“When more electricity generation capacity is needed and reserves begin to tighten, a well-designed competitive market sends the appropriate signals to generators to spend capital on both new and existing sources. We received that message loud and clear,” said Caleb Stephenson, Calpine EVP of Commercial Operations.

Over the last decade, Calpine has brought online 1,600 MW of new gas-fired generation within PJM territory. PJM is the largest grid operator in the U.S.

Last month, PJM announced the results of its latest power market auction. The auction produced a price of $269.92/MW-day for most of the PJM footprint, compared to $28.92/MW-day for the 2024/2025 auction. The more than 800% increase expects to have a massive ripple effect across PJM’s 13-state footprint.

Insufficient future transmission planning, the retirement of fossil-fired generation, long interconnection queues and the implementation of FERC market reforms are all contributing to the price hikes.

While Stephenson said the auction results send a build signal to Calpine and other power producers, he said “clarity regarding state-level air emissions regulations is needed for projects to move forward in Pennsylvania.”

After seeing positive market signals in Texas, Calpine began redevelopment efforts in the Lonestar State last year. The company is reportedly on track to add over 1,000 MW of generation to its Texas fleet over the next few years.

“We are increasing staffing and are looking forward to bringing more generation online in PJM as well,” added Stephenson.

The Sutter Decarbonization Project would be designed to capture 95% of carbon emissions from Sutter Energy Center. Calpine now plans to begin the first phase of the DOE cooperative agreement, which will support the engineering and design of the project.

Calpine is working with the Sacramento Municipal Utility District (SMUD) to support its 2030 Zero Carbon Plan through the project. Other partners include ION Clean Energy and 1PointFive Sequestration.

Sutter Energy Center is located in Yuba City, California. The 550 MW combined-cycle plant became commercially operable in 2001.

In December 2023, we first reported that the Sutter Decarbonization Project would receive up to $270 million in DOE funding.

The project would use ION’s ICE-21 solvent to capture the CO2 and sequester it permanently more than a half a mile underground in saline geologic formations. It would be the first in the world to deploy an air-cooling system at a carbon capture facility, which would eliminate the use of cooling water and significantly minimize freshwater usage.

Calpine also recently executed the first phase of its cost sharing agreement for the Baytown Decarbonization Project, a similar CCS demo project in Baytown, Texas.

“Calpine is grateful for the DOE’s commitment to working with Calpine to advance this important technology and believes that this is a recognition of the quality and strength of Calpine’s CCS program,” said Alex Makler, Calpine’s Senior Vice President, West Region.

The future adoption of carbon capture and storage likely depends on a variety of factors, like changes in the cost to capture CO2, the availability of pipeline networks and storage capacity for transporting and storing CO2, federal and state regulatory decisions and the development of clean energy technologies that could affect the demand for CCS.

The Baytown Decarbonization Project is designed to capture 95% of CO2 emissions from two of the three turbines at the company’s Baytown Energy Facility, enabling the facility to produce electricity as well as steam for collocated industrial use. Calpine will now begin the first phase of the DOE cooperative agreement, with other phases to follow upon successful completion of phase one and finalization of plans for subsequent phases.

“We are pleased to have reached another milestone in the development of our Baytown Decarbonization Project. This initial Phase 1 commitment by the DOE will support the engineering and design of the project, further our community engagement, and advance project planning,” said Caleb Stephenson, Calpine’s Executive Vice President of Commercial Operations.

“This marks an important step forward for the Baytown CCS Project,” added Stephenson. “While there remain many milestones ahead, this step demonstrates Calpine’s continued commitment to being a leader in the energy transition in general and in carbon capture technology in particular. Calpine looks forward to continuing its partnership with the DOE as we work toward decarbonization of facilities like the Baytown Energy Center, which will be a critical part of our energy infrastructure for the foreseeable future and play a key role in decarbonizing our nation’s industrial sector.” Stephenson said.

In addition to the company’s Baytown project, Calpine continues to advance its similarly sized Sutter Decarbonization Project in California, which is negotiating an agreement with OCED that will help advance that project as well.

“Calpine is grateful for the DOE’s commitment to working with Calpine to advance this important technology and believes that this a recognition of the quality and strength of Calpine’s CCS program,” said Stephenson.

Carbon capture and storage (CCS) involves removing carbon dioxide, either from the source of pollution or from the air at large and storing it deep underground. In some instances, the CO2 is transported across states through pipelines and stored at facilities and used for other purposes.

The Biden Administration believes large-scale deployment of carbon capture, transportation, and storage infrastructure could play a vital role in reducing emissions and has increased pressure on the CCS industry to show that the technology can significantly help combat climate change.

Proponents say CCS could have a huge role in reducing emissions, while environmentalists note the technology is far from scale and argue that focusing on it distracts from renewable energy solutions.

Each project aims to demonstrate integrated carbon capture, transport and storage technologies and infrastructure that can be deployed at power plants. However, the technologies and environments are different. In this case, three novel solvents would be demonstrated and combined with carbon transport and storage in different geological settings.

Funding for the projects – in California, North Dakota and Texas – comes from the Bipartisan Infrastructure Law signed in 2021.

The Biden Administration believes the large-scale deployment of carbon capture, transport and storage infrastructure could play a vital role in reducing emissions in the U.S. For more than a decade the federal government has provided financial support to boost the development and use of technologies for capturing CO2 emissions.

But in the last couple of years, legislation has significantly increased annual funding for these efforts. The Bipartisan Infrastructure Law, formally known as the Infrastructure Investment and Jobs Act, provides $8.2 billion in advance appropriations for CCS programs over the 2022–2026 period, according to a recent Congressional Budget Office (CBO) report.

Proponents say carbon capture could have a huge role in reducing emissions, while many environmentalists note the technology is far from scale and argue that focusing on it distracts from renewable energy solutions.

According to the CBO report, 15 CCS facilities are currently operating in the U.S. Together, they have the capacity to capture 0.4 percent of the nation’s total annual CO2 emissions.

The report notes an additional 121 CCS facilities are under construction or in development. If all were completed, they would increase the nation’s CCS capacity to 3 percent of current annual CO2 emissions.

Here are the three projects selected for award negotiation: 

Baytown Carbon Capture and Storage Project

The Baytown Carbon Capture and Storage (CCS) Project plans to capture CO2 from the Baytown Energy Center, a natural gas combined-cycle plant in Baytown, Texas. The project would use Shell’s CANSOLV solvent to capture CO2, which would be transported through new and existing pipelines and sequestered in storage sites on the Gulf Coast.

Calpine is serving as the lead for the Baytown CCS project and Covestro, an industrial manufacturer of plastics, will serve as the project’s primary power off-taker. Calpine expects the project will capture up to 2 million metric tons of CO2 per year

The project is also considering the use of greywater cooling to minimize freshwater consumption by reusing wastewater, according to DOE.

The 896 MW Baytown Energy Center provides steam and power to the adjacent Covestro chemicals manufacturing facility as well as power to the Texas electric grid.

Calpine said adding post-combustion carbon capture equipment to this facility would reduce the carbon dioxide emissions intensity of two of its three combustion turbines at a design capture rate of 95%.

Calpine has a total of 11 CCS projects in its pipeline.  

In July 2022 the company unveiled a carbon capture demonstration pilot project at its combined-cycle plant in Pittsburg, California. The CCS project at Calpine’s Los Medanos Energy Center will use a chemical solvent developed by ION Clean Energy to bind with carbon dioxide in the plant’s flue gas.

In the case of this pilot, the project will not store the captured carbon and instead release it back into atmosphere. However, in future plants, the CO2 could be pumped and stored underground.

Project Tundra

Project Tundra is a carbon capture system to be developed adjacent to the Milton R. Young Station, a coal-fired plant near Center, North Dakota. The project plans to use Mitsubishi Heavy Industries’ KS-21 solvent to capture CO2, which would be permanently stored in saline geologic formations beneath and surrounding the power plant. The storage site has already been approved for a Class VI well permit.

Project Tundra is being developed by project sponsors which include Minnkota Power Cooperative and TC Energy. The project is expected to capture an annual average of 4 million metric tons of CO2.

Minnkota said it plans to retrofit the coal-fired plant’s 430 MW Unit 2 to capture up to 90% of its CO2 emissions. Unit 2 is a cyclone-fired wet bottom boiler from Babcock & Wilcox.

MHI will collaborate on the CO2 capture facility with Kiewit, which will construct the project.

Project Tundra is receiving up to $350 million.

Sutter Decarbonization Project

The Sutter Decarbonization Project plans to demonstrate and deploy a carbon capture system at the Sutter Energy Center, a 550 MW combined-cycle plant near Yuba City, California. The project would use ION’s ICE-21 solvent to capture the CO2 and sequester it permanently more than a half a mile underground in saline geologic formations.

This project would be the first in the world to deploy an air-cooling system at a carbon capture facility, which will eliminate the use of cooling water and significantly minimize freshwater usage—a critical concern of the local community.

The Sutter Decarbonization Project will receive up to $270 million. Sutter CCUS (a subsidiary of Calpine) is developing the project.  

Funding applicants were required to submit Community Benefits Plans, intended to spur community and labor engagement in carbon management technologies while addressing environmental burdens in partnership with surrounding communities.

DOE estimates that reaching the current administration’s plan for a net-zero emissions economy would require capturing and storing between 400 million and 1.8 billion metric tons of CO2 annually by 2050. The power sector accounts for more than a quarter of U.S. carbon emissions.

According to the CBO report, the future adoption of carbon capture and storage depends on a variety of factors, like changes in the cost to capture CO2, the availability of pipeline networks and storage capacity for transporting and storing CO2, federal and state regulatory decisions and the development of clean energy technologies that could affect the demand for CCS.

DOE said it will host a national briefing on Dec. 18 to share more information about the selected projects. A period of stakeholder engagement will then take place starting in January. 

The project at Calpine’s Los Medanos Energy Center will use a chemical solvent developed by ION Clean Energy to bind with carbon dioxide in the plant’s flue gas. In the case of the pilot, the project will not store the captured carbon and instead release it back into atmosphere. However, in future plants, the CO2 could be pumped and stored underground.

Officials expect the technology to capture up to 95% of carbon emissions while producing power.

“This pilot will help facilitate the energy transition by allowing us to test and come up with the most effective way to decarbonize modern combined cycle flexible natural gas plants,” said Thad Hill, who is Calpine CEO.

The $25 million project is bolstered by a grant from the U.S. Department of Energy (DOE). The operational test period for the CCS technology at Los Medanos could take 13 to 15 months, said Andrew Awtry, VP of Engineering at ION Clean Energy.

From there, the findings could help bring the technology to other natural gas-fired plants in California and across the U.S.

“We’re pursuing projects at a number of our sites across the country,” said Hill. “Our goal is to be the leader in carbon capture and sequestration for power plants in this country.”

The unveiling ceremony featured California state, labor, and environmental leaders. 

Carbon capture and storage (CCS) involves removing carbon dioxide, either from the source of pollution or from the air at large and storing it deep underground. In some instances, the CO2 is transported across states through pipelines and stored at facilities and used for other purposes.

The Biden Administration believes large-scale deployment of carbon capture, transportation, and storage infrastructure could play a vital role in reducing emissions and has increased pressure on the CCS industry to show that the technology can significantly help combat climate change.

Proponents say CCS could have a huge role in reducing emissions, while environmentalists note the technology is far from scale and argue that focusing on it distracts from renewable energy solutions.

Rules announced by the U.S. Environmental Protection Agency earlier this year set caps on carbon dioxide pollution that most coal and gas-fired plant operators would have to meet. The EPA rules would not mandate the use of CCS but are expected to help usher it in.

Earlier this year the Texas Public Utility Commission (PUC) adopted a Performance Credit Mechanism (PCM) designed to incentivize new generation. Essentially, power producers will sell credits to retail energy providers in Texas. The credits offer assurance to the providers that power will be available to them during times of scarcity, which under the old system would trigger higher prices.

Critics have said the PCM doesn’t offer assurance that these new power plants will indeed be built but instead simply gives more money to power producers.

We’ve reported previously on Calpine’s initial project, a 425 MW gas-fired plant adjacent to the existing Freestone Energy Center in Freestone County. Efforts already underway include engineering and site planning, grid interconnection requests and environmental permitting. Calpine said gas turbine and generator components have been procured and are ready for deployment. The new facility would be operational before the summer of 2026.

Other projects under development by Calpine include a 425 MW gas-fired plant near the Guadalupe Energy Center in Guadalupe County. Permitting and interconnection efforts are underway.

Calpine would also develop a new large-scale combined cycle plant to support co-located industrial load as well as the electrical grid.

The company said it also hopes to develop generation projects equipped with carbon capture.

Earlier this month the Texas Senate approved two major bills aimed at building more natural gas-fired plants in the state. As much as 10 GW of these plants could be built if SB 6 is signed into law.

SB 7 would create a financial incentive to encourage the private development of energy generation resources that can come on within two hours and run for at least four hours, such as natural gas plants or batteries. 

The goal of the bills, according to the sponsors, is to prevent another catastrophic power shortage like the one that killed more than 200 people in 2021 as freezing temperatures knocked power production offline and left millions of Texans in the dark.

Calpine said this effort was warranted by the Texas Public Utility Commission’s recent adoption of a framework for implementing a Performance Credit Mechanism (PCM) designed to incentivize new generation.

Under the PCM, generators would be awarded performance credits based on how much capacity they make available during some as-of-yet-undefined number of hours of electricity scarcity. Load-serving entities—retail electric providers, co-ops, and municipal utilities especially—would be obligated to buy those credits from generators, generally passing costs on to customers.

The Freestone Energy Center is a 794 MW combined-cycle facility located near Fairfield, Texas. The plant consists of four combustion turbines, four heat recovery steam generators and two steam turbine generators, configured in two largely independent power blocks. 

The Freestone Energy Center was first commercially operable in June 2002.