Coal Fired Unit versus Natural Gas Combined - …

1 The economic development of one coun-try is dependent upon the ability of theauthorities to set up a highly suitable,competitive and reliable electricity is well known that Italy,where in 2010 morethan 56% of electricity will be produced bynatural gas, is the European country havingthe most expensive and unbalanced fuel mixin the electricity production main disadvantages for Italy from thisunbalanced fuel mix are: higher electricity cost in respect to otherwestern countries; this high Italian kWhcost reduces the competitiveness of manyenergy intensive industry productions; potential risk of electricity shortage in caseof interruptions of Natural gas supply fromone of the three main Italians suppliers(Algeria, Libya and Russia).The main reasons of this fuel Natural gasoriented policy in Italy have been: strong opposition to the conventional coalfired units from the green associations andfrom the local authorities, asserting that coalis more polluting in respect to Natural gas; higher capital cost required for the con-struction of coal Fired units; halt in 1988, after a referendum, of all nucle-ar construction, shut of the existing reac-tors and their decommission from 1990(the only country in the world).

2 Recent reduction of Natural gas supply withinthe 2005 and 2006 winters and political crisisamong Russia and its nearby countries con-cerning the gas prices, pushed Enel to increa-se its investments in new or retrofitted coalfired units,but also Italian IPPs started to takein due consideration the coal this framework IPG finalized a feasibi-lity study on behalf of a new Italian IPP intere-sted to compare for its brown field site anatural gas Combined cycle plant with a coalfired unit preparing also technical documentsfor the debate with local and governmentauthorities and with green associations so toobtain the permits required by the main addressed objectives of this paper are: underline advantages and disadvantages ofthe above mentioned alternatives that isImpiantistica Italiana Anno XX N. 6 novembre-dicembre 20071 Giorgio DoderoIPG Industrial Project Group SrlCoal Fired unit versusNatural Gas CombinedCycleCoal Fired Units Emissions are today approaching in Europethe Emissions of Natural Gas Fired Combined main addressed objectives of this paper are: underline advantages and disadvantages of the techincalalternatives of coal and Natural gas plant; evaluate the capital costs and revenues of these two alternatives.

3 Emphasize that by now coal Fired units emissions are approaching the emissions of the Combined cycle, butin the near future with the coming of the zero emission technology any difference could be , this paper will discuss what could be the position of an investor today in respect to the developmentand opportunities of the CCS (Carbon Capture Sequestration) tra impianti alimentati a carbone e a gas naturale in ciclo combinatoI principali scopi di questo articolo sono: illustrare i vantaggi e gli svantaggi di due tipologie di impianti alimenta-ti con carbone e con gas naturale; valutare i costi di investimento delle due alternative; mettere in rilevo il fattoche le emissioni delle nuove unit alimentate a carbone sono molto simili alle emissioni delle unit a gas a ciclocombinato e che in un prossimo futuro, con l entrata in servizio delle unit a carbone zero emission , non vi saran-no , questo articolo illustra quale potrebbe essere la posizione di un investitore di oggi di fronte agli sviluppi ealle opportunit offerte dalle tecnologie CCS (Carbon Capture Sequestration).

4 Coal and Natural gas; evaluate the capital costs and revenues ofthese two alternatives; emphasize that by now coal Fired units emis-sions are approaching the emissions of thecombined cycle, but in the near future withthe coming of the zero emission technologyany difference could be this paper will discuss what could bethe position of an investor today in respect tothe development and opportunities of theCCS (Carbon Capture Sequestration) Comparing Coal and Natural GasTechnology AlternativesElectricity is generated, in accordance withdemand, in peaking or base-load plants andtransported over long distances to reach theconsumer at the required the fossil fuel options are Natural gas andcoal and the technology options are coal firedconventional plants, coal Fired IGCC and natu-ral gas Fired Combined fuel oils areless used in the conventional plants, due to thehigh purification cost of their exhaust gas anddue also to their higher cost in respect to oil is used in the Combined cyclesusually only during start up or as secondaryfuel, due to its higher cost in respect to naturalgas and due to the consequent increase of gasturbines maintenance Coal versus Natural GasCoal-based technologies offer a significantfuel price advantage over its Natural gas basedcompetitors to virtually any power plant loca-tion.

5 On the other hand, Natural gas basedtechnologies have a capital cost advantageover coal these differences, the market areas forthe generating technology and fuel choicedecisions become quite clear. One simple wayfor defining these market areas is defining howlarge must be the coal fuel price advantageover gas to justify coal s plant higher in details,the market choice bet-ween coal and gas is sensitive to the type ofpower that is required. Peaking power capa-city is required to meet high air conditioningloads in the summer and high heating loads inthe winter, but this not in Italy where usuallyheating is made using Natural peakingcapacity is usually used only a limited portionof time and its choice is dominated by capitalcost , Natural gas turbine slarge capital cost advantage will continue tomake it the dominant choice for utilities tomeet expanding peaking load the other hand, base load power capaci-ty is required on-line for long time to meetthe bulk of the electrical system cost dominates the selection of the baseload technology, because fixed capital costsbecome less significant when spread over alarger generation differentials between coal and naturalgas are projected to grow larger in the coal prices are expected to remain sta-ble (depending also upon region and coal qua-lity)

6 Natural gas prices are expected to increa-se as higher cost Natural gas reserves need tobe developed to meet growing demand andoffset losses from depleting gas wells. Highernatural gas prices will be needed to supportdevelopment of new gas fac-tor increasing the cost of the Natural gas is itshigh transportation cost both through pipelineline or through the liquefied Natural gas Fired unit versus Natural Gas Combined CycleImpiantistica Italiana Anno XX N. 6 novembre-dicembre 20072 Note:this value could be reduced in case of atoo quick increase of Natural gas consumptionNote:US gas turbines have DLN systems capable of operating at less than 5 to 8 ppm NOx and catalyst must be used in addition to attain triple-pressure US HRSGs are equipped with SCR and CO catalyst Emissions control Emissions level ZEP (ZeroEmission Projects):the new frontierCoal- Fired PlantLow cost fuelMore costly initialplantMore investmentEmissions of coal fireunits are becoming dayby day near to theemissions ofGas- Fired PlantsEmissions will becomeequivalent to the GasFired plants emissionsand new technologiesare expectedGas- Fired PlantMore expensive fuelLess costly initial plantLower investment andemits very low SO2 Permits for new US gasfired plants typicallyrequire lower emissionsin respect to similarplants in Europe (3 ppmNOx and single-digit CO) (note)Gas Fired Plants couldremain competitive inrespect to Coal FiredPlants, if their efficiencywill increaseFuel TypeOil Natural GasCoal Estimated ConventionalGuaranteed supply (years)4164 (note)234 Table 1 - Differences between coal and Natural gas alternatives for new electricgeneration capacity decisionsTable 2 - Overview of the coal market in Italy Impiantistica Italiana Anno XX N.

7 6 novembre-dicembre 20073In Italy green associations and local authori-ties are opposing the coal choice, basing onthe fact that coal is dirty and its environmen-tal impact is more dangerous in respect tonatural gas. For this reason in Italy combinedcycles provide also base load power and in2010 more than 56% of electricity will be pro-duced by Natural chapter of this paper will be dedicated tocompare the emissions of the Natural gascombined cycle with the emissions of the coalfired conventional units and IGCC to the improvements of the exhaust gaspurification technologies coal Fired conventio-nal plants emissions start today to approach inEurope the Combined cycle emissions, on thecontrary the emissions of the coal Fired IGCCcan be today also lower of the cc Natural gas, coal is not suitable fordispersed on-site use. Coal can be used mosteffectively where it permits the user to enjoythe economics of scale of large units and coaldelivery by ship, barge, unit train or conveyor(for a mine mouth plant).

8 The differences between coal and Natural gasalternatives for new electric generation capa-city decisions are reported in table overview of the coal market in Italy indi-cates that coal supply is safer in respect to theother fuels for the following reasons (table 2): coal reserves are abundant and distributedin more than 100 countries, while oil and gasreserves are concentrated within few coun-tries and many of these countries are politi-cally instable; high availability of coal extraction, transpor-tation, storage and handling systems on wor-ldwide coal reserves in many countries canbe mined well into the next century at costs(in constant $ s) very close to today s produc-tion best evidence for this is thatnew coal mines are and will continue to beadded at a very full production cost veryclose to the production costs of the existingmines they are 1 and 2indicate, rispectevely, the natu-ral gas and coal price trends from 1995 to2005 (Cif = cost + insurance + freight).

9 Thesefigures show that the gas prices rise morequickly in respect to coal Fuel TransportationFuel transportation costs are also an impor-tant factor in the utility fuel can vary significantly by plant location,utility ability to promote inter-carrier compe-tition and distance between fuel source andplant. The cost to transport coal is rangingfrom $ to BTU for longdistances. But due to the dispersion of coalreserves, coal transport costs are usually lessthan these amounts and are ranging between$ to BTU. Gas pipeline tran-sport costs also vary widely depending upondistance and can range from $ BTU to $ 2,5/million BTU orhigher and have an impact ranging from 30%up to 50% on the total gas The Technology Choices and Their Costs (excluding CCS)Plant capital costs are significantly differentbetween the coal and the Natural gas firedpower generation gas based technologies have lowercapital costs than coal based technologies andthis difference is also depending from thetechnology selected for coal generation capital cost advantage of the NG plants isranging between $ 500 to $ 1000/kW depen-ding upon the assumptions used that is fuelsource, required by authorities environmentallimitations, selected technology for the coalfired plant, major equipment redundancy, plantsite location and labor cost on the plant main technologies that are competingtoday on the market are the Fired unit versus Natural Gas Combined CycleFig.

10 1 Cost trends of Natural gas from 1995 to 2005 Fig. 2 Costtrends of coal from 1995 to 2005US Dollars per millionUS Dollars per tonneCoal Fired unit versus Natural Gas Combined CycleImpiantistica Italiana Anno XX N. 6 novembre-dicembre Natural Gas Combined CycleThe Combined cycle is the basic gas-firedtechnology that consists of gas turbinesdischarging hot exhaust gases into recoveryboilers producing high pressure steam whichoperates a steam turbine. Both the gas turbi-ne and the steam turbine move one or twoelectrical generators which generate example a large 800 MWe plant of thistechnology costs around 600 $ gas Fired Combined cycle is the most effi-cient commercial technology with heat rates(LHV) of only 5880 BTU/kWh (58% efficien-cy), but further improvements are expectedin the near future. However, the Natural gasheat rate is sensitive to unit operations andcan decline to a lower energy efficiency ifoperated at loads of 50% of the rated low loads emissions also increase, becau-se the dry low NOx combustion systems is notin Conventional Pulverized CoalFired PlantThe key components of a conventional coalfired plant are the steam generator and thesteam turbine that are interconnected by thethermal cycle.