NRG Energy drops plan to build 800-MW coal-fired unit in Texas

HOUSTON Wed Dec 5, 2012 1:58pm EST

HOUSTON Dec 5 (Reuters) - NRG Energy has canceled a plan to add an 800-megawatt coal-fired unit at its Limestone plant in Texas, citing the abundant supply of affordable natural gas that makes coal plants less economic, NRG officials said.

NRG recently voided the air permit for Limestone 3 which was set to expire this month, said John Ragan, NRG's executive vice president and Gulf Coast regional president.

Limestone 3 was initially proposed in 2006 and obtained an air permit in 2009 after an unsuccessful challenge by the Sierra Club.

NRG operates two coal-fired units totaling 1,689 MW at the Limestone site, 120 miles (190 km) northwest of Houston.

NRG sought an extension of the permit for Limestone 3, but determined the project is not economical going forward.

"It would not be economical and would not be something our shareholders would want us to move forward with," Ragan said.

U.S. power companies began planning dozens of new coal plants in the mid 2000s when natural gas prices soared and power demand was rising.

Most of the projects were delayed or canceled as gas prices tumbled with increased production from shale formations, the recession pared power consumption and federal regulators implemented stricter environmental limits for coal plants, including a proposal to limit carbon dioxide emissions from new plants.

In Texas, the 900-MW Sandy Creek coal plant is expected to come online in 2013, a year later than scheduled after the LS Power project experienced start-up problems that damaged key equipment.

Developers of several projects designed to burn petroleum coke have been delayed or canceled while Summit Power Group continues to pursue a 400-MW coal-gasification project west of Odessa, Texas.

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