latest-news-headlines Market Intelligence /marketintelligence/en/news-insights/latest-news-headlines/colstrip-carbon-capture-not-financially-attractive-8211-doe-study-60920698 content esgSubNav
In This List

Colstrip carbon capture not 'financially attractive' – DOE study


Despite turmoil, project finance remains keen on offshore wind

Case Study

An Energy Company Assesses Datacenter Demand for Renewable Energy


Japan M&A By the Numbers: Q4 2023


See the Big Picture: Energy Transition in 2024

Colstrip carbon capture not 'financially attractive' – DOE study

A study commissioned and recently released by the U.S. Department of Energy concluded that installing carbon capture and sequestration technology at the two remaining operational units of the Colstrip coal-fired power plant in Montana is not a "financially attractive" option due to its "significant capital, operating and infrastructure costs."

"Capturing and compressing 63% of CO2 emissions from each unit ... could cost around $1,335 million, along with an annual operating cost of around $108 million," the report said.

The seven-page "order-of-magnitude energy efficiency study," first reported on by the Billings (Mont.) Gazette, was commissioned by the DOE following a request from Montana Gov. Steve Bullock in 2016.

The study results appear to be at odds with the promotion by some in the federal government of carbon capture technology as a feasible way to limit carbon emissions. Energy Secretary Dan Brouillette toured the Colstrip facility in early October and, in a series of tweets, signaled his support for "innovating Montana coal by making it cleaner and diversifying its use" through the department's carbon capture, utilization and storage program. In one of those Oct. 2 tweets, Brouillette attached a video stating that coal plants of the future would have "zero or near-zero emissions" thanks to such technologies.

But Derf Johnson, the clean water program director and staff attorney of the Montana Environmental Information Center, in an Oct. 26 email said the report "underscores that carbon capture and storage is a charade and a waste of taxpayer dollars."

Advocates say the technology can play a critical role in reaching global emissions cuts and climate targets while allowing resources fired by fossil fuels to continue operating. But given the tight economics that many coal plants face — Colstrip Units 1 and 2, for example, shuttered two-and-a-half years earlier than legally mandated due to financial pressures — many industry observers say the technology's costs must decline further if it is to become economically viable.

Colstrip Units 3 and 4 have been in operation since the 1980s, each with a nameplate capacity of 823.7 MW. Unit 3 is owned by Talen Generation LLC, which holds a 30% interest in the asset; Puget Sound Energy Inc., which holds 25%; Portland General Electric Co. with 20%; Avista Corp. with 15%; and PacifiCorp with 10%. Unit 4, meanwhile, is owned by NorthWestern Corp., which holds a 30% interest; Puget Sound Energy with 25%; Portland General Electric with 20%; Avista with 15%; and PacifiCorp with 10%.

NorthWestern, which just held its latest quarterly earnings call on Oct. 23, is working through the regulatory channels to get approval to purchase Puget Sound Energy's share of Unit 4. But staff with the Washington Utilities and Transportation Commission has recommended that regulators deny Puget Sound Energy's request to sell its share of the plant and related transmission holdings on the grounds that doing so may not represent the lowest reasonable cost option for the utility to meet the state's decarbonization goals.

Leonardo Technologies Inc., an Ohio-based energy consultancy, prepared the study for the U.S. Department of Energy's Office of Fossil Energy in May 2018. However, the report was not released until earlier in October after the Montana Environmental Information Center filed a Freedom of Information Act request in May 2019 and subsequently sued the federal administration in April for failing to respond to the request, Johnson explained.