U.S. Coal-Fired Power Development: Down But Not Out

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Written by John Egan for Industrial Info Resources (Sugar Land, Texas)--For developers of coal-fired power generation, 2010 was a difficult year, and 2011 looks to be more of the same. Long-sought legislative clarity on carbon dioxide emissions proved elusive, as Congress was consumed by lengthy debates over the BP oil spill, the economy, and reforms to the health care and financial systems. Despite the Obama administration's prodding and the potential for the Environmental Protection Agency to begin regulating carbon dioxide emissions under its authority in the Clean Air Act, nothing could move energy legislation on Capitol Hill in 2010.

The lack of clarity about carbon dioxide regulations, the EPA's Transport Rule, and the EPA's pending draft regulations on mercury emissions, among other factors, put development of new-build coal-fired power plants in the U.S. in a state of limbo during 2010. As of September, not a single new coal-fired power project has begun construction this year. Right now, Industrial Info is tracking 14 coal projects under construction in the U.S., representing approximately 9,200 megawatts (MW) of new generating capacity. These are continuations of projects that began work years earlier. Two more projects, with a total capacity of 1,250 MW, are in advanced stages of development. Another 25 projects, representing more than 15,000 MW of new capacity, are in various stages of planning. And 55 projects, representing over 33,000 MW of new capacity, have been placed on hold.

The Prairie State Energy Campus in Marissa, Illinois, is one of the few coal-fired projects still under construction. In many ways, the plant is a microcosm of the state of coal-fired power development in late 2010.

Prairie State is a $4 billion power plant and coal mine complex. When completed, it will include a two-unit, 1,600-MW plant. The first unit is scheduled to go online in late 2011. Environmental control equipment occupies nearly half of the complex's footprint. State-of-the-art scrubbers will remove most of the sulfur dioxide and nitrogen oxides from the generators' flue gas stream. The facility is in compliance with Illinois mercury emissions limits. The supercritical boilers will produce 15% less carbon dioxide than traditional pulverized coal boilers. But Prairie State is not required to install CO2 emissions controls. Locals welcome the direct and indirect economic benefits created by the energy complex. But environmentalists have kept Prairie State in their crosshairs, arguing that it should have CO2 emissions controls.

Environmental organizations continued their war on coal during 2010, and Prairie State remains one of their high-value targets. The "Beyond Coal Campaign," organized several years ago by the Sierra Club and including the participation of a number of environmental groups, has a goal of stopping all new coal-fired power plants. In hearings held by Congress and state public utility commissions, increasingly sophisticated environmental advocates called attention to the financial, environmental, and regulatory uncertainties posed by construction of new coal-fired power plants. The "Beyond Coal Campaign" claims to have killed 133 of 237 proposed coal-fired power projects in the U.S. Industrial Info's data shows that 131,000 MW of U.S. coal-fired generating capacity has been cancelled in recent years, representing a total investment value (TIV) in excess of $200 billion.

While the tide of public opinion has been turning against coal, time still may be on the side of coal-fired power developers. Roughly half of the nation's electricity still comes from coal-fired power plants. The U.S. has roughly 328,000 MW of operating coal-fired power plants, but more than one-third of that capacity--117,397 MW--is more than 40 years old. Among these senior citizens, more than 600 smaller coal-fired generators totaling more than 60,000 MW have installed no emissions control equipment to comply with EPA rules that are expected to be finalized by yearend 2011. Most analysts expect that many of these older, higher-emitting plants will be shut down, once the industry knows the environmental standards to which these plants will be held. According to Industrial Info's research, more than 14,000 MW of coal-fired capacity are scheduled to be retired over the next five years. Other sources see an even greater wave of coal power retirements, as much as 27,000 MW.

A sizable portion of the nation's coal fleet is nearing retirement age, and little is being done today to replace those aging plants. During 2010, a sizable amount of natural gas power development took place. But few who lived through the last gas-fired power build-out a decade ago want to repeat that experience, where the economics of many projects were destroyed when gas soared from $4 to $15 per million Btu. And despite the popular green luster of wind power and solar power, few expect those power sources to generate more than a few percentage points of the nation's electricity over the next decade.

Although there has been no ground broken on new-build coal generation projects this year, 340 projects at coal-fired power plants, valued at more than $23 billion, are scheduled to begin construction in 2011. This sum includes $16 billion in new Clean Coal projects, $5 billion in environmental retrofits (including carbon capture & sequestration), over $1.5 billion in major maintenance work, and nearly $1 billion in efficiency upgrades.

During 2010, coal power developers and utilities keenly tracked the progress of various post-combustion projects to capture and store power-plant carbon dioxide emissions, as finding a cost-effective means to capture and store power plant CO2 emissions is at the heart of keeping coal alive as a source of electricity.

AEP's Mountaineer project, which became operational in late 2009, was the nation's first integrated CO2 capture and sequestration project at a coal-fired power plant. That project, located in New Haven, West Virginia, is using Alstom's chilled ammonia process. The Mountaineer CCS project is receiving about $334 million in Department of Energy funding. Early this year, NRG's Parish Generating Station in Houston, received notice of a DOE award of up to $154 million to demonstrate capturing CO2 emissions using Fluor's Ecoamine FG Plus as a reagent. Carbon dioxide captured there will be used in enhanced oil recovery (EOR) project. NRG expects this CCS project to begin operating in 2013.

Pre-combustion technologies to lower carbon dioxide emissions got a huge boost in August when the DOE announced it was restarting its long-stalled FutureGen project, but the new version, dubbed "FutureGen 2.0," went in a completely new direction: Repower Ameren Corporation's shuttered 200-MW Meredosia Unit 4 with advanced oxy-combustion technology. The project also includes construction of a 175-mile pipeline that will transport CO2 from the generator for injection underground. The prior iteration of FutureGen called for construction of a Greenfield integrated gasification combined-cycle (IGCC) power plant in Mattoon, Illinois, coupled with a CCS system.

The current outlook for coal-fired power development is reminiscent of the title character in the Rocky movies: despite vicious attacks and devastating body blows, he nonetheless finds ways to triumph over opponents and fulfill his destiny. It's a stirring image for an industry that has been under attack throughout 2010.

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