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IGCC Update: Are We There Yet?

If a number of technical, financial, and regulatory hurdles can be overcome, power generated by
integrated gasification combined-cycle technology could become an important source for U.S.
utilities. Our overview presents diverse perspectives from three industry experts about what it
will take to move this technology off the design table and into the field.

In May, POWER interviewed representatives from two large consulting firms and a national
electric energy research organization. From the challenges of adding carbon dioxide (CO2)
capture technology to coal-fired plants to the impact of tax credits, the three experts shared
their insights about integrated gasification combined-cycle (IGCC) technology. They discussed
current and future IGCC technology developments and their predictions about when this
technology might become commercially available in the U.S.

Increasingly viewed as having strong potential to provide abundant electricity in the U.S., IGCC
technology still has to surmount a number of major challenges. As its name implies, the IGCC
generation system integrates two different technologies: coal gasification from the chemical
industry and combined-cycle power generation from the power industry. IGCC power plants can
use synthetic gas (syngas) derived from a variety of sources such as coal, pet coke, and
biomass as their fuel (Figure 1).

1. Dynamic duo. Integrated gasification combined-cycle (IGCC) plants integrate coal

gasification with combined-cycle technology and can use synthetic gas derived from coal, pet
coke, and other feedstocks. Source: Tampa Electric

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Advantages of IGCC Plants

IGCC plants have a number of well-known advantages over traditional coal-fired power plants
that use pulverized coal (PC), according to Steve Jenkins, the vice president of gasification
services at CH2M HILL Inc., an international consulting, engineering, construction, and
operations firm.

IGCC uses less water. IGCC uses about 33% less water for cooling purposes than a similar-size
PC plant. This is because about two-thirds of the power generated in an IGCC plant is from the
gas turbines and one-third is from a steam turbine-generator, which requires cooling water.
Minimizing water needs can be a significant advantage in areas of the U.S. where water use is
a major siting issue.

IGCC creates a usable by-product. When using high-temperature gasification technologies, the
ash in the feedstock is removed in the form of a glassy, nonleachable slag that can be used in
the manufacture of cement or roofing shingles, or as asphalt filler or aggregate. This slag is
different from the bottom ash and fly ash produced by most PC units, which can be more
leachable. Also, slag can be more easily handled, stored, and transported than fly ash.

IGCC has a carbon capture advantage. Although CO2 capture technologies are available for
both IGCC plants (pre-combustion) and PC plants (post-combustion), IGCC plants may have an
advantage because the technology required for pre-combustion CO2 capture has already been
used successfully on coal gasification (but not IGCC) technology. Enhancements are being
made to this technology for better performance in IGCC configuration. Furthermore, some of
these capture technologies have the capability to produce the concentrated CO 2 stream at high
enough pressures to match the needs of the compressors required to compress the CO2 for
transport in pipelines for either sequestration or enhanced oil recovery. However, the costs and
performance impacts for CO2 capture vary significantly between IGCC and PC plants.

IGCC Limitations
The advantages of IGCC must be balanced against its limitations, said David J. Stopek, PE, an
engineer with Sargent & Lundy, a Chicago-based consulting firm.

"IGCC can offer advantages compared to a conventional PC plant for the transition to a power
generation fleet with a lower CO2 footprint based on coal," he commented. "Having said this,
you must understand that IGCC is still an evolving technology compared to the level of
commercial status of conventional PC technology [see table]. Because IGCC deployment has
been limited, the costs for each plant require extensive engineering and development. Efforts
by GE and others to develop a ‘standard’ plant are intended to help lower the cost for
deployment. The projects first envisioned by Duke Energy and American Electric Power (AEP)
were an effort in that direction. However, the fact that AEP was unable to gain approval by their
state regulatory agencies to place their plants into rate-base has derailed these efforts to a
degree."

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An exclusive club. As of 2009, there are five operating coal-based IGCC plants worldwide.
Source: CH2M HILL

Major Roadblocks to Development

Jeffrey N. Phillips, the senior program manager of advanced generation at the Electric Power
Research Institute (EPRI) pointed out some of the major implementation challenges that IGCC
technology faces.

"For plants without CO2 capture, IGCCs are more expensive to build than PCs," he said. "Also,
with natural gas prices currently in the $4/MMBtu range, it is difficult to choose an IGCC over a
natural gas combined-cycle. IGCC suppliers need to improve their cost-competitiveness versus
PCs."

EPRI believes that one way to make that happen is to focus on standardized designs that
minimize up-front engineering costs. EPRI’s CoalFleet for Tomorrow has been encouraging
such an approach with the development of its CoalFleet User Design Basis Specification
(UDBS) for IGCCs that defines the capabilities that power plant owners would like to see in an
IGCC.

Jenkins listed a number of other challenges that IGCC developers currently face:

 Permit appeals. Appeals by environmental advocacy groups (even for IGCC plants)
make it difficult for projects to proceed. For non-utility projects, developers may not be
able to obtain the required funding from investors to move forward while permits are
under appeal. Of course, this is a tactic well understood by those advocacy groups.
 Cost issues and how they are addressed by public utility commissions. Because IGCC
plants cost more than PC plants (for the same capacity), some public utility
commissions have been reluctant to approve those additional costs, even when
approving IGCC technology as the choice to meet the "need for power" requirements of
a Certificate of Public Convenience and Necessity.
 Obtaining meaningful guarantees at an affordable price. Because there are only two
coal-based IGCC plants in the U.S. (Figure 2), IGCC technology suppliers do not have an
extensive database of experience to work with, as they do for PC plants. Therefore,
there is more potential risk to these suppliers with respect to performance and
availability (and associated monetary liabilities), and they must translate the potential
risk of nonperformance into additional cost.

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2. A power pioneer. Operating since 1996, Tampa Electric’s -MW 250 IGCC Polk Power Station
is located in Mulberry, Fla. It was the first full-size commercial plant in the U.S. to use the
advanced IGCC process. Courtesy: DOE

Stopek added two other roadblocks to the deployment of IGCC technology in the U.S.:

 The downturn in the economy has pushed back the drive to add new baseload capacity.
As baseload needs have eroded, the availability of natural gas has risen and its cost is
lower. These factors are allowing companies to sit on the sidelines and wait for new
greenhouse gas (GHG) regulations to become law and eliminate the uncertainties they
now face in supplying customer electricity demands for the future.
 Congress needs to step up and take action on climate and energy legislation that ends
the speculation that is crippling new action on new plant construction. Distribution of
incentives and/or penalties must be carefully weighed in the crafting of new laws to
ensure that unintended consequences do not occur. New laws must reshape the energy
landscape in a way that provides a reduction in GHG emissions while minimizing the
impact to the energy consumer without disrupting the entire economy. This is a delicate
balancing act that Congress faces in meeting this challenge.

IGCC’s Availability Challenges

"Historical data clearly shows that the existing coal-based IGCC plants have not been able to
achieve 85% availability on a sustained basis," Jenkins said. "It typically takes several years of
operation to achieve levels of even 80%, and some have not yet reached 70%. However, these
are one-gasifier-train systems." (See "Polk Power Station, Unit 1," POWER, Oct. 2007.)

Using that operational data and lessons learned, IGCC technology suppliers have implemented
enhanced design concepts (discussed above) to increase availability, including the use of
multiple gasifier trains, he said. Data submitted by IGCC developers to state and federal
agencies show that the two-train reference plant designs are expected to achieve about 85%
availability. Adding a spare (third) train may increase overall IGCC availability to about 90%,
although at considerable additional cost.

Phillips had an optimistic view of efforts to overcome this problem. "Overall, the availability of
coal- and oil-based IGCCs has been improving over time," he said. "The availability of the first
generation of IGCCs is similar to that of the first generation of supercritical PCs and nuclear

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plants. Both those technologies now enjoy availabilities in the mid-80% to 90%. With additional
experience it is reasonable to expect that IGCC availability will also increase."

Additionally, all of the first-generation IGCCs were based on single-train designs (one gasifier,
one gas turbine), he pointed out. EPRI’s UDBS for IGCCs calls for dual -train systems, which
EPRI’s analysis indicates will have better availability because the plant can continue e, to operat
albeit at reduced load, when one gasifier or gas turbine is down. The operating train can be
used to keep the equipment on the other train warmed up. This allows for faster start-up times
for the second gasifier or combined cycle, which helps availability.

Barriers Utilities Face in Building IGCC Plants

A major challenge is the time and expense in getting to the point that the utilities have a
detailed design with a solid cost estimate, according to Phillips.

"For example, Southern California Edison Co. (SCE) recently got approval from the California
PUC [Public Utility Commission] to spend up to $26.3 million on a feasibility study for their
‘Clean Hydrogen Power Generation’ project, which would be an IGCC with2 CO capture and
storage," he said. "Only at the end of that study will they know how much such a plant will cost
to build and what its operational performance will be. That’s a hefty price for just ‘window
shopping.’"

Stopek explained the differences for utilities seeking to build a new PC plant versus one that
would use IGCC technology. The current practice for a power company wanting to build a new
PC power plant starts with determining the size required to meet its needs and competitively
bidding the major components, such as the boiler, turbine, and emission controls, he explained.
Bidders then respond to detailed specifications developed from years of experience designing
what is now the industry standard for reliable power generation that meets all the emission
requirements based on specified fuels, location, and other requirements.

"This has not been the case for IGCC; the technology suppliers are not yet willing to compete
based on the traditional procurement model," he said. "The suppliers will not provide cost
estimates unless they are paid to perform their front end engineering design study. To develop
a cost estimate that is accurate to ±10% typically requires that about 30% of the design
engineering be performed at a cost of about $20 million (give or take). Duke and AEP
conducted a technology review and selected the company they thought would provide the ‘best’
price and product for an IGCC facility and proceeded on a sole-source basis with that
company."

CO2 Capture Technology’s Negative Impacts

"Recent detailed studies conducted by the U.S. Department of Energy (DOE) and EPRI clearly
show that the addition of CO2 capture equipment to IGCC plants has a significant impact on
plant efficiency and net output, as well as on capital cost," Jenkins said.

These studies show that, on average, the following impacts result from adding CO2 capture
systems to an IGCC plant using bituminous coal:

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 Capital cost in $/net kW goes up by 32%.

 The cost of electricity increases by 40%.
 Net output is reduced by 15%.
 Efficiency is reduced by 22%, or 8 to 10 percentage points.

These are significant impacts on performance and cost, according to Jenkins. For net output,
the reduction would be about 100 MW on a 600-MW net IGCC reference plant. This is primarily
due to the additional internal power needed for the CO2 capture equipment; using steam in the
CO2 capture system instead of steam turbine power generation, as designed; and the additional
power required for the CO2 compressors. What many do not understand is that this "lost" 100
MW must then be made up by other generating units, which may actually have higher emission
rates for CO2 as well as other pollutants, he noted.

Stopek agreed with Jenkins about these disadvantages and gave additional insights. "The
challenge of adding CO2 capture to an existing IGCC plant must be discussed at the early
phases of the project development," he said. "The owner must understand that converting the
syngas from a mixture of CO and H2 to predominantly H2 will result in a ‘de -rating.’ This
derating can be compensated for during design by ensuring the capability to gasify more fuel.
The owners must be willing to accept this cost. If not, they must be willing to accept the
derating. This is fundamentally different than just adding additional booster fans to a coal-fired
plant to accommodate the pressure drop of a flue gas desulfurization system."

The gasifier and downstream systems must be designed to process the additional fuel (up to
15% more), according to Stopek. More ash and sulfur are produced, so all the supporting tanks,
pumps, and equipment must have sufficient margin in their design to handle this future flow
rate. Some of this capacity may be available by increasing design pressure, but then the entire
equipment design must be scrutinized to ensure that it is designed for the appropriate new
pressure.

Long Timeline for Carbon Capture and Storage

"First, we need to prove that large-scale (greater than a million tons per year) geologic storage
of CO2 can be a reliable and long-term option for sequestering CO2 captured from power plants,
and also the legal rules governing storage need to be established," Phillips said. "Until that
happens, it will be very difficult to get commercial projects with carbon capture and storage
[CCS] financed. However, in the meantime, you could sell captured CO2 for enhanced oil
recovery [EOR] if your IGCC is located near oil fields; that is what Mississippi Power is
proposing to do. All the rules and liabilities for covering CO2 transportation and storage have
been established for EOR applications."

Stopek expanded upon Phillips’ comments. The demand for greenhouse gas control is a
steamroller that is moving quickly toward legislative action, he noted. However, the technology
needed to store CO2 forever must be demonstrated, and that takes time. The industry is now
moving quickly, in a programmatic fashion.

"Early this May, I attended a conference on CCS in Pittsburgh and was delighted to see the
amount of talent from across the country now focusing on these issues," he said. "However,
each step must be approached in a logical sequence, and testing takes time. The legal issues

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are complex. The insurance risks are real. But I am confident these will be solved. It is critical
that as the requirements for CCS come into place, particularly the sequestration part, that all
these issues be addressed. Also, it is important that a well-structured monitoring and
regulation framework go with it. This framework needs to be tested and validated. These take
time, money, and effort. I believe the current administration recognizes this and is putting the
resources into place to accomplish this mission. The true question is: Can the results come in
time for informed decision-making?"

Recent Technical Innovations

Jenkins pointed to a number of new developments with IGCC technology:

 More-efficient hot gas particulate removal systems.

 Higher-firing-temperature gas turbines.
 Gas turbines designed to combust high-hydrogen-concentration syngas (for IGCC plants
with CO2 capture).
 Gasifier "burners" that last much longer than those developed previously.
 Refractory materials using advanced "recipes" based on recent research and
development funded by the Department of Energy.
 Sulfur-free start-up procedures using patented start-up fuels.
 Larger gasifiers that operate at higher pressures (for higher efficiency).
 Use of activated carbon beds for mercury removal.
 Syngas moisturization and enhanced use of diluents such as nitrogen from the air
separation unit to reduce gas turbine combustion temperatures, leading to lower NOx
production.
 Better materials of construction in corrosive environments.
 Better performance when using Powder River Basin coals.
 Partial integration of the gas turbine compressor with the air separation unit (which
reduces overall plant internal load).

Stopek commented on IGCC manufacturers’ future technical goals. "Each of the equipment
suppliers is conducting its own reliability and maintainability analyses of its technology and
identifying means to improve availability, lengthen maintenance cycles, and eliminate
unscheduled outages," Stopek said. "However, the lack of a central reporting function such as
the North American Electric Reliability Corp. GADS [Generating Availability Data System]
database that is open to the public creates a lack of transparency to the consumer who must
‘trust’ the supplier or rely on guarantees."

Jenkins also commented on the new breakthroughs that IGCC manufacturers are trying to
achieve:

 Higher efficiency through the use of enhanced heat-recovery systems.

 Higher availability by using more advanced materials of construction (more corrosion-
resistant alloys) and gasifier refractory and by optimizing the use of spare equipment
and spare gasifier and syngas cleanup trains.

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"The thousands of lessons learned at existing IGCC plants are well documented in EPRI’s
CoalFleet IGCC UDBS, and are being incorporated by the manufacturers into new IGCC plant
designs," he said.

Regulatory Hurdles
"AEP’s experience with their proposed West Virginia IGCC is instructive," Phillips said.
"While it
was approved in West Virginia, they also needed approval from Virginia because the plant
would provide electricity to some parts of that state. The Virginia Public Service Commission
rejected the proposal because the IGCC plant was more expensive than conventional coal
plants, and they considered the potential benefits of an IGCC with CCS to be of ‘limited value’
because they felt ‘no party knows for certain the specific commercially available technology
that will be used for carbon capture and sequestration’ and because AEP did not ‘identify any
commercial generation facility that has implemented CCS.’ That points out the need for
educating regulators on CCS technology."

Stopek also had concerns about the regulatory challenges affecting U.S. utilities. The lack of a
regulatory framework over the past decade has played a part in the paralysis seen in the
industry, he said. The capital requirement for new coal-based generation capacity is so great
today that many companies and their financial institutions cannot take the risk associated with
an error in judgment of what the future might hold for CCS regulations.

"For this reason, I see more interest in gasification that is inherently more versatile in its
product alternatives, such as for production of substitute natural gas [SNG]," he said.
"Combustion turbines [CTs] firing gas (or coal-based SNG) can be sited closer to the electrical
demand, thus avoiding the cost of new transmission, which is also woefully needed. The
existing CT fleet will experience higher demand, and new turbines can be added much more
quickly than coal or nuclear power. Further, the addition of CTs will better match up with the
growing fleet of renewable power that is expected over the next decade. The use of SNG will
provide a greater certainty to gas prices and a hedge against price speculation in the market.
Of course, this is a very complex strategic decision that requires weighing many factors."

Jenkins also addressed the potential impacts of CO2 reduction regulations. IGCC technology
still needs to be operated at the two-train reference plant size, such as 600 MW to 650 MW, and
to prove its performance and availability with the design enhancements described earlier, but
without the addition of CO2 capture equipment to "weigh it down," he emphasized.

"It will be important for this first fleet of reference plants to be able to operate for a reasonable
timeframe without any CO2 capture equipment," he said. "In a sense, IGCC technology needs
the chance to ‘run before it can walk. ’ In addition, dealing with air permit appeals will delay the
construction and operation of these units. Unfortunately, some environmental advocacy groups
that previously supported IGCC technology are now opposing it."

The Inadequacy of Tax Credits

Phillips pointed out that, as of May 2009, only one IGCC that received the Energy Policy Act of
2005 (EPAct) tax credits is under construction: the Duke Edwardsport plant (Figure 3).

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3. Under construction. An artist’s rendering of Duke Energy’s 795

-MW Edwardsport IGCC
plant near Vincennes, Ind. Courtesy: Duke Energy

He mentioned the current status of several other IGCC projects:

 Mississippi Power has a proposal pending to build an IGCC plant in Mississippi, and it
could be under construction shortly if it is approved by the state’s Public Service
Commission.
 TECO Energy’s Polk 6 IGCC project received tax credits but was put on hold due to cost
and regulatory uncertainty.
 Hydrogen Energy’s Carson project received credits but ran into siting difficulties and is
now being reengineered for a location in California’s Central Valley.
 The federal government may have awarded tax credits to other IGCC projects, but after
announcing the first group of recipients, the government decided it could not announce
subsequent decisions due to taxpayer confidentiality concerns, according to Phillips.

Jenkins pointed out that although such tax credits are helpful, they are insufficient as the sole
incentive to drive these projects forward.

"For example, $135 million tax credits were awarded to several IGCC projects," he said.
"However, at a total installed cost of $2.3 billion, the tax credits amount to only about 5% of the
total project cost, and they do not provide the ‘cold, hard cash’ needed up front to fund these
projects. Combinations of tax credits, loan guarantees, and direct cofunding by state and
federal agencies can add up to the more significant amounts needed to enhance the project
economics and move them forward more quickly."

Comparative Costs of IGCC-Generated Electricity

If in the future some level of CO2 capture and storage is mandated for new coal-fired power
plants, that regulation will narrow and perhaps close the cost-of-electricity gap between IGCCs
and PCs, Phillips predicted. EPRI has also looked at technical improvements that could make
IGCCs more competitive. (See the free EPRI Report 1013219 on the EPRI website.)

"Among those innovations, the one that would provide the biggest improvement is using larger,
higher-firing-temperature G and H class gas turbines instead of F class turbines," he said.
These turbines offer two advantages for IGCCs: first, the larger size provides savings from
economies of scale and second, the higher efficiency decreases fuel costs and also decreases
the amount of CO2 that must be captured (on a lb-CO2 /MWh basis)."

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Jenkins was also optimistic that IGCC technology will become more competitive. As the
planned IGCC plants gain operational experience, that will led to continued enhancements in
efficiency and availability for the next fleet of IGCC plants. In addition, IGCC plants may be able
to utilize higher percentages of low-cost opportunity feedstocks, such as pet coke, thereby
further lowering power generation costs.

IGCC’s Future Prospects

POWER asked the three experts to look into their crystal balls and forecast how far along they
think IGCC technology will be in both the short-term and the long-term future.

"With only one IGCC currently under construction, another pending, and only two IGCCs
currently in operation in the U.S., it is obvious that IGCC technology will play only a small role in
generating electricity in the short term," Phillips said. "Whether its role will expand in the future
will depend in great part on the ability of suppliers to decrease capital costs so that their
technology is competitive with other options."

Jenkins was more willing to make a definite prediction about IGCC’s-term long fate. "Not much
change in the short term," he said. "But once the handful of planned units have been in
operation a few years, and there is more certainty with respect to CO2 emission limits or
reduction requirements, IGCC should become a viable choice for coal-based power generation.
Since these first IGCC plants are planned for start-up in the 2012 to 2013 timeframe, the next
fleet incorporating these enhancements would likely begin operation in the 2017 to 2020
timeframe."

Likewise, Stopek was optimistic about the technology’s future. Once GHG rules are settled and
the economy gets back on track, utilities will be able to better assess their needs for added
capacity and replacement capacity, he said. As their requirements become more defined, and if
the government takes an aggressive stand on CO2 emissions, he expects that at least one-half
of all new coal plants will be gasification-based. However, he does not think all the capacity will
be IGCC. He believes that there will be a wave of coal gasification to produce substitute natural
gas first. These plants may have natural gas combined-cycle plants installed on the same
property or simply supply gas to the pipeline. This development will be in response to the
growing demand for gas-fired generation capacity that will meet the earlyterm CO2 limitations.

"By 2020 I would not be surprised to see IGCC with hydrogen-fired engines," he said. "These will
be more efficient overall and will provide a lower carbon footprint. After more than 35 years
working on the development of IGCC technology, the wide-scale deployment of this technology
will be a gratifying achievement."

—Angela Neville is POWER‘s senior editor.

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