ZEP Technology Platform Zero Emission Fossil Fuel Power

ZEP Technology Platform Zero Emission Fossil Fuel Power Plants The cost of CCS technology - designing a cost estimation process Kick-off 14 th September 2009 in Berlin Vattenfall Research and Development AB/Clas Ekström 8 th September 2009

Need to establish European expert consensus on CCS costs Highlighted as an issue at: • • CASTOR-ENCAP-CACHET-DYNAMIS workshop, Lyon, January 08 CO 2 NET Seminar, Warsaw, April 08 Plant equipment costs and fuel prices have increased considerably during the latest years: Ø Projects started 2006 – CACHET, DYNAMIS – report higher costs than projects started year 2004 – CASTOR, ENCAP On-going and new projects likely to report new cost-figures Ø Consistency between costs from different projects – and consequently for various technology options - remaining issue European consensus lacking, especially on costs for transport and storage of CO 2 Ø This became evident when providing input to Mc. Kinsey study “Carbon Capture & Storage: Assessing the Economics”, Sept 2008, and following study “EU Demonstration Programme for CO 2 Capture and Storage (CCS): ZEP’s Proposal”, Nov 2008. These studies are useful starting points for TTech cost work Views on potential CCS costs (as well as costs for other CO 2 emission measures) are used and frequently requested by i. a. : Ø Ø Makers of long term price projections for CO 2 emission allowances and electric power EU/EC and national authorities as input to formation of support schemes, policies and legislation Views on costs for various technology options influence allocation of investments and support for R&D: Ø Consistency between such estimates important

Purpose • To support the development of policy and legislation and allocation of R&D investments and support, buy layout cost consensus across ZEP community, clarifying ranges of numbers for representative scenarios and technology options. • Focus on “post-demonstration”/”commercial” phase, also recognizing “demonstration phase”

Overview Working Procedure 1. Elaborate and illustrate representative CCS cases • 2. Identify key criteria for “representative” Define common issues across CCS chain • • • 3. Basic assumptions and interfaces Basis for the CCS costs elaborated by ZEP TTech Share with EU-financed projects as a consistent basis for their cost evaluations Collect and calibrate costs • • • 4. Collect input from EU-financed projects, available studies and TTech members Adjust to consistency with the selected, representative CCS cases and basic assumptions Perform calculations Elaborate costs for representative complete CCS cases • 5. Combine selected capture, transport and storage cases into “total CCS cases”, considered to be representative for European regions Establish consensus across working groups • 6. Challenge discussions to agree on cases, input data, methodology and outcome Perform updates; tentatively each 2 nd year • • CCS cases (if/when needed) and basic assumptions CCS costs

Overview Working Procedure Cases Assumptions Interfaces Cases Updates: (each 2 nd year) Costs Consensus

Common Issues across CCS Chain 1. CO 2 pressures, temperatures and quality standard/composition(s) 2. Project timing – 3. Typical timelines for realisations of CCS projects Economic boundary conditions/Key assumptions – – – Interest rates Economic lifetimes Fuel prices Electricity prices (to calculate electricity costs for transport and storage) Currency exchange rates Year for cost levels

Power Plant and Capture Issues 1. Define reference power plants without CCS Fuels, sizes, state-of-the-art year, efficiencies, availabilities, specific investments and O&M costs For which European regions they can be considered as representative • • 2. 3. Define relevant power plant concepts with CO 2 capture Define some inputs to transport and storage: – – – 4. 5. Make 1 st estimates of CO 2 production rates Define “typical/representative” operation cycle(s), load factors technical lifetime(s) Define technical and economic boundary conditions specific for power plants and CO 2 capture Environmental regulations

Transport Issues 1. Define representative Transport Cases Scenarios commercial phase • • • Point-to-Point Clusters (Multiple sources - Multiple sinks) On-shore and Off-shore Scenarios demonstrator phase • • 2. 3. Point-to-Point On-shore and Off-shore Assumptions defining “typical” cases Boundaries, battery limits Integrated with power plant where possible

Storage issues 1. 2. 3. Boundaries for a cost analysis across value chain Cost analysis methodology Identify main Storage Cost items CAPEX/OPEX – 4. Define storage demonstrator phase/“short term storage scenarios” – 5. Benchmark with existing studies identify from current and upcoming demo projects Elaborate an approach to define storage commercial phase/“long term scenarios” – – Point-to-Point Clusters (Multiple sinks)

Collect and Calibrate Costs (1) Power plants and Capture 1. Collect data on reference power plants without CO 2 capture and power plant concepts with CO 2 capture from EU-financed projects, other available studies and TTech members 2. Adjust data to achieve consistency with the CCS Cases and Basic Assumptions 3. Calculate costs and compare to the corresponding Reference Power Plants Without CCS

Collect and Calibrate Costs (2) Transport 1. Transport Cost Elements: Identify main CAPEX/OPEX items • 2. 3. 4. 5. benchmark with existing studies Cost analysis methodology Collect Cost Element (unit costs) estimates, evaluate model and benchmark with Referenced Literature Adjust data to achieve consistency with the CO 2 Transport Cases and Basic Assumptions Calculate costs

Collect and Calibrate Costs (3) Storage 1. Collect technical and cost data for CO 2 storage, from available studies and TTech members 2. Adjust data to achieve consistency with the CO 2 Storage Cases and Basic Assumptions 3. Calculate costs

Establish consensus across working groups 1. What is “Consensus”? (An average-quality “compromise”? ) – Challenge discussions to agree on cases, input data, methodology and outcome 2. How many “typical” representative cases? 3. Acceptable cost certainty range? 4. How will a conclusive consensus document be communicated? 5. Process to reach ZEP Consensus

CCS Cost Team Guidelines Proposed CCS Cost Team Guidelines • Openness and Transparency results • Involvement and Individual Contribution results • Responsibility and Time-keeping trust • Generous sharing enhanced competence

Perform updates; tentatively each 2 nd year 1. CCS Cases (if/when needed) and Basic assumptions • • Basis for the CCS costs Share with EU-financed projects 2. CCS costs

Time schedule (estimate 8 th September 2009) • Set up WG: s (Working Groups) and appoint WG leaders: • Elaborate proposal on work procedures June - August 2009 • Consensus CCS cases and basic assumptions; Kick-off: September 2009 14 th Sept • Collect and establish consensus on CCS costs • • Consensus in WG: s, 1 st Draft: Consensus in TTech established: Final version 1 st update: Perform updates; tentatively each 2 nd year • • CCS cases (if/when needed) and basic assumptions CCS costs April 2009 Dec 2009 Feb 2010 March 2010