hare_platts ccs brussels 2009 v1_0.ppt

7/29/2019 HARE_Platts CCS Brussels 2009 v1_0.ppt

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Pyry Energy Consulting

Platts CCS SummitFebruary 2009

Dr. Phil Hare

Is There Space in the Low

Carbon Markets of the Future?

HARE_Platts CCS Brussels 2009 v1_0..ppt


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Is there space.?


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33

Cost of electricity generation at $60/tonne coal

20

30

40

50

60

70

80

PC PC&CC IGCC IGCC&CC CCGT CCGT&CC

/MWh

15 25 35

Cost of carbon /tonneAssumes

Gas Price:Coal Price: /MWh$60 per tonne20


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Cost of electricity generation at $90/tonne coal

20

30

40

50

60

70

80

PC PC&CC IGCC IGCC&CC CCGT CCGT&CC

/MWh

15 25 35Cost of carbon /tonne

Assumes

Gas Price:Coal Price:

/MWh

$90 per tonne

20


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Economic drivers suggest that gas can be competitive

Assumption7.5/tonne transport and storage for carbon

0

20

40

60

4 7 11 14 18 21 25 28 32 35

Gas Price (/MWh)

CarbonPrice(EU

R/tCO2)

Coal&CCS

CCGT

CCGT&CCS

Coal

Assumes coal price of $90.00 /tonne


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and that cannot ignore fuel price movements

Curve for 2015: Central Favouring Coal, ETS @ 0/tCO2, Technology costs: Custom

10

15

20

25

30

35

40

45

0 20 40 60 80 100 120 140 160 180 200

Total volume abated (mtCO2) annually

Costofabatement(/tCO2abated)

Gas Retrofit Gas New Build Coal Retrofit Coal New Build Cogeneration Plant Industry

Gas Retrofit

Coal Retrofit


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10

15

20

25

30

35

40

45

0 20 40 60 80 100 120 140 160 180 200

Total volume abated (MtCO2) annually

Costofabatemen

t(/tCO2abated)

Impact of coal gas differential reversal

Gas Retrofit

Coal Retrofit


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CCS power stations will have to compete with other low carbontechnologies and has higher short run costs

-

20

40

60

80

100

1 2 3 4 5 6 7 8 9 10

Price of gas ($/mmbtu)

CO2p

rice($/tCO2)

NGCC&CC

NGCC

IGCC&CC

PC

IGCC

PC&CC

Nuclear

OnshoreWind

OffshoreWind

NGCC+CCS Coal+CCS

CoalNGCC

-

20

40

60

80

100

1 2 3 4 5 6 7 8 9 10


CO2p

rice($/tCO2)

NGCC&CC

NGCC

IGCC&CC

PC

IGCC

PC&CC

Nuclear

OnshoreWind

OffshoreWind

NGCC+CCS Coal+CCS

CoalNGCC

Long run costs

Short run costs

0

20

40

60

80

100

1 2 3 4 5 6 7 8 9 10


CO2

price($/tCO2

)

Coal + CCS

NGCC

NGCC

+CCS

Coal
http://images.google.co.uk/imgres?imgurl=http://www.uaf.edu/news/featured/06/amchitka/images/universal_warning.gif&imgrefurl=http://www.uaf.edu/news/featured/06/amchitka/index3.html&h=225&w=225&sz=8&tbnid=EEdX3Dgjm0Ln-M:&tbnh=108&tbnw=108&prev=/images%3Fq%3Dnuclear%2Bsymbol%26um%3D1&start=3&sa=X&oi=images&ct=image&cd=3http://images.google.co.uk/imgres?imgurl=http://www.uaf.edu/news/featured/06/amchitka/images/universal_warning.gif&imgrefurl=http://www.uaf.edu/news/featured/06/amchitka/index3.html&h=225&w=225&sz=8&tbnid=EEdX3Dgjm0Ln-M:&tbnh=108&tbnw=108&prev=/images%3Fq%3Dnuclear%2Bsymbol%26um%3D1&start=3&sa=X&oi=images&ct=image&cd=3http://images.google.co.uk/imgres?imgurl=http://www.uaf.edu/news/featured/06/amchitka/images/universal_warning.gif&imgrefurl=http://www.uaf.edu/news/featured/06/amchitka/index3.html&h=225&w=225&sz=8&tbnid=EEdX3Dgjm0Ln-M:&tbnh=108&tbnw=108&prev=/images%3Fq%3Dnuclear%2Bsymbol%26um%3D1&start=3&sa=X&oi=images&ct=image&cd=3http://images.google.co.uk/imgres?imgurl=http://www.uaf.edu/news/featured/06/amchitka/images/universal_warning.gif&imgrefurl=http://www.uaf.edu/news/featured/06/amchitka/index3.html&h=225&w=225&sz=8&tbnid=EEdX3Dgjm0Ln-M:&tbnh=108&tbnw=108&prev=/images%3Fq%3Dnuclear%2Bsymbol%26um%3D1&start=3&sa=X&oi=images&ct=image&cd=3http://images.google.co.uk/imgres?imgurl=http://www.uaf.edu/news/featured/06/amchitka/images/universal_warning.gif&imgrefurl=http://www.uaf.edu/news/featured/06/amchitka/index3.html&h=225&w=225&sz=8&tbnid=EEdX3Dgjm0Ln-M:&tbnh=108&tbnw=108&prev=/images%3Fq%3Dnuclear%2Bsymbol%26um%3D1&start=3&sa=X&oi=images&ct=image&cd=3http://images.google.co.uk/imgres?imgurl=http://www.uaf.edu/news/featured/06/amchitka/images/universal_warning.gif&imgrefurl=http://www.uaf.edu/news/featured/06/amchitka/index3.html&h=225&w=225&sz=8&tbnid=EEdX3Dgjm0Ln-M:&tbnh=108&tbnw=108&prev=/images%3Fq%3Dnuclear%2Bsymbol%26um%3D1&start=3&sa=X&oi=images&ct=image&cd=3


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CCS plant will target the baseload part of the power market..

De

mand

hours per year

BASELOAD


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10

but the renewable electricity penetration implied by 2020requirements could transform the power sector...

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Fran

ce

Germa

ny

Italy

Spain

UnitedKingdo

m

EU

27

Austria

Belgiu

m

Bulga

ria

CzechRepub

lic

Denmark

Estonia

Finla

nd

Gree

ce

Hungary

Irela

nd

Latvia

Lithuania

Luxembou

rg

Ma

lta

Netherlan

ds

Pola

nd

Portugal

Romania

Slovakia

Slovenia

Swed

enS

hareofRenewable

sinelectricityproduction Incremental to meet the 2020 target

BAU 2020

BAU 2010


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Nuclear plant also claims baseload operation

De

mand

hours per year

BASELOAD Nuclear

Wind


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and wind intermittency may still prove too much of achallenge..

Demand

hours per year

BASELOAD Nuclear

Wind


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Winds intermittency means that proportionately more capacityneeds to be built to realise renewables targets

Projection for GB market in 2030:- 43GWinstalled wind capacity

-10,000

0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

0%20%40%60%80%100%

MW

Demand

Demand to be metby thermal plant


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Interesting months January 2000

January 2000-GBJanuary 2000 SEM

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

01-Jan

03-Jan

05-Jan

07-Jan

09-Jan

11-Jan

13-Jan

15-Jan

17-Jan

19-Jan

21-Jan

23-Jan

25-Jan

27-Jan

29-Jan

31-Jan

Date

MWh

Demand WindGeneration

0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

01-Jan

03-Jan

05-Jan

07-Jan

09-Jan

11-Jan

13-Jan

15-Jan

17-Jan

19-Jan

21-Jan

23-Jan

25-Jan

27-Jan

29-Jan

31-Jan

Date

MWh

Demand WindGeneration

January 2000 is an interesting period as there is significant excess wind capacity in SEMfollowed by two low wind periods


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Number of starts will grow, even for coal stations

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2010 2015 2016 2020 2025 2030

%o

fperiods

0

10

20

30

40

50

60

70

80

90

100

#starts

Outage

Off

MSG orLess

Inter

Max

Starts/year

Runs Near Baseload,sometimes going toMSG (mainlyovernight).

Runs less. Often off whenwindy, and sometimes atweekends. Often runs at

MSG when on overnightand at demand troughs,with little room for thermalgeneration.


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Low load factors changes the economic outlook

45% load factor

85% load factor

0

20

40

60

4 7 11 14 18 21 25 28 32 35

Gas Price (/MWh)

CarbonPrice(EUR/tCO2

)

Coal&CCS

CCGT

CCGT&CCS

Coal

Assumes coal price of$90.00 /tonne

Assumption7.5/tonne transport and storage; coal delivered at $90/tonne

0

20

40

60

4 7 11 14 18 21 25 28 32 35

Gas Price (/MWh)

CarbonP

rice(EUR/tCO2)

Coal&CCS

CCGT

CCGT&CCS

Coal

Assumes coal price of $90.00 /tonne


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Different business models will be challenged in different ways

Revenue

Power and capture Transport Storage

Joint Venture

Distribution of Profit

Transport

Storage

Take-Or-Pay

Revenue

Power and capture

CO2 Flow

Fixedcontract CO

2 Flow

Fixed contract

Transport Storage

Variable Contract

Revenue

Power and captureCO2 Flow

Price per

tCO2

CO2 Flow

Price per

tCO2

Revenue

Power and capture Transport Storage

Joint Venture


Power and capture TransportTransport StorageStorage

Joint Venture


TransportTransport

StorageStorage

Take-Or-Pay

Revenue

Power and capture

CO2 Flow

Fixedcontract CO

2 Flow

Fixed contract

TransportTransport StorageStorage

Variable Contract

Revenue

Power and captureCO2 Flow

Price per

tCO2

CO2 Flow

Price per

tCO2


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Uncertainties: effect on levelised costs of both technologies

Low load factor

Discount rate 15%

High Capex

Low Capex

High commodity prices

Low commodity prices

Discount rate 12.5%

High Opex

Low Opex

Build time +2 years

Low efficiency

High efficiency

-20 -15 -10 -5 0 5 10 15 20 25 30-20 -15 -10 -5 0 5 10 15 20 25 30

Coal + CCS Gas + CCS


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Impact of volume change on different business models

0%

2%

4%

6%

8%

10%

12%

Joint Venture Full Take or Pay Full Market Contract 50:50

ReturnonInvestmen

Powerstation Pipeline Storage Full Project

Impact of 50% reduction in Load Factor


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Can we afford to ignore the risk


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Pyry Energy ConsultingPyry Energy ConsultingKing Charles HousePark End StreetOxford, UKOX1 1JD

+44 (0) 1865 722660

www.poyry.comwww.ilexenergy.com

Dr Phil Hare+44 (0) 7770 [email protected]

Pyry Energy (Oxford) Ltd. Registered in England No. 2573801. King Charles House, Park End Street, Oxford OX1 1JD.
mailto:[email protected]:[email protected]


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