Impact of CCS on the Economics of Coal-Fired Power Plants: Why Investment Costs Do and Efficiency Doesn’t Matter

Richard Lohwasser () and Reinhard Madlener
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Richard Lohwasser: E.ON Energy Research Center, Future Energy Consumer Needs and Behavior (FCN), http://www.eonerc.rwth-aachen.de/fcn

No 7/2009, FCN Working Papers from E.ON Energy Research Center, Future Energy Consumer Needs and Behavior (FCN)

Abstract: In this paper we analyze how development of the economics related to CCS technology in coal-fired power plants affects market diffusion. Specifically, we (1) show the (significant) variance in economic expectations for commercial-grade CCS hard coal power plants observed in selected recent scientific publications; (2) analyze the impact of economic factors related to CCS on electricity generation costs; and (3) study possible deployment of CCS technology in Europe using the bottom-up electricity sector model HECTOR. Simulation results show that investment costs strongly influence the market deployment of coal-fired CCS power plants, leading to a share of 16% in European generation capacity by 2025 with the lowest observed investment costs of 1400 €/kW, but only 2% with the highest of 3000 €/kW. A variation of conversion efficiency between 37% and 44%, the minimum and maximum observed values, only leads to a share of CCS-equipped power plants between 13 and 15%. These findings are robust for the Base Case with a CO2 price of 43 €/t and also for sensitivities with 30 and 20 €/t CO2, but with a lower effect, as the overall share of CCS is significantly reduced at these prices.

Keywords: Electricity market; simulation; model; CCS; power plant economics; technology adoption (search for similar items in EconPapers)
JEL-codes: O33 Q47 (search for similar items in EconPapers)
Pages: 29 pages
Date: 2009-11
New Economics Papers: this item is included in nep-cmp, nep-ene and nep-env
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (8)

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Persistent link: https://EconPapers.repec.org/RePEc:ris:fcnwpa:2009_007

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