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IGCC’s ChasmA Utility View of IGCC
Two Years Later
Michael J. Mudd
Manager Technology DevelopmentAmerican Electric Power
Acting CEOFutureGen Alliance, Inc.
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Key Points
• Utilities need a viable coal-fired technology option for future plants
• IGCC Technology has the greatest potential to meet that need
• First of a Kind (FOAK) IGCC Plants are generally not competitive in the current marketplace
• An appropriate level of incentives and R&D is required to obtain commercialization of IGCC
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Two Years Later What has Changed in Two Years?
• Skyrocketing Natural Gas Prices • Electricity Prices Climbing• Shareholder Resolutions on CO2• Paradigm Change in IGCC Suppliers • Announcement of new IGCC Plants• Energy Policy Act Incentives
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IGCC – The Good, the Bad, and the Ugly
• The good– Superior efficiency on Eastern Bituminous Coal – Flexible byproduct processing
• Tri-generation opportunities• Hydrogen production
– Superior environmental performance– Conducive to Carbon Capture & Disposal
• The bad – High capital cost– More IGCC plants must be built to reduce cost and improve availability– Currently not economical for low-BTU coals
• The ugly– The business deal
• Traditionally, there were no equipment suppliers, only technology licensers• Virtually all of the technology and performance risk has been on the plant owner
Paradigm Shift: GE’s acquisition of CTX, coupled with recent announcements of partnering between other IGCC licensors and EPC firms has addressed the “Ugly” and allows utilities to take advantage of the “good” and manage the “bad”.
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Wholesale Electricity Prices are Climbing
Constant Dollar Levelized Cost of Electricity for Pulverized Coal with Pit #8 Bituminous Coal
500 MW Plant Size, 2010 Startup, Coal Cost = $1.50/MBtu with 0% real escalation
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Leve
lized
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t of E
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ricity
, $/M
Wh
(200
4$)
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O&M
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Levelized COE
2004 Prices
ATC Historical Pricing (April 2004-August 2005 MTD)
0102030405060708090
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Jun-0
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MTD
PJMPVERCOTENTERGYCINERGYHRS
2005 Prices
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What A Power Plant Investor Requires
• Proven Technology• Acceptable Pricing Structure• Reliability• Risk Hedges
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Proven Technology
• Cost Maturity• Known Systems• Tangible US Experience• Operating Data• Predictable and Sustainable Performance
–Emissions–Heat Rate–O&M Costs
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Proven Technology
• Cost Maturity• Known Systems• Tangible US Experience• Operating Data• Predictable and Sustainable
Performance–Emissions–Heat Rate–O&M Costs
October 2005No: IGCC is not matureNo: Technology owners are paranoidYes: U.S. plants are runningYes: Data exists for current designs
Yes: Predictable and superiorYes: But worse than advertisedYes: But higher than advertised
How Does IGCC Score?
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Can a utility engineer evaluate IGCC technology?
?? ??
???
I want to talk with other customers and industry
experts about their experience We can’t let you do that until
your plant is up and running, our secret proprietary designs
are too important to our company!
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Acceptable Pricing Structure
• Known Capital Costs• Firm Price or Price with a Collar• Predictable O&M Costs• Competitive Life-Cycle Costs
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Acceptable Pricing Structure
• Known Capital Costs
• Firm Price or Price with a Collar
• Predicable O&M Costs
• Competitive Life-Cycle Costs
October 2005No: FEED the vendors millions
Maybe: Depends on the negotiations
Yes: Thanks to the openness of TECo
No: But it can be if you consider the CO2 variable
How Does IGCC Score?
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Does IGCC have an acceptable pricing structure?
?? ?????
How much does an IGCC Plant cost?
$$
Give me several hundred thousand dollars and I will give you a guess, and give me lots of millions of dollars and I will
give you a real price.
$$$
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Operability/Reliability
• Operates When It is Needed• Acceptable Start up Time Requirement• Quick Access during Forced Outages• Good turn-down characteristics• Fuel Flexibility
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Reliability
• Operates When It is Needed
• Acceptable Start up Time Requirement
• Quick Access during Forced Outages
• Good turn-down characteristics
• Fuel Flexibility
October 2005
Hard sell to regulators and intervenersNo: Start-up is complicated
No: Extensive refractory to cool
No: Turn down is a real concernNo: Ash content Ash Fusion Temp. and Chlorine limitations
How Does IGCC Score?
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Risk Hedges
• Guarantees and Warranties• Reasonable Regulatory Horizon• Competitive COE for Merchant Plant or
PPA for non-competitive COE
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Risk Hedges
• Guarantees and Warranties
• Reasonable Regulatory Horizon
• Competitive COE for Merchant Plant or PPA for non-competitive COE
October 2005Yes: Supplier Paradigm change
No: (but IGCC can hedge this uncertainty better than other technologies, especially for CO2)
Maybe
How Does IGCC Score?
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How to Achieve IGCC’s Promise
• Minimize the cost gap–Energy Policy Act–Suppliers need to stop FEED-ing off the industry to fund studies
• Provide Fuel flexibility– Identify realistic limitations up front
• Be realistic about high efficiency potential–Don’t push the envelope for the first couple plants–Availability is more important than efficiency
• Minimize Gas-to-Gas Heat Exchangers• Eliminate or solve problem of Convective Syngas Coolers• Prove FOAK Systems before using them in a commercial plant
• Be realistic about excellent emission potential–Evaluate cost/benefit of SCR and deep sulfur removal for first couple plants in light of existing cost premium.
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How to Achieve IGCC’s Promisecont.
• Take advantage of carbon capture potential–Take importance of carbon capture potential in up-front design seriously
• Acknowledge importance of all coal-based technologies– IGCC and PC should not be in competition–Leverage best features of both technologies
• Understand importance of EPRI Coal Fleet Program–Standardized Specifications–Quick learning curve for new potential users–Expert input to customers and (hopefully) suppliers
• Understand the importance of FutureGen–Unique opportunity to advance IGCC on all fronts–If not FutureGen, then how can industry get towards near-zero emissions and prove CCS quickly enough?
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IGCC Project Update
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Potential Site Locations
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Current Activities
• Submitted interconnect applications with PJM• Submitted Rate Application in Ohio• Submitted intent to file for a Certificate of Public
Convenience and Necessity in WV• Site Assessments• Initiated FEED with GE/Bechtel Sept. 29, 2005• Technology assessments
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FutureGen
One billion dollar, 10-year demonstration project to create world’s first, coal-based, zero-emission
electricity and hydrogen plant with sequestration President Bush, February 27, 2003
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FutureGen Industrial Alliance Membership:
– American Electric Power– BHP-Billiton– CONSOL Energy Inc.– Foundation Coal– Kennecott Energy Company– Peabody Energy– Southern Co.
Characteristics:– >45% of U.S. Coal Production– >15% Coal-Fueled Electricity Production– Represent all major coal types
Open membership policy with an active recruiting effort
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FutureGenIndustry’s View of the Facility
Air
Advanced Electricity
Generation
Research “User Facility”
Advanced Gas Clean-Up
SyngasSyngas CO2 H2
Advanced CO2 separation
O2 SyngasSyngas H2CO2Coal
Air
Slag
AirSeparation
UnitGasification Gas Clean-Up**
CO2Separation**
ElectricityGeneration**
Transportation and
other H2 uses
CO2Sequestration &
Monitoring
PotentialAdditional
CO2 Source
Electricity/Hydrogen Generation “Backbone” with CO2 Sequestration/Monitoring System
Advanced Oxygen
Separation
**Candidate for Multiple Technology Upgrades over FutureGen’s Lifetime.
Other Technologies
Electricity,H2, or
other Products
Advanced Coal
Conversion
“State-of-the-ArtGasificationTechnology
Platform”
“SequestrationPlatform”
“StakeholderInvolvement & Research
Platform”
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Current Activities • Negotiations with DOE
– Application for Federal Assistance submitted• Formalizing Alliance Structure
– Board and Officers established• Charles Goodman - Chairman• Mike Mudd – CEO
• Adding new members– China Huaneng Group
• Initiating up-front tasks– Site RFP– Technology evaluation
