The Post-2020Cost-Competitiveness of CCS

Eric Drosin

Director of Communications

Why is this Work Ground-Breaking?

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Publicly available cost data on CCS

…remains scarce

Reliable base for ZEP estimationsnew, in-house data provided exclusively by 15 ZEP member organisations

Over 100 contributors and 2 years of work…

Complete CCS value chains; individual reports analyse costs

CO2 Capture

CO2 Transport

CO2 Storage

Focus on new-build coal- and gas-fired power plantslocated at a generic site in Northern Europe from the early 2020s

The study features a BASE and an OPTIMISED case

Reference point for costs of CCS, based on a “snapshot” in time (investment costs referenced to Q2 2009)

Key Conclusions

CCS can technically be applied to both coal- and gas-fired power plants

Relative economics mainly depend on power plant cost levels, and fuel prices

In the 2020s all CCS equipped power plants will operate in base-load since the variable generation cost of a CCS equipped plant will be considerably lower than the variable cost for a corresponding conventional plant.

It is too early to distinguish a technology winner, due to uncertainties that are still large and differences small

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CCS is applicable to both coal- and gas-fired power plants

Key Conclusions

EU CCS demonstration programme will validate and prove the costs of CCS technologies and form the basis for future cost reductions (introduction of 2nd- and 3rd-gen. technologies)

Results of the reports indicate post-demonstration CCS will be cost-competitive with any other low-carbon energy technology (on-/offshore wind, solar power & nuclear), but also will form a reliable low-carbon power source

CCS is on track to become one of the key technologies for combating climate change

ZEP will undertake a complementary study on the costs of CCS in the context of other low-carbon energy technologies

CCS will be cost-competitive with other low-carbon power technologies

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Levelized Cost of Electricity (LCOE) for Integrated CCS projects (coal and gas)

The Levelised Cost of Electricity (LCOE) of integrated CCS projects (blue bars) compared to the reference plants without CCS (green bars)

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CO2 Avoidance Costs – Price of EUAs to Justify Building CCS Projects vs. Plant w/o CCS

CO2 avoidance costs for possible plants commissioned in the mid 2020s – the price of EUAs required to justify building CCS projects vs.a plant without CCS from a purely economic point of view (calculated on the same basis as previous graph)

LCOE for Hard Coal Plants w/CO2 Capture (capture costs only)

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The LCOE for hard coal-fired power plants with CO2 capture (using Middle fuel costs)

LCOE for Natural Gas Plants w/CO2 Capture (capture costs only)

LCOE and CO2 avoidance costs for natural gas-fired power plants with CO2 capture are heavily dependent on the fuel cost. The vertical blue lines for €4.5, €8 and €11/GJ represent the Low, Middle and High cases used for gas fuel cost.

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Key Conclusions

Currently no clear difference between capture technologies & all could be competitive once successfully demonstrated (using agreed assumptions & LCOE as main quantitative value)

Fuel/investment costs are main factors influencing total costs

Reports include the three main capture technologies (post-combustion, pre-combustion and oxy-fuel)…

…but exclude second-generation technologies (e.g. chemical looping, advanced gas turbine cycles)

The LCOE and CO2 avoidance costs calculated are higher than those of previous European capture cost studies, but tend to be slightly lower than majority of recent international studies

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All three CO2 capture technologies could be competitive once successfully demonstrated

CO2 Transport Cost Estimates for Demo Projects

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CO2 Transport Cost Estimates for Large-Scale Networks

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CO2 Transport – Onshore vs. Offshore Pipelines

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Short distance (180 km) pipeline;

small volume transported (2.5 MT CO2 per year)

onshore offshore

5.4 €/tonne CO2

9.3 €/tonne CO2

Short distance (180 km) pipeline;

large volume transported (20 MT CO2 per year)

onshore offshore

1.5 €/tonne CO2

3.4 €/tonne CO2

€ €

Total Cost Euro Per Tonne

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2.5 10 200

5

10

15

onshore pipelineoffshore pipelineship

Mtpa

€/t

Point-to-Point 180 km

2.5 10 200

5

10

15

20

25

onshore pipelineoffshore pipelineship

Mtpa

€/t

Point-to-Point 500 km

Key Conclusions

Clustering plants to a transport network can achieve significant economies of scale – in both CO2 transport/storage in larger reservoirs (on- and offshore)

Large-scale CCS requires the development of a transport infrastructure equivalent to the current hydrocarbon infrastructure

Greatly reduced long-term costs can be ensured with early strategic planning – including the development of clusters and over-sized pipelines – and the removal of cross-border restrictions

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Early strategic planning of large-scale CO2 transport infrastructure is vital to reduce costs

CO2 Storage Cost Ranges

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Storage cost per case, with uncertainty ranges; purple dots correspond to base assumptions

40 Mt5 fields to 1 emitter

66 Mt3 fields to 1 emitter

200 Mt1 fields to 1 emitter

Storage Capacity Estimates

43 255 323980 1313

813 788

2700

24400

123 183600 665

1350 1188 1050

3150

520029200

<1 1-5 5-10 10-25 25-50 50-75 75-100 100-200 >200

11 159765

2380 2100 2000

1050

3750

24400

303 345 4951383 1050 1000

7001350 1600

8000

Offshore Onshore

SA

DOGF

Key Conclusions

1 €/tonne CO2 - 20 €/tonne CO2 = CO2 storage cost range

Location and type of storage site, reservoir capacity and quality are the main determinants for the costs of CO2 storage

Onshore is cheaper than offshore

Depleted oil and gas fields are cheaper than deep saline aquifers

Larger reservoirs are cheaper than smaller ones

High injectivity is cheaper than poor injectivity

Risk-reward mechanism required for large variation in storage costs (up to a factor 10) & risk of investing in saline aquifer exploration

Such a mechanism will aid realisation of saline aquifer potential and ensure sufficient storage capacity

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A risk-reward mechanism is needed to realise the significant aquifer potential for CO2 storage

General Conclusions from the Study

Price of Emission Unit Allowances (EUAs) will not, initially, be a sufficient driver for investment after the first generation of CCS demonstration projects is built (2015 - 2020)

Enabling policies required in the intermediate period – after the technology is commercially proven, but before the EUA price has increased sufficiently to allow full commercial operation

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CCS requires a secure environment for long-term investment

The goal: to make new build power generation with CCS more attractive to investors than without it

+ €=

What’s Next?

ZEP acknowledges costs of CCS will be inherently uncertain until further projects come on stream

Cost reports don’t provide a forecast of cost development but…

…will be updated every two years in line with technological developments and the progress of the EU CCS demo programme

Future updates will also refer to co-firing with biomass, combined heat and power plants, and the role of industrial applications

ZEP aims to undertake further work on costs to put the cost of CCS in perspective with other low carbon energy technology options

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