June 22, 2017 Read More →

Regulators Acknowledge Failure of $7.5 Billion Kemper ‘Clean Coal’ Experiment

Bloomberg News:

A first-of-its-kind “clean coal” power plant that utility owner Southern Co. spent years constructing in Mississippi may end up burning no coal at all — and instead just run like a natural gas generator.

After years of delays and billions of dollars in cost overruns, Mississippi regulators on Wednesday called on Southern to work up a deal that would have the Kemper plant fueled only by gas. The state Public Service Commission said in a statement that it’s looking for a solution that eliminates the risk to ratepayers “for unproven technology,” which involved converting coal into gas that could then be used to generate electricity — all while capturing emissions.

Settling for gas only at Southern’s Kemper plant threatens to undermine the business rationale for the kind of clean-coal technology the Trump administration has hailed as a way to save jobs at mines. It would mark the end of a very costly venture that has company investors demanding pay cuts for executives. The utility owner is also grappling with its long-delayed, over-budget Vogtle nuclear project in Georgia.

“Clean coal was a very uncertain prospect after all the cost overruns, and difficulty getting the gasifiers to work just makes it worse,” Kit Konolige, a New York-based utilities analyst for Bloomberg Intelligence, said by phone Wednesday. “But gas is so cheap it would have been an uphill battle even if this plant had been finished on time and on budget.”

A first-of-its-kind “clean coal” power plant that utility owner Southern Co. spent years constructing in Mississippi may end up burning no coal at all — and instead just run like a natural gas generator.

After years of delays and billions of dollars in cost overruns, Mississippi regulators on Wednesday called on Southern to work up a deal that would have the Kemper plant fueled only by gas. The state Public Service Commission said in a statement that it’s looking for a solution that eliminates the risk to ratepayers “for unproven technology,” which involved converting coal into gas that could then be used to generate electricity — all while capturing emissions.

Settling for gas only at Southern’s Kemper plant threatens to undermine the business rationale for the kind of clean-coal technology the Trump administration has hailed as a way to save jobs at mines. It would mark the end of a very costly venture that has company investors demanding pay cuts for executives. The utility owner is also grappling with its long-delayed, over-budget Vogtle nuclear project in Georgia.

“Clean coal was a very uncertain prospect after all the cost overruns, and difficulty getting the gasifiers to work just makes it worse,” Kit Konolige, a New York-based utilities analyst for Bloomberg Intelligence, said by phone Wednesday. “But gas is so cheap it would have been an uphill battle even if this plant had been finished on time and on budget.”

Once seen as the prototype for a new generation of clean-burning coal plants, Kemper has been plagued by construction challenges. The part of the plant that turns the coal into gas is months behind schedule and the plant’s costs have more than doubled from an original $2.88 billion budget.

Southern has said it will seek to recover the costs of the Kemper project through customer rates. The company has delayed the startup of the entire plant at least five times so far this year.

In its latest update on the project, Southern disclosed a leak on a gasifier at the plant and said it needed more time to establish “sustained operation” of both gasifiers to produce electricity.

A First-of-Its-Kind Clean Coal Plant May Not Burn Coal at All

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