The $3.5 billion Taylorville Energy Center (TEC), a proposed integrated gasification combined cycle (IGCC) plant with carbon capture and storage (CCS), has been awarded a $417 million investment tax credit under a program jointly administered by the Department of Energy (DOE) and the U.S. Treasury Department. The tax credit is believed to be the largest ever granted to a single project.
Tenaska, a managing partner of the 716-MW (gross), 602-MW (net) project that has been proposed for construction in Central Illinois, said on Tuesday that cost savings from the tax credit will be passed through to Illinois electric utility customers under the Illinois Clean Coal Portfolio Standard Law (Clean Coal Law). That law requires large utilities to enter into long-term, cost-based contracts to purchase up to 5% of their electricity from clean coal facilities that capture at least 50% of their greenhouse gas emissions.
To qualify for the credit, the DOE was required to evaluate competing projects and certify that TEC is both technically and economically “feasible.” The criteria also included certifying that the facility “can be operated to capture at least 65 percent of its carbon dioxide emissions,” Tenaska claimed. “Following its evaluation, DOE certified the project and ranked TEC first among bituminous coal projects, enabling the plant to receive this significant federal tax credit.”
The DOE’s 1,800-page report concluded that the plant would result in an average projected rate impact of approximately 1.8% for the utilities’ residential customers. The report also demonstrated that the project would create more jobs than previously estimated, with 10 million labor hours required to build the plant. It also found that TEC would reduce the state’s carbon dioxide emissions by nearly 2 million tons per year.
Under the Clean Coal Law, purchases from TEC are not permitted to cause utility residential rates to increase by more than 2.015%. Electricity customers would see no impact on their bills until mid-2015, when the project is slated for completion, Tenaska said.
"As new environmental rules push conventional coal plants out of the market, Taylorville and projects like it must come online to replace that lost baseload power,” said Illinois Power Agency Director Mark Pruit. “These baseload plants are needed to balance the supply and price volatility caused by the growing number of variable-output renewable power projects in our state’s energy portfolio."
“Not only will this substantial federal benefit help us hold the line on electric rates, it validates our design and commercial approach,” said Bart Ford, Tenaska vice president. Ford added, “Over the next several months, Tenaska will be working through a number of issues to confirm the project’s ability to take advantage of the awarded tax credit.”
Tenaska announced last year that TEC was selected in a competitive process for term sheet negotiations for a $2.579 billion DOE loan guarantee. When finalized, the loan guarantee would put total federal support for the project at nearly $3 billion.
“Tenaska has done all it can to move this project forward, and the federal government has stepped up in a big way,” Ford said. It’s now up to the Illinois General Assembly to say ‘yes’ in the fall veto legislative session to thousands of high end jobs and reliable energy produced from Illinois coal at the Taylorville Energy Center.”
Sources: Tenaska, POWERnews