Tenaska drops coal projects in Texas, Illinois

The Sierra Club bragged June 21 about the fact that independent power developer Tenaska Inc. has dropped plans for two coal-fueled power plants in Illinois and Texas, citing poor market economics for new coal plants.

“Coal is a bad bet for utilities everywhere, and after years of fighting the inevitable, Tenaska learned this the hard way,” said Bruce Nilles, Senior Director of the Sierra Club Beyond Coal Campaign. “The cost of coal will continue to rise as clean energy, especially wind and solar, get cheaper and cheaper. This great news in Texas and Illinois showcases what is happening across the nation. Only one coal plant has broken ground in the past five years, while solar panels and wind turbines are going up rapidly. Coal is the energy source of the past.”

Tenaska’s proposed Trailblazer facility in West Texas faced numerous hurdles, including serious water scarcity in an area prone to drought, the club said. In Texas, more than a dozen proposals for new or expanded coal-fired power plants have been cancelled since 2001, it added.

In Illinois, which at one point had 17 proposed coal plants, now just two projects are left on the drawing board, the club said. Tenaska’s proposed Taylorville facility in southern Illinois had problems, including permitting issues, a lack of financing for the expensive project, and a long-pending environmental review process associated with a loan request for federal assistance from the Department of Energy, the club said. Tenaska last year said it might pursue Taylorville as a natural gas-fired project, with the originally-planned coal gasification to possibly be added at a later time.

The Trailblazer plant, to be built near Sweetwater in Nolan County, was designed to be a 600-MW (net)  advanced pulverized coal power generating plant that would capture 85% to 90% of its CO2 emissions.

Taylorville was a 602-MW (net) plant to be fueled by substitute natural gas made from 100% Illinois coal.

Asked on June 24 by GenerationHub if Taylorville might be continued as a natural gas-only project, the company provided this statement from Dave Fiorelli, Tenaska president, development: “Tenaska is withdrawing from Christian County Generation, LLC, the entity responsible for development of the Taylorville Energy Center site. It will no longer have a role in development of any kind at the project site. MDL Holding will continue as the project owner.”

Tenaska: cheap and plentiful natural gas a major factor in its decisions

Tenaska said in a June 21 statement that with these two coal projects gone, it will focus its efforts on ongoing development of natural gas-fueled and renewable facilities. “Tenaska’s development activity for the Taylorville Energy Center, located in Christian County, Ill., and the Tenaska Trailblazer Energy Center, located in Nolan County, Texas, is being discontinued due to changing economics and the lack of legislation to provide a sufficient foundation for advanced coal projects to move forward,” the company said.

Tenaska began pursuing these projects in the 2006-2007 timeframe. “A number of market and policy changes have occurred since then, all of which have contributed to our belief that these projects are no longer viable,” said Fiorelli. “We take a conservative approach to development, working to ensure projects will have a long-term market for their power before we begin construction. That approach has and continues to serve us well, even as markets and policies change, but it means sometimes we have to make difficult business decisions.”

Fiorelli said these changing factors include:

  • an increase in the supply of natural gas;
  • a significant decrease in the price of natural gas;
  • the reduced cost of renewable power;
  • for Taylorville, the lack of state legislation to implement the long-term sale of an initial clean coal project’s electric output; and
  • for Trailblazer, a lack of federal law or regulatory policies that would provide a sufficient foundation for the commercial-scale clean coal project to move forward.

Tenaska said it has approximately 4,000 MW of natural gas-fueled and renewable energy projects in pre-financing development across the nation. The company has developed and constructed 16 generating stations, totaling about 9,000 MW throughout its 26-year history. The 130-MW Tenaska Imperial Solar Energy Center South near El Centro, Calif., is under construction and slated for commercial operation in late 2013. At the time of financing, it was among the largest commercially financed solar projects in the nation.

The two Tenaska proposals mark the 178th and 179th proposed plants cancelled since the launch of Sierra Club’s Beyond Coal campaign in 2002, the club said. In addition, since 2010, 147 existing coal plants have retired or announced to retire.

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.