Apr 7, 2015

Engineering Possibilities vs. Practical Implementation: Coal- and Gas-Fired Plants

Renewable Energy
Natural Gas
David Porter, Simon Hobday, Ja...
6 min
Europe’s energy landscape is in a state of transition and nowhere is it being felt more than in the fossil fuel sector. In this roundta...

Europe’s energy landscape is in a state of transition and nowhere is it being felt more than in the fossil fuel sector.

In this roundtable discussion, members of POWER-GEN Europe’s Advisory Board consider the role that gas- and coal-fired plants will have in Europe’s future energy landscape, ahead of the conference and exhibitions which will be held in Amsterdam from June 9 to 11.

Roundtable participants include David Porter, senior energy advisor at Navigant; Simon Hobday, energy partner at Osborne Clarke; Jacob Klimstra, energy and engine consultant of Jacob Klimstra Consultancy and Ulla Pettersson, managing consultant and founder of E for Energy Management.

There is growing consensus that traditional coal- and gas-fired plant remains ‘un-investable’: what are the best options for optimizing legacy plant operations for nations needing to maintain fossil fuel-fired plants to meet baseload requirements or ensure security of supply?

Simon Hobday: Gas is in many respects a low carbon technology. It is much cleaner than coal and it’s an excellent source for ensuring stability in generation whilst new smart technologies continue to develop— power is still required regardless of whether or not the wind is blowing.

However, deciding to commit to gas generation is currently a difficult decision. The market design and other support must give investors confidence they will be able to recover finance construction, operating costs and make a profit; otherwise they simply will not build.  If the market model does not allow this then other approaches, such as the UK's capacity market, will be needed.

David Porter: It is no longer financially viable to run existing power plants in the traditional way and certainly not economical to build new power plants— the scope for them to run and earn an income has been reduced by the mandatory ‘must-run’ nature of renewables. But, we need plants that can provide electricity when customers want it. There’s currently a lot of discussion about how capacity mechanisms can pay for a plant to be available 24/7 and fill the gaps when intermittent renewables are not generating.

However, in Europe this is creating problems for the slowly emerging single market in electricity. Theoretically, one country ought to be able to take account of a neighbouring power station in another country if there is an interconnector between the two countries. But capacity mechanisms are being developed by individual countries, rather than centrally from Brussels. Therefore they focus on particular countries’ requirements and this creates difficulties for countries that would like a proper market in electricity across Europe. It underlines where true political responsibility lies.

Jacob Klimstra: A recent conference in Brussels revealed that cogeneration in cities will play a major role in optimizing legacy plant operations. The demand for heat in Europe is two or three times more than the demand for electricity, therefore only integrated power, such as combined heat and electricity generation, will be flexible enough to thrive in the new energy landscape. Remotely located large power plants are not the answer due a lack of flexibility and high costs.

Ulla Pettersson: I think that each country must have an ISO (Independent System Operator) whose responsibility is to put up auctioning capacity if needed, but this offering is stronger and weaker in different countries. However, this approach is more applicable to kick load; it is very unlikely to use capacity contribution for baseload and mid merit.

Is there a future for new-build large plants if they were to include technologies such as those based on co-firing, co-generation or carbon capture systems (CCS) technology?

DP: I believe there is a future for new build large plants, but they’ve gone through such a period of trauma that companies will need to see stability and have much more confidence in the politics of the market before anything happens. Gas, which, like coal, can be run flexibly, is widely accepted as a ‘bridging’ fuel in the lower carbon transition, so it will remain part of the mix. In fact, coal- and gas-fired plants will be part of the market for a while to come, but the market arrangements must inspire developers and investors with more confidence than they currently do. Power companies will face huge challenges in optimizing the running of their plant and making a portfolio profitable.

UP: There is definitely a future for big plants because if we don’t build them we will never get out of this recession. The manufacturing industry in Europe isn’t operating at maximum capacity, therefore we cannot base supply on this lower demand; otherwise we’ll face difficulties when we try to increase capacity in manufacturing industries. If we replace old plants with many small ones, the costs for staff and environmental protection— for example filters— will increase. If we don’t replace old plants, we will never be able to catch up and manufacturing will move to other parts of the world. That would be a catastrophe for Europe.

SH: I believe there is a future in large plant, but while support is being given renewable to encourage high capital cost, low marginal operating cost plant mechanisms need to be looked at to encourage the construction of large efficient plant. In the UK, the new capacity mechanism auction has secured some additional capacity, but it’s still new and remains to be seen whether it will in fact serve to provide cost efficient new balancing plant. Other approaches used historically in the UK include the supplemental payment in the Pool Price prior to NETA (PIP or Pool Input Price and POP, Pool Output Price).

JK: For CCS to be implemented, the price of [carbon dioxide] has to be about €80 per tonne, but this doubles the electricity production costs of coal-fired power plants. Biomass co-firing is an option to keep the [carbon dioxide] production of power plants low. However, in order to optimize energy use in Europe, power plants have to be very flexible and offer CHP facilities. However, I believe that smaller scale local power plants are the best option for the future. They can offer the required flexibility, especially if they are of a modular design.

Should national and EU policy be adjusted to ensure coal- and gas-fired plants can operate alongside more intermittent forms of power generation?

SH: If a country makes the policy decision to intervene in the power markets to promote intermittent renewable generation, then once the intermittent generation reaches a certain level where it affects the economic health of other plant required to balance the power system, the country must, I believe, look at methods to support non-intermittent generation. Otherwise energy technologies, such as storage, which has additional cost for the consumer otherwise the lights will go out. I believe a number of countries are currently in this position.

DP: I think policy will have to change because of the imperative of keeping the lights on. Part of the answer is the ‘smart’ agenda, which should help us manage better the mix of plant, which was forced on to the system by public policy before we had the means of properly managing it. That’s exciting, but however smart we are, we still need plants that can respond to demand. Policy will have to allow for that.

JK: This situation would mean further leaving the free market for energy. Energy is one of the most important driving factors in our economy. Purely commercial operation procedures and quarterly profits goals do not fit with the long-term planning required for the power sector. May be we have to go back to a fully government controlled energy supply sector, as is practically already the case with renewables.

This piece was produced by Osborne Clarke, Navigant, Jacob Klimstra Consultancy and E for Energy Management.                    

To hear more about some of the critical issues forming the heart of business and political discussion, the forthcoming POWER-GEN Europe conference being held in Amsterdam June 9 to 11, 2015 is the place for the power industry to meet, share information and do business. There will be tracks dedicated to Coal’s Cleaner Future, Flexing the Power of Gas and The Big Carbon Question register for the conference here.

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Jul 29, 2021

Carbon dioxide removal revenues worth £2bn a year by 2030

Dominic Ellis
4 min
Engineered greenhouse gas removals will become "a major new infrastructure sector" in the coming decades says the UK's National Infrastructure Commission

Carbon dioxide removal revenues could reach £2bn a year by 2030 in the UK with costs per megatonne totalling up to £400 million, according to the National Infrastructure Commission

Engineered greenhouse gas removals will become "a major new infrastructure sector" in the coming decades - although costs are uncertain given removal technologies are in their infancy - and revenues could match that of the UK’s water sector by 2050. The Commission’s analysis suggests engineered removals technologies need to have capacity to remove five to ten megatonnes of carbon dioxide no later than 2030, and between 40 and 100 megatonnes by 2050.

The Commission states technologies fit into two categories: extracting carbon dioxide directly out of the air; and bioenergy with carbon capture technology – processing biomass to recapture carbon dioxide absorbed as the fuel grew. In both cases, the captured CO2 is then stored permanently out of the atmosphere, typically under the seabed.

The report sets out how the engineered removal and storage of carbon dioxide offers the most realistic way to mitigate the final slice of emissions expected to remain by the 2040s from sources that don’t currently have a decarbonisation solution, like aviation and agriculture. 

It stresses that the potential of these technologies is “not an excuse to delay necessary action elsewhere” and cannot replace efforts to reduce emissions from sectors like road transport or power, where removals would be a more expensive alternative.  

The critical role these technologies will play in meeting climate targets means government must rapidly kick start the sector so that it becomes viable by the 2030s, according to the report, which was commissioned by government in November 2020. 

Early movement by the UK to develop the expertise and capacity in greenhouse gas removal technologies could create a comparative advantage, with the prospect of other countries needing to procure the knowledge and skills the UK develops.

The Commission recommends that government should support the development of this new sector in the short term with policies that drive delivery of these technologies and create demand through obligations on polluting industries, which will over time enable a competitive market to develop. Robust independent regulation must also be put in place from the start to help build public and investor confidence.

While the burden of these costs could be shared by different parts of industries required to pay for removals or in part shared with government, the report acknowledges that, over the longer term, the aim should be to have polluting sectors pay for removals they need to reach carbon targets.

Polluting industries are likely to pass a proportion of the costs onto consumers. While those with bigger household expenditures will pay more than those on lower incomes, the report underlines that government will need to identify ways of protecting vulnerable consumers and to decide where in relevant industry supply chains the costs should fall.

Chair of the National Infrastructure Commission, Sir John Armitt, said taking steps to clean our air is something we’re going to have to get used to, just as we already manage our wastewater and household refuse. 

"While engineered removals will not be everyone’s favourite device in the toolkit, they are there for the hardest jobs. And in the overall project of mitigating our impact on the planet for the sake of generations to come, we need every tool we can find," he said.

“But to get close to having the sector operating where and when we need it to, the government needs to get ahead of the game now. The adaptive approach to market building we recommend will create the best environment for emerging technologies to develop quickly and show their worth, avoiding the need for government to pick winners. We know from the dramatic fall in the cost of renewables that this approach works and we must apply the lessons learned to this novel, but necessary, technology.” 

The Intergovernmental Panel on Climate Change and International Energy Agency estimate a global capacity for engineered removals of 2,000 to 16,000 megatonnes of carbon dioxide each year by 2050 will be needed in order to meet global reduction targets. 

Yesterday Summit Carbon Solutions received "a strategic investment" from John Deere to advance a major CCUS project (click here). The project will accelerate decarbonisation efforts across the agriculture industry by enabling the production of low carbon ethanol, resulting in the production of more sustainable food, feed, and fuel. Summit Carbon Solutions has partnered with 31 biorefineries across the Midwest United States to capture and permanently sequester their CO2 emissions.  

Cory Reed, President, Agriculture & Turf Division of John Deere, said: "Carbon neutral ethanol would have a positive impact on the environment and bolster the long-term sustainability of the agriculture industry. The work Summit Carbon Solutions is doing will be critical in delivering on these goals."

McKinsey highlights a number of CCUS methods which can drive CO2 to net zero:

  • Today’s leader: Enhanced oil recovery Among CO2 uses by industry, enhanced oil recovery leads the field. It accounts for around 90 percent of all CO2 usage today
  • Cementing in CO2 for the ages New processes could lock up CO2 permanently in concrete, “storing” CO2 in buildings, sidewalks, or anywhere else concrete is used
  • Carbon neutral fuel for jets Technically, CO2 could be used to create virtually any type of fuel. Through a chemical reaction, CO2 captured from industry can be combined with hydrogen to create synthetic gasoline, jet fuel, and diesel
  • Capturing CO2 from ambient air - anywhere Direct air capture (DAC) could push CO2 emissions into negative territory in a big way
  • The biomass-energy cycle: CO2 neutral or even negative Bioenergy with carbon capture and storage relies on nature to remove CO2 from the atmosphere for use elsewhere

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