Donald McNicol, Atkins, UK

The case for coal in light of the UK government’s desire for a balanced energy portfolio merits further examination. David McNicol discusses the options available to extend the use of coal fired plants and how they can operate more cleanly.

The power cuts which hit the UK in late May 2008 affecting over 500 000 people were a clear warning that the country’s ageing infrastructure is struggling. The head of one major utility remarked that the blackouts were a small indication of what might occur in the future, if we do not start building new power stations. Dr Paul Golby, CEO of E.ON UK, said: “Unless we do build we are simply going to be unable to meet the country’s energy needs.”

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Most industry insiders would agree with that stark assessment. So too does the UK government. Its latest modelling shows that the UK will need enough new power stations to provide capacity of between 20-25 GW by 2020. However, the need to build new plant which not only meets future demand, but also lowers greenhouse gas and other harmful emissions, is causing the estimates for new infrastructure spending to soar into the stratosphere.

Consider the thorny issue of coal, which still accounts for the biggest share of the UK’s current electricity generation, representing 37 per cent compared to 36 per cent for gas and 18 per cent for nuclear. It is very hard to see how we can meet future demand in the UK without coal continuing to play a significant role. But the costs of building next generation coal plants are, without exaggeration, going to be massive. For example, let’s examine two clean coal technologies, one of which is now currently being deployed overseas, namely integrated gasification combined-cycle (IGCC), and the other, some distance in the future, carbon capture and storage (CCS).

Integrated Gasification Combined-Cycle

IGCC shows some promise in lowered nitorgen oxides (NOx) and sulphur oxides (SOx) emissions and the ability to produce hydrogen for use in, for example, fuel cells or engines that can provide power without producing carbon dioxide (CO2).

The problem with IGCC technology is that it is no more efficient than the current generation of supercritical power stations and considerably more expensive per installed MW, even without carbon capture equipment. Its efficiency is possibly slightly higher than a comparable supercritical power station with carbon capture equipment but there is a significant penalty in capital cost and reliability at present. Current and medium-term emissions legislation for NOx and SOx can be complied with more cost effectively with a supercritical plant than through gasification, so the benefit of an IGCC plant rests primarily on its ability to produce hydrogen if a shift reactor is installed.

There are currently no IGCC plants in the UK and only a handful worldwide. Yet we have some indication of what the costs might be from proposed new plants in the United States. One of the largest utilities in the US, American Electric Power (AEP), has proposed building a new 629 MW IGCC plant in Mason County, West Virginia. The capital costs for this project are estimated at over $1.5 billion. AEP has indicated that the plant will only be economically feasible if ‘costs can be recovered through the regulatory process’.

Carbon Capture and Storage

In seeking to promote CCS, the UK government decided to choose the post combustion or oxy-fuel model for its 2012 demonstration project. This can, in principle, be retrofitted to an existing coal fired plant. But this does not make it any less expensive an enterprise. In fact, recent analysis from investment bank Climate Change Capital showed that the total costs of a demonstration project in Europe, using post-combustion technology, would be over €1 billion ($1.4 billion). Its conclusion was that CCS is not currently a commercially viable technology. It is unlikely to become so under liberalized markets such as the UK until there is greater certainty in the price of carbon and further development of the technology.

One of the biggest issues facing our utilities today is solving the coal conundrum: how can we continue to receive a significant proportion of our energy from coal? The existing infrastructure is ageing and increasingly subject to failure, and the costs of new plant which can take advantage of cleaner coal are prohibitive. There is also uncertainty concerning the carbon capture costs and penalties for not meeting emission targets.

The conundrum becomes even more critical when one considers that the UK is on course to lose about 8.5 GW of coal fired capacity by 2015, simply as a consequence of complying with the European Union’s Large Combustion Plant Directive, which aims to reduce SOx and NOx emissions.

Observations

As someone who has been a utility engineer for many years, and now a consultant to some of the major players, I would like to offer the following observations on the coal conundrum:

1. Coal does have a major role to play in the UK’s future energy mix, even in a carbon constrained world.

The economics (not to mention geo-politics) of gas are changing so fast that it would be a mistake to assume that gas, with its lower capital expenditure costs and carbon footprint, can fill all the gaps in the UK’s existing coal capacity. The same goes for renewables, such as wind, and nuclear.

The UK government is right to talk about a balanced energy portfolio, and to set the framework for new nuclear build and change the planning laws to favour wind farms. But most experts agree that, given current technology, renewables cannot provide baseload power for a country like the UK.

The revival of nuclear power is to be welcomed, but even maintaining the country’s existing capacity from nuclear over the next 20 years is going to be a technical and economic challenge. Coal has to be part of the UK’s diversified portfolio, a fact that E.ON has been arguing in the case of the proposed new plant at Kingsnorth. Coal is plentiful, relatively inexpensive and available from many parts of the world, most of which have a stable political structure.

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2. Focus more on investments in maintaining and improving efficiency in existing UK coal capacity.

Given that most of the UK’s existing coal plants were built in the late 1960s and early 1970s, designed to have a life of 25 to 30 years, the temptation is to believe that increasing problems at this stage are inevitable. But one of the questions that the industry has to ask itself is: Has enough resource been put into maintenance over the past 15 years or so? I would argue the answer to the question is ‘no’, and that is one of the reasons why we are now seeing an increased level of failure.

A combination of financial pressures in the years following privatization and a fall in electricity price due to the ‘dash for gas’ did not provide the right drivers for investment in the plants. The evidence over the past few years is that operators have significantly increased maintenance expenditure, in recognition both of the increase in market prices and the necessity to take action to keep plant operational.

The good news is that advances in techniques are now putting much more science into the art of maintenance, allowing operators to assess the risks to plant much more accurately and therefore to make more cost-effective decisions. For example, one major issue for operators is when a defect occurs in a high-temperature part of the plant and there needs to be an assessment of whether or not it is safe to continue operating. This decision can be made by analyzing all of the relevant components in the plant, including those with very complex geometry such as large valves, pressure vessels and steam chests, and then using sophisticated integrity management tools to calculate the effects of any defects and predict how long the plant can continue running with those defects in place. When it can cost over £1 million ($1.8 million) to have a power plant out of service for a single day, the ability to make more scientifically informed decisions can result in significant operational expenditure savings and better plant performance.

At the opposite end of the telescope from this kind of micro-analysis, risk assessment techniques can also help operators get a much more accurate macro picture of a power plant. For example, Atkins has developed tools to analyse risks to the business based on a systematic set of technical issues. Plant availability, plant reliability, level of production, health and safety, and environmental impact are some of the areas of assessment. This approach allows operators to have an overview of which systems might fail, how they might fail, and what would be the consequences of that failure, allowing them to set budgeted priorities for plant maintenance. Key to success is to involve operators as part of the assessment team to get their contribution to the input and output of the process.

This systematic risk management approach can also inform well-focused plant refurbishment by identifying critical components that will require replacing to meet or extend expected design life and, conversely, those for which the risk of continuing to operate is acceptable.

Looking forward, the power generation sector may be able to share lessons with other capital intensive industries. The Energy Division within Atkins is exploring how its Fleet Management System developed to provide clear visual and documentary asset information for oil and gas platforms may be adapted for the power market.

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3. Examine ways in which emissions, including greenhouse gases, from existing coal fired stations can be reduced before expenditure is made on CCS storage technologies.

Carbon capture is the least developed of the gaseous emission control technologies, there are many competing or complementary techniques available to take CO2 from flue gas but the market drivers for deployment are not yet strong or secure enough for widespread investment.

NOx and SOx emissions will be significantly reduced by 2015 when the Large Combustion Plant Directive is implemented through a combination of plant closures and retrofitting of technologies such as selective catalytic reduction (SCR).

Outlook for coal

Using the kind of advanced maintenance techniques described, it is my view that by a combination of improved analytical techniques, better focused maintenance and refurbishment, and environmental retrofits, many of the existing coal fired plants in the UK could have a much longer life-span than currently anticipated. The capture of NOx and SOx will also provide a reduction in pollution.

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This will allow operators the necessary financial breathing space to consider how they are going to get new plant up and running, given all of the constraints that have been discussed. Hopefully it will also permit greater certainty to develop in the market for the price of carbon. Ironically, it would also make it easier for the planned expansion of the UK renewables portfolio to happen because by maintaining the country’s existing coal plants it would ease the strain on capacity and allow alternatives such as wind, marine and solar to develop without bearing the impossible burden of attempting to provide the UK’s baseload power source.