The Price of Capturing CO₂

Executive Summary

The planned FutureGen 2.0 coal power plant when equipped with a carbon capture and sequestration (CCS) system is analyzed and compared with the same plant without the CCS equipment.  This establishes a preliminary estimate for the cost of electricity from a fossil fuel powered electric plant to compare with the cost of electricity from sustainable power systems.  Furthermore, a price for the cost/ton to capture and store CO₂ is established as well as a lower bound for a possible future CO₂ tax.  Here are the calculated values:

·      Cost of electricity from a new coal power plant                                      $70.1 / MWh

·      Cost of electricity when a CCS capability is added                                 $257 / MWh

·      Cost/ton to capture and sequester the CO₂                                           $107 / ton of CO₂

1.     The Proposed FutureGen 2.0 System

A common theme in articles on the Internet these days attempts to compare the cost of electricity from sustainable energy systems to electricity from conventional fossil fuel power plants.  The argument proceeds along the lines that sustainable power needs to be able to compete with fossil fuel power without the market-altering benefits of sustainable energy subsidies.  OK, that’s fair.  However, let’s be sure that we are making an “apples to apples” comparison.  For instance, many of the fossil fuel powered electrical plants in the US are quite mature and the initial capitalization of the plants has been retired for a long time.  This fact eliminates a large component of the cost of generating the electricity.  Thus, we should compare the cost of newly constructed fossil fuel plants to newly constructed sustainable energy power plants.  That would be the start of a fair comparison. 

Now we need to consider the somewhat dicey issue of the cost of pollution emitted by the fossil fuel plants (particularly coal) compared to the lack of these pollution emissions from the sustainable energy power plants.  Estimating the cost of a system to capture the carbon dioxide for sequestration such that it remains out of the environment on a permanent basis (say 1,000 years) is not easily done since there are no systems that perform that task at this time.  However, some work has been started by the Department of Energy on a project called FutureGen 2.0 (a follow-on to the originally planned FutureGen Project) where a coal burning electrical power plant is to be equipped with a carbon dioxide capture and sequestration (CCS) system.  I was fortunate enough to speak recently with Mr. Joseph Giove of the Department of Energy FutureGen 2.0 Program in Germantown, MD.  Mr. Giove was extremely helpful and provided critical information that has enabled me to perform a very top-level analysis to estimate the impacts on the cost of electricity form coal power plants equipped with carbon capture and sequestration (CCS) equipment.  These results establish an early benchmark for the cost of electricity from fossil power plants that do not emit CO₂ for comparison with sustainable power systems that avoid CO₂ pollution altogether. 

Mr. Giove cautioned that the FutuerGen 2.0 program is in the early stages and has not yet completed the FEED (Front End Engineering Design) stage.  The FEED stage results in a thorough design package from which fairly accurate estimates can be made to manufacture the CCS equipment and then integrate it with the coal power plant.  As greater accuracy is available in the cost estimates, I plan to update this analysis to more accurately reflect the cost of electricity calculations for comparison to the cost of electricity from sustainable energy systems.

FutureGen 2.0 Plant Basis or Rationale Gross Plant Size 202 MW FutureGen 2.0 Design per Dr. Giove at DOE Plant Cost w/o CCS $121 M Assumes $600/KW Plant Cost w/ CCS $1,081 M Assumes 75% of FutureGen 2.0 Program CCS Equip $960 M Difference in Plant Cost Estimates Hours/year 8760 h Hrs/day x days/year Capacity Factor 70 % Typical value for fossil plants Net Energy Output/yr w/o CCS 1,238,664 MWh Plant size x Capacity Factor x Hrs/yr Net Power w/ CCS 139 MW Information provided by Dr. Giove at DOE Net Energy Output/yr w/ CCS 852,348 MWh Net energy reduced by ~ 31% to power CCS

Figure 1 Values Used to Analyze the FutureGen 2.0 Coal Power Plant

2.     CO2 Emissions from Coal

I used the reference article Carbon Dioxide Emission Factors for Coal by B.D. Hong and E. R. Slatick to estimate the coal requirements and the amount of carbon dioxide released by the coal plant during a typical yearly operation.  Here are the values provided by the reference paper for Bituminous Coal:

Bituminous Coal				Basis or Rationale
Units conversion: 1 MWh =	3,414,462	Btu	Chemistry or Physics handbooks
	3.414462	MMBtu	Chemistry or Physics handbooks
Assumed coal energy content	28	MMBtu/ton	Assumes 14,000 Btu/lb for coal
Assumed coal energy content	8.2	MWh/ton	Converting MMBtu to MWh
Assumed coal plant efficiency	35	%	Typical thermal efficiency from trade literature
Actual plant energy output	2.87	MWh/ton	Coal energy content x plant efficiency
Gross annual energy / year	1,238,664	MWh/year	From Figure 1 above
Coal required annually	431,564	tons/year	Gross annual energy / Plant energy output
Emissions of CO2 from Coal	204.3	lbs CO2/MMBtu	From Hong and Slatick referenced above
CO2/ton Coal	5,720	lbs CO2/ton Coal	Coal energy x Emissions of CO2 from Coal
Assumed price of coal	$80	$/ton	Current literature
Annual cost of fuel	$34,525	$k/year	Cost/ton of Coal x Coal required annually
CO2 released	2,469	MM lbs CO2 /year	lbs CO2/ton x tons/year of Coal
	1,234,359	tons CO2/year	Assumes short tons (1 ton = 2,000 lbs)
Weight Ratio of CO2/Coal	2.86		Agrees with value from Hong and Slatick

Figure 2 Values for Bituminous Coal to Fuel Plant Defined in Figure 1

3.     Cost of Electricity and Plant Revenue

To determine the cost to generate electricity from a new coal plant without employing the CCS equipment, I assumed that the standard coal burning power plant would cost around $600/kW to permit and build.  That figure is possibly a little generous but for the purposes of this analysis, I believe it is a reasonable assumption.  This places a capital cost of the coal power plant at $121M.  Mr. Giove indicated that the FutureGen 2.0 Program is budgeted at $1.28B.  To obtain an estimate for the cost of the CSS equipment, I assumed that 25% of the program costs are required for Program Management and non-recurring engineering leaving 75% of the program costs for the CSS equipment to be added to the existing power plant.  That suggests a cost of $960M for the CSS equipment.

I can now use my financial model to calculate the cost of the electricity from the coal power plant alone and the cost of the electricity from the coal plant equipped with the CCS system.  My final assumption is that the utility will multiply the cost of the electricity by 1.2 to arrive at the sale price of the electricity to the customer.  The table below shows the results of this analysis:

Power Plants	Cost $/MWh	Sale Price $/MWh	Annual Revenue $/year
Coal Plant Only	$58.4	$70.1	$86,805,573
Coal Plant with CCS	$214	$257	$218,882,966
		Difference	$132,077,393

Figure 3 Comparison of Power Plant With CCS and Without CCS

The cost of adding the CO₂ capture and sequestration is ~ $132M to capture 1,234,359 tons of CO₂.  This value equates to a cost of $107/ton to capture the CO₂. What is interesting is that the coal costs $80/ton but the CO₂ cost is ~ $107/ton, about 34% greater than the cost of the fuel. 

Given the above analysis, the cost of electricity from sustainable energy systems should be compared to the value of $257/MWh (25.7 ¢/KWh), not the value of $70.1/MWh (7.01 ¢/KWh).  When this is done, I believe that the cost of electricity from sustainable energy systems will compare rather favorably to the cost of electricity from fossil fuel plants that are equipped with CCS technology.  That offers a fair comparison between non-polluting systems.  Note that the cost of electricity from the plant equipped with CCS is 3.66 times greater than the cost of electricity from the plant without the CCS.  Actually, the cost of electricity at $257/MWh is about the same as the rate that is currently being paid by consumers on Oahu, Hawaii for conventional electrical power and is much less than what is being charged on some of the less populated islands in Hawaii.  This value is also slightly above what we expect the price of the electricity will be from our first commercial ocean energy system.  Thus, a value of $257/MWh for the coal power plant with CCS gives me a lot of encouragement that non-polluting power plants will become the norm in the coming years. 

4.     In the Name of Fairness

This article was developed to establish a method for fair comparison between sustainable energy systems and fossil fuel energy systems.  However, the FutureGen 2.0 system cost estimates are quite rough at this point and are highly likely to decrease with time the same way the sustainable energy system costs have decreased with time.  Obviously, this system cost decrease only occurs when lessons are learned as a result of building these systems.  Thus, the price tag of the first system should not stop the entire development effort – that defeats the whole purpose of the technology development activity.  Even though I am an advocate of sustainable energy systems and I have rather little faith that “clean coal” will ever be an economically viable clean energy system, I still support the rigorous pursuit of technology development needed to bring this CCS capability to fruition.

Our development team has the exact same problems relative to obtaining financing to commercialize our ocean energy technology.  It is quite capital intensive and has never been built at a commercial scale before.  I contend that when the first commercial plant is finally built, it will be the most expensive ocean power plant that will ever be built on a $/MW basis.  All of the follow-on systems will benefit from lessons learned from their predecessors to enable the cost to gradually be reduced even in the absence of major technology breakthroughs that may still occur to further reduce the ultimate cost of these systems. 

Given the evolutionary trend of maturing energy technologies to become less expensive with time, what would be a reasonable target price for a mature CCS system?  The value of ~$107/ton of CO₂ is just a starting point and I fully expect that the cost/ton of CO₂ capture can probably be cut in half to around $54/ton.  That would result in a price of electricity of around $179/MWh, or about 2.56x the price of electricity without CCS and again, a price that sustainable energy systems could likely compete with quite well.  Of course, the remaining costs for transportation and storage of the CO₂ need to be included in the cost calculation.  The FutureGen 2.0 system is capable of compressing and sending the CO₂ to the sequestration facility by pipeline but other locations may require the gas to be transported by truck or rail cars thereby increasing the overall cost.  Experienced gained from building and operating the FutureGen 2.0 plant will provide a sound basis to establish these important system cost elements.

5.     Conclusions

What is evident from this analysis is that the price of electricity from coal plants with CCS may not be all that prohibitive.  It really depends on whether or not the US is serious about reducing greenhouse gas emissions.  The initial price of capturing the CO₂ gas from a coal power plant is around $107/ton and in time might be reduced to as low as $54/ton or even less.  That suggests that a pollution tax should be at least $150/ton of exhausted CO₂ to encourage the various utilities to rapidly develop and adopt CCS technologies that will certainly be less expensive than simply paying the tax.  If the CO₂ tax is substantially lower than this amount, then the utilities would likely continue to pollute and simply pay the tax. 

This also places a target price on the cost of electricity from sustainable energy systems at somewhere between $150/MWh and $200/MWh.  I suggest that this should be the price range for both sustainable energy systems as well as fossil power plants where CCS technology is employed.

6.     Final Comment: Noland’s Law

Noland’s Law goes something like this: “Polluting fossil powered electrical plants that are allowed to dump their waste into the environment at no cost will always generate electricity at a lower cost compared to sustainable energy systems that do not generate pollution in the first place.”

The corollary to this law can be stated as follows: “Systems that remove the pollution from fossil fuel power plants for permanent sequestration can not be built and operated for an infinitesimally small cost.” 

Noland’s Law and the Corollary stated above are the reasons why the price of electricity from sustainable energy systems can not be fairly compared to electricity from pollution-spewing fossil electric power plants.  The cost of electricity from sustainable electrical power plants can only be fairly compared with the cost of generating electrical power when carbon capture and sequestration systems are integrated into the fossil power plant and successfully operated over the lifetime of the plant.

I welcome your comments.

Thank you.

Gary Noland

G. Noland & Associates, Inc.

Pleasanton, CA 94566

(925) 462-8701

gmnoland@comcast.net