Defining CCS Ready: An Approach to An International Definition

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Appendix C: Policy Considerations and Assessments of CCS Ready EconomicsExhibit C-10: Tabular Results: Sensitivity Casewith Accelerated GHG RestrictionsSimulated Frequency of Retrofit for CCS Ready OptionsRetrofit TechnologyBAU Reference PlantOption 1: ThrottleValve CaseOption 2:Clutch CaseOption 3: OversizedBoiler CaseNo CCS Retrofit 7% 6% 4% 0%Retrofit to Current CCS 0% 7% 22% 71%Retrofit to Advanced CCS 93% 87% 74% 29%Year GHGRestrictionsBeginOption Zero: BAU Reference PlantOption 1: Throttle Valve CaseNPV Overall including CCS NPV OriginalNPV Overall including CCSNPV Original Year CCSYear CCSPlant w/o CCS is Adopted priv discPlant w/opub disc rateis Adopted priv discStatisticrateCCSpub disc raterateAverage 2017.0 136,007 2044.1 178,893 1,278,000 100,694 2042.9 160,785 1,315,263Min 2016.0 (164,011) 2037.0 (133,393) 797,105 (199,325) 2035.0 (135,097) 760,447Max 2018.0 461,123 2053.0 502,118 1,765,791 425,810 2053.0 487,422 1,831,890Median 2017.0 129,966 2042.0 176,683 1,289,524 94,653 2042.0 159,236 1,335,421Stand Dev. 0.8 112,895 4.7 112,006 172,857 112,895 5.3 113,255 195,341Year GHGRestrictionsBeginOption 2: Clutch CaseOption 3: Oversize Boiler CaseNPV Overall including CCS NPV OriginalNPV Overall including CCSNPV Original Year CCSYear CCSPlant w/o CCS is Adopted priv discPlant w/opub disc rateis Adopted priv discStatisticrateCCSpub disc raterateAverage 2017.0 29,147 2041.1 100,977 1,294,719 (445,577) 2033.0 (307,253) 1,038,141Min 2016.0 (270,831) 2032.0 (195,522) 685,968 (745,596) 2026.0 (629,312) 246,113Max 2018.0 354,286 2053.0 426,514 1,833,936 (120,462) 2037.0 61,912 1,725,030Median 2017.0 23,175 2040.0 98,032 1,323,109 (451,619) 2033.0 (302,516) 1,102,645Stand Dev. 0.8 112,910 5.4 114,469 215,931 112,895 1.7 126,581 310,628Exhibit C-11: Distribution of NPV Results: Sensitivity Casewith Accelerated GHG Restrictions (private discount rate)23 February 2010 118
Appendix C: Policy Considerations and Assessments of CCS Ready EconomicsThe results of the Accelerated GHG Restrictions sensitivity case show that the powerplants without CCS retrofits have 4.4 year shorter expected lives: 33.4 years versus 37.8years in the Base Case. As would be expected, the retrofits to CCS occur more quickly forall plant design options. The Not CCS Ready option goes to CCS an average of 1.0 yearssooner, CCS Ready 1 option retrofits 1.5 years sooner, CCS Ready option 2 retrofits 2.2years sooner, and the CCS Ready 3 option goes to CCS 4.9 years earlier. Also, the percentof scenarios in which the plants convert to CCS is higher with 93 percent retrofitting ofeven in the No CCS Ready option.The relative economic attractiveness of the more intense CCS Ready options increases inthe Accelerate GHG Restrictions sensitivity case. The net present values of the plantsdecline by about $89,000 per MW in the Not CCS Ready option to $53,000 in the CCSReady 3 option. The decline in value stems from the higher allowances prices, which are notfully compensated by higher electricity prices. The more intense CCS Ready options declineless in value because they are more economic to convert to CCS and thus retrofit soonerand operate at higher utilization rates. The order of preference among the four optionsdoes not change in Accelerate GHG Restrictions sensitivity case, as the Not CCS Readyoption still has the highest private sector NPV.C.4.9 Sensitivity Case: Pricing of Natural Gas and ElectricityThe second sensitivity case assumes that natural gas prices are $1.00 to $1.25 per MMBtuless expensive than in the in the Base Case. Such a sensitivity case might be justified by moreoptimistic views for the prospects for gas shales and other kinds of non-conventional gasesin the US, Canada and possibly other countries. This assumption of lower natural gas priceshas the effect of dropping electricity prices from about $9.00 to $2.00 per MWhr. The keyinputs to this case are shown in Exhibit C-12 and the summary outputs are shown in ExhibitC-13 and Exhibit C-14.The most important impact of these changes is to make the NPV of all four coal powerplant options negative, even with the option to retrofit. This means that the desired returnon investment of 9 percent real after taxes, on average, would not be achieved and thepower plant would not be built by developers if this price environment were anticipated.The lower electricity prices cause the CCS retrofits to occur a little (0.6 to 1.1 years)sooner than in the Base Case. The order of preference among the four options does notchange in Lower Natural Gas sensitivity case, as the Not CCS Ready option still has thehighest private sector NPV and the CCS Ready 3 has the lowest.23 February 2010 119
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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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Chapter 4: Storage Ready Plant Defi
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Page 135 and 136: Appendix E: ReferencesInternational
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Page 139 and 140: Appendix E: ReferencesNational Coal
Page 141 and 142: Appendix E: Referencesfrom http://w
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