PEP Review TIPPING POINT FOR POWER GENERATION: NEW NGCC VS LEGACY COAL By Michael Arné (December 2012)

Transcription

1 PEP Review TIPPING POINT FOR POWER GENERATION: NEW NGCC VS LEGACY COAL By Michael Arné (December 2012) ABSTRACT Coal-fired electric power generation is facing serious economic pressure in the United States. Low natural gas prices are predicted to continue into the indefinite future. In addition, the US Environmental Protection Agency (EPA) has issued plans for tighter restrictions on emissions. Combined, these two issues threaten the ongoing economic viability of many older US coal-fired power stations. In this review we examine the incremental costs for various coal-related environmental remediation retrofits. We then compare these costs, when added to the levelized cost of electricity for a legacy coal-fired facility, to the levelized cost from a new natural gas combined cycle (NGCC) unit. In addition, we examine sensitivities to coal, natural gas, and potential carbon dioxide prices. This information allows us to estimate the tipping point where low gas prices, remediation requirements, and carbon costs combine to tip the economics in favor of closing the coal-fired plant and replacing it with an NGCC unit IHS PEP Review

2 A private report by the Process Economics Program Review No TIPPING POINT FOR POWER GENERATION: NEW NGCC VS LEGACY COAL by Michael Arné December 2012 Santa Clara, California 95054

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4 CONTENTS INTRODUCTION... 1 TRENDS IN ENERGY PRICES... 1 TRENDS IN ENVIRONMENTAL REGULATIONS... 3 LEGACY COAL OPTIONS... 5 NATURAL GAS COMBINED CYCLE OPTIONS... 8 WIND AND SOLAR COST ESTIMATES ASSESSING THE RESULTS REFERENCES IHS iii PEP Review

5 FIGURES 1 US Spot Market Prices for Crude Oil and Natural Gas , Dollars (2010) per Million BTU US Electricity Demand Growth , 3-Year Moving Average (%) Effect of Heat Rate on CO 2 Emissions Various Coal Types Relative Difference in CO 2 Emissions, Coal vs. NGCC Base Case, Illinois # Coal Price Yielding Equivalent LCOE to NGCC Base Case Legacy PC with Heat Rate = 10,500 BTU/KWH Installed Wind Project Costs over Time Wind Capacity Factors over Time Example of Renewable Energy Availability by Time of Day Comparison of Legacy Coal Retrofit Options to NGCC Comparison of Legacy Coal Retrofit Options to NGCC Comparison of Retrofit Options to NGCC Older Plant Case Comparison of Wind and Solar to NGCC and Legacy Coal IHS iv PEP Review

6 TABLES 1 Design Coal Specification Properties of Four US Coals Pulverized Coal Power Generation Abbreviated Design Bases Natural Gas Combined Cycle Power Generation Base Case Design Bases Natural Gas Combined Cycle Power Generation Advanced Technology Case Design Bases Incremental Costs for Coal Environmental Retrofits Coal-Fired Power Generation Levelized Cost of Electricity Natural Gas Combined Cycle Power Generation Levelized Cost of Electricity Coal-Fired Power Generation Environmental Remediation SO x Levelized Cost of Electricity Coal-Fired Power Generation Environmental Remediation NO x Levelized Cost of Electricity Coal-Fired Power Generation Environmental Remediation MATS Levelized Cost of Electricity Coal-Fired Power Generation Environmental Remediation Ash and CW Levelized Cost of Electricity Wind and Solar Power Generation Levelized Cost of Electricity IHS v PEP Review