the ENERGY lab

Economic Feasibility of CO2 Capture Retrofits for the U.S. Coal Fleet: Impacts of R&D and CO2 EOR Revenue

2013 CO2 Capture Technology Meeting

July 11th, 2013

Michael Matuszewski

Use Picture of Existing Fleet Map

• Determine Economic Feasibility of today’s Carbon Capture Retrofits in an Enhanced Oil Recovery (EOR) market – Capture CO2 and sell for enhanced oil production

• Determine how 2nd generation capture technologies can

improve retrofit economics – Cost to capture CO2 at plant gate

• Assess economic sensitivity to key market variables

– Economic life, dispatch, oil prices

Objectives

* Image from www.clker.com

In a 2nd Generation CO2 Capture Market (2030) with No Carbon Regulations, Compare BAU to Retrofit for EOR

• Database of design and operational details for existing PC units allows extrapolation of CO2 retrofit cost and performance – ~1,350 units comprising 324 GW of nameplate generation

– Capital, operating cost and performance extrapolations

– This analysis evaluates only CO2 capture - no criteria pollutant costs

• 2nd gen capture technology reduces fleet-wide captured costs by ~25% – 2030 projected oil prices ($138/bbl) may further promote capture

– 2nd gen may increase candidate retrofit GW’s five-fold over SOA

• EOR revenue promotes more competitive dispatch – With EOR revenue, CO2 capture may increase dispatch in power markets

– Reasonable CO2 prices ($10-$30/tonne) can eliminate marginal cost increases due to capture

Executive Summary

• By convention, technology evaluations performed on baseline greenfield plant – Conceptual, 550MW greenfield installation – Includes benefits of A-USC Steam cycle

• 2nd generation CO2 capture performance projections based on greenfield plant capture technology contributing to target of $40/tonne captured

• Apply same capture technology to baseline existing plant – Retain existing limitations such as fixed

steam cycle, current heat rate, etc. – Cost of lost power generation – Often requires additional equipment &

effort – Consequently, existing plant cost of

captured is generally >$40/tonne greenfield target (@ constant CF, no EOR)

2nd Generation Projections Overview

New CCS

Existing CCS

Extrapolating Results to the Existing Fleet

• Data on 1,355 individual PC units (324 GW)

• Key information: – Unit ID, Nameplate Capacity, Heatrate, CO2 Emissions,

Capacity Factor

• CO2 Generation Allows Calculation of: – CO2 Captured, Capital Costs, Fixed O&M*, Variable O&M**

• Heatrate and Nameplate Capacity Allow Calculation of: – Post-Retrofit Output, Lost Power Revenue***

• Capacity Factor Allows Calculation of: – Cost of CO2 Captured, Incremental COE/Marginal Costs

Existing Plant Database

*Proportional to TPC ** Proportional to amount of CO2 Captured

***Assuming a market price of electricity

A baseline existing plant is established for conceptual evaluation of retrofitted CO2 technologies on a consistent basis

– Allows evaluation of system-wide effects on power plant

– Isolates net power generation penalty due to CO2 capture retrofit

Baseline Existing Plant

Baseline Existing Plant is equivalent to a subcritical pulverized coal plant without carbon capture, as defined in NETL report “Cost and Performance

Baseline for Fossil Energ y Plants” (Case 9)

* Image from www.clker.com

Technology Comparison • Baseline PC Plant Retrofit (comparison to 2012)

Technology Vintage

Metric 2005* 2012* Example 2nd Gen.

Net Energy Penalty [kWhnet/lb CO2 Captured]

0.181 (+26%)

0.144 0.143 (-1%)

Reference Capital Cost [$/tpd CO2 Capt. @ full load]

$55,400 (-17%)

$66,400 $48,000 (-28%)

Incremental Fixed O&M [$/tpd CO2 Capt. @ full load]

$1,828 (-5%)

$1,926 $1,872 (-2.8%)

Incremental Variable O&M [$/tpd CO2 Capt. @ full load]

$2.59 (-50%)

$5.13 $4.75 (-7%)

CO2 Capture Basis [tpd] 11,216 11,216 11,216

* Based on amine technology

Basis

Technology Comparison • Baseline PC Plant Retrofit (comparison to 2012)

Technology Vintage

Metric 2005* 2012* Example 2nd Gen.

Net Energy Penalty [kWhnet/lb CO2 Captured]

0.181 (+26%)

0.144 0.143 (-1%)

Reference Capital Cost [$/tpd CO2 Capt. @ full load]

$55,400 (-17%)

$66,400 $48,000 (-28%)

Incremental Fixed O&M [$/tpd CO2 Capt. @ full load]

$1,828 (-5%)

$1,926 $1,872 (-2.8%)

Incremental Variable O&M [$/tpd CO2 Capt. @ full load]

$2.59 (-50%)

$5.13 $4.75 (-7%)

CO2 Capture Basis [tpd] 11,216 11,216 11,216

* Based on amine technology

Basis

Not used Evaluated in this

work

Equipment Cost Scaling (2011 dollars)

y = 1359.1x0.6374

y = 1747.4x0.6374

$0

$200,000

$400,000

$600,000

$800,000

$1,000,000

$1,200,000

0 5,000 10,000 15,000 20,000 25,000 30,000

$100

0

TPD Captured CO2 @ Full Load

CO2 Capture TPC

5B.1 TPC (1 train)

5B.1 TPC (2 trains)

y = 416.03x0.6501

$0

$50,000

$100,000

$150,000

$200,000

$250,000

$300,000

$350,000

0 5,000 10,000 15,000 20,000 25,000 30,000

$100

0

TPD Captured CO2 @ Full Load

BoP

y = 1908.7x0.2241

$0

$2,000

$4,000

$6,000

$8,000

$10,000

$12,000

$14,000

$16,000

$18,000

$20,000

0 5,000 10,000 15,000 20,000 25,000 30,000

$100

0

TPD Captured CO2 @ Full Load

Letdown Turbine

y = 109.46x0.6093

y = 143.51x0.6093

$0

$10,000

$20,000

$30,000

$40,000

$50,000

$60,000

$70,000

$80,000

0 5,000 10,000 15,000 20,000 25,000 30,000

$100

0

TPD Captured CO2 @ Full Load

CO2 Compression TPC

5B.2 TPC (1 train)

5B.2 TPC (2 trains)

Reference Reference

Reference Reference

0%

5%

10%

15%

20%

25%

30%

35%

40%

7,000 8,000 9,000 10,000 11,000 12,000 13,000

Pow

er P

enal

ty [%

of o

rigi

nal o

utpu

t]

Pre-Retrofit Heat Rate [BTU/kWh HHV]

Net Output Penalties of CCS Retrofits

PC-2005 Amine

PC-2012 Amine

PC-Sorbent Based

PC-Membrane Based

Ideal Power Penalty

Net Derate Projections*

*As evaluated on baseline existing plant. Does not include balance of plant improvements

Includes: •Regeneration Energy •Capture Electrical •Compression Electrical •Off-design ST Operation

Thermodynamic Advancements

0.184 kWh/lb

0.144 kWh/lb

0.143 kWh/lb

0.113 kWh/lb

0.048 kWh/lb

• Where: – Captured Cost [=] $/tonne

– TOC = Total Overnight Cost [=] $

– CCF = Capital Charge Factor [=] yr-1

– LP = Lost Power [=] MW

– PP = Market Power Price [=] $/MWh

– CF = Capacity Factor [=] (fraction)

– FOM = Fixed O&M [=] $/yr

– VOM = Variable O&M [=] $/yr @ 100% load

– Annual CO2 Captured [=] tonnes/yr

CO2 Captured Cost Metric

CapturedAnnualCOCFVOMFOMCFPPLPTOCCCFstCapturedCo

2

**8760*** +++=

Plant-gate cost to capture CO2 defined as key metric for retrofit evaluation in EOR market.

Cost of lost power generation

Existing Plant Retrofit Projections 2030 EOR Market with No CO2 Regulations

0

10

20

30

40

50

60

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80

20 40 60 80 100 120 140 160 180

CO2 E

OR

Pric

e at

Pow

er P

lant

Gat

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2 Cap

ture

Cos

t ($

/ton

ne)

WTI ($/bbl)

2030 Oil Prices May Support EOR CO2 Prices that are Equal to or Above CO2 Capture Costs

From 2008 to mid-2011, the average annual new contract price for CO2 ($/MSCF) at the Denver City, Texas “hub”, varied between 1.8% and 2.5% of the average annual WTI Crude oil price ($/bbl) in the corresponding years. Expressed in $/tonne, this is 34% to 47% (at standard conditions of 60 ⁰F and 14.7 psia). (The non-averaged contract prices ($/MSCF) varied between 1.4 and 3.3% of the oil price between 2008 and mid-2011.) Source: Chaparral Energy “US CO2 & CO2 EOR Developments” Panel Discussion at CO2 Carbon Management Workshop December 06, 2011. Estimated 100 km pipeline transport cost of $3.65/tonne is subtracted to convert the historical “hub” price to an estimated power plant gate price.

Greenfield 2nd Gen CC

Today’s Coal with CC

Favorable CO2 Prices

Prohibitive CO2 Prices

$138/bbl*

$61

$42

*NEMS Projection

0

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Cum

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Ret

rofit

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Marginal Costs w/CO2 Revenue [$/MWh]

Pre-Retrofit

Post-Retrofit - no EOR Revenue

Post Retrofit w/CO2 Revenue ($10/tonne)

Post Retrofit w/CO2 Revenue ($30/tonne)

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350

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Marginal Costs w/CO2 Revenue [$/MWh]

Pre-Retrofit

Post-Retrofit - no EOR Revenue

Post Retrofit w/CO2 Revenue ($10/tonne)

Post Retrofit w/CO2 Revenue ($30/tonne)

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Marginal Costs w/CO2 Revenue [$/MWh]

Pre-Retrofit

Post-Retrofit - no EOR Revenue

Post Retrofit w/CO2 Revenue ($10/tonne)

Post Retrofit w/CO2 Revenue ($30/tonne)

0

50

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350

-60 -40 -20 0 20 40 60 80 100

Cum

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Marginal Costs w/CO2 Revenue [$/MWh]

Pre-Retrofit

Post-Retrofit - no EOR Revenue

Post Retrofit w/CO2 Revenue ($10/tonne)

Post Retrofit w/CO2 Revenue ($30/tonne)

$10/tonne CO2

Incremental Marginal Cost Trends Retrofitting SOA CO2 Capture

Retrofit: Increased O&M, lost power revenue

0

50

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)

Marginal Costs w/CO2 Revenue [$/MWh]

Pre-Retrofit

Post-Retrofit - no EOR Revenue

Post Retrofit w/CO2 Revenue ($10/tonne)

Post Retrofit w/CO2 Revenue ($30/tonne)

0

50

100

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350

-60 -40 -20 0 20 40 60 80 100

Cum

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Marginal Costs w/CO2 Revenue [$/MWh]

Pre-Retrofit

Post-Retrofit - no EOR Revenue

Post Retrofit w/CO2 Revenue ($10/tonne)

Post Retrofit w/CO2 Revenue ($30/tonne)

0

50

100

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350

-60 -40 -20 0 20 40 60 80 100

Cum

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Marginal Costs w/CO2 Revenue [$/MWh]

Pre-Retrofit

Post-Retrofit - no EOR Revenue

Post Retrofit w/CO2 Revenue ($10/tonne)

Post Retrofit w/CO2 Revenue ($30/tonne)

0

50

100

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350

-60 -40 -20 0 20 40 60 80 100

Cum

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rofit

s (G

W p

re-re

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)

Marginal Costs w/CO2 Revenue [$/MWh]

Pre-Retrofit

Post-Retrofit - no EOR Revenue

Post Retrofit w/CO2 Revenue ($10/tonne)

Post Retrofit w/CO2 Revenue ($30/tonne)

$10/tonne CO2

Incremental Marginal Cost Trends Retrofitting SOA CO2 Capture

Retrofit: Increased O&M, lost power revenue

$30/tonne CO2

Reasonable CO2 revenue supports higher dispatch

But to what level?

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Minimum Plant Gate CO2 EOR Revenue Required to Incentivize CCS ($/tonne)

Existing CFIncrease to 75% CFIncrease to 85% CF

UnlikelyCO2 Prices

abovehistorical range

PossibleCO2 Prices

withinhistorical range

ProbableCO2 Prices

belowhistorical range-50

0

50

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150

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250

300

350

0 10 20 30 40 50 60 70 80 90

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cent

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Minimum Plant Gate CO2 EOR Revenue Required to Incentivize CCS ($/tonne)

Existing CF

Increase to 75% CF

Increase to 85% CF

UnlikelyCO2 Prices

abovehistorical range

PossibleCO2 Prices

withinhistorical range

ProbableCO2 Prices

belowhistorical range

Effect of Dispatch - 2030 Capacity Factor Parameter Sensitivity

*NEMS Projections. Capital costs reflect ~15% premium due to increase in oil prices.

State of the Art

• 30yr CCF • $75/MWh*

power price • $138/bl oil* State

of the Art

32.4GW (top decile)

-50

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50

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0 10 20 30 40 50 60 70 80 90

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Minimum Plant Gate CO2 EOR Revenue Required to Incentivize CCS ($/tonne)

Existing CF

Increase to 75% CF

Increase to 85% CF

UnlikelyCO2 Prices

abovehistorical range

PossibleCO2 Prices

withinhistorical range

ProbableCO2 Prices

belowhistorical range-50

0

50

100

150

200

250

300

350

0 10 20 30 40 50 60 70 80 90

Cum

ulat

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rofit

s In

cent

iviz

ed (G

W p

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)

Minimum Plant Gate CO2 EOR Revenue Required to Incentivize CCS ($/tonne)

Existing CFIncrease to 75% CFIncrease to 85% CF

UnlikelyCO2 Prices

abovehistorical range

PossibleCO2 Prices

withinhistorical range

ProbableCO2 Prices

belowhistorical range

Effect of Dispatch - 2030 Capacity Factor Parameter Sensitivity

*NEMS Projections. Capital costs reflect ~15% premium due to increase in oil prices.

State of the Art

• 30yr CCF • $75/MWh*

power price • $138/bbl oil* State

of the Art

2nd

Gen

~24% decrease in top decile CO2 price

2nd Generation

Unlikely

CO2 Pricesabove

historical range

PossibleCO2 Prices

withinhistorical range

ProbableCO2 Prices

belowhistorical range

Note shift from EOR revenues @ $100/bbl

In 2030, 2nd gen capture could saturate EOR market

32.4GW (top decile)

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Minimum Plant Gate CO2 EOR Revenue Required to Incentivize CCS ($/tonne)

30yr

20yr

10yrUnlikely

CO2 Pricesabove

historical range

PossibleCO2 Prices

withinhistorical range

ProbableCO2 Prices

belowhistorical range-50

0

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0 10 20 30 40 50 60 70 80 90

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Minimum Plant Gate CO2 EOR Revenue Required to Incentivize CCS ($/tonne)

30yr

20yr

10yr

UnlikelyCO2 Prices

abovehistorical range

PossibleCO2 Prices

withinhistorical range

ProbableCO2 Prices

belowhistorical range

Effect of Capital Recovery Period - 2030 Capital Charge Factor Parameter Sensitivity

State of the Art

• 85% CF • $75/MWh

power price • $138/bbl oil

State of the Art

32.4GW (top decile)

-50

0

50

100

150

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250

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0 10 20 30 40 50 60 70 80 90

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cent

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Minimum Plant Gate CO2 EOR Revenue Required to Incentivize CCS ($/tonne)

30yr

20yr

10yr

UnlikelyCO2 Prices

abovehistorical range

PossibleCO2 Prices

withinhistorical range

ProbableCO2 Prices

belowhistorical range-50

0

50

100

150

200

250

300

350

0 10 20 30 40 50 60 70 80 90

Cum

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ive

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rofit

s In

cent

iviz

ed (G

W p

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Minimum Plant Gate CO2 EOR Revenue Required to Incentivize CCS ($/tonne)

30yr

20yr

10yrUnlikely

CO2 Pricesabove

historical range

PossibleCO2 Prices

withinhistorical range

ProbableCO2 Prices

belowhistorical range

Effect of Capital Recovery Period - 2030 Capital Charge Factor Parameter Sensitivity

State of the Art

• 85% CF • $75/MWh

power price • $138/bbl oil

State of the Art

~27% decrease in top decile CO2 price

2nd Generation

2nd Gen

32.4GW (top decile)

Short-term (10yr) investment viewpoints reduce viability by ~90%!

• In 2030, SOA technology promotes 0-45GW of economic retrofits*

• 2nd gen improvements increase potential up to five-fold (25-215GW)* – CO2 contract price relationship to price of WTI crude

• EOR market while limited in size, is an excellent transition step for proving out carbon capture and reducing risk for future installations

• Still need help for “slam dunk” EOR scenario – Need CO2 capture R&D success!

– Dispatch is essential – and likely achievable

– Regulatory drivers encouraging CO2 capture should also support a long-term (30yr) investment viewpoint

• EOR revenue will offset lost power revenue, reducing marginal costs – $10/tonne nearly offsets marginal cost increases for entire fleet

– $30/tonne eliminates marginal costs (≤$0/MWh) for ~150GW

Conclusions Compared cost of CO2 retrofits to minimum CO2 price in EOR market

Bounding scenario: Calculations indicate best case for BAU vs. retrofit

*Range dictated by capital recovery period range (10-30yrs) assuming fleet-wide CF increase to 85%

• NETL – John Wimer – Project Guidance

– Kristin Gerdes – Sensitivity Analyses

– Robert Stevens – 2nd Gen Technology Projections

• Booz Allen Hamilton – Vince Chou – Cost and Performance Extrapolation

• Leonardo Technologies Inc. – Massood Ramezan – Project Guidance

– Connie Zaremsky – Database Management

– Eric Lopert – Data Generation

Acknowledgements

Questions?