Making CCS Projects Happen ADB Clean Energy Forum June 2012

Gwen Andrews Vice President, Power & Environmental Policies, Asia & Oceania

Three main activities in four Sectors

Equipment & services for power generation

Equipment & services for rail transport

ALSTOM THERMAL POWER

ALSTOM TRANSPORT Equipment & services for power transmission

ALSTOM RENEWABLE POWER

ALSTOM GRID

Global power market forecast New Power Plant Orders in GW p.a, medium term
Av 230/260 GW p.a
Europe Russia & Cis

China

NAM

India

Other renewable Solar Wind Hydro Nuclear Conventional Steam Plant GT Plant

MEA LAM Asia

Highest demand in emerging countries Growing share of CO2-free across the globe.

CO2 Capture Solutions within Alstom

Power Plant with CO2 capture

Post-combustion
(New + retrofit)

Oxy-combustion
(New + retrofit)

Pre-combustion
(New only)

Source: Vattenfall

Solutions developed by Alstom

Chilled Ammonia
Advanced Amines

Oxy combustion with Air Separation Unit Chemical Looping Combustion

CCS must be applied to the installed base as well as to new plants

Alstom activity on demonstrations 1st and 2nd Generation CCS

Tests complete Operating Large-scale projects-under development
NER300 NER300

Dow Chemical Co. US -2 MWth Adv. Amines - coal

Vattenfall SchwarzePumpe Germany30 MWth Oxy - Lignite

Total Lacq France - 30 MWth Oxy - Gas

PGE Belchatow Poland 260 MWe Adv. Amines - Lignite

NER300

EoN Karlshamn Sweden - 5 MWth

Chilled AmmoniaFuel oil

WE Energie US - 5 MWth Chilled Ammonia, Coal

Alstom Labs Vxj Sweden 0.25 MWth Post C. multi purpose

Alstom BSF Windsor US - 15 MWth Oxy - coals

Getica - CET Turceni Roumania >250MWe Chilled ammonia - Lignite

NER300: Applied for EU ETS New Entrant

Datang- China Oxy 350 MWe lignite, Post 350 MWe eq. coal
Selected for receiving EEPR funding

Under construction

2nd

Gen

Reserve funding

2 Gen

TCM Mongstad Norway - 40 MWth Chilled Ammonia - Gas

EDF Le Havre France 5 MWth Adv. Amines - Coal

DOE/Alstom Windsor US 3 MWth Chemical looping - coal

RFCS EU -Darmstadt Germany 1 MWth Chemical looping - coal

What we have achieved

Reached CO2 capture rate
We Energies Pleasant Prairie USA - Coal - Chilled Ammonia AEP Mountaineer USA - Coal - Chilled Ammonia Dow Chemical Co. Charleston USA - Coal Advanced Amines Vattenfall Schwarze Pumpe Germany - Lignite & Bit. Coal - Oxy

CO2 purity >99%

25

Load [%] on net efficiency

90%

First commercial units will be at or below 20%

90%

>99.9%
20

90%

>99.5%

15

Realistic limit
10

90%

>99.7%

**

Pilot operation confirm CO2 capture works and performances are improving

Costs of decarbonised power compared

/ MWh
400

CoE - Low Carbon technologies Europe in 2011-2016 period

300

Reference case
200

100

65
0

84

20 15

H yd ro

20 15

N uc le ar

in d

in d

ol ar P

er m

ns ho r

G T

H ar dc oa l

ffs

C C

CCS on Coal and Gas is competitive

ol ar Th er m

C C S

C C S

eo th

ho re

al

al

Barriers and Challenges

Technical - technical performance has been proven - costs of energy penalty an issue

Storage

- mapping and proving appropriate storage takes time

- locations near large sources are most economic Regulatory

- Regulation of ownership, operation and monitoring of storage - Policy regulation to encourage CCS (eg, emissions performance standards) - Regulation to avoid stranded assets (eg, CCS ready standards)

Barriers and Challenges - Financing

The biggest challenge is to find a means of financing the large scale demonstrations that will allow the technology to become commercialised Capital costs will need to be shared by governments, as the investment required for capture, transport and storage is too large to be borne by utilities during the demonstration phase

A method must be found to cover the operating costs of CCS demonstration plants as well
- carbon pricing may cover some of the shortfall where it exists

- preferential tariffs can ensure that extra costs are covered

- there is precedent for preferential tariffs in terms of renewable energy

Datang CCS DEMO Projects

Daqing 350MWe+th Project
Full size Oxy-fuel combustion CO2 capture Cogeneration of Heat and Power based on Super Critical boiler using lignite

Location: Daqing, Heilongjiang province

EOR and CO2 storage: adjacent to PetroChinas Daqing oil field for EOR, near Songliao basin for geological sequestration

Dongying 1000MWe Project

Partial flue gas stream slip to Post-combustion CO2 capture Ultra Super Critical boiler using bituminous or subbituminous coal Location: Dongying, Shangdong province EOR: very close to Sinopecs Shengli oil field for EOR

Key Success Factors for CCUS in China

Cost effective CO2 capture technology Reliable and cost effective CO2 Storage

Outside funding for project execution

Special power tariff/ EOR or other utilisation schemes MOST endorsement of CCS capture technology and storage technology NDRC approval of project execution

How does CCS get financed?

Europe: NER 300 funding

- value of 300 million permits from the New Entrant Reserve in the EU ETS
- money identified upfront, time given for consortia to bid, possible US: project proposals assessed by DOE: - AEP Mountaineer had received $330 million - but could not get rate relief from the West Virginia state China: early days and the process is ad hoc - international funding is necessary - special tariff is necessary regulator competitive bidding

Issues for ADB

CCS is a developing technology of particular importance to Asia It requires co-operation by a number of partners, public and private, in the chain of capture, transport and storage
These are inherently complex projects

In emerging economies, CCS requires transfer of technology and skills

Which can realistically only come from Western companies at this point

Equally, it requires complex and co-ordinated support from government and financial partners

Two obvious impediments from ADB procurement policies

The prohibition against consultants being further involved in project delivery
Projects in countries like China can only be realised by technology suppliers and utilities working together Partners must commit early and co-operate through the entire chain of study, design, financing, construction and operation of the project

The requirement for International Competitive Bidding

The co-operative model is ill suited to ICB No international technology supplier will undertake the early planning work at the risk of losing the project to a competitor CCS is not a commercial technology that many vendors can provide

A different approach is required to realise innovative projects

Conclusion: What makes CCS projects different?

Technology not yet proven at commercial scale, and continuous R&D required with projects Large scale demonstrations required for learning and cost reduction Demonstration projects in China can help to bring costs down to address Asian expectations There must be co-operation between utility clients and suppliers with experience in integrating CCS equipment into power plants for this to succeed There is as yet no real competitive landscape for CCS. A way must be found to fund commercial scale demonstrations on a flexible basis without commercialisation, there is no competition

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