Powering Up

Energy providers in the Southeast are still trying to keep up with the growing region's increasing demands. From gas- and coal-fired units to numerous nuclear plants, the companies are looking at a diverse mix of alternatives.

By Bruce Buckley

Developers remain hard at work speculating on what types of homes and businesses will be in demand as the population continues to grow steadily in the Southeast.

But regardless of whether people gravitate toward condos or single-family homes, there is one sure bet - they will all need power.

The power market in the Southeast looks promising for the construction industry, and several major companies are planning to invest billions of dollars to increase base load in the coming years. Plants powered by coal, natural gas, nuclear and small amounts of renewables are all under consideration as companies chart the most effective ways to meet rising demand.

The race to keep pace

The need for additional power echoes the residential construction boom experienced by many communities in the region, said Tom Williams, spokesperson for Duke Energy in Charlotte, N.C., which is building the first base-load plant in its system since 1986.

"We have more temporary hookups on our electric system [from new developments] today than in our history," Williams said. "That's indicative of the level of construction going on in the Carolinas."

The story is similar in Florida, where Florida Power & Light of Juno Beach is adding 80,000 to 100,000 customers per year, creating 600MW to 800MW of added demand, said Rachel Scott, spokesperson for FP&L.

In South Carolina, Santee Cooper of Moncks Corner is pressed to keep up. The company is constructing two 600 MW coal-fired facilities at Cross Generating Station in Cross, S.C. The combined $1.4 billion in projects, which are both being built by WorleyParsons of Reading, Pa., will be completed in 2007 and 2009.

Although the projects represent the largest capital expenditures in the company's history, it is not enough to keep pace with population growth, said Laura Varn, spokesperson with Santee Cooper. As population in the state is expected to rise from 4.2 million this year to 5 million by 2010, the company is scrambling to bring more facilities online.

In May, the company announced plans to build a new $998 million 600MW coal-fired plant in Pee Dee, S.C., for completion in 2014. The company has since accelerated its plan, hoping to fast-track the project for 2012.

"Even when our projects in Cross come online in 2009, we don't have any excess energy after that," she said. "Because of the growth, all of that energy is accounted for. We'll be purchasing some power around 2010 to make up the gap until the Pee Dee site is online."

That's good news for contractors in the power sector who have seen levels of activity fluctuate in recent years.

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In the early part of the decade, the total value of new starts in Florida, Georgia and the Carolinas averaged close to $1.5 billion, according to data from McGraw-Hill Construction, publisher of Southeast Construction. Those values dipped below $1 billion in 2005 and are expected to drop even lower by the end of this year. In 2007, McGraw-Hill Construction forecasts that the sector will rebound to $1.2 billion in starts.

And with the number large generation plant projects currently in the application and permitting phases, those numbers could jump significantly by 2010.

A nod to nuclear

A major contributor to future base load in the area could come from a resurging interest in nuclear power plants. The Bush Administration gave a big boost to the nuclear option with the passage of the Energy Policy Act of 2005.

The legislation provides $4.3 billion in tax breaks for nuclear projects; $2 billion for support of delays and cost overruns; and loan guarantees for innovative technologies.

On the other side of the political spectrum, some environmental groups concede that nuclear is a viable option to reduce carbon emissions.

It's an opportunity that has companies such as Progress Energy of Raleigh, N.C., considering nuclear sites. The company is currently completing the application process for a nuclear project at New Hill, N.C.

Rick Kimble, spokesperson at Progress Energy, said the company plans to submit those applications next year in the hope of receiving approvals by 2010.

"When you look at your options - the pros and cons - you make decisions based on what's best for your customers, the environment and the long-term stability of rates," Kimble said. "Given that, nuclear will almost always come out on top as a cheap fuels source, an environmentally friendly way to create electricity and one that has longevity."

Duke Energy is preparing an application for a potential new nuclear station at a site in Cherokee County, S.C. The proposed station, which would be called the William States Lee III Nuclear Station, would include two Westinghouse AP1000 reactors.

The Westinghouse reactors are capable of generating 1,117MW of electricity each and have an operating life of nearly 60 years. The application would be completed by the end of 2007 with the potential to begin construction in 2010.

Santee Cooper announced in February that it and South Carolina Electric & Gas were considering building a Westinghouse AP1000 reactor at their co-owned V.C. Summer Nuclear Station site near Jenkinsville, S.C. Permitting could be completed by 2010 with the hopes of bringing the plant online by 2015, spokesperson Varn said.

FP&L is also reportedly considering potential future nuclear sites.

Gas now, coal next

Before the next wave of nuclear plant construction sweeps through the Southeast, power companies are banking on new coal-fired plants. Duke Energy has applied for permits to modernize its Cliffside Steam Station in the North Carolina counties of Rutherford and Cleveland. The plan calls for two 800MW coal-fired units with the initial units projected to come online as early as 2011.

The company is also reducing emissions at existing facilities with the additions of new scrubbers at its Marshall Steam Station and Belews Creek Station. The scrubbers, which will reduce sulfur dioxide emissions by nearly 95 percent, will be online in 2007 and 2008, respectively.

FP&L announced plans in September to build an advanced technology coal-fired generating facility in Glades County, Fla. The facility would include two 980MW coal plants with an estimated construction cost between $2 billion and $3 billion. The company hopes to break ground in 2008 with the first unit online in 2012 and the other in 2013.

With the future of gas prices in question, power company executives are not as bullish on natural gas as they have been in the past. However, work at natural gas plants continues in the region, particularly in Florida.

Next year, FP&L will wrap up work on its $600 million expansion at Turkey Point Generating Station in Florida City. The natural gas-fueled, combined-cycle facility will provide 1,150MW of power. Zachry Construction of San Antonio, Texas, is the general contractor. Black & Veatch of Kansas City, Mo., is the engineer.

FP&L is also in the final stages of licensing its West County Energy Center in Palm Beach County. The $1.2 billion project features two 1,200MW natural gas-fired combined-cycle units. The first unit would come online in 2009 with the second following in 2010.

The Southern Co. of Atlanta spent the early part of the decade in building mode. Recently, it has shifted to acquiring existing sites and expanding them as necessary.

Last year, the company purchased Plant Oleander - a 680MW dual-fueled, simple-cycle generating plant in Cocoa, Fla. - from Constellation Energy. The plant has four existing GE gas turbine units and the company will build a fifth next year, said company spokesman Mike Tyndall.

This year, the Southern Co. closed on the purchase of two natural gas-fueled plants from Progress Energy - the Rowan County Energy Complex in Salisbury, N.C., and the DeSoto County Energy Complex in Arcadia, Fla. Tyndall said there are no current plans to expand the facilities, but the company is leaving the option open as a potential growth strategy.

Alternatives on the horizon

Although renewable and alternative fuels are getting more attention these days, their application in the power market remains limited.

Atlanta-based Geoplasma has plans to design and build a $400 million plasma arc gasification plant in St. Lucie County, Fla. The plant superheats trash to produce a combustible gas. The plant would produce 12MW of power daily by burning 3,000 pounds of garbage.

FP&L plans to build Florida's first solar array at Rothenbach Park in Sarasota, which will generate 250-kW. Santee Cooper will have a combined 50MW of green power by 2012 through a combination of wind, solar and other sources, Varn said. However, at that level, renewables will provide less than 1 percent of the company's total power generation.

Although renewables are environmental friendly, they remain long way from being cost-effective, she said.

"That's the quandary we're in with renewables - it's just not economically viable to meet the growth of the state," she said.