Power Generation Efficiency and CCS Study

The imposition of GHG limits will have significant far reaching effects on states’ electric generation technology and fuel choices, the ultimate cost of electricity generation, and the retail price of electricity. And, since Kentucky is highly reliant on coal fired generation for electricity production the economy of the state will further erode. It is important most to understand how GHG emission rules will affect the electric utilities because they represent the largest single stationary sources of emissions. Thus far, electric generation utilities have been complying with EPA pollution emission rules by adding on additional equipment to clean post combustion flue gases. For a variety of reasons, utilities have not implemented any significant technology improvements in the fuel combustion and electric generation processes. For the most part, regular maintenance has occurred on the generation units. However, the vintage technology embodied in individual units has been maintained over time; not upgraded. For example, a coal fired base load unit brought on line in 1970 still has essentially the same vintage boiler and turbine 43 years later, despite the fact that newer more efficient boiler technologies and materials and turbine designs and materials exist. The NRDC study contemplates multiple supply and demand side strategies to comply with ever more stringent GHG emission rules. Of particular interest to states which rely on coal as a primary fuel for generation is the potential for allowing utilities to increase the efficiency of electricity generation process (supply side) without the underlying concern of triggering further compliance issues as a result of New Source Performance Standard (NSPS). Although not in commercial deployment carbon capture and sequestration (CCS) technologies (including algae) are vital part of an overall GHG compliance strategy. There are large scale demonstration projects underway which are designed to confirm the scalability of the process. Further research is underway to determine methods to increase the efficiency of capture and reduce the cost of implementation. Currently, the largest market for CO2 is for use in enhanced oil and gas recovery (EOR). EOR has created a CO2 market that can help defray CCS cost. However, while EOR can take some of the additional CO2 captured under a broad deployment of CCS technology, it is not clear the extent to which EOR could absorb the volume of CO2 that would be captured under the EPA¡¦s GHG rules, i.e. the price of CO2 would go to zero and the market would collapse. There are other significant issues that still must be overcome before CCS technology is ready for market including but not limited to: „h Liability „h Cost „h Energy penalty ¡V roughly a third of unit generating capacity. „h Sequestration areas outside EOR fields need proving and development „h Insufficient pipeline infrastructure for CO2 transport (interrelated siting and construction) „h Facility footprint ¡V units that have had SOx and NOx and particulate matter emission reduction equipment installed may not have the requisite space to install CCS technology.