Economic Conditions for Developing Hydrogen Production Based on Coal Gasification with Carbon Capture and Storage in Poland

Radosław Kaplan,Michał Kopacz

doi:10.3390/en13195074

Abstract

This study documents the results of economic assessment concerning four variants of coal gasification to hydrogen in a shell reactor. That assessment has been made using discounting methods (NPV: net present value, IRR: internal rate of return), as well as indicators based on a free cash flow to firm (FCFF) approach. Additionally, sensitivity analysis has been carried out, along with scenario analysis in current market conditions concerning prices of hard coal, lignite, hydrogen and CO2 allowances, as well as capital expenditures and costs related to carbon capture and storage (CCS) systems. Based on NPV results, a negative economic assessment has been obtained for all the analyzed variants varying within the range of EUR −903 to −142 million, although the variants based on hard coal achieved a positive IRR (5.1–5.7%) but lower than the assumed discount rates. In Polish conditions, the gasification of lignite seems to be unprofitable, in the assumed scale of total investment outlays and the current price of coal feedstock. The sensitivity analyses indicate that at least a 20% increase of hydrogen price would be required, or a similar reduction of capital expenditures (CAPEX) and costs of operation, for the best variant to make NPV positive. Analyses have also indicated that on the economic basis, only the prices of CO2 allowances exceeding EUR 40/Mg (EUR 52/Mg for lignite) would generate savings due to the availability of CCS systems.

Highlights

Hydrogen has been used in various forms of human activity for over 200 years
The study provides the results of an economic assessment concerning four variants of coal gasification to hydrogen in a shell reactor
Concerning prices of hard coal, lignite, hydrogen and CO2 allowances, as well as capital expenditures and costs related to carbon capture and storage (CCS) systems, a negative economic evaluation, based on NPV and IRR, was obtained for all analyzed variants of coal gasification:

Summary

Introduction

Hydrogen has been used in various forms of human activity for over 200 years. Originally, it was used in steam engines and for lifting balloons and airships in the 18th and 19th centuries. Hydrogen density is one tenth (1:10) of natural gas, its energy per unit of mass (Lower Heating Value—LHV) is three times higher than that of gasoline, flame velocity is eight times higher than that for methane and its autoignition temperature is 585 ◦ C (ignition energy is 1/10 of methane). This makes hydrogen light, storable and reactive, with high energy content per unit mass; it can be readily produced at an industrial scale.

Methods

Discussion

Conclusion