Leczna IGCC Project: High costs and unreliable operations can be expected
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Key Findings
The Ministry of Energy has estimated that the proposed Łęczna IGCC project would cost somewhere in the range of 7.8 million PLN/MW to build.
ENEA’s EIA estimates that the gross capacity of the Łęczna IGCC Project would be 545 MWe, with a net capacity of ~488 MWe. This assumes that 57 MWe, or slightly more than 10% of the plant’s output would be consumed running onsite plant equipment.
ENEA’s EIA application assumes that Łęczna will operate an average of 6,500 hours a year, for an average plant availability of 74%. However, based on the experience of Edwardsport, Łęczna cannot be expected to operate these many hours on gasified coal. Nor can the plant’s gasification system be expected to operate reliably.
Executive Summary
A number of the key assumptions submitted by ENEA SA for its proposed Łęczna integrated gasification combined cycle (IGCC) project are very unrealistic and bias the results of ENEA’s net present value (NPV) analysis in favor of completing the project. These flawed assumptions include:
- Plant construction cost
- Likely Net Installed Capacity
- Plant operating costs
- Plant heat rate
This assessment is based on the actual construction and operating experience at the only two IGCC plants built in the U.S. in the past 10 years: The Edwardsport IGCC Project (Edwardsport) built in Indiana by Duke Energy and the Kemper IGCC Project (Kemper) built in Mississippi by the Southern Company.
Overall, the U.S. experience has shown that it is extremely expensive to build and operate new IGCC power plants, and that, once completed, these plants do not operate reliably. This is especially true for systems involved in the gasification of coal.
As background, during the past 15 years, many U.S. utilities considered but then rejected IGCC projects because the technology was untested and involved higher financial risk than conventional power plants. In the end, Edwardsport and Kemper were the only two to proceed, while more than 25 proposed plants in the U.S. were cancelled because of customer and/or investor risks. Only Edwardsport actually operates on gasified coal, as Kemper’s gasification systems proved too expensive and unreliable (Kemper runs now instead on natural gas).
Construction began at the 618 MW (net) Edwardsport IGCC Project in 2007, and the plant was declared to be in service in June 2013, although it didn’t complete pre-operational testing until April 2014. Construction began at the 824 MW (net) Kemper IGCC Project in 2010 and ended in 2017 when the decision was made to operate the plant as only a natural gasfired combined cycle unit.
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Press release: IEEFA report: Polish ‘clean coal’ project risks high construction and operating costs and unreliable performance
