Energy giant Dynegy announced this week they would close the 60 year old Morro Bay Power plant adding that the site could still have a future – a green future.
Dynegy said in a statement they were advising the State of California that they were“currently evaluating alternatives for the site including developing renewable energy shaping technologies as well as preferred renewable resources, as defined by California laws and regulations, at the site with Starwood Energy Group Global, Inc.”
The natural gas fired plant that uses water from the ocean to cool its turbines was expected to close as a result of state regulations requiring coastal power plants – including the state’s two nuclear power plants – to phase out the use of once-through cooling systems. The process is said to harm aquatic life.
About a year ago Dynegy advised the state it would not upgrade the waterfront plant to a new technology or modernize the aging facility although they are modernizing a similar plant in Moss Landing.
By the end of 2015, the Morro Bay plant has to either eliminate or drastically reduce the amount of seawater it uses for cooling. The Tribune quoted Morro Bay city attorney Rob Shultz as saying earlier this year “I don’t know how they go past 2015.”
It turns out they won’t go past 2015..
This week Houston-based Dynegy, fresh out of bankruptcy for some of its operating units, confirmed the Morro Bay plant will close as soon as February 2014.The company filed their 10Q financial report with the SEC this week and the closure was mentioned in the document.
About 40 are employed at the plant has a nameplate capacity of 1056MW with its rating now at 600MW. The plant has been used recently only in the hot summer months when the state is low on power. The plant no longer has a long term contract to sell electricity and has been running at something like 5% of capacity or less – key reason why it is shutting down. Ironically , the state appears to be low on baseload power these days with the sudden shut down of Santa Onofre and threat to do the same with nearby Diablo Canyon.
For the City of Morro Bay – who leases the plant to the company, it means the loss of $750,000 a year that has gone into their budget.
The big question remains what happens to 50s era hulk of a building and its 110 acres located on the waterfront of Morro Bay’s vibrant Embarcadero.It could be a grim picture for the community of Morro Bay because it’s likely the landmark power plant with its three 450 ft tall stacks will sit mothballed for many years – a huge eyesore for this tourist town.
Green Future?
If the old plant casts a grim shadow it also offers an opportunity as the Dynegy announcement alluded to.
Greenwich Conn-based Starwood Energy has a track record of investing in both renewable and fossil fuel-based power plants including some in California. In September the company announced the sale of some gas fired peaker plants they built.
The company website offers a glimpse of what the company does.”Starwood Energy is a private equity investment firm based in Greenwich, CT that specializes in energy infrastructure investments. Through its existing general opportunity fund, Starwood Energy Infrastructure Fund, LP (“SEIF”) and other affiliated investment vehicles, Starwood Energy manages total equity commitments of approximately $1.2 billion. To date Starwood Energy and its affiliates have committed to energy infrastructure transactions totaling nearly $4 billion in enterprise value. Recent transactions include investments in a combined cycle power plant in Colorado, a 70MW solar photovoltaic project in Ontario, interests in two biomass projects in the eastern U.S., and Hudson Transmission Project, a 660 MW submerged power cable connecting Manhattan to New Jersey that began commercial operation in June 2013.”
The company has also worked with New Jersey-based Ocean Power Technologies,Inc. who specializes in wave power technology. Ocean Power has been struggling to launch some its patented energy producing buoys off of the Oregon coast for several years.
Most recently they announced a deal with Japan to help that country diversify its nuclear power dominated energy portfolio in light of what happened at Fukushima.
According to Ocean Power announced last month – the Japanese Environment Minister has said that Japan’s strategy is to increase the present generating capacity of renewable energy in Japan by more than six times. The Japanese government specifically identified wave energy as a component of this policy, setting a goal of 1,500 MW in new power generation capacity by 2030 using wave and tidal power sources.”
Could Starwood be looking at wave technology off of Morro Bay? PGE and others appeared to give up on the idea off the Central Coast in the past few years.
Morro Bay’s own visionary Tom Fee, who owns Ecobaun,a construction company, spent several years on a plan to retrofit the Morro Bay power plant for a renewable future that included a school collaborating with top universities that would study green energy projects. Fee worked with Dynegy on the concept until 2009 in an office inside the big plant.
Now he is on to other things but worries that people don’t understand that even if it shuts down “ the Moro Bay power plant is not going away any time soon.”
Staring At The Corpse
Some may be happy”we’ve killed the giant but the corpse is still there.”
Fee recites some facts he says people may not be aware of; ”There is 12 million cubic feet of space with a major asbestos problem.” Fee says he has heard the cleanup costs could reach $100 million.
Further he says the lease agreement with the City of Morro Bay allows that Dynegy does not have it clean it up and can mothball the plant for 15 years. After that, the city can become the proud owner of the problem for $1.
Fee says he has visited the waterfront in Baltimore where there are several mothballed water-cooled power plants just sitting there.
Still,Fee offers a vision of how the plant’s problems can be cleaned up over time with a market-based redevelopment of the facility – if there was a cash flow.
“It has a fantastic future if you are practical about it” maintains Fee. You can’t just put some green project on the property without a plan to clean it up, he says.
What could Starwood be looking at for the facility? Fee says several options he has studied might have merit.
Water & Waves
One is to use the reverse osmosis technology already at the plant to generate drinking water from the sea – creating a revenue stream while helping to solve a big problem for a parched California economy.
Secondly, because of its proximity to the sea,kinetic energy from waves – making tidal power has merit although ”it would come at price.” “We’re talking about lots of buoys about the size of a VW in Estero Bay.” He wonders what the surfers fishermen and public think about that.
Generating electricity or water – the product could be sold to the San Joaquin Valley where both are in high demand. A pipeline that once carried oil still connects Morro Bay with the San Joaquin Valley.
In his 2009 proposal Fee offered this vision for the future of the Morro Bay plant.”Situated at the foot of windy coastal foothills, on the shores of the Pacific, beneath plentiful California sun and atop some of the country’s richest geothermal potential, the 12 million cubic foot plant will become the shell for studying and developing advanced power systems to harness the potentials of wind, wave, tidal, solar and geothermal energies; incubating innovation in energy production with the potential to not only supply its own power demand, but to sell clean power to Morro Bay and the region beyond through the existing distribution network.”
Fee works on other major construction projects these days including overseeing the building of the luxury Ayers Hotel in Paso Robles and several school parking lot solar projects.He says the Ayers will have a 400kw solar array.
Other ideas are out there.It could be the renewable option might bring solar power based electricity generated elsewhere – into the facility to make something,say drinking water for example. Alternatively, the plant could use biogas instead of natural gas to power air cooled jet engines to make power. Such a project could build up green credits that enables you to sell the electricity in the California market because it cuts global warming.
A spokesperson for Starwood has yet to respond to our questions about what technology is under consideration.