The first utility-scale power plant to be equipped with carbon capture and storage (CCS) technology became operational this month in Canada. Canada refurbished an older unit, extending its life 30 years and retrofitted it with CCS equipment at a cost of $1.35 billion Canadian ($1.2 billion U.S.).[i] This is 3 times as much as building a similar-sized plant from scratch without CCS and this Canadian plant was only refurbished. Besides the large cost, Canada has found that there are formidable challenges that must be overcome before CCS is ready to provide a significant role in electric utility operations.[ii]
The Canadian Plant
SaskPower’s Boundary Dam Unit #3 is a 43-year old coal-fired generating unit that has been retrofitted with CCS technology. Despite SaskPower receiving $240 million from the Canadian government towards the $1.3 billion Canadian construction costs, the high capital costs of this pilot project underscore how far away CCS is from being competitive with conventional power plants. But the high construction cost is not the only problem with the plant.
The retrofitted plant is much less efficient than a conventional coal plant. It is rated at 110 megawatts compared to 139 megawatts before the retrofit–a reduction of around 20 percent. That reduction is in line with some published estimates for the “energy penalty” imposed by CCS systems. In other words, the CCS technology itself uses about 20 percent of the energy produced by the plant. This parasitic use of energy is one barrier to the adoption of CCS technology.
Scientists at Harvard and the Massachusetts Institute of Technology (MIT) found that the CCS energy penalty could range from a theoretical lower bound of 11 percent to as much as 40 percent, with 29 percent as a good target for power plants. This phenomenon – reducing the efficiency of coal-fired power plants by requiring carbon dioxide emissions controls — flies in the face of the Obama Administration’s Clean Power Rule, which as its first “building block” suggests to states that they require an increase in the thermal efficiency of coal plants.
The Boundary Dam power plant expects to reduce carbon dioxide emissions by 90 percent by trapping the carbon dioxide underground instead of releasing the gas into the atmosphere. The plant works by separating carbon dioxide from the other gases in the plant’s exhaust stream, compressing it, transporting it by pipeline and injecting it deep underground under high pressure. This process consumes a significant amount of the heat and electrical output from the power plant. Because of the penalty, either more fuel must be burned or the net amount of electricity supplied is reduced. In the case of the Canadian unit, the net electrical output was lowered by about 20 percent despite the addition of components that would otherwise have increased output. Thus, the energy penalty for adding CCS technology is more likely greater than the 20 percent for this unit and more in line with the penalty found by Harvard and MIT researchers.
The project is expected to reduce greenhouse gas emissions by about 1 million metric tons a year. The captured carbon dioxide will be pumped underground and some of it will be sold to the Cenovus oil company for use in priming nearby oil fields using enhanced oil recovery technology. The remainder of the carbon dioxide will be buried in a sandstone cavern near the power plant. Fly ash from the burned coal will be used in making concrete.[iii] According to SaskPower, because the Saskatchewan plant relies on a local source of coal and on selling the carbon dioxide to the oil industry, the plant could be in the black and be a rare CCS success story. [iv]
Retrofitting Coal-fired Power Plants with CCS
The most modern ultra-supercritical coal power plants have a thermal efficiency of around 45 percent. Retrofitting an ultra-supercritical power plant with CCS would reduce its thermal efficiency by almost 25 percent to around 35 percent. For less-efficient supercritical and sub-critical power plants with initial thermal efficiencies of less than 40 percent, the penalty could be as high as 40 or 50 percent of the plant’s total electrical output.
A 20 to 30 percent energy penalty due to the addition of CCS systems would radically affect the operation of coal-fired power plants throughout the world. For example, retrofitting all coal-fired plants in the United States with CCS would increase coal consumption by 400 to 600 million tons per year or reduce the net electrical output of the plants by 75 to 100 gigawatts. Thus, only the most modern and efficient plants would most likely be retrofitted, but only if the cost of other lower cost fossil fuel technologies, such as natural gas combined cycle, was somehow increased to be on par with CCS technology.[v]
Attempts at CCS Coal Plant Technology
Due to the high costs of carbon capture and sequestration, early attempts to use CCS at coal plants have failed. For example, in 2011, American Electric Power Company shelved plans to add CCS technology to a power plant in West Virginia, which was originally estimated to cost $668 million.
Southern Company is building the first large-scale U.S. plant with CCS, which will cost more than twice initial estimates, making it one of the most expensive generating plants ever built.[vi] Their project in Kemper County is totally new construction and is currently projected to cost $5.6 billion — more than twice as much as the original $2.4 billion estimate[vii]. Construction began in 2010 and the 565-megawatt plant is expected to start operating in mid-2015.[viii] By turning coal into combustible gas, Southern Company’s Kemper plant is expected to capture 3.5 million tons of carbon dioxide per year– 65 percent of the plant’s annual emissions. Like the Canadian plant, the captured carbon dioxide is expected to be used in enhanced oil recovery. The Kemper County Project is one of two projects selected by the U.S. Department of Energy’s Clean Power Initiative.[ix] The Kemper County Energy Facility received a $270 million grant from the Department of Energy and $133 million in investment tax credits approved by the IRS.[x]
Other U.S. CCS projects also received hundreds of millions in federal government funding. The Texas Clean Energy Project received $211 million from the Obama Administration’s 2009 stimulus package and the California Hydrogen Energy Project received an award of $308 million from the Department of Energy. Since the Texas and California projects are still in the permitting and finance stage, there is no guarantee that they will get built.[xi]
CCS projects have been plagued with long delays and significant cost overruns. While the SaskPower’s Boundary Dam project in Canada is now operational and a success story for CCS technology, the plant is a reconstruction of a 43-year old plant and as such is not a good prototype for constructing new CCS plants. Further, the utility system in Canada is very different from that of the United States. Because the SaskPower facility is owned by the people of Saskatchewan, its developers have a streamlined financing process, which would not be the case for new U.S. plants.
Coal-fired plants with CCS also face intense competition from historically low prices for natural gas, which makes it prohibitively expensive to build new coal plants with CCS. Though the Boundary Dam project and the Kemper project may both be a success owing to their ability to sell large quantities of carbon dioxide to enhance oil production, their high cost and energy penalty make them unable to compete with natural gas combined cycle technology.
[i] Bloomberg, Canada to Start First Carbon-Capture Coal Power Plant, October 1, 2014, http://www.bloomberg.com/news/2014-10-01/canada-to-start-first-carbon-capture-coal-power-plant.html
[ii] Reuters, Carbon capture’s energy penalty problem, October 7, 2014, http://www.reuters.com/article/2014/10/07/us-carboncapture-economics-kemp-idUSKCN0HW0TZ20141007
[iii] Bloomberg, Canada to Start First Carbon-Capture Coal Power Plant, October 1, 2014, http://www.bloomberg.com/news/2014-10-01/canada-to-start-first-carbon-capture-coal-power-plant.html
[iv] The Guardian, Canada switches on world’s first carbon capture power plant, October 1, 2014, http://www.theguardian.com/environment/2014/oct/01/canada-switches-on-worlds-first-carbon-capture-power-plant
[v] Reuters, Carbon capture’s energy penalty problem, October 7, 2014, http://www.reuters.com/article/2014/10/07/us-carboncapture-economics-kemp-idUSKCN0HW0TZ20141007
[vi] Bloomberg, Canada to Start First Carbon-Capture Coal Power Plant, October 1, 2014, http://www.bloomberg.com/news/2014-10-01/canada-to-start-first-carbon-capture-coal-power-plant.html
[vii] National Geographic, World’s First Full Scale ‘Clean’ Coal Plant Opens in Canada, October 2, 2014, http://energyblog.nationalgeographic.com/2014/10/02/worlds-first-full-scale-clean-coal-plant-opens-in-canada/
[viii] International Business Times, World’s First Full Scale Carbon Capture and Storage Project To Launch at Canada’s Boundary Dam Plant, October 1, 2014, http://www.ibtimes.com/worlds-first-full-scale-carbon-capture-storage-project-launch-canadas-boundary-dam-plant-1697926
[ix] Bellona, World’s first industrial scale CCS plant opens in Canada, October 2, 2014, http://bellona.org/news/climate-change/2014-10-worlds-first-industrial-scale-ccs-coal-plant-opens-canada
[x] MIT, Carbon Capture and Sequestration Technologies, https://sequestration.mit.edu/tools/projects/kemper.html
[xi] Institute for Energy research, September 25, 2013, http://instituteforenergyresearch.org/analysis/are-there-benefits-from-the-epas-proposed-rule/