Kemper clean coal project delayed by at least 5 months

Construction of Mississippi Power’s now nearly $5 billion coal-fueled Kemper County integrated gasification combined-cycle project has been delayed by approximately five months.

The construction of an innovative new power plant, which is part of a $5 billion Carbon Capture and Sequestration project in Kemper County, Miss., has been delayed by at least five months, the Los Angeles Times reported. The 582-megawatt coal-fueled power project owned by Georgia-based electric utility Southern Company (NYSE: SO) is expected to significantly reduce potential carbon dioxide emissions while replacing capacity from aging coal-fired power plants.

The projected delay for the Kemper County integrated gasification combined-cycle (IGCC) project marks another set-back for the project which has also seen development costs balloon between $540 million and $1.2 billion over its original budget. Southern Company informed the Securities and Exchange Commission in a filing in October 2013 that it would not be able to meet its initial May 2014 construction deadline for the plant. That delay resulted in the power company having to repay $133 million in tax incentives it received in 2009 under the condition of completing the project within five years.

The ambitious Kemper IGCC project is still anticipated to come online before the end of the year. The new plant, equipped with TRIG™ technology, is expected to reduce CO2 emissions by 65 percent – making CO2 emissions from the Kemper IGCC equivalent to a similarly sized natural gas-fired combined-cycle power plant. The U.S. Department of Energy has so far subsidized the project an estimated $270 million as part of its stimulus funds toward carbon reduction technologies.

While the project has met with certain set-backs, some experts believe the Kemper IGCC model could still represent a sound investment for Southern Company.

"If you think that it's a sound bet that coal will be part of the future of the country, if you have an interest in coal, and companies like Southern do, it makes good business sense to develop technology that lets you use the resource in [a] way that is socially acceptable," said Edward Rubin, professor of engineering and public policy at Carnegie Mellon University, according to the Times.

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(Editor's Note: Clarifications on total project costs and overruns have been included at the request of Mississippi Power - Initial costs for the Kemper IGCC plant alone were estimated at $2.4 – 2.8 billion. Current cost estimates for the plant is approximately $4 billion - a difference of  $1.2 billion from $2.8 billion rather than “some 2 billion over its original budget”  as originally reported by the author.)

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