Ongoing litigation over EPA rules raises compliance risks and costs. North Carolina utilities, however, benefited from the state’s forward thinking.
The Capture-Committed Power Plant
Moving coal forward requires a clear path to CCS.
to speculators acquiring the rights of way in order to extract payments from plant owners, which potentially could increase the cost of CCS.
Retrofitting CCS will mean that a portion of the net electric capacity and generation that formerly was available to the grid from the plant no longer will be available because some of the thermal and electric output of the plant will need to be diverted to the capture process. With the further development of CCS, this lost capacity and generation is likely to be lessened, but it still will occur. The plant also might be offline for some period during retrofit, although this may be reduced with an initial design that minimizes the switchover time. In states with regulated wholesale power markets, regulated utilities will need to make this up. This means making a plan that can be implemented when necessary to replace lost energy and capacity. This plan, however, may be modified as capture technology evolves prior to implementation. It should be noted that the interests of both the plant developer and the public are aligned in minimizing this loss.
Finally, from the perspective of the power-plant developer, the capture commitment obviously creates the risks that, by the time CCS is to be implemented, the technology would not be commercially viable, the regulatory framework would not be in place, or the value of CO 2 reductions would not be adequate. Adequate methods for mitigating these risks must be part of the legal-regulatory framework for capture-committed plants (see Figure 1) . The objective isn’t to eliminate these risks, but rather to facilitate sharing them appropriately. Also, the plant developer will have the opportunity to earn a return on the power plant for at least several years prior to the implementation of capture. If the plant is project financed, that could be long enough to pay off a substantial portion of the project debt.
Making it Happen
Implementation of the capture-committed power-plant concept requires actions both to develop the basis for the capture-committed concept and to ensure broader progress on CCS.
Many of the actions necessary to develop the basis for capture-committed power plants lie within the authority of states, and others will be driven by the federal government.
First, policymakers must develop clear guidelines and requirements for capture-committed power plants. Potential plant developers need to know exactly what they need to demonstrate in order to have their plants be permitted and considered capture committed. This will, at a minimum, require action by state utility regulators and it also may require actions by environmental regulators and state legislatures depending on the state regulatory framework. All five of the criteria listed earlier for being capture committed should be addressed.
Second, the industry and its regulators will need to establish mechanisms to implement the CITF. A number of questions need to be answered. What is the total target funding to be reached? How much money should be put into the CITF each period? Who will manage the CITF? In what may it be invested? How should the proceeds from the CITF be