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CCS and Its EconomicsPresentation to CCS Leadership Forum

American Clean Skies Foundation

November 4, 2011

Robert G. Hilton

© ALSTOM 2011. All rights reserved. Information contained in this document is indicative only. No representation or warranty is given or should be relied on that it is complete or correct or will apply to any particular project. This will depend on the technical and commercial circumstances. It is provided without liability and is subject to change without notice. Reproduction, use or disclosure to third parties, without express written authority, is strictly prohibited.

Alstom in the U.S. - P 2 | © Alstom 2011

Alstom: Three Activities

Leading global provider of equipment & services for…

Power Generation

Power Transmission

Rail Transportation


Strong & Sustained Sales, Worldwide


Transport

$8.0 bn

Power

$16.8 bn

•27%

•56%

•17%Grid

$5.1 bn

Total sales 2010/11: More than $29 billion USD

Key Facts & Figures:

•93,500 employees in 100 countries

•6% increase in sales from 2009/10 to 2010/11

•Steady increase in R&D investment to more than

$1 bn USD in 2010//11

•Leading provider of innovative clean

technology solutions


• Stabilising emissions by 2030 is possible thru solutions available today

Alstom’s Clean Power Strategy

Balanced Energy Portfolio

Production Efficiency & Flexibility

Carbon Capture & Storage


Life Cycle Management

Gas Hydro

Geothermal SolarBiomass

Oil

Coal Nuclear

Wind

Power Technologies for all Energy Sources



Fossil Support for Renewables

• Ability to rapidly counter sudden drop in renewable generation is essential to preserving reliability

• Intermittent renewables must be accompanied by “on-demand” sources� Flexible, CCS controlled gas generation� Technology available today can deliver >450MW in 10 mins� “Parking” at below 20% of plant output helps limit excess supply


Clean Power Day Malaysia - Clean Power Strategy - 07/11/2011 - P 7

Production Efficiency

New Plants

Retrofit

60% of the 2030 installed base still to be built

60% of Carbon emitted in 2030 will come from today’s installed base

•Automation Retrofit

•- 1% CO2

•Coal: +20 p.p in efficiency saves 40% emissions

•Plant Optimisation:

•-5% CO2

•Turbine retrofit:

•-5% CO2

•Boiler retrofit:

•-3% CO2

•Fleet automation

•Optimization of the use of CO2 free power

•Gas: +20 p.p in efficiency saves 33% emissions


Costs of CCS - PJ - 25 May 2011 - P 8

Key Messages

• CCS essential and affordable on both gas and coal.

• Fossil power with CCS costs no more than renewables.

• Policy support: an expectation of future regulation is needed to create the market for CCS.

• CCS deployment and demonstration needs further financial support:– Federal (or states) monies diverted such as EOR royalties or uniform

wire charges– Subsidies as applied to renewables- level market place– Credit subsidies for sequestration– Credit sale into existing and developing carbon markets


The CCS Reality today

• 74 large-scale integrated CCS projects identified world-wide � However many at risk or cancelled

• 14 projects operating or under construction � On power/gas processing/synfuels/fertilizer plants

• ALL operating projects:� Already capture CO2 as part of existing process� Earn revenues by selling CO2 (e.g. EOR)� Have advanced knowledge storage reservoirs (saves years of

costly research)

• Many major demonstrations postponed indefinitely due to uncertain policy environment & lack of funding

Technology has hit speed-bump on the road to commercializationSource: GCCSI Global Status of CCS: October 2011



Total LacqFrance - 30 MWth

Oxy - Gas

Vattenfall Schwarze PumpeGermany - 30 MWth

Oxy - Lignite

Vattenfall JänschwaldeGermany - 250 MWe

Oxy - Lignite

Dow Chemical Co. USA, West Virginia

Advanced Amines - Coal

AEP MountaineerUSA - 58 MWth

Chilled Ammonia - Coal

Coming

TCM MongstadNorway - 40 MWth

Chilled Ammonia - Gas

TransaltaCanada - >200 MWe

Post - Coal

Alstom BSF WindsorUS - 15 MWthOxy - Coals

CET - Getica (Turceni)Romania – >250MWe

Chilled Ammonia - Lignite

Selected for receiving EEPR funding Selected by Alberta and Federal Canadian funding

Selected by US DOE to receive CCPI Round 3 funding

EDF – Le HavreFrance – 5 MWth Adv.

Amines - Coal

PGE BelchatowPoland – 260 MWe Adv.

Amines - Lignite

Pre-commercial Projects

AEP MountaineerUSA – 235MWe

Chilled Ammonia - Coal

Alstom activity on pilots and demonstrations 1st and 2nd generation CCS

RFCS EU - Darmstad Germany – 1 MWth

Chemical looping - Coal

DOE/Alstom WindsorUS – 3 MWth

Chemical looping - Coal

Drax - SelbyUK - 426 MWe

Oxy – Hard Coal

2nd GEN

2nd GEN

NER300 appl.

NER300 appl.

NER300 appl.

NER300 appl.

Operating

http://mariusostrowski.files.wordpress.com/2008/09/eu_flag.jpg




CCS Cost Study – Key Assumptions

Study based on New Plant in Europe

Add-on costs for energy penalty and increase cost of electricity generation rises

Considers cost of electricity generated with CCS & cost of CO2 avoided

Two capture technologies: post-combustion and oxy-combustion using two fuels: hard coal and gas

Coal and gas (combined cycle) plants with CCS operating as base-load

CO2 capture rate of 90%

Conservative learning curves up to 2030; based on Rubin/CMU curves




• 90 % CO2 Capture and 99% CO2 Purity is demonstrated

• Feasibility of integrated capture – transport – storage established on a power plant

• Energy penalty < 20%, and soon at 15%

• Solid base for design and cost control

• Oxy and Post have good potential

14%

15%

16%

17%

18%

19%

20%

2010 2015 2020 2025 2030 2035

CCS OXYCCS PCC

15%

CCS PLANT – ENERGY PENALTY % AGAINST MWe net REF PLANT

Hardcoal CCS commercial plant size - Europe

Source: Alstom

Pilots show that CCS works:



Results (1)Hard coal• Costs of electricity generated (*):

€84/MWhr in 2015 = 70% more than the same plant without CCS€73/MWhr in 2030 = 45% more than the same plant without CCS

• The additional costs (*) are equivalent to:in 2015, €54 per tonne of CO2 avoidedIn 2030, €37 per tonne

• Oxy and post-combustion technologies deliver the same performance by 2030

• Energy penalty of 15-16 % can be realistically targeted by 2030• Lower total cost of electricity than solar, geothermal and off-shore wind• Competitive with nuclear, on-shore wind and large hydro• Coal with CCS is cheaper than onshore wind as well when additional

system costs for intermittent renewables are counted

�� PCC ��



Results (2)Gas• Costs of electricity generated (CoE):

– €65/MWhr in 2015 = 50% more than the same plant without CCS– €55/MWhr in 2030 = 30% more than the same plant without CCS

• The additional costs are equivalent to:– in 2015, €74 per tonne of CO2 avoided– In 2030, €49 per tonne

• Energy penalty of 15-16 % can be realistically targeted by 2030

• Lower total cost of electricity than wind (off- and on-shore), solar and geothermal

• Competitive with nuclear and large hydro



Overall• CCS on gas or coal is cost competitive with wind even now, before cost

reductions from learning effects. With the same FIT given to wind, CCS will be “commercially viable” as soon as demonstrated in 2015.

• Learning effects will increase CCS competitiveness against more mature renewables.

• A target of CO2 avoided cost in the range of €30-35/t is realistic by 2030 for coal.

• CoE uplift in 2030 will be 45% for coal and 30% for gas: CCS on gas is thus commercially viable and cheaper than CCS on coal.

• At a carbon price of €43 in 2025, coal CCS will be commercially viable without FIT. Gas, at a price of €54 in 2026.

• The main determinant of CoE remains the fuel price, especially for gas.

Results (3)



Cost increase <50% by 2030 for both Coal and GasCost of CO2 avoided: 37 €/t for coal and 49 €/t for gas in 2030

CCS essential and affordable on both gas and coal

CCS Cost of Electricity Impact is lower on gas than on coal !


Coal with CCS



Gas with CCS



CCS Cost Study - U.S. Implications

• NETL analysis shows some similarities to Alstom findings

• Alstom findings shared with key U.S. Stakeholders� Customers, Congress, DOE, EPRI

• Alstom planning U.S. and Asia studies -Fall 2011



8565

0

100

200

300

400

Nuclear

Hydro

Geotherm

alCCGT C

CS 201

5Onsh

ore Wind

PC Hardcoal C

CS 201

5Offs

hore W

ind

Solar P

VSo

lar The

rmal

•€ / MWh•CoE - Low Carbon technologies Europe in 2011-2016 period

•Reference case

Source : Alstom analysis 2011

CCS on Coal and Gas are competitive

Costs of decarbonised power compared



Variable Renewables

LevelizedCost of

Electricity(LCOE)

+ 20 to 50%

Source: Alstom, based on IHS- CERA and IEA studies

• Firming Costs :– Back-up capacity & storage

– CO2 emissions from back-up

– Installed base cost impact on flexibility, maintenance, and lower utilisation rate

• Intermittent Cost Penalty :– Increases with penetration

– Is highly dependent on regional grid configuration

– Is highly dependent on installed capacity base and reserve margin composition

TransmissionIntegration

Firming

Capex&

Opex

Intermittent power generation costs must be taken into account.

Cost Penalty for intermittent sources


Key Messages• CCS essential and affordable on both gas and coal.

• Fossil power with CCS costs no more than most renewables.

• CCS is an essential part of the portfolio of solutions needed to decarbonise power generation.

• Alstom is ready and well positioned for immediate scale-up, and to provide for a commercial offer by 2015.

• CCS deployment still faces significant challenges world-wide:– Financial support – Regulation/Permitting– Storage sites validation– Public awareness

12


How Do We Get There

Address the Challenges to CCS DeploymentC

CS

Dep

loym

ent

Increase Financial Support

Address Permitting & Regulation

Validate Storage Sites

Educate the Public

Build Rate Recovery Framework

Establish carbon price, policy or regulatory framework

Equal stance for CCS and other low-carbon options

Subsidize sequestration

Sell credits into existing carbon market

Uniform sector or regional wire charge

EOR royalties or other funding diversions

Alstom in the U.S. - P 29| © Alstom 2011


What Needs To Be Done

Funding

• Establish funding mechanism for large-scale demonstration

Market

• Re-engage discussions on policy framework for regulation and financial support

Technology

• Return to critical path for CCS evolution, drive down cost curve to meet customer needs

CCS Deployment & Progress Towards Climate GoalsAlstom in the U.S. - P 30 | © Alstom 2011


Thank You

alstom.com/us

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