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Written by John Egan for Industrial Info Resources (Sugar Land, Texas)--Last week, American Electric Power (NYSE:AEP) (Columbus, Ohio) said, "thanks, but no thanks," to a large grant from the Department of Energy (DoE) (Washington, D.C.), and instead terminated plans to build a commercial-scale carbon capture and sequestration (CCS) project at its Mountaineer Power Station in West Virginia.
AEP's decision is a significant setback for CCS projects, which capture carbon dioxide emissions from power plants and inject them underground for long-term storage. CCS is widely seen as a technology that could help the electric power industry continue its reliance on coal to generate electricity, while offsetting carbon dioxide emissions. About 50% of the electricity generated in the U.S. comes from coal.
AEP has a large stake in the future shape and timing of U.S. climate-change policy--about 65% of its 39,000 megawatts of electric generation comes from coal plants. AEP is one of the largest electric utilities in the country.
The future of CCS, at least in the U.S., may now be in question. The commercial-scale CCS project at Mountaineer, and an earlier CCS technology validation project there, were closely watched by electric utilities, technology vendors, elected officials, coal companies and environmentalists. The AEP projects were among the most prominent of several CCS projects in the U.S. As recently as February of this year, AEP reiterated its commitment to build a commercial-scale CCS project at Mountaineer, despite negative rulings from utility regulators in Virginia and West Virginia.
But AEP's decision, announced July 14, changes all that. "We are placing the project on hold until economic and policy conditions create a viable path forward," Michael G. Morris, AEP's chairman and chief executive, said in a statement last week. "With the help of Alstom, the Department of Energy and other partners, we have advanced CCS technology more than any other power generator with our successful two-year project to validate the technology. But at this time it doesn't make economic sense to continue work on the commercial-scale CCS project beyond the current engineering phase."
In 2009, the DoE awarded AEP a grant of up to $334 million to help pay for constructing a commercial-scale CCS system at the utility's 31-year-old, 1,300-megawatt (MW), coal-fired Mountaineer power plant in New Haven, West Virginia. That system would capture at least 90% of the carbon dioxide (CO2) from 235 MW of the plant's generating capacity. The captured CO2, approximately 1.5 million metric tons per year, would be treated and compressed, then injected into suitable geologic formations for permanent storage approximately 1.5 miles below the surface. The estimated cost to build the commercial-scale project was $668 million.
In his statement, Morris said AEP was "in a classic 'which comes first?' situation. The commercialization of this technology is vital if owners of coal-fueled generation are to comply with potential future climate regulations without prematurely retiring efficient, cost-effective generating capacity. But as a regulated utility, it is impossible to gain regulatory approval to recover our share of the costs for validating and deploying the technology, without federal requirements to reduce greenhouse gas emissions already in place. The uncertainty also makes it difficult to attract partners to help fund the industry's share."
Federal legislation to limit power-plant emissions of carbon dioxide died in 2010, when the Senate was unable to pass companion legislation to the Waxman-Markey bill that had narrowly passed the House of Representatives. Elections held in 2010 brought a new crop of lawmakers to Capitol Hill that questioned the science underpinning climate change. Since being seated in January of this year, the new leaders in the House have prevented any consideration of climate-change legislation and clashed repeatedly with the U.S. Environmental Protection Agency (EPA) (Washington, D.C.) over regulation of carbon dioxide emissions from power plants.
One senior Obama administration official told The New York Times, "This is what happens when you don't get a climate bill."
Franklin Orr, director of Precourt Institute for Energy at Stanford University, told Reuters, "it is unlikely that large-scale implementation of CCS will take place in the absence of some sort of regulatory structure that requires it and allows companies that put projects in place to recover the costs."
Sen. Jay Rockefeller (D-West Virginia), who had helped AEP obtain federal funding for Mountaineer's commercial-scale CCS project, pointed out that the utility had invested more than $100 million of its own money in the smaller technology validation project. He praised the efforts of AEP and its technology partner, Alstom S.A. (EPA:ALO) (Levallois-Perret, France). Because of the efforts of AEP and Alstom, he said, "we have learned a great deal that will help us get closer to fully deploying this important technology. Unfortunately, the financing to continue this demonstration project ... just isn't available. Nonetheless, I sincerely hope and believe that it will lead to other opportunities, and eventually help pave the way to a bright energy future for West Virginia and build jobs in our state."
In October 2009, AEP began operating a smaller CCS technology validation project at Mountaineer, which the utility subsequently called a success. The utility said the project was the world's first fully integrated carbon capture and storage project. It captured up to 90% of the CO2 from a slipstream of flue gas, equivalent to 20 megawatts of generating capacity, and injected it into suitable geologic formations for permanent storage approximately 1.5 miles below the surface. The validation project received no federal funds. AEP's Morris said that the lessons learned from the validation project were incorporated into the Phase I engineering for the commercial-scale project.
Between October 2009 and May 2011, the life of the validation project, the CCS system operated more than 6,500 hours, captured more than 50,000 metric tons of CO2 and permanently stored more than 37,000 metric tons of CO2. For more on the Mountaineer technology validation project, see the October 26, 2009, article - Power Plant Carbon Sequestration Era Begins at Mountaineer.
View Plant Report - 1013868
View Project Report - 24001398
Industrial Info Resources (IIR) is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. IIR'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.
AEP's decision is a significant setback for CCS projects, which capture carbon dioxide emissions from power plants and inject them underground for long-term storage. CCS is widely seen as a technology that could help the electric power industry continue its reliance on coal to generate electricity, while offsetting carbon dioxide emissions. About 50% of the electricity generated in the U.S. comes from coal.
AEP has a large stake in the future shape and timing of U.S. climate-change policy--about 65% of its 39,000 megawatts of electric generation comes from coal plants. AEP is one of the largest electric utilities in the country.
The future of CCS, at least in the U.S., may now be in question. The commercial-scale CCS project at Mountaineer, and an earlier CCS technology validation project there, were closely watched by electric utilities, technology vendors, elected officials, coal companies and environmentalists. The AEP projects were among the most prominent of several CCS projects in the U.S. As recently as February of this year, AEP reiterated its commitment to build a commercial-scale CCS project at Mountaineer, despite negative rulings from utility regulators in Virginia and West Virginia.
But AEP's decision, announced July 14, changes all that. "We are placing the project on hold until economic and policy conditions create a viable path forward," Michael G. Morris, AEP's chairman and chief executive, said in a statement last week. "With the help of Alstom, the Department of Energy and other partners, we have advanced CCS technology more than any other power generator with our successful two-year project to validate the technology. But at this time it doesn't make economic sense to continue work on the commercial-scale CCS project beyond the current engineering phase."
In 2009, the DoE awarded AEP a grant of up to $334 million to help pay for constructing a commercial-scale CCS system at the utility's 31-year-old, 1,300-megawatt (MW), coal-fired Mountaineer power plant in New Haven, West Virginia. That system would capture at least 90% of the carbon dioxide (CO2) from 235 MW of the plant's generating capacity. The captured CO2, approximately 1.5 million metric tons per year, would be treated and compressed, then injected into suitable geologic formations for permanent storage approximately 1.5 miles below the surface. The estimated cost to build the commercial-scale project was $668 million.
In his statement, Morris said AEP was "in a classic 'which comes first?' situation. The commercialization of this technology is vital if owners of coal-fueled generation are to comply with potential future climate regulations without prematurely retiring efficient, cost-effective generating capacity. But as a regulated utility, it is impossible to gain regulatory approval to recover our share of the costs for validating and deploying the technology, without federal requirements to reduce greenhouse gas emissions already in place. The uncertainty also makes it difficult to attract partners to help fund the industry's share."
Federal legislation to limit power-plant emissions of carbon dioxide died in 2010, when the Senate was unable to pass companion legislation to the Waxman-Markey bill that had narrowly passed the House of Representatives. Elections held in 2010 brought a new crop of lawmakers to Capitol Hill that questioned the science underpinning climate change. Since being seated in January of this year, the new leaders in the House have prevented any consideration of climate-change legislation and clashed repeatedly with the U.S. Environmental Protection Agency (EPA) (Washington, D.C.) over regulation of carbon dioxide emissions from power plants.
One senior Obama administration official told The New York Times, "This is what happens when you don't get a climate bill."
Franklin Orr, director of Precourt Institute for Energy at Stanford University, told Reuters, "it is unlikely that large-scale implementation of CCS will take place in the absence of some sort of regulatory structure that requires it and allows companies that put projects in place to recover the costs."
Sen. Jay Rockefeller (D-West Virginia), who had helped AEP obtain federal funding for Mountaineer's commercial-scale CCS project, pointed out that the utility had invested more than $100 million of its own money in the smaller technology validation project. He praised the efforts of AEP and its technology partner, Alstom S.A. (EPA:ALO) (Levallois-Perret, France). Because of the efforts of AEP and Alstom, he said, "we have learned a great deal that will help us get closer to fully deploying this important technology. Unfortunately, the financing to continue this demonstration project ... just isn't available. Nonetheless, I sincerely hope and believe that it will lead to other opportunities, and eventually help pave the way to a bright energy future for West Virginia and build jobs in our state."
In October 2009, AEP began operating a smaller CCS technology validation project at Mountaineer, which the utility subsequently called a success. The utility said the project was the world's first fully integrated carbon capture and storage project. It captured up to 90% of the CO2 from a slipstream of flue gas, equivalent to 20 megawatts of generating capacity, and injected it into suitable geologic formations for permanent storage approximately 1.5 miles below the surface. The validation project received no federal funds. AEP's Morris said that the lessons learned from the validation project were incorporated into the Phase I engineering for the commercial-scale project.
Between October 2009 and May 2011, the life of the validation project, the CCS system operated more than 6,500 hours, captured more than 50,000 metric tons of CO2 and permanently stored more than 37,000 metric tons of CO2. For more on the Mountaineer technology validation project, see the October 26, 2009, article - Power Plant Carbon Sequestration Era Begins at Mountaineer.
View Plant Report - 1013868
View Project Report - 24001398
Industrial Info Resources (IIR) is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. IIR'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.
