The Department of Energy’s Office of Fossil Energy, faced with the expiration of its cooperative agreement with Summit Power Group’s Texas Clean Energy Project (TCEP), on Friday extended the deal by seven weeks, but committed no further funding to the initiative during that time. “[T]he Energy Department’s Office of Fossil Energy granted a no-cost extension to the Texas Clean Energy Project (TCEP) providing additional time for the company to secure financial close and reach key project milestones. The new deadline is July 1, 2016,” a DOE spokesperson told GHG Daily.
Summit is developing TCEP, a 400-megawatt coal integrated gasification combined cycle facility that will incorporate carbon capture and storage. The project, being built outside the city of Odessa, was initially billed at $1.9 billion but is now expected to cost $3.9 billion. The original forecast completion date of June 2014 has been pushed back to after June 2018.
The department awarded Summit a total of $450 million for TCEP. As of February 2016, at which time DOE suspended funding for the project, the department had reimbursed Summit approximately $116 million in project costs, or approximately one-third of its total commitment.
A recent DOE Inspector General’s Office report questioned the leniency with which DOE has handled TCEP. “The Department incorporated milestones into the cooperative agreement that had to be completed by specific dates for the Project to receive additional funding. Despite Summit’s inability to meet established milestones, the Department continued to support and provide funds for the Project,” the report says.
Funding for the project does not seem likely to be reinstated at this point, as DOE has included in its fiscal 2017 budget request the reallocation of $240 million of “prior year balances” that had been earmarked for TCEP. However, neither the recently passed Senate Energy and Water Appropriations Bill, nor the draft House version, includes this language.
The Senate bill, which sets funding for fossil energy research and development at $632 million, does include a general provision to rescind “unobligated balances available from appropriations,” including the $240 million from the Fossil Energy Research and Development program. “The Senate bill would therefore reallocate the TCEP funds through a different but similar mechanism – by sending it back to the Treasury to offset the new FER&D $632M appropriation,” the DOE spokesman said.
