Cost Effectiveness of Carbon Capture-Ready Coal Power Plants with Delayed Retrofit

Wilko Rohlfs () and Reinhard Madlener
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Wilko Rohlfs: Chair of Heat and Mass Transfer, Faculty of Mechanical Engineering, RWTH Aachen University, Postal: Eilfschornsteinstr. 16, 52056 Aachen, Germany

No 8/2010, FCN Working Papers from E.ON Energy Research Center, Future Energy Consumer Needs and Behavior (FCN)

Abstract: In this paper we investigate the cost effectiveness of coal-fired CCS plants. Two different model approaches are used. First, we consider marginal costs to determine the impact of fuel and CO2 certificate prices on electricity generation cost. Second, we apply a net present value evaluation to identify the main factors influencing the NPV, using projections for the price of electricity and CO2 as well as the costs of capturing, transporting and storing CO2. The NPV assessment shows that the threshold price of CO2 is highly sensitive with respect to the electricity price. Incorporating the possibility to postpone the CCS investment leads to much higher threshold prices, rendering the investment less attractive from today’s perspective. Finally, with a risk-adjusted discount rate for all CCS options it turns out to be more attractive than with a predefined discount rate of 10%, providing evidence that typical practitioner’s assumtions may indeed be too pessimistic.

Keywords: CCS; Capture-ready; Coal combustion; Retrofit (search for similar items in EconPapers)
JEL-codes: C63 O30 Q47 (search for similar items in EconPapers)
Pages: 30 pages
Date: 2010-08, Revised 2010-12
New Economics Papers: this item is included in nep-ene and nep-env
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (14)

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Persistent link: https://EconPapers.repec.org/RePEc:ris:fcnwpa:2010_008

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