PPA price is “very good” for a small project without other revenue streams, like solar renewable energy credits (SRECs), he added. But that PPA price was contingent on the tax credits going to the developer-owner to offset the construction costs, he said.
The OUC coal waste landfill had been retired and capped for many years, leaving no need for further remediation, according to the utility.
“Community support is crucial in any project and, in many places, even if you are building the fountain of youth, there will be complaints.”
CEO, Greenwood Energy
The solar array was sited atop the capped ash, adjacent to operational coal and gas plants, Cole said. OUC managed and paid for the interconnection with the Energy Center substation, which made “a significant difference in the economics of the project, allowing Greenwood to keep the PPA price down, he added.
The project required a higher-cost ballasted foundation to avoid penetrating the cap over the ash. “The key to the project’s viable economics was the falling price of solar modules,” Cole said. “It would not have been financially viable at 2015 panel prices.”
Permitting and related factors were easier than many projects because the array was built at the working industrial site, Cole said. “Community support is crucial in any project and, in many places, even if you are building the fountain of youth, there will be complaints,” he added. “Here, there were no residential neighbors and a cooperative landowner.”
A site-by-site question
The viability of coal-to-solar projects is “a site-by-site question,” Cole said. But this allows a place where they are not going to build condos to be repurposed into something productive.”
Unlike the OUC project, Engie’s Mount Tom Solar facility in Massachusetts was not part of an industrial site. Community backing from local environmental advocates was a key factor in getting it built, according to Lena Entin, deputy director for the Toxics Action Center.
Engie spokesperson Carol Churchill agreed. The concept “aligned with community preferences” and “met aggressive internal Engie targets for solar generation,” she emailed Utility Dive.
Like the OUC project, one of Engie’s first concerns was financial, Entin said. At the first meeting with the community, they said that replacing the coal plant with solar would be “a big profit loss,” Entin told Utility Dive.
Churchill said the PPA terms and financing details are confidential. But the project offered several opportunities that appealed to Engie, she added.
First, it is on flat land in a flood plain. Second, the nearby HG&E substation meant “interconnection accessibility” and a “willing” distribution system host and off-taker. Third, the highly successful Massachusetts SREC program provided financial certainty. Finally, “local teams” were available for the remediation and construction.
Remediation was done by an Engie subsidiary, which absorbed the undisclosed costs, Churchill said. Development required placing the array’s inverters on piles and platforms higher than the Connecticut River flood plain. It also required further soil inspections and disposal of residual ash and debris.
The solar array interconnected with HG&E’s distribution system through an existing substation, though it required upgrading to accommodate the solar-plus-storage system, Churchill said. “The fact that the location was inside HG&E’s service territory was key.”
It did not intertie with the New England regional transmission system because matching the coal plant’s 115 kV interconnection with the 13.8 kV solar array would have added cost, she added.
Soil conditions did not require special racking, but the battery system will require concrete footings and steel pylons, wiring, and more interconnection work, Churchill said.
Engie does not own, or have public plans for other coal-to-solar projects. “Using disturbed land for renewable generation is a great example of sustainability,” Churchill said. But a specific project’s viability depends on many variables, including “the strategy of the company, the availability of incentives, community preferences, land characteristics, willing hosts, such as HG&E, and financing options.”
Buena Vista project site owner David Fiore would like the City of Pittsburgh or Duquesne Power and Light (DP&L) to take a closer look at his 600-acre brownfield.
Fiore’s father commercialized its value as an industrial waste disposal site in the 1970s and 60 acres was specifically used for disposal of coal fly ash from a nearby DP&L plant. The entire site was remeditated before 2010 by the companies that used it for waste disposal.
Fiore has proposed a 100 MW solar project which he expects to be able to build — with a long term PPA — at $1.30 per watt. Interest has been growing, he said.
Pennsylvania solar developers have struggled because SRECs fell to “a nearly zero value” due to an incentive program loophole, Fiore said. But recent policy revisions are expected to boost the SREC value.
“I decided to go the solar route because I want to make friends instead of the enemies my father made by using the site for waste disposal.”
Owner, Buene Vista Project Site
The City of Pittsburgh, which joined Sierra Club’s 100% renewables movement in 2017, and the Department of Economic Development for Allegheny County, where the site and the city are located, have shown interest, he said. And he has talked to DP&L about a PPA.
“The city will need hundreds of millions of kWh,” he said. “This site is tabletop flat, with both a 15 kV and 138 kV power line, and a First Energy substation just across the river.”
The solar installed cost has fallen dramatically and the state’s retail residential electricity price was up to $0.149/kWh in 2017, Fiore said. With the loophole in the SREC policy closed, solar should be cost-competitive, he added.
“I decided to go the solar route because I want to make friends instead of the enemies my father made by using the site for waste disposal,” Fiore told Utility Dive. “We're getting a very high level of support from the local community and many are talking about a community solar project.”
Borrego Solar has built between 35 MW and 40 MW of solar on brownfields and landfills, but none on remediated coal sites, Jared Connell, vice president for New England project development, told Utility Dive. “We have not come across coal-to-solar opportunities.”
Good brownfield sites for solar should have 40 acres to 50 acres of flat land and the waste must be well-capped, he said. They typically require higher-cost ballasted racking and time- and cost-consuming post-remediation use permits.
“Interconnection costs are always a factor, so if the site is near a substation, it can make a difference,” Connell added. The projects can be financially workable, especially if there are extra incentives for repurposing, "but we tend to gravitate to sites that don’t require the extra time and expense.”
Charlotte, N.C.-based Forsite Development, a specialist in fixed cost decommissioning and redevelopment services, could also be a player in the coal site-to-solar world.
Last fall, the Michigan Public Service Commission approved the $62.5 million Consumers Energy sale of two coal plants to Forsite. The company will take title to the plants and assume full responsibility for their structural decommissioning and the site’s remediation.
Turning the project over to Forsite is expected to save Consumers Energy ratepayers $31 million, according to a statement to Utility Dive from Director of Project Development Scott Thomas. Forsite was picked because of its experience and “unique risk transfer offering,” Thomas added.
Forsite specializes in acquiring shuttered coal plants and assuming the liabilities associated with legacy contamination, CEO Tom McKittrick told Utility Dive.
In recent years, economics and environmental regulations have forced an increasing number of coal plant closures, he said. “We began approaching utilities about divesting of their shuttered plants via a risk transfer structure and found a lot of traction.”
The company has decommissioned and repurposed five coal plants and is negotiating contracts on two others. It offers utilities “a fixed cost divestment option, indemnity from future liabilities, and a path toward repurposing the site,” McKittrick said.
Another “enormous selling point” is that Forsite can bring in an insurer to “essentially underwrite” the decommissioning, McKittrick said. “We can procure insurance on the utility’s behalf because the insurance companies know we can handle the clean-up without creating an event.”
Forsite is also “a redevelopment company and once the site is cleaned up, we work to attract industry back,” McKittrick said. That appeals to the utility and to the community, which has just lost a huge piece of its tax base.
What Forsite does is essentially “a real estate play,” McKittrick said. The underlying value of the site, which varies with many factors, is factored into the deal with the utility. He has not built solar on coal sites, “but, intuitively, it feels like that would be a great fit,” he said.
To date, most of the interest has been from regulated utilities because they can recover the cost of decommissioning, McKittrick said. It is “totally different” with IPPs because remediation costs come out of their bottom line,” he added. “But all these plants have to be decommissioned. That is the next wave of this work.”
Repurposing shuttered coal plant sites is “an overlooked opportunity to put these sites back into use and bring jobs and investment to communities that have been hit hard,” McKittrick said. “A lot of utilities tear the plant down, put a fence around the site, and forget about it, but they can turn these liabilities into assets.”