Pathways to low-carbon coal-fired power generation in Europe

DNV SERVING THE ENERGy INDUSTRyAbatement potential towards 2020

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CONTENTS

04 Abatement potential towards 202004 How to read the abatement curves?05 The relevance to utility managers

07 What is a realistic reduction potential?11 Conclusions

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In this Pathways to low-carbon coal-fired power generation in Europe, DNV analyses the projected coal-fired power plant (CFPP) population in 2020 and the potential and cost of four major CO2 emission abatement measures. The baseline emission of the population in 2010 is determined to be 830Mton. This corresponds to 17% of the total CO2 emissions in Europe. Since nearly a third of the electricity in Europe is generated by CFPPs, this population covers a major fraction (64%) of the power sector’s greenhouse gas emissions. The four measures have been investigated in order of cost-effectiveness, starting with the most cost-effective measure: combined heat and power, a shift from subcritical to supercritical units, biomass co-firing, and carbon capture and storage. The results of this study are presented in Marginal Abatement Cost Curves (MACC). These curves demonstrate that, by 2020, CO2 emissions from CFPPs can be reduced by 7% below baseline at negative cost and by almost 13% if all four measures are fully implemented.

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abatement potential towards 2020

This study analyses the carbon dioxide emission reduction potential in the year 2020 by introducing four major emis-sion reduction measures to the coal-fired power plant popu-lation in Europe.

Marginal abatement cost curves (MACC) have been devel-oped based on DNV’s experience gained from energy effi-ciency studies, as well as on technology outlooks available in literature [1], industry sources [2] and the DNV model for low carbon shipping [3].

Figure 1 illustrates the reduction potential achievable by four emission reduction measures plotted against their estimated cost-effectiveness for the coal-fired power plant population in Europe (see the box at the bottom of this page “How to read the abatement curves?”). The measures included in the analysis are: combined heat and power (CHP), a shift from subcritical to supercritical units (S2SC), biomass co-firing (BCF) and carbon capture and storage (CCS).

General improvements (GI) are also accounted for. These improvements include not only operations and control optimisations and improvements in turbine technology, but also progress in material science which leads to improved

combustion technology or advanced boiler materials and performance, etc.

The population model includes units in countries with a share of electricity generated by coal that exceeds 20%. The European countries with the largest contributions are Germany, the UK, Spain and Poland. The IEA Clean Coal Centre Database [4] has been used as a basis for the base-line population in 2010. In total, more than 76% of the installed electric CFPP capacity in Europe is produced in the selected countries, and the population database covers 79% of the capacity in these countries. The baseline emission of the population in 2010 is determined to be 830Mton. This corresponds to 17% of the total CO2 emission in Europe in 2010 [5].

DNV’s baseline scenario assumes a constant coal-fired elec-tricity generation up to 2020 and predicts that the baseline emissions will be reduced to 767Mton. This baseline sce-nario is the situation in 2020 without implementing the proposed measures but incorporating the general improve-ments. In this scenario model, the construction of new units and decommissioning of old units are incorporated and determined on a yearly basis.

The abatement curves illustrated in Figure 1 summarise the technical opportunities to reduce emissions from the coal-fired power plant population in operation by 2020. The width of each bar represents the potential of that measure to reduce CO2 emissions from the population compared to a baseline scenario. The height of each bar represents the average marginal cost of avoiding 1 ton of CO2 emissions through that measure, assuming that all measures to the left are already applied.

The marginal cost shown in Figure 1 is the average cost for all power plant types and sizes. The graph is arranged from left to right, showing the increasing cost per ton of CO2 averted. The effect of the remaining measures decreases as one measure is implemented, and the most cost-effective measures are implemented first. Where the bars cross the x-axis, the measures start to result in a net cost instead of a net cost reduction. Future carbon cost is not included in the illustration (i.e. the carbon price is zero), but will in principle improve the cost-effectiveness of the measures.

How to reAd tHe AbAtement curves?

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100

75

50

25

0

-25

-500 10 20 30 5040 60 70 80 10090

GI CHP S2SC

BCF CCS

Baseline: 767 million tons per year

CO2 reduction (million tons per year)

Cos

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n C

O2

aver

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(€/t

on)

FIGure 1: Average marginal co2 reduction per option - coal-fired power plants in Europe in 2020

The model includes the majority of coal-fired power plants in Europe divided into a manageable set of segments. The results presented here show the emission reduction potential evaluated for characteristic (average) units within each segment. Detailed analysis of individual units or stations within the same segment might result in different emission and cost curves depending on technical and operational aspects and taking into account measures that may already have been implemented. Hence, utility managers should read the results with care and not expect the

results to be directly transferable to their own units or stations.

In the DNV models, individual CO2 reducing measures can be analysed and the effects and costs can be accurately assessed taking into account the specific details of each unit and its operational characteristics. The analysis presented here is primarily designed to support decisions regarding policy and regulations. It also illustrates the overall sector dynamics and can serve as guidance for portfolio management.

tHe relevAnce to utIlIty mAnAGers

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In the DNV analysis, the population of coal-fired power plants has been divided into 14 segments. These segments represent the major technology types, i.e. Pulverized Coal Combustion, Fluidized Bed Combustion, Integrated Gasification Combined Cycles, as well as unit sizes. Examples are Pulverized Coal Combustion units larger than 600MWel or Fluidized Bed Combustion units between 100MWel and 200MWel. A further differentiation into coal types (anthra-cite, bituminous coal, sub-bituminous coal, lignite) and steam conditions (subcritical, supercritical) has also been incorporated.

Each of these segments has been modelled separately with regard to:■■ fuel mix and fuel price■■ the reduction potential of each measure■■ the lifetime of each measure■■ he utilisation rate of each measure, i.e. the percentage of units with the measure implemented

■■ the cost of each measure (incl. additional investment costs and additional operational and maintenance costs)

■■ the year when available measures are phased in

This allows for an activity-based determination of the fuel consumption and related carbon dioxide emissions.

Some measures are available for implementation in existing plants as retrofit solutions (e.g. biomass co-firing). Other measures are available for new constructions only (e.g. a shift from subcritical to supercritical units). The cost and reduction effect of the different measures can vary signifi-cantly between segments. Not all measures are applicable to every segment. For example, biomass co-firing is not applica-ble to IGCC units.

The assumptions per measure regarding the emission reduc-tion potential, cost and introduction schedule are based on literature surveys and DNV’s research and sector expertise [2].

Table 1 presents some of the main results highlighting the economic aspect. It shows the abatement cost levels neces-sary for ensuring a given emission reduction and the remaining emission level.

Co-combustion of biomass or waste together with a base fuel in a boiler is a simple way to replace fossil fuels with biomass or to utilise waste. Figure 2 shows the abatement curve for biomass co-firing. This curve illustrates that biomass co-firing is considerably more expensive, especially for smaller units, because of higher specific investment costs and increased operational and maintenance costs.

An average biomass price of 65€/ton was used, but large variations in biomass price exist depending on type and location. The total marginal abatement potential for bio-mass co-firing is 5.5Mton. Without policy support, biomass co-firing is not recommended as a structural abatement measure, but it may be applied if inexpensive waste fuel is available. Similar curves were developed for the other meas-ures as well.

Predicting future emissions involves significant uncertainty. A sensitivity analysis has been performed to determine the uncertainties in the model’s major input parameters. Important elements include uncertainty about the price and emission reduction effect of measures, the rate of uptake of new technologies and the population growth estimates. Best-case and worst-case scenarios have also been developed.

The main contributions to the uncertainty are caused by the population growth estimates. Early retirement of old units and replacement by new constructions will have a major impact on the population’s CO2 emissions. The conclusions for the individual abatement measures were strengthened by the results of the sensitivity analysis. The ranking of the abatement measures in terms of cost-effectiveness remained unchanged in all scenarios.

tAble 1 – Emission reduction and emission level in 2020 for specific abatement cost levels

AbAtementcost level [€/tco2]

emIssIon reductIon [%]

emIssIonlevel [mton]

baseline 0 767

0 6.8 715

70 13 670

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FIGure 2: Abatement curve for biomass co-firing

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FBC >200MWe

FBC 0-100 MWe

PC 0-50 MWePC 50-100 MWe

PC 100-150 MWePC 150-200 MWe

PC 200-300 MWe

PFBCPC >600MWeFBC 100-200 MWe

PC 400-500 MWe

PC 500-600 MWe

PC 300-400 MWe

CO2 reduction (million tons per year)

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This study has estimated the potential reduction in CO2 emissions from the coal-fired power plant population in Europe when a set of abatement measures is implemented. The aim has been to identify the maximum technically obtainable emission reduction in 2020. Where emission reduction and sound economic rationale pull in the same direction, the widespread implementation of cost-effective measures will occur over time. The rate at which existing technology

is adopted and the rate of uptake of new technology are important criteria. One crucial factor for achieving large reductions fast is the widespread use of technology as soon as it becomes available. Enforcement through regulatory means is necessary to ensure full implementation when one cannot wait for the economic pull to work. In this study, DNV has pointed out the costs of meeting specific emission reduction targets.

wHAt Is A reAlIstIc reductIon potentIAl?

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Artist’s impression of a Carbon Capture and Storage power plant

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conclusions

[1] For instance: IEA Energy Technology Perspectives 2010, Scenarios & Strategies to 2050, July 2010.[2] DNV Technical Report, Marginal abatement cost curves for coal-fired power plants in the EU – CO2 reduction potential for 2020, Report nr. 2010-9454.[3] Pathways to low carbon shipping. Abatement potential towards 2030, February 2010. http://www.dnv.com

[4] IEA Clean Coal Centre Coal Power Database: http://www.iea-coal.org.uk[5] EU energy trends to 2030 – update 2009, European Commission, Directorate-General for Energy, 2010, doi:10.2833/21664.

reFerences/Footnotes:

The results of this study illustrate what can be achieved when four measures are applied to Europe’s population of coal-fired power plants. The conclusion is that the popula-tion has the potential to reduce its CO2 emissions in 2020 by 7% below baseline at negative cost and by almost 13% if the four abatement measures are fully implemented. This cor-responds to a total reduction potential of 104Mton CO2 (including the general improvements).

DNV believes that the most important measures currently known have been included. The main conclusions regarding these measures are as follows:

■■ Carbon capture and storage has a great potential for reducing CO2 emissions but at a considerable cost (the highest cost of all the measures considered).

■■ Biomass co-firing is expensive and cannot be recom-mended as a structural solution for the sector. However, it may be an option if sources of inexpensive (waste) bio-fuel are available and it is aided by subsidy mecha-nisms (e.g. green certificates) and specific market instru-ments (e.g. carbon credits).

■■ Combined heat and power is interesting when applicable and can be achieved at negative cost for all segments. Local heat demand has to be seriously considered when investigating suitable locations for new construction.

■■ A shift from subcritical to supercritical units has the largest abatement potential and can be achieved at nega-tive cost for all segments.

Note that the CO2 price is set at zero. Including carbon prices will result in a lower cost per ton abated and thus increase the reduction potential achievable at negative cost.

Predicting future emissions involves significant uncertainty. Important elements include uncertainty about the price and effect of measures, the rate at which existing technol-ogy will be adopted, the rate of uptake of new technologies, population growth and unit decommissioning estimates. However, a sensitivity study confirmed the conclusions when reasonable uncertainties in the input parameters were taken into account.

10 I ENERGy I pathways to low carbon power generation I

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