Economic Conditions for Developing Hydrogen Production Based on Coal Gasification with Carbon Capture and Storage in Poland

Radosław Kaplan and Michał Kopacz
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Radosław Kaplan: Faculty of Management, AGH University of Science and Technology, Gramatyka 10, 30-059 Krakow, Poland
Michał Kopacz: Mineral and Energy Economy Research Institute, Polish Academy of Sciences, Wybickiego 7a, 31-261 Krakow, Poland

Energies, 2020, vol. 13, issue 19, 1-20

Abstract: This study documents the results of economic assessment concerning four variants of coal gasification to hydrogen in a shell reactor. That assessment has been made using discounting methods (NPV: net present value, IRR: internal rate of return), as well as indicators based on a free cash flow to firm (FCFF) approach. Additionally, sensitivity analysis has been carried out, along with scenario analysis in current market conditions concerning prices of hard coal, lignite, hydrogen and CO 2 allowances, as well as capital expenditures and costs related to carbon capture and storage (CCS) systems. Based on NPV results, a negative economic assessment has been obtained for all the analyzed variants varying within the range of EUR −903 to −142 million, although the variants based on hard coal achieved a positive IRR (5.1–5.7%) but lower than the assumed discount rates. In Polish conditions, the gasification of lignite seems to be unprofitable, in the assumed scale of total investment outlays and the current price of coal feedstock. The sensitivity analyses indicate that at least a 20% increase of hydrogen price would be required, or a similar reduction of capital expenditures (CAPEX) and costs of operation, for the best variant to make NPV positive. Analyses have also indicated that on the economic basis, only the prices of CO 2 allowances exceeding EUR 40/Mg (EUR 52/Mg for lignite) would generate savings due to the availability of CCS systems.

Keywords: coal to hydrogen; clean coal technologies; hydrogen production and outlook; economic assessment of coal gasification in Poland (search for similar items in EconPapers)
JEL-codes: Q Q0 Q4 Q40 Q41 Q42 Q43 Q47 Q48 Q49 (search for similar items in EconPapers)
Date: 2020
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (10)

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