Profitability and the use of flexible CO2 capture and storage (CCS) in the transition to decarbonized electricity systems. (October 2022)

• Record Type: Journal Article
• Authors: Singh, Surinder P.; Ku, Anthony Y.; Macdowell, Niall; Cao, Can
• Is Part Of: International journal of greenhouse gas control. Volume 120(2022)
• Publication Date: 2022-10
• Subjects: CO2 capture -- Firm power -- Flexibility -- Load-following, CCS -- Techno-economics; Greenhouse gases -- Environmental aspects -- Periodicals; Air -- Purification -- Technological innovations -- Periodicals; Gaz à effet de serre -- Périodiques; Gaz à effet de serre -- Réduction -- Périodiques; Air -- Purification -- Technological innovations; Greenhouse gases -- Environmental aspects; Periodicals; 363.73874605
• DOI: 10.1016/j.ijggc.2022.103767
• Languages: English
• ISSNs: 1750-5836

Abstract

Highlights: Fossil power with CCS will need to operate flexibly to ensure grid stability. The profitability potential of flexible CCS is assessed in four national markets. We show how a fraction of power plants can be profitable in each market. This suggests a possible role for existing fossil plants in grid decarbonization. Abstract: As the share of variable renewable energy (VRE) generation in a system increases, services such dispatchable "firm power" will be vital to ensure system reliability. Fossil power plants with CO2 capture and storage (CCS) can be a source of firm power, but they must be operated in a flexible manner to support grid stability. This paper considers the use of CCS to pivot the role of at least some existing fossil plants towards providing firm power in decarbonized grids. We present an analysis of the profitability potential of CCS-equipped power plants in electricity markets in US, UK, Australia and China. Conventional wisdom holds that CCS must be operated in a baseload manner to be economically viable; we demonstrate that the flexibly-operated power plants with CCS are not generally profitable today, but can become profitable in cases with a proper combination of market incentives and cost reductions in capture technology; we highlight the possibility of retrofitting older plants with mostly depreciated capital for operation a "second life" peaker mode to retain investment flexibility during an energy system transition as an intriguing option requiring further study. Flexible operation offers less value in China's electricity markets due to more rigid pricing structures, but a plausible path towards profitable CCS-firm power exists for lower cost power plants in some regions of the country. The results presented here imply a strong potential for the profitable operation of CCS retrofitted to amortized assets, acting in a market-compatible way in synergy with greater integration of renewable energy to the power grid, whilst contributing to overall grid stability. As price volatility is likely to increase with increased penetration of VRE, the trend of these results are likely to become more pronounced with the passage of time. Graphical abstract: Image, graphical abstract