Economic History

The investment final cost of ELCOGAS in its Puertollano IGCC plant was as follows:

Investment Costs	Million Euros
Gasification Plant	233.6
Air Separation Unit	34.6
Combined Cycle	167.1
BOP (Balance of Plant)	166
TOTAL	601.3
Others	45
Financial costs during construction	85.3
TOTAL	731.8

These costs became 9.8% higher than the ones initially budgeted in October 1991 for the project. For a pioneering plant like ELCOGAS IGCC is, this difference does not become an important deviation. The main reasons for this deviation were:

changes from the original design in the gasification systems.
prolongation in the commissioning due to the great complexity and integration of the systems of the power station.

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OUTSTANDING EVENTS

Date	Description
1996	First synchronization of the power plant with the electricity grid operating with natural gas combined cycle technology.
1997	The power plant was included in the Stable Legal Framework of the Electricity Sector. The results during the first year in operation were succesful.
1998	First electricity production with IGCC technology. On November 27, the Electricity Sector liberalization Law 54/1997 came into effect. This law included opening the electricity generation market to free competition. In order to reduce the impact due to the change to the liberalized system, the law created an economic compensation scheme through the so-called CTC (Costs of Transition to Competition). The aim was to allow to recovery the investment in determined generation assets. ELCOGAS power plant was one of the installations with the right of compensation through the CTC.
2001	Lack of regulatory experience with IGCC technology led to insufficient allocation of CTC. The assumptions used for calculation of the CTC for ELCOGAS, coming many of them from outside the company, turned out to be wrong. In addition, the speed of recovery of the CTC was much lower than expected. For that reason, the Spanish government, on October 10 2001, issued an Order approving an Extraordinary Finance Plan for ELCOGAS. The aim was to guarantee that ELCOGAS would receive the corresponding amount from CTC, reducing the risk of not receiving them because of insufficient funds (revenue deficit) in the Spanish Electricity System .
2006	As a result of the elimination of the CTC scheme from the Spanish Electricity System and the existence of special financial difficulties which might have placed the normal course of the company's activities, the Extraordinary Finance Plan was replaced by a Feasibility Plan (under the Twentieth Additional Provision to Law 54/1997). Indeed, the innovative nature and lack of commercial maturity of IGCC technology, together with all the R&D&I activities that continued being carried out, prevented the power station from competing with traditional technologies on the same terms. This meant that the revenue obtained from the market was insufficient to cover all its costs.
Future	The European Council, the European Commission and the European Parliament have proposed the construction of up to 12 large demonstration plants of clean technologies generation from fossil fuels, in order to improve techniques of efficient coal conversion and CO₂ capture and storage. In fact, in January, 2008, the Commission issued a statement specifically aimed at supporting early, large-scale demonstration of clean coal generation technologies with CO₂ capture and storage systems, considering crucial the immediate construction of large demonstration installations. The ELCOGAS power station is the main IGCC technology plant for electricity generation using coal in the world, and it is essential to continue developing industrial-scale testing of the technology and to facilitate the introduction and generalization of new IGCC power stations in the European Union. So the ELCOGAS project completely matches with the statement where the Commission mentioned that the European Union should immediately begin to apply policies to maintain and support its world leadership in the fight against climate change.