From demonstrators to commercial CCS costs

Dr. Wilfried Maas, Shell General Manager Technology

Carbon Capture demonstration projects

Member UK CCS Cost Reduction Task Force

• CCS demonstration projects can have high costs (from constraints and FOAK elements) – but will bring key first data points and thus establish the

stepping stones for:

• further reduction in CCS costs in a developing industry with – T&S infrastructure sharing and – Financing (derisking) and – Scale and supply chain and – Engineering and Technology and – Retrofit on CCS ready // Greenfield clean power plants and – ..

• Task force (CCSA chair) 25 participants:

- Key cost components of CCS and the key cost reduction opportunities; - Routes to realising these cost reductions and the actions required - Commitment from industry on initiatives to reduce cost and the steps Government could take to establish the right market framework and incentives to encourage industry to invest

- 21/11/2012 Interim report - 16/05/2013 final report

- Inventory of gaps and actions - 16/10/2013 Response from Government

- CCS Development Forum - UK CO2 Storage Development Group - UK CCS Commercial Development Group - UK CCS Knowledge Transfer Network

https://www.gov.uk/government/policy-advisory-groups/ccs-cost-reduction-task-force

Key Conclusion

UK gas and power stations equipped with Capture, Transport and Storage have clear potential to be cost competitive with other forms of low carbon power generation, delivering electricity at levelised costs approaching 100 £/MWh by the early 2020s and at a cost significantly below 100 £/MWh soon thereafter.

Uncertainty in cost ranges

Sources for cost reduction • Commercial operation lifetimes from shorter duration demonstrators • Storage

– Liability and risk management – Storage hubs – Rate of injection – Scale

• Transport – Well designed network – Scale

• Generation and Capture – Scale up – Capture technology improvements, specifically energy penalty – Competitive supply chain – Redundancy, integration and materials

• Cost of Capital/Finance – Derisking of CCS chain – Suitable funding structures – Education and involvement of financial sector in CCS

Impact on cost vs uncertainty

Cost build up differ for fuel & technologies

0

20

40

60

80

100

120

140

Post Comb Gas 2020 Post Comb Coal 2020 Oxy Comb Coal 2020 Coal IGCC 2020

£/M

Wh

Storage Opex

Storage Capex

Transport Opex

Transport Capex

Carbon cost

Host plant additional fuel cost

Host plant additional Opex

Host plant additional Capex

Capture O&M

Capture levelised Capex

Ref fuel cost

Ref plant O&M

Ref plant levelised Capex

• Supporting demonstration for different fuels and technologies

Modest cost reductions in base power plant costs

0

20

40

60

80

100

120

140

160

Post Comb Gas 2013 Post Comb Gas 2020 Post Comb Gas 2028

£/M

Wh

Storage Opex

Storage Capex

Transport Opex

Transport Capex

Carbon cost

Host plant additional fuel cost

Host plant additional Opex

Host plant additional Capex

Capture O&M

Capture levelised Capex

Ref fuel cost

Ref plant O&M

Ref plant levelised Capex

• Reflecting maturity of base generation and fixed fuel price premises

• Fuel price and base plant capex impact base power costs more than CCS costs

• Base power cost contribute significantly to clean power costs

Additional cost of Post Comb gas CCS • Substantial contribution from T&S infrastructure

• Capture plant scale and lifetime

• Additional fuel cost reduction through efficiency improvements

0

10

20

30

40

50

60

70

80

90

Post Comb Gas 2013 Post Comb Gas 2020 Post Comb Gas 2028

£/M

Wh

Storage Opex

Storage Capex

Transport Opex

Transport Capex

Carbon cost

Host plant additional fuel cost

Host plant additional Opex

Host plant additional Capex

Capture O&M

Capture levelised Capex

Additional cost of Post Comb Coal CCS

0

20

40

60

80

100

120

Post Comb Coal 2013 Post Comb Coal 2020 Post Comb Coal 2028

£/M

Wh

Storage Opex

Storage Capex

Transport Opex

Transport Capex

Carbon cost

Host plant additional fuel cost

Host plant additional Opex

Host plant additional Capex

Capture O&M

Capture levelised Capex

• Substantial contribution from T&S infrastructure

• Capture plant scale and lifetime

• Additional fuel and capex reduction through efficiency

Study premises 2013 2020 2028 2013 2020 2028

Fuel/fuel price £/GJ Gas/7.3 Gas/7.3 Gas/7.3 Coal/3 Coal/3 Coal/3

MW capacity 300 600 600 300 800 800

Host % efficiency 54 56 56 43 45 45

Host plant capex £/kW

550 500 500 1400 1400 1400

Capture plant capex £/kW

813 726 626 1241 1103 932

Energy penalty % 19 14 11 25 18 15

Capture Efficiency % 85 90 90 85 90 90

Type T&S km On/ Offshore Vol (mtpa)/ line size “

Single 30/300 1/10”

Single 40/300 2/15”

Cluster 40/300/x/36”

Single 30/300 2/15”

Single 40/300 4/18”

Cluster 40/300/x/36”

Economic life (y) 15 25 25 15 25 25

WACC Gen, Cap & T/S 10/15 10/14 8/12 10/15 10/14 8/12

7 Key next steps • Ensure optimal UK CCS transport and storage network

configuration • Incentivise CO2 EOR to limit emissions and maximise UK

hydrocarbon production • Ensure funding mechanisms are fit for purpose • Create bankable contracts • Create a vision for development of CCS in UK from follow on

projects through to widespread adoption • Promote characterisation of UK CO2 Storage locations • Create policy and financing regimes for CCS from industrial CO2

– + 26 supporting steps – + 3 Development groups

Backup

CCS Cost build up differ for fuel & technologies

0

10

20

30

40

50

60

Post Comb Gas 2020 Post Comb Coal 2020 Oxy Comb Coal 2020 Coal IGCC 2020

£/M

Wh

Storage Opex

Storage Capex

Transport Opex

Transport Capex

Carbon cost

Host plant additional fuel cost

Host plant additional Opex

Host plant additional Capex

Capture O&M

Capture levelised Capex

Model background

• Model described in

– Potential cost reductions in CCS in the power sector Discussion Paper, May 2012. Department of Energy and Climate Change. Mott MacDonald

• Adjusted by CRTF from MMD low cost pathway

• New plant iso retrofit