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Written by John Egan for Industrial Info Resources (Sugar Land, Texas)--Mississippi Power Company's Kemper County integrated gasification combined cycle (IGCC) generator, which is under construction in Mississippi, is now estimated to cost $6.1 billion, nearly $2 billion more than originally estimated, according to the most recent progress report the utility filed with the Mississippi Public Service Commission (MPSC) (Jackson, Mississippi). The plant is now scheduled to begin operating in the first half of 2016, Jeff Shepard, a spokesman for Mississippi Power (Gulfport, Mississippi), told Industrial Info.
The 582-megawatt (MW) generator originally was scheduled to begin operations in May 2014, Shepard said in an interview: Why the delays and cost overruns? "This is a first-of-its-kind technology to be deployed at that scale," he said. "Our initial estimates missed the amount of piping, labor, time and material we would need for the gasifier and the gas cleanup portion of the plant."
Mississippi Power's corporate parent, Southern Company (NYSE:SO) (Atlanta, Georgia) will absorb all of the cost overruns.
If $6.1 billion is the final price tag to build the Kemper County plant, it will be among the most expensive power plants ever to be built in the U.S., at a cost of about $10.5 million per megawatt of installed capacity. Building a high-efficiency, natural gas combined-cycle (NGCC) generator, by contrast, costs about $1 million per megawatt of installed capacity.
The Kemper County plant will use proprietary technology called "transport integrated gasification," (TRIG) to turn locally sourced lignite into a synthesis gas, in the process removing about 65% of the carbon dioxide (CO2) before the synthesis gas is combusted. The CO2 will be used in a nearby enhanced oil recovery (EOR) project.
Mississippi Power is required to file monthly progress reports on the Kemper County plant with the MPSC. The most recent progress reports reflect the company's best estimates through the end of October, Shepard said, adding: "We feel IGCC is a way forward for the continued use of coal. We believe fuel diversity is important. We can't rely only on one fuel source--natural gas--for our future supply of electricity." Still, the utility has no plans to build another IGCC plant, he added.
IGCC generators, hailed years ago as a way to remove coal's impurities and CO2, have fallen into disfavor due to cost overruns stemming from problems with scaling up the technology. Duke Energy Corporation (NYSE:DUK) (Charlotte, North Carolina), completed its 630-MW IGCC Edwardsport plant in Indiana about 18 months ago. That project cost about $3.6 billion to build, about $2.6 billion over cost estimates made in 2006. Duke has had to absorb about $900 million of cost overruns. The plant has had a rocky first 18 months of operations.
Last January, Excelsior Energy Incorporated (Minneapolis, Minnesota) cancelled plans to install IGCC technology on an existing power plant in Minnesota. The 603-MW Mesaba Energy Center was projected to cost about $650 million. For more on the challenges of building an IGCC, see October 30, 2013, article - IGCC Plants: So Far, Perils and Problems Exceed Potential and Promise.
In the U.S., one IGCC plant remains in an active state of development: The 400-MW Texas Clean Energy Project (TCEP) in Penwell, Texas. Development of that project stalled after CPS Energy (San Antonio) exercised its option to walk away from the plant at the end of 2013 when the project failed to hit its milestones. But last October, CPS Energy and Summit Power Group Incorporated (Seattle, Washington), developer of the TCEP, reached an agreement where the utility would take its original 200-MW allocation of TCEP when the plant begins operating.
Summit said TCEP is scheduled to achieve financial closing this April and begin construction this summer. Commercial operations are scheduled for 2018. The plant will use carbon capture & sequestration (CCS) technology to capture about 90% of CO2 emissions, which will be shipped in a pipeline to a West Texas EOR project.
"We remained hopeful this project would be built and that CPS Energy customers could take advantage of this low-carbon source of power," said Doyle Beneby, chief executive of CPS Energy, in a statement announcing the agreement. "Adding clean coal to our portfolio dovetails with our strategies to diversify and reduce the carbon intensity of the power we supply to our customers."
"The Kemper County and Edwardsport experiences are huge red flags for the Coal and Power industries as they try to keep coal as a viable option for electric generation in the face of tightening federal environmental regulations," said Brock Ramey, Industrial Info's research manager for North American Power. "I expect the new Congress will be actively engaged in trying to delay or defund President Obama's Clean Power Plan, which would basically prohibit any new coal plant from being built at the same time that asset owners are being compelled to retire tens of thousands of megawatts of coal-fired electric generation. Unless the courts step in and reorient U.S. energy policy, in five years we'll either be sitting in the dark, paying exorbitant electric prices, or both."
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, three offices in North America and 10 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.
The 582-megawatt (MW) generator originally was scheduled to begin operations in May 2014, Shepard said in an interview: Why the delays and cost overruns? "This is a first-of-its-kind technology to be deployed at that scale," he said. "Our initial estimates missed the amount of piping, labor, time and material we would need for the gasifier and the gas cleanup portion of the plant."
Mississippi Power's corporate parent, Southern Company (NYSE:SO) (Atlanta, Georgia) will absorb all of the cost overruns.
If $6.1 billion is the final price tag to build the Kemper County plant, it will be among the most expensive power plants ever to be built in the U.S., at a cost of about $10.5 million per megawatt of installed capacity. Building a high-efficiency, natural gas combined-cycle (NGCC) generator, by contrast, costs about $1 million per megawatt of installed capacity.
The Kemper County plant will use proprietary technology called "transport integrated gasification," (TRIG) to turn locally sourced lignite into a synthesis gas, in the process removing about 65% of the carbon dioxide (CO2) before the synthesis gas is combusted. The CO2 will be used in a nearby enhanced oil recovery (EOR) project.
Mississippi Power is required to file monthly progress reports on the Kemper County plant with the MPSC. The most recent progress reports reflect the company's best estimates through the end of October, Shepard said, adding: "We feel IGCC is a way forward for the continued use of coal. We believe fuel diversity is important. We can't rely only on one fuel source--natural gas--for our future supply of electricity." Still, the utility has no plans to build another IGCC plant, he added.
IGCC generators, hailed years ago as a way to remove coal's impurities and CO2, have fallen into disfavor due to cost overruns stemming from problems with scaling up the technology. Duke Energy Corporation (NYSE:DUK) (Charlotte, North Carolina), completed its 630-MW IGCC Edwardsport plant in Indiana about 18 months ago. That project cost about $3.6 billion to build, about $2.6 billion over cost estimates made in 2006. Duke has had to absorb about $900 million of cost overruns. The plant has had a rocky first 18 months of operations.
Last January, Excelsior Energy Incorporated (Minneapolis, Minnesota) cancelled plans to install IGCC technology on an existing power plant in Minnesota. The 603-MW Mesaba Energy Center was projected to cost about $650 million. For more on the challenges of building an IGCC, see October 30, 2013, article - IGCC Plants: So Far, Perils and Problems Exceed Potential and Promise.
In the U.S., one IGCC plant remains in an active state of development: The 400-MW Texas Clean Energy Project (TCEP) in Penwell, Texas. Development of that project stalled after CPS Energy (San Antonio) exercised its option to walk away from the plant at the end of 2013 when the project failed to hit its milestones. But last October, CPS Energy and Summit Power Group Incorporated (Seattle, Washington), developer of the TCEP, reached an agreement where the utility would take its original 200-MW allocation of TCEP when the plant begins operating.
Summit said TCEP is scheduled to achieve financial closing this April and begin construction this summer. Commercial operations are scheduled for 2018. The plant will use carbon capture & sequestration (CCS) technology to capture about 90% of CO2 emissions, which will be shipped in a pipeline to a West Texas EOR project.
"We remained hopeful this project would be built and that CPS Energy customers could take advantage of this low-carbon source of power," said Doyle Beneby, chief executive of CPS Energy, in a statement announcing the agreement. "Adding clean coal to our portfolio dovetails with our strategies to diversify and reduce the carbon intensity of the power we supply to our customers."
"The Kemper County and Edwardsport experiences are huge red flags for the Coal and Power industries as they try to keep coal as a viable option for electric generation in the face of tightening federal environmental regulations," said Brock Ramey, Industrial Info's research manager for North American Power. "I expect the new Congress will be actively engaged in trying to delay or defund President Obama's Clean Power Plan, which would basically prohibit any new coal plant from being built at the same time that asset owners are being compelled to retire tens of thousands of megawatts of coal-fired electric generation. Unless the courts step in and reorient U.S. energy policy, in five years we'll either be sitting in the dark, paying exorbitant electric prices, or both."
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, three offices in North America and 10 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.
