Box 42 Replacing Old Power Plants

Almost all energy-using and energy-producing technologies have natural cycles of capital stock turnover, ranging from 3-4 years for computers to 10-20 years for vehicles and 50-150 years for buildings. Power plants, in contrast,get life extensions. Components degrade at different rates, and if there is no required maximum lifetime they are replaced as needed. Some components could be 40 years old and others two months old, providing a disincentive for utilities to ever retire their plants.

In the United States, power plants constructed before a specific year are exempt from air quality standards unless they are "substantially upgraded." Utilities therefore hold on to old inefficient power plants, retrofitting the minimum required to keep plants operating for as long as possible. As a result, the average efficiency of U.S. coal-burning power plants is only 33 percent and the median age is over 40 years. A similar situa tion faces heavy coal-producing and coal-consuming countries like China, India, Indonesia, Australia, and Russia.

Economies that successfully reduce their electricity use will have a comparatively easy time retiring older, less efficient, high-emissions plants as demand falls. Those with stable demand must decide which plants to shut down as they wear out or become obsolete and which technologies will replace them. Rapidly expanding economies with a lot of new capacity might not replace plants for some time, but they must make decisions about future additions.To avoid getting locked further into carbon-intensive fuels, low-carbon plants—distributed or central renewable power capacity—should be installed as new capacity is needed.To accelerate the closing of older plants everywhere, governments must set phaseout dates and provide incentives.

Source: See endnote 62.

away from fossil fuels. This is one reason to use the natural capital stock turnover time to replace older plants when they reach the end of their useful lives. (See Box 4-2.) When existing infrastructure is replaced, as much of the energy embodied in the concrete and steel as possible should be recovered through material recycling.62

Building massive numbers of new wind, solar, geothermal, and biomass plants and other renewable systems will also require large amounts of energy. But the energy payback periods for renewables are declining as efficiencies increase. They are already relatively short—three to eight months (depending on wind speed) for a wind turbine and one to five years for today's solar PV panels (depending on cell type and location), which have a lifetime of close to 30 years. And once most renewable technologies are built, no further energy is required to extract and transport fuels for them to operate.63

Finally, the dramatic improvement in energy efficiency and the matching of supply to demand that is both required and possible today means that the replacement of existing power generators with smaller units capable of delivering comparable energy services with less energy should accelerate in coming years.

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