Rising costs drag down coal projects
- From: "nada" <dave.walters@xxxxxxxxxxx>
- Date: 10 Jan 2007 14:17:45 -0800
[Seems Duke could build a APWR for the cost of the coal plant.
Interesting. --David Walters]
From POWER GEN NEW
Rising costs drag down coal projects
Rapidly increasing costs are roiling the economic waters for utilities
looking at new coal-fired plants. The problem affects not just the
state-of-the-art integrated gasification combined-cycle plants but
conventional pulverized coal projects as well.
Late last year, Westar Energy, based in Topeka, Kan., said it is
delaying a siting decision for a planned 600-MW PC plant in the eastern
portion of the state, citing rapidly escalating cost estimates.
Effectively, Westar said it is reevaluating its decision to go for
coal.
Westar's original estimate for the project was $1 billion, and the
state's largest utility said it would make a siting choice by year-end.
But big-time cost escalation has derailed that schedule.
Said Westar CEO James Haines, "When we started this process over a year
ago, the lowest cost means to satisfy these needs was with a
coal-fueled plant. With the recent increases in the estimated cost of
coal plants, however, that assumption does not necessarily remain
valid. When equipment and construction cost estimates grow by $200
million to $400 million in 18 months, it's necessary to proceed with
caution."
Westar started looking at sites for a new coal-fired plant in May 2005.
Since then, the company said in a press release, "most major
engineering firms and equipment manufacturers of coal-fueled plant
equipment are at full production capacity and yet are not indicating
any plans to significantly expand their production capability. As a
result, fewer manufacturers and suppliers are bidding on new projects
and equipment prices have escalated and become unpredictable."
Westar said the market dynamics have caused the gap between coal and
other fuels-primarily natural gas-to narrow. Local environmentalists
are arguing that Westar's experience should boost the prospects for
wind energy in windy Kansas, although it's much more likely that gas
would be the fuel of choice.
More significantly, Westar's collision with a tightening market for
concrete, steel, equipment, and labor could influence the plans of
Sunflower Electric Power Corp., a Kansas generation and transmission
(G&T) cooperative, to build three new 700-MW PC plants, at an estimated
total cost of $3.6 billion, in the western part of the state. A
Sunflower spokesman told the Lawrence Journal-World that the Westar
decision would have no effect on the co-op's plans.
The Sunflower project has earned opposition from environmentalists,
eight states, and the Lawrence City Commission. It represents a major
risk for the G&T, which now has some 595 MW of generating capacity,
although much of the financing might come from the federal government's
Rural Utilities Service and the Cooperative Finance Corp.
Westar isn't the only power developer to take an even sharper pencil to
its coal-fired plans. POWERnews reported last week that American
Electric Power is having trouble getting a reliable bottom line on the
costs of an IGCC plant in West Virginia.
Also, Duke Energy in November said it was revising the cost of its
planned two-unit, 1,600-MW Cliffside pulverized coal plant in North
Carolina from $2 billion to $3 billion. And the New York Power
Authority (NYPA) late last year gave "conditional" approval to a plan
by NRG Energy to build a 600-MW IGCC plant in the town of Tonawanda.
The condition is that the project's price tag of $1.5 billion must come
down, or the developer must find additional funding sources beyond the
state public power agency.
NYPA selected the NRG project over a pulverized coal project proposed
by AES Corp.
.
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