Energize Weekly, November 28, 2018
Carbon capture technologies, after 15 years of research and development, remain expensive and technologically challenged and are rapidly being priced-out by renewable energy generation and natural gas, according to an Institute of Energy Economics and Financial Analysis (IEEFA) report.
“Billions of dollars have been spent for carbon capture research and development in North America, and rosy predictions for CCS [carbon capture and storage] have been ritually repeated year in and year out,” the report, Holy Grail of Carbon Capture Continues to Elude Coal Industry, said.
Despite that investment there has yet to be an effective, economical plant in operation, the study said. The IEEFA, a nonprofit think tank, looked at four CCS projects attached to coal-fired plants in North America: Petra Nova, Boundary Dam, Southern Company’s Kemper Unit, and Duke Energy’s Edwardsport plant.
In each case the projects have been plagued with delays, cost overruns and underperformance. Only two of the plants—NRG Energy’s Petra Nova plant near Houston and the Canadian Boundary Dam plant owned by Saskatchewan Power—are in operation.
Each of the plants have come with an expensive price tag. Boundary Dam’s CCS unit cost $700 million but the plant required upgrades and emission controls that raised the total cost to $1.5 billion. The Petra Nova unit cost $1 billion. The two plants use technology to remove carbon from flue gas after coal is burned.
For the abandoned CCS projects the costs were even higher. Southern Company poured nearly $7 billion, the original projected cost was $3 billion, into the into the Kemper project in Mississippi before scrapping it in 2017. The CCS technology used gasifies coal and removes the carbon before combustion.
Duke Energy’s saw the cost of CCS, using the same technology as Kemper, at its Edwardsport plant in Indiana, rise from $1.985 billion to $3.5 billion when it was completed in 2013. The CCS unit, however, was not put in service because of its operation costs.
The CCS units require a great deal of power to operate, which impairs their competitvity. For example, the Boundary Dam coal plant has a 150-megawatt (MW) capacity, but the CCS unit uses about 30 MW and another 15 to 16 MW are needed to compress the captured carbon dioxide (CO2) before it is piped offsite.
In 2003, when President George W. Bush announced the FutureGen carbon capture project, coal still supplied more than 50 percent of the nation’s electricity and was seen as a key component of electricity generation, but since then coal’s share has steadily dropped and accounted for 30 percent of electricity in 2017.
The Bush FutureGen program was cancelled after costs rose to $1.8 million. An Obama administration FutureGen was also cancelled after cost reached $1.65 billion.
“High-risk, high-cost CCS investments looked potentially viable a decade ago but are being eclipsed today by less-costly ways to produce electricity while curbing carbon emissions,” the report said.
The added costs of CCS are estimated by the U.S. Department of Energy at $60 a megawatt-hour (MWh). The current cost of coal-fired generation is around $30 a MWh. The IEEFA calculated that the cost of the two is $96 a MWh. Even with projected declines in technology costs the price for coal-fired generation and CCS would be $60 a MWh, the analysis said.
That compares with recent prices for power purchase agreements of $35 a MWh for solar plus battery storage and $21 a MWh for wind plus storage.
The prime substitute for coal-fired generation in the last few years, however, has been natural gas, which accounted for 32 percent of all U.S. electricity in 2017.
Sixty-six percent of the 32 gigawatts of new generation projected to come on line in 2018 by the federal Energy Information Administration will be natural gas-fired.
The IEEFA study said a combination of increased gas supplies from horizontal drilling in shale formations around the country, plus increasingly efficient gas turbines poses another competitive threat to CCS. Natural gas plants emit 50 to 60 percent less CO2 than coal units.
CCS is further challenged on cost by the need to have compressors and pipelines to carry the CO2 offsite to storage. Petra Nova and Boundary both cut costs by selling their captured carbon for injection in oil fields to boost production. “That is not necessarily available to coal plants elsewhere,” the report said.
Finally, the U.S. market for CCS appears to be dwindling, the IEEFA said. By the end of 2017 about 245 GW of coal-fired power plants were operating in the U.S. with only 14 percent less than 30 years old and 50 percent more than 50 years old, according to data from S&P Global Market Intelligence.
“The CCS experiments described here have unfolded against the backdrop of an electricity sector revolution driven by increasingly low-cost, zero-emission wind and solar and plentiful and relatively low-cost natural gas supplies,” the study said.” These larger trends further undermine the economics of CCS retrofits.”
