CPS Energy Begins Operations at New Coal-Fired Power Plant in Texas

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Written by John Egan for Industrial Info Resources (Sugar Land, Texas)--One of the nation's few remaining coal-fired power projects under construction has become operational: CPS Energy, the municipal utility serving San Antonio, Texas, dedicated the 750-megawatt (MW) Unit 2 of the J.K. Spruce Power Station on September 20.

Now that Spruce Unit 2 has begun commercial operations, only 14 coal-fired power projects remain under construction in the U.S., according to Industrial Info's research. Only a handful of new coal-fired power plants have begun construction this year, and seven new-build coal-fired power projects are scheduled to kick off in 2011, according to Shane Mullins, Industrial Info's global vice president of product development for the power industry.

"Coal-fired power development continues to face a lot of uncertainty," said Mullins, noting the recent draft Clean Air Transport rule from the U.S. Environmental Protection Agency (EPA) (Washington, D.C.) and its Mercury rule, expected early next year. "These and other environmental uncertainties are keeping coal-fired power development in a state of limbo."

This uncertainty has devastated coal-fired power development in the U.S. in recent years. Across the U.S., 55 coal-fired power projects, representing more than 33,000 MW of new capacity, have been placed on hold in recent years, according to Industrial Info's research. And another 131,000 MW of coal-fired generating capacity has been cancelled, representing a total investment value (TIV) in excess of $200 billion. In addition, 27 projects, representing about 16,250 MW of new capacity, are in various stages of planning.

CPS Energy officials say that Spruce Unit 2 is the first coal-fired power plant to be built in Texas since 1992, when construction began on the utility's Spruce Unit 1. Building Spruce Unit 2 cost $1 billion, which includes more than $250 million in advanced environmental emissions controls that will reduce emissions of sulfur dioxide (SO2), mercury, particulates, and oxides of nitrogen (NOx). However, Spruce Unit 2 has no CO2 emissions control equipment. Construction of Spruce Unit 2 began in 2006; Zachry Construction Corporation (San Antonio) was the engineering, procurement and construction (EPC) firm for the project.

In discussing the new generator, CPS Energy officials have emphasized the low-cost of the coal resource. The Powder River Basic coal burned by Spruce Unit 2 costs about $1.80 per million British thermal units (MMBtu), compared to about $4 per MMBtu for gas.But back when Spruce Unit 2 was being planned, gas briefly hit $12 per MMBtu.

Between May and August, when Spruce Unit 2 was operating in what CPS Energy described as "temporary" mode, the power plant saved customers $45 million, compared to power that would have been purchased from the state grid. Spruce Unit 2 will save CPS Energy residential customers about $4 per month, nearly $50 per year, utility officials estimate.

Now that Spruce Unit 2 is online, coal's share of CPS Energy's fuel mix has increased to about 32%, to about 2,200 MW out of 7,000 MW. Natural gas is burned to generate about 40% of the utility's electricity. About 16% of the utility's electricity comes from nuclear, while renewables, chiefly wind, account for the remaining 11%. CPS Energy serves about 707,000 electric customers in the San Antonio area.

Construction of Spruce Unit 2 is part of the strategic energy plan adopted by CPS Energy's Board of Trustees in June 2003 that sought to provide low-cost, competitively priced electricity; meet environmental commitments; promote energy conservation; and expand renewable energy resources such as wind and solar. CPS Energy also is several years into an aggressive energy conservation campaign, committing $850 million to defer the construction of 771 MW of generating capacity by 2020, which it calculates would save customers up to $2 billion.

And construction is under way on the Blue Wing Solar Park, a 14-MW solar farm that is just west of the CPS Energy power plant campus that includes Spruce Unit 2. That solar station is said to be the largest in Texas. It has a TIV of $50 million, and is scheduled to be complete by the end of 2010.

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