Alstom Empowered by Prospect of Low-Carbon Power Future

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Written by John Egan for Industrial Info Resources (Sugar Land, Texas)--Despite the widely predicted death of cap & trade legislation in the U.S. Congress, Alstom is rapidly moving forward with multiple initiatives that will de-carbonize its North American power business.

The North American unit of Alstom S.A. (EPA:ALO) (Levallois-Perret, France) is in the final stages of selecting a site in the Midwest to build a "sizable" wind turbine manufacturing facility, Pierre Gauthier, president of Alstom U.S., told Industrial Info. The company also hopes to enter the solar business by acquiring a concentrating solar power company. "It would take us 10 years to enter a business through in-house development of technology," Gauthier said. An acquisition would allow Alstom to enter a rapidly growing business much faster than if it were to develop a proprietary technology in-house, he added.

Click on image at right for a breakdown of Alstom's global power business by fuel type.

Alstom also is putting the finishing touches on a $300 million investment in Chattanooga to manufacture large steam turbines, continued Gauthier. The turbines, ranging up to 1,800 megawatts (MW) in size, will be the world's largest. The facility, scheduled to open during the first quarter of 2010, will create 350-400 jobs, he estimated.

Industrial Info interviewed Gauthier at the recent Power-Gen International 2009 convention in Las Vegas, where he was a keynote speaker. Commenting on U.S. climate change policies, he told an estimated 1,000 attendees at the keynote session, "It is not a question of if, but rather when, climate change legislation is coming. We support cap & trade legislation because it leaves important technology decisions to our customers. Cap & trade will provide the industry with much-needed certainty about carbon prices and emissions-reduction targets."

Gauthier disagrees with analysts who have predicted the death of cap & trade legislation in the U.S. Congress. The U.S. House of Representatives narrowly passed the Waxman-Markey bill in June, but the Senate will not be considering its version of the legislation until early 2010. Sponsors of the Senate legislation, Sens. Barbara Boxer (D-Calif.) and John Kerry (D-Mass.), delayed introduction of their bill several times in the autumn. Capitol Hill observers have said that too many Democratic Senators have come out against the bill for it to pass that body. For more on the legislation, see October 2, 2009, article - Boxer-Kerry Draft Climate Bill Seeks Larger Emissions Reductions, Is Silent on Cap & Trade.

In the U.S., Alstom has been reaping the benefits of an effort to lower the Power Industry's carbon-dioxide emissions. Two months ago, at the Mountaineer Power Station in New Haven, West Virginia, Alstom and American Electric Power Incorporated (NYSE:AEP) (AEP) (Columbus, Ohio) inaugurated the first U.S. integrated carbon capture and sequestration (CCS) project at a coal-fired power generator. For more on the project, see article from October 26, 2009 - Power Plant Carbon Sequestration Era Begins at Mountaineer, and June 8, 2009 - Mountaineer CCS Project on Time and on Budget for October Start-up.

Earlier this month, the U.S. Department of Energy awarded AEP $334 million to build a larger, commercial-scale CCS unit at Mountaineer. Dubbed "Mountaineer CCS Unit 2," this future project will be a 235-MW scale-up of Alstom's chilled-ammonia carbon-capture process currently in use at Mountaineer. The project, valued at more than $650 million, will capture and compress approximately 1.5 million tons of CO2 annually and inject it into geologic formations more than one mile under the surface. The project is expected to break ground in 2011 or 2012, he said, and begin operating in 2015. A front end engineering and design (FEED) study is expected to begin in 2010.

"We need a portfolio of solutions" to lower the power industry's carbon emissions and meet future electric demand, Gauthier said at the Power-Gen keynote session. "We need a mix of technology solutions, increased efficiency on the supply and the demand side, and the retrofitting of CCS onto our existing generation fleet. CCS is a must." The Power-Gen International convention drew an estimated 18,000 attendees and more than 1,000 exhibitors, according to a PennWell official. PennWell sponsors the annual convention.

Although he acknowledged that there is no commercial-scale CCS process available today, Gauthier declared that, "the pilot projects are all behind us. We know the technology works, and we will have a commercial-scale product with performance guarantees by 2015. In our business, 2015 is basically tomorrow."

Speaking with Industrial Info, the Alstom U.S. president said the company is seeking to "dramatically" lower the parasitic load of its chilled-ammonia CCS process to between 10% and 15%, compared to today's 20%. When Alstom deployed this process at We Energies' (Milwaukee, Wisconsin) Pleasant Prairie Power Plant, the parasitic load was about 40%, he said. The parasitic load refers to how much of a power generator's output will be used to operate the CCS machinery. Electricity used to operate this machinery is electricity that can't be sold to customers or other utilities. So utilities and their equipment suppliers are working hard to lower the parasitic load of various CCS technologies.

Last month Alstom and Schlumberger Limited (NYSE:SLB) (Houston, Texas) announced that they will collaborate to study the technical readiness of power plants to evaluate the CCS-readiness of power plants. For additional information, see November 11, 2009, article - Alstom and Schlumberger Sign Joint Offering to Evaluate CCS Systems. Europe has mandated that all large power plants must be evaluated for CCS-readiness, starting in 2011. Queensland, Australia, has also announced that it will not grant approval to any new coal-based power plant that is not CCS-ready.

The Alstom executive said its non-U.S. power business has been nearly unaffected by the U.S. recession. Alstom's 200-MW CCS project with TransAlta Corporation (NYSE:TAC) (Calgary, Alberta) recently received hundreds of millions of dollars in Canadian government funding, Gauthier told Power-Gen attendees, adding that Alstom hopes to begin construction "shortly" on a 250-MW oxy-fuel feasibility study with Vattenfall AB (Stockholm, Sweden) at the Swedish company's Jänschwalde lignite-fired generator in Germany.

Asked about the high cost of CCS, Gauthier acknowledged that the projects were quite expensive, but expressed confidence that these costs will steadily decrease with each new commercial deployment. "The cost curve will decline over time and with more widespread deployment, much to my regret as an equipment supplier," he said mischievously.

Industrial Info Resources (IIR) is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy related markets. For more than 26 years, Industrial Info has provided plant and project opportunity databases, market forecasts, high resolution maps, and daily industry news.