Tamar Hallerman
GHG Monitor
05/11/12
Both the Department of Energy and GE announced plans this week to help lower the cost of coal gasification technology, efforts that if fruitful could help bolster some projects that have stalled or teetered in recent months due to higher than expected costs. This week GE, an early pioneer in gasification technologies, announced it was pairing up with coal giant Shenhua Group for a new joint research venture in China to help reduce the costs of the technology at large-scale. The two said that GE Shenhua Gasification Technology Company Ltd. would conduct R&D work to improve the cost and performance of Integrated Gasification Combined Cycle (IGCC) technology—a higher-efficiency option for coal plants that converts coal to syngas before combustion.
Also this week, DOE said researchers at its National Carbon Capture Center in Alabama found a way to increase net power output and achieve cost savings for IGCC technology by tweaking operating conditions in the system. DOE said researchers tested different commercially-available water-gas shift catalysts, which in the presence of steam help kick start the chemical process that converts carbon monoxide to CO2. During that process, DOE said it found the ideal catalyst to reduce the steam to carbon monoxide ratio needed for conversion while also maximizing efficiencies within the system. The Department said those efficiencies could lead to an increase of net power output equaling 40 MW for a 500 MW IGCC plant while also minimizing the increase to the cost of electricity associated with carbon capture, equaling a cost savings of more than $275 million over a plant lifespan.
Research Could Help Teetering Projects
Ultimately, the research could be a boon to many new-build IGCC projects that have stumbled in recent months due to higher than expected costs. While IGCC technology has been in use for more than a decade, in recent years it has found new life through pairings with carbon capture technology. In particular, the technology is considered ideal for project operators seeking to utilize captured CO2 to subsequently produce sellable products like urea fertilizer.
However, both IGCC and carbon capture technologies are expensive on their own, and when combined can make the economics of a project difficult to push forward for operators looking to receive rate recovery from public utility commissions. This week, Tenaska Energy floated the idea of temporarily deferring the IGCC portion of its Taylorville Energy Center in Illinois in order to gain approval to move forward from the state legislature, which in recent months criticized the project for its $3.5 billion price tag (see related story). Another IGCC project with CCS, Mississippi Power’s Kemper County plant in Mississippi, has experienced problems in recent weeks due to its $2.88 billion rate recovery contract, which opponents say is too high an amount to be passed on to consumers.
Even without a carbon capture component, IGCC is seen as expensive compared to other options available to utilities, particularly in light $2 per mmBtu natural gas prices. In recent months, Duke Energy Indiana acknowledged that its Edwardsport IGCC power plant is $1.3 billion over budget and will likely be forced to pay out of pocket for most project cost increases due to the terms of a recent settlement agreement with consumer groups in the state.
