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Economic evaluation of IGCC plants with hot gas cleaning

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  • Melchior, Tobias
  • Madlener, Reinhard

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 The starting point is the expected shut-down of nuclear power stations and outdated coal-fired power plants, as well as the projected evolution of the CO2 price.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.

Suggested Citation

  • Melchior, Tobias & Madlener, Reinhard, 2012. "Economic evaluation of IGCC plants with hot gas cleaning," Applied Energy, Elsevier, vol. 97(C), pages 170-184.
  • Handle: RePEc:eee:appene:v:97:y:2012:i:c:p:170-184
    DOI: 10.1016/j.apenergy.2012.02.065
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    Cited by:

    1. Dergiades, Theologos & Madlener, Reinhard & Christofidou, Georgia, 2012. "The Nexus between Natural Gas Spot and Futures Prices at NYMEX: Do Weather Shocks and Non-Linear Causality in Low Frequencies Matter?," FCN Working Papers 17/2012, E.ON Energy Research Center, Future Energy Consumer Needs and Behavior (FCN), revised Sep 2013.
    2. Bernstein, Ronald & Madlener, Reinhard, 2011. "Responsiveness of Residential Electricity Demand in OECD Countries: A Panel Cointegation and Causality Analysis," FCN Working Papers 8/2011, E.ON Energy Research Center, Future Energy Consumer Needs and Behavior (FCN).
    3. Michelsen, Carl Christian & Madlener, Reinhard, 2011. "Homeowners' Preferences for Adopting Residential Heating Systems: A Discrete Choice Analysis for Germany," FCN Working Papers 9/2011, E.ON Energy Research Center, Future Energy Consumer Needs and Behavior (FCN).
    4. Cartelle Barros, Juan José & Lara Coira, Manuel & de la Cruz López, María Pilar & del Caño Gochi, Alfredo, 2015. "Assessing the global sustainability of different electricity generation systems," Energy, Elsevier, vol. 89(C), pages 473-489.
    5. Rohlfs, Wilko & Madlener, Reinhard, 2013. "Challenges in the Evaluation of Ultra-Long-Lived Projects: Risk Premia for Projects with Eternal Returns or Costs," FCN Working Papers 13/2013, E.ON Energy Research Center, Future Energy Consumer Needs and Behavior (FCN).
    6. Harmsen - van Hout, Marjolein & Ghosh, Gaurav & Madlener, Reinhard, 2013. "The Impact of Green Framing on Consumers’ Valuations of Energy-Saving Measures," FCN Working Papers 7/2013, E.ON Energy Research Center, Future Energy Consumer Needs and Behavior (FCN).
    7. Siefert, Nicholas S. & Litster, Shawn, 2013. "Exergy and economic analyses of advanced IGCC–CCS and IGFC–CCS power plants," Applied Energy, Elsevier, vol. 107(C), pages 315-328.
    8. Mansouri Majoumerd, Mohammad & Raas, Han & De, Sudipta & Assadi, Mohsen, 2014. "Estimation of performance variation of future generation IGCC with coal quality and gasification process – Simulation results of EU H2-IGCC project," Applied Energy, Elsevier, vol. 113(C), pages 452-462.
    9. Rohlfs, Wilko & Madlener, Reinhard, 2011. "Multi-Commodity Real Options Analysis of Power Plant Investments: Discounting Endogenous Risk Structures," FCN Working Papers 22/2011, E.ON Energy Research Center, Future Energy Consumer Needs and Behavior (FCN).
    10. Harmsen - van Hout, Marjolein & Ghosh, Gaurav & Madlener, Reinhard, 2013. "An Evaluation of Attribute Anchoring Bias in a Choice Experimental Setting," FCN Working Papers 6/2013, E.ON Energy Research Center, Future Energy Consumer Needs and Behavior (FCN).
    11. Yan, Pei & Zheng, Chenghang & Zhu, Weizhuo & Xu, Xi & Gao, Xiang & Luo, Zhongyang & Ni, Mingjiang & Cen, Kefa, 2016. "An experimental study on the effects of temperature and pressure on negative corona discharge in high-temperature ESPs," Applied Energy, Elsevier, vol. 164(C), pages 28-35.
    12. Cocco, Daniele & Serra, Fabio & Tola, Vittorio, 2013. "Assessment of energy and economic benefits arising from syngas storage in IGCC power plants," Energy, Elsevier, vol. 58(C), pages 635-643.
    13. Kraas, Birk & Schroedter-Homscheidt, Marion & Pulvermüller, Benedikt & Madlener, Reinhard, 2011. "Economic Assessment of a Concentrating Solar Power Forecasting System for Participation in the Spanish Electricity Market," FCN Working Papers 12/2011, E.ON Energy Research Center, Future Energy Consumer Needs and Behavior (FCN).
    14. Moon, Dong-Kyu & Lee, Dong-Geun & Lee, Chang-Ha, 2016. "H2 pressure swing adsorption for high pressure syngas from an integrated gasification combined cycle with a carbon capture process," Applied Energy, Elsevier, vol. 183(C), pages 760-774.

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    Keywords

    IGCC; Economic evaluation; Hot gas cleaning;

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