Federal Policy Drives New Power Projects
Through most of the past decade, rising demand for electricity in the U.S. led utilities and independent power companies to plan, design and build scores of new powerplants.
With an anemic economic recovery and a focus on energy efficiency, now electricity demand is essentially flat, and new plant construction is driven more by federal and state energy policy than by load growth. That summation is the consensus of power generators, contractors and others who say that while some plants fired by coal or natural gas are still being built, policy-makers are providing loan guarantees and other incentives to jump-start the development of new nuclear, clean-coal, solar and wind projects.
The plan by Abengoa Solar to build a 250-MW concentrating solar plant near Gila Bend, Ariz., is a prime example. Earlier this summer, the U.S. Dept. of Energy offered Seville, Spain-based Abengoa a $1.45-billion loan guarantee to support the construction of the project, expected to break ground later this year.
Federal loan guarantees also are helping to advance a plan by Atlanta-based Georgia Power and its partners— Oglethorpe Power, Tucker, Ga., and the Municipal Electric Authority of Georgia, Atlanta—to build two 1,117-MW nuclear units at their jointly owned Vogtle nuclear station near Waynesboro, Ga. The Georgia Power joint venture in June accepted $8.2 billion in DOE loan guarantees for the Vogtle expansion project. The guarantees will support loans providing up to 70% of the cost of the two new units. Sitework for the units already is under way, and Georgia Power and its partners expect to secure a combined construction and operating license for the project from the Nuclear Regulatory Commission as soon as late 2011.
Baton Rouge, La.-based Shaw Group and its Westinghouse subsidiary, which is based in Cranberry Township, Pa., are serving as engineering-procurement-construction (EPC) contractor. Shaw and Westinghouse also serve as EPC on the joint plan by South Carolina Electric & Gas of Cayce, S.C., and Santee Cooper of Moncks Corner, S.C., to add two 1,117-MW units to their V.C. Summer nuclear station near Jenkinsville, S.C. The project partners are awaiting word from DOE on whether they too will be offered a multibillion-dollar loan guarantee.
“We remain very optimistic that both V.C. Summer and Vogtle are going to continue to proceed in parallel and will be coming online in 2016,” says Shaw Executive Vice President and CFO Brian Ferraioli.
DOE’s loan guarantee programs for solar and nuclear projects are key elements of the Obama Administration’s effort to support the development of power projects that do not contribute to climate change. The administration is helping to advance coal-based projects that promise to capture and sequester most of their greenhouse-gas emissions. For instance, Summit Power Group of Poulsbo, Wash., will receive $350 million in American Recovery and Reinvestment Act funding as well as DOE’s Clean Coal Power Initiative round-three funding for its planned 400-MW, integrated gasification combined-cycle plant in Penwell, Texas.
Keith Manning, executive vice president at Zachry Holdings Inc., San Antonio, says the powerplant construction business would benefit not only from an improving economy but from “more legislative and regulatory certainty” from the federal government. Manning says federal support has aided nuclear, clean coal and solar development, but that utilities still are not sure what future federal policy will be on reducing sulfur dioxide, nitrogen oxide and other pollutants, and on regulating and pricing CO2 emissions. Zachry itself has secured several power-related projects in tough times, Manning notes, including, recently, the EPC contracts for two 1,250-MW, natural gas-fired combined-cycle plants that Florida Power & Light of Juno Beach, Fla., is developing at its Cape Canaveral and Riviera Beach stations. Zachry also is part of a consortium with Burns & McDonnell of Kansas City, Mo, and Mitsubishi Power Systems America of Lake Mary, Fla., designing, equiping and building the 650-MW Coleto Creek Unit 2 coal plant in Goliad County, Texas.
