For sale: Coal plant parts, ready to ship, motivated seller.
Three years after Santee Cooper nixed its controversial Pee Dee coal-fired power plant project, a 600-megawatt turbine and equipment worth about $250 million sit in storage, costing the utility megabucks to maintain.
Santee Cooper pays about $13 million a year to keep the equipment in ready-to-use condition.
“We’re still actively working to sell and market it, and we have a number of interested parties,” said Laura Varn, vice president of Santee Cooper corporate communications.
She said likely customers are outside the United States.
The utility bought the equipment for its proposed Pee Dee Generating Facility.
Unveiled in 2006, the project ran into stiff opposition from environmental and citizens groups concerned about emissions and mercury contamination.
Santee Cooper leaders pulled the plug in 2009, citing the economic downturn, possible global warming regulations and decisions by state electric cooperatives to obtain power from another utility.
That left the utility with parts worth millions spread across a 25-acre site near Johnsonville and another area at its Cross Generating Station. Two companies, PPM and Worley Parsons, run motors and perform other activities to keep the equipment in the kind of condition that will attract a buyer. Since 2010, Santee Cooper has paid these companies $3.5 million.
Varn said that so far, existing rates have been enough to cover these extra costs. But if the agency isn’t able to make its money back, “the unrecovered portion may need to be collected through customer rates.”
Last year, the agency ran ads in industry publications: “Engineered, Procured and Ready to Construct. Fully designed as a nominal 600 MW GE steam turbine, this Unit 1 power block is a coal-fired electric generating unit in waiting — making it or its equipment a perfect solution for a utility that projects demand and demands efficiency … they are priced to move. Quickly.”
The sale comes amid tectonic shifts in the energy industry. Ten years ago, American utilities were building coal plants at a torrid pace, fueled in part by increases in the price of natural gas. As late as 2007, 24 coal plants were under construction. And the pace was even faster in China, where an average of one coal plant went online every week.
But new technologies to extract natural gas, such as fracking, drove down natural gas prices. Meanwhile, environmental groups pushed hard to shutter coal plants because they produce enormous amounts of greenhouse gases.
Now, more U.S. coal plants are being retired than proposed, according to a report in January by the National Energy Technology Laboratory. In May, Scana announced it was shuttering two South Carolina coal plants, including its generating station in Canadys. The utility also said it would convert a coal-burning unit near Aiken to natural gas.
Varn said that Santee Cooper’s recent proposal to raise rates 3.5 percent for two consecutive years had nothing to do with the Pee Dee equipment. “Even if it had been sold now, we would still need the increase for nuclear and environmental regulations.”