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Carbon capture getting lots of renewed attention

image credit: W H Parish Generating Station, courtesy of Wikimedia Commons

Supported by advances in new technology and federal support through grants and tax incentives, the nascent carbon capture sequestration (CCS) industry might well be in a stronger position today than ever before.  The high cost and complication of carbon capture technology have created several obstacles for success over the years.  According to the U.S. Department of Energy’s (DOE) advanced fossil energy research program, over the period from 2010-2017, only 3 of 9 projects funded remain active now.  There have been several announced projects that never got off the ground.  The most high-profile in recent years has been Southern Company’s mammoth Kemper County Energy Center (aka Plant Ratcliffe) integrated coal gasification (ICG), and CCS project (582 MW) in Mississippi.  With mounting costs, the company decided to scrap the development of the ‘clean coal’ technology project and convert the power plant to burn only natural gas. 

The importance of achieving success with CCS technology is paramount to slowing the rate of carbon emissions globally.  Consider that roughly 1,140 gigawatts (GW) of coal-fueled capacity has come online in the past 20 years, with nearly all (95%) built in China, India, and Southeast Asia.  The retrofit of CCS technology is key to keeping these relatively new power plants running in the future.  But today, according to data compiled by the Global CCS Institute, there are only 19 large-scale facilities in commercial operation around the world, with 4 currently under construction and 28 in various stages of development.  Of all the projects in operation, 17 are in the industrial sector, and only 2 in the power sector, the Petra Nova project (240 MW) in the United States, and SaskPower’s Boundary Dam project (115 MW) in Canada.   Of the 51 projects tracked, nearly half (24) are in the Americas.

The driver in America

The recently elevated interest in carbon capture across the United States is driven by the bipartisan Budget Act of 2018, in which Congress expanded and reformed the 45Q tax credit covering carbon capture projects.  Some of the key elements of the legislation including recent IRS guidance include:

  • $50/ton CO2 removed permanently 
  • $35/ton CO2 removed and used for enhanced oil recovery (EOR)
  • Commence to construct by the end of 2023 – requiring 5% of costs incurred
  • Construction over a six-year window
  • 80% minimum carbon removal goal

The high cost is the primary hurdle dampening CCS development, but with a 45Q tax credit as high as $35 and $50/ton granted for CO2 removal, CCS has gained new interest.  To put the tax credit into perspective, assume a project can remove permanently or through EOR technology 1 million tons of CO2 per year, over a ten-year period that translates into $500 million at $50/ton or $350 million at $35/ton – that is a significant and attractive tax credit. 

Newest American coal power plant explores the benefits of carbon capture

The Prairie State Energy Campus is one of America’s most efficient, largest, newest, and cleanest coal-burning power plants.  The large facility (1,766 MW) near the community of Marissa, Illinois, is comprised of two units that came online 8 years ago in 2012.  The plant is operated by the Prairie State Generating Company, LLC, and is owned by a group of eight public utilities that serve nine midwestern states and Peabody Energy, owner of the nearby mine that supplies coal via conveyor belt to the plant.

Late last year it was announced that three of the largest players in the carbon capture sequestration (CCS) market space would, under a federal grant (roughly $17.5 million), perform a Front-End Engineering Design (FEED) study to retrofit Prairie State with post-combustion carbon capture technology.

The three companies include Mitsubishi Heavy Industries (MHI) America, Kiewit Corporation, and Sargent & Lundy, all companies involved in the development and construction of the largest operating CCS project in the country, the Petra Nova facility in Thompsons, Texas, northwest of Houston.   The three companies are working on the Prairie State FEED study with The Prairie Research Center at the University of Illinois at Urbana-Champaign.  The work involves the retrofit of one of the two Prairie State units (816 MWe).  The study effort will be conducted from October of last year (2019) through October 2021. The engineering design goal is to achieve 95% CO2 removal.  The project represents the largest post-combustion carbon capture development project in the world with a goal to break ground at the study’s completion.

Prairie State Energy Campus unit-level generation (MWh), and total plant CO2 emissions (metric tons)

 

During the two-year period of 2018 and 2019, the Prairie State generating plant produced about 12.1 million MWh of electricity while emitting roughly 13.5 million tons of CO2 per year.  Incorporating sophisticated CCS technology like that developed by MHI’s Advanced KM CDR Process could be extremely beneficial and go a long way toward extending the life of valuable baseload generating assets like Prairie State. 

Petra Nova CCS Project

When completed in 2017, Petra Nova became the largest installed CCS facility in the world at a large-scale electricity generating power plant.  The project was started in 2009 when NRG Energy, owner, and operator of the huge W A Parish fossil power plant (3,652 MW), chose Sargent & Lundy to conduct the initial FEED studies and ultimately was awarded the engineering contract to develop the project, a joint venture of Carbon 360 (a subsidiary of NRG) and Japanese conglomerate JX Nippon Oil Exploration, Ltd.  Construction was contracted to a consortium of MHI and The Industrial Company (TIC) with the facility starting operations in 2016 on schedule and on budget.  Petra Nova was named “Project of the Year (with JX Nippon)” and “Coal-Fired Project of the Year” by Power Engineering Magazine in 2017. The project removes roughly 90% of all COemitted from the unit.   

From data compiled by the ABB Velocity Suite research team, Unit 8 (Petra Nova retrofit) at W A Parish produced 3.6 million MWh of electricity in 2016, with 4.0 million tons of CO2, an emission rate of approximately 1.13 tons/MWh.  Last year (2019) the plant generated nearly 4.0 million MWh, with CO2 emissions of about 2.3 million tons, a rate of 0.58 tons/MWh – nearly 43% less than in 2016.  The carbon captured at the Petra Nova facility is compressed and transported through an 82-mile pipeline where it is used for enhanced oil recovery (EOR) in the western Texas oil fields.

Petra Nova (W A Parish Unit 8) electricity production (MWh), and carbon emissions (metric tons)

 

Petra Nova has averaged around 1.3 million tons of CO2 removal in recent years with a 90% carbon emission capability.  The Prairie State project, when complete, could remove as much as 95% of carbon emissions from half of their plant – which calculates to about 6.5 million tons per year.  That translates into billions of dollars in potential tax credits over a decade of operation.      

Other projects getting attention

On May 20, 2020, Flour Corporation announced they had been chosen to lead the FEED effort for Minnkota Power Cooperative’s ‘Project Tundra’.  Back in April, the DOE awarded $17 million to North Dakota’s Energy and Environmental Research Center (EERC) to fund the study.  With the EERC award and other grants, the project has secured about $43 million.  The CCS project involves retrofitting the Milton R Young Station in Center, North Dakota with Fluor’s Econamine FG Plus(SM) carbon capture technology that involves the removal of carbon from flue gas streams.

The Milton R Young CCS project comes with an estimated $1.3 billion price tag.  When construction is complete, and the project is operating, the project (455 MW) would become the largest CCS operating project in the world with a carbon emissions removal goal of 90%.  When fully operational the project could create roughly $3 billion in tax credits over 20 years.  Minnkota serves 11 distribution cooperatives with 135,000 customers in eastern North Dakota and northwestern Minnesota.  The company’s plan to study CCS comes at the same time another regional cooperative, Grand River Energy, announced they intend to retire the largest power plant in North Dakota, Coal Creek Station (1,210 MW), by the end of 2022.  The concern for Minnkota centers on the need for baseload power in the harsh climate of the northcentral United States, where winters can be brutal and renewables like wind and solar are dependent on sunshine and windy days. 

Along with Prairie State and the Minnkota project, earlier this year, the city of Farmington, New Mexico, with partner Enchant Energy, announced they would also study the feasibility of retrofitting the massive, slated for shutdown San Juan Generating Station (1,684 MW) with CCS technology.  If the partners can find financial support, the estimated $1 billion project would start construction as early as the end of 2023.  The retrofit would enable 90% carbon removal rates and allow the coal plant to operate through 2035, otherwise, closure is expected by the end of 2022.

On a smaller scale, Occidental Petroleum, the largest oil producer in the Permian Basin of Texas and New Mexico, has announced, with Canadian partner Carbon Engineering, plans to implement carbon capture technology at two ethanol facilities in Texas.

UK’s ambitious ‘Humber Zero’ plan

Topping the global mega carbon capture development projects is the United Kingdom’s hydrogen and CCS plans for the refineries and a large fossil-fuel power plant in the Humber region.  The consortium of partners, including Phillips 66, Uniper and Vitol’s VPI Immingham (1,240 MW) power plant, recently signed a memorandum of understanding (MoU) to co-develop ‘Humber Zero’, a large-scale carbon capture and hydrogen production project with the capability to initially decarbonize up to 8 million tons of CO2 emissions per year, with the potential to target up to 30 million tonnes.  The project, which involves post-combustion carbon capture on two of the three operating generating units at the VPI Immingham plant and selected processing units at the Humber and Lindsay refineries, will combine to create both green (renewables) and blue (natural gas) hydrogen fuels to drive the third generator at the plant.  The primary goal is to keep one of the UK’s largest and most efficient baseload power generating facilities running while staying on target with ambitious government ‘zero-carbon’ goals.

In the United States, carbon capture projects will likely only be economically viable with the lucrative 45Q tax credit, so time is of the essence.  Construction must start before the end of 2023, with at least 5% of project investment, and be completed within a six-year window.  Around the world there are about 630 GW of operating coal capacity that is less than a decade old.  With that backdrop, continued investment in new innovative CCS technology could keep the relatively new coal-fueled power plants contributing to the grid as the industry continues moving toward a cleaner power future.

Kent Knutson's picture

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Discussions

Matt Chester's picture
Matt Chester on May 27, 2020 4:39 pm GMT

Kent-- based on your reading and understanding, how much of this attention is driven by those who have a personal/political/financial stake in coal remaining viable vs. those who see it as a genuine part of the climate solution?

Kent Knutson's picture
Kent Knutson on May 29, 2020 7:32 pm GMT

Matt -- I am not sure I can answer your question.  New technology is evolving all the time -- its driven by the opportunity to make money.  I don't think the promotion of carbon capture for some relatively new fossil plants has much to do with climate or personal/political reasons.  It's always all about the money.  With a lucrative tax credit hanging overhead, EPC companies and utilities are taking a close look at the benefits of CCS.  But the costs are high, so it will be a tough row to hoe.    

Mark Silverstone's picture
Mark Silverstone on Jun 1, 2020 2:22 pm GMT

DNV-GL has just published a look at CCS. It is not encouraging. https://www.dnvgl.com/feature/carbon-capture-storage-ccs.html?utm_campaign=OG_GLOB_20Q2_NURT_Hydrogen%20whitepaper%20-%20download-follow-up%2001&utm_medium=email&utm_source=Eloqua

Even with a $50 per tonne cash rebate and massive investment, CCS is not likely to be economically attractive anytime soon.  It is hard to imagine that even a hefty CO2 tax will make it happen.

"A recent analysis by WindEurope and DNV GL (2018), focusing on Europe, shows that CCS would be economically attractive with CO2 prices at €90 per tonne, allowing for the extended use of natural gas against other possible low-carbon alternatives."

Gary Hilberg's picture
Gary Hilberg on Jun 2, 2020 2:29 pm GMT

Kent - very detailed summary of the most current CCS plants.  As you continue to document this progress, I would recommend that you report on the net CO2 removed.  Many of these CCS technologies are highly energy intensive. I looked at a direct air capture technology earlier this year and it consumed about 1000 lb of CO2e (electricity and natural gas) while capturing 2000 lb of CO2e, of course it is listed at the gross capture rate.  Assuming that we will have excess renewable energy to capture CO2 is a viable way for good technology development.  Good article, it would be good to see a comparative listing of net carbon capture vs. gross.  

Carl Bozzuto's picture
Carl Bozzuto on Jun 2, 2020 6:46 pm GMT

Using the figures of $1.3 billion for the M. Young plant of 455 Mw, I get $83/ton of CO2 removed using a 20% capital charge rate and 7000 full power hours/yr.  That assumes that the 455 Mw is net after the addition of the CCS plant.  If that is the base plant, the energy use of the CCS plant does need to be accounted for.  Both MHI and Fluor have been working the reduce the energy penalty for their systems.  The last figure that I recall is a 17% energy penalty.  This would raise the cost to $100/ton of CO2 removed.  This figure is reasonably close to the 90 euro/tonne cited above.  Thus, $50/ton covers only half the cost.  However, other costs have to be considered as well.  If there is economic life in the existing plant, there is additional value to be considered.  Also, there is some value in having the plant available when wind and solar are not.  There may also be availability issues with natural gas at the plant.  One plant in New York State wanted to convert to natual gas, but had no pipeline access.  Thus, the cost of permitting and constructing a new gas pipeline had to be added to the cost.

CCS developers are trying to get the energy penalty down below 10% and their cost down below $50/ton of CO2.  The DOE target was $40/ton at around the time the 45Q incentive was included in legislation.  If the $80 - 90/ton figure is used in the learning curve at 3 plants (instead of $120/ton), then another handful of plants could possibly get to $50/ton, or less.  The question then becomes how to fund the first 10 - 12 plants needed to get there.  Presuming large scale, global reductions in CO2 will be necessary, CCS will be a needed technology in the suite of solutions needed to achieve that goal.

Kent Knutson's picture
Kent Knutson on Jun 3, 2020 4:43 pm GMT

Carl, Gary and Mark,  Thx for your comments.  Carbon capture is a difficult proposition . . . but with over 600 GW of less-than-a-decade old coal plants, mostly in Asia, it's going to take a lot of innovation, battery storage, and who knows what new technologies to keep the grid reliable and electricity reasonably priced.  Interesting times today and ahead.  thx again 

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