Thursday, February 19, 2004

Cinergy open to coal-gas process

By Mike Boyer
The Cincinnati Enquirer

Cinergy Corp. is interested in using a more environmentally friendly coal technology at one of its Indiana power plants, if a partnership with federal and state regulators can be developed.

Cinergy chairman James Rogers has endorsed an idea developed at the John F. Kennedy School of Government at Harvard University for a way to use the technology, known as integrated gasification combine cycle (IGCC), to convert coal for power generation in the next decade.

"(The technology) provides a way to continue to use coal, reduce emissions and take a serious look at how we might deal with greenhouse gas emissions,'' Rogers told a workshop last week in Cambridge, Mass., on the new technology.

Cinergy, which generates almost all its electricity with coal, has been under attack by environmental groups and the federal government for violating federal pollution limits.

Instead of burning coal in boilers to generate electricity, the new process turns the coal into a synthetic gas that's burned to drive a turbine to produce electricity. Steam formed as a byproduct of gasification also would be used to drive a turbine and generate power.

Cinergy and other utilities now trap and scrub the pollutants released when coal is burned. But the gasification process removes them beforehand, a more efficient method that also eliminates the need for expensive pollution control equipment. Gasification also removes mercury, a toxic heavy metal, from coal at a much lower cost than conventional methods, Cinergy says.

William Rosenberg, who led Clean Air Act implementation in the George H.W. Bush administration, developed a three-way financing model for coal gasification while a senior fellow at the Kennedy School.

The idea is that the federal government would provide loan guarantees to finance the project, the utility would construct and operate the facility and state utility regulators would guarantee rates sufficient to recover the financing costs.

The cost of building a 500-megawatt gasification-powered plant would be about $300 million more than a conventional coal-fired plant, but Rosenberg said the three-way financing would make the technology competitive with a coal- or gas-fired power plant.

"Cinergy is the first utility to indicate its support,'' said Rosenberg.

The utility used coal gasification in a demonstration project at its Wabash River plant near West Terre Haute, Ind., several years ago.

Rogers, who has known Rosenberg for a number of years, told the workshop that Cinergy has already done preliminary engineering and site analysis at its Edwardsport, Ind., generating plant, for development of an IGCC plant.

The coal-fired Edwardsport plant, north of Evansville in southern Indiana, now has three generating units capable of producing 160 megawatts of electricity. Rogers said Cinergy would be looking to add 300 to 500 megawatts if the project moves forward.

"We'll need additional (generating) capacity for our system,'' Rogers said Wednesday. But he added that developing the three-way partnership to make the IGCC project happen could take six years to develop.

Rosenberg was more optimistic. He said the energy bill still before Congress would allow financing guarantees like those he envisions. He said the project could come together in the next couple of years.


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