In regions that are “100% powered by renewable energy”, what happens to the traditional power plants?
In: Engineering
I’m in the industry and am part of a group involved in answering this complicated question. I’m not sure if the answer you’re looking for is related to the impacts on jobs, on the local peer grid, the jobs in the local community, the environment, or power bills for customers. It impacts all of them in important ways, and those answers will be nuanced usually.
My area is finance, so I’ll speak to that more specifically. In most of the US, electric utilities are are regulated monopoly, meaning since there is no competitive market the government audits the utility to ensure the rates being charged grant a reasonable profit and recovery of operating and maintenance costs. Accounting rules require plant and equipment to be depreciated over the course of the expected life of the asset. In other words, a utility that built a coal-fired power plant and expected it to operate for 40 years would make financing arrangements which allowed it to collect 1/40 of the cost of the plant through customer’s bills each year + the cost of capital (interest and dividends).
When a major asset like a power plant shuts down ahead of the original depreciation schedule (less than 40 years in this case), power company and the regulator need to make decisions about how to pay off the remaining debts associated with the assets.
Beyond the financial, there are important questions about what makes the most sense as a replacement power resource, requirements for environmental remediation, local workforce retraining resources, etc. Many complicated issues, and every state will address them differently.
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