Progress & Challenges With Technology

Carbon capture technology similar to this, being tested at a Wisconsin Energy plant, will be installed at a western power plant.

While we actively support programs to reduce the growth in demand, that still leaves us with a need for new generation capacity – a need that is particularly imminent for our southwestern operating companies. Balancing this need alongside our responsibility to protect the environment will require the development of new technology, an area in which AEP has excelled.

Ultra-supercritical Pulverized Coal
In 2006, we proposed building two ultra-supercritical pulverized coal power plants – in Arkansas and in Oklahoma. Ultra-supercritical coal plants are more efficient than traditional coal plants. Because they burn less coal per kilowatt hour produced, they also emit less CO2 on a per-kilowatt hour basis. Arkansas regulators approved the 600-MW $1.3 billion John W. Turk Plant last year with conditions we accepted, giving us room to develop technology while meeting our obligation to serve our customers' needs. Louisiana regulators approved it in March 2008. (We are awaiting approval from regulators in Texas.) One of the conditions is that we report annually on our progress on carbon capture and storage technologies. The plant, to be built in Arkansas, could serve customers in all three states. Turk Plant will emit carbon dioxide, which we plan to largely offset with reductions elsewhere in the system.

Carbon Capture & Storage
We are working on two different types of carbon capture technology for coal-fired power plants. The first is a 20-MW chilled ammonia process that we are developing in conjunction with Alstom and RWE (a German utility) at our Mountaineer Plant in West Virginia. The Mountaineer Plant pilot project, on which we are collaborating with Battelle, would capture up to 100,000 metric tons of CO2 per year, which would be stored underground in deep saline aquifers.

AEP's Carbon Capture & Storage Initiative

Once the chilled ammonia technology is validated our plan is to deploy it on a commercial scale at a plant in our western service territory, delivering the captured CO2 for use in enhanced oil recovery. This will help the region to recover its natural resources and will defray the high costs of carbon capture technology. We are piloting the second GHG reduction technology, an oxy-coal combustion process, with 16 other utilities on a 10-MW scale to verify feasibility and understand the commercial issues. If it proves feasible, we plan to retrofit an existing 150-600 MW unit by 2020. It would result in the capture of 3,000 or more tons of CO2 per day.

There is increasing pressure for new coal plants to employ these full-scale carbon capture and storage technologies from the start. We feel this is an unrealistic expectation that could delay bringing the technology forward to full commercial scale. We are pushing the technology forward as fast as we can. In the meantime, we are facing a growing demand for energy – one that cannot be met without near-term construction of new plants.

Integrated Gasification Combined Cycle (IGCC)
In West Virginia, the Public Service Commission approved our 629-MW IGCC plant; we are hoping for a similar decision from the Virginia State Corporation Commission and are ready to begin construction when all approvals are in hand. The plant, estimated to cost $2.23 billion and take up to 48 months to build, would be built in West Virginia but serve customers in two states – West Virginia and Virginia. A second IGCC plant proposal in Ohio has regulatory support but faces legal challenges. The Ohio Supreme Court in March ruled against AEP and returned the case to the Public Utilities Commission of Ohio. Some of our stakeholders support adding carbon capture to these plants. We are prepared to go forward with regulatory aspects of such an action when the economics of this technology become clearer.

The promise of bringing IGCC technology to commercial operation gained momentum in 2007 when Indiana regulators approved a similar proposal by Duke Energy to build a 630-MW IGCC plant – bucking a nationwide regulatory trend against coal-fueled power plants. Although IGCC plants are more expensive than conventional pulverized coal plants, they are considered to be more compatible with carbon capture technology and have fewer negative impacts on the environment. One stakeholder, the Clean Air Task Force, supported the Duke proposal and is publicly supporting AEP's proposed plant in West Virginia.