The Role of Coal in Future Power Generation in India:

Prospects of Advanced Generation Technologies in a Carbon-Constrained World

Coal and Electricity in India ConferenceSponsored By:

International Energy Agency, Ministry of Coal and Mines & Ministry of Power of the Government of India

22-23 September 2003; New Delhi, India

Manoj K. GuhaFormer Manager, Corporate Technology Development

American Electric PowerColumbus, Ohio, USA

Presentation Outline

• Electrical generation in a carbon constrained world

• Role of coal in sustainable development in a carbon constrained world

• The role of coal gasification in the Hydrogen Economy

India’s Energy Strategy

Vision:

To meet the energy needs of all segments of India’s population in the most efficient and cost-effective manner while ensuring long-term sustainability

Provide Clean and Affordable Energy to All

• Promote the design and establishment of decentralized energy service providers

• Design a basket of differentiated services available at differential prices to empower poorer customers choice

• Re-assign energy subsidy allocations towards the provision of micro-credit

Ensure Security of Energy Supply

• Map all energy resources and develop a databank of technology choices, efficiencies and costs to facilitate evaluation of trade-offs between alternative energy paths

• Investments in energy systems and efficiency improvements

• Encourage commercially-driven goal-oriented R&D efforts

• Public R&D funds towards reducing energy delivery costs to the poor

• Prepare energy plans to meet unforeseen emergency situations

Improve the Efficiency of the Energy System

• Open up energy markets to allow more players in all market segments

• Adequately empower independent regulatory authorities

• Adopt uniform pricing principles• De-link social function of subsidy

provision from energy pricing decisions• Institutionalize preparation of information

systems, communication and education programs promoting efficiency

Reduce Adverse Environmental Impacts of

Energy Use

• Accelerate development and market adoption of environmentally friendly technologies

• Strategically exploit opportunities arising out of international agreements and the WTO to meet energy goals

• Establish and stringently enforce appropriate environmental standards

Comparison of Per Capita Energy Consumption

Energy and Electricity Demand and the Indian Economy

Power Generation Capacity

India’s Energy Consumption Pattern

Electricity Capacity Additions: Past and Projected

Comparison of Capacity and Energy Generation (Latest Data, 1997)

28.21003,649.30779.8Total

74.0 (0.4)1.6NA59.512.9All Other Renewables

35.0 (0.1)0.4NA14.32.9Geothermal

~~NA-4.019.3Hydro Electric Pumped Storage

14.3 (2.8)9.8NA358.979.9Conventional Hydro

29.5 (5.2)18.510,320673.799.7Nuclear

153.4Dual-fired

46.4Petroleum 20.9 (5.2)18.510,600673.9

50.2Natural Gas

38.8 (14.5)51.29,9601,873.00315.1Coal

USA

3.06100405.696.35Total

~~NA0.2< 0.25All Non-Hydro Renewables

2.7 (0.5)16.9NA68.421.0Hydro

0.3 (0.06)1.811,8007.42.0Nuclear

6.8 (2.5)81.315,500329.673.1Fossil (coal, gas,

petroleum)

India

% of Total World Generation

% Total Within the Country

Average Heat Rate Btu/kWh

BkWHCapacity

GWFuel and/or Generation

SourceCountry

Generation

Energy Consumption by Sector

Electricity, Transportation & CO2

• Electricity accounts for about 40% of end use energy and 36% of CO2 production in the U.S.

• Transportation accounts for about 37% energy consumption and 33% of CO2 in the U.S.(Carbon emissions in India from these sources do not appear to be that much different from U.S. on percentage basis) (Except for passing comments, I will not cover

transportation sector in my presentation)

Cost of Additional Megawatt of Capacity

Low-Carbon Energy Technologies

• DSM and efficiency improvements are powerful tools, but focus is on technologies for future power plants

• Many low/no-carbon technologies available– Renewables– Natural Gas– Nuclear– Coal

Renewables: An Important Niche

• Carbon-free technologies are promising

• Wide variety of options– Solar

– Wind

– Biomass

– Hydropower

• Constrained by intermittency, reliability, cost

U.S. Non-Hydro Renewable Generation

EIA AEO 2001 (2000-2020); AEP Projection (2020- 2030)

300

50

01995 2000 2030

Gen

erat

ion

, BkW

h

Year

150

100

250

200

2010 2020

Wind

Solar Photovoltaic

Solar Thermal

Wood / Biomass

Municipal Solid Waste

Geothermal

AnnualGrowth Rates

2000 - 2030

2.6%

12.6%

2.4%

1.8%

1.8%

1.0%

Non-Hydro Renewables% Total Generation

19952000201020202030

1.4%1.6%1.6%1.7%1.8%

Maximum Potential of Non-Hydro Renewable Generation

Extension of production credits to all Renewables past 2010AEP Projection (2020- 2030)

300

50

02000 2030

Gen

erat

ion

, BkW

h

Year

150

100

250

200

2010 2020

Wind

Solar Photovoltaic

Solar Thermal

Wood / Biomass

Municipal Solid Waste

Geothermal

AnnualGrowth Rates

2000 - 2030

9.0%

19.6%

5.7%

5.1%

5.0%

4.2%

Non-Hydro Renewables% Total Generation

2000201020202030

1.6%3.7%5.5%6.0%

Limits to Renewables

• Even with accelerated expansion of non-hydro Renewables, potential market penetration remains small in near- to mid-term in the U.S.

• Prohibitively high capital costs continue to constrain renewable deployment in developing countries

Natural Gas: A Near-Term Remedy

• Dramatically increased natural gas use is primary strategy for U.S. GHG reductions

• Several technologies available– Natural Gas Combined Cycle (NGCC)– Cogenerations/Combined Heat and Power

(CHP)– Distributed Generation (microturbines, etc.)

• However, natural gas requires extensive infrastructure and abundant fuel reserves

Nuclear Power: A Zero-Carbon Option

• Many disadvantages, but nuclear offers a plentiful source of zero-carbon electricity

• Technological advances to help address concerns– Safety– Capital costs– Economic competitiveness

Coal: The Foundation of Electric Power

• Coal fuels majority of power generation in U.S. and many developing nations

• High carbon content can be offset by low prices and technological improvements– Near-term

• Advanced Pulverized Coal-Fired (PCF) steam cycles• Fluidized Bed Combustion

– Long-term• Integrated Gasification Combined Cycle (IGCC)• Carbon Capture and Sequestration (based on IGCC)• Co-production of energy, heat, and fuels (“EnergyPlexes”)

Coal-Based Energy Technologies I

Coal-Based Energy Technologies II

Heat Rates ComparisonCoal-Based Technologies - Conventional and Advanced

0

2,000

4,000

6,000

8,000

10,000

12,000

ExistingCapacity

PCF w/FGD Adv. PCFw/FGD

PFBC GCC Adv. PFBC Adv. GCC AG w/FuelCell

Hea

t R

ate,

Btu

/kW

h

PCF w/FGD – Pulverized Coal-fired with Flue Gas DesulfurizationPFBC – Pressurized Fluidized Bed CombustionGCC – Gasification Combined CycleAG w/Fuel Cell – Advanced Gasification with Fuel Cell

10,3

59

9,32

0

8,50

0

8,32

0

7,80

0

6,83

0

6,25

0

5,73

0

Generation Technology40% CO2reduction

H2: The New Champion?…

• The ultimate energy carrier– Most abundant element on earth

– Sources are uniformly distributed

– Clean combustion

• But where will the Hydrogen come from?

Hydrogen Production Today

• Steam methane reforming

• Electrolysis

• Partial oxidation of fossil fuels

Limits to Steam Reforming

• Over 80% of global hydrogen is produced via steam reforming of methane

• CH4 + 2H2O → CO2 + 4H2

• Endothermic reaction, requiring high energy inputs

More Limits to Steam Reforming

• Competing uses for natural gas could drive up prices– Heating

– Power generation

– Industrial processes

– Chemical production

• Natural gas is unevenly distributed

Limits to Electrolysis

• 2H2O → 2H2 + 2O2

• Good for distributed applications

• Opens door for Renewables and Nuclear

• Less efficient than alternatives

• Less cost-effective than alternatives

Coal to Hydrogen

• Coal can contribute to this goal as an integral part of the emerging hydrogen system, because it is:– Abundant – Affordable ($1.10/106 BTU)– Reliable– Domestic– Improveable

Rationale for Coal-based H2

• Coal can, and must, become a leading source of hydrogen– Gasification

• Releases the H2 in coal, unlocks the H2 in water

• Coal + H2O + O2 → Syngas (H2, CO) + CO2 + … ($3.75/106 BTU) provided gasification technology can be commercialized at or below $1,000/kW.

• Syngas can be further processed to generate pure H2

• Key developing countries are coal-rich, with every intent of using it

Steps to Success

• For coal to play a role in the hydrogen economy, we must:– Improve gasification systems

• Hot gas clean-up (particulates, H2S)

• High efficiency gas turbines

– Develop carbon capture techniques

– Create carbon storage options

Normalized Costs of Electricity for Different Technologies*

*Levelized Costs at 65% capacity factor for all technologies, except NGCT, which is at 40%

Breakeven Capital Costs of IGCC using Coal Fuel

Lev

eliz

ed C

ost

of

Ele

ctri

city

($M

WH

)

Breakeven Capital Costs of IGCC using Petroleum Coke

Lev

eliz

ed C

ost

of

Ele

ctri

city

($M

WH

)

Integrated Energy Facility (Trigeneration)

Preliminary Economics of a Trigeneration FacilityAssumptions

– 100,000 barrels crude oil/day facility

– 75% of energy from crude oil goes to produce premium fuel (gasoline, kerosene, aviation fuel)

– Refining of high distillate fuel is 72% efficient

– Remaining 25% of energy from crude oil goes to produce heavy distillate residues and/or petroleum cokes. These could be utilized in an entrained bed gasification process to generate electricity and steam

– Premium Fuel, MGED 3.2

– Chemical Feedstock, GED 200,000

– Electric Power, MW 750

– Max. Load Factor for Electricity 75%

– Effective Energy Utilization 85%

Note: These calculations do not include additional steam that can be generated in addition to what is required to operate the refinery and chemical production plant

Preliminary Economics of a Trigeneration Facility

EconomicsA) Operating Costs

• Total Capital Requirements $3 bil1

• Annual Operating Cost $120 mil• Annual Crude Oil Costs $550 mil• Total Annual Operating Costs $1,120 mil2

B) Revenue• Revenue from Premium Fuel3 $935 mil• Revenue from Chemical Feedstock4 $50 mil• Total Annual Revenue $985 mil• Revenue needed from electricity sales $135 mil

C) Cost of Electricity• Annual required electricity revenue $135 mil• Total annual electricity generation 4.93x106 MWH• Cost of electricity (busbar) $27.3/MWH

Notes: 1. Best estimate as per discussion with oil companies & $1 billion for power plant cost2. Projected from refinery data with 15-year recovery period3. Assumes current price of petroleum fuel (80 cents/gal.)4. Assumes average price of 72 cents/gal

Energy Use vs Energy R&D

• Coal & natural gas R&D funding must increase

Challenges Facing Coal for Future Power Generation

A. Environmental Issues• Proposed legislation of 0.15 lb/MBTU limit on NOX emissions• Proposed PM2.5 legislation that may require additional 60% SO2

removal over CAAA of 1990• Global climate change and CO2 emissions• Volatile organic compounds (VOCs) & air toxics, including Hg

emissions control at the ppb level

B. Infrastructure-related Issues

C. Deregulation/Restructuring Issues:• Will the future market price of electricity be able to absorb these

additional costs? • Can coal-fired generation be competitive in the future under

these scenarios?

Conclusions

• Fossil fuels will remain the dominant energy source in foreseeable future

• Environmental constraints demand cleaner, more efficient utilization

• Near to mid-term answer for coal is gasification

• Coal gasification could accelerate the Hydrogen Economy.

Appendix

Appendix:Power Capacity in the Baseline

Scenario

Appendix: Power Generation in the Baseline Scenario

Appendix: Investment Requirements for Generation

by Scenario

Appendix: Total Discounted Costs, Emissions, and Fuel

Consumption