Cost-benefit analysis of coal-plant repurposing in developing countries

Abstract

Countries retiring old, polluting and uneconomical coal plants are looking to repurpose them for productive end uses. In this paper, we undertake a cost-benefit analysis for a representative coal plant (1000 MW) and examine the value proposition of repurposing over decommissioning for coal plants across three repurposing options- solar, battery energy storage system (BESS) and synchronous condenser (SynCON). Our main findings include the following. First, the benefits of repurposing outweigh corresponding costs of decommissioning – while the direct, indirect and total decommissioning costs are $58.11 million, $59.31 million and $117.42 million, respectively; the corresponding repurposing benefits are up to $122.79 million, $605.94 million and $728.73 million, respectively. Second, the direct and indirect system benefits of repurposing cover at least 60.02% of the capital expenditure of the repurposing option(s). Finally, based on high vintage, high energy charges, and key qualitative factors; we identify a prospective list of Indian coal plants suited for repurposing. Our empirical estimation of costs and benefits provide evidence that repurposing makes an economic case for retiring coal plants over plain decommissioning. The framework developed under this analysis could act as a useful guide for developing countries with sizeable coal capacity nearing retirement such as South Africa, Chile and India.