Finding (Re)Purpose: How Planners Can Make Effective Coal Repurposing Decisions
In this third installment of the Finding (Re)Purpose series, we break down the steps that regulators and utilities can follow when planning for coal repurposing.
This year has seen growing political momentum behind phasing out coal, with Malaysia joining G7 countries in putting forward a coal phaseout commitment this spring. Despite forecasts for declining coal demand, emissions from coal power in emerging markets and developing economies remain at record highs. To advance climate commitments, power sector decision makers will need to devise innovative transition strategies into their electricity system planning. One such strategy is repurposing existing coal plants for new uses.
Thus far in this article series, we’ve broken down what repurposing is, various repurposing options, and how some coal plant owners are already exploring the practical options and financial implications of repurposing. While plant owners will be important for implementing repurposing strategies, their plant-level decisions need to be put into the context of the broader power sector transition. In this third installment, we dig into some of the questions regulators and utilities — key power sector planners — face, and propose guiding principles for effective decision-making on coal plant repurposing.
Repurposing is primarily an interim strategy, focused on enabling the long-term shift to carbon-free energy sources while maintaining grid reliability.
Selecting a repurposing approach
Planners can streamline their decisions by using a “screening” process to preselect repurposing approaches that are suitable for their electricity and policy contexts. Screening can save planners time and resources by identifying the most promising repurposing approaches (and discarding less attractive ones) early in the planning process, thus reducing the number of technology options that need to be studied in depth. This can help planners consider repurposing in two ways: (1) after screening the approaches, they can include plausible technology options into quantitative system analyses, such as in capacity expansion planning, and (2) the screening framework can help inform guidelines necessary to streamline approval processes for plant owners, making it easier for repurposing projects to move forward smoothly.
As covered in our first article on coal repurposing, our repurposing categories are centered around the coal plant’s role in the grid to maintain reliability. Each approach comprises technology options that could meet the same reliability goal, but some options rely more heavily on fossil fuels than others, and will be much more costly to replace for a zero-carbon alternative in the future. Therefore, to avoid falling in that trap, planners should aim to prioritize repurposing approaches based on their potential to enable clean energy integration, with the most promising approach starting from:
When assessing these approaches, reliability and affordability are the most crucial criteria. While a climate-aligned pathway is the ultimate goal, prioritizing reliability and affordability first helps mitigate the risks associated with a hasty transition, such as economic disruption or energy insecurity. Once these foundations are secured, planners can create a supportive environment in which emissions reduction and investment potential can be maximized effectively and sustainably.
Selecting a repurposing technology
Once a planner identifies the appropriate repurposing approach, they will need to assess which technological options they should consider. A wide range of technologies exists within each approach, so it’s important to narrow down options that are viable in context and technologically proven before quantitative analysis and modeling.
This assessment should evaluate: the potential to reduce overall fossil fuel utilization, just transition opportunities, and financial bankability or financial attractiveness of different technologies. These often involve trade-offs. For example, biomass cofiring may be more financially attractive in regions with extensive agricultural lands, but it risks prolonging the operation of coal plants. Alternatively, in regions with abundant variable renewable resources, utility-scale energy storage can augment integration but may conflict with financial viability if supportive market mechanisms are unavailable.
While technological readiness varies greatly depending on context and geography, RMI has conducted a general assessment of each technology based on what is currently prevalent worldwide.
RMI’s Assessment of Repurposing Technologies
| Financial Attractiveness | Transition Outcomes | |||||||
|---|---|---|---|---|---|---|---|---|
Repurposing Approach |
Technology option |
Technology Maturity |
Commercial Deployment |
Execution Time |
Eligibility for Climate Finance |
Capital Cost Savings |
Just and Equitable Transition |
Emissions Reduction |
Post-retirement Reuse |
Renewable energy replacement | |||||||
| Synchronous condensers | ||||||||
Operational Flexibility |
Flexible coal generation | |||||||
| Thermal energy storage | ||||||||
| Battery energy storage system (BESS) | ||||||||
Lower Emissions Continuous Output |
Co-firing with biomass or ammonia2 | |||||||
| Conversion to small modular reactors (SMR) | ||||||||
| Carbon capture, utilization, and storage (CCUS) | ||||||||
2. Technology outlook varies greatly on the type of fuel (i.e., biomass or ammonia) and co-firing ratio (i.e., low or high)
After identifying these trade-offs and strategies to minimize them, quantitative modeling can help select the least-cost solution and define system impacts over different timescales within the broader context of the power sector plan.
To illustrate how planners can pursue coal plant repurposing, we are going to utilize two hypothetical examples. These examples illustrate two common high-level contexts in which coal plants currently exist. Then we will aim to fill in the details that would sway a decision toward one pathway versus another.
A Tale of Two Grids
The Lagger:
In a particular region, a coal-fired power plant, or a portfolio of such plants, operates within a geographic area where clean energy sources, such as wind and solar, have become more cost-effective than coal generation.
The region also benefits from ample reserve margins, meaning there is an adequate buffer of spare capacity in the power grid to ensure reliability during peak demand periods or unexpected outages. This surplus capacity further reduces the necessity of relying on coal plants, which are more expensive to run and maintain than their renewable counterparts.
Assessment:
The Lagger would be a better fit for Post-Retirement Reuse if retirement and replacement will not affect resource adequacy even in critical or high-demand hours, transmission constraints are non-existent or manageable, and grid balancing resources to manage higher variability exist. Total system costs are also likely lower than continued coal operation, in both present value and yearly.
However, it would be a better fit for Operational Flexibility if additional firm capacity is still necessary during certain peak hours of the year or if there is surplus generation from renewable energy being curtailed during surplus times. Operational flexibility is preferred when it reduces total system costs by serving as a flexible service or balancing resource to allow for more efficient system utilization.
Lower emissions continuous output (LECO) is not a good choice for The Lagger because it would hinder further integration of clean energy in areas where there is already ample readiness and would likely be cost-ineffective in the long run.
The Pivot:
In a specific region, a coal-fired power plant operates under conditions where renewable energy sources, such as wind and solar, are competitive in cost only in select, prime locations. However, in most other areas within the region, the cost of generating electricity from renewables remains higher than coal for reasons like less favorable natural conditions or the need for additional infrastructure investments.
Despite this, projections indicate that by the 2030s, advancements in technology and expanded infrastructure will make renewable energy fully competitive across a wider range of locations. Moreover, policy measures and market incentives aimed at promoting clean energy are already in place and can likely accelerate this transition. In the short term, however, there are concerns about the reliability of the power supply. Thus, the coal plant continues to play a critical role in providing a stable source of electricity.
Assessment:
The Pivot would be a better fit for Operational Flexibility when the current supply mix can meet the demand during most hours of the year, and there is surplus renewable generation that is being curtailed. In this instance, Operational Flexibility may reduce total system costs by enabling higher renewable utilization; however, market mechanisms and policy incentives must support investments to make the technology or flexible service viable.
If Operational Flexibility is not possible, The Pivot may consider LECO as a repurposing approach when reserve margins are critically thin or renewable energy adoption in the region is progressing slowly (e.g., projects facing significant delays due to transmission development). However, exposure to international market risks should be minimized or there should be mechanisms in place to shield customers from potential impacts as the costs associated with LECO may be greater.
The Pivot would not be an ideal candidate for Post-Retirement Reuse in the near term if retiring the coal plant results in an insufficient power supply and increased electricity costs.
Call to Action
By thoroughly understanding the three approaches to coal plant repurposing and the specific considerations for a coal plant’s context within the grid, regulators and utilities can confidently achieve policy priorities while ensuring reliability and significant emissions reductions. Additionally, evaluating the financial viability and execution feasibility of repurposing projects will enable regulators to establish robust guidelines and enforceable rules. This strategic approach helps ensure that only the most effective, efficient, and feasible repurposing projects are advanced, and that repurposing can credibly support energy transition strategies.
This is the third installment of the Finding (Re)Purpose article series. Explore the full series: