Wednesday, June 29, 2011

Texas Clean Energy IGCC being readied for financing

TCEP reaches major milestone with signing MOU for PPA

The Texas Clean Energy Project (TCEP) is nearing the point of lining up a group of banks to arrange project financing.

So says one industry leader close to the project.

"The key to achieving the next big step will be keeping capital costs in line,"  he said.

Last week, TCEP took an important step forward with the signing of a memorandum of understanding (MOU) for the purchase of half of the electricity produced by what will be one of the world’s most advanced and cleanest coal-based power plants. 

Under the 25-year agreement, CPS Energy – a municipally owned utility serving San Antonio, Texas – will purchase electricity generated by the first-of-a-kind commercial clean coal power plant starting in mid 2014.

TCEP, a 400MW IGCC facility located near Odessa, TX will capture 90% of its CO2 – approximately 3 million tons annually – more than any power plant of commercial scale operating anywhere in the world.

The project was originally proposed as the losing candidate from Texas for the ill-fated FutureGen IGCC project, which was to be built in Matoon, IL.

In January 2010, DOE awarded a cooperative agreement to Summit Texas Clean Energy to design, construct, and demonstrate an IGCC power plant that can co-produce high-value products and capture CO2.

The CO2 captured from TECP will be used for enhanced oil recovery (EOR) in the West Texas Permian Basin. EOR is a way to squeeze additional hard-to-recover oil from older fields, and is an increasingly important contributor to U.S. oil supplies.

Additionally, the plant will produce urea, a high-value chemical, and smaller quantities of commercial-grade sulfuric acid, argon, and inert slag, all of which will also be marketed.

Summit has selected Siemens gasification and combined-cycle technology for the project, and Fluor was awarded the EPC contract.

CPS Energy signed the MOU to purchase 200MW from Summit Energy's TCEP, or half of the plant's electric energy output. In announcing the agreement CPS Energy President and CEO Doyle Beneby stated that the IGCC plant will be cleanest coal-fueled power project ever permitted in Texas.

Ironically,  five years ago, the utility decided against building its own IGCC plant and instead invested $1 billion in a new 750MW conventional coal-steam plant that was just completed.  At the time, the utility commented that IGCC was "not ready for prime time".

U.S. EPA Administrator Lisa Jackson said in a statement released at the signing ceremonies that  “San Antonio is stepping up to lead Texas and our nation into a clean energy future....."

On the same day CPS announced that it plans to shut down its two-unit late-1970s vintage  JT Deely coal station  to avoid spending as much as $3 billion for environmental equipment needed to upgrade the 871MW plant to comply with pending EPA regulations.

From DOE Fossil Energy TECH LINE and other sources

Tuesday, June 07, 2011

Kemper County IGCC plant "on schedule and budget"


Construction of Mississippi Power Co.'s Integrated Gasification Combined Cycle (IGCC) power plant in Kemper County is on schedule and on budget, the company's head says.

Last year, the Mississippi Public Service Commission approved the company's proposal for the project and in December, ground was broken.

As a result of a law the Mississippi Legislature passed in 2008, the cost of the plant will be passed on to ratepayers in stages while the project is being built. In its approval for the project, the PSC set a cap for the cost of the plant at $2.88 billion.

In a recent speech given by Mississippi Power chief executive Ed Day he said the company aims to keep the cost below the cap. The goal is to have the plant operating in 2014.

"Internally, we really only talk about $2.4 billion," Day said.

The plant has been fought by the Mississippi Sierra Club, which has concerns over environmental aspects of the project, along with the company's plans to pass construction costs on to ratepayers. The Sierra Club contends the plant is dirty, expensive and unnecessary and that natural gas would have been a better fuel source.

The company contends that the price of natural gas is much less predictable than that of lignite coal, which the plant will use. The company says lignite is abundant in Mississippi and represents the best option.

Day said there's a chance large fuel cost savings by using the coal could result if natural gas prices rise substantially over the next few years. Typically, about 50 percent of a ratepayer's power bill goes toward fuel costs.

"We know what (price) the coal will be mined at, within a small tight range, it's just now a matter of what will gas do, and how high will it go," Day said. "There's got to be a natural fuel savings to the customer over long periods of time. That's kind of what wins the day."

The increase on a customer's power bill could range from as much as 33 percent, according to the company, to as high as 48 percent, according to the Sierra Club.

Mississippi Power has said those increases could be phased in over 10 years.

Editor's note: At $2.4 billion, the nominal 600MW Kemper County plant will cost $4000/kW to build. A new natural gas fired combined cycle plant would cost less than one-quarter of that amount. For the total cost of energy (covering investment, fuel cost and other operating expenses) to be the same, natural gas price would have to climb from the current $4 per million Btu to about four times that level. Although those high prices are paid for natural gas today in places like Japan, plentiful supplies in the US are expected to keep the price low for the foreseeable future.