A first-of-its-kind “clean coal” power plant that utility owner Southern Co. spent years constructing in Mississippi may end up burning no coal at all — and instead just run like a natural gas generator.
After years of delays and billions of dollars in cost overruns, Mississippi regulators on Wednesday called on Southern to work up a deal that would have the Kemper plant, now estimated to cost about $7.5 billion, fueled only by gas. The state Public Service Commission said in a statement that it’s looking for a solution that eliminates the risk to ratepayers “for unproven technology,” which involved converting coal into gas that could then be used to generate electricity — all while capturing emissions.
The gas conversion at Kemper stands to be another blow for coal, which is already getting squeezed out of U.S. power mix by cheap natural gas and renewable resources such as solar and wind. It now supplies about a quarter of the nation’s power, down from half a decade ago.
Southern said in a statement Wednesday that the commission had indeed “provided several guidelines to consider for the negotiations, including the possibility of the project only operating as a natural gas-fueled combined cycle plant.” The company said it expects more details to be included in the agency’s formal order and looked forward to reviewing it.
In February, the company issued a report showing the coal-gasification plant was more economically viable than simply a gas one assuming gas prices around $5 per million British thermal units in 2020. The company said at the time that the plant still stands to “play an important role in mitigating any such upward trend in natural gas prices” over its 40-year lifetime.
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Once seen as the prototype for a new generation of clean-burning coal plants, Kemper has been plagued by construction challenges. The part of the plant that turns the coal into gas is months behind schedule and the plant’s costs have more than doubled from an original $2.88 billion budget.
Southern has said it will seek to recover the costs of the Kemper project through customer rates. The company has delayed the startup of the entire plant at least five times so far this year.
In its latest update on the project, Southern disclosed a leak on a gasifier at the plant and said it needed more time to establish “sustained operation” of both gasifiers to produce electricity.