Defining CCS Ready: An Approach to An International Definition

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Appendix C: Policy Considerations and Assessments of CCS Ready Economicsreduced for capture Ready plants because site selection expenditures have been made at thetime the plant was designed (and reflected in higher initial power plant capital costs) andbecause the time needed to find and develop the a suitable storage sites is reduced. In otherwords, the total dollar amount of the finding and developing the storage site is the same –only the timing of those costs is different. In contrast, there are significant savings expectedfor the transport costs.Exhibit C-4: Retrofit to Current CCS Technology Capitaland Operating Cost Assumptions (all cases)After Regular (Current Technology) CCS is AddedCCS Ready OptionIncrementalCapital Costs($/Original MW)Fixed O&MCosts($/MW/yr)Variable O&MCosts ($/MWhr)Heat Rate(Btu/kWhr) aCO2 Transport& Storage Cost($/metric ton)CO2Emissions(kg/MWhr)CapacityLostNot CCS Ready $ 1,088,200 $ 62,161 $ 4.18 12,637 $ 12.67 117 31%1: Throttle Valve Case $ 1,057,313 $ 60,840 $ 4.02 12,146 $ 10.96 112 28%2: Clutch Case $ 1,067,751 $ 59,922 $ 3.91 11,828 $ 9.24 109 26%3: Oversized Boiler Case $ 831,431 $ 53,582 $ 3.79 11,556 $ 9.24 107 13%aCoal burned for baseload.Exhibit C-5: Storage and Pipeline Cost Assumptions(Incurred After Retrofit Decision)Best (Capture Ready) Middle (Capture Ready) Worse (BAU Plant)Miles of Pipelines NecessaryMiles of 12 inch Pipeline 25 50 75Miles of 16 inch Pipeline 25 50 75Miles of 36 inch Pipeline 100 50 0Total Miles 150 150 150Transport (Pipeline) and Storage CostsPipeline Cost $/metric ton $ 4.74 $ 6.21 $ 7.67Storage Cost $/metric ton $ 4.50 $ 4.75 $ 5.00Total Pipeline and StorageCost $/metric ton $ 9.24 $ 10.96 $ 12.67The Monte Carlo analysis may include a representation of an advanced CCS Technology interms of when it might be available and its cost and performance characteristics. Theimportance of an advanced CCS technology is that it can make retrofitting to CCS moreeconomic (thus making CCS Ready investment more valuable) and it might change thespace, equipment and energy requirements for CCS, (possibly making some of the CCSReady investments unnecessary).Exhibit C-6 shows the incremental capital costs (per unit of original plant capacity) ofretrofitting the power plants to the assumed advanced capture technology. The advancecapture technology is assumed to be more energy efficient than current amine technologiesand to have somewhat lower capital costs. Capture efficiency is 90 percent in both cases.Because the advanced technology capture process requires less energy for solventregeneration, the net electricity generating capacity lost is substantially lower for the firstthree options in which steam needs to be diverted for solvent regeneration. The CCS Ready3 option (which assumes that the plant is built with an over-sized boiler to supply steam to afuture amine capture process) has nearly the same capacity loss with the current and the23 February 2010 112
Appendix C: Policy Considerations and Assessments of CCS Ready Economicsadvanced technologies, because the source of lost capacity is only electricity needs for CO 2compression. The small difference in capacity lost for CCS Ready Option 3 between currentand advanced technologies stems from the fact that less CO 2 is compressed per MWh ofelectricity for the advanced technology because less coal needs to be burned.Exhibit C-6: Retrofit to Advanced CCS Technology Capitaland Operating Cost Assumptions (all cases)After Advanced CCS is AddedCCS Ready OptionIncrementalCapital Costs($/Original MW)Fixed O&MCosts($/MW/yr)Variable O&MCosts($/MWhr)Heat Rate(Btu/kWhr) aCO2 Transport &Storage Cost($/metric ton)CO2Emissionskg/MWhrCapacityLostNot CCS Ready $ 794,386 $ 56,460 $ 3.79 11,581 $ 12.67 103 22%1: Throttle Valve Case $ 771,838 $ 55,815 $ 3.67 11,223 $ 10.96 101 21%2: Clutch Case $ 779,458 $ 55,367 $ 3.60 10,991 $ 9.24 100 20%3: Oversized Boiler Case $ 606,945 $ 51,877 $ 3.50 10,792 $ 9.24 98 12%aCoal burned for baseload.C.4.7 Base Case ResultsThe results of Monte Carlo analysis are typically calculated in terms of average or expectedvalues of key outputs or in terms of probability distributions of those outputs. For example,a new power plant can be evaluated in terms of a net present value (NPV). The NPV is thesum of annual revenues minus costs discounted by the time value of money. Under a welldesigned policy, a CCS Ready power plant might have an expected NPV better or a leastsimilar to its Not-CCS Ready counterpart. A well-designed policy also might have aprobability distribution of NPVs that has fewer instances of large losses.Each of the four possible power plant configurations (Not CCS Ready and three levels ofCCS Ready) is modelled for each Monte Carlo scenario through an operating life that couldspan 41 years, if economic conditions permit. First, the annual dispatch of the original (i.e.no CCS retrofit) plants are computed based on market prices for fuels, electricity and GHGallowances. Increasing GHG allowance prices reduce the number of profitable dispatchhours each year and, in some instance, eventually cause the originally-configured plants to beshut down before their 41 year operating life is reached. On average in the Base Case, theplants would operate 37.8 years in the absence of CCS retrofits. In a second step in theanalysis, the option to retrofit the plants to current CCS technology (and, if available, theadvanced CCS technology) is evaluated in each year. If the discounted net present value ofthe plant can be increased by the CCS retrofit, then it is assumed to take place that year.The summary results of the Monte Carlo simulation are shown in tabular form inExhibit C-7. The first column in the tables show what year the CO 2 restrictions begin. Byassumption, the earliest year is 2016 and the latest year is 2025. The average year CO 2restrictions begin is 2020.6 across all scenarios.A key measure of the economics of each option is the expected value (that is, the averageover all Monte Carlo scenarios) of NPV per MW of original plant capacity. The secondcolumn in Exhibit C-7 shows expected NPV of the original plants assuming they are notretrofitted to CCS. For this calculation, the plant operators are assumed to either pay theCO 2 emission costs or cease operating. Because the operating characteristics (heat rates,O&M costs and CO 2 emissions) of the four plant options are nearly identical, the differences23 February 2010 113
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Defining CCS Ready: AnApproach to A
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PrefacePrefaceThe Global CCS Instit
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Acknowledgements and CitationsThe c
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Executive SummaryThe components spe
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Executive SummaryExhibit ES-3: Illu
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Chapter 1: IntroductionDevelopers o
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Chapter 1: Introductionor more, lic
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Chapter 1: Introductionrelatively n
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Chapter 1: IntroductionExhibit 1-3:
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Chapter 1: IntroductionJustificatio
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CO2 Transport Ready PlantExhibit 1-
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Chapter 2: Capture Ready Plant Defi
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Chapter 3: Transport Ready Plant De
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3.3.2 Environmental, Safety, and Ot
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Chapter 4: Storage Ready Plant Defi
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• Site DesignChapter 4: Storage R
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