TH CCS COST NETWORK, 2016 WORKSHOP - · PDF fileBrian Anderson West Virginia University ......

4TH CCS COST NETWORK, 2016 WORKSHOP Report: 2016/09 August 2016

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ACKNOWLEDGEMENTS AND CITATIONS

The steering committee for this meeting were: • George Booras, EPRI • Lynn Brickett,, USDOE/NETL • John Chamberlain, GASNATURAL FENOSA • John Davison, IEAGHG • Howard J. Herzog, MIT • Wilfried Maas, SHELL GLOBAL • Sean T. McCoy, LLNL • Richard Rhudy, EPRI • Edward S. Rubin, CMU

The report should be cited in literature as follows: ‘IEAGHG, “CCS Cost Network, 2016 Workshop”, 2016/09, August, 2016.’ Further information or copies of the report can be obtained by contacting IEAGHG at: IEAGHG, Pure Offices, Cheltenham Office Park Hatherley Lane, Cheltenham, GLOS., GL51 6SH, UK Tel: +44 (0)1242 802911 E-mail: [email protected] Internet: www.ieaghg.org

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CCS COST NETWORK 2016 WORKSHOP

23–24 MARCH 2016

CAMBRIDGE, MASSACHUSETTS, USA

ORGANISED UNDER THE AEGIS OF THE:

CCS COST NETWORK INTERNATIONAL ENERGY AGENCY GREENHOUSE GAS PROGRAMME CHELTENHAM, UK

BY STEERING COMMITTEE MEMBERS:

GEORGE BOORAS, EPRI LYNN BRICKETT, USDOE/NETL JOHN CHAMBERLAIN, GASNATURAL FENOSA JOHN.DAVISON, IEAGHG HOWARD J. HERZOG, MIT WILFRIED MAAS, SHELL GLOBAL SEAN T. MCCOY, LLNL RICHARD RHUDY, EPRI EDWARD S. RUBIN, CMU

PUBLISHED: MAY 2016

TABLE OF CONTENTS

AGENDA 1

PARTICIPANTS 2

INTRODUCTION 3

PRESENTATION SUMMARIES 4Session1:FramingtheIssue 4Session2:ProjectCosts–IndustrialApplications 4Session3:ProjectCosts–PowerApplications 5Session4:CCSintheContextofChangingElectricityMarkets 7

BREAK‐OUT SESSION SUMMARIES 8SessionA.ReconcilingRealandEstimatedCCSPlantCosts 8SessionB.ChallengesofCCSCostEstimationandFinancing 9SessionC.MakingCCSMoreCompetitive 10

PRESENTATIONS 13

ProceedingsoftheCCSCostNetwork2016Workshop

1

AGENDA

Tuesday, March 22, 2016

8:00RegistrationandCoffee: Massachusetts of Institute Technology (MIT), Silverman Skyline Room, Building E14, Room 648

8:30Introduction

9:00Session1:FramingtheIssue(Chair:HowardHerzog,MIT)

– TheCostofCCS:AReviewofRecentStudies(EdRubin,CMU)

– MethodologyofaDetailedCCSCostStudy(JeffHoffmann,NETL)

10:30Break

11:00Session2:ProjectCosts–IndustrialApplications(Chair:JohnDavison,IEAGHG)

– Quest(WilfriedMaas,Shell)– IllinoisBasin/Decatur(SallieGreenberg,Univ.ofIllinois;RayMcKaskle,Trimeric)

12:30Lunch

1:30Session3:ProjectCosts–PowerApplications(Chair:GeorgeBooras,EPRI)

– BoundaryDam(MaxBallandPeterVersteeg,SaskPower,viateleconference)

– FutureGen2.0(KenHumphreys,FutureGen2.0)– WhiteRose(LeighHackett,GEPower)

3:45Break

4:15Session4:CCSinthecontextofchangingelectricitymarkets(Chair:SeanMcCoy,LLNL)

– Thevalueofflexible,firmcapacityonadecarbonizedgrid(AndyBoston,EnergyResearchPartnership)

– InitialRespondents:NeilKern(DukeEnergy),GeoffreyBongers(GammaEnergyTechnology)

5:30Adjourn

7:00Dinner(sponsoredbyShell),EVOO,350ThirdSt,Cambridge,MA

Wednesday,March23,2016

8:30Coffee

9:00Threeparallelbreakoutsessions:

A.CanwereconcilerealprojectandNthplantcosts?Howshouldwepresentthisinformationtopolicymakers?(Co‐chairs:EdRubin,CMU;GeorgeBooras,EPRI)

B.WhatarethemainchallengesofindustrialandpowerCCScostestimationandfinancing?(Co‐chairs:JeffHoffmann,NETL;HowardHerzog,MIT)

C.WhatcanbedonetomakeCCSmorecompetitive?WhatarerealisticexpectationsforCCScostreductionsovernext10‐20years?By2050?(Co‐chairs:WilfriedMaas,Shell;SeanMcCoy,LLNL)

12:00Lunch

1:00BreakoutSessionReports

2:00GeneralDiscussion Whathavewelearned? Whereshouldwebegoing?

2:45Nextmeeting–Topics,Location,Timing

3:00Adjourn


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PARTICIPANTS

NAME ORGANIZATIONStåleAakenes GassnovaMakotoAkai AIST

BrianAnderson WestVirginiaUniversityTimBarckholtz ExxonMobil

GeofferyBongers GammaEnergyTechnologyGeorgeBooras EPRI

AndyBoston EnergyResearchPartnership

HenryChen MITGaneshDasari ExxonMobilJohnDavison IEAGHGJamesDuffy CleanAirTaskForcePaulFennell ImperialCollegeBrockForrest 8RiversCapitalMikeFowler MHIAKristinGerdes NETLJonGibbins UKCCSResearchCentreSallieGreenberg UniversityofIllinoisLeighHackett GEPowerHowardHerzog MITJeffHoffmann NETLKenHumphreys FutureGen2.0LawrenceIrlam GCCSINigelJenvey BP

NAME ORGANIZATIONPaulJohnson CorningNeilKern DukeEnergyJordanKearns MITHaroonKheshgi ExxonMobilAmishiKumar USEAJohnLitynski DOEMonicaLupion MITWilfriedMaas ShellNiallMacDowell ImperialCollegeSeanMcCoy LLNLMikeMcGroddy 8RiversCapitalRayMcKaskle TrimericJenMorris MITMasakiNemoto GCCSIMarkNortham UniversityofWyomingSergeyPaltsev MITBrucePhillips NorthBridgeGroupMassimilianoPieri ENIEdRubin CarnegieMellonUniversityHansThomann ExxonMobilJohnThompson CleanAirTaskForceViaTeleconference: MaxBall SaskPowerPeterVersteeg SaskPower

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INTRODUCTION

ThefourthmeetingoftheCCSCostWorkshop(alsoknownastheExpertGrouponCCSCosts)washeldonMarch23‐24,2016attheMassachusettsInstituteof Technology (MIT) in Cambridge, Massachusetts.This function is now designated as the CCS CostNetwork under the auspices of the InternationalEnergyAgencyGreenhouseGasProgramme.

ThemeetingwasorganizedbyaSteeringCommitteeincluding representatives from: Carnegie MellonUniversity (Ed Rubin), Electric Power ResearchInstitute (George Booras and Richard Rhudy), IEAGreenhouse Gas Programme (John Davison),Lawrence Livermore National Laboratory (SeanMcCoy), Massachusetts Institute of Technology(Howard Herzog), National Energy TechnologyLaboratory (Lynn Brickett), NaturalGas Fenosa(John Chamberlain) and Shell Global (WilfriedMaas).

Thepurposeoftheworkshopistoshareanddiscussthemostcurrentlyavailableinformationonthecost

of carbon capture and storage (CCS) in electricutility and other industrial applications, as well asthe current outlook for future CCS costs anddeployment. The workshop also seeks to identifykey issues or topics related toCCS costs thatmeritfurtherdiscussionandstudy.

Asshownonthepreviouspages,thefirstdayoftheworkshop was a plenary session addressing fourgeneral topics, each addressed by invitedpresentations, followed by a discussion amongworkshop participants. The second day pursuedthree topics in more detail via parallel breakoutsessions, followed by a plenary sessionwith groupreportsanddiscussion.

ThisdocumentpresentsbriefsummariesofeachofthefoursessionsfromDay1andthethreebreakoutsessions from Day 2, together with the full set ofpresentations by invited speakers on Day 1. Theproceedingsofpreviousworkshopsareavailableat:https://www.globalccsinstitute.com/publications/ccs%2520cost%2520workshop

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PRESENTATION SUMMARIES

Session 1: Framing the Issue The purpose of this session was to frame theissue of CCS cost estimates by providingbackground on the current status of theseestimates.Thefirsttalkpresentedtheresultsofareviewofrecentcoststudiesfoundintheopenliterature. The second presented themethodology that goes into adetailedCCS costestimate. A brief description of each talkfollows.TheCostofCCS:AReviewofRecentStudiesPresented by Edward S. Rubin, CarnegieMellonUniversityThispresentationwasbasedonapaperwrittenforaspecialeditionoftheInternationalJournalof Greenhouse Gas Control1that celebrated thetenth anniversary of the 2005 IPCC SpecialReport onCarbonDioxideCapture andStorage(SRCCS). 2 The paper included costs of fourcapture technologies: Supercritical PulverizedCoal(SCPC)withpost‐combustioncapture,SCPCwith oxy‐combustion capture, Integrated CoalGasification Combined Cycle with pre‐combustioncapture,andNaturalGasCombinedCyclewith post‐combustion capture. Costs forCO2 transport and storage were also included.The current reported range of costs werepresented and compared to the costs found intheSRCCSafteradjustingallcoststoacommon2013 cost basis. While current capital costswere generally higher than adjusted SRCCScosts,thecostofelectricitycomparisonshowedlittle change primarily because of lower fuelprices and higher assumed capacity factors inrecent studies. The ranges of CO2 avoidancecostsalsoweresimilartoadjustedSRCCSvaluesafter accounting for some changes in CO2transportandstoragecosts.Thetalkconcludedwithadiscussionof theoutlook for futurecostreductions.

1Rubin, E.S., J.E. Davison, and H.J. Herzog, "The Cost of CO2 Capture and Storage," International Journal of Greenhouse Gas Control, 40, pp 378-400, September (2015).2 IPCC, 2005: IPCC Special Report on Carbon Dioxide Capture and Storage. Prepared by Working Group III of the Intergovernmental Panel on Climate Change [Metz, B., O. Davidson, H. C. de Coninck, M. Loos, and L. A. Meyer (eds.)]. Cambridge University Press, Cambridge, United Kingdom and New York, NY, USA, 442 pp.

MethodologyofaDetailedCCSCostStudyPresentedbyJeffHoffmann,NationalEnergyTechnologyLaboratory(NETL)NETLhasproduceda seriesofbaseline studiesonthecostandperformanceofvariousstate‐of‐the‐art CCS power plants.3 These studies arevery detailed and provide a valuable referencefor the CCS community. This presentationreviewed the methodology that goes intogenerating a baseline technology cost estimatefor the “next commercial offering.” The sevenkeystepsare:

1. Develop a technology analysis plan andsolicitfeedbackfromstakeholders.

2. CreateaperformancemodelofeachpowerplantbasedonNETLprocessmodels.

3. Integrate carbon capture technologymodels based on literature and developerinput.

4. Adjust balance of plant as needed per thenewtechnologydemands.

5. Estimate the capital, operating andmaintenance cost of all plant componentsusing the method described in NETL’sQGESS documents and elaborated in theBaselinestudies.

6. Apply plant financing and utilizationassumptions to develop a cost ofelectricity.

7. Perform sensitivity analyses and provideR&Dguidance.

Afterdescribingeachstepindetail,acasestudywas presented based on a SCPC plant with anamine‐based post‐combustion CO2 capturesystem.

Session 2: Project Costs – Industrial Applications John Davison introduced the session onindustrial capture project costs. He highlightedthatthereisincreasinginterestinindustrialCCSbutcostestimationcanbecomplex,forexampledue to integration with existing sites and insome cases multiple CO2 sources. Also, manyindustrial plants are located in developingcountries, where cost data are not easilyavailable. There are examples however somesuccessful industrial CCS projects and

3http://www.netl.doe.gov/research/energy-analysis/baseline-studies


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presentations were made on two of them: theQuestandIllinoisBasin/Decaturprojects.Wilfried Maas of Shell made a presentationabout the Quest CCS project and its costs. TheQuest project involves capture of CO2 at ahydrogen plant at the Scotford upgrader nearEdmonton, Canada, which processeshydrocarbonsfromoilsandsfields.Thecaptureplant uses Shell’s ADIP‐X amine process. Thecaptured CO2 is compressed in a multistagecentrifugalcompressorandistransported65kmto a saline reservoir storage site. Modularconstructioninvolving69moduleswasusedforthe capture and compression plant, whichminimisessiteconstruction.The plant has operated continuously for 6months during which time 0.5Mt of CO2 hasbeen injected, exceeding the target rate. TheFOAK facilities cost forecast is CAN$812M,equivalent to752$/tpacaptured.Asubstantialpart of the costs (CAN$137M) is venture costswhich could be reduced substantially in NOAKplants.Thereisanextensiveknowledgesharingpart of the programme, as described in thepresentationslides.Somekeymessageswere:

Itwasemphasisedthatadequatesupportisneeded to demonstrate CCS and reducecosts from FOAK to NOAK to deliver acompetitive and viable technology in adecarbonisedworld.

ForFOAKplants, capitalgrants (tosupportbuild) and OPEX support (to ensure theplant operates) are required, plus othertemporarymeasure(e.g.CCScertificates) ifthe uptake rate continues to bedisappointing.

Non‐financialmeasures(enablingregulations,liabilityagreementsetc)arealsoimportant.

The main requirement for NOAK plants isexpectedtobearobustCO2price.

SallieGreenbergoftheUniversityofIllinoisandRayMcKaskleofTimericCorporationpresentedinsightsintocostsofCCSgainedfromtheIllinoisBasin – Decatur Project. This project involvescompression, dehydration, transmission andstorage of high purity CO2 from a bio‐ethanolplant at a rate of 1,000t/d. The pipeline isrealtively short (1.9km) but it had to be aboveground and insulated. The Illinois project usesreciprocating compressors. An important issuein the selection of reciprocating compressors,rather than the multi‐stage centrifugalcompressor used at Quest, was greaterfamiliarityandproximity toa local supplier forsupport and spares. The project costs werepresented in detail, showing a cost forcompression, dehydration and transmission of

$31/t.Thecapitalcostwasamortisedoverthe3year injection period, costs for a commercialproject would be amortised over much longerperiod,resultinginlowercosts.Thecapitalcostswere higher than the initial estimate butoperating costs were lower. Some significantconclusionsare:

CCSisamajorundertakinginvolvingmanytypes of industry, government andfinancial professional, as well as manyindustrytrades.

First mover projects can provide usefulbenchmarks and lessons learned thatwillbenefitfutureprojects.

IncorporatingCCSintoexistingoperationalplantscomeswithadditionalcase‐specificchallengesandcosts.

Permittingtimelinesandgeneraleconomicconditionsmayimpactcostsoffutureprojectsinwaysthataredifficulttopredict.

Session 3: Project Costs – Power Applications This session focused on cost estimates for CCSapplications in electric power generationapplications. The overall session objectiveswere to learn about the cost of actual CCSprojects,includingasummaryoflessonslearnedand opportunities for future cost reductions.The projects included one operating post‐combustioncaptureproject,andtwolarge‐scaleoxy‐combustion projects that were in theadvancedstagesofdevelopmentatthetimetheprojectswerecancelled.

BoundaryDamCarbonCaptureProject

The first speakers were Max Ball and PeterVersteeg who joined the workshop viateleconference from SaskPower’s office inRegina, Saskatchewan. Peter started with asummary operating statistics for the first‐of‐a‐kindBoundaryDamCarbonCaptureProject. In2015 the net power output averaged 107MW,with the plant being down for maintenanceduring the month of September. The dailyaverage amount of CO2 captured was 1,739tonnesin2015,howeverthatincreasedto2,726tonnesinFebruaryof2016.

Themajor factors impacting the capital cost oftheproject included site‐specific, first‐of‐a‐kind(FOAK), andmarket factors, aswell as specificplantdesignfeatures.Thesmallsizeoftheplantresultedindis‐economiesofscalerelativetothelarger plant sizes assumed in most conceptual


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studies. Firing lignite also imposed a cost andperformance penalty relative to higher rankcoals.Atthetimetheplantwasconstructed,anabundance of other heavy industrial activity inthe Province resulted in higher hourly laborcosts and reduced productivity. A heavyemphasis was placed on maximizing poweroutput,asopposedtominimizingcapitalcost.

FOAK issues included schedule extensions dueto conducting three parallel CO2 capture plantFEED studies, additional regulatoryrequirements to be met, development ofoperating and environmental health & safetystandards for a power plant integrated with aCO2 capture system. Contingency provisionsand design margins were impacted by an “itmust work” philosophy. And finally, somecomponents did not perform to their designexpectations. A chart showing the widefluctuations in the price of steel illustrated oneexample of how market factors adverselyimpacted thecostduring the timeperiodwhenBoundaryDamplantwasconstructed.

Basedonthelearningsfromconstruction,start‐up, and initial operation of the Boundary Damcaptureplant,SaskPowerexpectsthecostofthenextcaptureplanttobesubstantiallyless. Maxalso noted that their next plant would bedesignedtoreduceCO2emissionstoessentiallynatural gas equivalence to meet the CanadianFederal requirements, as opposed to thenominal 90% CO2 capture capability atBoundaryDam.

FutureGen2.0

KenHumphreys,CEOof theFutureGenAlliancegave an overview of the project and themanymilestones that were achieved prior to theproject being terminated. Unit 4 of theMeredosia Energy Center in Illinois was to berepowered with oxy‐combustion and CCStechnology. Thenetplantoutputwasexpectedtobe167MW,whilecapturing90+%oftheCO2(or about 1.1 MMT/yr). A 28 mile pipelinewould transport the CO2 to a deep geologicstorage site. Some of the many milestonesachievedbytheprojectteamincluded:

Powerpurchaseagreementsigned Final permits were issued for air, water,

pipelineandCO2storage Subsurface rights were acquired and CO2

liabilitymanagementwasaddressed Mega‐FEEDwascompleted(70‐90%offinal

design,atacostof$90million) Projectlaboragreementsweresigned.

Unfortunately the federal co‐funding expiredand the project had to be terminated. The EPCcostswerewellknownduetothefacttheyhadfixed price contracts. The total as‐spent capitalcost of the power plant was estimated to be$1,256 million, which excludes the over‐the‐fenceASUandthe$423millioncostfortheCO2pipeline and storage facilities. Ken presenteddetailed breakdowns for the Owner, Financingand Start‐Up costs. Plant operating costswereestimated to be $128/MWh on a 20‐yearlevelized basis. The major operating costdriversincludedoxygen,fuel,purchasedpower,ash disposal & consumables, and CO2transportation & storage. The total 20‐yearlevelized LCOE including capital recovery wasestimatedtobe$179/MWh.However,aftertheMISO energy/capacity sales credit the net costto the ratepayers would have only been$138/MWh, representing less than a 2%averagerateincrease.

Lessons learned during the project includedhow to deal with a very large number oflandowners for the CO2 pipeline right‐of‐way,andtheCO2storagesubsurfacerights.Theyalsofound that the EPC negotiations took muchlonger,andthebalanceofplant(BOP)wasmorecomplicated than originally planned. Futureoxy‐combustionplantswillhavereducedcapitalcostsandimprovedefficiencyduetoretrofittingnewer, larger USC plants thatwill benefit fromeconomies of scale. CO2 transportation andstoragecostswillalsobenefitfromeconomiesofscale.

WhiteRoseCCSProject

The final speaker in this sessionwas Dr. LeighHackett from GE Power, who talked about theWhiteRoseCCSProject.TheWhiteRoseprojectis a new ultra‐supercritical oxy‐combustionplantwithagrossoutputof448MW.Theplantwas designed to capture 90% of the CO2, orabout2milliontonnesCO2peryear. Theplantwould have been the “anchor” project forNational Grid’s regional CO2 transport &offshore storage network, where theinfrastructure was sized for 17 million tonnesCO2 per year to enable future projects. ThecapturedCO2was tobe stored inadeep salineformationoffshore,beneaththeNorthSea.

TheUKDepartmentofEnergy&ClimateChange(DECC)willpublish41WhiteRoseprojectkey‐knowledge reports later in 2016, including thefull‐chain FEED summary report, FEED lessonslearned,FEEDriskreport,andfull‐chainprojectcost estimate report. The term “full‐chain”


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refers to the oxy power plant, the onshore &offshore pipeline networks, and the CO2injection & storage systems. The full‐chainproject costestimatewasclassifiedasanAACELevel2estimate for themajorityof items,with90%ofthecostsbasedonvendorquotes.

For the DECC reports, the actual White Roseproject cost estimates were adjusted andnormalizedtotakeoutprojectspecificdataandallow comparison tootherpublisheddata. Forexample, thesitewasadjusted toUSGulfCoastbasisandsitepreparationcostswere removed.The normalized project cost estimate wasbroken down into externally supplied utilities,the oxy boiler/ASU/gas processing unit, powergenerationequipment&BOP,onshorepipeline,offshore pipeline, and storage facilities. Dr.Hackett then showed a chart illustrating thesavingsachievableforfollow‐onprojectswherethey can take advantage of the existing CO2transportationandstoragenetwork.

The White Rose Project resulted in lessonslearnedinthefollowingfourkeyareas:

Full‐chain commercial structuring andmanagementofcross‐chainrisks

Non‐EORCO2storagebusinessmodel OversizingandsharingCO2

transportation&storageinfrastructure Potentialinsurancegaps

Key take‐aways from the White Rose projectwere that no significant technical barriersremain to project implementation, full‐chainaspectswereadequatelydefinedanddeveloped,and the next step is a large‐scale commercialproject.Dr.HackettconcludedbysayingthattheUKGovernment’sdecisiontocanceltheUKCCSCompetition has stalled commercialization inthe UK and Europe and “dented” confidence inCCS.

Session 4: CCS in the Context of Changing Electricity Markets Inthefourthsessionoftheworkshop,speakerstook a step back from the topic of CCS costestimation to look at the context for CCS infuture electrical systems, what this impliesaboutthevalueofCCS‐equippedgeneration,andsome alternative metrics that might betterconveyitsvaluetodecisionmakers.Thesessionbegan with a presentation from Andy Boston(Energy Research Partnership), which wasfollowed by responses from Neil Kern (Duke

Energy) and Geoffrey Bongers (Gamma EnergyTechnology),andthengeneraldiscussion.

The presentation from Andy Boston capturedthe lessons from an ERP analysis of futureUnited Kingdom electricity systems, andhighlightedthreekeymessages:

Azero‐orverylow‐carbonelectricitysystemwithvariablerenewables(e.g.,solar,wind)needsdispatchable,low‐carbontechnologiestoprovidefirmcapacity

Policymakersandsystemoperatorsneedtovalueservicesthatensuregridstabilitytoestablishamarketfornewproviders

Aholisticapproachthataccountsforthecostofbalancingthesystemwouldbetterrecognizetheimportanceoffirmlowcarbontechnologiesthanconventionalmeasuresofindividualtechnologycost

To illustrate the final point, Andy presentedresults from his analysis showing that, eventhough gas‐fired generation equippedwithCCShada relativelyhighLCOE,additionof capacitycould result in a net reduction in system cost.His results also clearly showed, however, thatthe value of a technology is dependent on theexistinggenerationmixand thegrid services itprovides,whichmakes these resultsdifficult togeneralize.Hisprovocative conclusionwas thatthisvaluecannotbecapturedbyLCOE.

In the first invited response to the initialpresentation, Neil Kern highlighted that DukeEnergy sees a paradigm shift in the waytraditional utility planning takes place as aresultofthegrowingtrendtowardsdistributedgeneration.TheresultisthatDukeisplacinganincreased emphasis on flexibility of centralizedgeneration, and seeking to identify non‐traditional markets for central stations. In thesecond invited response, Geoffery Bongershighlighted the multi‐attribute comparisons ofgeneratingtechnologyintherecentlypublishedAustralianPowerGenerationTechnologyStudy.In that study, technologies were evaluated notonlyontheirLCOE,butalsoontheircapitalcost,water requirements, CO2 emissions, wasteproducts,availabilityandflexibility.

In the ensuing discussion, participants debatedwhether LCOE is an inadequate metric or issimply being used inappropriately, such as bycomparing baseload plants with intermittentrenewable that do not provide comparableservices(ignoringtheadditionalintegrationandbackup system costs that would be required).


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Others felt the true value of dispatchablegeneration, like fossil‐fuels equippedwith CCS,can best be measured by the reductions insystem‐levelcostthatresultsassuchcapacityisadded.Othersnotedthatmanydecisionmakerswant simpler metrics like LCOE. While mostparticipants agreed on the need for ways tomake better technology comparisons, and tomore clearly quantify the value of CCS, therewasnoconsensusonhowthisshouldbedone.

BREAK‐OUT SESSION SUMMARIES

Session A. Reconciling Real and Estimated CCS Plant Costs Questions: CanwereconcilerealprojectandNthplant costs? How shouldwepresent thisinformationtopolicymakers?Co‐chairs: Ed Rubin, CMU; George Booras,EPRI;assistedbyKristenGerdes,NETLThis session focused on identifying the factorsthattypicallycontributetohighercostsofinitialfull‐scale installations of CCS and other newly‐commercial technologies (often referred to asFOAK, or “first‐of‐a‐kind”) relative to thelonger‐term (NOAK, or “Nth‐of‐a‐kind”) costscommonly reported for mature technologies.Additional thoughts on how this information

shouldbepresentedtopolicymakersfollowthepresentationofthefactorsidentified.ReconcilingActualvs.NthPlantCosts

In general, the cost of a specific project isaffectedbyseveralclassesoffactors,including:

SiteSpecificFactors MarketFactors DesignBasisFactors ProjectExecutionFactors Financing/Contracting/Owner’sCosts FOAKFactors(Planned&Unplanned)

Each of these categories can be furtherexpanded to identifymore specific factors thatinfluence actual costs. Given the focus of thisworkshoponCCScosts,thefactorswhosecostisexacerbatedbyFOAK installationsarehighlightwithanasterisk(*). Site‐SpecificFactors

o LaborCosts,Productivity,Availability/SkillRequirements*

o Materialscosto Seismicactivityo Ambient conditions (temperature,

etc.)o Wateravailability&qualityo Fuelavailability&qualityo ProximitytoCO2storage

DesignBasisFactorso Scope and battery limits: base plant,

capture,transport,storageo Fueltypeo Plantsizeo Pipelinecapacityo Storagecapacityo Coolingsystemdesigno Ambientconditionso CO2capturerateo CO2purityrequirementso Emissionstandardso Brownfieldvs.greenfieldvs.retrofito Flexibilityofoperations*

– Loadfollowing*– Start‐up/shutdown*– Flexiblecapture*

MarketFactors

o Commoditypriceso Laborcostso Engineeringcostso Competitionandavailabilityo Currencyexchangerateso Construction equipment and services

availabilityo CO2valueo Offtakeagreements*


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o Regulationsandpolicieso Privatesectorincentives?o PublicsectortoleranceforR&D

ProjectExecutionFactors

o Scheduling*o Re‐designinmid‐construction*o Modularvs.stickbuild(shopvs.field

fabrication)

FinancingandOtherFactorso Financing(riskpremiums)*o Permitting‐relatedcostsanddelays*o Regulatoryandlegalissueso Plantavailability,capacity factor,and

dispatch expected (when assessingfinancialviability)*

o Owner’scosts*o Contractingstrategy(whereisthe

risk?)* FOAKFactors(Planned)

o Schedulelengtho Contingency/over‐designo Developmentoftraining,simulators,

maintenanceprotocolso Extendedramp‐upo Chemicalplantoperationinapower

plantcultureo Performanceguaranteelimitations

FOAKFactors(Unplanned)o Performanceshortfalls

PresentingtoPolicyandDecisionMakers

RatherthanshowinghowvariousfactorsaddtoFOAK plant costs, our approach should be toshow how removing various cost escalationfactors that are unique to, or exacerbated by,FOAKprojectswillreducethecostofsubsequentprojects.Thiscouldbe illustrated, forexample,withasetofbargraphslikethosepresentedbySaskPower, but in the reverse order, startingwiththehighcostofanFOAKinstallation,withcosts thencomingdownasvariouscostaddersare removed with increasing experience andknow‐how.

Session B. Challenges of CCS Cost Estimation and Financing Question: What are the main challenges ofindustrialandpowerCCScostestimationandfinancing?(Co‐chairs: Jeff Hoffmann, NETL; HowardHerzog,MIT)Thebreakoutstartedbyaskingeachparticipantto respond to the question for this breakout

session.Theresponsesandadditionalquestionsgeneratedfollow: How do you capture the global market

competitiveness for internationallytraded industrial products made withprocessesincludingCCS?

For projects with government support,how do you capture government subsidy(andrisk)asitrelatestofinancing?

How do you capture costs of real worldprojects?

How do you effectively estimate projectcontingencies?

Howcanwebestassurecostestimatesareusedinanappropriatemanner?

Since industrial processes are moreheterogeneous than fossil‐fueled powergeneration, how to develop a novel plantfor policy modeling and marketdeployment studies that is widelyrepresentative?

Thecycletimesforindustrialprocessesarelong. Thedevelopedworldisnotbuildingnewplantsandthetypicalbusinessmodelis to replace rather than refurbish andretrofit.

Itisdifficulttoestimatecostsinnon‐OECDcountries.

PolicymakersviewCCSandrenewablesasinterchangeable. Cost estimating usingLCOEsupportinterchangeability.

Time factor (permitting, etc.) can drivecostshigher.

Credibilityofpublicallyavailablecostestimatesisdifficulttoassessbecauseoffrequentlackoftransparencyinassumptions.Thelackoftransparencymakesitverydifficulttocalibrate,compareandvalidateindividualpublishedstudies.

Even studies that seem to be reasonablytransparentarecomplicated,andaprimerto methodology and intended purposewouldbehelpfulinaddressinghowtousethestudies.

Studiesaremadeinthecontextof“something”(i.e.,specificpolicyscenario,fuelpricescenario,anticipatedfuturecapacityneeds),butthe“something”isoftenchanging.

After somediscussion in trying to get a handleon these many disparate issues, the groupfocusedontwoareastogainsomeinsights.Costvs.economicanalysis

A major issue for cost estimation is how todevelop costs to compare CCS to othertechnologies. Right now there is an over‐


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reliance on the levelized cost of electricity(LCOE),whichisnotalwaysaverygoodmetricforcomparison.Therefore,thereisaneedtogobeyondtheLCOE.Cost estimates can generate what we term“hard” numbers, as well as context specificnumbers. Examples of hard numbers includecapitalcostsandheatrates. Whilecapitalcostscan vary over time (e.g., inflation) andgeography, these variations can generally becaptured through sets of cost indices. Otherhardnumbermetricscanincludeprocessinputs(e.g., water), process effluents, and availabilityfordispatch.Doing an economic analysis, such as one thatproducesanLCOE,requirescontext.Theplant’scapacity factordependsondispatch,which canonly be known in the context of the utilitysystem inwhich the plant operates. There aremanyprojectspecificfactorsthatdependontheplant’slocation,permittingrequirementsofthatlocation, labor environment, access to utilities,etc.Themonetizingofriskandthevaluationofancillary services (e.g., capacity) will also varywidelydependingonthecontext.For comparing CCS to other technologies,developing methods based on the relativelyhardnumbersinvolvedinacostestimate(bothcost and performance metrics) are preferred.Muchmorecaremustbetakenwhencomparingtechnologies using context dependent numberslikeLCOE.Industrialprocesses

AbigchallengeintryingtodeterminethecostsofIndustrialCCS(ICCS)isthesignificantamountof process heterogeneity, both betweenindustrial sectors andwithin industrial sectors.The appropriate technological approaches forCO2capturemayvarygreatlyacross industries.While at first blush it may seem that post‐combustioncapturewithamineswillalwaysbean option, this may not be so. Impuritiesassociated with exhaust streams may pose asignificant challenge to amines. An example istheexhauststreamfromthecatalyticcrackeratthe Mongstad refinery, where the SO3 in theexhaustgascausedtheamineprocesstofail.ApotentialmajorissuewithICCSismaintainingthe integrityoftheproduct.Whilethismaynotbe an issue for post‐combustion capture, otherpathways that integrate CCS with the processmust make sure that they maintain productintegrity. As a result, there is aneed formoredetailed engineering assessments for capture

options for thevarious industrial sectors andaneedformoreengagementwiththeindustries.AnadditionalpotentialbarriertodeploymentofCCS technologies in the industrial sector is theapproach that many industrial business takeregarding existing and new assets. Several ofthe breakout participants suggested that it ismore common for industrial sector businessesto run existing capacity to the endof its usefullife “as built” or replacewith new state‐of‐the‐art infrastructure rather than modify (i.e.,retrofit) existing (and potentially outdated)capacitywithnewadd‐onprocesses.Therefore,it is likely that any back‐end CCS technologieswould compete against 1) alternative lowercarbon intensive industrial processes and 2)location for replacement industrial facilities(either regionally or globally). Ultimately, theselection will be for the scenario that leads tothe least‐cost production of the industrialproductandCCSisexpectedtoplayaroleonlyifalow‐carbon“benefit”canbemonetized.

Session C. Making CCS More Competitive Questions: What can be done to make CCSmore competitive? What are realisticexpectationsforCCScostreductionsovernext10‐20years?By2050?(Co‐chairs:WilfriedMaas,Shell;SeanMcCoy,LLNL)Round‐tablecomments

Weknowhowmuchstuffcosts;gettingitfinancedandbuiltisthehardpart.

Real questions about accuracy of publicliterature costs for capture (e.g., the USgovernment can’t even agree on anumber)andwe’renot surehow toadd‐upthecosts.But,fromapracticalindustrystandpoint, this isn’t a big deal becausethey’reintherightballpark.

Variabilityofcostsis,however,asurprise;also,surprisedatthecostofcompressionandinjection.

Worried about risks associated withstorage. Looking at risk separately isconvenient, but thewhole chainmatters;what about injection and monitoringcosts?What are the costswhenwe havesurprises (e.g., OK seismicity from w/wre‐injection,BCseismicityfromfracking)?

The big issue facing CCS is getting thewhole thing together; system costs areimportant.


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Commercial structures are key in gettingCCSbuiltbut…

…thecommercialcase forCCS isn’t there,at least in global aggregate near‐ term;creates an issue of timing, since we toneed to work technology developmenttoday.

Ina really toughplaceon the technologydevelopment curve: need to de‐risktechnologiesandgetpolicysupport.Needsomedatapoints.

Current technologies not sociallyacceptable, and learning‐by‐doing won’tcutit

Nonetheless, there is a strong societalcase for CCS; butmassivemarket failuremeans there is no business case forindividual developers. Need policy toaddressthefailures.

Perhaps early projects were tooambitious: they tried to solve bothcaptureandstoragesimultaneously.

WhatistherightscaleforCCS:littlewithhigh unit cost (and lower risk) or highwithlowunitcost(andhigherrisk).Doesthisargueforsmall‐scale?

Busy talking about cost, rather thanrevenuemaximization.HowcanCCShavevaluetothosewhoaredoingit?

Need tomove towards system costs andaway from LCOE; however, as bad asLCOEmightbe,butwedon’thaveagoodalternative.

Don’tbetoonegativeonrecentprogress:much in the technology space hasimprovedoverthelastdecade.

Whatdowedo?

Marginal value of additional paper coststudiesisverylow.

UK CCS cost reduction taskforce foundthat 25% reduction from technologyimprovement,50%economiesofscaleinT&S, 25% from reduction in financecosts;all that isneededareahandfulofplants in the UK to reach their costreductiontargets…

Comments suggestmain issue in risk isnot capture related: it’s the transportand storage that is the problem andwherefocusneedstobe.Historyisfilledwithprogramsfocusedoncapture/plantside justified by technologydevelopment, few (noteworthy)successes; has this been the wrongfocus?

Need government action to handle T&Sproblemornorealwaytomanagerisk–

fundamentaldifferencebetweenCCSandothertechnologiesinpowergeneration.

MuchofthepastCCSfocuswasbasedonthepresumptionthattherewasgoingtobearushtobuildingcoalthatwasgoingtohappeninUSandEurope.

So,whatisthestatesupportpackagefordevelopment of a CCS industry? Oneanswerisregulatoryframeworkstopushdeployment: accelerate learning‐by‐doingandtechnology innovation.Createamarketpull.

Opposite commercial logic between USand Europe: US wants cheap CO2 andlow‐cost sources fill the need; Europewant emissions reductions fromexpensive sources, who are begging oiland gas to play. For example, in the USphysicalCO2hasvalue,butinEuropeitispapercontractsthathavethe(uncertain)value.

IntheabsenceofEOR/CCUS,Europehasnorevenue in the transportandstoragechain.

US thinking is that the storage side iswell understood (from a technologyperspective) based on R&D and currentoperations. Agreement that this is atrans‐Atlantic difference, where Europeis more concerned with the transportandstoragerisk.

With LCFS, issue is that there arecheaperways tomeet the requirementstodayviabiofuels.Needtohitblendwallbefore CCS comes into play. However,LCFS in one jurisdiction that can driveCCS somewhere else – opposite todiscussionwitheconomicleakage.

Whataboutcarbontakebackobligations?ThinkingaboutthisinEurope.

Energysystemsanalysis (e.g. IPCC) saysCCS is critical and lowest‐cost. Butanalysis is complicated, and question ishowtosell it tothepublicandtopolicymakers.

China and SE Asia are wild cardsacknowledged by all – huge potential,butcapabilitygaps.

Another wild card is advanced nucleartechnologies; technology and resourceavailabilityenablestargetstobeset(e.g.,REGGI,CPP).

Other drivers (e.g., reductions in wateruse)mayputus in a position to delivercheaper capture as a co‐benefit – likemoltencarbonatefuelcells.


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Question to the group:Will CCS be at 100USD/MWh and commercially available by2030?

5 No – timing of needs and business case,scale‐up cannot be rapid enough; supplychaincollapsedandwillneedtoberebuilt;competition from other technologies;governmentnotwillingtoacknowledgethatprices need to go up (or justify increasedprices)tomakethisallwork

12 Yes – prices will rise, and CCS will bemarginal technology; Asia will do it, initialregulations will spur a discussion of whathappensnextthatwillleadtoCCS;potentialfor breakthrough technology; CCSwith gaswill be where cost happens; costmight bethere, but not widely demonstrated; newwayofpricingenergyinfutureenablesCCS;costsforcaptureongasarealreadythere.

1Abstention–don’tknowenough

ReporttoPlenarySession:

1. We asked the question: will CCS becommercially available for powergeneration in 2030 at a cost of $100‐120/MWh? 12 responded “yes”; 5 said“no”; and 1 abstention. Disagreement onwhether it will actually be deployed,though.

2. Difference between EU and USperspectivesonwherecostreductionsaregoing to come from: capture technology,versus T&S infrastructure (particularly inregardstorisk).

3. Cost reduction requires learning‐by‐doingwhichimpliesmarkets;needmarkets!

4. Market for CCSwas going to be new coal,but now, not much new coal—at least indeveloped countries—so now there is agapbeforewegettogas.

5. Tensionbetweensmall‐scalewithhighunitcostbutlowprojectcost,hence,lowerrisk;or large‐scale with low unit cost but highprojectcost,hencehigherrisk.

6. Marginal benefit of additional cost studiesislow.

7. Need to come up with effective means(messaging) to convey importance of CCSinasystemcontext.

8. In themeanwhile, industrial CCS—oil andgas sector—will continue be a big driver.Wild card: what China decides to do is ahugedeal.

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PRESENTATIONS

Introduction CCSCostNetworkWorkshopOverviewHowardJ.Herzog

Session 1: Framing the Issue TheCostofCCS:AReviewofRecentStudiesEdwardS.Rubin

MethodologyofaDetailedCCSCostStudyJeffHoffman

Session 2: Project Costs – Industrial Applications QuestProjectandItsCostsWilfriedMaas

InsightsintoCostofCCSGainedfromtheIllinoisBasin‐DecaturProjectSallieE.Greenberg,RayMcKaskle

Session 3: Project Costs – Power Applications ProjectCostsPowerApplicationsGeorgeBooras

FactorsImpactingCapitalCostsatSaskPower’sBoundaryDamIntegratedCCSProjectMaxBallandPeterVersteeg

FutureGen2.0KenHumphries

WhiteRose—Oxy‐fuelCCSProjectLeighA.Hackett

Session 4: CCS in the Context of Changing Electricity Markets TheValueofFlexible,FirmCapacityonaDecarbonisedGridAndyBoston

DukeEnergyNeilKern

CCS Cost Network Workshop Overview

The Cost of CCS: A Review of Recent Studies

Methodology of a Detailed CCS Cost Study

Quest Project and Its Costs

Insights into Cost of CCS Gained from the Illinois Basin-Decatur Project

Project Costs Power Applications

Factors Impacting Capital Costs at SaskPower’s Boundary Dam Integrated CCS Project

FutureGen 2.0

White Rose—Oxy-fuel CCS Project

The Value of Flexible, Firm Capacity on a Decarbonised Grid

Duke Energy

INTERNATIONALENERGYAGENCYGREENHOUSEGASPROGRAMMECHELTENHAM,UKwww.ieaghg.org

TH CCS COST NETWORK, 2016 WORKSHOP - · PDF fileBrian Anderson West Virginia University ......

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