The concept of the
Trans-America Grid (TAG) involves locating new power plants at the coal
reserves (near the mine mouth) and then transmitting electricity, in bulk
amounts, to distant customers via new and existing EHV AC and high voltage
direct current (HVDC) transmission lines. This allows coal to be used
for energy without the high cost of transporting the coal via rail to
power plants that are traditionally located near the customer. This is
literally transporting coal by wire.
The construction
of new transmission lines and utilizing existing transmission lines allows
the project to take advantage of weather and time zone changes between
market regions to enhance the value of the coal-fueled generation. This
ability to enhance the value of generation has not previously been available
because of the isolation between the east and west grids of the United
States.
TAG will integrate
with the existing bulk transmission system to enable power to be transmitted
from coast to coast. In addition to the obvious time zone differences
to enhance the value of the coal fueled generation, weather differences
(as fronts generally move from west to east) will provide a significant
enhancement of value by allowing more base load energy to be sold at peak
times. The advent of deregulation in the United States offers the project
the opportunity for increased profit margins from both the sales and cost
sides. From the sales side, deregulation offers the opportunity for higher
prices on peak.
On the cost side,
the project's ability to provide greater amounts of energy into market
regions during times of peak at base load costs further increases margin.
With variable operating costs as low as $4/MWh, the project will not only
provide higher margins, it will also be the low cost producer ensuring
revenue throughout the project's long life.
The project will
be implemented by building 8,000 MW (nominal) of generating capacity with
2,000 MW coal plants, each consisting of four standardized 500 MW units,
located at sites in Pierre, South Dakota (two plants); Orin, Wyoming;
and Green River, Wyoming. The plants are located at sites that provide
the lowest possible fuel costs consistent with cooling water availability
and permitting requirements. EHV AC and HVDC transmission lines will be
constructed along existing right-of-way to markets in the west and upper
Midwest which in turn connects to the rest of the eastern grid. The plants
will be interconnected, allowing the low cost energy to be sent either
east or west to obtain the highest margins. The modular aspect of the
project provides unlimited flexibility with respect to staged implementation.
Commercial operation of the first unit is scheduled for 2005. The complete
system is expected to be operating in ten years.
EAST-WEST
BRIDGE TO BE BUILT
One of the most exciting
aspects of TAG is the construction of the HVDC facilities interconnecting
the east and the west grids. The lack of this transfer capability has
historically stymied western coal mine mouth projects in the past. The
magnitude of this project makes the east-west transmission interconnection
feasible. The proposed HVDC transmission lines are shown in Figure 1-1.
Current east-west transfer capability is approximately 1,000 MW, which
is virtually all subscribed. Through the HVDC transmission lines, TAG
will add 6,000 MW of capability that can be provided to either the east
or west grids as physical assets in each marketing region. The HVDC transmission
lines to marketing regions in the west and upper Midwest allow access
from the coal-fueled units in the Powder River Basin that is not available
from the existing grid. The HVDC transmission line to the upper Midwest
connects with the existing 765 kV transmission system, allowing access
all the way to the east coast.
UTILIZATION
OF MOST PLENTIFUL/LEAST EXPENSIVE COAL IN US
The coal supply for
the proposed power generation plants will be from mines located within
the Southern Powder River Basin (SPRB) of Campbell and Converse Counties,
Wyoming. The coal reserves of the SPRB constitute the bulk of the economically
mineable reserves of the larger Powder River Basin (PRB).
The total reserves
of the overall PRB are enormous, constituting the coal equivalent for
the United States of world oil reserves to the Middle East. The total
reserve base is conservatively estimated to be in excess of 141 billion
tons, of which about 58 billion tons are projected as being readily and
economically capable of extraction by present-day surface-mining technologies.
The 58 billion tons represents over 50 years of the total United States
coal consumption compared to only 9 years of natural gas reserves for
North America.
The coals of the
SPRB are subbituminous in rank, ranging in heating value (as-received
basis) from about 7,500 to 9,000 Btu/lb, with the bulk of the current
production ranging between 8,200 and 8,900 Btu/lb. Sulfur content is low
(range of 0.1 to 1.7 percent, with typical values of 0.4 to 0.8 percent),
and thus the coals are well suited as compliance coals under the US Clean
Air Act (1990).
As a result of the
highly favorable mining conditions of the SPRB, extraction costs are the
lowest of any mining region within the United States. These low production
costs, coupled with large-scale mining operations under competitive market
conditions and highly developed rail infrastructures (both existing and
proposed), enable the SPRB coals to aggressively compete against coals
from other sourcing regions throughout most of the United States.
The siting of the
power plants makes them relatively proximate to the SPRB mines, thereby
minimizing rail haulage distances. This maximizes the opportunity for
TAG. The additional benefit of using PRB coal is the stability of supply.
The SPRB mines, both existing and projected, have the reserves capability
to supply the coal supply requirements of the United States for at least
40 years into the future. As a result, the stability of the pricing of
coals, compared to alternative fossil fuels such as natural gas, is assured.
DELIVERY
OF POWER TO VIABLE MARKETS
The generated electricity
would be transported by new HVDC transmission lines to the following primary
destination markets as indicated on Figure 1-1:
* Chicago area and
Upper North Central US (Northern Illinois, Northern Indiana, Wisconsin,
and Minnesota).
* Southern California (Los Angeles and vicinity metro areas).
* Secondary destination markets for which transmission corridors could
be developed at a later date as extensions of the primary
grid would include the following:
* Northern California (San Francisco Bay and Sacramento metro areas).
* Northern Utah (Ogden-Salt Lake City metro area).
* Southern Nevada (Las Vegas-Clark County) and Central Arizona (Phoenix-Tucson
metro areas).
* Colorado (Boulder-Denver metro areas).
* Central Minnesota (Minneapolis-St. Paul metro area).
* Northern Texas (Dallas-Fort Worth metro area).
PROJECT
SCHEDULE
A staged schedule
is currently anticipated, beginning with partial blocks of delivered power
and single point-to-point connections. Initial construction would include
2,000 MW of coal-fueled generation and one HVDC converter station at Pierre,
North Dakota, and a 2, 000 to 3,000 MW HVDC line to Chicago. Initial commercial
operation is scheduled for 2005. The complete system is expected to be
in operation about 10 years after the start of the project.
FINANCIAL
PROJECTIONS
The conceptual design
and cost estimates are generally conservative at this point in the project.
For example, the HVDC transmission lines included in the capital cost
have an additional 4,000 MW of transfer capacity for which the economic
benefits have not been included.
Total capital costs
for both Phase I and Phase II will include plant construction costs, transmission
construction, financing charges, and indirect construction cost. Stated
in (1999) dollars, the total projected capital cost for the TAG project
is approximately $15 billion.
Figure 1.1--The proposed
HVDC transmission lines are shown at right. Current east-west transfer
capability is approximately 1,000 MW, which is virtually all subscribed.
|