Natural Gas-CCS: Not a Bridge, but a Destination - presentation by John Thompson of Fossil Transition Project Clean Air Task Force at the UKCCSRC Natural Gas CCS Network Meeting at GHGT-12, Austin, Texas, October 2014

1. Natural Gas-CCS: Not a Bridge, but a Destination
John Thompson, Director Fossil Transition Project
Clean Air Task Force
Natural Gas CCS Networking Meeting at GHGT-12 Austin, Texas October 7, 2014

2. Low Cost Natural Gas
•
At current North American gas prices, one of the lowest cost options for electricity with minimal CO2 emissions is natural gas combined-cycle power plants equipped with CCS-EOR.
Natural Gas Price ($/MMBtu)
NGCC-CCS/EOR Electricity Price

3. Capital Cost Advantage
•
The cost of building an NGCC plant with CCS is about the same as building an uncontrolled coal plant. So the magnitude of the capital risk to investors for a natural gas plant with CCS is quite favorable.

4. Dispatch Advantage?
•
NGCC plants with CCS-EOR could have a dispatch advantage over uncontrolled NGCC plants.
–
With EOR, each ton of CO2 captured is sold and produces revenue.
–Depending upon the CO2 selling price and transportation costs, the EOR revenue could reduce the variable costs of an NGCC plant with CCS-EOR below those of an uncontrolled NGCC plant.

5. Limited Integration Costs
•
Compared to intermittent sources like wind and solar, NGCC with CCS-EOR has minimal integration costs.
Electricity price of new, uncontrolled gas plant
PTC exclusion Integration costs
LCOE ($/MWh)
Source: CATF adaptations to EIA Annual Energy Outlook 2013

6. Conclusions
•
NGCC-CCS/EOR is perhaps the lowest cost, low-carbon option in the US today given current natural gas prices.
•
The capital risk to investors is quite favorable. The capital needed to build an NGCC plant with carbon capture is equal to or less than the capital needed to build an uncontrolled coal plant.
•
NGCC plants with CCS-EOR could have a dispatch advantage over uncontrolled NGCC plants.
•Unlike variable low-carbon resources such as wind, NGCC- CCS/EOR plants do not have high hidden system integration costs.
•These advantages mean natural gas should not be seen simply as a bridge fuel. When coupled with CCS-EOR, natural gas is a destination – a long-term low-carbon energy solution.

7. Appendix

8. Integration Costs
•
Integration includes profile costs (fluctuating output), balancing costs (output uncertainties) and grid costs.
•
At higher penetration, integration costs for wind exceed generation costs.
Source: System LCOE: What are the costs of variable renewables? Falko Ueckerdt, Lion Hirth, Gunnar Luderer, Ottmar Edenhofer Paris, June 20, 2013 32th International Energy Workshop

9. Integration Costs (continued)
•
Idaho Power Study examined integration costs for wind:
–
11% wind penetration: ~$17/MWh
–
16% wind penetration: ~$50/MWH
Source: Wind Integration Study Report, February 2013
Integration Costs and Penetration