What is required to make the ROAD project work? Dr. Peter Radgen, Head of Innovation Center CCS, E.ON, Düsseldorf, Germany

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1 What is required to make the ROAD project work? Dr. Peter Radgen, Head of Innovation Center CCS, E.ON, Düsseldorf, Germany

2 ROAD CCS Demonstration Project ROAD stands for Rotterdam Opslag en Afvang Demonstratieproject The owner of the project is the Maasvlakte CCS Project C.V. a 50/50 joint venture of E.ON Benelux and GDF Suez Energie Nederland Intended partners for Transport and Storage are GDF SUEZ E&P and TAQA Energy Financial support is provided by the European Commission (EU) under the EEPR Program and the Dutch Government 2

3 The E.ON Power Plant Site Maasvlakte in 2007 If you want to demonstrate CCS, it pays of to attach it to a new power plant MPP 1+2 MPP= Maasvlakte Power Plant 3

4 The E.ON Power Plant Site Maasvlakte in

5 The E.ON Power Plant Site Maasvlakte in

6 What the market was expecting in 2007 Increasing electricity demand based on economic growth in Europe A stable but rather constant growth of renewable energies 6

7 What the market was expecting in 2007 CO 2 certificate prices to increase further. A single European Energy Market with a fair competition of low carbon technologies CCS Demonstration Project and 10 B public funding available. 7

8 Development of Prospects for NER-300 funding Sale of 1 st Tranche (200 Million Certificates by EIB took place from 12/2011 to 09/2012. Average price achieved was

9 STOXX Europe 600 Utilities 9

10 Expected Number of CCS Demonstration Projects in Europe 10

11 Maasvlakte Power Plant 3 The ROAD project setting CO 2 Capture Installation N.O.P.: barg. N.O.T.: deg C Onshore Transport Pipeline Compression and Cooling Dehydration, Metering Offshore Transport Subsea Pipeline N.O.P.: barg. N.O.T.: around 50 deg C Metering P18 A Platform 5 km 20 km 3,5 km Start of MCP scope N.O.P.: Normal Operating Pressure N.O.T.: Normal Operating Temperature This flow diagram is not on scale, numbers are indicative CO 2 Storage into depleted gas reservoirs N.O.P.: barg. N.O.T.: deg C 11

12 Planning of the Flue Gas Tie-Inns 12

13 Flue gas and Steam Tie-Inns at MPP3 installed 13

14 Why Final Investment Decision (FID) for ROAD is pending since end of

15 Why Final Investment Decision (FID) for ROAD is pending since end of 2012 Window of Opportunity is closing as EU might have to terminate EEPR contract if no FID can be taken in

16 The Financial Gap It is real! Can it be closed? The project over it s lifetime will not make any profit but a significant loss. CCS has currently a climate change but not a business driver. Currently CCS Demonstration does not look to be a business opportunity 16

17 Development of Project Costs CAPEX Prices for major pieces of equipment and personal costs are typically increasing based on normal inflation as long as prices can not be fixed in an EPC contract. However financial support is not indexed. Increased environmental performance based on lessons learnt from pilot installations require sometimes additional efforts OPEX Key driver for an increasing operational deficit is the decreasing CO 2 certificate price Normal price escalation for all operation costs such as salaries and consumables needs to be taken into account 17

18 Conclusion The Outlook for CCS on the short and mid term does not look promising Increasing financial gaps in project financing can only be closed by a concerted short term action of the EU and/or the willing Member States Uncertainty over future development of energy policy threatens all energy related investments Most of the EEPR projects and the NER-300 first phase CCS Demonstration projects failed to reach FID The ROAD project has still a chance to go ahead, but the window of opportunity is closing 18

19 It is not enough to know, it has to be applied; it is not enough to intend, it has to be done. Johann Wolfgang von Goethe (in: Wilhelm Meisters Wanderjahre) 19