Economic evaluation of IGCC plants with hot gas cleaning

Abstract

This paper investigates whether coal-fired Integrated Gasification Combined-Cycle (IGCC) power plants can be an economically viable future technology for providing less carbon-intensive electricity and heat energy in Germany than today. In the context of CO2 emission mitigation in power generation, energy conversion technologies enabling the implementation of Carbon Capture and Storage (CCS) need to be considered. IGCC is such a technology, as it utilizes coal but does not necessarily emit CO2. In our study we investigate, from an economic perspective, whether IGCC plants can be an alternative to nuclear and/or conventional coal-fired power plants. The research is based on scenario analysis. The starting point is the expected shut-down of nuclear power stations and outdated coal-fired power plants, as well as the projected evolution of the CO2 price. The hot gas cleaning option in IGCC plants is of particular interest, as it allows a significant enhancement of the efficiency of the IGCC technology and the use of combined heat and power production (CHP). Corresponding supplementary earnings (incl. subsidies) are compared with an increase in specific investment costs. Besides hot gas cleaning, we also investigate the economic impact of injecting pure CO2 (separated from the IGCC process) into oilfields, as Enhanced Oil Recovery (EOR) can help to reduce the costs of CO2 transport and storage. Based on the results from our analysis we find that the replacement of currently operating power plants by IGCC facilities is only reasonable under certain circumstances, e.g. for locational reasons. Furthermore, from today’s perspective, and due to its various advantages, a complete abandonment of the IGCC technology seems rather unlikely. Our analysis of NPVs of total costs indicates that some IGCC designs exist that are less expensive to set up and operate than a conventional reference power plant. The option of injecting CO2 sequestered from the power plant process into almost depleted oil fields appears attractive for a utility investing in IGCC technology, rendering such a plant configuration as likely cost-competitive. However, with regard to climate change mitigation, the least-cost investment alternative is not necessarily the one with the lowest GHG emissions. Significant cost reductions can be achieved by improving the efficiency or the availability of the plant. Finally, the NPV changes markedly when the heat-to-power ratio is altered, and high ratios are found to be incompatible with NPV minimization.