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Researched by Industrial Info Resources (Sugar Land, Texas)--It's called "the bleeding edge" for a reason. Integrated gasification combined cycle (IGCC) generators hold the promise of using an abundant domestic energy source--coal--to generate electricity with fewer air emissions, reduced water use and less solid waste production. But IGCC projects confront a large gap between potential and reality: Across North America, dozens of IGCC projects worth nearly $100 billion have been cancelled or placed on hold in recent years, the victims of huge capital costs, abundant supplies of natural gas, and low gas prices. With current gas prices of less than $4 per million British thermal units (MMBtu), the question is: Why gasify coal to generate electricity when you could simply burn natural gas?
"IGCC has been around for a number of years," said Brock Ramey, Industrial Info's manager of North American Power research, at a recent Industrial Info Outlook briefing in Jersey City, New Jersey. "Right now in the U.S., we have two IGCCs--one is Edwardsport, an Indiana plant that began generating electricity in June, and the Kemper County Energy Center in Mississippi, which is still under construction.
"In the U.S., 15 more IGCC projects have received their air permits. But here's the deal: The construction cost for an IGCC has ramped up to between $4 billion to $5 billion for a 400-megawatt to 500-megawatt (MW) facility. True, not all those costs are for the actual power generator--only about $500 million to $600 million actually goes to building the power plant. At that price, and given current gas prices, IGCC projects are not economic."
Edwardsport, a 618-MW plant owned by Duke Energy Corporation (NYSE:DUK) (Charlotte, North Carolina), cost about $3.5 billion, which was about $1.5 billion more than originally proposed, and took about two years longer to construct than expected. Duke suffered a black eye when it was accused of acting improperly in an Indiana utility regulatory proceeding involving Edwardsport.
Click on icons at right to view images of the Edwardsport generator.
"Coal has powered Indiana for more than a century," said Doug Esamann, the president of Duke Energy Indiana, in a statement when the plant began commercial operations this past June. "But today's air quality standards require us to use that fuel in a cleaner, more efficient way. Edwardsport turns coal into a cleaner-burning fuel and enables us to continue using an abundant local resource."
"Edwardsport replaces about 500 megawatts of older coal-fired generation that we recently retired or expect to retire soon due to new EPA regulations," Esamann continued. "The average age of coal-fired plants on our Indiana system is 45 years, and this facility is key to modernizing our system and filling the gap left by plant retirements."
Edwardsport was recognized as one of POWER magazine's top plants of the year because the plant "is too important to overlook," and because Duke "decided that commercializing state-of-the-art gasification technology was the right thing to do. Whatever your personal feelings about carbon controls, one must appreciate Duke's single-mindedness in deploying 'bleeding edge' technologies, particularly in an industry customarily uninterested in serial No. 1 projects, particularly those with a nine- or 10-digit price tag."
Some 500 miles south of Edwardsport, construction continues at the Kemper County Energy Facility, a 582-MW IGCC that plans to burn Mississippi lignite and sell its carbon dioxide by-product to enhanced oil recovery (EOR) projects. Mississippi Power Company (Gulfport, Mississippi), a unit of the Southern Company (NYSE:SO) (Atlanta, Georgia), owns the plant, which has received a $270 million grant from the U.S. Department of Energy (DoE) (Washington, D.C.). In addition, the Internal Revenue Service (Washington, D.C.) has approved a total of $412 million in investment tax credits for the project, which is scheduled to come online next May.
The Kemper County IGCC project also has endured scheduling delays, cost overruns and dust-ups at Mississippi Public Service Commission (Jackson, Mississippi). The project's current estimated cost of $4.6 billion is more than double the initial estimate of $1.8 billion made back in 2006. Mississippi utility regulators have capped the project's recoverable $2.4 billion, and Mississippi Power already has written off nearly $1 billion of the plant's construction cost.
Mississippi Power has received approval to increase electric prices 15% to begin recovering the cost of constructing the Kemper County generator. Next year, the Mississippi Public Service Commission is scheduled to hold "prudence" hearings to determine how much of the project costs were prudently incurred, and how much the utility will have to absorb.
The Kemper County project recently hit several important construction milestones, including the first fire of the facility's two combustion turbines (CT). Also, Mississippi Power said, the project's final 230-kilovolt (kV) transmission line was energized in August and is now capable of receiving electricity from the plant. Five new transmission lines and five new substations are being built to carry electricity from the Kemper facility to Mississippi Power customers. The transmission construction phase of the Kemper project is scheduled to be completed by early 2014, when the final 115-kilovolt line is completed.
"Firing up the combustion turbines is an important milestone in both the construction and startup phases of the Kemper County energy facility," said John Huggins, Mississippi Power's vice president of generation development, in a statement. "The Kemper team continues its around-the-clock work to deliver this 21st century technology for the benefit of our customers for generations to come. Employees safely and successfully executed the first fire process and completed all necessary checks and tests to ensure the combustion turbines' capabilities. We are one step closer to the startup of the plant."
IGCC projects in the U.S. are unlikely to move forward until gas prices are much higher and the industry develops some experience constructing and operating this type of generators. The high costs to build an IGCC plant place those generation projects on par with the cost to build a new nuclear power plant, on a cost-per-installed-megawatt basis.
Industrial Info's North American Electric Power Database lists several "active" IGCC projects in the U.S., some with far-off construction start or in-service dates. That database also lists 66 IGCC projects in the U.S. that have been cancelled or placed on hold. Developers have cancelled 56 projects valued at about $65.8 billion. An additional 10, valued at about $30 billion, have been placed on hold. Most of the projects that have been placed on hold are scheduled to be built in Colorado, Texas and Saskatchewan. States with the largest value of cancelled IGCC projects include Illinois, Texas and Wyoming.
View Plant Profile - 1071647 1080388 1066551 1079967 1065047
View Project Report - 3002827 6004783 300104228 1012503 14002854
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, three offices in North America and nine international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities.
"IGCC has been around for a number of years," said Brock Ramey, Industrial Info's manager of North American Power research, at a recent Industrial Info Outlook briefing in Jersey City, New Jersey. "Right now in the U.S., we have two IGCCs--one is Edwardsport, an Indiana plant that began generating electricity in June, and the Kemper County Energy Center in Mississippi, which is still under construction.
"In the U.S., 15 more IGCC projects have received their air permits. But here's the deal: The construction cost for an IGCC has ramped up to between $4 billion to $5 billion for a 400-megawatt to 500-megawatt (MW) facility. True, not all those costs are for the actual power generator--only about $500 million to $600 million actually goes to building the power plant. At that price, and given current gas prices, IGCC projects are not economic."
Edwardsport, a 618-MW plant owned by Duke Energy Corporation (NYSE:DUK) (Charlotte, North Carolina), cost about $3.5 billion, which was about $1.5 billion more than originally proposed, and took about two years longer to construct than expected. Duke suffered a black eye when it was accused of acting improperly in an Indiana utility regulatory proceeding involving Edwardsport.
Click on icons at right to view images of the Edwardsport generator."Coal has powered Indiana for more than a century," said Doug Esamann, the president of Duke Energy Indiana, in a statement when the plant began commercial operations this past June. "But today's air quality standards require us to use that fuel in a cleaner, more efficient way. Edwardsport turns coal into a cleaner-burning fuel and enables us to continue using an abundant local resource."
"Edwardsport replaces about 500 megawatts of older coal-fired generation that we recently retired or expect to retire soon due to new EPA regulations," Esamann continued. "The average age of coal-fired plants on our Indiana system is 45 years, and this facility is key to modernizing our system and filling the gap left by plant retirements."
Edwardsport was recognized as one of POWER magazine's top plants of the year because the plant "is too important to overlook," and because Duke "decided that commercializing state-of-the-art gasification technology was the right thing to do. Whatever your personal feelings about carbon controls, one must appreciate Duke's single-mindedness in deploying 'bleeding edge' technologies, particularly in an industry customarily uninterested in serial No. 1 projects, particularly those with a nine- or 10-digit price tag."
Some 500 miles south of Edwardsport, construction continues at the Kemper County Energy Facility, a 582-MW IGCC that plans to burn Mississippi lignite and sell its carbon dioxide by-product to enhanced oil recovery (EOR) projects. Mississippi Power Company (Gulfport, Mississippi), a unit of the Southern Company (NYSE:SO) (Atlanta, Georgia), owns the plant, which has received a $270 million grant from the U.S. Department of Energy (DoE) (Washington, D.C.). In addition, the Internal Revenue Service (Washington, D.C.) has approved a total of $412 million in investment tax credits for the project, which is scheduled to come online next May.
The Kemper County IGCC project also has endured scheduling delays, cost overruns and dust-ups at Mississippi Public Service Commission (Jackson, Mississippi). The project's current estimated cost of $4.6 billion is more than double the initial estimate of $1.8 billion made back in 2006. Mississippi utility regulators have capped the project's recoverable $2.4 billion, and Mississippi Power already has written off nearly $1 billion of the plant's construction cost.
Mississippi Power has received approval to increase electric prices 15% to begin recovering the cost of constructing the Kemper County generator. Next year, the Mississippi Public Service Commission is scheduled to hold "prudence" hearings to determine how much of the project costs were prudently incurred, and how much the utility will have to absorb.
The Kemper County project recently hit several important construction milestones, including the first fire of the facility's two combustion turbines (CT). Also, Mississippi Power said, the project's final 230-kilovolt (kV) transmission line was energized in August and is now capable of receiving electricity from the plant. Five new transmission lines and five new substations are being built to carry electricity from the Kemper facility to Mississippi Power customers. The transmission construction phase of the Kemper project is scheduled to be completed by early 2014, when the final 115-kilovolt line is completed.
"Firing up the combustion turbines is an important milestone in both the construction and startup phases of the Kemper County energy facility," said John Huggins, Mississippi Power's vice president of generation development, in a statement. "The Kemper team continues its around-the-clock work to deliver this 21st century technology for the benefit of our customers for generations to come. Employees safely and successfully executed the first fire process and completed all necessary checks and tests to ensure the combustion turbines' capabilities. We are one step closer to the startup of the plant."
IGCC projects in the U.S. are unlikely to move forward until gas prices are much higher and the industry develops some experience constructing and operating this type of generators. The high costs to build an IGCC plant place those generation projects on par with the cost to build a new nuclear power plant, on a cost-per-installed-megawatt basis.
Industrial Info's North American Electric Power Database lists several "active" IGCC projects in the U.S., some with far-off construction start or in-service dates. That database also lists 66 IGCC projects in the U.S. that have been cancelled or placed on hold. Developers have cancelled 56 projects valued at about $65.8 billion. An additional 10, valued at about $30 billion, have been placed on hold. Most of the projects that have been placed on hold are scheduled to be built in Colorado, Texas and Saskatchewan. States with the largest value of cancelled IGCC projects include Illinois, Texas and Wyoming.
View Plant Profile - 1071647 1080388 1066551 1079967 1065047
View Project Report - 3002827 6004783 300104228 1012503 14002854
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, three offices in North America and nine international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities.
