epri igcc engineering & economic evaluations - 2009

EPRI IGCC Engineering & Economic Evaluations - 2009

4th International Conference on IGCC & XtL Technologies May 18-20, 2009, Dresden, GermanyNeville Holt, George Booras, Ronald Schoff – EPRI Environment & Generation Sector

2© 2009 Electric Power Research Institute, Inc. All rights reserved.

EPRI Engineering and Economic Evaluations 2009

• Recent US Coal Plant Announcements• Impact of global economic crisis on construction costs

(Fuel prices, Commodity costs, currency exchange rates)• Summary of EPRI IGCC and PC Plant Studies• EPRI Review of Studies by Others• US has >300 GW of existing PC Plants. Close? Run and

pay for CO2 emissions? CCS Retrofit?• Where are Capital costs headed?


Capital Cost Estimates in Press Announcements and Submissions to PUCs in 2007–09

Owner Name/Location

Net MW Technology/ Coal

Estimate Date

Reported Capital $ Million

Reported Capital $/kW

Notes/Status

AEP/Swepco

Hempstead, AR

600 SCPC/PRB Dec 2008 >2000 >3333 CPCN issued

Southern Co.

Kemper County, MS

560 Air IGCC/ Lignite +50% CCS

Dec 2008 >2200 >3930 FEED in progress

Duke Cliffside, NC 800 SCPC/Bit May 2007

2400 3000 Permitted

Duke Edwardsport, IN

630 IGCC/Bit May 2008

2350 In Service

3730 Under construction

AEP Mountaineer, WV

630 IGCC/Bit June 2007

2230 3545 On hold

Tampa Electric

Polk County, FL

630 IGCC/Bit July 2007 2013 In Service

3185 Shelved: now NGCC

Sunflower Holcomb, KS 2 x 700 SCPC/PRB Sept 2007

3600 2572 Now one 700 MW

Am. Muni. Power

Meigs County, OH

1000 SCPC/Bit & PRB

Jan 2008 2900/3300 2900/3300

Tenaska Sweetwater County, TX

600 SCPC + CCS/PRB

Feb 2008 3000 5000


Key Drivers for Coal Plant Economics

• Coal costs– Mining and transportation costs– Expected heat rates, especially with CO2 capture

• Capital costs– Equipment and commodity escalation rates– Currency exchange rates

• Construction schedule• EPC contracting strategies• Financing availability and costs• Operating and maintenance costs

– Expected reliability and capacity factor


U.S. Regional Coal Spot Prices

http://www.ferc.gov/market-oversight/othr-mkts/coal/othr-coal-bs-prb-pr.pdf


Coal – US, Europe, South Africa and Australia

Coal Spot Prices Indices in Local Currencies

January 2004 - February 20092JAN2004 = 100

50

100

150

200

250

300

350

400

450

500

550

Inde

x Va

lue Central Appalachia

Newcastle, AustraliaRichards Bay, South Africa

ARA, Europe

Source: Bloomberg, Energy Information Administration.

1/04 7/04 1/05 7/05 1/06 7/06 1/07 7/07 1/08 7/08 1/09


Metal Prices Peaked in 2008 and Have Now Reduced to 2004–06 Levels

Date March 04 March 06 March 08 August 08 April 09Price $/lb Aluminum 0.75 1.05 1.40 1.20 0.64 FerroChrome 60-65% HC 0.65 0.6 2.0 2.15 0.73 Copper 1.40 2.20 4.0 3.30 2.0 Nickel 6.0 6.1 15.0 9.0 5.0 Cold rolled Steel 0.30 0.33 0.4 0.58 0.26 Steel Rebar 0.20 0.25 0.37 0.52 0.26 Std. US Steel Plate 0.26 0.38 0.42 0.72 0.31

Source: MetalPrices.comNote that equipment prices seem to be lagging the above metal price reductions, possibly due to orders that were placed prior to the economic downturn.


Historical Currency Conversion Rates

0.4

0.6

0.8

1.0

1.2

1.4

1.6

1.8

2.0

2.2

Jan-02 Jan-03 Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10

Euro to AUDUSD to AUDUSD to EuroCAD to USD

source: http://www.oanda.com


Source: Producer Price Index, Bureau of Labor Statistics

Copper and Copper Alloy Wire & Cable

Semi-Finished Steel Mill Products

Note that equipment price indexes seem to be lagging the commodity price reductions, possibly due to orders that were placed prior to the economic downturn.

Many Commodity Price Indexes Are Dropping


Plant Construction Costs Are Turning Around (Source: Chemical Engineering Magazine, March 2009)

One engineering company reported that their cost estimate for an IGCC project is now ~12% lower than the original estimate

developed in October 2008

Construction Cost Indices(Source: Chemical Engineering Magazine, March 2009)

360

380

400

420

440

460

480

500

520

540

560

580

600

620

640

660

Jun-98 Jun-99 Jun-00 Jun-01 Jun-02 Jun-03 Jun-04 Jun-05 Jun-06 Jun-07 Jun-08 Jun-09

Che

mic

al E

ngin

eerin

g Pl

ant C

ost I

ndex

900

950

1,000

1,050

1,100

1,150

1,200

1,250

1,300

1,350

1,400

1,450

1,500

Mar

shal

l & S

wift

Equ

ipm

ent C

ost I

ndex

Chemical Engineering Plant Cost Index

Marshall & Swift Equipment Cost Index


We Are in a Period of Uncertainty…


With Current Technology CO2 Capture CostlyNo Clear Winners in Current Designs (2007 Data)

40

50

60

70

80

90

100

110

120

130

140

150

30-Y

r lev

eliz

ed C

OE,

$/M

Wh

(Con

stan

t 200

7$)

. No Capture

Retrofit CaptureNew Capture

· COE Includes $10/tonne for CO2 Transportation and Sequestration · IGCC & CCS include 10% TPC contingency for first-of-a-kind

Illinois #6 Bituminous PRB ( Western Coal)

MEA- installed initially

Installed Later

Supercritical PC

Ultrasupercritical PC

GE Total Quench

ConocoPhillips E-Gas

Average IGCC

Average IGCC


IGCC Case Studies 2008 Process Design Basis

• Site: Kenosha, WI (600 feet/190 m elevation); clear and level• Ambient Conditions: 59°F, 14.4 psia, 60% RH

(15°C, 1.0 bara, 60% RH)• Fuels (costs as-delivered to site):

– Pittsburgh #8: 13,260 Btu/lb HHV; $2.00/MMBtu 30,800 kJ/kg HHV; $1.90/GJ

– Powder River Basin: 8,340 Btu/lb HHV; $1.80/MMBtu 19,400 kJ/kg HHV; $1.71/GJ

• Design Strategy:– Environmental: UDBS Profile #2 (SCR included in HRSG)– GT-ASU: Maximize for non-CCS; allow for CCS– CO2 Capture: Full capture retrofit (80–90%) with pre-investment– CO2 Purity: 100 ppmv total sulfur


IGCC Case Studies 2008 Financial Design Basis

• 1st Quarter 2008 costs (Foster Wheeler Italiana)• Total Plant Cost (TPC):

– TPC = Bare Erected Cost + Eng/HO Fees + Contingency (10%)• Production Cost (PC):

– PC = O&M + Consumables + Fuel + CO2 Transportation & Storage• O&M: O&M = Fixed + Variable• Consumables: Chemicals, Catalysts, Water, etc.• Fuel: Coal and Natural Gas (backup/flaring)• CO2 Transportation & Storage: $10/tonne• Carrying Charge Factor: 0.1236 (Capital Component of COE)• Constant Dollar COE:

– COE = Total Production Cost + Carrying Charges

Assumed 80% Plant Capacity Factor for All COE Calculations


Comparison with Prior EPRI Estimates

0

1,000

2,000

3,000

4,000

5,000

6,000

Tota

l Pla

nt C

ost,

$/kW

Shell Shell CCS Shell Shell CCSUSC-PC USC-PCGE-RQ GE-CCS

PRB Bituminous Coal

Cross-hatched ranges are for corresponding cases in prior year EEE report


IGCC Case Study Capital Cost Observations

• There is a broad overlap of cost estimates for IGCC plants both with and without CO2 capture

• Capital costs for PRB plants are 5–10% higher than for plants designed for Pittsburgh #8 coal

• The capital costs are only slightly higher than those shown in the prior EEE report (1014223, Sept. 2008)– Uncertainty bands are now more balanced at +/-

15% versus -5/+20% for IGCC and -5/+10% for PC in prior EEE report


EPRI Review of Studies by Others

• IEA Report on Co-Production of H2 and Electric Power– Foster Wheeler adjusted capital cost estimates from 1Q 2007 to

2Q 2008 by using the following factors: Direct materials 1.21, Construction 1.33, Other costs 1.27, and EPC Services 1.33. Delivered coal cost was adjusted to 100 Eu/mt.

• GE In-House IGCC Study on CO2 Capture– Looked at adding “Carbon Island” to IGCC plants w/o capture– Evaluated different levels of capture with single or 2-stage shift

• CoP/WorleyParsons IGCC Study on CO2 Capture at High Elevation– Based on Siemens 5000F gas turbine– Evaluated performance and cost penalties for 0–90% capture

• Several IGCC papers advocate CCS designs for NGCC equivalency (~50-60% CO2 capture).

• CoP/WorleyParsons Feedstock Impact on IGCC with CO2 Capture (~50%)– Gulf coast vs. minemouth performance and cost


Existing US Coal Plants—Pay Carbon Tax? Shut Down? Replace with New? CCS Retrofit?

• US Existing boilers >300 MW and <35 years old represent 184 GW. 90% CO2 capture applied to these units would provide a 50% reduction in US coal power CO2 emissions (~1 Billion mt/year).

• Keep running and pay for CO2 allowances or CO2 tax?• Keep running, but at reduced capacity factor (CF), and pay the CO2allowances/taxes?• Shut down—but need to replace power with new build?• New coal plant costs have risen to the point that CCS retrofits may

warrant consideration if: – Space available– FGD and SCR in place– Suitable sequestration site identified– Remaining life of existing plant renders it worthwhile

• Preliminary analysis for 600 MW SCPC suggests LCOE of retrofitted plant lower than new coal plant, and while dispatch cost higher than for new coal is still lower than NGCC at NG >5$/Mbtu.

• EPRI now conducting Multiple site specific CCS Retrofit studies


Where Are Capital Costs Headed?

Factors leading to lower capital costs:• Commodity costs are declining from 2008 peaks• Reduced demand due to worldwide recession • Currency exchange rates (country-specific; in United

States, the dollar improved versus other currencies) Factors leading to higher capital costs:

• Need for infrastructure projects in developing nations• Increased project finance costs due to credit crisis

We are indeed in a period of great uncertainty…


Together…Shaping the Future of Electricity

epri igcc engineering & economic evaluations - 2009

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