Air quality rules make IGCC attractive to some, but costs deter

Air quality rules make IGCC attractive to some, but costs deter

Washington (Platts)--10May2006

While some in the power industry cite emissions regulations and government
incentives as the impetus to build integrated gasification combined-cycle
power plants, others point to costs and uncertainty as reasons not to build
them.

Increasing costs for reducing emissions are the main reason Duke Energy
Indiana is looking to build IGCC plants, said President Kay Pashos at Platts'
2nd Annual IGCC Symposium in Pittsburgh Tuesday.

According to Pashos, Duke has spent more than $2 billion complying with state
and federal emission regulations, including $500 million complying with the
1990 Clean Air Act and $600 million on nitrogen oxide state implementation
plans. It will spend more than $1 billion to comply with the Clean Air
Interstate and the Clean Air Mercury rules. She believes carbon dioxide
regulations are coming, based on congressional proposals and public concern
over greenhouse gases.

Another factor pulling Duke toward IGCC is the availability of government
incentives. Tax incentives and loan guarantees would help get the first plants
off the ground and lower financing costs, Pashos said.

"IGCC is a good technology. ... When compared to a conventional
pulverized-coal plant, IGCC uses less water, produces less solid waste
material, is more efficient, has lower emissions and reduces CO2 somewhat,
potentially removing the need to add emission reduction equipment later."

But, some utilities are not prepared to be first out of the gate. JEA may not
want or need an IGCC plant, said Gregg Quick, director of corporate planning
at Florida-based company.

"There are too many uncertainties," Quick said. "Where would we store the CO2,
and it costs 10% to 20% more than a conventional plant." JEA needs more
baseload power going into 2012, 2014 and 2016, but it is looking at
supercritical power plants.

"In 2008, we'll have to make a decision on what type of plant to build for
2014, and unless we see some proven performance out of IGCC, we won't be
looking at building that kind of plant," he said.

"It's time to start building these plants," said Gary Stiegel, technical
manager with the Department of Energy's National Energy Technology Laboratory.
"You think prices are bad now? [Natural gas and oil prices] are indicative of
what's in store for the country if the government and industry don't do
something."

-- Regina Johnson, regina_johnson@platts.com

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