TXU Corp. and its private equity suitors said last Friday they have begun planning two integrated gasification combined cycle (IGCC) commercial demonstration generating plants in Texas. The move marks a change in thinking at TXU, which has said that IGCC technology was not mature enough to reliably burn the Powder River Basin (PRB) coals or lignite available to Texas generators.

Prior to the announcement of TXU’s private equity buyout (see NGI, March 5), the Dallas-based utility giant had been resolute in its assertion that IGCC plants were not yet appropriate for Texas.

The IGCC plan was announced by Texas Energy Future Holdings LP (TEF), the holding company formed by Kohlberg Kravis Roberts & Co. (KKR) and Texas Pacific Group (TPG) to acquire TXU.

TXU said it will issue a request for proposal (RFP) from companies offering coal gasification technologies with carbon dioxide (CO2) capture. TXU’s new Sustainable Energy Advisory Board (SEAB) will review the proposals. The SEAB is composed of individuals who represent the environment, customers, Texas economic development and ERCOT reliability standards, including representatives from Environmental Defense and the Natural Resources Defense Council, the two environmental groups supporting the private equity buyout.

The commitment to pursue IGCC development in Texas is one of the concessions brokered by environmentalists involved in crafting the TXU buyout plan. TXU and its supporting environmental groups have come in for criticism by some who call TXU’s agreement to cancel eight planned pulverized coal-fired plants a hollow victory for the environmentalists who negotiated the agreement as part of TXU’s buyout talks. Analysts are now saying they expect the cancellation of plans for other coal-fired plants across the country (see related story).

“Over the past year we have held steady in our belief that integrated gasification combined cycle (IGCC) holds the most promise for future coal use in Texas,” read a statement Friday from Jim Marston, Environmental Defense regional director. “Today’s announcement that TXU has started the planning process and is investigating two IGCC plants with carbon capture and storage in Texas is another step in the right direction and directly contradicts the inaccurate claim that IGCC is not a feasible alternative here.”

“We have been listening to and following the lead of [Texas] Gov. Rick Perry, legislators and interested parties all over Texas,” said TPG’s Michael MacDougall. “We are announcing our intention to dedicate two sites for these new facilities. We are inviting representatives from communities across the state to contact the company with their views on the various site options.”

From the proposals it receives, TXU said it will select two or more competing IGCC technologies that can be developed and commercially deployed with CO2 capture in power plants utilizing PRB and lignite coals, respectively, as the primary fuel source. This project will focus on driving efficiency improvements, emissions reductions and technological breakthroughs that could enable IGCC to meet the growing energy needs of Texas. Linking the technological expertise of selected providers with TXU’s operational expertise will create a combination capable of redefining research and development in the power sector.

Late last year the results of an Electric Power Research Institute (EPRI) study were published that examined the performance of IGCC versus pulverized coal technology when burning PRB or lignite in Texas. The study showed the economics of the two plant technologies were similar, Stuart Dalton, EPRI director, generation, told Power Market Today in January. When carbon capture is added to each plant, the pulverized coal plant performed better from an emissions standpoint, but without carbon capture the IGCC plant performed better on emissions.

Selected IGCC development partner companies of TXU will be focused on two major objectives: (1) research and development aimed at improving the efficiency, cost profile and environmental performance of gasification technologies; and (2) front-end engineering and development for IGCC units at existing sites originally reserved for the now-suspended pulverized coal units. The identified plant sites will be well-situated to support carbon capture and sequestration projects. If acceptable proposals are submitted in response to the RFP, these new facilities could be the first power plants in the world to separate and sequester CO2.

Last month, TXU announced a joint venture with Evergreen Energy Inc. to design, test and implement Evergreen’s K-Direct coal refining process for potential use at existing and proposed coal-fired plants.

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