BOSTON, Aug. 12, 2020 /PRNewswire/ -- A new study by consultants at The Brattle Group assesses the cost-effectiveness of carbon capture and sequestration (CCS) for utilities in meeting decarbonization goals. The study shows that some opportunities currently exist to retrofit coal-fired power plants with CCS at low net costs. In the future, the economics of CCS are likely to become more favorable, as the value of emission-free dispatchable energy in deeply decarbonized systems, which CCS can provide, is likely to be very large.
The new study suggests that with the benefit of recent tax credits and under the right market circumstances, CCS can be developed today at a minimal incremental net cost. The Brattle study also shows that the value of CCS has the potential to grow as utilities and states fully decarbonize their systems. This value will increase because, as renewable penetration becomes material, the marginal costs of decarbonization with only wind, solar, and battery storage can become very high. CCS may also help supply decarbonization in settings where renewables are not as abundantly available. Therefore, the study authors suggest that utilities should start to consider CCS in their planning, anticipate the tradeoffs of CCS with other emerging technologies, and lay the long-run foundation for this technology.
Until recently, the development of CCS has progressed slowly, due to the more favorable economics of other clean generation technologies, as well as uncertainty about public policies for decarbonization. The recent expansion of US federal tax credits (45Q), which provide $35 or $50 per ton of emissions sequestered depending on the storage location, combined with the possibility for enhanced oil recovery (EOR) revenues in some locations, have created a material new incentive for CCS.
The study authors find that retrofitting a fairly efficient coal plant with present-day CCS technology can add little or no incremental operating cost to the owner with these tax benefits, EOR revenues, and moderate emission allowance pricing. Retrofitting may also provide other benefits – such as job preservation and dispatchable clean power – that are difficult for renewables to match.
The Brattle study focuses on the costs of CCS rather than value. Currently, even a clean coal plant is likely not as economical as renewables. However, they note that the value of non-intermittent clean backup and round-the-clock generation is likely to be substantially higher in a deeply decarbonized system than the value today, in an environment where renewable penetration is low and its integration is fairly easy.
"Utilities should shift their perspective of CCS as a 'retrofit technology' to a technology that is a valuable option in a long-range solution set to reduce costs and improve the reliability of achieving a very clean grid," noted Brattle Associate Kasparas Spokas, a study coauthor who has been involved in CCS analyses.
Brattle's analysis finds that the amount and timing of when CCS becomes cost-effective will depend on the renewable resources in the power system's region, opportunities to sell or sequester CO2, the cost of alternative technologies (including emerging technologies such as the Allam Cycle), and the degree of decarbonization desired. In a future where many as-yet unproven and improving approaches and technologies will be needed, CCS may become an important part of that tool kit.
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