By Russell Ray, Managing Editor
The U.S. power sector is on the verge of a massive transformation driven by unprecedented changes in policy, pricing and technology. The investment in new infrastructure, technology and labor will reach into the hundreds of billions of dollars as power producers install costly new control technologies to existing coal-fired generation and build new cleaner-burning gas-fired generation to comply with strict new emission standards.
Utility executives are facing big choices and a lot of risk.
There is the risk of choosing the wrong technology, the wrong feedstock, the wrong strategy and the wrong construction firm. The wrong decision could lead to higher costs, higher rates, a loss of reliability and a loss of jobs.
New federal standards for mercury, sulfur dioxide and nitrogen oxide emissions have created tremendous demand for emission control systems such as activated carbon injection, flue gas desulfurization and dry sorbent injection. The sharp increase in demand means power producers could face serious shortages in materials and labor as the industry races to meet compliance standards and deadlines. Good planning and research will be essential to staying on budget and on time.
One of the biggest decisions executives face is the selection of an engineering, procurement and construction firm. With hundreds of millions of dollars at stake, choosing the wrong firm could be disastrous and costly.
The looming construction boom has attracted scores of construction firms with little or no experience in power generation. Lured by the promise of big contracts, many contractors who don’t know the difference between a combustion turbine and steam turbine are trying to break into the power sector. It’s a trend that should be worrisome for power producers facing tough compliance deadlines.
When hiring a construction firm, power plant owners need to ask several questions. Is this firm capable of handling the scope and size of the project? Do they have the design capability? Do they have the construction capability? Do they have knowledge about the location and construction codes?
After answering these questions, only then can you decide if the construction firm you’re considering can take on your project.
On April 16, the Environmental Protection Agency’s Mercury and Air Toxics Standards (MATS) became law. The new law limits mercury, acid gases and other toxic air pollution from power plants. The industry has just three years to comply. The Cross-State Air Pollution Rule (CSAPR) would place new limits on sulfur dioxide and nitrogen oxides emissions. The rule was finalized last year but was stayed by an appeals court and is pending judicial review.
Just last month, the EPA proposed standards for carbon dioxide emissions from new power plants, a measure that is sure to kill plans for new coal-fired generation and bolster the development of cleaner-burning gas-fired generation.
Together, MATS and CSAPR could result in the need to install up to 1,000 new activated carbon injection and dry sorbent injection systems that use many of the same components at power plants nationwide. The spike in demand will stretch resources, including labor and materials.
In 2008, 48 activated carbon injection systems were purchased and installed in the U.S. To meet new emission standards, some estimate that up to 300 systems must be purchased in 2012 alone.
What's more, the Energy Information Administration has forecasted that the U.S. will add 222 GW of capacity between 2010 and 2035, or about a fifth of current U.S. capacity. More than 50 percent of that new capacity will be fired by natural gas. Between 2011 and 2015, generation from more than 250 new gas-fired power plants will come online, according to EIA statistics.
In addition, AEP plans to install or upgrade emission control systems on more than 13,000 MW of coal-fired capacity. Southern Co. has similar plans for about 12,000 MW of coal-fired generation. The hope is that power plant owners and construction firms recognize the potential crunch in supplies and resources and place their orders for new generation and control technology well ahead of time to avoid delays. The key is prudent planning.
Some power providers have already completed major emission control investments and will be showcasing their projects Aug. 15-17 at COAL-GEN 2012 in Louisville, Ky. The keynote session will feature John Voyles, vice president of Generation for Louisville Gas & Electric, Greg Graves, chairman and CEO of Burns & McDonnell, and Pierre Gauthier, president and CEO of Alstom North America. To register online, go to www.coal-gen.com.
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