GE Shuts Down California Natural Gas-Fired Power Plant 20 Years Early

Last Thursday, General Electric Co. (NYSE: GE) filed a decommissioning and demolition plan for its Inland Empire Energy Center, a natural gas-fired electricity generation plant in Riverside County, California. The gas-fired plant opened in 2009. Similar plants have an expected life span of about 30 years, but GE has decided to close this one after just 10 years of operation.

The electricity generated by the plant is sold on the open (unregulated) market and was designed to supply base-load power. In last week’s filing, GE offered this terse explanation of why it is shutting down the plant: “The plant is highly efficient but is not designed for the needs of the evolving California market, which requires fast start capabilities to satisfy peak demand periods.” California aims to source 100% of its electricity needs from renewable sources by 2045 and 50% by 2025.

The plant’s two generating units have a generating capacity of approximately 240 megawatts (MWs) and a base load capacity of about 730 MWs. One unit was shut down in 2017, and GE plans to shut down the other at the end of this year.

GE has agreed to sell the 45.8-acre site to Nova Power, which plans to develop a battery energy storage system at the location. Therein lies GE’s problem.

As prices fall for wind and solar power and battery storage becomes more cost-effective, fossil-fuel powered plants have a hard time competing with renewables that are able more quickly to meet peak demand for electricity with fast-start capabilities. The Inland Empire plant’s H-class GE turbines take several hours to power up, much longer either than the company’s newer HA-class turbines or wind and solar generation supported by battery storage.

In its filing, GE said that retrofitting the plant with the newer turbines “is not economically feasible” in part due to market and regulatory conditions that may “preclude” California utilities “from purchasing energy from fossil fuel plants.” Only one other plant, in Wales, uses the older H-class turbines, and GE now calls this an “orphan technology” that it will no longer support or make spare parts for.

GE did not indicate whether it would take a charge related to the shutdown of the Inland Empire plant, one of the few power plants that the company operates on its own.

Approximately 24 full-time jobs will be lost when the plant closes.

GE stock closed down 1.9% on Monday at $10.28 and traded up about 0.1% in Tuesday’s premarket session at $10.29. The stock’s 52-week range is $6.40 to $13.88 and the consensus price target for the stock is $12.76.