The FutureGen Industrial Alliance on Feb. 19 filed with the Illinois Commerce Commission a report that said, among other things, that it has been able to bump up the planned capacity of the FutureGen 2.0 clean coal project by 8 MW and that the project is targeted for completion in mid 2017.
The commission on Jan. 9 began the second phase of a two-phase approval process related to the FutureGen project’s electricity sales and costs. The “Pre-Approved Capital Cost Request and Updated Ratepayer Impact Analysis” filed on Feb. 19 was requested by the commission in its Dec. 20, 2012, order approving the first phase of this proceeding.
The Illinois Power Agency Act (IPA Act) created a state agency responsible for procuring electricity for Illinois retail ratepayers. Under the IPA Act, the Illinois Power Agency (IPA) serves as a procurement agent that acquires power for two of Illinois’ regulated electric utilities – Commonwealth Edison (ComEd) and Ameren Illinois. The IPA primarily fulfills this procurement function via an annual Power Procurement Plan, which is implemented through an annual power procurement auction. The IPA also helps administer compliance with the IPA Act’s Clean Coal Portfolio Standard for both the regulated electric utilities and Alternative Retail Electric Suppliers (ARES). The IPA Act also directs the IPA, as part of the procurement planning process, to consider sourcing agreements from qualifying clean coal facilities for utilities and ARES.
The FutureGen Industrial Alliance is a non-profit corporation engaged by the U.S. Department of Energy (DOE) under a federal financial assistance award to implement the DOE’s FutureGen 2.0 Program. The FutureGen 2.0 Program will develop, repower, own and operate the Meredosia Energy Center and the integrated CO2 pipeline and storage facility in Morgan County, Ill.
FutureGen 2.0 was initiated in October 2010 by DOE, which has committed more than $1bn in American Recovery and Reinvestment Act (ARRA) funds and other appropriations for research, development and demonstration activities of oxy-combustion and CO2 capture, transportation, and storage. The activities are divided into two distinct, but related projects:
- The Oxy-combustion Power Plant Project involves the retrofit and repowering of a fossil fueled power plant in Meredosia with an advanced oxygen-combustion technology. This technology is designed for 98% CO2 capture during steady-state operations, and will reduce SOX, NOX, mercury and particulate emissions to levels well below applicable regulatory requirements. DOE has committed $590m to this portion of the project.
- The CO2 Pipeline and Storage Project, which must annually accept, transport, and store more than 1 million metric tons of CO2 produced by the oxy-combustion project in the Mount Simon deep saline geologic formation. DOE has committed $459m to this portion of the project.
Plant would burn combination of Illinois and PRB coals
The oxy-combustion project will retrofit and repower Meredosia with a near-zero emissions oxy-combustion process utilizing the Unit 4 steam turbine generator, certain coal-based infrastructure associated with Units 1-3, and certain of the site’s common facilities. The project will use a blend of high-sulfur Illinois bituminous coal (60%) and low-sulfur Powder River Basin (PRB) coal (40%) and have a gross output capacity of 176.3 MW, which includes an approximate 8 MW capacity increase that results from a steam turbine upgrade. This configuration enables the project to exceed the DOE minimum capture target requirement of 1 million metric tons of CO2 per year at an 85% availability/capacity factor.
The CO2 storage project will transport the captured CO2 in a newly-constructed pipeline from the Meredosia site to the proposed storage facility in Morgan County, a distance of about 30 miles. The CO2 storage facility is being designed and permitted to accept approximately 22 million metric tons of CO2 over a 20-year period from the oxy-combustion project.
Both the power and pipeline projects are currently in the planning, permitting and design phase; project construction is anticipated to begin in early 2014, with commercial operations commencing in mid-2017.
Benefits of the projects, said the report, include:
- Most Cost-Effective Approach to Advance Clean Coal Technology (including carbon capture and storage) – The two DOE subsidies make FutureGen 2.0 the most cost-effective approach to achieve progress toward Illinois’ clean coal policy goals and the advancement of statutory requirements for the purchase of clean coal power.
- Low Ratepayer Impact – The proposed impact on electric customer rates is well below the statutory rate caps enacted by the Illinois General Assembly, the report said. The rate impact of FutureGen 2.0 will be competitively neutral as among all retail electricity suppliers servicing retail customers in the ComEd and Ameren services territories, and will be implemented through a tariff of ComEd and Ameren applied to all retail customers in the ComEd and Ameren service areas.
- Construction Job Creation – At the peak of construction, to occur from 2014 through 2016, the oxy-combustion project and associated CO2 storage project are estimated to need 700-1,000 direct employees, plus drive the creation of an additional 700-1,000 indirect jobs.
- Permanent Job Creation – During routine operations, both the power and pipeline ends of the project are expected to create 100 to 125 full-time on-site jobs. In addition to the permanent jobs, the project will generate additional employment related to the mining and transportation of the fuel to the Meredosia site and the disposal of the fly and bottom ash to an off-site facility.
- Utilization of High Sulfur Illinois Coal – The oxy-combustion project is expected to use between 300,000 and 400,000 tons per year of high-sulfur Illinois bituminous coal.
FutureGen working with B&W and others on project planning
Total estimated project costs are redacted from the public version of the report. The Reference Case oxy-combustion project cost estimate was developed from the ground up, with each supplier (The Babcock & Wilcox Co. for the boiler and gas quality control system, and Air Liquide for the CO2 part of the project) providing the costs for their respective island scopes, URS for the balance of plant, and the Alliance and URS providing the estimate of the owner’s costs. This estimate includes the purchase of the Meredosia assets by the Alliance from Ameren Energy Generating Co.
Phase I of the FutureGen 2.0 project (project definition) was completed in late 2012 and the project started Phase II (permitting and design) in early February 2013. During Phase II, the Alliance and its partners envision that about 90% of equipment design and process and controls engineering will be completed and that progress will be made in establishing vendor contracts to provide pricing certainty for equipment and materials. This is a far greater level of design and cost certainty than is typical for most coal-fueled power projects, the report noted.
As important, the Alliance will be entering into fixed price EPC agreements with B&W and AL for their respective portions of the project. The Alliance, B&W and Air Liquide also intend to have a contractual relationship for the start-up, commissioning, and performance testing of the repowered facility (Phase III).
Based on the current capital cost estimate and operating cost assumptions, the 20-year levelized cost of electricity (LCOE) for the oxy-combustion project, expressed in 2012 dollars, is forecasted to be $131.3/MWh assuming a 10% discount rate and $144.6/MWh assuming an 8% discount rate. The LCOE includes the expected capital recovery component, fuel charges, plus non-fuel fixed and variable operating expenses including all CO2 capture and storage costs components that are part of the sourcing agreement formula rate. The updated LCOE is about 2.5% less than the LCOE provided in an October 2012 report.
Three nearby coal mines identified as possible coal suppliers
In assessing the coal sources for this project, the report noted that no rail unloading facilities currently exist at the site, so the primary Illinois coal sources it looked at were three mines within 50-75 miles of the plant for truck deliveries: Arch Coal’s (NYSE: ACI) Viper deep mine; coal operator Chris Cline’s Shay #1 deep mine; and Tri-County Coal’s Crown III deep mine. Mines greater than 75 miles from the Meredosia site would require both truck and barge transportation, increasing the delivered cost of fuel for the project.
PRB coal was assumed to be sourced from mines located in the southern portion of the basin because of higher thermal content (8,800 Btu/lb) and lower transportation costs. These mines include the North Antelope Rochelle mine of Peabody Energy (NYSE: BTU), the Antelope mine of Cloud Peak Energy (NYSE: CLD) and the Black Thunder mine of Arch Coal. Transportation from the PRB would consist of rail transport from the basin to the Cahokia Dock barge loading facility, and then barge transport up the Illinois River to the Meredosia site.
Cost estimates for the various Illinois and PRB coals were redacted from the report.