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Economic Evaluation of IGCC Plants with Hot Gas Cleaning

  • Melchior, Tobias

    ()

    (RWTH Aachen University)

  • Madlener, Reinhard

    ()

    (E.ON Energy Research Center, Future Energy Consumer Needs and Behavior (FCN))

This paper investigates whether coal- or biomass-fired Integrated Gasification Combined-Cycle (IGCC) power plants can serve as an economically viable future technology for providing clean electricity and heat in Germany. In the context of CO2 emission reduction in power generation, energy conversion technologies that enable the implementation of Carbon Capture and Storage (CCS) need to be considered. IGCC is one such technology, as it utilizes coal or biomass but does not necessarily emit CO2. We therefore investigate whether IGCC plants can, from an economic perspective, be an alternative to nuclear and/or conventional coal-fired power plants. Our research is undertaken with the help of scenario analysis. The possible shut-down of nuclear power stations as well as of outdated coal-fired power plants, together with the evolution of CO2 prices, provides the starting point of our study. The option of hot gas cleaning in IGCC plants is of particular interest, as it is expected to significantly enhance the efficiency of IGCC technology and allows for combined heat and power production (CHP). Corresponding supplementary earnings (incl. subsidies) are compared with an increase in specific investment costs. Besides the hot gas cleaning advancement, we also investigate the injection of pure CO2 (separated from the IGCC process) into oilfields, as it reduces the costs of CO2 transport and storage through Enhanced Oil Recovery (EOR). Based on the results, a judgement on the ability of IGCC technology to replace nuclear power stations and/or conventional coal-fired power plants in Germany is made. Net present values calculated provide decision-support for energy suppliers about the if and when to invest in IGCC plants. We find that only a partial substitution of current power plants by IGCC facilities is reasonable, e.g. for locational reasons, whereas a complete abandonment of IGCC technology seems to be unlikely from the current point of view.

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Paper provided by E.ON Energy Research Center, Future Energy Consumer Needs and Behavior (FCN) in its series FCN Working Papers with number 22/2010.

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Length: 36 pages
Date of creation: Dec 2010
Date of revision:
Handle: RePEc:ris:fcnwpa:2010_022
Contact details of provider: Web page: http://www.eonerc.rwth-aachen.de/fcn
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  1. Harmsen-van Hout Marjolein J.W. & Herings P. Jean-Jacques & Dellaert Benedict G.C., 2011. "Communication network formation with link specificity and value transferability," Research Memorandum 022, Maastricht University, Maastricht Research School of Economics of Technology and Organization (METEOR).
  2. Harmsen - van Hout, Marjolein J.W. & Herings, P. Jean-Jacques & Dellaert, Benedict G.C., 2010. "The Structure of Online Consumer Communication Networks," FCN Working Papers 3/2010, E.ON Energy Research Center, Future Energy Consumer Needs and Behavior (FCN).
  3. Harmsen-van Hout, Marjolein J.W. & Dellaert, Benedict G.C. & Herings, P. Jean-Jacques, 2008. "Behavorial Effects in Individual Decisions of Network Formation," Research Memorandum 019, Maastricht University, Maastricht Research School of Economics of Technology and Organization (METEOR).
  4. Gibbins, Jon & Chalmers, Hannah, 2008. "Carbon capture and storage," Energy Policy, Elsevier, vol. 36(12), pages 4317-4322, December.
  5. Lang, Joachim & Madlener, Reinhard, 2010. "Relevance of Risk Capital and Margining for the Valuation of Power Plants: Cash Requirements for Credit Risk Mitigation," FCN Working Papers 1/2010, E.ON Energy Research Center, Future Energy Consumer Needs and Behavior (FCN).
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