Utility executives face volatile energy markets, skyrocketing fuel prices, and changing federal energy policies. How are utilities benefiting from the turnaround in energy trading?
Coal Gasification Gets Real
Electric Power Research Institute (EPRI). "If you have invested in the capital, you can use coal at an attractive marginal cost."
Additionally, coal offers advantages in terms of energy security, particularly in the context of plans to import more natural gas in the future.
"I don't think the general public understands the energy risks we face," says John Stowell, a vice president with Cinergy. "They've seen prices at the gas pump, but we haven't seen a hot summer followed by a cold winter, which could drive natural gas prices into the $12 range. That would signal a crisis." In such a situation, coal would become even more vital as a plentiful, indigenous energy resource.
The rub, of course, is pollution, and that's where IGCC shines. Tampa Electric's Polk IGCC facility, for example, has removed 97 percent of the sulfur in its fuel feedstock over its five-year lifespan, and emits less than half the nitrogen oxide (NO x) allowed under the Clean Air Act's New Source Performance Standards. But such performance comes at a significant capital cost-about $200/kW to $300/kW of installed capacity, to be precise.
"There's definitely a cost gap between conventional and IGCC technologies," says Mike Mudd, manager of generation technologies with American Electric Power (AEP). "Based purely on competitive forces, the market will drive me toward the least-cost option."
If coal is the fuel of choice, then the least-cost option is a PC plant. But in the past few years, the calculus has been changing in IGCC's favor.
The biggest factor is global warming, or more specifically, the emerging consensus that the phenomenon is real and calls for action to stop it. While the Bush administration strongly opposes any new regulation around carbon dioxide (CO 2), utility companies are beginning to see it as inevitable.
"You can debate the issue of global warming, but there is a clear need for society to reduce CO 2 emissions from the combustion of fossil fuels," Mudd says. "Strategically, you have to acknowledge the possibility of future regulations."
In present form, IGCC technology's CO 2 emissions performance is good, but not great; it emits about 20 percent less CO 2 than conventional coal-fired technologies, and significantly more than plants burning natural gas. But the conversion process itself simplifies the process of capturing CO 2 before the fuel is burned, making IGCC a favored technology in a carbon-constrained world.
"Because gasification is done under pressure, you have 0.5 percent of the volume of gas to be treated, compared to what you'd have if you just burned the coal and tried to deal with the CO 2," Dalton says. "That high concentration makes it easier and less energy-intensive to remove CO 2 from the gas. That's why people see gasification as the great hope for CO 2 removal."
Specifically, a gasifier lies at the heart of the Future Gen concept, an emissions-free commercial power plant that the Bush administration is promoting for long-term development. And more generally, an IGCC plant would be in a better position to comply with increasing environmental pressures.