FutureGen 2.0 coal project working through DOE, Illinois reviews

The FutureGen 2.0 clean coal project in Illinois is going through two Phase 2 approval processes, one at the U.S. Department of Energy related to project funding, the other at the Illinois Commerce Commission related to sales of the power to be produced by the project.

Following the successful completion of a first phase, DOE on Feb. 4 announced the beginning of Phase II of project development with a new cooperative agreement between the FutureGen Industrial Alliance and DOE for this innovative carbon capture and storage (CCS) project in Illinois.

“The Department of Energy is committed to the demonstration of carbon capture and storage technologies. We believe FutureGen 2.0 is an important step in making economic, commercial scale CCS a reality,” said DOE Secretary Steven Chu, who will soon leave that job. “The project is an important part of a portfolio of approaches we are pursuing to reduce carbon emissions from existing coal-fired power plants and perhaps other large, localized CO2 emitters.”

“Today’s announcement from the Department of Energy that the FutureGen project is moving forward with Phase II shows a strong commitment from the Obama Administration to create jobs and demonstrate the future of low-carbon-emission coal power right here in central Illinois,” said Sen. Dick Durbin, D-Ill. “I thank Governor Quinn and all of the Illinois and industry stakeholders for their continued leadership on this issue. I join them in remaining committed to making FutureGen a reality, and to putting Illinois and the United States at the forefront of cutting-edge technology to improve the environment and create good-paying jobs.”

“We have shown time and again that FutureGen is welcome, and the project will succeed in Illinois,” said Illinois Gov. Pat Quinn. “We look forward to working with all of the project partners to see that FutureGen 2.0 will move forward, and that the reality of this first-of-its-kind project will be realized in Illinois.”

In cooperation with the FutureGen project partners, DOE is investing in the upgrade of a coal-fired power plant in Meredosia, Ill., with oxy-combustion technology, with a plan to capture more than 1 million tons of CO2 each year—more than 90% of the plant’s carbon emissions. Other emissions will also be reduced to near-zero levels.

Instead of capturing CO2 in the presence of a large amount of nitrogen, the oxy-combustion approach extracts the oxygen from air before combustion, greatly reducing the cost of carbon capture at the exhaust stack, DOE noted. This project will test oxygen separation technology and exhaust processing technology after combustion at power plant scales. Using proven pipeline technology, the CO2 will then be safely transported and securely stored underground at a nearby storage site. This groundbreaking project will help pave the way for other cleaner and more sustainable advanced coal-burning power plants.

The completion of the FutureGen 2.0 project’s first phase included important technical and financial milestones like the identification of a sequestration site in Morgan County, Ill., preliminary characterization and test drilling, and a commitment from the Illinois Commerce Commission to cover the FutureGen 2.0 project’s output under its power purchasing plans. The cooperative agreement announced Feb. 4 with the FutureGen Industrial Alliance will build on these successes to begin preliminary design, pre-construction and engineering for the retrofitted, near-zero emission coal-fired power plant.

Illinois Commerce Commission works on power sales issues

In the meantime, on Jan. 9 the Illinois Commerce Commission began the second phase of a two-phase review process related to sales of power from the FutureGen 2.0 plant. In a Feb. 1 ruling, a commission administrative law judge noted that by a Jan. 30 deadline, various entities had filed comments in this case, including: the Illinois Power Agency (IPA); Ameren Illinois; commission staff; the FutureGen Industrial Alliance; Commonwealth Edison; and the Illinois Competitive Energy Association. The ALJ ordered that workshops to try and work out issues be held on Feb. 20 and Feb. 27 as proposed by staff, ComEd and Ameren Illinois, or on such other dates and locations as are agreeable to the parties.

In its Jan. 30 filing, the FutureGen Alliance outlined a proposed case schedule and urged quick action, since the project is under DOE deadlines and there is a risk of losing project funding if it is delayed.

In its Jan. 30 filing, the Illinois Power Agency, which has the responsibility to basically place the power from the plant with Illinois customers, said issues to be resolved in this Phase 2 proceeding include:

  • Mandatory provisions within Section 1-75(d)(3) of the Illinois Power Agency Act (IPA Act) that are not associated with the statutory “initial clean coal facility” – This item was explicitly raised by the commission’s Dec. 19, 2012, final order in phase one of this case, and appears to remain in controversy unless a resolution arises in a workshop.
  • Preapproved total capital costs – This item was explicitly raised by the Dec. 19 final order. The IPA notes that it has provided cost benchmark information to staff pursuant to Section 1-75(d)(5) of the IPA Act, which (while protected from disclosure to litigants) will inform any commission determination of reasonableness.
  • Staff’s recommendations for annual audits, reconciliations, and periodic benchmark tests – This item was explicitly raised by the final order.
  • The nature of Alternative Retail Electric Suppliers (ARES) obligations to Ameren and ComEd regarding FutureGen contracts – This item was not explicitly raised in the final order, but a similar sub issue is being raised in a joint motion for clarification filed by FutureGen, Ameren, and ComEd. The IPA is not sure that the parties agree on the mechanics of staff’s “Alternative Proposal.” To the extent that consensus does not exist, the IPA believes that the parties should address the ARES role.
  • Equitable and Competitively Neutral Allocation of Costs – This item was not explicitly raised in the final order, but the IPA is not sure if all parties agree on the proper mechanisms for equity and competitive neutrality. To the extent that consensus does not exist, the IPA said it believes that the parties should address any impediments to competitive neutrality or equitable allocation of costs under the Sourcing Agreement.

Phase 1, approved by the commission on Dec. 19, consisted of commission consideration of approval of the power sourcing agreement as to form and the rate formula.

The IPA Act contains a goal that cost-effective clean coal resources account for 25% of the electricity used in Illinois by Jan. 1, 2025. The act describes two special cases: the “initial clean coal facility” and “electricity generated by power plants that were previously owned by Illinois utilities and that have been or will be converted into clean coal facilities (‘retrofit clean coal facility’).” Currently, there is no facility meeting the definition of an “initial clean coal facility” that the IPA is aware of that has announced plans to begin operations within the next five years. However, the IPA said it is aware of a retrofit clean coal facility that intends to begin operations within the next five years, FutureGen 2.0.

FutureGen 2.0 consists of the proposed repowering of one unit at the shut Meredosia power plant of Ameren Energy Resources, which is located in Morgan County. FutureGen 2.0 is to be developed as 166 MWe (gross) of near-zero emissions coal-fueled generation, with a targeted commercial operation date in 2017, and a 30-year life. It is anticipated to operate as a baseload plant to be dispatched by the Midwest ISO in the coal stack of the dispatch order.

The sponsoring FutureGen Industrial Alliance is made up of various industry parties, including coal producers Alpha Natural Resources (NYSE: ANR) and CONSOL Energy (NYSE: CNX).

About Barry Cassell 20414 Articles
Barry Cassell is Chief Analyst for GenerationHub covering coal and emission controls issues, projects and policy. He has covered the coal and power generation industry for more than 24 years, beginning in November 2011 at GenerationHub and prior to that as editor of SNL Energy’s Coal Report. He was formerly with Coal Outlook for 15 years as the publication’s editor and contributing writer, and prior to that he was editor of Coal & Synfuels Technology and associate editor of The Energy Report. He has a bachelor’s degree from Central Michigan University.