Power Plant Economics

Carl Bozzuto
ALSTOM 2006. We reserve all rights in this document and in the information contained therein.
Reproduction, use or disclosure to third parties without express authority is strictly forbidden

Overview

Economic Terms

Economic Methodologies

Cost Models

Pitfalls

Cost Studies

Results

Some words about CO2

Conclusions

Economic Terms
z

Return on Sales = Net after tax/Sales revenue

Asset turnover = Sales revenue/Assets

Leverage = Assets/Equity

PE Ratio = Stock Market Price (per share)/Net after tax (per share)

Market/Book Ratio = Stock Market Price (per share)/Equity (per share)

Return on Assets = Net/Assets

Return on Equity = Net/Equity

Discount Rate = Time value of Money

Net Present Value = Present Value of Future Returns @ Discount Rate

Internal Rate of Return = Discount Rate which yields an NPV of zero

3

Why do we care?

ROS x Turnover x Leverage x PE = Market/Book

Listed firms want to increase stock price (shareholder value)

The Discount Rate considers risk as well interest rates and inflation
The discount rate is often a project hurdle rate

Many firms use IRR for project evaluation

Return on Equity is a key consideration for any investment

Economic Methodologies

A Power Plant is a long lived asset that is capital intensive.

It also takes a long time to acquire the asset.

Construction times range from 2 years for a combined cycle plant to 3 4
years for a coal plant to 10 years for a nuclear plant.

A key issue is treating the time value of money.

Depreciation is a key consideration.

Different entities treat these considerations differently.

Plant Cost
z

Plant Cost is exceptionally site specific.

Labor costs
Shipping and material costs
Environmental costs
Site preparation costs
Site impacts on performance
Fuel costs
Cooling water type and availability
Connection costs

Today, we really dont know what the final cost of a plant will be.
Raw material escalation
Shipping costs
Labor costs

Plant Cost Terminology

z

There are numerous ways to talk about plant cost.

Engineered, Procured, and Constructed (EPC cost)
Most commonly used today
Fits best with Merchant Plant model
Does not included Owners Costs
Land, A/E costs, Owners Labor, Interconnection, Site Permits, PR, etc.

Can often be obtained as a fixed price contract for proven technology

Equipment Cost
Generally the cost to fabricate, deliver, and construct the plant equipment
Overnight Cost
Either the equipment cost or the EPC cost with the NPV of interest during
construction. This was used in the 70s and 80s to compare coal plants
with nuclear plants due to the difference in construction times.
Total Installed Cost (TIC)
The total cost of the equipment and engineering including interest during
construction in present day dollars. This is the cost that a utility would
record on its books without the cost of land and other home office costs.
7

Total Plant Cost (TPC) includes all costs

Economic Methodologies
Simple payback

The number of years it takes to pay back the original investment

Return on Equity

For regulated utilities, the ROE is set by the regulatory body. The equity is determined
by the total plant cost being allowed in the rate base. The equity portion is determined by
the leverage of the company. The ROE is applied to the equity and added to the cost in
determining the cost of electricity and thus the rate to be charged to the customer.

Capital Charge Rate

This is the rate to be charged on the capital cost of the plant in order to convert capital
costs (ie investment) into operating costs (or annual costs). This rate can be estimated
in a number of ways. This rate generally includes most of our ignorance about the future
(ie interest rates, ROE, inflation, taxes, etc.)

Discounted Cash Flow Analysis

This method is preferred by economists and developers. A spread sheet is set up to

estimate the cash flows over the life of the project. An IRR can be calculated if an
electricity price is known (or estimated).
8

Economic Methodologies
z

All of these methods can be made equivalent to one another for

any given set of assumptions.
A simple payback time can be selected to give the same cost of electricity
(COE) as the other methods.
A return on equity can be selected to give the same COE.
A capital charge rate can be selected to give the same COE.
The Discounted Cash Flow method is considered the most accurate. However,
there are still a considerable number of assumptions that go into such a model
such as the discount rate, inflation rate, tax rate, interest rates, fuel prices,
capacity factors, etc. that the accuracy is typically less in reality.

The Independent Power Producer pioneered the use of the DCF

model for smaller power projects.
In this model, the developer attempted to fix as many costs as possible by
obtaining fixed price contracts for all of the major cost contributors. These
included the EPC price, the fuel contract, the Operations & Maintenance
Contract (O&M), and the Power Purchase Agreement.

Cost Models
z

Capital Charge Rate Model

The goal is to select a capital charge rate that typically covers most of the
future unknowns. This rate is applied to the EPC cost in order to provide an
annual cost that will provide the desired return on equity.
In its simplest form, one can use the following:
Interest rate on debt - 8 - 10% for utility debt
ROE - 10 12 % for most utilities
Inflation rate - 3 4%
Depreciation - 2 4%
Taxes and Insurance - 3 5%
Risk - ? (typically 3% for mature technologies, higher for others)
Another approach would be to run a number of DCF cases with different
assumptions and then assess a capital charge rate that is consistent.
A reasonable number for a regulated utility is 20% (one significant figure)

10

Discounted Cash Flow Model

z

The goal is to estimate the cash flows of the project over the life of the
plant. A significant number of variables are involved and must be
estimated or assumed in order to make the spread sheet work.
Input variables include net output, capacity factor, availability, net plant heat rate
(HHV), degradation, EPC price, construction period, insurance, initial
spares/consumables, fixed O&M, variable O&M, fuel price, fuel heating value (HHV),
financial closing date, reference date, depreciation, analysis horizon, owners
contingency, development costs, permitting costs, advisory/legal fees, start up fuel, fuel
storage, inflation rates, interest rates, debt level, taxes, construction cash flow,
discount rate, and ROE.
A detailed cash flow analysis is set up for each year of the project. For shorter term
projects, these estimated cash flows are more realistic. For longer term projects, the
accuracy is debatable.
Since the cash generation may be variable, it is often desirable to perform some kind of
levelizing function to generate an average that is understandable. There are risks
associated with this step.
The most common application is to assume a market price for electricity and then try to
maximize the IRR for the project.
11

Discounted Cash Flow Model

z

The model assumes that we know a lot about the project and the
number of variables. What if we dont know very much about the future
project? For example, what if we dont know where the plant will be
located? What if we dont know which technology we will use for the
plant? What if we want to compare technologies on a consistent basis?

One approach is to run the DCF model backwards. In this approach,

we stipulate a required return and calculate an average cost of
electricity needed to generate that return. We still need to make a lot of
assumptions, but at least we can be consistent.

One advantage of having such spread sheet programs is that a wide

range of scenarios and assumptions can be tested. This approach
gives us a little more insight into the decision making process and
helps us understand why some entities might chose one technology
over another.
12

Typical Construction Period w/Cash Drawdown

1. CumulativeDrawdown

-100,000
-200,000
-300,000
-400,000
-500,000
-600,000

13

47

45

43

41

39

37

35

33

31

29

27

25

23

21

19

17

15

13

11

Typical Levelized Cash Flow

4. EndingEquityCashflow

50,000
0
(50,000)
(100,000)
(150,000)
(200,000)
(250,000)
(300,000)
(350,000)

14

11

13

15

17

19

21

23

25

27

29

31

33

35

37

39

41

Pitfalls
z

The biggest pitfall is thinking that these numbers are real. They are
only indicative. Just because a computer can calculate numbers to the
penny does not mean that the numbers are accurate. There is a lot of
uncertainty due to the number of assumptions that have to be made.

It is important to understand what the goal and/or objective of the

analysis is. In the following study, the goal was to compare
technologies that might be used in the future. This goal is different
from looking at a near term project where the site, technology, fuel,
customer, and vendors have already been selected.

There is no substitute for sound management judgement.

The analysis itself does not identify the risks. The analyzer must
consider the risks and ask the appropriate what if questions. In the
following study, over 3,000 spread sheet runs were made in order to
analyze the comparisons effectively.

Avoid the Swiss Watch mentality.

15

Technology Position and Experience

Experience
Base
Sub-Critical PC

1,200 GW

Major Competitors

Technology
Maturity

Alstom,MHI, B&W, FW
and Several Others

Mature

Alstom,MHI, B&W

Proven

Super-Critical PC

265 GW

PFBC

0.5 GW

IGCC

1 GW

GE, Shell, Conoco Phillips

Demo

CFB

20 GW

Alstom, FW

Proven

GE, Siemens, Alstom

Mature

NGCC

200 GW GT
100 GW ST

16

Demo

Baseline Economic Inputs 1997 400 MW Class

Subcritical Supercritical P800 PFBC

Size

IGCC

400

400

400

400

1,000

1,050

1,100

1,380

9,374

8,385

8,405

8,700

80

80

80

80

36

36

48

48

31.14

32.11

33.69

39.08

0.77

0.69

1.01

0.42

(MW)

Capital Cost
($/ kW)

Heat Rate
(Btu/ kWh)

Availability
(%)

Cycle Time
(months)

Fixed O&M
($/ kW)

Variable O&M
(mills/ kWh)
Source:

17

Market

Market

ABB

GE

Baseline Economic Inputs 1997 100 MW Class

Size

CFB

P200 PFBC

NGCC

100

100

270

1,000

1,200

500

10,035

8,815

6,640

80

80

80

30

32

24

44.13

55. 41

16.92

1.18

1.06

0.01

(MW)

Capital Cost
($/ kW)

Heat Rate
(Btu/ kWh)

Availability
(%)

Cycle Time
(months)

Fixed O&M
($/ kW)

Variable O&M
(mills/ kWh)
Source:

18

Market

ABB

PGT

Baseline Economic Inputs - 2005 400 MW Class

Subcritical Supercritical P800 PFBC IGCC
Size

400

400

400

400

750

750

750

1,100

8,750

8,125

8,030

7,800

80

80

80

80

24

24

30

36

26.33

26.33

26.95

33.69

0.81

0.75

1.05

0.37

BA Plan

BA Plan

(MW)

Capital Cost
($/ kW)

Heat Rate
(Btu/ kWh)

Availability
(%)

Cycle Time
(months)

Fixed O&M
($/ kW)

Variable O&M
(mills/ kWh)
Source:
19

SECAR

GE

Baseline Economic Inputs 2005 100 MW Class

Size

CFB

P200 PFBC

NGCC

100

100

270

725

850

325

9,350

8,530

6195

80

80

80

18

22

18

38.84

48.67

16.44

1.15

1.12

0.01

(MW)

Capital Cost
($/ kW)

Heat Rate
(Btu/ kWh)

Availability
(%)

Cycle Time
(months)

Fixed O&M
($/ kW)

Variable O&M
(mills/ kWh)
Source:

20

BA Plan

SECAR

PGT

Financing Scenario Summary

Loan structure

21

Municipal Utility IPP 1 IPP 2 Industrial

Horizon (years)

40

30

15

15

10

Interest rate (%)

5.75

7.75

8.75

8.75

8.25

Loan term (years)

40

30

10

Depreciation (years)

40

30

15

15

10

Equity (%)

50

30

50

75

Debt (%)

100

50

70

50

25

ROE (%)

n/a

10

20

20

23

Taxes (%)

20

30

30

30

Comparison of Financing Scenarios

400 MW Subcritical PC Fired Plant
10.0
9.0

Levelized Tariff, c/ kWh

8.0

Financial
Fixed O&M
Variable O&M
Fuel

ts have
s
o
c
l
a
i
c
Finan
n COE
o
e
c
n
e
u
l
major inf

7.0
6.0
5.0
4.0
3.0
2.0
1.0
0.0
Municipal

Utility

IPP-1

Financing Arrangement
22

IPP-2

Industrial

Comparison of Technologies
Municipal Financing - 1997
(80% CF, $1.20 coal and $3.00 gas)

4.0
Financial
Fixed O&M

3.5

Variable O&M
Fuel

Levelized Tariff, c/ kWh

3.0

2.5

2.0

1.5

1.0

0.5

0.0
Subcrit PC
(400 MW)
23

Super PC
(400 MW)

P-800
(400 MW)

IGCC
(400 MW)

P-200
(100 MW)

CFB
(100 MW)

NGCC
(270 MW)

Comparison of Technologies
Utility Financing - 1997
(80% CF, $1.20 coal and $3.00 gas)
5.0
4.5

Levelized Tariff, c/ kWh

4.0
3.5
3.0
2.5

Financial

NGCC lo
oks bett
er on to
but wor
tal COE
se on di
,
spatch b
asis.
t
s
o
ncial c
a
n
i
f
r
e
h
g
Hi
ce on
n
e
u
l
f
n
i
s
increase
CO E

Fixed O&M
Variable O&M
Fuel

2.0
1.5
1.0
0.5
0.0
Subcrit PC
(400 MW)

24

Super PC
(400 MW)

P-800
(400 MW)

IGCC
(400 MW)

P-200
(100 MW)

CFB
(100 MW)

NGCC
(270 MW)

Comparison of Technologies
IPP(1) Financing - 1997
(80% CF, $1.20 coal and $3.00 gas)

8.0
Financial
Fixed O&M

7.0

Variable O&M
Fuel

Levelized Tariff, c/ kWh

6.0

5.0

4.0

3.0

2.0

1.0

0.0
Subcrit PC
(400 MW)
25

Super PC
(400 MW)

P-800
(400 MW)

IGCC
(400 MW)

P-200
(100 MW)

CFB
(100 MW)

NGCC
(270 MW)

Comparison of Technologies
IPP(2) Financing - 1997
(80% CF, $1.20 coal and $3.00 gas)

9.0
Financial
Fixed O&M

8.0

Variable O&M
Fuel

Levelized Tariff, c/ kWh

7.0
6.0
5.0
4.0
3.0
2.0
1.0
0.0
Subcrit PC
(400 MW)
26

Super PC
(400 MW)

P-800
(400 MW)

IGCC
(400 MW)

P-200
(100 MW)

CFB
(100 MW)

NGCC
(270 MW)

Comparison of Technologies
Industrial Financing - 1997
(80% CF, $1.20 coal and $3.00 gas)
16.0

14.0

Financial
Fixed O&M
Variable O&M
Fuel

Levelized Tariff, c/ kWh

12.0

10.0

8.0

6.0

4.0

2.0

0.0
Subcrit PC
(400 MW)
27

Super PC
(400 MW)

P-800
(400 MW)

IGCC
(400 MW)

P-200
(100 MW)

CFB
(100 MW)

NGCC
(270 MW)

Capacity Factor Effect on COE

Municipal Financing - 1997
($1.20 coal and $3.00 gas)
8.0
Subcrit PC
Supercrit PC

7.0

P-800

Levelized Tariff, (c/ kWh)

IGCC

D is

P-200

patc
CFB
h ra
NGCC
hav
t
e
a
em
ajor nd/or c
influ apac
i
en c
e on ty facto
COE r

6.0

5.0

4.0

3.0

2.0
20%

30%

40%

50%

60%

70%

Capacity Factor, (%)

28

80%

90%

100%

Impact of Availability on COE

Municipal Financing - 1997
($1.20 coal)

3.5
3.4

Levelized Tariff, (c/ kWh)

3.3
3.2

Subcrit PC

5 days lost availability makes

sub and supercritical equal.

Supercrit PC

3.1
3.0
2.9
2.8
~5 days

2.7
2.6
2.5
6,500

6,600

6,700

6,800

6,900

7,000

7,100

Capacity, (hrs/ year)

29

7,200

7,300

7,400

7,500

Sensitivity Analysis
Subcritical PC
1997 IPP1 Financing - $1.20 coal

20%

ty a nd
i
l
i
b
a
l
i
a
v
CO E
nge in a
n
a
o
h
e
c
c
,
n
e
%
u
In
est infl
h
g
i
h
e
v
a
eh
EPC pric

15%

Change in COE, (%)

10%

5%

0%

-5%

-10%

Availability
EPC price
Plant heat rate
Fixed O&M
Cycle time
Var O&M

-15%

-20%
-20%

-15%

-10%

-5%

0%

5%

Percent Variable Change

30

10%

15%

20%

Sensitivity Analysis
NGCC
1997 IPP1 Financing - $3.00 gas

20%

and
y
t
i
l
i
b
a
l
i
a
e in av
g
n
a
h
c
,
on COE
e
%
c
C
n
C
e
u
G
l
f
N
For
ighest in
h
e
v
a
h
efficiency

15%

Change in COE, (%)

10%

5%

0%

-5%

Availability
EPC price
Plant heat rate
Fixed O&M
Cycle time
Var O&M

-10%

-15%

-20%
-20%

-15%

-10%

-5%

0%

5%

Percent Variable Change

31

10%

15%

20%

Comparison of Technologies
China 1997 Municipal Financing Conditions
($1.80 coal and $5.00 LNG)

4.0

3.5

Levelized Tariff, (c/ kWh)

3.0

gh
NGCC hi
el
due to fu
cost

r ta nt
o
p
m
i
s
s
t le
h c os t
First cos
g
i
h
o
t
e
itive du
s
n
e
s
l
e
u
f

2.5

2.0

1.5

1.0

Financial
Fixed O&M
Variable O&M

0.5

Fuel

0.0
Subcrit
PC

32

Supercrit
PC

P-800

IGCC

P-200

CFB

NGCC

Comparison of Technologies
China 1997 IPP Financing Conditions
($1.80 coal and $5.00 LNG)
7.00

Levelized Tariff, (c/ kWh)

6.00

5.00

4.00

3.00

2.00
Financial
Fixed O&M

1.00

Variable O&M
Fuel

0.00
Subcrit
PC
33

Supercrit
PC

P-800

IGCC

P-200

CFB

NGCC

Comparison of Technologies
Japan Market Conditions - 1997
($2.90 coal and $5.00 LNG)

5.0
4.5

Levelized Tariff, c/ kWh

4.0
3.5
3.0
2.5
2.0

o r ta nt
p
m
i
s
s
e
l
t
c os t
h
First cos
g
i
h
o
t
v e due
i
t
i
s
n
e
s
l
fue

1.5
1.0

Financial
Fixed O&M
Variable O&M
Fuel

0.5
0.0
Subcrit PC
(400 MW)
34

Super PC
(400 MW)

P-800
(400 MW)

IGCC
(400 MW)

P-200
(100 MW)

CFB
(100 MW)

NGCC
(270 MW)

Net Plant Heat Rate Summary

12,000

9,350

10,035
8,530

8,815

10%

7%

7%

6,195

8%
6,640

7,800

8,000

8,700

8,030

8,405

8,125

8,385

8,750

9,375

10%

7%

6,000

6%

4%
4,000

4%
3%

3%
2,000

1997
2005
Improvement

0%
Subcrit PC
(400 MW)

35

2%

Super PC
(400 MW)

PFBC-P800
(400 MW)

IGCC
(400 MW)

PFBC-P200
(100 MW)

CFB
(100 MW)

NGCC
(270 MW)

NPHR Improvement (%)

Net Plant Heat Rate (Btu/kW)

10,000

12%

Summary of EPC Prices

$1,000

29%

30%
28%
25%
$725

$850

$750

$750

$750

25%

35%

$1,200

$1,100

$1,100

$1,000

20%

20%

$600

$400

$325

15%
$350

EPC Price ($/kW, net)

$800

29%

32%

1997
2005
% Decrease

10%

7%
$200

5%

$0

0%
Subcrit PC
(400 MW)

36

Super PC
(400 MW)

PFBC-P800
(400 MW)

IGCC
(400 MW)

PFBC-P200
(100 MW)

CFB
(100 MW)

NGCC
(270 MW)

EPC Decrease (%)

$1,000

$1,050

$1,400

$1,200

40%

$1,380

$1,600

Coal Technology Cost Trends

Extrapolated to 2005

2,000
1,800

Subcritical PC
Supercritical PC
P800
P200

EPC Price ($/kW, net)

1,600
1,400
1,200
1,000
800
600

all
4
have 00 MW t
echn
the s
olog
ame
ies
mid
term
targ
et

400
200
0
1989

1991

1993

1995

1997

Year
37

1999

2001

2003

2005

Market Trends
Carbon Steel Price Trends

Index Base 1982

175

150

125

100
01/02

01/03

01/04

Month

38

01/05

01/06

January
February
March
April
May
June
July
August
September
October
November
December
January
February
March
April
May
June
July
August
September
October
November
December
January
February
March
April
May
June
July
August
September
October
November
December
January
February
March
April
May
June
July
August
September
October
November
December
January
February
March
April
May
June
July
August
September
October
November
December
January
February
March
April
May
June
July
August
September
October
November
December
January
February
March
April
May
June
July
August
September
October
November
December

Spot Nickel

Market Trends
Nickel Trend: 2000 - 2006

39
16.20
15.80
15.40
15.00
14.60
14.20
13.80
13.40
13.00
12.60
12.20
11.80
11.40
11.00
10.60
10.20
9.80
9.40
9.00
8.60
8.20
7.80
7.40
7.00
6.60
6.20
5.80
5.40
5.00
4.60
4.20
3.80
3.40
3.00
2.60
2.20
1.80

2000
2001
2002
Month / Year
2003

Low Ni
Avg. Spot Ni
2004

High Ni
2005
2006

Todays Costs (Estimated)

z

Todays debate centers around conventional pulverized coal plants

(PC) and integrated gasification combined cycle plants (IGCC).

As we have seen, the current level of development for IGCC makes it

uncompetitive with PC, which explains why very few have been built.

The claim for the future is that the cost of capture of CO2 to mitigate
greenhouse gas concentrations in the atmosphere will be more
expensive for PC than for IGCC. Further, as IGCC develops, its costs
will come down (learning curve).

As we are in a state of flux with regard to present day costs for plants,
the best we can assume (to one significant figure) is that costs have
escalated from their 1997 level to about double. That is, a PC plant is
now about $2000/Kw and an IGCC is about $3000/Kw (EPC). Recall
that the forecast in 1997 was for PC to be $750/Kw and the IGCC to be
$1100/Kw. Unfortunately, that is one of the dangers of forecasting.
40

Todays Costs (Estimated)

z

Fuel costs have also escalated. Recent data for fuel costs delivered to
new plants is about $1.75/MMBTU for coal and $6.50/MMBTU for gas.

We can input these new costs into the spread sheet model and get an
estimate for the COE for a utility trying to make a decision today.
Under these conditions, with no CO2 capture, the COE for the PC plant would be 6.55
cents/Kwhr and the IGCC plant would be 9.41 cents/Kwhr.
The natural gas plant would again look competitive at 6.3 cents/Kwhr with an 80%
capacity factor. However, at a more typical 40% capacity factor, the COE is 8.30
cents/Kwhr.
As a result, we see a lot of utilities considering supercritical pulverized coal plants.

What about the argument for CO2 capture?

This is a subject of intense debate/argument. IGCC costs are expected to increase by
15 - 20% for CO2 capture. The range for PC is considerable. Old technology could
increase by as much as 50%. Current technology ranges from 20 30%. New
technology is estimated between 10 15%. Whos right?
41

Efficiency
Critical to emissions strategy
Source: National Coal Council
From EPRI study

100% Coal

Coal w/ 10%
co-firingbiomass

Commercial
Supercritical/
First of kind IGCC

Existing US coal
fleet @ avg 33%

42

Net Plant Efficiency (HHV), %

Plant Efficiency % (HHV Basis)

Meeting the Goals for

Coal Based Power - Efficiency

43

50
40
30
20
10
0
POLK/WABASH
IGCC

Target for New

IGCC*

SCPC Today

USC Target

Next Gen IGCC

CO2 Mitigation Options

for Coal Based Power

9Increase efficiency
Maximize MWs per lb of carbon processed
9Fuel switch with biomass
Partial replacement of fossil fuels =
proportional reduction in CO2
9Then, and only then .Capture remaining CO2
for EOR/Sequestration
= Logical path to lowest cost of carbon reduction
44

CO2 Capture Post Combustion

Technology

Status

CO2 Scrubbing options

ammonia based

Demonstration in 2006. Advantage of lower costs than Amines.

CO2 Frosting

Uses Refrigeration Principle to Capture CO2 from Flue Gas.

Applicable for retrofit & new applications

Process Being Developed by Ecole de Mines de Paris, France, with ALSTOM Support

CO2 Wheel

Use Regenerative Air-Heater-Like Device with Solid Absorbent Material to Capture ~ 60% CO2
from Flue Gas.
Being Developed by Toshiba, with Support from ALSTOM

CO2 Adsorption with Solids

Being Developed by the University of Oslo & SINTEF Materials & Chemistry (Oslo, Norway),
in Cooperation with ALSTOM

Advanced Amine Scrubbing

Further Improvements in Solvents, Thermal Integration, and Application of Membranes

Technologies Focused on Reducing Cost and Power Usage Multiple suppliers driving
innovations

45

Technology Validation & Demonstration

Post Combustion CO2 Capture

Chilled Ammonia

46

Without CO2
Removal

MEA-Fluor Dan.
Proc.

NH3

Total power plant cost, M$

528

652

648

Net power output, MWe

462

329

421

Levelized cost of power, c/KWh

5.15

8.56

6.21

CO2 Emission, lb/kwh

1.71

0.24

0.19

Avoided Cost, $/ton CO2

Base

51.1

19.7

Going Down The Experience Curve for

Post Combustion CO2 Capture

Heat of Reaction (BTU/lb)

3000
ABB
Lumnus

2500

Values From
Current
Projects

2000
1500

1,350 BTU/lb

1000

ALSTOMs
Chilled
Ammonia
Process

2001 Parsons
Study (Fluor)

500
0
1990

Process
Optimization

1995
1995

2000
2000

Advanced
Amines

2005
2005

Process
Innovations

2010
2010

Significant Improvements Are Being Achieved

47

2015
2015

2020

Multiple Paths to CO2 Reduction

Innovations for the Future
Hatched Range reflects cost variation from fuels and uncertainty

10

No CO2 Capture ------------------------------With CO2 Capture---------------------------

8
6
4
2
w
/M
O
EA
xy
fir
in
g
w
SC
CO
PC
2
ad
v
am
in
IG
es
CC
F
tu
rb
in
e
SC
PC
US
NH
IG
C
3
CC
PC
H
ad
tu
v
rb
C
O
in
2
e
w
ad
v
CO
2

SC
PC

IG
CC

0
SC
PC

Levelized COE cents/Kwhr

Technology Choices Reduce Risk and Lower Costs

Note: Costs include compression , but do not include sequestration equal for all technologies

48

Economic Comparison
Cost of Electricity (common basis)
Ref Air fired CFB w/o
capture

9.00

Ref IGCC 7FA w/ capture spare

8.50
8.00

O2 fired PC w/
capture

(Cents/kWhr)

7.50
7.00

O2 fired CFB w/ capture

6.50
6.00

Ammonia scrubbing

5.50
5.00

Chemical Looping
4.50
4.00
0

10

20

30

40

CO2 Allowance Price ($/Ton CO2 Emitted)

49

50

Conclusions

New coal fired power plants shall be designed for highest

efficiency to minimize CO2 and other emissions

Lower cost, higher performance technologies for post

combustion CO2 capture are actively being developed, and
more are emerging

There is no single technology answer to suit all fuels and all

applications

The industry is best served by a portfolio approach to drive

development of competitive coal power with carbon capture
technology

50