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Clean coal’s future isn’t looking so bright today, as Mississippi regulators voted to stop progress on the second clean coal power plant in the U.S. in favor of cheaper natural gas.
Southern Co., the utility that has been working on a new type of coal-fired power plant that emits no CO2, seems to be out of luck – the Mississippi Public Service Commission has asked the company to keep the Kemper plant running on natural gas, saying this will “eliminate ratepayer risk for unproven technology and assure no rate increase” for the consumers of the electricity to be generated at Kemper.
The Kemper plan was supposed to work by converting coal to gas and then turning this gas into power. The project became controversial as costs ballooned from US$2.3 billion when it was launched, to US$7.5 billion now. What’s more, the coal technology was never implemented – the Kemper plant was supposed to start gasifying coal in 2014, but instead it has been operating as a gas-fired plant since 2015, according to Climate Investigations Center’s Dan Zegart.
Environmentalist groups naturally hailed the decision, as did consumer groups – the commission also asked Southern Co. to roll back current electricity rates for Mississippi customers of its local subsidiary Mississippi Power.
On the other hand, Bloomberg notes, the failure of the Kemper project, which was supposed to be the first of its kind in the clean coal segment, would undermine the Trump administration’s efforts to revive the U.S. coal industry, which has suffered a heavy blow from the sharp growth in cheap natural gas supply thanks to the shale revolution.
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One analyst told Bloomberg that clean coal is a “very uncertain prospect” but even if it was certain, the commercial viability of the Kemper project as a coal-fired plant is questionable today because of the ample supply of affordable gas.
Gas has already overtaken coal as the main source of power generation, although by less than four percentage points to date: gas accounts for 33.8 percent of the energy mix for power generation, versus 30.4 percent for coal, according to the Energy Information Administration. Ten years ago, coal accounted for over half of power generation capacity in the U.S.
By Irina Slav for Oilprice.com
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Irina is a writer for the U.S.-based Divergente LLC consulting firm with over a decade of experience writing on the oil and gas industry.