PANEL 4

THE COST OF CAPTURE: PROGRESS AND OPPORTUNITIES Anne Margrete Blaker and Stale Aakenes – Gassnova SF George Booras – EPRI Robert Hilton – Alstom Don Wharton – TransAlta

October 11, 2012

The Costs of Capture: Progress and Opportunity

Calgary, Alberta, Canada

Robert G. Hilton

GCCSI Annual Meeting

© ALSTOM 2012. All rights reserved. Information contained in this document is indicative only. No representation or warranty is given or should be relied on that it is complete or correct or will apply to any particular project. This will depend on the technical and commercial circumstances. It is provided without liability and is subject to change without notice. Reproduction, use or disclosure to third parties without ALSTOM’s express written authority is strictly prohibited

CoE of coal & gas CCS power plants – 14 June 2012 P 3

• IPCC 2007: Max GHG 450 ppm for +2°C scenario ⇒ reduce massively CO2 emissions in Power Gen

Efficiency increase Nuclear & Renewables CCS on Fossil plants

• CCS necessary because: 2035: >50% of W-W TWh still fossil Fossil will remain strong until ~2050 IEA WEO: - 2,7 GtCO2 CCS in 2035 CCS on Coal and Gas

Introduction

450 NPS

397

EUROPE - MtCO2 - 2035 New Policies Scenario

and 450 Scenario (IEA-WEO 2011)

COAL

81

449

159

450 NPS

GAS

CCS needed on both Coal and Gas. Will it be competitive ?

© ALSTOM 2012. All rights reserved. Information contained in this document is indicative only. No representation or warranty is given or should be relied on that it is complete or correct or will apply to any particular project. This will depend on the technical and commercial circumstances. It is provided without liability and is subject to change without notice. Reproduction, use or disclosure to third parties without ALSTOM’s express written authority is strictly prohibited

CoE of coal & gas CCS power plants – 14 June 2012 P 4

CCS experience: 16 pilots/demos

Component manufacturer

Alstom know-how for a solid CoE study on CCS PP

Introduction Alstom Cost of Electricity study on CCS

Plant integration experience (supply of turnkey power plants)

© ALSTOM 2012. All rights reserved. Information contained in this document is indicative only. No representation or warranty is given or should be relied on that it is complete or correct or will apply to any particular project. This will depend on the technical and commercial circumstances. It is provided without liability and is subject to change without notice. Reproduction, use or disclosure to third parties without ALSTOM’s express written authority is strictly prohibited

CoE of coal & gas CCS power plants – 14 June 2012 P 5

CCS Cost of Electricity study Main assumptions

Reference plants: Coal & Lignite (without CCS)

Realistic set of assumptions by region

• Base case at 7450 hrs per a. plus sensitivity analysis • Performance improvement considered (e.g. double reheat ST) • Cycle arrangement in 2020/30: 300b-600°C-620°C

EUR NAM SEAFuel type Bituminous Raw Lignite Dried Lignite PRB coal BituminousFuel heating value KJ/Kg LHV 24 930 10 278 21 283 20 425 20 896 Carbon content UB mass% 65% 31% 57% 56% 53%Fuel price 2011 Euro/t 78,2 24,3 24,3 25,7 53,4

Euro/GJ 3,14 2,37 2,13 1,26 2,56 Cycle argt 2020/30 bar/°C/°C 300b/600/620°C 272b/600/605°C 300b/600/620°C 300b/600/620°C 300b/600/620°C

Cooling type °C 13°C - Direct C 18°C - Direct C 18°C - Direct C 19°C - CT 28°C - Direct CNet Output MWe net 837 1 000 1 000 837 837 Net eff. 15/20/30 % LHV 46.2/48/48.4 % 44/-/- % w HR 47,6/48,8/49 % 44/46.2/46.7 % 41/42.7/43 %

EPC 2015/20/30 €/KW net 1421/1518/1518 1583/-/- 2070/2200/2200 1612/1722/1722 814/869/869

© ALSTOM 2012. All rights reserved. Information contained in this document is indicative only. No representation or warranty is given or should be relied on that it is complete or correct or will apply to any particular project. This will depend on the technical and commercial circumstances. It is provided without liability and is subject to change without notice. Reproduction, use or disclosure to third parties without ALSTOM’s express written authority is strictly prohibited

CoE of coal & gas CCS power plants – 14 June 2012 P 6

Hardcoal CCS power plant Energy Penalty (EP)

Energy penalty (EP) = (Ref PP net MWe – CCS PP net MWe)

(Ref PP net MWe)

Performance improvement and cooling temperature impacts

SEA EUR NAM &

Note : 90% capture of CCS PP CO2 emission, CCS plant and Reference plant at same net

© ALSTOM 2012. All rights reserved. Information contained in this document is indicative only. No representation or warranty is given or should be relied on that it is complete or correct or will apply to any particular project. This will depend on the technical and commercial circumstances. It is provided without liability and is subject to change without notice. Reproduction, use or disclosure to third parties without ALSTOM’s express written authority is strictly prohibited

CoE of coal & gas CCS power plants – 14 June 2012 P 7

EUR CoE €/MWh net

Hardcoal CCS power plant CoE base case (with T&S, without CO2 price)

NAM SEA

• All with T&S, on-shore saline aquifer: impact on CoE: 4,8 to 7,2 €/MWh net

EUR 2032: CCS => +45% increase in CoE; NAM/SEA: lower CoE

CoE €/MWh net CoE €/MWh net

30

40

50

60

70

80

90

2015 2020 2025 2030 2035

OxyPostRef PP

+45% (Post)

73,5 €/MWh(Post)

30

40

50

60

70

80

90

2015 2020 2025 2030 2035

OxyPostRef PP

30

40

50

60

70

80

90

2015 2020 2025 2030 2035

OxyPostRef PP

64 €/MWh(Post)

62 €/MWh (Post)

© ALSTOM 2012. All rights reserved. Information contained in this document is indicative only. No representation or warranty is given or should be relied on that it is complete or correct or will apply to any particular project. This will depend on the technical and commercial circumstances. It is provided without liability and is subject to change without notice. Reproduction, use or disclosure to third parties without ALSTOM’s express written authority is strictly prohibited

CoE of coal & gas CCS power plants – 14 June 2012 P 8

Hardcoal CCS power plant Fuel, Capex/Opex and T&S contribution in CoE

POST REF

€ / MWh net

NAM EUR POST REF POST REF

SEA

CoE Ref Plant & Incremental CCS in 2032

Regional differences in Fuel, Capex/Opex costs

High capex, expensive coal Cheap coal, lower efficiency Low Capex, expensive coal

0102030405060708090

100

50,5

73,5+45%

40,5

64

T&SFuel

Capex+Opex

40

62

© ALSTOM 2012. All rights reserved. Information contained in this document is indicative only. No representation or warranty is given or should be relied on that it is complete or correct or will apply to any particular project. This will depend on the technical and commercial circumstances. It is provided without liability and is subject to change without notice. Reproduction, use or disclosure to third parties without ALSTOM’s express written authority is strictly prohibited

CoE of coal & gas CCS power plants – 14 June 2012 P 9

Gas Reference Combined-Cycle Power Plants (without CCS)

CCS Cost of Electricity study Main assumptions

Combined cycles realistic set of assumptions

• Base case combined cycle at 6570 hrs per a. • Performance improvement considered

EUR NAM SEAFuel type Natural gas Natural gas Natural gasFuel heating value KJ/Kg LHV 50 000 50 000 50 000 Carbon content mass% 75% 75% 75%Fuel price 2011 Euro/GJ 7,2 2,8 3,8 (subs.)Cycle argt 2020/30 1-1 SS 2-1 MS 1-1 SSCooling type °C 13°C - Direct C 19°C - CT 28°C - Direct CNet Output 15/20/30 MWe net 600/650/700 850/900/950 538/583/628Net eff. 15/20/30 % LHV 61/62/63 % 60/61/62 % 60/61/62 %EPC cost 15/20/30 €/KW net 558/544/529 452/441/429 473/461/449

© ALSTOM 2012. All rights reserved. Information contained in this document is indicative only. No representation or warranty is given or should be relied on that it is complete or correct or will apply to any particular project. This will depend on the technical and commercial circumstances. It is provided without liability and is subject to change without notice. Reproduction, use or disclosure to third parties without ALSTOM’s express written authority is strictly prohibited

CoE of coal & gas CCS power plants – 14 June 2012 P 10

Gas Combined Cycle CCS Power Plant CoE base case (with T&S, without CO2 price)

EUR CoE €/MWh net NAM SEA CoE €/MWh net CoE €/MWh net

• Lowest gas price at 2,8 €/GJ

• Subsidized gas price 3,8 €/GJ => offsets Capex advantage

• Gas price at 7,2 Euro/GJ • -5 % reduction with FGR

Difference in gas price between regions drives CoE level Note : 90% capture of CCS PP CO2 emissions, CCS plant net output de-rated vs Reference plant (energy penalty)

253035404550556065707580

2015 2020 2025 2030 2035

Post FGR, 90% captRef plant

253035404550556065707580

2015 2020 2025 2030 2035

Post FGR, 90% captRef plant

253035404550556065707580

2015 2020 2025 2030 2035

Post FGR, 90% captRef plant

COE - NAM COE - ASIACOE - EUROPE

Ref plant

Ref plant

Ref plant +28%

+42%

+32%

68,5 €/ MWh)

© ALSTOM 2012. All rights reserved. Information contained in this document is indicative only. No representation or warranty is given or should be relied on that it is complete or correct or will apply to any particular project. This will depend on the technical and commercial circumstances. It is provided without liability and is subject to change without notice. Reproduction, use or disclosure to third parties without ALSTOM’s express written authority is strictly prohibited

CoE of coal & gas CCS power plants – 14 June 2012 P 11

POST REF POST REF POST REF

Gas Combined Cycle CCS Power Plant Fuel contribution in CoE

NAM EUR SEA

€ / MWh net CoE Ref Plant & Incremental CCS in 2032

Smaller % increase in CoE than for coal due to higher fuel cost contribution

0102030405060708090

100

53,6

68,5 +28%

26,6

37,7 +42%

FuelCapex+O&M+T&S

34,4

45,4 +32%

© ALSTOM 2012. All rights reserved. Information contained in this document is indicative only. No representation or warranty is given or should be relied on that it is complete or correct or will apply to any particular project. This will depend on the technical and commercial circumstances. It is provided without liability and is subject to change without notice. Reproduction, use or disclosure to third parties without ALSTOM’s express written authority is strictly prohibited

CoE of coal & gas CCS power plants – 14 June 2012 P 12

7986

0

50

100

150

200

250

300

Hardcoal wCCS Post

2017

Gas CCPPw CCS2017

Nuclear Hydro Geo-thermal

WindOnshore

WindOffshore

SolarThermal

Solar PV0

50

100

150

200

250

300

Under realistic assumptions and with a conservative variation range, CCS is already in the “mix” of low carbon alternatives

CCS competitiveness against other low carbon alternatives in Europe in 2012-17

€ / MWh CoE Low Carbon technologies – New PP over next 5 years

Reference case

Source : Alstom analysis 2012. CCS w Post amine 2017 costs, including on shore T&S & CO2 price (Flue Gas Recirculation for CCS Gas CC) CoE do not include “externalities” of Intermittent power (Back-up cost, balancing cost, grid enhancement if required)

EUROPE

Low case CSP Tower with storage

Up to 45€ cents/kWh

(82 for Ref CCS Oxy)

© ALSTOM 2012. All rights reserved. Information contained in this document is indicative only. No representation or warranty is given or should be relied on that it is complete or correct or will apply to any particular project. This will depend on the technical and commercial circumstances. It is provided without liability and is subject to change without notice. Reproduction, use or disclosure to third parties without ALSTOM’s express written authority is strictly prohibited

CoE of coal & gas CCS power plants – 14 June 2012 P 13

Technology and Scale

• CCS technology is proven and is technologically feasible.

• CCCS is not commercially available as it has not been demonstrated at commercial power plant scale

• Demonstration at commercial scale is critical to define risks, optimize process and achieve cost reduction to support commercial contracting

• The CCS technology requires both policy direction and financial support to be demonstrated at commercial scale

• CCS could be competitive on a level playing field in a free market

• EOR will help close the gap on financing particularly on early move projects.

• Other products may be helpful depending on markets

• Stronger Governmental support is required

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