The $3.5 billion Taylorville Energy Center (TEC), a hybrid integrated gasification combined cycle (IGCC) power plant proposed for Illinois by Tenaska and MDL Holding Co., has been selected by the U.S. Department of Energy for final term-sheet negotiations under its loan guarantee program. If all goes well—as Tenaska expects—the guarantee could secure up to $2.579 billion for the project, depending on final project costs and capital structure, the company said on Monday.
The Taylorville project is one of six IGCC projects in the U.S. that are in the permitting process, or near or under construction, according to the National Energy Technology Laboratory. Several high-profile IGCC projects have been cancelled recently—despite climate change concerns—primarily due to soaring high capital costs and subsequent funding issues.
“This is a very important step toward securing a clean coal facility in Taylorville. The federal loan guarantee would significantly reduce the cost of financing the construction of the facility,” said Illinois Attorney General Lisa Madigan in a press release. “That’s important because cost will be a critical factor when the General Assembly reviews this project next year.”
The project, which is expected to produce 525 MW to 550 MW of electricity and capture and store at least 50% of its carbon dioxide emissions, earlier this year received another boost when Illinois lawmakers effected a legal framework to develop and pay for coal gasification projects. “Because TEC financing costs are included in electric rates under the recently enacted Illinois Clean Coal Portfolio Standard Law, the DOE loan guarantee results in savings of between $40 and $60 million per year to Illinois consumers,” Tenaska said.
The legislation limits procurement of electricity from out-of-state generating sources that produce emissions greater than those produced by a combined-cycle plant burning natural gas, without paying a surcharge. Additionally, the law requires electric utilities and other electric retail suppliers in Illinois to purchase up to 5% of their electricity from clean coal facilities. SB 1987 entitles one initial clean coal facility with a final air permit—which will likely be the Taylorville facility—to 30-year purchase agreements for the sale of its output.
“This joint state/federal effort is exactly what is needed in order to show that coal can be used on a commercial scale to produce power with no greater emissions than natural gas plants,” said Bart Ford, Tenaska vice president. “The implications for the State of Illinois and the country as a whole are enormous.”
The Nebraska-based company said that negotiations for the loan guarantee are expected to take six to nine months. In the meantime, it said it would continue to move forward with the front end engineering and design (FEED) work required by the Illinois Clean Coal Portfolio Standard law. FEED is expected to include more than 100,000 work hours by the time the facility’s cost report is presented to the Illinois Commerce Commission in early 2010.
Source: Tenaska, POWERnews