Copyright 2011 General Electric Company. All Rights Reserved. This material may not be copied or...

Copyright 2011 General Electric Company. All Rights Reserved. This material may not be copied or distributed in whole or in part, without prior written permission of the copyright owner.

Clean Coal CommercializationProgress and Opportunity

GE Energy

University of Texas – AustinSeptember 14, 2011

By:Doug HeguyCommercial LeaderGasification Licensing

Agenda

• Introduction to GE• Gasification (“Clean(er) Coal”)

Technology• Description• Comparison to conventional coal

• Clean(er) Coal Project Developments• Commercial realities/policy

implications• Profile of a government program• 3 cases

• Summary/Policy implications• General Discussion


•Power & Water

•Energy Services

•Oil & Gas

•Aviation

•Healthcare

•Transportation

•Aviation Financial

•Commercial Finance

•Energy Financial

•GE Money

•Treasury

•Appliances

•Lighting

•Cable, Film, Network

•International

•Sports & Olympics

GE – corporate overview

EnergyTechnology Infrastructu

reGE Capital

Media, Home & Business Solutions

More than 300,000 employees • 2010 revenue of $150.2B • Founded 125 years ago & operating in 100 countries


• Drilling & Production

• Refinery/Petrochemical

• LNG and Pipeline

• Pipeline Solutions

• Industrial power generation

• Global Services

GE Energy

• Gas and Steam turbine generators

• Renewable energy

• Gas engines

• Nuclear Energy

• Gasification

• Water & Process Technologies

• Smart grid

• Solutions for measurement and control technology

• Contractual Services

• Environmental services

• Parts & Repair

• Transmission and Distribution

Power & Water Oil & GasEnergy Services

More than 90,000 employees • 2010 revenue of $37.5B • Operating in 140 countries


GE Power & Water… power generation platforms

• Gas turbines

– Heavy duty (40–500MW)

– Aeroderivatives (18-100MW)

– Combined cycle systems

• Coal

– IGCC

– Gasification Licensing

– Steam turbines

• ABWR & ESBWR

• Adv nuclear fuel

• CANDU fuel & services

• Reactor & field services

• Performance services

• Nuclear isotopes

•Wind – Land based– Offshore•Solar– Grid connected– Stand alone

• Jenbacher– Gas engines

0.3-3MW– Fueled with

waste gas

Thermal Renewables Nuclear


GE Gasification Profile


World leader in Gasification Technology

•73 licensed facilities in commercial operation•21 licensed facilities in engineering, design & construction•Duke Edwardsport

• Indiana coal• 618 MWe net electricity• Commissioning – 4Q 2011

Duke Energy: Edwardsport IGCC plant

November 2010November 2010

The Basic Chemistry of Gasification

CxHy + H2O + O2 → aH2 + xCO

For example:

4 CH + 2 H2O + O2 4 H2 + 4 CO (Hydrocarbon) (Water) (Oxygen) (Hydrogen) (Carbon Monoxide)


Water Shift Reaction: CO + H2O => CO2 + H2

9


GasificationTechnology

Refineries

Chemicals

Coal to liquids

Ammonia

Oxochemicals: Butanol, Ethylhexanol

Hydrogen

Steam

Power

Methanol

FormaldehydeMTBEAcetic acidAmineDMEUrea

Ammonia nitrate/sulfate

Syngas

(H2

+ CO)

Power (IGCC)

GreenfieldPolygenRefuelingSite repowering

Transportation fuels

Gasification

Methanation

Substitute natural gas

Feedstocks• Coal• Pet coke• Asphalt• Heavy Oil• Vacuum Residue• Natural Gas

10


Typical Gasification Facility

Five basic systems

GasificationSyngas Cooling

Water Shift ReatorSyngas clean-up

Airseparation

system

Power

NH3

Methanol

H2 Separation

Coal

Slag

Air Air/N2

CO2

Sulfur

Hg

Clean fuelHeat

Electricity or

O2

Chemical products

11


Efficient pollutant removal

Pre-CombustionPM, Hg, Su

Pulverized coal• Pollutants are removed after the

coal is burned

• The gas volume treated is 300 times the gas volume of an IGCC plant

• Combustion produces large quantities of waste & consumes more water than IGCC

IGCC• Gasification cleans the syngas

before combustion

• High pressure & low volume provide favorable economics for pollutant removal

• IGCC offers increased fuel diversity, reduced emissions, and increased siting & permitting flexibility

Boiler

SCRESP/FF

CarbonInjection

FFFGD

WESP

CO2

12


Advanced PC/SCPC

IGCC NGCC0.00

0.05

0.10

0.15

SO2

NOx

Average of Recent Permit Data

Best Individual Plant Level

Lb

/MM

BTU

Water Consumptio

n

MercuryRemoval

PC IGCC

With IGCC, Coal can Approach Natural Gas Emissions…

50%-90%

90%+

PC IGCC

30%Less

Source: GE internal data, average of 28 permits granted, applications and publicly reported emissions

PM10

13


GE carbon island* option

Option to GE’s IGCC• Up to 90% pre-combustion

carbon capture … flexible

• Full integration with GE’s IGCC solution

• Mark** VIe

• Interoperability with CO2 transportation & storage

• Small footprint … 2 acres

• Delivers high purity CO2

• Reliable CO2 separation process

• Install as greenfield or as a retrofit up to 65% CO2 capture

* Carbon Island is a trademark of the General Electric Company.** Mark is a trademark of the General Electric Company

Carbon Islandtm

Carbon

Island

14


Plant modifications for retrofit

Shift integrated with LTGC

LargerAGR

Feed Prep.

Gasifier

RSC

InternalQuench

HRSG

H2 upgraded 7F GT

G13 ST

Carbon Island™ Retrofit

Low temp. gas cooling

(LTGC)AGR

Feed Prep.

Gasifier

RSC

InternalQuench

HRSG

7F GT

G13 STReference Plant

CO2 Enrichment & Compression

Compressed CO2

15


0%

2%

4%

6%

8%

10%

12%

14%

16%

18%

Baseline Entitlement5%

Entitlement17%

NG EquivalentRetrofit

NG EquivalentGreenfield

Max Capture

Capi

tal C

ost I

ncre

ase

(%)

1

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

Avoi

ded

CO2

(MM

-ton

nes/

yr)

1

Tradeoff: CO2 versus Capital Cost

1 GEB reference plant baseline

+30%

+30%

Source: GE Energy internal data

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Carbon Island™ performance

•Total installed cost +~10%

•585 MW output (from 630 MW)

•33% efficient (from 38.5%)

•Tie-ins matched GT outages (Minimum plant downtime)

Output/Efficiency Drop ~ ($40 MM/yr)

NG Eq. CO2 Footprint

• Simple Cycle: 50% carbon capture (~1,100 lb/MWh)

• Combined Cycle: 65% carbon capture (~770 lb/MWh)

Note: Illinois Basin Coal on ISO site with proven technology…Performance and CAPEX are coal-dependant

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Gasification US Project Realities

Typical Project Profile

•Project Developer Led• Limited resources (OPM)• Banks define risk and uncertainty• Pre-FC spending tension

•5 years - $100 Million to get to NTP

•3-4 years; $1.7 Billion – $ 3 Billion to construct

•30 years to operate

Sources of Project Uncertainty

•Time•Market•Interest rates/Credit availability•Credit•Energy prices•New energy developments•Regulation changes•Permit changes•EPC Risk•Changes in policy goals•Changes in client goals and management

Uncertainty in Gov. Programs

•First-come-first-serve allocation process• Can’t take award to a bank

•Funds commitment date

18


Government Programs Supporting GasificationProgram Appropriate Amounts /

Funding Mechanism Description

CCPI-III $ 1.4 Billion Cooperative Agreement

Demonstrate advanced coal technologies that capture and sequester, or put to beneficial reuse, CO2 and that make “significant progress” toward 90% carbon capture and CCS at less than 10% increase in COE

Industrial Carbon Capture Program Cooperative Agreements Awards for the portion of the project that— (A) carries out the large-scale capture (including purification and compression) of carbon dioxide from industrial sources; (B) provides for the transportation and injection of carbon dioxide; and (C) incorporates a comprehensive measurement, monitoring, and validation program.

48A Investment Tax Credits Coal Power Phase I

Tax Credit Provides a 20% investment tax credits for IGCC and a 15% tax credit for other advanced coal generation

48A Investment Tax Credits Coal Power Phase 2

Tax Credit Provides a 30% investment tax credit for qualifying investent, increases the credit allocation under 48A by $1.25B, opens credits to both PC and IGCC, and increases the amount for the coal categories to $417MM and removes the $133MM cap for individual projects.

48B Investment Tax Credits Industrial Gasification

Tax Credit Provides a 30% investment tax credit for certified industrial gasification projects

Federal Loan Guarantees (Round 3)

Federal Loan Guarantee Loan guarantee to support debt financing for projects that employ energy efficiency, advanced coal, renewable energy, and advanced transmission and distribution technologies that reduce GHG emissions

45Q Credits Annual Certification for CO2 sequestration credit

The 45Q tax credit for carbon capture and sequestration was enacted in EESA of 2008, and amended by ARRA in 2009. Under the provision, facilities capturing over 500,000 tons of carbon dioxide per year are eligible to claim a credit for every ton of carbon dioxide captured and either permanently sequestered or used for enhanced oil recovery.

19


Example Government ProgramDOE Federal Loan Guarantee

EPACT 2005Support debt financing for projects that reduce GHG emissions; advanced coal, renewable energy, advanced T&D

ProcessSelection as “Finalist”Government due diligenceDraft term sheet< Fulfill conditions of draft term sheet>Execute loan agreement

Project Project Status Funding Status

Excelsior Masaba IGCC Changed to NGCC

TX Energy (Eastman Chemical)

Project modified and sold

Tenaska Taylorville Illinois legislature has not issued Authority to Negotiate for this project

Midwest Coal to SNG

Permits and offtakes in placeRevising project definition to include CO2 solution

Received draft term sheetNegotiating a conditional term sheet

Mississippi GasificationPetcoke to SNG

Negotiating offtakes Received draft term sheet

Western State CTL Completing FEED on reduced scale project

Stalled

20


Ex. 1: Gulf Coast Petcoke to ChemicalsGasification License: 3Q

2008

Value Proposition

Government Programs

Status / Challenges

Past Challenges

CO2 Solution

21


Ex. 2: Midwest Coal to SNG

Gasification License: Not signed

Value Proposition

Government Programs

Status / Challenges

Past Challenges

CO2 Solution

22


Ex. 3: Western State CTL

Gasification License: 1Q 2006

Value Proposition

Government Programs

Status / Challenges

Past Challenges

CO2 Solution

23


Summary/Discussion Points

Summary:

•Gasification projects are expensive, long-term long-lead time projects.•Risk management is critical. Government programs should explicitly identify what risks the government is absorbing, why, and the impact on the project being developed.•CO2/EOR is critical element of successful coal projects at this time.•Government programs can play an important role in encouraging development, but understanding project development dynamics and client are critical to achieving desired impact

Discussion Points:

•What roll should coal play in the US energy industry?•When contemplating coal use, how should the government weigh economic and security issues with environmental issues?•Can coal use be contained?•The US is building its first gasification plant in 25 years. China is building 1/month. Why? What are the long term implications?•What is the CO2/EOR potential in the US? What role should the government play in developing CO2/EOR?•Can/Should government choose winners and losers?•What role should energy policy play in developing industrial policy, and vice-versa?

Future Trends:

•Overseas investments in US projects

24


Copyright 2011 General Electric Company. All Rights Reserved. This material may not be copied or...

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