High costs have trumped high hopes in the quest to reduce globe-warming pollution from coal-fired power plants.
A day after American Electric Power said it would halt a project to bury carbon dioxide deep beneath a coal-fired power plant in West Virginia,
High costs have trumped high hopes in the quest to reduce globe-warming pollution from coal-fired power plants.
A day after American Electric Power said it would halt a project to bury carbon dioxide deep beneath a coal-fired power plant in West Virginia, experts say the decision reflects a seismic change in the economics of generating electricity.
Since AEP announced its $668 million "carbon-capture" plan in 2009, estimates of the cost of the technology have grown. Natural-gas prices also have plummeted, and Congress has been unable to agree on a system for regulating carbon dioxide.
"Urgency has been diminished," said Chris Lafakis, an energy economist for Moody's Analytics.
Those same dollars might be better spent on building natural-gas-fired power plants, he said.
"It's a very different kind of world we're looking at now," said Kenneth B. Medlock III, an energy economist at Rice University in Houston.
One of the key differences is that Congress isn't close to an agreement about carbon regulation. As recently as 2008, many observers viewed such a deal as inevitable and those assumptions made carbon capture seem more feasible, he said.
Industry officials say clean-coal research is still very much alive. Southern Co. is testing a similar carbon-dioxide system at its Barry power plant in Alabama, said Revis James, director of the Electric Power Research Institute's Energy Technology Assessment Center.
"The stoppage of work at Mountaineer is not going to fundamentally change what we are going to do," James said, referring to the name of the AEP plant.
A new coal plant with carbon capture would cost $137 per megawatt-hour, according to the most-recent forecast from the Energy Information Administration. That is based on the estimated cost of construction and operation in 2016. The amount is more than double the cost from a gas-fired plant, which is $62.
Those numbers do not reflect the costs to modify plants such as Mountaineer.
AEP officials said the decision was tied to the sluggish economy and lingering uncertainty about federal energy policy. Spokesman Pat Hemlepp said the rising cost of carbon capture was not a significant factor, noting that "costs always rise" on construction projects.
The company also cited difficulties in getting state regulators to approve charging customers for the costs of carbon capture. The company, which is active in 11 states, has run into these kinds of problems in Indiana, West Virginia and Virginia.
"We were willing to pay our fair share," said Byron Harris, director of West Virginia's Consumer Advocate Divisi