CCS Cost Development

CCS Cost Development

As of mid-April, nine pilot carbon capture and sequestration (CCS) power plant projects were in operation in China, Europe, and the United States. These projects are delivering important insights regarding the prospects for large-scale commercial application of carbon capture in coal and natural gas power plants. No large-scale CCS power plant is in operation yet, but the industry is working hard to push forward with 45 projects in various stages of development.

Although it remains unclear when the first commercial CCS power plant project will start operation, new findings reveal greater certainty about another aspect of CCS development: cost. Several studies in the last few years suggest that CCS in coal and natural gas power plants is far more expensive than was anticipated even just six years ago.

One of these early studies is Capturing CO2, published by the International Energy Agency Greenhouse Gas R&D Programme (IEAGHG) in May 2007. Based on 2005 cost data and on per-Gigajoule (GJ) fuel prices of $2.20 for coal and $7.80 for gas, the report estimated that carbon capture in natural gas combined-cycle (NGCC) plants would lead to a per kilowatt-hour (kWh) electricity price of 7.9¢ using post-capture combustion and 10.0¢ using oxyfuel combustion technology. For coal plants, the electricity price would be 7.4¢ using post-combustion capture technology, 7.3¢ using pre-combustion technology, and 7.8¢ using oxyfuel technology. (See Worldwatch’s Carbon Capture and Storage Attracts Government Attention for a discussion of different carbon capture technologies.)

In relative terms, the report found that carbon capture in power plants would lead to electricity costs that were 24–45 percent higher in coal power plants and 25–60 percent higher in natural gas plants, depending on the capture technology used.

More recent reports, however, suggest that costs might be even higher. In March, the International Energy Agency published a working paper on the cost of CCS in developed countries that compares nine studies published since 2007 (including the IEAGHG report). To levelize the cost of electricity to a 2010 level, author Matthias Finkenrath used Chemical Engineering’s Plant Cost Index and findings from the OECD’s Projected Costs of Generating Electricity. He used per-GJ fuel prices of $3.60 for coal and $9.76 for natural gas, reflecting how dramatically fossil fuel prices have risen in recent years (an increase of 60 percent for coal and 25 percent for natural gas between 2005 and 2010).

Based on these updated estimates, levelized costs for the 2007 Capturing CO2 report would now stand at (for NGCC power plants) 9.7¢ per kWh for post-capture combustion , and (for coal power plants) 9.6¢ per kWh for post-combustion capture, 9.9¢ per kWh for pre-combustion capture and 10.1¢ per kWh for oxyfuel combustion, representing increases of 23–35 percent since 2005.

Reports using cost data for 2008 and later suggest that it’s not just inflation that is making CCS an expensive technology. Based on reports from the CO2 Capture Project (CCP 2009), Carnegie Mellon University (CMU 2009), Electric Power Research Institute (EPRI 2009), Global CCS Institute (GCCSI 2009), and IEAGHG (2009), the average per-kWh price in the OECD area is now estimated at 10.4¢ for post-combustion in NGCC power plants, or 0.7¢ above the 2007 study even after levelizing costs. In coal power plants, the price now averages 11.7¢ using post-combustion (+ 1.1¢), 10.8¢ using pre-combustion (+0.9¢), and 10.9¢ using oxyfuel combustion (+0.8¢).

All in all, the report reveals that using carbon capture in power plants leads to a relative increase in electricity costs of 39–64 percent for coal plants and 33 percent for NGCC plants, compared to plants without capture. This finding suggests that natural gas is the more reasonable application of carbon capture (the study does not include carbon pricing). But it also suggests that CCS is becoming an increasingly pricey low-carbon energy option, particularly as fossil fuel prices continue to rise.

Of course, there are alternatives. Wind power is proving to be a stable baseload source for electricity generation (under favorable local conditions) and can be an attractive option for countries that rely heavily on fossil fuels. Modern and efficient wind turbines can produce electricity for as low as 8.5¢ per kWh (or even 5¢ per kWh, according to the California Energy Commission)–independently of a fluctuating resource and with the potential to become even cheaper.

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Capture, Carbon, CCS, coal, Combustion, Cost, IEA, IEAGHG, natural gas, Price, Sequestration, Storage