Planned Illinois plant should serve as a reference for coal gasification benefits for future facilities.
A couple of decades from now, power plant owner-operators could be looking back at the seed in America’s Heartland that sprang up a crop of coal-gasification plants a little like Midwestern cornstalks during growing season. Just as specific soil, climate, and geography suit specific crops, the Taylorville Energy Center in central Illinois will utilize integrated gasification combined cycle (IGCC) technology because the conditions present make it the logical strategic choice.
Gasification—converting coal to a gas—is not a new idea in general, having been invented in the early eighteenth century in Scotland. Bringing its environmentally superior profile to commercialization, however, has been a challenge. One of just a handful of IGCC projects with permits currently in application, the planned Taylorville facility is being subcontracted by Eastman Gasification Services Co. of Kingsport, TN---the first company to commercialize gasification in the US.
The 644-MW Taylorville facility, which is being built by Louisville, KY--based private developer The ERORA Group, is on track to begin commercial operation in late 2009 or early 2010 and might very well serve as a prototype for commercial IGCC power generation in certain instances for the following reasons:
- competitive pricing of output;
- environmental benefits;
- chemical co-production capability;
- local regulatory environment/receptiveness to coal usage;
- amount of output; and
- local feed properties and availability.
Competitive Pricing of Output
The ERORA Group has significant experience with developing conventional pulverized coal (PC) power plants and initially planned to use that technology for the Taylorville project. David Schwartz, principal with ERORA, notes that a feasibility study undertaken by GE Gasification and Kansas City, MO--based construction and engineering firm Burns & McDonnell indicated that the IGCC process will enable the developer to price the output of the Taylorville facility lower than that of PC. Assuming that environmental regulations are met, pricing is the foremost issue in choosing an energy production technology, Schwartz notes.
“Ultimately, the capital and operating costs impact the price of the final product, but it’s important to focus on the final price of the product and not the installed per-megawatt cost,” Schwartz notes. “While that’s important, it’s not the only factor that determines the final cost of the electricity. What’s important is whether we can produce the electricity at a price that is attractive to the market. While we acknowledge that IGCC is probably more expensive to build and operate, there’s no agreement as to the magnitude of that differential. Just because you can build and operate a plant doesn’t necessarily mean that you can produce a product with a market value; the product has to have a price that will be attractive to the customer.” An attractive price point creates an acceptable payback period for the investment, he adds.
Published reports have claimed that the capital cost of IGCC facilities is about 20% higher than that of PC, with efficiencies driving the cost down. Still, Schwartz is skeptical about that figure.
“I’ve heard that 20% number bandied about, but I’m not sure where that number comes from. While we acknowledge that IGCC is more expensive, it’s not 20% more expensive. In order to get that installed-megawatt cost down, some economies of scale have to be brought to bear” for PC to match the efficiency of IGCC, meaning the output must be in the 1,000-MW range. “More importantly, it’s not the differential installed cost, it’s the price of the output. Even assuming the 20% differential, if I’m able to sell the output cheaper from an IGCC plant, I’m not sure that 20% matters. For us, the real backbone of the decision to go with IGCC was the fact that we believe the output from the facility will be more attractive in terms of price, reliability, and availability than the price, availability, and reliability of a similar product from a pulverized coal facility.”
Environmental Benefits
IGCC is the best available coal-burning technology in terms of minimizing emissions of sulfur, mercury, and particulate matter, and it facilitates the capture of carbon. Its superior environmental profile to PC makes it easier for the developer to obtain an air permit, generate goodwill among the local community and environmental groups, and adhere to potentially stricter regulations in the future.
The Taylorville facility feasibility study compared the projected emissions of key pollutants under an IGCC scenario with those of the most recently permitted PC plant in Illinois at the time and, while PC is certainly an environmentally viable technology, IGCC generally projects out at a superior level (see table).
Even though current regulations do not require the capture and sequestration of carbon dioxide, it is much easier and less costly to do it with the syngas produced during gasification than with carbon exhaust gas. “One of the advantages of IGCC over the next 20, 30, 40 years is that if at one point over that next half century there are regulations that require retrofitting, how to do it and the cost ramifications are at least understood today,” Schwartz says. “They’re not known to the same degree with respect to pulverized coal. The general consensus among the industry is not if but truly when, and we’ll be able to address it.”
One environmental benefit of IGCC that should not be overlooked is a reduction in water usage when compared with conventional PC. In the PC process, all of the output is produced by a steam turbine, which requires a large volume of water for cooling. More than half of the output in IGCC, in contrast, comes from combustion turbines and the remaining 42% from steam turbines.
Local Regulatory Environment
Schwartz indicates that IGCC generally is viewed favorably among communities and environmentalists, and the environmental benefits of the technology should result in favorable action since the filing of the Taylorville permit in April 2005.
David Gallaspy, lead on the project for IGCC technology pioneer and ERORA project partner Eastman Gasification Services, feels that the permit application process was easier for ERORA due to the mere presence of IGCC. “When you go with IGCC, you can get more support from your local jurisdiction for zoning, and you also get a pretty good response from the state for the overall permitting process,” he says. “Even though you may have the law on your side as far as meeting permitting requirements, if you don’t have community support, there are a lot of roadblocks that can be put in the way. One of the things that is overlooked is getting the support that you need---the zoning, the permitting, getting all of the local support---which makes the project happen quickly.”
Schwartz adds that local regulators are taking an appropriately careful approach to the approval process, given the newness of the technology as far as they’re concerned. “Pulverized coal can be pretty clean, but IGCC is cleaner, and whether it’s the permitting agencies or the environmentalists, they are more receptive to the technology,” he says. “There are site-specific conditions that may influence the response to a specific project at a specific site, but as a general statement, I agree.”
The most difficult part of the permitting process for IGCC? Noting three separate major processes of gasification, air separation, and the deployment of turbines to generate power with IGCC, Schwartz relates, “The biggest issue has been finding a way to, on paper, ensure---from an engineering and warranty perspective---that the facility is viewed as one facility, not three separate components. Getting guarantees and warranties for any one of those technologies is easy; getting guarantees and warranties with respect to the facility as a whole is where there have been problems. That has shifted significantly with the acquisition by GE of the gasification technology from Texaco. You’ve got one company that owns both ends of the process, so you don’t have that ‘our part is working well; it’s the other part that’s not working.’ From a contractual standpoint, it’s become a lot easier.”
Still, “whether it’s regulatory agencies or John Q. Public, there seems to be a growing awareness of IGCC and its benefits,” Schwartz says. “That being said, there is not the experience with permitting IGCC that there is with other technologies, and I think that the regulators, appropriately, are approaching IGCC air permits carefully; there isn’t a lot of history or precedent for permitting IGCC.”
However, “folks who are trying to obtain permits to build pulverized coal facilities are not having an easy time of it,” Schwartz continues. “Even if the permits have been issued, the environmental groups have taken issue with those permits. So, from a permitting perspective, it’s really unclear how long it will take to get a permit not only through the permitting level but whether it will get through the ensuing litigation.”
The coal-friendly state of Illinois does have a generally favorable view of coal, which is to ERORA’s advantage in trying to get a cleaner coal-burning technology permitted. “Illinois is also sitting on a lot of coal,” Schwartz adds. “The state recognizes that that’s a valuable commodity and a valuable resource, and they have taken steps and implemented programs to use that resource in a way that benefits the state. So from that perspective, we very much like doing business in Illinois.”
Chemical Co-Production Capability
A significant factor in the economic viability of IGCC at Taylorville---and ERORA’s choice of the technology for the project---is its chemical co-production capability. At the permit application stage of the project, no plans were in place for the co-production of a particular chemical or chemicals. However, it is possible to co-produce commodities such as methane, methanol, and fertilizers with IGCC. Eastman Gasification Services, a subsidiary of Eastman Chemical Co., has operated the first commercially available IGCC plant in the US since 1983, and there it co-produces acetic anhydride and acetic acid for production of acetyls, which are used in the manufacture of various consumer products.
“That, above the environmental drivers, is really what switched the Taylorville project over to gasification. It’s the value of the co-production,” says Brenda Barnicki, managing director of Eastman Gasification Services. “I don’t think that can be understated; there’s some real value there.”
“As we looked at operating scenarios for this facility, we knew that chemical co-production enables us to operate the facility in such a manner that we will be able to produce products that we will be able to sell in the market today, and it will result in a pricing point that we think will be attractive,” agrees Schwartz. “It was chemical co-production that enabled us to make IGCC work from a business perspective. There are lots of advantages to IGCC, but ultimately those advantages don’t have any value if we can’t make the business scenario work; chemical co-production enables us to make the business scenario work.”
Amount of Output
Schwartz and ERORA dispute the notion that PC is significantly less expensive than IGCC from a capital cost standpoint. Even if this were true, Schwartz notes, experience and the Taylorville feasibility study strongly indicate that PC requires a minimum economy of scale to be capital cost-competitive.
“When you look at pulverized coal on a cost-per-megawatt basis, it’s cheaper than IGCC if you make it 1,000 MW plus,” says Schwartz. “If you drop the size of that facility to 400 or 500 MW, the cost of capital demand starts to diminish; get below that, and it starts to swing the other way; in order to achieve those economies of scale, you have to be very, very large. Being very large has a lot of impacts; you’re going to need a lot of water, you need a lot of transmission, and you need a lot of demand.”
Admittedly, little IGCC capital and operating cost data are available because the technology has not yet been commercialized to a great extent. But the financial analyses that took place as part of the feasibility study allowed ERORA to calculate the pricing of the output using projected capital and operating costs, and other inputs.
“The differential costs between pulverized coal and IGCC are driven by how large the pulverized coal station is,” Schwartz says. “If you compare a 600- or 644-MW IGCC plant with a 1,000-MW pulverized coal plant, we have a higher capital cost” with IGCC. “If you compare a 500-MW IGCC plant with a 1,000-MW pulverized coal plant, you’ve got a higher capital cost, too.”
Local Feed Properties and Availability
Two reasons coal in general and IGCC in particular suit the Taylorville project are the site’s location on the Illinois Coal Basin and the opening of a new coal mine nearby. “The coal plant is a great corner customer, someone who will have enough coal usage to justify a new mine,” says Schwartz. “That’s how we ended up there.”
“One of the reasons that the Taylorville project is looking at the state of Illinois is that they have rich coal resources,” reiterates Barnicki. “It’s generally higher sulfur coal than some other areas, so, historically, they’ve had a difficult time burning that coal in traditional power plants. Illinois is a very attractive place for coal, so Illinois is a great place to build a gasifier.”
Generally speaking, coal is a resource that the US would do well to utilize for energy production, so long as environmental concerns can be adequately addressed in an economically viable fashion. Estimates of US coal’s supply availability range from 200 years to 250 years---up to six or seven times that of natural gas---while natural gas prices recently have climbed due to tightening supplies. More than half of the electricity generation in the US utilizes coal.
“I think that certainly reliance on natural gas as a fuel of the future is probably a mistake, and learning how to use this country’s coal reserves in a way that makes sense economically and environmentally is something that people should be focused on,” notes Schwartz. “We think that IGCC is certainly a big step in that direction. We’re proponents of IGCC; therefore, we’re proponents of the use of coal. We do think that coal has a role in the energy future of the country, and there are a host of reasons; it reduces dependence on foreign sources of energy, as well.”
As for the future of IGCC, Schwartz and ERORA have high hopes for the Taylorville project. But, he notes, it’s difficult to predict how commercialized the technology will be several decades in the future.
“I think that IGCC has a role in the future,” he says. “It can play an important role in terms of providing energy on a cost-effective basis and in an environmental fashion. I don’t think it’s the right solution for all situations, but I think it has an important role to play.”