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Duke Energy: Cleaning Up Coal Even Pricier Than Expected

Duke Energy (s DUK), one of the country’s largest utilities and consumers of coal in the U.S., aims to fire up a new coal plant in 2012 in Indiana — a 618-MW behemoth meant to test carbon capture and storage technology and use what’s called integrated gasification combined cycle tech to limit the plant’s emissions and water use. It was never going to be cheap, but now the utility says cost estimates for the project have ballooned to a whopping $2.88 billion, up from original 2007 estimate of less than $2 billion and a later revised estimate of $2.35 billion.

Duke needs approval from state utility regulators to hike up electricity rates by some 19 percent to cover the rising costs. The company’s notice to the utility commission today comes at a time when coal kingpins are fighting in Congressional hearings to boost federal aid for carbon capture and storage projects, and to promote coal as the cheapest and most abundant resource around for electricity generation in the U.S. (They’re butting heads with oil baron and natural gas promoter T. Boone Pickens in the process.)

So what did Duke overlook in its previous cost estimates for a project that the utility says is now nearly 60 percent complete? General complexity. “As engineering progressed, the project’s design and complexity expanded significantly,” James Turner, president and chief operating officer of Duke’s regulated utilities, said in a statement today.

As part of the investment that regulators have already approved for the project, Duke plans to spend $17 million studying capture and underground storage of carbon dioxide emissions at the plant. According to Secretary of Energy Steven Chu, carbon capture and storage technology as it exists today would increase the cost of generating energy from coal by about 80 percent. But the tech needs to be ready for “widespread, affordable deployment” — somewhere in the range of 20-25 percent above today’s coal costs — within a decade, Chu said in an event hosted by Google (s GOOG) last year. Duke’s rising cost estimates offer a glimpse of the hurdles sure to arise en route to that goal, while highlighting the urgency to commercialize low-cost green alternatives and making efficiency look like a pretty good deal.

Graphic courtesy of the International Energy Agency's CCS Technology Roadmap

2 Responses to “Duke Energy: Cleaning Up Coal Even Pricier Than Expected”

  1. I seriously hope that Pickens beats back the competition. $2.88 billion is a huge amount of money and that sort of investment could finance a formidable number of wind turbines which have no need for carbon capturing technology. Wind is already clean and it is a great investment. Many studies done by the AWEA report that a wind turbine can pay for itself in as little as 5 years at current electricity rates. With a looming 19 percent cost increase to Indiana electricity consumers some of the population should be waking up to the fact that good money is being thrown after bad money now. Seriously, something should be done about the use of coal because I have seen many photographs online showing the mountaintop removal mining that is done for coal. It is just devastating and if you are curious as to the effects of this mining practice, I suggest doing a Google search for it. The pictures are a horror story.