IGCC would combine best aspects of coal, natural gas power

IGCC would combine best aspects of coal, natural gas power

Washington (Platts)--27Jun2006

The growing emphasis on domestic energy sources and concerns over global
warming have raised commercial interest in the use of integrated gasification
combined-cycle technology, according to a report released Monday by Standard
and Poor's Ratings Services.

S&P, like Platts, is part of The McGraw-Hill Companies.

IGCC has the potential to provide energy that, like coal, is stable and
domestically produced, and, like natural gas, is environmentally friendly, S&P
said in "IGCC: Can it Combine the Best of Coal-fired and Gas-fired
Generation?"

The increased interest in IGCC coincides with an industrywide expansion in
baseload construction for electric utilities, a trend that began a few years
ago and is expected to last a decade or more, the report found.

"Since IGCC exhibits characteristics associated with both coal and natural
gas, comparisons with pulverized coal and combined-cycle gas-fired units are
both appropriate," said S&P analyst Swami Venkataraman. "However, the
comparison with pulverized coal is the more important one, given the current
need for baseload generation in the US utility industry."

In an IGCC plant, coal is converted into a synthetic gas made up of more than
85% hydrogen and carbon monoxide, which is used as the fuel in a standard
combined-cycle power plant.

Coal gasification has been used to produce liquid fuels such as diesel in
addition to power generation. And now some projects propose producing multiple
fuels including electricity, potentially creating an independent fuel producer
business rather than just an independent power producer industry, the report
said.

"IGCC promises environmental performance that is substantially superior to PC
units because pollutants are separated from the syngas prior to combustion, a
more efficient process than treating post-combustion emissions," the authors
said. "While not as low as combined-cycle natural gas plants, existing IGCC
facilities can achieve sulfur, nitrogen and particulate matter reduction
comparable to state-of-the-art supercritical PC technology while
simultaneously exceeding PC technology in mercury removal (greater than 90% to
95%), generating only 50% of the solid waste and using 40% less water. IGCC
units currently being proposed are expected to achieve even lower sulfur,
nitrogen and particulate matter emission levels."

But it will be IGCC's ability to economically capture carbon dioxide, although
currently unregulated, that S&P believes will spur sufficient interest.

"Carbon monoxide in the syngas reacts with steam to make hydrogen and CO2,
which his concentrated at about 30% to 40% of the gaseous mixture and can be
relatively easily removed, unlike the processes in pulverized coal plants,"
the report said. "While carbon capture and sequestration techniques haven't
been commercialized even for IGCC and, hence, must be considered unproven, the
consensus is that the cost of carbon capture in PC units is substantially
higher. By some estimates, it would add about 25% to the cost of electricity
for an IGCC plant versus 70% from a conventional PC unit. IGCC units also emit
about 15% to 20% less CO2/MWh of electricity generated."

Another strength of IGCC plants are their ability to achieve thermal
efficiencies of 40% to 43%, compared with that of PC units at 33% to 35%.
While new supercritical PC technology that promises efficiencies of greater
than 40%, future advances may improve IGCC efficiency to 45% to 50%, S&P said.

Weaknesses of IGCC plants include construction risks, capital costs of 15% to
25% higher than PC systems and low reliability with demonstration plants
running about 80% while PC plants exceed 85%.

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