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RWE Power Dr. Schwendig 2010-05-03 PAGE 1
CtL/CtG - Boundary Conditions and Chances of Implementation
Dr. Frank Schwendig – RWE Power AG
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RWE Power Dr. Schwendig 2010-05-03 PAGE 2
Starting point
CtL/CtG is economic when oil price is higher than 80 $/bbl ?
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RWE Power Dr. Schwendig 2010-05-03 PAGE 3
Analysed CtL/CtG products
~ 580 m³ H2
~ 180 m³ CH4 (SNG)
~ 270 kg Methanol
~ 140 l FuelsCO2 to atmosphere or storage
1 t ligniteGas
conditioningGasification
Products
From RWE‘s perspective, i. e. - power producer with own lignite mines- experience with coal gasification- Germany
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RWE Power Dr. Schwendig 2010-05-03 PAGE 4
Basis for investigations:
⇒
Based on large-scale project⇒
Realistic information about plant technology and for economic evaluations
Project development for450 MW IGCC/CCS Hürth power plant
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RWE Power Dr. Schwendig 2010-05-03 PAGE 5
Criteria for chances of realization
Market> Market volume, market share of production> Demand for product, space for additional production> Market entrance conditions> Necessary infrastructure> …
Costs> Production costs> Market price> Production costs of alternatives> …
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RWE Power Dr. Schwendig 2010-05-03 PAGE 6
Market conditions - summary
H2
- Almost no open market- Low future potential (example: 10 % of H2 produced in IGCC/CCS
Hürth sufficient for complete bus fleet of Berlin)- Only for special cases and small amounts (slip steam)
CH4 (SNG, synthetic natural gas)- Unrestricted market (20 million tons per year of lignite cover
some 4.6 % of Germany’s natural gas demand)- Existing infrastructure- Optimum market conditions
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RWE Power Dr. Schwendig 2010-05-03 PAGE 7
Market conditions - summaryMethanol- Worldwide over capacity- Price risks
Fuels (Diesel)- Unrestricted market (20 million tons per year of lignite cover
some 3 % of Germany’s motor fuel consumption)- Existing infrastructure- Market access possibly problematic- Good market conditions
2000 2000 2200 3000 29504000 4500
55007000
8000
0
5.000
10.000
15.000
20.000
25.000
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009Cumulative Demand Grow th Cumulative Net Capacity Grow th
demand
capacity
Best market conditions for SNG
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RWE Power Dr. Schwendig 2010-05-03 PAGE 8
Main costs drivers
> Fuel (coal) price
> Plant price
> Emission trading system ⇒ carbon price or CCS
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RWE Power Dr. Schwendig 2010-05-03 PAGE 9
Correlation between coal/gas/oil prices
Coal
Gas
Oil
High oil prices alone do not help because of simul- taneously high coal prices
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RWE Power Dr. Schwendig 2010-05-03 PAGE 10
RWE’s Rhenish lignite mining area
A 4
A44
A46
North-South-
Railway
Key Data- Surface mining ~ 92 M t/a- 3.4 bn t approved lignite reserves- Further potential: 35 bn t resources
Land recultivationSurface Facilities
Power stations
Garzweiler:1.3 bn t coal reserves
Inden:0.5 bn t coal reserves
A61
Hambach:1.6 bn t coal reserves Approved mining claim
Cologne
offers a coal (lignite) resource which is independent from world market and offers stable fuel costs
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RWE Power Dr. Schwendig 2010-05-03 PAGE 11
Development of plant prices
Plants
Oil
When oil prices seemed to be attractive for CtL/CtG, plant prices were also high (price driver is a booming economy)⇒Realization of a project when plant price is low together
with a perspective of high oil prices
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RWE Power Dr. Schwendig 2010-05-03 PAGE 12
Emission trading system
Emission trading is a significant cost driver for CtL/CtG products
Share of CO2 costs- depending on carbon price- depending on CO2 intensity and
transfer of C into product respectivelyCH4 (SNG)Split of product costs
Basic product costs w/o ETS
CtL/CtG leads to CO2 emissions, i. e. to costs for CO2 certificates
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RWE Power Dr. Schwendig 2010-05-03 PAGE 13
Emission trading system
Emission trading is a significant cost driver for CtL/CtG products
Share of CO2 costs- depending on carbon price- depending on CO2 intensity and
transfer of C into product respectivelyH2Split of product costs
Basic product costs w/o ETS
CtL/CtG leads to CO2 emissions, i. e. to costs for CO2 certificates
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RWE Power Dr. Schwendig 2010-05-03 PAGE 14
Conclusion
CtL/CtG in Germany
> SNG offers best market opportunities followed by diesel; otherwise rather limited applications
> Coal source independent from world market price needed
> Realization of project, when plant prices are low
> Emission trading sets the hurdle for economy significantly higher