The coal and power industry cited gasification technology as a way to save coal’s role as the dominant fuel in electric generation as federal limits on carbon dioxide (CO2) emissions appeared imminent, but the technology was unable to gain traction in the face of high capital costs, carbon legislation delay and rising supplies of natural gas.
IGCC plants face a “host of issues,” starting with high construction costs, said Gary Stiegel, director of major projects at the Energy Department’s National Energy Technology Laboratory, which supports CCT. With only two plants being built, Duke and Southern “need to show that they are able to start up and achieve their production capacity within a reasonable time,” Stiegel said.
High construction costs and technical glitches dogged the nation’s first three IGCC projects in the 1990s. Only two still run: TECO Energy’s 250-mw Polk County IGCC in Florida and the 260-mw Wabash River Power Station in Indiana, operated by Duke.
As prospects dimmed for carbon legislation, gas prices declined while shale production rose and recession eroded the need for new generation, many of the nearly 20,000 mw of proposed IGCCs were abandoned with little fanfare. American Electric Power, which once touted IGCC as a “critical” technology for the nation, is no longer pursuing an ambitious plan to build three IGCC plants in the Midwest. NRG Energy, Xcel Energy, ConocoPhillips and MidAmerican Energy Holdings Co. have also dropped IGCC plans.
In 2008, after a long site-selection process, FutureGen, the industry’s showcase IGCC plant featuring carbon capture and sequestration (CCS), lost Energy Department financial support due to soaring cost estimates. A revised FutureGen 2.0 project will not include coal gasification. Now, the lowest gas prices in a decade make it even harder for companies to justify IGCC’s costs for the ratepayers that must pay the tab.
Duke’s Edwardsport IGCC project is expected to produce power by year-end. Cost overruns have boosted its price tag to $3.3 billion from early estimates of less than $2 billion. Under a settlement proposed to satisfy consumer groups, Duke’s Indiana customers will pay just 79% of Edwardsport’s price tag. That will limit the rate increase on Duke’s 790,000 customers in Indiana to 14.5%, down from 22% without the settlement, the utility said.
Construction at the IGCC project run by Southern’s Mississippi Power Co. continues despite an ongoing legal challenge by the Sierra Club. After initially capping Kemper’s cost at $2.4 billion, a divided Mississippi Public Service Commission raised the amount that the utility can recover from its 190,000 customers to a maximum of $2.88 billion. In the most recent monthly update, Mississippi Power said it had spent or committed $1.5 billion to the Kemper project, which was running $366 million over the initial budget.
Expected to be operational in 2014, it will showcase technology developed by another Southern unit, along with KBR Inc. and the DoE, called Transport Integrated Gasification (TRIG), which can be used to gasify lower-quality coal such as the lignite in Mississippi.