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Redevelopment of
Redevelopment of Former Coal Plant Sites
Industrial real estate firms are joining environmental investors to redevelop former coal plant sites in an effort to breathe new life into the communities where they are located.
By Kerry Smith, Informationworks
Environmental Liability Transfer (ELT), which acquired the Meredosia Power Station in November 2019, anticipates a two-year time frame to remediate and repurpose the 75-acre site.
Coal-fired power plants across the United States shut down in 2019 at the second-fastest pace on record. According to the U.S. Energy Information Administration (EIA), plants with a combined total of more than 15,100 megawatts ceased operating nationwide last year — enough to power 15 million homes, and second only to the number of megawatts retired during 2015. The reasons behind these closures are many: decreasing wholesale prices, competition from comparatively cheap and plentiful alternate energy sources such as natural gas, subsidized solar and wind energy, continued compliance with federal energy regulations, and public concern over coal’s effect on climate change.
The decommissioning of U.S. coal-fired power plants, according to the U.S. EIA, is not limited to any one state nor to any one type of coal. The three largest coal plants to cease operation in 2019 were in Pennsylvania (FirstEnergy Bruce Mansfield), Arizona (Navajo), and Alabama (Gorgas).
Energy Companies Seek Out Industry Experts
With even more coal-fired plants projected to come offline in 2020 and beyond, energy companies are seeking industry experts in the decommissioning, site remediation, sales, and redevelopment of these sites. For example, Southern Illinois-based industrial real estate brokerage firm BARBERMURPHY is actively working with coal-fired power plant owners, environmental remediation companies, and others to assist in the decommissioning, sale, and redevelopment of these sites.
BARBERMURPHY principal and broker Steve Zuber, SIOR, has been working with St. Louisbased Commercial Development Company (CDC) in the disposition and repurposing of these plants, most recently the Meredosia Power Station (formerly owned and operated by Ameren Energy Medina Valley Cogen LLC) located 100 miles west of Springfield, Ill. Commercial Development Company’s affiliate, Environmental Liability Transfer (ELT), acquired the plant in November 2019 and anticipates a two-year time frame to remediate and repurpose the 75acre site, which operated as a power plant from 1948 through mid-2011. Permitting, asbestos abatement, waste removal, environmental remediation and restoration, liquidation of surplus machinery and equipment, and demolition of most of the Meredosia plant’s infrastructure is included in ELT’s scope of work. Since 2014, the firm has assumed and abated nearly $2 billion in corporate environmental liability.
“BARBERMURPHY is intently involved in the disposition and repurposing of this site,” Zuber says. “The existing substation and power grid will remain intact, which is a plus for users with high energy requirements. We’re looking at a wide array of different industrial users that can utilize this site, from solar energy producers that want to tie into the power grid to heavy manu-
The
facturing companies that decommissioning of tion in 2012) is enrolled in need power from the grid. this program,” she says. Another attraction is the Illi- U.S. coal-fired nois River for access to barg- Attributes of Power ing services.” The Meredosia site is but power plants, Plant Reclamation Commercial Development one example of plant site re- Company is actively targetdevelopment. Illinois’ identity ing industrial real estate, as one of 16 states with de- according including power plants, for regulated electricity markets redevelopment. Marketing also positions it well in terms to the U.S. EIA, is Director John Kowalik says of remarketing its decom- CDC has purchased seven remissioned coal-fired power plant sites to green-energy not limited tired coal-fired power plants since 2014, representing prospects, says Zuber. “The more than 3,700 megawatts cost of power here in Illinois of retired generation capacis certainly more competitive to any one state ity. “And as energy markets than in many other states,” continue to embrace more he notes. efficient and renewable tech-
According to Illinois Envi- nor to any one nologies, we expect signifironmental Protection Agency cantly more acquisitions over (IEPA) Bureau of Air spokes- the next few years,” Kowalik woman Kim Biggs, Meredo- type of says. sia is in good company with Once a power plant a host of other coal-fired power plants to have ceased coal. closes, beyond the job losses and tax revenue losses, the operations in Illinois over the environmental impact from past nine years. Biggs cited historic plant operations still the 2016 closure of Dynegy needs to be resolved. That’s Midwest Generation LLC’s where CDC steps in. “WithWood River Power Station on out a buyer willing to take the Illinois side of the St. Louis MSA and 10 other plants the risk, old shuttered power plants could remain in a in northern and central Illinois. perpetual state of decay and deterioration,” he explains.
“There are currently 11 coal-fired power plants that “That’s not a good scenario for the utility or the surremain in operation in Illinois,” says Biggs. “Illinois EPA rounding community.” cannot speculate on the future status of the remaining Kowalik agrees with Zuber that the range of potencoal-fired power plants. The agency does not expect to tial end-users of these sites is very broad. “One of the see any new coal-fired power plant developments in Il- incredible attributes of power plant reclamation is that linois’ future.” the real estate typically has built-in infrastructure com-
The 11 operational coal-fired power plants in Illinois, ponents that can be easily reused for new industries… according to the IEPA, include three plants in Baldwin, access to rail, access to waterways and ports, access to Newton, and Peoria owned by Vistra Energy (which ac- highway transportation, access to utility grids, and so quired Dynegy in 2018); NRG’s plants in Pekin, Waukeg- on,” he says. “Additionally, retired power plants are typian and Will County; Electric Energy Inc.’s plant in Joppa; cally located in areas where there is a strong talent base Dominion Energy’s plant in Kincaid; CWLP’s Interstate and the need for good-paying jobs.” plant in Springfield; Southern Illinois Electric Coopera- In addition to the Meredosia, Ill., site, CDC’s plant tive’s plant near Marissa; and Prairie State Generat- redevelopment projects include Brayton Point Power Staing Co., LLC’s plant, also near Marissa in Washington tion (Dynegy) in Somerset, Mass.; Tanners Creek Power County. Plant (Indiana Michigan Power) in Lawrenceburg, Ind.;
As each site is ready for redevelopment, Biggs says Mighty Marysville Power Plant (DTE) in Marysville, Mich.; property owners can enroll in the IEPA’s Voluntary Site Chamois Power Plant (AECI) in Chamois, Mo.; Fox Lake Remediation Program. The program provides IEPA re- Generating Station (Alliant) in Sherburn, Minn.; and Picview, technical assistance, and no further remediation way Power Plant (AEP) in Pickaway County, Ohio. determinations from the agency. “Currently the former Massachusetts is among the states that are doing Crawford Power Station in Chicago (which ceased opera- their part to promote redevelopment of former coal-fired
power plant sites. According to the U.S. EPA, the Massachusetts legislature launched the Plant Revitalization Task Force several years ago and created a plan for redeveloping the Salem Harbor Power Station. The state’s strategy also includes a plan for decommissioning other coal-fired power plants that were facing imminent closure throughout the state. Massachusetts provided $100,000 for each of three reuse studies.
And in Illinois, several years back, former Chicago Mayor Rahm Emanuel appointed a nonprofit environmental policy organization to engage the public and business leaders to forge a plan for redeveloping the previously mentioned decommissioned Fisk and Crawford coal-fired plant in Chicago.
State and federal government brownfields initiatives are another framework within which former power plant sites are being cleaned up and repurposed. At the state level, tax increment financing (TIF) is also a means through which municipalities can cover upfront cleanup and infrastructure costs.
In the private sector, commercial and investment funding mechanisms are often used to finance these redevelopment projects, as is the scenario with CDC and Meredosia, among others. Program-related investments (PRIs) may also fund the redevelopment of power plants, according to the U.S. EPA. PRIs are loans, loan guarantees, or equity investments made by a foundation to support charitable activities. Educational and research institutions may also contribute to redevelopment by conducting initial feasibility analyses and renewing remediation options.
Regardless of the source of funding to make these deals happen, preparing a site for reuse is often a complex, multi-year process that includes not only decommissioning and demolition but also cleaning up contamination existing in materials, soil and/or groundwater. But a tiny town in central Pennsylvania is making it happen. Within the next 60 days, a 38,400-square-foot medical marijuana growing facility is expected to open in Shamokin Dam, Pa., employing 60 people on a 219-acre site upon which stood a coalfired power plant that operated for more than 60 years before closing in 2014.
Pennsylvania publishes detailed “playbooks” for each coal-fired power plant that retires, outlining specific property characteristics for potential investors. Denise Brinley, executive director at the Pennsylvania’s Office of Energy, says these playbooks are proving to be an effective means of marketing the redevelopment of sites like this one. “We don’t want sites with infrastructure like these to be underutilized, eyesores on the community, and offer no real tax revenue or employment opportunities going forward,” Brinley says. “They have great potential for future redevelopment that can breathe new life into communities.” n
