Futureproofing power generation in Louisiana

Supporting Cleco to decarbonise its operations, pioneer carbon capture technology and bring jobs to central Louisiana.

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Sector Energy
Sub-sector Utilities
Location Louisiana, United States


Louisiana has a long history with the oil, natural gas and petrochemical industry. Today, it has the opportunity to be a pioneer in the deployment of large-scale carbon capture and storage (CCS) in support of energy security and emissions reductions.1

Macquarie Asset Management (MAM) portfolio company Cleco operates an electricity distribution network that serves approximately 290,000 customers in the state. Its 600 MW electric generation unit, known as Madison 3, is the largest of its fleet. However, it is fuelled predominantly by petroleum coke – a waste product of oil refining – alongside coal sourced from the Illinois Basin. The plant is the largest emitter of CO2 by a utility in the state, emitting between 3-4 million tonnes of CO2 per year.2 Alongside its other coal and gas-fired power stations, Cleco is aware that its Madison 3 unit poses a challenge to achieving its goal to reduce total GHG emissions by 60 per cent by 2030.3

Pursuing CCS technology – which captures CO2 emissions and stores them underground to prevent their release into the atmosphere – presents an opportunity for Cleco to significantly decarbonise its Madison 3’s operations, while preserving and expanding local employment. The plant’s low sulphur emission rates, which are necessary for carbon capture efficiency, along with the availability of electricity and steam to support the carbon capture process, make its Madison 3 unit a good candidate for CCS. Furthermore, there are geological formations suitable for permanent carbon sequestration directly below the plant, meaning there is no need for Cleco to invest in costly pipelines to transport the CO2.

Additionally, the business case for investing in CCS technology recently became more attractive as a result of the United States’ Inflation Reduction Act, which provides tax credits4 for qualified facilities capturing and disposing of CO2.


MAM is supporting Cleco to explore the development of a new, state-of-the-art carbon capture facility in the heart of central Louisiana at the Brame Energy Centre.

In April 2022, MAM helped Cleco submit a grant application which successfully secured $US9 million to help finance a two-year Front-End Engineering Design (FEED) study. The project, known as Diamond Vault, is expected to be one of the first projects in the US to capture CO2 emissions from a power plant and sequester them in geological formations onsite.

The FEED study is designed to scope out Project Diamond Vault’s contract, design and construction requirements. The process consists of four phases: feasibility, technology selection, pre- and initial-FEED, and finalised FEED. The feasibility phase commenced in July 2022 and the project is currently in pre- and initial-FEED phase which began in March 2023. The finalised FEED is expected to reach completion later in 2024 and, if successful, Cleco will retrofit its existing Madison 3 plant from 2025 and target commercial operation to commence in 2028.


Project Diamond Vault is expected to help futureproof Cleco’s business by reducing its Madison 3 unit’s GHG emissions by up to 95 per cent and help achieve its goal of to reduce GHG emissions by 60 per cent by 2030.5

According to an impact study by Louisiana State University economist Dr Loren Scott, Project Diamond Vault, if successful, is expected to create approximately 2,900 direct and indirect jobs each year during the construction period, while also injecting approximately $US2.7 billion into the Louisiana economy in increased sales and household earnings. Once operational, it is also expected to create 30 to 40 new permanent jobs at Cleco’s Brame Energy Centre.5

Furthermore, as a result of the tax credits, Cleco expects it will be able to fund the retrofitting of its Madison 3 unit without increasing rates for its customers – 40 per cent of whom belong to lower-income households who depend on low-cost energy.6


Editor’s note: Since 2019, MAM’s Private Markets businesses have been subject to a policy restricting investments in standalone coal-fired power generation or in any asset for which more than 25 per cent of its revenue is dependent on coal. For businesses with a smaller exposure to coal, the investment case must incorporate a transition away from this dependency. At the time the policy was implemented, it was not applied retrospectively to MAM’s existing Private Markets portfolio of infrastructure companies, which included Cleco. This is why MAM, in line with its net zero commitment, is proactively working with Cleco on Project Diamond Vault as one step in its goal to reduce GHG emissions by 60 per cent by 2030. As a MAM investment that is not funded by Macquarie Group’s balance sheet, Cleco is not impacted by Macquarie Group’s commitment to runoff its limited remaining on-balance sheet lending and equity exposure to coal companies by the end of 2024.

~95 per cent

of Madison 3’s CO2 emissions expected to be captured5

2,900 jobs

direct and indirect expected to be created each year through the construction phase5

$US2.7 billion

boost projected to Louisiana’s economy (subject to regulatory approval)5

Project Diamond Vault is expected to help decarbonise energy production in a state that has built its economy around carbon. In Louisiana, we have the natural resources, the ingenuity, the geology, the people and the infrastructure to transform the power industry as we know it.”

Bill Fontenot
President and Chief Executive Officer


  1. ‘What is carbon capture, usage and storage (CCUS) and what role can it play in tackling climate change?’, Grantham Research Institute on Climate Change and the Environment, 13 March 2023.
  2. William Conway, Cleco former General Counsel, Chief Compliance Officer and Chief Corporate Development Officer, ‘Project Diamond Vault,’
  3. ‘Project Diamond Vault’, Cleco Diamond Vault, April 2022,
  4. ‘Inflation reduction act tax credit’, US Department of Labor. November 2022.
  5. ‘Project Diamond Vault’, Cleco Diamond Vault, April 2022,
  6. ‘Leading the charge: How utilities can pave the way to achieving net zero’, Navigating to Net Zero, November 2022,

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