Friday, March 16, 2012

Gasification & IGCC News:

Harsh Reality in Mississippi
Setback for Clean Coal and
IGCC Power Generation

Mississippi Supreme Court 
reverses PSC approval of 
Kemper County IGCC plant

The writing was on the wall
Even with the plant already under construction, issues regarding the cost and need for the plant persisted.   On March 16 the harsh reality came home to roost.  The high cost of a coal-based Integrated Gasification Combined Cycle (IGCC) power plant, especially in the face of cheap natural gas and low demand, has abruptly caused a major setback for the Kemper County IGCC project in Mississippi.

In a 9-0 vote the state supreme court  reversed an approval by the Public Service Commission for the $2.8 billion 582MW power generation project.

In its decision, the court said that the May 2010 approval failed to demonstrate that the plant would benefit the utility's customers, as required by law, and sent the case back to the PSC.

Plant already under construction
Mississippi Power is already building the 582-megawatt the plant, which had been awarded more than $680 million in federal grants and tax incentives, including $270 million from the U.S. Department of Energy's clean coal power initiative.

The status of these federal funds are unknown, and the DOE is yet to issue a statement.

Mississippi Power officials said that they were reviewing the court ruling but declined further comment, according to wire services.

Sierra Club Behind Challenge
The Sierra Club, which challenged the PSC approval to build the plant commented that ruling "has dealt a severe blow to the project in the sense that they (Mississippi Power) are back to square one."

"It's going to be very difficult for an unbiased observer to say that this plant is a good idea given the current state of the energy market, the natural gas market and the economy," said a Sierra Club lawyer.

A distinct possibility exists that the plant will ultimately go forward as a natural-gas fired combined cycle, using the Siemens gas turbines already purchased. There could be plans designed into the plant for future conversion to IGCC using Mississippi lignite feedstock when economic conditions can justify it.    It is noted that this is only speculation, and that neither the PSC nor Southern Company has as yet made any statement in this regard.

PSC does 'flip-flop'
Mississippi Power is the smallest utility in the Southern Company system, and has a customer base of less than 200,000.    In 2010, the three-member PSC initially ruled that the company failed to prove that the costly plant would benefit its customers.

About a month later, however, the commission voted 2-1 to allow the plant to be built under revised conditions, including raising the cost cap by nearly $500 million to $2.88 billion (almost $5000 per net kW).

The lone Mississippi PSC commissioner who voted against the project both times, called Thursday's Supreme Court ruling "a major victory" for Mississippi Power customers.

"Untried technology"?
The dissenting commissioner, Brandon Presley, claimed that the plant is based on using "untried technology," and that "the customers (of Mississippi Power) have all the risks along with a 45 percent rate hike to boot."

The plant is designed to use a gasification technology developed by Southern Co and KBR (Kellogg Brown & Root) to burn Mississippi lignite. The so-called TRIG (Transport Integrated Gasification) design is based on long-proven catalytic cracking tower design used in refineries, but has, to date, operated as a coal gasifier only at small scale at the DOE advanced systems test facility in Wilsonville, Alabama.

However, according to a September, 2009 release,  and subsequent updates, it was expected that the first commercial-scale TRIG gasifier would be operating in Guandong Province, China before the end of 2011.

Current information on the actual status of the Guandong project is still being researched.