With CCS on back burner what happens to coal-based IGCC ?

AEP pullout from large-scale CCS demo is setback for coal-plant retrofit program, and for hopes of IGCC becoming competitive.

Bloomberg Business Week's July 21 issue features a must-read article entitled "What's Killing Carbon Capture?". It reports on the decision by AEP to cancel plans to demonstrate ammonia-based post-combustion CO2 capture at their 1300MW Mountaineer coal-fired power plant in West Virginia.

Citing the high cost of the project and given the fact that the US government has yet to come up with any policy related to carbon capture and sequestration (or "CCS"), AEP announced that they would not go beyond the current $100 million proof-of-concept pilot project at the plant.

Without the requirement for power plants to employ means of reducing CO2 emissions, what can be said about the future for IGCC technology as the preferred form of coal-based power generation in a carbon-constrained world?

As summarized in past issues of Gas Turbine World magazine, numerous industry and government studies have shown that the cost impact of employing post-combustion CCS on conventional coal plants is so great that IGCC + CCS technology (with pre-combustion CO2 removal) would be elevated to the status of the lowest-cost option for future coal-based power generation.

However, if there is no regulatory requirement, or even some significant cost incentive such as a CO2 tax, to coerce power generators to employ CO2 capture,  the apparent 20+ percent cost premium for the use of IGCC vs. conventional PC  technology would be very difficult to justify.

To many, the high cost of current coal-based IGCC projects such as Duke's Edwardsport and the Mississippi Power Kemper County plant has already spelled the end of IGCC as we knew it.

For a while it appeared that the concept of a 'hybrid IGCC' plants was a winning idea,  where coal-derived SNG would be produced for either power generation or injection into the natural gas pipeline.  The associated power plant would be a stand-alone gas-fired combined cycle unit.

But even those projects (for example, Tenaska's Taylorville "IGCC" in Illinois) are proving too expensive, and with the growth of shale gas production and the precipitous fall of natural gas prices, there is no way for SNG from coal to be competitive in the foreseeable future.

Perhaps the answer is "polygneration" - such as being employed at Summit's 400MW Texas Clean Energy Project, where the sale of plant byproducts, including chemicals and CO2 for enhance oil recovery, appears to be making the project economically viable.  This is yet to be seen, however,  as the project developers pursue bank financing.

To this writer, CCS in any shape or form always seemed to be too expensive  - both in capital costs and in its impact on operating costs - for it to be commercially acceptable.   If there were going to be constraints on CO2 emissions, alternative cheaper ways to reduce CO2 emissions would have to come along
.   

With natural gas combined cycle (NGCC) plants emitting only half the CO2 of coal-based generation, and costing only a fraction to build, they have emerged as the clear winner.  This is particularly true in the US under currently depressed natural gas costs, and is making a lot of sense in Europe too, where there is a cost placed on CO2 emissions and shale gas is beginning to come into play.

The Business Week article on the sorry state of CCS does not come as any surprise, especially, as it points out, with the US government putting any specific climate-change regulations on the back burner. Without a clear government policy, industry will only act in its own best interest.
  

The big question still on the table, however,  is whether or not the US EPA will issue CO2-reduction rules for existing and new coal plants.
  

The agency has already dug a huge hole for itself with its new rules regarding hazardous pollutant emissions and new interstate pollution rules, which together threaten to shut down a large portion of the US coal fleet.
  

As I see it, any ruling regarding CO2 emissions, effectively mandating either CCS retrofit or plant closure, has been put off for at least several years.
  

As AEP has pointed out, they have done their share to host a pilot project to demonstrate that the technology works, now they owe it to their stake holders to put CCS on the shelf while the rules of the game are clarified.  (Recall that AEP also made a big run at IGCC a few years back, only to cancel efforts on several announced projects due to high costs.)

Yes, the requirement to add CCS to coal-based power generation was supposed to "level the playing field" for IGCC to compete.   For now, as long as that requirement doesn't exist, and use of natural gas in a new combined cycle plant is the cheapest way to reduce carbon emissions, IGCC will again have to wait its turn.  Whether or not it ever makes another comeback, is not at all clear.

As described in the May-June issue of Gas Turbine World, this is all points to a sustained period of growth for the gas turbine industry.  Some of the largest coal-based utilities in the US, including AEP, Xcel,  Duke and TVA, are already making plans to shut down their obsolete 50-year old PC plants and replacing them with new high-efficiency NGCC plants.
   

Even if natural gas prices are to increase by 50% or more from where they are today, studies show that a new combined cycle plant would still make a lot more economic sense than to invest billions in retrofitting those old coal plants to clean them up.