Progress Energy Carolinas will officially close its Lee power plant near Goldsboro Saturday as the Duke Energy subsidiary shuts down older coal-fired plants and turns to cleaner, cheaper natural gas.
Lee opened the first of its three coal units in 1951 as one of Progress’ first major construction projects after World War II. Four oil-fired units also will be retired Oct. 1.
New gas-fueled units will begin operating early next year. They will join existing units that burn natural gas or oil at the Wayne County Energy Complex.
New federal air standards that go into effect in 2015 make it too expensive to fit many old coal plants with new pollution controls. Demand for electricity has dropped during the economic slump and the price of natural gas has plummeted.
Duke Energy Carolinas, in a 20-year plan filed with the N.C. Utilities Commission last week, said it generated 46 percent of its electricity from coal in 2011. But Duke has retired units at three Carolinas plants, totaling 587 megawatts, and plans to shut down an additional 1,080 megawatts by 2015. It now has about 7,000 megawatts of coal generation in the Carolinas.
After a new 800-megawatt coal unit at its Cliffside plant in Rutherford County starts operating this fall, Duke expects all its new generation through 2032 to come from gas- and oil-fired units or from nuclear power.
One gas-fired unit, at the Buck plant in Rowan County, started up in 2011, and another at its Dan River plant in Rockingham County is nearly complete. Duke also might convert its Lee plant in South Carolina from coal to natural gas.
Retiring old coal plants could boost profits for utilities that operate in regulated states such as the Carolinas, financial analysts at Bernstein Research reported Friday.
Since 2009, Bernstein reported, U.S. utilities have retired about 12 gigawatts of coal-fired capacity, four times as much as in the preceding four years. A gigawatt is 1,000 megawatts, the measure commonly used to describe power plants.
Utilities have announced they will retire 30 gigawatts more by the end of 2015, when two new federal air-pollution measures for power plants take effect. But Bernstein believes a total of 54 gigawatts will actually close.
Bernstein groups Duke among the regulated utilities that could benefit financially from the need to build new power plants. New plants are added to utility rate bases, which are the value of property on which they’re allowed specified rates of return.
Progress Carolinas retired the coal-fired Weatherspoon power plant near Lumberton last October. It plans to also shut down plants near Moncure, Wilmington and Hartsville, S.C., in 2012 and 2013.
Together, the retired plants represent about one-third of Progress Carolinas’ coal-fired fleet. The old plants don’t have advanced pollution controls and will be replaced by natural gas-fired units.