TECO Bails On New IGCC Coal Plant

Oct 11, 2007 (The Energy Daily/Access Intelligence via COMTEX) -- COAF | charts | news | PowerRating -- In a surprising announcement, Tampa Electric Co. said last week it has shelved plans to build a $2 billion, 632 megawatt coal gasification power plant to meet a projected need for new baseload generation in 2013, saying that uncertainty about future federal and state requirements for carbon capture and storage make the planned investment too risky.

The decision, announced October 4, is surprising in that TECO owns and operates the nation's only working integrated gasification combined cycle (IGCC) plant, a 260 MW unit that began operation in 1996 and was paid for in part by the Energy Department's Clean Coal Technology program. The new IGCC unit was to have been built on the same site as TECO's first IGCC unit, in Florida's Polk County.

In dropping its plans to build the second Polk unit, TECO also is passing up more than $133 million in federal tax credits awarded in November under a DOE initiative aimed at spurring deployment of IGCC technology.

And the announcement is puzzling because the company only a few months ago petitioned the Florida Public Service Commission for permission to build the plant, stating it was needed by 2013 to meet projected demand growth in the utility's service territory.

In announcing the petition July 20, company officials said the IGCC proposal, along with the company's planned expansion of its energy efficiency and renewable energy programs, was aligned with Florida Gov. Charlie Crist's (R) call for state businesses and consumers to intensify their efforts to reduce emissions of carbon dioxide (CO2) and other heat-trapping gases blamed by scientists for global warming.

IGCC technology uses a gasifier to convert coal to a synthetic gas that is burned in a combined cycle turbine. Many industry officials think the technology, widely used in the chemical industry, may be the best hope for the continued use of coal for power generation in a carbon-constrained regulatory environment.

IGCC plants can be easily configured to capture CO2 and pipe the gas to sequestration sites. In addition, IGCC allows the removal of key pollutants from the synthetic gas prior to combustion, a method that is significantly cheaper than capturing pollution from power plant smokestacks.

Crist is widely seen as opposing any new coal-fired generation that lacks carbon capture and storage equipment, but the most promising CO2 capture technologies won't undergo commercial-scale testing for several years and are not expected to be widely deployed for at least a decade. In addition, considerable uncertainty remains about the cost and viability of storing billions of tons of CO2 below ground for a century or longer.

Unlike some of its neighbors, southern Florida has suitable sites for storing CO2, primarily gas and oil basins in the Gulf of Mexico. TECO officials said Thursday, however, the uncertainty about the rules Congress and Florida will set for capturing and storing CO2 from coal-fired power plants led them to shelve the proposed IGCC unit--at least for now.

"We believe there is a role for IGCC in Tampa Electric's future generation plans, but with the uncertainty of carbon capture and storage regulations being discussed at the federal and state levels, the timing is not right to utilize it for a baseload facility needed by 2013," TECO President Chuck Black said in a press release. "We are not prepared to expose our customers to that risk."

In the press release, TECO said the utility "remains steadfast in its support of IGCC as a critical component of future fuel diversity in Florida and the nation, and believes the technology is the most environmentally responsible way to utilize coal, an affordable, abundant and domestically produced fuel."

TECO spokesman Rick Morera told The Energy Daily Friday that the company hopes to submit a new proposal to the state commission by mid-2008 for meeting growing demand in its service territory. Morera said all options remain on the table.

"What we do know is we are dropping back to re-evaluate, looking at different technologies and fuels, including natural gas, energy efficiency and renewables," Morera said. "The game plan is to have that ready by mid-2008."

Almost certainly TECO will not bring the commission a proposal to build another coal-fired power plant. The Florida commission this summer rejected a proposal by Florida Power & Light to build an ultra-supercritical pulverized coal plant, an advanced coal combustion technology that boasts superior efficiency and very low emissions.

"I think there is no question it's going to be difficult in the state, at least at this point, to site a coal plant in Florida," Morera said. "But on the other hand, I think once the carbon capture and storage rules are finalized, there may be a place for IGCC down the road."

The Energy Daily, Vol. 35, No. 195

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