Memorandum submitted by Mitsui Babcock
Mitsui Babcock is a British company (HQ in Crawley;
R&D, Manufacture and Services in Renfrew) established in 1891,
and wholly owned by Mitsui Engineering and Shipbuilding Co. Japan,
since 1995. We employ 4,000 people worldwide (3,800 in the UK,
of whom 1,000 are in Scotland). We serve all sectors of the Energy
industry in UK and Europe. In the UK, whilst we have interests
in nuclear, renewables, oil and gas, our largest business area
is coal-fired power plant. In Asia Pacific and the Americas our
main focus is coal-fired power plant.
In China, we have supplied 4 GW of coal-fired
plant in the last decade and in 2003, when approaching 100 GW
of pulverised coal fired power plant was ordered, we had around
15% of the boilers for this market, more than 10 GW being high
efficiency supercritical boilers. Currently we are bidding coal-fired
supercritical boiler plant in Germany, USA and China.
As a UK company, we support the government's
objectives in energy, the environment and enterprise. We have
successfully developed cleaner coal technology products with the
assistance of the DTI's Cleaner Coal R&D programme and exported
these. We have a portfolio of Carbon Abatement Technologies for
fossil fired plant at various stages of development ready for
full-scale demonstration and are pressing the government to recognise
the major opportunities which such technologies bring for carbon
dioxide abatement world-wide.
Our response focuses on measures to obtain significant
cost effective reductions in CO2 emissions from fossil
power generation additional to those obtained by energy efficiency
and renewable measures.
INTRODUCTION
We welcome yet another "Energy inquiry"
since it gives us the opportunity to raise issues that are very
important with respect to implementing the objectives of the Energy
White Paper—urgent issues which go beyond energy efficiency
improvements and deployment of renewables and address directly
how to contribute to security of supplies, "Keeping the Lights
On" and reducing carbon emissions by addressing technologies
for coal-fired plants.
Our response is limited to comments pertaining
to the generation mix, the generation gap that is developing and
the relative costs of generation technologies.
We understand that the Nuclear Industry Association
(of which we are members) will respond to the detailed questions
on Nuclear power, and we support the Institute of Mechanical Engineers'
response, which has a similar focus.
QUESTION 1—NEED
FOR A
BALANCED PORTFOLIO
A balanced portfolio of electricity generation
types is necessary to safeguard security of supplies, costs of
electricity (against fuel price hikes) and to allow varying generation
to match the varying load demand.
For example:
(i) It would be wrong to focus too much generation
capacity on nuclear because nuclear is a baseload technology and
needs to be backed up by technologies that can match load demand.
It is, however, essentially CO2 free and relatively
price stable.
(ii) It is clear from Danish and German experience
that too large a proportion of intermittent renewables generation
(wind) causes grid stability issues. Also, the renewable capacity
needs to be fully backed up by alternative capacity for times
when there is no wind.
(iii) Coal and gas provide baseload and load-following
capacity. Modern plant are more efficient and produce much less
CO2 than the older plant currently in service. Both
coal and gas could in future be retrofitted with carbon dioxide
capture and the carbon dioxide stored permanently underground.
(iv) The advantages of coal over gas are
its relative abundance (>200 years supplies), its sources (UK
and stable countries around the world) and its ability to be cheaply
stockpiled.
(v) Whilst generation from old coal-fired
power stations produces more carbon dioxide than gas-fired CCGTs,
modern clean coal technologies, which can also incorporate biomass
cofiring, are closer to CCGT performance[205].
There is also evidence that total lifecycle GHG emissions from
gas can exceed those from coal. This is due to methane leakage
from pipelines, CO2 stripped out when gas is produced,
and CO2 produced during liquefaction and regasification
of LNG.
Advanced Supercritical plant will emit 23% less
carbon dioxide than current old coal-fired plant. Fitted with
biomass cofiring, the total carbon dioxide reduction can be 40%.
Such plant can be designed to be capture-ready (ie capable of
having carbon dioxide capture equipment retrofitted later).
With carbon dioxide capture and storage, around
90% of the carbon dioxide would be captured. See Figure 1.
Figure 1
Carbon Dioxide abatement for coal and gas
Experience shows that the current generation
capacity mix (nuclear 16%, coal 38%, gas 33%), with a growing
proportion of intermittent renewables, provides an appropriately
balanced portfolio. The challenge is how to replace a large amount
of generating capacity which will be retired by 2015 whilst preserving
this balance and further reducing carbon emissions.
The DTI's modelling (A Strategy for Developing
Carbon Abatement Strategy for Fossil Fuel Use) shows this can
be achieved by introducing carbon abatement technologies for coal-fired
and gas-fired plant, including carbon dioxide capture and storage.
The amount of coal and gas (+ CCS) that is ultimately needed depends
on whether nuclear is closed down, replaced or expanded.
QUESTION 1—THE
EXTENT OF
THE "GENERATION
GAP"
The generation gap will arise due to the closure
of nuclear stations and the closure of those coal-fired stations
which "opt-out" of the LCPD. This will reduce the available
generation capacity at times of peak demand. In Figure 2, the
available generation in 2015 is compared with the required generation
capacity.
Nuclear Closures
The nuclear plants that are scheduled to close
by 2015 are listed in Table 1.
Table 1
NUCLEAR PLANTS SCHEDULED TO CLOSE BY 2015
| Dungeness A 1 & 2 |
450 MW |
| Sizewell A 1 & 2 | 420 MW
|
| Oldbury 1 & 2 | 437 MW |
| Dungeness B 1 & 2 | 1100 MW
|
| Wylfa 1 & 2 | 980 MW |
| Hinkley Point B 1 & 2 | 1220 MW
|
| Hunterston B 1 & 2 | 1190 MW
|
| Hartlepool 1 & 2 | 1210 MW
|
| Heysham 1 & 2 | 1150 MW
|
| |
| Total | 8157 MW |
These closures will reduce the nuclear generation capacity
from 11.9 GW in 2004-05 to 3.8 GW in 2015.
Note: If life extensions proposed by British Energy
are approved, the closures will be 3400 MW by 2015 and 5760 MW
by 2019.
COAL CLOSURES
Currently, out of 27,915 MW of coal-fired plant in England,
Wales and Scotland, 15,156 MW have fitted or have announced they
are fitting FGD—consistent with Opting In to the LCPD in
2004-05. 13,279 MW of plants are not fitting FGD and would appear
to be Opting Out of the LCPD. See Table 2. These plants will only
be allowed to operate a total of 20,000 hours between 2008 and
2015 and must close by 2015, removing 13,279 MW of capacity, leaving
14.6 GW in 2015-16.
| Opted in ie FGD installed or planned
| MWe |
| |
| Drax Power Station | 3870
|
| Cottam Power Station | 2008
|
| West Burton Power Station | 1972
|
| Aberthaw Power Station | 1455
|
| Ratcliffe on Soar Power Station | 2000
|
| Uskmouth Power Plant | 393 |
| Ferrybridge "C" Power Station |
978 |
| Fiddlers Ferry Power Station | 981
|
| Eggborough Power Station | 980
|
| 14636 |
| Opted Out ie no plan for FGD announced
| MWe |
| |
| Ironbridge Power Station | 970
|
| Kingsnorth Power Station | 1940
|
| Rugeley Power Station | 1006
|
| Didcot A Power Station | 1940
|
| Cockenzie Power Station | 1152
|
| Tilbury Power Station | 1029
|
| Longannet Power Station | 2304
|
| Ferryfridge "C" Power Station |
978 |
| Fiddlers Ferry Power Station | 981
|
| Eggborough Power Station | 980
|
| 13278 |
Plant assumed to be ½ opted in and ½ opted out
Table 2: Coal-fired Power Plants (England, Wales and Scotland)
TOTAL CLOSURES
This gives total closures of 16.7 GW to 21 GW by 2015.
These closures are very significant—amounting to 18%
to 25% of the installed electricity generation capacity in the
UK, which was 75 GW in 2004-05.
REQUIRED GENERATION
CAPACITY
The Average Cold Spell (ACS) peak demand in 2004-05 was 61.5
GW and a plant margin of 21% (13 GW) was necessary to cover the
risk of generating plant unavailability (eg breakdown) or higher
than average peak demand (eg due to severe weather).
NGC 2005 Seven Year Statement states 61.5 GW
In 2015-16 the ACS peak demand can be forecast as:
| Basis | Annual Growth %
| ACS Peak Demand | IncludingPlant Margin (21%)
|
| No growth | 0 | 62 GW
| 75 GW |
| DTI growth forecast | 0.7% |
66.7 GW | 81 GW |
| NGC base case | 0.9% | 68 GW
| 82 GW |
| NGC high case | 2.4% | 71 GW
| 86 GW |
Hence the required generation capacity in 2015 to maintain
the current plant margin will be between 75 GW and 86 GW.
It follows that up to 21 GW of replacement plant and up to
11 GW of additional generation plant will be needed over the next
10 years.
ABILITY OF
NUCLEAR TO
FILL THE
GAP
It is being said elsewhere that it would take 10 years to
build a new nuclear power plant (five years planning and licensing,
and five years to build). Hence it is already too late for any
of the expected generation gap in 2015 to be replaced by nuclear.
COAL OR
GAS
Clean Coal (with carbon abatement) and Gas (CCGT and/or CHP)
are the only technologies available to meet this capacity gap
in the required timescale. The plants closing are made up of a
mixture of "baseload" plants (the nuclear plants) and
"load following plants" (the coal and gas plants) which
are used to balance electricity supply with demand (winter/summer,
day/night). The replacement and additional plants must exhibit
greater flexibility since they will co-exist alongside an increasing
proportion of intermittent renewable generation. Between 21 GW
and 32 GW of new coal or gas plant will need to be built over
the next 10 years.
It takes about three years to build a new gas-fired power
plant and about four years to build a new coal one.
Hence, to maintain security-of-supplies at times of peak
demand, and to "keep the lights on" in 2016, we will
need to see between 3,600 and 5,000 MW of plant completions each
year from 2009 to 2015, which means between 3,600 and 5,000 MW
of projects being started each year between 2005 to 2011.
Note:
Wind generation is excluded from the consideration of "how
to fill the generation gap" because, whilst the ambitious
targets to instal onshore and offshore wind may contribute significantly
to the overall annual generation (in TWh), wind cannot be relied
upon due to its intermittency to fill the gap on the days in the
year when demand is at a maximum. Statistics from NCG indicate
that the generation from wind is less than 10% of the nameplate
installed capacity for 20% of the days in the year[206].
QUESTION 2 AND
QUESTION 3—FINANCIAL
COSTS AND
INVESTMENT CONSIDERATIONS
A comparison is given below of the relative investment requirements,
costs-of-electricity, timescales, flexibilities and risk levels
of the technologies that can be used for new electricity generation.
Prices quoted are from the Royal Academy of Engineering report
and other back-up sources.
It should be noted that Clean Coal (Advanced Supercritical),
whether New-Build or Retrofit, is very cost-competitive with Gas-fired
CCGT. Advanced Supercritical plant will emit 23% less carbon dioxide
than current old coal-fired plant. Fitted with biomass cofiring,
the total carbon dioxide reduction can be 40%. Such plant can
be designed to be capture-ready (ie capable of having carbon dioxide
capture equipment retrofitted later). With carbon dioxide capture
and storage, CO2 emissions will be less than 10% of
those from the original coal-fired plant.
Notes:
(a) The cost-of-electricity for coal is given on
the basis of a coal price of £30.5/te, which is the current
cost of UK and world traded coal. The estimate is a company estimate
supported by the RAe estimate[207].
(b) Nuclear costs are a range encompassing the estimate
from the Royal Academy of Engineering report (2.3p/kWh).
(c) The cost-of-electricity quoted for gas—CCGT
and gas CCGT with CCS—is highly dependent on the price of
gas. The range quoted is for gas prices from 30p/therm to 50p/therm.
(d) Renewables (Onshore and Offshore Wind) costs
are derived from the Royal Academy of Engineering report excluding
back-up generation and based on a 25% capacity factor.
(e) Cost for CCS include Capture but not Storage.
No credit is given for Enhanced Oil Recovery. Estimates from IEA
GHG Programme reports[208].
(f) There is a very wide range of estimates for
IGCC ranging from £486/kW to more than £1000/kW. Promoters
of IGCC in the USA indicate it is around 25% more expensive than
Clean Coal (Advanced Supercritical).
IMPLICATIONS OF
CHOICE BETWEEN
COAL AND
GAS ON
BALANCE OF
PORTFOLIO
In 2004-05 the shares of the capacity portfolio were Nuclear
16%, Coal 38% and Gas 33%.
If all the replacement capacity was to be gas, these percentages
would become Nuclear 4%, Coal 18%, and Gas 66% in 2015, making
the UK electricity supply system very vulnerable with respect
to security of supplies, particularly in severe winters when peak
electricity demand and peak demand for gas for domestic heating
coincide, as well as price hikes.
21 September 2005
205
D J Spalding, G B Welford, J L King and J M Farley, "Retrofit
Options for Carbon Abatement of Coal-Fired Boiler Plant",
IMechE Seminar on Steam Power Plant Update, London, September
20, 2005. Back
206
National Grid PIU Supplementary Submission 28 September 2002. Back
207
Royal Academy of Engineering report, "Cost of Generating
Electricity", 2004. Back
208
C A Roberts, J Gibbins, R Panesar and G Kelsall, "Potential
for Improvement in Power Generation with Post-Combustion Capture
of CO2", Proceedings of the 7th International
Conference on Greenhouse Gas Control Technologies. Peer-reviewed
Papers, Vancouver, BC, 5-9 September 2004. Back
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