1. IGCC Integrated Gasification Combined Cycle

2. IGCC - Industry Coal based IGCC plants went through an important development stage during the 1990s Grew 50% from 1990-1999 Currently growing at a rate of 10% per year Almost all coal power plants that are currently being installed are IGCC gasification plants

3. IGCC – US Demonstration Plants Subsidized by DOE Tampa Electric, FL – Texaco/GE Wabash River, West Terre Haute, IN Pinon Pine, Nevada

4. IGCC – Variations Design integration – plant efficiency, start- up time Gasifier Formats - Fixed Bed, Fluidized Bed, Entrained Flow Process operation temperature Mix of coal, oxygen and air Catalyst (i.e. Syngas can be used to make plastic)

5. IGCC – Driving Forces Push towards ZERO emissions Global Warming High Natural Gas Prices

6. IGCC – Benefits to Utilization Lower SO 2, NO X, and CO 2 emissions Half the volume of solid waste as a conventional coal plant Higher Thermal efficiency – lower fuel costs Gasification uses less coal than burning to produce the same amount of power

7. IGCC – Barriers to Market High capital costs relative to competing technologies Technological feasibility still in development – demonstration phase Need more stringent environmental regulations Geographically, there is little room to build more coal burning plants - saturated

8. IGCC – Cost Comparison IGCC: $1,200-$1,400 per kW Conventional coal-fired plant: $1000 per kW Natural gas combined-cycle plant: $500 per kW However, coal is much cheaper and more plentiful than gas

9. IGCC – Technological Uncertainty No company is producing an IGCC as a single component Components are sold by different companies Higher financing costs Longer construction times

10. IGCC - Illinois Stephen Shaw Power Holdings of Illinois LLC Developing a Coal Gasification Facility in Jefferson County, southwest of Mount Vernon IL 2004 – Started Planning 2007 – Start Construction 2009 – Completed Plant

11. IGCC – Illinois Technology GE Gasification Technology Leader in Gasification Technology 100 Gasifiers in Operation 50% Market Share Entrained-flow Gasifier – operate at higher temperatures, pulverized feed Oxygen blown – highly integrated, less gas to clean

12. IGCC - Illinois Coal Mining Mine Mouth Gasification Facility Requires Opening a New Mine Uses 12,000 Tons of Illinois Coal Every Day – 4 Million Tons/Year IL Coal Btus = Saudia Arabia Oil Clean Air Act Amendments of 1990 – Too Much Sulfer in IL Coal 23 Coal Plants in IL – Only 3 Use IL Coal

13. IGCC – Illinois Facility Costs and Funding Current Estimated Cost is 1 Billion Clean Coal Review Board - $2.5 Million IL Dept. of Commerce and Economic Opportunity - $500,000 Possible $130 Million in Tax Credits and Loan Guarantees from Federal Govt. Financing – Solid Business Model and Revenue Stream to Gain Capital Investors

14. IGCC – Illinois Facility Production 50 Bcf of Synthetic Natural Gas Annually 5% of What Illinois Uses

15. IGCC – Illinois Facility Specifics The plant makes O 2 Coal slurry is mixed with O 2 in a metal cylinder lined with brick Placed under high pressure to create partial combustion Gas comes out the top Gunk comes out of the bottom and is used as a building materials Sulfur is scrubbed out of gas and used to make Sulfuric Acid

16. IGCC – Illinois Facility Specifics (2) Remainder is Syngas – CO and H 2 Syngas used to power turbine to create electricity Syngas is run through a nickel-based catalyst producing CH 4 and H 2 0 CH 4 (natural gas) goes right into pipeline to customers CO 2, greenhouse gases, sequestered and stored underground

17. IGCC – Illinois Legislation Senate Bill 90 Consumer and Utility Benefits Price Cap - SNG Price 18-30% than Conventional Natural Gas Permits gas utilities to enter into 20-year supply contracts with any SNG producer - Per Se Prudent Producers can secure sales contracts to obtain project financing No State Subsidies or Added Cost to Ratepayers

18. IGCC – Illinois Supply Contracts Working with the Illinois Commerce Commission 3 Utilities – Ameren, People’s and Nicor Each Utility gets 1/3 of SNG Produced Sales Contracts are Identical

19. IGCC – Illinois Economic Benefits Natural Gas Expenditures Stay in the State Aggregate Economic Benefit - $7-10 Billion over the Life of the Project 1400 New Jobs – 300 Mining, 150 Plant Facility, 1000 Construction (3 Years)

20. IGCC – American Electric Power (AEP) in Ohio Nation’s largest utility and biggest coal burner Depends on coal to generate about 70% of its electricity PUCO granted request to recover full cost of first phase of IGCC facility from ratepayers - $23.7 million Phase one - finding other financing options, then AEP will apply to PUCO for full facility cost recovery from ratepayers

21. IGCC – We Energies in Wisconsin Regulatory commission rejected proposal to include plant costs in rate base Reasons included uncertainty of technology IGCC is not a BACT in WI Based on cost analysis, commission preferred to build a conventional coal plant

22. IGCC – Question of Motivation Push or Pull to Market Push: Increased environmental regulation, require decrease in emissions Demand-side (i.e. California – utilities may not purchase power from plants that produce more CO2 than the latest natural gas plants

23. IGCC – Question of Motivation (2) Pull: Tax incentives, subsidies Incentives (i.e. Wyoming – utilities get tax breaks for building coal gasification plants, construction credits) Utilities expect regulations they are just uncertain of when and what, so put them in place sooner than later, utilities need to be locked in to the future otherwise they will just keep building gas turbines

24. IGCC – Illinois Motivation Entrepreneurship Revenue Public Interest