Sept. 26, 2018 (IEEFA) — A proposed gasified-coal-fired power project at Łęczna in Poland risks high build costs and unreliable operation, given real-world experience of similar technology in the United States, concludes a report published today by the Institute for Energy Economics and Financial Analysis (IEEFA).
The report—“Łęczna IGCC Project: High Costs and Unreliable Operations Can be Expected”—draws parallels between the proposal by the Polish utility ENEA SA and two failed projects in the U.S.: Southern Company’s Kemper County Energy Facility in Mississippi and Duke Energy’s Edwardsport Power Station in Indiana.
The report questions ENEA SA’s construction and operational cost estimates for Łęczna, as well as the day-to-day viability of the project if it were built, and its impact on consumers. It concludes that the proposed project would be unable to compete with increasingly inexpensive forms of renewable energy.
“Overall, the U.S. experience has shown that it is extremely expensive to build and operate new IGCC (integrated gasification combined cycle) power plants, and that, once completed, these plants do not operate reliably,” wrote David Schlissel, IEEFA’s director of resource planning analysis and lead author of the report. “This is especially true for systems involved in the gasification of coal.”
Edwardsport, which began construction in 2008 on a $2 billion budget, cost $3.55 billion to build. Kemper’s construction costs, estimated at $2.4 billion at the outset of construction, exceeded $7.5 billion.
Both also took much longer than expect to come online. Edwardsport, originally scheduled to be finished by the summer of 2011, didn’t begin producing electricity until 2013 and did not complete operational testing until 2014. Kemper came online a year later than expected, in 2014.
Neither plant has performed as promised. Kemper operators gave up on coal gasification entirely, and the plant runs now on natural gas. Edwardsport has been hobbled by “parasitic” power loads that sap much of the electricity it produces to run its own equipment. As a result, the plant has operated at barely half its peak capacity, including both the time that it runs on gasified coal and on natural gas.
“A number of the key assumptions submitted by ENEA SA for the proposed Łęczna Integrated Gasification Combined Cycle (IGCC) project are very unrealistic,” Schlissel said.
The report concludes that the Łęczna project may emit more carbon dioxide than ENEA has acknowledged, and that its electricity would be prohibitively expensive, and on the latter point, Schlissel said the Edwardsport case is especially instructive.
“The all-in cost of Edwardsport, including financing costs, fuel and non-fuel O&M costs, has been extremely expensive for Duke’s customers. In the 55 months between June 2013 and December 2017, customers paid $1.76 billion for only 12.3 million MWh from the plant during this period, equivalent to an average cost of $143.19 per MWh. Including the $397 million in financing costs that Duke’s customers paid for the plant before it was declared to be in-service costs increases the all-in cost of Edwardsport to customers to $175.53 per MWh.”
“As a result, power from Edwardsport has been much more expensive than the cost of buying the same energy and capacity from the competitive wholesale markets.”
The Institute for Energy Economics and Financial Analysis (IEEFA) conducts global research and analyses on financial and economic issues related to energy and the environment. The Institute’s mission is to accelerate the transition to a diverse, sustainable and profitable energy economy.