How does Changing the Penetration of Renewables and Flexibility Measures Affect the Economics of CCS Penetration?

Abstract

In recent years, investment into carbon capture and storage (CCS) technologies has been seemingly sidelined to encourage larger renewable energy generation investment. High initial CCS costs have to compete with decreasing renewable costs and in some scenarios the role of CCS is completely overtaken by renewable energy. However, not recognising the value of a wider variety of low-carbon options in an energy system and committing to a single low-carbon technology can lead to a reduction in flexibility and further down the line even a lock out from successfully adapting the system to new advancements in smart technologies. On the path to a greener British energy system, gas power plants are considered as the transitional technology given the intermittent nature of most renewable generation. CCS can play a crucial role in mitigating the polluting effects of conventional generation. This paper employs real options analysis (ROA) to explore various cost and flexibility states, accounting for various penetrations of CCS and renewables working in cohesion.