Oxy-Fuel is Looking Good - Hot Topic August 12

Oxy-fuel promises to provide electric power with close to zero emissions at a cost which eventually will be 37 percent higher than conventional supercritical coal-fired power plants. This cost/kWh is for gas which has been compressed and is pipeline ready. This conclusion was seemingly shared by many of the speakers and participants in the meeting yesterday.

Dennis McDonald P.E., Manager of Functional Technology, and Steve Moorman, Manager of Business Development for Advanced Technologies at the Babcock & Wilcox Company, gave us some insights about the DOE funded project which essentially replaces Future Gen. Up to $1 billion will be available to convert an Ameren 200 MW oil-fired boiler (Meredosia 4) to oxy-combustion with coal. B&W was selected as a supplier and there are still a number of details which need to resolved, but the project could be in operation by 2015. The system is attractive as a retrofit because the existing turbine can be utilized. The low emissions and projected capital and operating costs have been determined progressively starting with a first set of pilot tests in 2003 and then a 30 MW demo system. The system is attractive as a retrofit because the existing turbine can be utilized. The low emissions and projected capital and operating costs have been determined  progressively starting with a first set of pilot tests in 2003 and then a 30 MW demo system.

Timothy Fout, Project Manager in the Existing Plants Division of the U.S. Department of Energy NETL, provided  an overview and status update on the oxy-combustion R&D being conducted by the US DOE/NETL existing plants program. In addition to the B&W program, there are projects with Jupiter Oxygen and Alstom. Pilot scale tests at 15 MW are being conducted by Alstom.

David Thimsen at EPRI discussed the achievements of oxy-coal technology developers to date and development requirements going forward.  If public policy requires that CO₂ from coal-fired combustion be captured and stored, preliminary economic analyses indicate that oxy-coal power generation technology could be competitive and may be the low-cost power generating option under this constraint.  However, oxy-coal technology faces development challenges that post-combustion and pre-combustion CO₂ capture do not face. 

David also brought us up to date on the offshore projects the Australian Callide plant (25 MW) is now operating on air firing. Oxy-coal operations will commence later this year. It is essential that large commercial pilot plant experience be gained. Here are the planned projects.

Commercial Pilot Plants* in Planning

*Commercial Pilot Plant: >25% full scale, revenue generation

David pointed out that Meredosia is fully funded but the European plants are not. There is only an EU commitment for €180 million for each project. However each is expected to cost €1 billion. So even though there is a planned in-service date of 2015, it is highly uncertain that this date will be met or even that the projects will proceed.

Dr. Minish Shah, a Senior R&D Manager in the Hydrogen and Energy Technology Group at Praxair, discussed the near-zero emissions oxy-combustion flue gas purification technology that Praxair is developing with support from the U.S. DOE.  This technology will reduce atmospheric emissions of CO₂ by 99%, SO_x by 99%, NO_x by > 95% and mercury by >99% compared to a state of the art power plant operating in air-firing mode.  

Create and Trade May be the Way to Fund Carbon Capture Projects

McIlvaine developed a concept to further the implantation of mercury control technology a decade ago.  In retrospect it would have been a much better route than the one taken. It is probably even more applicable to CO₂ capture because local emissions are not relevant.

The concept is simple. It is the carrot and not the stick. A utility that invests in removal is paid for tons it removes. Payment comes from other generators using the same fuel, e.g. coal. In the case of Jäenschwalde and Compostilla funding is €800 million short for each project. The governments won’t put up more money and the utilities cannot increase rates to fund the projects. So we need private sector investment.

Let’s take the B&W power point with comparative costs. A conventional supercritical is 6.32 cents/kWh. The B&W/AL Warm Recycle for a supercritical with pipeline ready gas is 9.62 c/kWh. Investors would be offered enough of a potential subsidy or surcharge to attract groups interested in high risk and high return. There are many billions of dollars available for the high risk/high return projects. McIlvaine has been working with hedge fund operators recently on utility investments. So there is first-hand experience for this assertion.

The utility would partner with an investment group. The investment group would take most of the risk and if the project is successful obtain most of the return. The other operators would pay based on their percentage of total CO₂ emissions. The payment could be structured in terms of tons removed but would be based on creating enough of a profit to attract the high risk investor.

The project could turn out better than expected and then the investors make more than they had hoped. It could be a failure with costs in excess of the subsidized rate available. In this case the investors are the losers. As long as the probability of a high return is greater than the probability of a big loss, the investment community will step up to the plate.  This will be of a lot more benefit to the world than investing in bundled high risk mortgages.

This route assures that all rate payers share any subsidy payments. Each utility would be allowed to add his payments to the rate base. This whole approach is better than the one which says just cap CO₂ and set up a per ton cost which will force CO₂ capture. The problem is that no one knows for sure whether CO₂ can be economically captured and what is a fair rate. Maybe the best choice is wind or solar or even co-generation with coal and ethanol. This approach will quickly determine whether there is faith in CO₂ capture at the costs projected.  If a high rate of return is available and yet no investor steps up to the plate, then you can conclude that the costs are probably higher than claimed.

This approach also opens the door for any innovative technology. There could be additional premiums for early reduction. Say an extra 5 c/kWh was available for any reductions in 2013. Furthermore say the extra 5c /kWh premium was provided for the equivalent number of tons in the 10 succeeding years. So if you obtain an extra $1 million premium in 2013 you would also receive it for the same tonnage reduction in the succeeding years. This could set up a race to become commercial.

This is a high risk situation. Utilities and governments are the least suited to deal with such risks. This is where many in the private sector make their living. Why not let them shoulder the responsibility?

The BIOS, ABSTRACTS AND PHOTOS can be viewed as follows: BIOS, PHOTOS, ABSTRACTS - AUGUST 12, 2010.htm

The individual slides can be viewed in the Universal Decision Tree as follows:

DENNIS McDONALD – BABCOCK & WILCOX CLEAN AIR TECHNOLOGIES

STEVE MOORMAN – BABCOCK & WILCOX CLEAN AIR TECHNOLOGIES

TIMOTHY FOUT - NETL

DAVID THIMSEN - EPRI

DR. MINISH SHAH – PRAXAIR