THE FY 1997 FOSSIL ENERGY RESEARCH AND DEVELOPMENT BUDGET Testimony of Manager, Special Projects Research and Environmental Affairs Committee on Appropriations Subcommittee on Interior and Related Agencies Introduction Mr. Chairman and Members of the Committee Southern Company Services, Inc., ("SCS”) is a subsidiary of The Southern Company. The role of SCS is to provide, at cost, technical and management services to the five operating companies and other affiliates of The Southern Company. SCS is actively involved in many areas of research including technologies that could be used by the affiliated operating companies to produce power more efficiently. In particular, The Southern Company, through SCS and its operating companies, supports and conducts research that will help the nation utilize its coal resources while minimizing the environmental effects of using our nation's most plentiful and valuable resource. As a result, SCS is currently participating in projects in both the Department of Energy's ("DOE") Clean Coal Technology program and the DOE Fossil Energy Research and Development program. The purpose of this testimony is to request this Subcommittee's continued support for the Power Systems Development Facility ("PSDF") for advanced coal gasification and pressurized combustion research. SCS would also like to express appreciation to this Subcommittee for previous support for advanced fossil energy research. SCS specifically requests a minimum of $25.3 million for the PSDF project in FY'97. This request assumes that the full $24 million that was approved by this committee for FY'96 is available to the project. The Strategic Importance of Technological Improvements in Electric Power Production The growth and health of the U.S. economy are strongly linked to the availability of clean, low-cost, and dependable sources of energy. Fostering innovation has been a hallmark of our nation. American industry relies heavily on low-cost electric power and other energy to remain competitive globally. We in the electric utility industry are currently making dramatic changes and reducing cost to prepare for greater competition in the supply and delivery of electricity. We are also aware of the pressures for government to streamline and re-invent itself to serve Americans in a more cost-effective manner. While lower cost and increased efficiency in government and in the operation of electric utilities are positive developments, it is imperative in the process of reducing short-term costs that long-term issues not be ignored. Funding for the research and development of important technologies, such as DOE's advanced coal-based and advanced turbine power generation programs, are easily lost in such an environment. For example, the time required to develop new coal-based technology for electric power production typically exceeds fifteen years while the expense can far exceed what any one company or a single industry can reasonably afford. Thus, without continued federal investment, advanced coal-based technologies that can provide long-term societal, environmental, and national security benefits may simply go undeveloped and domestic suppliers of these technologies will not be available when new power plants are built in the early 2000's. SCS believes that it should be the Federal Government's role, in conjunction with private industry, to develop energy and environmental policies that protect the environment and increase energy security. The development of these polices should include consideration of the impact such policies will have on our standard of living and quality of life. If America is to continue to grow and compete in a world economy, it is imperative for the Federal Government to continue to support programs that foster the development of new technologies to help achieve these policies. Coal is the most abundant energy source in the U.S. and provides 55 percent of the electricity generated in the nation. Most of this electricity is produced by pulverized coal (“PC”) boilers that are approaching the end of their effective lives and will need to be replaced re-powered within the next 10 to 20 years. In addition, as demand for power increases, new generating units will be required. Coal will remain a cost effective fuel option for generating electricity from base-loaded power plants if capital cost can be reduced and efficiency increased. Technologies, such as integrated gasification combined cycle systems (“IGCC”) or pressurized combustion, offer the potential for both lower capital cost and increased efficiency. Compared to the previous generation PC plants they will be replacing, these technologies produce electricity at lower cost and will reduce emissions of carbon dioxide (CO2), sulfur dioxide (SO2), and nitrogen oxides (NO). These advanced coal technologies have benefited from DOE supported research and development programs. In order to achieve their full potential, however, coal gasification and circulating pressurized combustion technologies require improved gas cleanup technology called hot gas cleanup systems. The results of advanced coal-fired research activities go beyond just the electric utility industry -- coal producers, basic industries, engineering and construction firms, and consumers all benefit from the development of new technologies that use coal. The following national benefits can be realized through successful coal research: · Electric energy prices will be lower because the technologies will help make our nation's most abundant fossil fuel resource more competitive. Electric energy prices will be more stable because technologies will provide competition between fossil fuels. Environmental emissions, including CO2, will be reduced due to the higher efficiency of the technologies compared to conventional pulverized coal. • Electric power companies and their equipment suppliers will have energy efficient, environmentally superior technology to export to high growth foreign markets. Other RD&D programs, specifically the Clean Coal Technology program, can apply technology improvements at lower cost and at reduced risk. For example, it is estimated that at least $6 million has been already saved on one Clean Coal Technology project as a direct result of work on the PSDF project. However, this research, which will benefit the entire nation, not just a few select companies, cannot and will not be completed without continued federal support. Continued federal investment in the research and development of coal-based power technologies is necessary or the U.S. may lose the technological advantage necessary to provide economical and dependable electric power which is vital to maintaining America's competitive business position in global markets. This investment will be repaid to the U.S. economy through new jobs and tax revenue. Power Systems Development Facility The Wilsonville PSDF is a joint industry/DOE facility for engineering-scale testing and development of devices to remove particulates and other contaminates from hot gas in high-efficiency coal gasification and pressurized fluidized bed combustion power plants. SCS and our industrial partners are investing over $30 million in the PSDF project. The industrial partners, which represent a major share of the domestic electric power generation manufacturing and construction business, include: M.W. Kellogg, Inc., Foster Wheeler Corporation, Southern Research Institute, Westinghouse Electric Corporation, Combustion Power Corporation, Industrial Filter & Pump, Inc., and the Electric Power Research Institute. In addition to the Wilsonville, Alabama plant site, components for the facility are being developed at the following locations: Grand Forks, North Dakota (gasifier development), Houston, Texas (gasifier development); Livingston, New Jersey (combustor development), Menlo Park, California (filter fabrication); Cicero, Illinois (filter fabrication); Orlando, Florida (gas turbine burner), and Pittsburgh, Pennsylvania (filter fabrication). High-temperature, high-pressure gas cleanup must be perfected in order to use new high-performance gas turbines in coal-based power plants. When fully developed, these technologies will 1) improve the efficiency of power generation from coal by over 1,000 Btu/kWh (approximately 25 percent higher efficiency compared to pulverized coal power plants with a corresponding reduction in CO2 emissions); 2) lower the cost of electricity by over 10 percent; 3) be more acceptable to coal-based utilities than today's coal-gasification combined-cycle designs; and 4) reduce pollutants by over 95 percent. The PSDF will be the focal point for much of the America's advanced electric power generation technology development in the 1990s and into the twenty-first century. Current plans call for the facility to contain five modules: 1) an advanced pressurized fluidized-bed combustor (“PFBC"), an extremely clean method for burning coal; 2) a transport reactor gas source, a generic type of coal gasifier and pressurized combustor; 3) a hot gas cleanup module to remove to test filters for removing fine particles and other contaminates from coal gases; 4) an advanced burner-gas turbine module; and 5) an advanced fuel cell. At the PSDF, private developers will be able to test innovative electric power systems components -- new combustors, improved cleanup systems, and advanced turbines and fuel cells -- at a central location, saving the time and expense of building separate test facilities. The facility is currently under construction with the gasification side scheduled to begin operation in the middle of this year and the pressurized combustion side scheduled to begin operation by mid-1997. The Wilsonville PSDF offers several advantages to the utility industry and to the nation by being able to address issues for the near, middle, and long-term management of technology risk: A fully integrated facility to demonstration the interaction between the many subsystems The testing of hot gas cleanup systems addresses near-term developmental needs, and the schedule of the PSDF is geared towards providing support to Clean Coal Technology (“CCT") projects for advanced power generation as these projects enter the design and operational phase. The advanced pressurized combustion process offers the potential of a high efficiency system for the midterm that may be widely used in repowering applications or as stand-alone plants. The integrated gasification/fuel cell concept is a system that has the potential to become the most efficient and environmentally superior coal-based system available over the long-term. Another important aspect of the technologies being developed at the PSDF is the interaction with technologies being developed in other DOE programs such as advanced turbine and the fuel cell programs. The Wilsonville PSDF will be the only facility in the world where all the components of an advanced coal-fired power plant can be tested in an integrated system. This facility will allow U.S. electric utilities to maintain reasonable domestic energy prices and for U.S. equipment suppliers to gain a technological advantage in electric power production that can help increase competitiveness in foreign electricity markets. A Broad Range of Technologies The technology chosen for new or repowering applications will depend on the specific requirements of the utility. Factors to be considered include the following: 1. Integrated Gasification Combined Cycle • Removes more than 98 percent of the sulfur. Can be used to repower natural gas-fired applications when fuel costs or fuel availability favor coal. • Will benefit from improvements in natural gas technologies such as combustion turbines and fuel cells. · Can be used to co-produce chemical products such as methanol and hydrogen. 2. Pressurized Fluidized Bed Combustion Excellent environmental performance. Compatible with pulverized coal power plant infrastructure, making it well suited for repowering applications. Compact modular design reduces construction time and cost. Advanced designs include a combustion turbine which can benefit from improvements in Potentially, lowest electricity cost of all projected options. 3. Particulate Control Devices Both coal gasification and pressurized combustion technologies will benefit from the particulate control devices to be tested and developed at the Wilsonville PSDF project. Current coal gasification technology requires that the syngas produced be cooled to about 100°F before removal of sulfur and particulates. However, with in-situ sulfur removal (being tested at the PSDF) and reliable particulate control devices, gas stream cooling requirements will be reduced or eliminated, which will increase efficiency and reduce cost. Current generation pressurized combustion technology uses specially fabricated, low efficiency, expansion turbines that are designed to withstand the erosive nature of particulate-laden gas. Incorporating a particulate control device to remove virtually all dust will allow conventional gas turbines to be used -- lowering capital cost, increasing efficiency, and reducing the cost of electricity. Hot particulate control is currently not a commercial technology for high temperature application and a great deal of effort must be expended to fully understand the mechanisms that are causing premature failure. Commercial users of hot particulate control technology will require that the filter systems operate at least 8,000 to 20,000 hours between failure. The best demonstrated performance of particulate control devices in high temperature applications to date is only about 500 hours between failures. Conclusion The United States has always been a leader in energy research. Current DOE fossil energy research and development programs in the coal and fossil energy field will assure that a wide range of technology options continue to be available for future needs. We recognize the difficult choices that confront Congress when it examines the near-term effects of research programs on the Federal budget. We believe, however, that supporting advanced coal-based energy research today, in programs like the PSDF, will be a net plus for the economy, the federal government, and the American people over the long run. For the foregoing reasons, SCS requests your continued support for the Power Systems Development Facility by including $25.3 million in funding in the Department of Energy's Fossil Energy Budget. We thank you for the opportunity to appear before you today. FY 97lest doc, March 3, 1996 DOE WITNESS THURSDAY, MARCH 7, 1996. ERIC L. SIMPKINS, ENERGY RESEARCH CORP. Mr. REGULA. Our next witness is Energy Research Corporation, Mr. Simpkins. Thank you for coming. Mr. SIMPKINS. Thank you. Good morning, Mr. Chairman. My name is Eric Simpkins. I am sitting in for Donald Glenn. I direct ERC's corporate business development function. I appreciate your invitation to discuss the progress of ERC's carbonate-based direct fuel cell program. The program is ranked among the most important of DOE's programs and is actively supported by over 25 utilities that represent over 20 percent of the United States' generational capacity. Despite the uncertainty associated with deregulation of the electric utility industry, the 5-year-old market development program with our utility buyers group remains on track. With these facts as background, I urge the subcommittee to support bringing the ERC carbonate fuel cell account to the contracted amount of $21.2 million for Fiscal Year 1997 to enable market entry in 1999. The commercial direct fuel cell plant will offer to customers the most efficient, environmentally-benign power source known and sustain America's lead position in fuel cell technologies and as power equipment supplier to the world. Mr. REGULA. Do you anticipate it will produce the same price per KWH as a coal fired plant? Mr. SIMPKINS. In time, yes. Mr. REGULA. That's the goal, I assume. Mr. SIMPKINS. That's the goal. Our goal is to Mr. REGULA. When do you think you would reach that? Mr. SIMPKINS. Our goal is to produce power for somewhere in the range of $900 to $1,000 per kilowatt fully installed. Mr. REGULA. So, how does that compare with coal? Mr. SIMPKINS. Well, coal is-I can't speak for the coal industry, but I suspect it is in that order of magnitude. Fuel cell power plants are the first totally new generation technology to reach market entry since the turbine was introduced after World War II. In Fiscal Year 1996, you acknowledged the continued importance of this program by appropriating $38 million for the carbonate fuel cells, a 27 percent increase over the budget request. Mr. REGULA. When do you anticipate that this will go commer cial? Mr. SIMPKINS. 1999. Mr. REGULA. 1999, that's what I thought. Mr. SIMPKINS. At this level, the Nation's two carbonate fuel cell developers were able to continue their scope of work essentially as planned. After this year, the ERC program begins a significant phasing down of the DOE support. We believe that the direct fuel cell program is an outstanding example of the type of industry-government partnership advocated by this subcommittee. It represents near completion of the successful long term investment responsive 24-697 96-2 |