With Ameren Corp. (NYSE: AEE) saying recently it plans to shut the last two operating units at its Meredosia power plant in Illinois, the FutureGen Alliance announced Nov. 28 that it is negotiating an option to purchase portions of the Meredosia site.
The purchase would ber from Ameren Energy Resources Co. LLC (AER), which runs merchant generation operations for Ameren Corp. The purchase option would provide the alliance with the assets needed to continue the development of the FutureGen 2.0 clean coal power project at the site.
In addition to the purchase option, the alliance will write an application requesting that the U.S. Department of Energy approve the alliance to take over AER’s cooperative agreement with DOE. AER has indicated that it will not continue with its cooperative agreement beyond 2011, but it has pledged to provide continued environmental permitting assistance and to maintain the power plant required for the FutureGen 2.0 program in a retrofit-ready condition, the alliance noted.
Late this past summer, AER and the alliance submitted preliminary project cost and design reports to DOE. The preliminary total project cost estimate is $1.65bn, which is composed of $1.1 billion to repower one Meredosia unit, and $550m for a CO2 pipeline and storage site. The program participants have identified several hundred million dollars in potential cost reduction opportunities that will be evaluated over the coming month, the alliance noted.
“Contingent upon DOE’s approval, we have an opportunity to lead the entire program, build on potential cost savings, and bring the power plant on-line in 2016 as planned,” said Ken Humphreys, CEO of the FutureGen Alliance.
Humphreys also said the strong support of the state of Illinois in helping move the program forward. “Two pieces of enabling legislation benefiting FutureGen 2.0 were enacted this year: one related to pipeline siting and one addressing liability management,” he explained. “The State of Illinois is to be commended for its support, which helped substantially move the program forward. As we look ahead, the State and the project will work together on a power purchase agreement.”
The alliance is a non-profit membership organization created to further the development and demonstration of near-zero emissions coal technology. FutureGen 2.0 involves upgrading the Meredosia plant’s Unit 4 with oxy-combustion technology to capture about 90% of the plant’s CO2 emissions. The CO2 would be transported by pipeline and permanently stored underground at a nearby storage site. The FutureGen 2.0 program is supported by a $1bn commitment in federal funding from the American Recovery and Reinvestment Act.
Ameren announced Oct. 24 that the Meredosia and Hutsonville energy centers will cease operating by the end of 2011. The net generating capacity of Meredosia is 369 MW—including one 203-MW, coal-fired unit and one 166-MW, oil-fired unit (Unit 4). Hutsonville has two coal-fired units with a net generating capacity of 151 MW. The closure of these units is mostly due to the expected cost of complying with the Cross-State Air Pollution Rule issued in July by the U.S. Environmental Protection Agency. Ameren said at the time that the Meredosia shutdown would have no impact on the FutureGen project at Unit 4.
Another factor driving the closure of operations at these two facilities is a lack of a multi-year capacity market managed by the Midwest Independent Transmission System Operator. Without the ability to sell capacity several years out, the company cannot afford to make the substantial investment for environmental controls that would be required to keep these units in service, Ameren said.
The alliance is made up of various entities, including U.S. coal producers and electric utilities, who support the advancement of technology to ensure that coal remains part of the country’s future energy mix.