Plan to build 2 clean coal power plants: TXU

New York, Mar 10: TXU Corp. and the private equity firms leading the nearly billion takeover of the power company said they plan to build two clean coal power demonstration plants in Texas.

Kohlberg Kravis Roberts&Co. , Texas Pacific Group and TXU said they have started the planning process for two integrated gasification combined cycle (IGCC) demonstration plants.

IGCC technology turns coal into a cleaner-burning gas to reduce emissions.

''We're focused on advancing the new technology and getting a first-hand understanding of the IGCC plants,'' said TXU spokesman.

Critics of IGCC technology have argued that the plants are currently much more expensive to build than conventional pulverized coal plants. Some also doubt reliability of the technology, pointing out that the only IGCC plants now in operation are relatively small ones.

Several utilities have made high-profile investments to build or study building IGCC plants.

NRG Energy Inc. Texas second-largest generator behind TXU, has been studying ways to bring IGCC to Texas for about a year, said Thad Hill, NRG Texas president. NRG has a conditional contract to build an IGCC plant in New York.

''We are looking at sites, fuels and vendors,'' Hill said.

''We believe IGCC needs to be a part of the future power needed for Texas.'' NRG Chief Executive David Crane invited TXU's new owners and other coal-plant developers ''to work with us to make a Texas IGCC project a reality,'' on an analyst call after TXU's buyout announcement.

Texas legislators are considering certain incentives for IGCC development.

TXU does not have estimates for the cost of building its proposed IGCC demonstration plants nor the amount of megawatts these plants will generate, according to a TXU spokesman.

As part of the plan, TXU will issue request for proposals from companies offering coal gasification technologies with carbon dioxide capture. Currently, there is no commercially viable technology to capture and store carbon dioxide, the greenhouse gas widely seen as contributing to global warming.

''We like the commitment to carbon capture,'' said David G.

Hawkins, director of the climate center for the Natural Resources Defense Council which supported TXU's buyout.

Hawkins said NRDC believes carbon technology is now available and the biggest obstacle to its use is a lack of government policy to limit carbon emissions.

Hawkins said TXU's IGCC plan should reduce criticism of the buyout from other environmental groups.

''This indicates that the announcement was not the end of the process, but the beginning,'' he said.

TXU said its new Sustainable Energy Advisory Board, which includes representatives from NRDC and Environmental Defense, will review the proposals.

As part of the buyout, KKR and Texas Pacific have said that they would cut the number of coal-fired units TXU had wanted to build to three from 11 and increase its use of alternative energy sources.

Reuters