Louisville, Kentucky (Platts)--2Aug2011/536 pm EDT/2136 GMT

Closing out a century as a coal-fired generator, municipal utility Richmond Power & Light of Indiana plans to switch its 100-MW Whitewater Valley coal-fired generating station to burn gas produced from solid waste by the spring of 2013.

The conversion is estimated to cost $150 million to $160 million, general manager Steve Saum said Tuesday. "The process takes municipal solid waste, refines it into resource derived fuel, taking out the recyclables in the front end but leaving the high Btu content for us," he said.

"Then, it goes into a gasification process, not incineration, which produces the gas" that subsequently is burned to generate electricity.

Only one of Whitewater Valley's two units -- a 66-MW unit installed in 1972 -- is expected to be retrofitted with the gasification technology, he said. The other 34-MW unit will be shut down within the same timeframe.

Article continues below...

Sign up to Coal Outlook today.
	Coal Outlook and Coal Trader provides daily vital strategic market intelligence on U.S. coal markets that keep the most successful coal executives up-to-date on who's buying, who's selling, and where the markets are heading. The mix of authoritative news coverage, accurate price assessments, and analytical commentary is essential reading for those who want to dictate events rather than merely follow them.

According to Saum, the conversion technology is used commercially in Japan and Europe, but is not currently in use in the US.

"We're going to be the first commercial-sized plant in the US," said Harry Phillips, RP&L delivery service director.

The city is signing a contract with Cate Street Capital of Delaware, which is expected to finance and operate the new venture.

Saum said the muni, which serves 21,500 customers, decided to sever its historic relationship with coal for economic and environmental reasons, such as rising coal prices and increasing Environmental Protection Agency pollution control rules.

RP&L's existing coal contract with a southwestern Indiana supplier, which Saum did not identify, runs through 2011 and has an option for 2012.

The year "2012 probably will be the last year for coal out of southwestern Indiana," he said.

--Bob Matyi, newsdesk@platts.com