‘Unknown unknowns’ remain at Kemper IGCC

Southern (NYSE:SO) CEO Tom Fanning said July 30 that utility subsidiary Mississippi Power is entering the home stretch in construction of the 582-MW Kemper County Integrated Gasification Combined-cycle (IGCC) project.

During a quarterly earnings call, Fanning said the project is probably 95% complete now. The company believes most of the construction hiccups are behind it and the main concern are “unknown unknowns” as the IGCC approaches commercial operation in mid-2015.

This would include the risk of a major piece of equipment failing to work as it’s supposed to approaching startup, Fanning said. It could also include unforeseen engineering problems, weather conditions or delays related to labor or suppliers.

That said, Southern and Mississippi Power feel good about the prospects for the project that will gasify local lignite coal to generate power. Most of the resulting carbon dioxide will be captured via carbon capture and storage (CCS).

The facility is now “pipe-tight” meaning that 900,000 linear fleet of pipe have been installed and are ready for testing. The company has also completed pneumatic pressure tests for both gasifiers. Upcoming milestones will include putting the combined-cycle unit in service and achieving “first gasifier fire” and first syngas production later this year, Southern officials said.

In a carbon-constrained regulatory world, Kemper is one of the few types of new coal plants that might be built in the future in the United States, Fanning said.

On another coal-related topic, Southern CFO Art Beattie acknowledged that the usage of Southern power plants burning Powder River Basin coal was down in the second quarter of this year compared to one year earlier, but that’s largely because of plant outage work.

The capacity factor for Southern PRB coal plants was 64% in the recently-completed second quarter, compared to 75% in the second quarter of 2013. The company’s non-PRB coal plants had a 43% capacity factor in the recently-completed quarter compared to only 30% a year earlier.

Combined-cycle gas plants in the Southern fleet saw their capacity factors remain stable at 60% for both periods, according to quarterly earnings data.

About Wayne Barber 4201 Articles
Wayne Barber, Chief Analyst for the GenerationHub, has been covering power generation, energy and natural resources issues at national publications for more than 20 years. Prior to joining PennWell he was editor of Generation Markets Week at SNL Financial for nine years. He has also worked as a business journalist at both McGraw-Hill and Financial Times Energy. Wayne also worked as a newspaper reporter for several years. During his career has visited nuclear reactors and coal mines as well as coal and natural gas power plants. Wayne can be reached at wayneb@pennwell.com.