The U.S. Department of Energy is moving forward with plans to provide $450 million in funding for an advanced coal-fired power project in Texas.

The proposed Texas Clean Energy Project is a 400-MW integrated gasification combined-cycle facility to be built 15 miles west of Odessa, Texas, being pursued by developer Summit Power Group Inc. The plant will capture 90% of emitted CO2 — an estimated 3 million tons annually — and use it for enhanced oil recovery in Texas.

In a Sept. 27 news release, DOE said it issued a record of decision, or ROD, for the project that together with a signed cooperative agreement will allow federal funding to be used to help construct the IGCC plant.

“The integration of carbon capture, utilization, and storage technologies planned for this flagship project are vitally important to America and the world,” said Chuck McConnell of the DOE’s Office of Fossil Energy. “The Texas Clean Energy Project is a significant step forward that demonstrates the Administration’s commitment to developing clean energy technologies, creating jobs, and reducing emissions of greenhouse gases.”

DOE said that during the ROD process it considered the potential environmental impacts from the project, the practical options for mitigating the impacts and the importance of achieving programmatic and legislative mandates.

The project, managed by the Office of Fossil Energy’s National Energy Technology Laboratory, will be partially funded with $450 million from DOE’s Clean Coal Power Initiative, or CCPI. Approximately $211 million will come from American Recovery and Reinvestment Act funds dedicated to the CCPI, DOE said. The CCPI is a cost-shared partnership between the federal government and private industry with a goal of stimulating investment in low-emission, coal-based power generation technology through successful commercial demonstrations.

The Texas Clean Energy Project’s total capital cost in 2009 dollars is $1.73 billion, according to the DOE. The balance of the project funding is expected to come from private sector investors and lenders. The project is expected to employ an average of 650 construction workers during construction with a peak of 1,500 workers.

Summit Power Group has signed agreements with companies to sell both the CO2 and the electricity generated by the plant.

The Texas Clean Energy Project is far from the only new coal-burning plant moving forward, despite the gloomy headlines about coal unit retirements from cheap natural gas and strict air pollution regulations. In fact, several thousand megawatts of coal-fired generation are under construction and expected to come online in the next few years. Almost all of the new coal capacity is in the South and Midwest. Many units are in advanced stages of construction, and many still face legal challenges.

source: SNL Financial by Dan Lowrey