- Email: [email protected]
As Partner Roster Shrinks, Not Grows, FutureGen's Future Gets Darker
increases in revenues extending into the indefinite future. Until now. Preliminary figures for the first half of 2009 are in and the numbers – for an industry unaccustomed to the ups and downs of other businesses – are shocking. Overall domestic retail sales were down 5.4 percent, with industrial demand plunging 14.7 percent and commercial demand off by 3.5 percent, according to Credit Suisse Securities. Even the residential sector, long believed to be immune to business cycles, is down 1.7 percent. For 2009 as a whole, the projection is a 2.8 percent drop in sales – the steepest decline on record since World War II. What worries some utility executives and analysts is that even when the economy rebounds, electricity sales may not. Everyone recognizes that unemployed people tend to be frugal consumers – but what may be different is that once people get used to conserving energy, the habit may stick with them even after the economy gets going again. Habits aside, an increasing number of consumers have figured that they can save money in the long run by making modest investments in energy efficiency improvements. A more efficient appliance or a better insulated home pays back handsomely over time. And many utility, state, and federal programs provide incentives for such measures, including solar hot water heaters, solar PVs, more efficient appliances, and insulation. & doi:/10.1016/j.tej.2009.10.006
Coal Exports May Make Australia’s Energy Sector Among Least Sustainable Australia, a resource-rich country with an exportdominated economy, has long enjoyed a high standard of living. Its electricity prices are among the lowest globally thanks to an abundance of cheap and plentiful coal, allowing energy-intensive industries to thrive. The country’s vast natural gas, uranium, and mineral resources have created global resourcebased icons like Rio Tinto, PHB, and Woodside, to name a few. November 2009, Vol. 22, Issue 9
Plentiful coal and cheap energy prices, however, have resulted in an unusually heavy carbon footprint, by far the biggest among the OECD countries. Not only do Australians use large quantities of electricity, but it is predominantly generated from coal, over 82 percent nationally. The state of Victoria is the dirtiest, with three of the four most polluting coal-fired plants in the country. Making matters worse, Australia exports a lot of coal – much of it burned in heavily polluting plants in China and other developing countries. Despite all the rhetoric coming from Canberra, there are plans to expand the country’s coal exporting capacity. David Spratt, in an op ed essay in The Age in early September, points out that two major export projects announced in 2008 will ‘‘result in destination nation emissions (that is, exported coal burned somewhere else) 17 percent greater than Australia’s total emissions.’’ Clearly, Australia has to rethink how much coal it will use to feed its own growing economy while becoming more conscious of its significant carbon export problem. For a country long used to digging the coal out of the ground and shipping it overseas, climate change will be a game changer. Not surprisingly, Maplecroft, a British global risk consultancy, ranks Australia 33 out of 135 countries examined in its unsustainability index. The index measures a number of attributes, including total emissions from the energy sector (high), per capita energy emissions (higher) and cumulative emissions from energy use (also high). If this were not bad enough, Australia surpasses the U.S. in per capita CO2 emissions at 20.58 tonnes per person per annum versus 19.78, according to the U.S. Department of Energy. & doi:/10.1016/j.tej.2009.10.007
As Partner Roster Shrinks, Not Grows, FutureGen’s Future Gets Darker FutureGen, the U.S. Department of Energy’s answer to clean coal, has had an eventful history. With 1040-6190/$–see front matter
7?
rapidly escalating costs, DOE withdrew its support for the project under the Bush Administration. Incoming President Barack Obama was heavily lobbied to revive the project. But it appears that the resuscitation came too late, leaving the project’s fate in limbo. The resurrected project calls for a 275 MW plant designed to capture 60 percent of the carbon – not 90 percent as originally proposed – with an estimated cost currently pegged around $2.4 billion. DOE has earmarked $1 billion from CCS funding under the American Recovery and Reinvestment Fund of 2009. But the money comes with many strings attached, including a requirement that the FutureGen Industrial Alliance expand its membership from the original 11 to 20, each contributing at least $30 million to the project over the next four to six years. Other requirements include a complete funding plan, rapid restart of design, and detailed cost estimates. In the meantime, American Electric Power (AEP) and Southern Company, two of the biggest supporters of the Alliance and both big coal-burning utilities, have decided to withdraw their support, pursuing their own initiatives that are not mired in
bureaucratic red tape and thereby viewed as more likely to succeed. AEP has embarked on its own plan to test CCS at the Mountaineer coal-fired power plant in New Haven, W. Va., while Southern Company is pushing its own idea. This leaves FutureGen with only nine members, mostly coal mining companies. With so much CCS money floating around the corridors of Congress these days, the project may still be salvaged, but it would look odd without the backing of several big coal-burning utilities. There is some speculation that the requirement to gasify Illinois Basin coal may have prompted the withdrawal of AEP and Southern Company support. These issues aside, FutureGen would have to compete with Southern Company’s initiative, the National Carbon Capture Center (NCCC), which has the backing of DOE, the Electric Power Research Institute (EPRI), and at least four other big utilities. Expected to become operational in 2010, the NCCC is to be located at Southern Company’s Power Systems Development Facility (PSDF) adjacent to Plant Gaston coal plant near Birmingham, Ala. & doi:/10.1016/j.tej.2009.10.008
CCS Is Looking More Expensive than Hoped Continued from page 3
s30–40 range (US $40–60) by 2030, assuming massscale implementation. A more recent study by Harvard University’s Belfer Center for Science and International Affairs, in July 2009, concludes that first-generation CCS coal power plants would entail a cost premium of 10 cents/kWh compared with conventional coal-fired plants, which it reckons would generate electricity in the 8–12 cents/kWh range. The study assumes a pre-combustion approach and excludes the costs of CO2 compression, transport, and storage – all significant cost items. This amounts to an abatement cost in the range of 8?
1040-6190/$–see front matter
$120–180 per metric ton of CO2, with $150 being a good guess. As the technology matures, costs will decline, resulting in a price premium of 2–5 cents/ kWh and abatement costs in the $35–75/tCO2 range, all in 2008 dollars. The good news, if you believe the numbers, is that the costs will come down over time. Moreover, CCS costs will be more or less on par with other available low-carbon options – slightly above nuclear but lower than many renewables. The bad news is that we’ll never have it as good as we’ve had it up to now. The average cost of electricity generation from existing coal-fired generation in the U.S. in 2008 was a mere 2.75 cents/kWh, according to Ventyx. These The Electricity Journal
Coal Exports May Make Australia’s Energy Sector Among Least Sustainable Australia, a resource-rich country with an exportdominated economy, has long enjoyed a high standard of living. Its electricity prices are among the lowest globally thanks to an abundance of cheap and plentiful coal, allowing energy-intensive industries to thrive. The country’s vast natural gas, uranium, and mineral resources have created global resourcebased icons like Rio Tinto, PHB, and Woodside, to name a few. November 2009, Vol. 22, Issue 9
Plentiful coal and cheap energy prices, however, have resulted in an unusually heavy carbon footprint, by far the biggest among the OECD countries. Not only do Australians use large quantities of electricity, but it is predominantly generated from coal, over 82 percent nationally. The state of Victoria is the dirtiest, with three of the four most polluting coal-fired plants in the country. Making matters worse, Australia exports a lot of coal – much of it burned in heavily polluting plants in China and other developing countries. Despite all the rhetoric coming from Canberra, there are plans to expand the country’s coal exporting capacity. David Spratt, in an op ed essay in The Age in early September, points out that two major export projects announced in 2008 will ‘‘result in destination nation emissions (that is, exported coal burned somewhere else) 17 percent greater than Australia’s total emissions.’’ Clearly, Australia has to rethink how much coal it will use to feed its own growing economy while becoming more conscious of its significant carbon export problem. For a country long used to digging the coal out of the ground and shipping it overseas, climate change will be a game changer. Not surprisingly, Maplecroft, a British global risk consultancy, ranks Australia 33 out of 135 countries examined in its unsustainability index. The index measures a number of attributes, including total emissions from the energy sector (high), per capita energy emissions (higher) and cumulative emissions from energy use (also high). If this were not bad enough, Australia surpasses the U.S. in per capita CO2 emissions at 20.58 tonnes per person per annum versus 19.78, according to the U.S. Department of Energy. & doi:/10.1016/j.tej.2009.10.007
As Partner Roster Shrinks, Not Grows, FutureGen’s Future Gets Darker FutureGen, the U.S. Department of Energy’s answer to clean coal, has had an eventful history. With 1040-6190/$–see front matter
7?
rapidly escalating costs, DOE withdrew its support for the project under the Bush Administration. Incoming President Barack Obama was heavily lobbied to revive the project. But it appears that the resuscitation came too late, leaving the project’s fate in limbo. The resurrected project calls for a 275 MW plant designed to capture 60 percent of the carbon – not 90 percent as originally proposed – with an estimated cost currently pegged around $2.4 billion. DOE has earmarked $1 billion from CCS funding under the American Recovery and Reinvestment Fund of 2009. But the money comes with many strings attached, including a requirement that the FutureGen Industrial Alliance expand its membership from the original 11 to 20, each contributing at least $30 million to the project over the next four to six years. Other requirements include a complete funding plan, rapid restart of design, and detailed cost estimates. In the meantime, American Electric Power (AEP) and Southern Company, two of the biggest supporters of the Alliance and both big coal-burning utilities, have decided to withdraw their support, pursuing their own initiatives that are not mired in
bureaucratic red tape and thereby viewed as more likely to succeed. AEP has embarked on its own plan to test CCS at the Mountaineer coal-fired power plant in New Haven, W. Va., while Southern Company is pushing its own idea. This leaves FutureGen with only nine members, mostly coal mining companies. With so much CCS money floating around the corridors of Congress these days, the project may still be salvaged, but it would look odd without the backing of several big coal-burning utilities. There is some speculation that the requirement to gasify Illinois Basin coal may have prompted the withdrawal of AEP and Southern Company support. These issues aside, FutureGen would have to compete with Southern Company’s initiative, the National Carbon Capture Center (NCCC), which has the backing of DOE, the Electric Power Research Institute (EPRI), and at least four other big utilities. Expected to become operational in 2010, the NCCC is to be located at Southern Company’s Power Systems Development Facility (PSDF) adjacent to Plant Gaston coal plant near Birmingham, Ala. & doi:/10.1016/j.tej.2009.10.008
CCS Is Looking More Expensive than Hoped Continued from page 3
s30–40 range (US $40–60) by 2030, assuming massscale implementation. A more recent study by Harvard University’s Belfer Center for Science and International Affairs, in July 2009, concludes that first-generation CCS coal power plants would entail a cost premium of 10 cents/kWh compared with conventional coal-fired plants, which it reckons would generate electricity in the 8–12 cents/kWh range. The study assumes a pre-combustion approach and excludes the costs of CO2 compression, transport, and storage – all significant cost items. This amounts to an abatement cost in the range of 8?
1040-6190/$–see front matter
$120–180 per metric ton of CO2, with $150 being a good guess. As the technology matures, costs will decline, resulting in a price premium of 2–5 cents/ kWh and abatement costs in the $35–75/tCO2 range, all in 2008 dollars. The good news, if you believe the numbers, is that the costs will come down over time. Moreover, CCS costs will be more or less on par with other available low-carbon options – slightly above nuclear but lower than many renewables. The bad news is that we’ll never have it as good as we’ve had it up to now. The average cost of electricity generation from existing coal-fired generation in the U.S. in 2008 was a mere 2.75 cents/kWh, according to Ventyx. These The Electricity Journal