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Combustion Industry News

From the IFRF's correspondent in Australia
From the Sydney office
Contributed by Patrick Lavery
Australia, Thursday 29th June 2017

Mississippi regulators decline further price support for Kemper coal gasification/CCS plant

The state of Mississippi has decided not to allow Southern Company, the owners of the carbon capture and storage-equipped Kemper integrated gasification combined cycle power plant, to raise their electricity prices in order to cover further expenses to make the facility fully operational. With the project now US$4 billion (€3.5 billion) over and some years past its original schedule, the Public Service Commission regulatory body appears to have run out of patience, advising Southern Company (and its subsidiary Mississippi Power) that it would not be allowed to recover from ratepayers the cost of its gasifiers, and that the plant should run on natural gas (as it has been doing until now) instead. The unexpected decision is a major blow to Southern Company, which aimed to have the first commercial CCS-equipped coal-fired power plant in the US. Instead, it is looking at a huge debt while also seeing no final technical solution in sight for its original plans. According to E&E News, while both gasifiers have worked at times, there may be a need to redesign some parts of the plant to allow continuous operation, and this in itself may take 18 months to two years. Southern Company and the PSC have 45 days to come to an agreement over the matter, but the news will be discouraging for the entire nascent CCS industry.

Climate Leadership Council proposes US carbon tax and abolition of environmental regulations

A new business-driven alliance aimed at combatting climate change has officially been unveiled, including companies such as BP, Total, ExxonMobil, Schneider Electric, Shell and General Motors, as well as individuals such as Nobel Prize-winning physicist Steven Chu, the former US Secretary of Energy, Michael Bloomberg, and Stephen Hawking. Conservation International and The Nature Conservancy are also members. The Climate Leadership Council aims to develop policy to combat climate change, and at present has a focus on a type of carbon tax, replacing environmental regulations (such as the Clean Power Plan), which returns its revenue to “the American people”, rather than keeping it as government revenue. An “adjustment tax” would be put in place for imported products that were not already subject to some form of carbon taxation. With its regulation cutting component, the policy may appeal to the current Trump administration, though there is no sign yet of such appeal, despite members of the CLC meeting with the administration some months ago.

Leading anti-Rampal critic receives death threats

Reuters has reported on death threats received by Bangladeshi academic Anu Muhammad in regards to his opposition to the proposed Rampal coal-fired power plant, planned to be built 69 kilometres from the edge of the UNESCO World Heritage-listed Sundarbans mangrove forest. Mr Muhammad has been a leader of the opposition to the project, and describes the Sundarbans as "a huge natural safeguard against frequent cyclone, storm and other natural disasters in the country." In October last year, Mr Muhammad received a text message reading “Say 'yes' to Rampal otherwise you will be hacked to death incredibly by us!" The article suggests two possible senders of the threats, one a group linked to Al Qaeda (which in 2014 killed a sociology lecturer) and one linked to the ruling government, which is championing the plant. Such threats have been made against a range of activists in Bangladesh, and have been effective in reducing activist activity, according to Erin Kilbride of the human rights campaign group Front Line Defenders. The United Nations has called for the plant to be relocated, but to date, there have been no changes to the site of the proposed plant, which is due to become operational in 2021.

Gorgon CCS project to become world’s largest, possibly within months

The Australian Financial Review has looked at the upcoming start of the carbon capture and storage facility that will form part of Chevron’s US$54 billion (€48 billion) Gorgon LNG project, off the coast of Western Australia. The CCS facility, currently costed at AU$2 billion (US$1.5 billion/€1.3 billion), will be capable of storing three times as much CO2 as the world’s largest currently operating facility, Shell’s Quest facility in Canada. Brad Page, the CEO of the Global Carbon Capture and Storage Institute, said that the Gorgon project shows the commercial viability of CCS for LNG projects, and would demonstrate it even if the cost of the CCS facility doubled. The facility will store between 3.4 and 4.0 million tonnes of CO2 per year, accounting for a reduction in greenhouse gas emissions of around 40%. Apart from the environmental aspect, there is a good reason to separate out CO2 – one of the gas fields has concentrations of CO2 at 14%, a level that would cause the gas mixture to freeze during the LNG production process. While Chevron has not been firm on a launch date for the CCS facility, Mr Page expects it to begin operation within months.

UK’s Carbon Trust establishes Energy Systems Innovation Platform

The UK’s Carbon Trust has launched a new initiative called the Energy Systems Innovation Platform, which brings together a range of power generation companies, including Centrica, DONG Energy, SSE, Scottish Power, Statoil and Wood Group, to “solve key issues currently preventing a more effective transition to a low cost and low carbon energy system.” While the companies have both renewable and conventional power generation assets, the focus of the work of the new platform is energy storage, particularly as a means to better integrate wind energy into the grid. It aims to publish its findings on business models, regulatory barriers and solutions by the end of the year, and they will be of interest to conventional power generators in understanding the possible future shape of the UK energy system.

General Electric uses Alstom network to win supply contract for Romanian power plant

General Electric has won a major contract to supply a range of components for a 430 MW gas-fired power plant to be built in central Romania. The award comes through the network that GE gained access to when acquiring Alstom in 2015, the first major east European deal to be gained this way. The €268 million (US$299 million) combined-cycle plant is to be built by Duro Felguera and Romelectro, with GE supplying four 6F gas turbines, two steam turbines and four heat-recovery steam generators. Due to be opened in 2019, the plant will be operated by state-owned Romgaz.

Bidders showing interest in Engie’s Loy Yang B plant

The sale of Engie’s lignite-fired 1050 MW Loy Yang B, the youngest such plant in the Australian state of Victoria, has moved forward a few notches, with Australia’s Delta Electricity and China’s Alinta Energy amongst the companies preparing bids. Delta already owns another Australian coal-fired plant, and sees coal-plants as essential to future baseload power generation (especially as older coal-fired plants close), while Alinta is reported to be interested only if they can get the plant cheaply. Loy Yang B, which Engie jointly owns with Mitsui & Co (which holds a 30% stake), may sell for around AU$1 billion ($US758 million/€677 million), according to Reuters.

Centrica to sell Langage and South Humber power stations

In further UK news, Centrica has announced that it is to sell its Langage and South Humber combined-cycle gas turbine plants, which have a combined capacity of 2.3 GW, to a subsidiary of the Czech utility EPH for £318 million (US$412 million/€362 million). Centrica wishes to move away from baseload power generation and towards more peaking plants, energy storage (as the Carbon Trust story indicates) and customer-facing business. For EPH, it will add to the existing UK portfolio of Lynemouth and Eggborough coal-fired power stations, the latter of which EP wants to transform into three gas-fired units. The deal is subject to EU merger clearance, and is expected to go through in the second half of the year.


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