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Luminant to retire 55-year-old, 235-MW gas-fired plant at Trinidad, Texas


Low capacity factor, high O&M costs

Reserve margins depend on solar

Houston — Luminant plans to retire by April 29 its 235-MW natural gas-fired Trinidad Power Plant about 70 miles southeast of Dallas, the Electric Reliability Council of Texas announced late Nov. 30, which elicited diverse opinions Dec. 1 from industry observers regarding market impacts.

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The plant started up in May 1965, but its capacity factor in 2019 was less than 3.2%, according to S&P Global Market Intelligence, which estimated its operating and maintenance cost at almost $118/MWh.

"I do find it surprising mostly due to the expected very tight upcoming reserve margins in the next two summers," said Campbell Faulkner, senior vice president and chief data analyst at OTC Global Holdings, an interdealer commodity broker, in a Dec. 1 email. "Not because that unit alone accounts for a great deal of dispatchable reliability (it's a known laggard), but more so due to the potential to for a large number of dispatched high price hours over the next two summers."

At the ERCOT North Hub, which would include the Trinidad plant, day-ahead on-peak locational marginal power prices averaged $34.19/MWh from June through August, down from $83.45/MWh for the same period of 2019 and $60.98/MWh for the same period of 2018, according to the S&P Global Platts price database.

'Robust reserve margins'

Travis Whalen, a power market analyst at S&P Global Platts Analytics, said the Trinidad retirement "puts a dent in ERCOT's robust reserve margins, but even accounting for that -- and the cancellation of Friendswood II and the Gibbons Creek restart – [it] leaves margins far above what we've seen in recent years."

ERCOT's May Capacity, Demand and Reserves Report indicated that the summer 2021 and 2022 reserve margins – the percentage by which expected resources exceed forecast peakload – would be 17.3% and 19.7%, respectively, but ERCOT is expected to soon release a new CDR.

The 117-MW Friendswood Energy Generation II gas peaker, proposed by Quantum Energy Partners in the Houston area, was canceled in October, and the Texas Municipal Power Agency decided in September to decommission the idle 420-MW Gibbons Creek coal-fired power plant.

Solar projects

"A massive portion of these reserves are meant to be provided by solar projects that are either under construction or have yet to begin construction, so the risks of an unexpectedly tight summer are still very much present," Whalen said in a Dec. 1 email. "But completing even half of the scheduled renewable capacity would leave reserves around where they were going into this summer. That makes the closure of a 55-year-old gas plant with a high heat rate fairly understandable."

Jeff Schroeter, managing director of Genova Power Advisors, a generation developer and consulting firm, said the Trinidad plant's retirement was "not a surprise, and [I] am questioning why it took Luminant so long."

"A single natural gas fired steam boiler plant about 50 years old is a dinosaur," Schroeter said in a Dec. 1 email. "The site was once an essential location on the former Texas Power and Light transmission network before the major 345kV system of the 1980's and previously had been one of the first lignite sites with even older boilers in Texas."