Presentation toPittsburgh Coal Conference

September 28, 2006

Update on FutureGen – A Technology Response to Climate Issues

Charles H. GoodmanSenior Vice President, Southern Company

Chairman of the Board, FutureGen Industrial Alliance

U.S. Demand for Electricity Continues to Grow

Generation capacity additions in gigawatts by fuel type

Forecast Generation capacity additions in gigawatts by region and fuel through 2030

Source: U.S. Energy Information Administration Annual Energy Outlook 2006

How to meet this demandHow to meet this demand??

Future Generation Plans Must Consider Multiple Resources

• Pulverized coal • Natural gas combined cycle • Integrated gasification combined cycle• Nuclear power• Renewable energy

Bottom Line: Gas prices are volatile and future supplies uncertain. Nuclear power needs public support. Renewable options can supplement but fall far short of meeting total growth in energy demand. We have coal and must develop and demonstrate technologies to utilize it responsibly.

Bottom Line: Gas prices are volatile and future supplies uncertain. Nuclear power needs public support. Renewable options can supplement but fall far short of meeting total growth in energy demand. We have coal and must develop and demonstrate technologies to utilize it responsibly.

GasifierGasifier

Coal, Water and OxygenCoal, Water and Oxygen

Sulfur RemovalSulfur Removal

Solids and CoSolids and Co--ProductsProductsSulfurSulfur

Clean SyngasClean Syngas

Other Chemical ProductsOther Chemical Products

ElectricityElectricityElectricityElectricity

SteamSteam

WaterWater

Cooling WaterCooling WaterAirAir

IGCC: Innovative Technology

Advantages of IGCC• Provides a fuel price hedge for NGCC

• Design cycle can be shorter than PC due to standardization to fit gas turbine

• Allows coal to benefit from gas turbine technology improvements

• Easier to permit than new pulverized coal

• Versatile - feedstock flexibility and multiple products (electricity, chemicals -including hydrogen, transportation fuel, or "synthetic" natural gas)

• Potential to reduce incremental cost of CO2 capture

Advantages of IGCC• Provides a fuel price hedge for NGCC

• Design cycle can be shorter than PC due to standardization to fit gas turbine

• Allows coal to benefit from gas turbine technology improvements

• Easier to permit than new pulverized coal

• Versatile - feedstock flexibility and multiple products (electricity, chemicals -including hydrogen, transportation fuel, or "synthetic" natural gas)

• Potential to reduce incremental cost of CO2 capture

IGCC: Innovative Technology

Existing Stanton CC

New Combined Cycle

Gasifier IslandNew Coal Conveyor Gas Cleanup Subsystems

and Booster Compressor

New CoolingTower

• 285 MW IGCC air-blown transport gasifier• Startup in mid - 2010• Jointly owned by Southern and Orlando Utilities;

co-funded by U.S. DOE

Transport Reactor Integrated Gasification (TRIGTM) at Orlando Utilities’ Stanton Energy Center

Transitioning from NGCC to IGCC Adds Cost and Complexity

CombinedCycle

GASTURBINE

STEAMTURBINECONDENSER

TO STACK

HP, SUPERHEATEDSTEAMCONDENSATE

Heat Recovery Steam GeneratorCO

CATA

LYST

SCR

POWER

Natural gas

POWER

TRIG™ Simplified Flow Diagram

CombinedCycle

GASTURBINE

STEAMTURBINECONDENSER

TO STACK

HP, SUPERHEATEDSTEAMCONDENSATE

Heat Recovery Steam GeneratorCO

CATA

LYST

SCR

POWER

POWER

GasifierIsland

COAL PILE

PROCESSAIR

COMPRESSOR

PARTICULATECOLLECTION

HIGHTEMPERATURE

SYNGASCOOLING

LOWTEMPERATURE

SYNGASCOOLING

SULFURREMOVAL AND

RECOVERY

COALMILLING &DRYING

HIGHPRESSURE

COALFEEDING

SOURWATER

TREATMENT

AMMONIARECOVERY

SYNGASRECYCLE

SYNGAS

SYNGAS

SYNGAS

VENT GASANHYDROUS

AMMONIA

SULFURSYNGAS

G-ASH HP BFW

HP STEAM

MERCURYREMOVAL

TRANSPORTGASIFIER

AIR

F-ASH

EXTRACTION AIR

GasifierIsland

CombinedCycle

COAL PILE

PROCESSAIR

COMPRESSOR

PARTICULATECOLLECTION

HIGHTEMPERATURE

SYNGASCOOLING

CO2 and SULFURREMOVAL AND

RECOVERY

COALMILLING &DRYING

HIGHPRESSURE

COALFEEDING

SOURWATER

TREATMENT

AMMONIARECOVERY

GASRECYCLE

GASTURBINE

STEAMTURBINE

LOWTEMPERATURE

GASCOOLING

CONDENSER

SYNGAS

Hydrogen/ Nitrogen

EXTRACTION AIR

VENT GASANHYDROUS

AMMONIA

SULFURGAS

G-ASH

G-ASH

HP BFW

HP STEAM

TO STACK

HP, SUPERHEATEDSTEAMCONDENSATE

MERCURYREMOVAL

TRANSPORTGASIFIER

AIR

Heat Recovery Steam GeneratorCO

CATA

LYST

SCR

POWER

POWER

F-ASH

WATER GASSHIFT

REACTION

CO2

TRIGTM with Carbon Separation Technology Added

Coal Gasification to Produce SNG(North Dakota)

Petcoke Gasification to Produce H2(Kansas)

Sour

ce:

Dako

ta G

asifi

catio

n

Sour

ce:

Chev

ron-

Texa

co

Examples of Syngas CO2 Capture Systems

How Will CO2 Sequestration Impact Plant Operations?

Commercialization PathwayEmerging

Commercial IGCC IGCC w/Carbon

Capture & Storage

Challenges: …………..

1.Verify Capex / OpEx2.Prove electricity costs3.Validate design decisions4.Verify operability

Carbon CaptureChallenges:

1. Incremental Capex and OpEx costs

2. Additional design andoperational complexity

Sequestration Challenges:

1. Uncertainty in sequestration science

2. Permitting and compliance for long-term.

Existing Stanton CC

New Combined Cycle

Gasifier IslandNew Coal

ConveyorGas Cleanup Subsystems and Booster Compressor

New CoolingTower

Orlando FutureGen

• Commercial-scale, 275-MWe Plant • Minimum of 1 million tons/year CO2 captured and

sequestered• Production of electricity from hydrogen• “Living laboratory” to test and validate cutting-edge

technologies• Public-private partnership• Stakeholder involvement• International participation

FutureGen ProjectKey Features

FutureGen Project Benefits

• Supports a technology-based climate change strategy– Mitigates the financial risks of climate change

• Validates the cost and performance of an integrated near-zero emission coal-fueled power plant– Advances IGCC technology– Advances carbon capture, sequestration, and hydrogen-production

technologies– Sets groundwork for CO2 sequestration siting and licensing

• Creates the technical basis to retain coal U.S. energy mix with a long-term goal of zero emissions

• Enables the public and private sector to share the cost and riskof advanced technology demonstration– Platform for emerging technology demonstration

The FutureGen Alliance

• An international, non-profit consortium of some of the largest coal and utility companies in the world

• Partnering with US Department of Energy to design, construct and operate the facility

Project Schedule

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Alliance Established

Facility Construction

Plant Startup & Testing

Full Scale Plan Operations

Siting, Environmental Review & Permitting

Project Structuring and Conceptual Design

Design

Proposed Sites

Preferred Site

NOI

ROD

EIS

DOE NEPA Process

Alliance Siting Process

Qualifying CriteriaEliminated Sites

Scoring and Best Value Criteria

Eliminated Sites

Candidate Site List

Site Characterization & EIV

Alternate Sites

Sites For Evaluation

Acceptable Site List

Final Selection Criteria

Overview of the Site Selection Process

FutureGen Site Selection Underway

12 Sites in 7 States

C. Davidson 2006

Candidate Sites

Project Schedule

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Alliance Established

Facility Construction

Plant Startup & Testing

Full Scale Plan Operations

Siting, Environmental Review & Permitting

Project Structuring and Conceptual Design

Design

FutureGen ProjectAddress the Technology Challenges

• Establish the technical, economic, and environmental viability of near-zero emission coal plants by 2015; thus, creating the option for multiple commercial deployments by 2020

• Adopting aggressive goals:– Sequester >90% CO2 with potential for ~100%– Extensive control of other emissions

• >99% sulfur removal• <0.05 lb/mmbtu NOx• <0.005 lb/mmbtu PM• >90% Hg removal

– Integrate new equipment, yet achieve commercial availability– With potential for a Nth plant commercial cost no more than 10%

greater than that of a conventional power plant

• Requires diffusion type burner due to H2 flame speed• Operations will require fuel flexibility

H2, syngas, NG• 15 ppm NOx is achievable with H2 / diluent

Will need SCR

• Combustor technology improvements needed:– Fuel flexibility– Catalytic & premix based combustion

H2 / N2 Flame

Hydrogen Combustion Is Challenging

Gen

H2 / Diluent 24%

Air - 100%

Gas Turbine

Natural Gas 2%NG Exhaust 102%

H2 Exhaust 124%

Hydrogen Fuel Affects Gas Turbine Operations

• Gas turbines are 'mass flow' machines– More mass throughput = more power – Current design geometries based on NG

• Fuel input is part of total mass flow through hot section

– Changing from NG to H2affects flows and output

– H2 / Diluent has higher mass flow– Unbalanced mass flow in

turbine section can impact compressor stability

• Turbine impacts of H2 firing:– Higher H20 in exhaust reduces life– Requires reduced firing temperatures (lost efficiency)

Other Required Process Operations

• Water Gas Shift Reactors– convert CO in syngas to

CO2 and H2

Syngas in

Absorption at processpressure

CO2-lean solvent

Pure CO2

Steam

Clean gas out

CO2-rich solvent

Regeneration T/P depends on solvent properties

Compression

~830°F

~550°F

~555°F

~600°F

~550°F

~550°F

Syngas in

water quench or steam addition

CO + H2O ⇔ CO2 + H2COS + H2O ⇔ CO2 + H2S

• Carbon Separation Equipment– remove CO2 and H2S

from H2

FutureGen ProjectIntegrated Operations at Utility Scale

“Commercial Scale

Integrated Facility”

“Sequestration”

“Sub-scale ResearchFacility”

Source: FutureGen Industrial Alliance

Air

Advanced Electricity

Generation

Advanced Gas Clean-Up

SyngasSyngas CO2 H2

Advanced CO2 separation

O2 SyngasSyngas H2CO2Coal

Air

Slag

AirSeparation

UnitGasification Gas Clean-Up**

CO2Separation**

ElectricityGeneration**

CO2Sequestration &

Monitoring

Advanced Oxygen

Separation

**Candidate for Multiple Technology Upgrades over FutureGen’s Lifetime.

Other Technologies

Electricity,H2, or

other Products

Advanced Coal

Conversion

H2

Project Schedule

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Alliance Established

Facility Construction

Plant Startup & Testing

Full Scale Plan Operations

Siting, Environmental Review & Permitting

Project Structuring and Conceptual Design

Design

FutureGenSummary

• FutureGen is real and moving forward fast• FutureGen creates significant value

– Supports a technology-based climate change strategy, which mitigates the financial risk of climate change while protecting the environment

– Validates the cost and performance of an integrated near-zero emission coal-fueled power plant

– Creates the technical basis to retain coal in global energy mix with a long-term goal of zero emissions

• FutureGen is an opportunity to share the cost and risk of near-zero emission technology development