Assessing the value of CO2 capture ready in new-build pulverised coal-fired power plants in China

Making new plants CO2 capture ready (CCR) would enable them to retrofit to capture CO2 at a later date at lower cost when the appropriate policy and/or economic drivers are in place. In order to understand the economic value and investment characteristics of making new plants CCR in China, a typical 600 MW pulverised coal-fired ultra-supercritical power plant, locating in Guangdong province, was examined. Combined with an engineering assessment, costs were estimated for different CCR scenarios. To analyze CCR investment opportunities, the paper applies a cash flow model for valuing capture options and CCR investment. Results were obtained by Monte-Carlo simulation, based on engineering surveys and an IEA GHG CCR study, as well as plant performance information and expert projections on carbon prices, coal prices and electricity prices.

CCR investments are justified by factors such as higher retrofitting probabilities, lower early closure probabilities and fair economic return. However, the economic case for CCR largely depends on two factors: (a) whether the original plant is retrofittable without CCR; and (b) the type of investments made, for example, investments essential to CCR tend to be more economic than additional non-essential CCR features such as clutched low pressure turbines. The carbon price and discount rate were found to have significant impacts on the economics of CCR. Overall, it appears that the value of the ‘capture options’ that CCR generates for retrofitting CCS is significant, and so could justify a modest CCR investment, even assuming the original plant is retrofittable without CCR. It was also found the value of CCR might be significantly understated if the range of potential retrofitting dates is artificially constrained.