October 15, 2006

Balancing risks and rewards

Dr. Robert Peltier,

More top utilities are making plans to add one or more integrated gasification combined-cycle (IGCC) plants to their generation portfolios over the next decade. Some 25 separate projects are on the drawing board, virtually all planning to use Eastern coal. Western coals pose tougher challenges for gasifiers, and their lower heat content disadvantages project economics.

 

The three alliances of IGCC suppliers (turbine and gasifier makers) and plant designer/builders say the technology is ready for prime time and are offering attractive guarantees and warranties to early adopters. I agree that for IGCC, the question is not "if" but "when" and "how many." But like so many things in life, timing is everything.
 

Sedan or sports car?

Utility executives, ratepayers, and most regulators are understandably conservative when considering billion-dollar decisions they'll have to live with for decades. Once bitten, twice shy, they might say. Massive capital outlays for emissions control retrofits, needed investments in conventional coal and gas capacity, and recent large rate increase requests have left many utility execs wary of going back to the well one too many times.

In the power business, adopting a sexy technology like IGCC demands a satisfactory answer to three prosaic questions: Is it commercially available? What does it really cost? and Has it worked reliably? In the case of IGCC, the answers will be "yes" only when the technology proves—at utility scale—capable of baseload operation on a grid at performance levels like those of the newest pulverized coal (PC) plants. The gasification tax credits in the Energy Policy Act (EPAct) are intended to act as a thumb on IGCC's risk/reward scale, if you will.
 

---