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Economies of Scale vs the Learning Curve
Joan MacNaughton, Senior Vice President, Power & Environmental Policies
BIEE 8th Academic Conference, 23 September 2010
Agenda
The challenge
Meeting the challenge in the power sector
The policy framework
© ALSTOM 2010. All rights reserved. Information contained in this document is indicative only. No representation or warranty is given or should be relied on that it is complete or correct or will apply to any particular project. This will depend on the technical and commercial circumstances. It is provided without liability and is subject to change without notice. Reproduction, use or disclosure to third parties, without express written authority, is strictly prohibited.
BIEE - JM - 30/09/2010 - P 2
Conclusions
World abatement of energy-related CO2 emissions
Efficiency 65 57
1. End-use 59 52
2. Power plants 6 5
Share of abatement %
2020 2030
34
36
38
40
42
Gt
Reference Scenario
3.8 Gt
13.8 Gt
© ALSTOM 2010. All rights reserved. Information contained in this document is indicative only. No representation or warranty is given or should be relied on that it is complete or correct or will apply to any particular project. This will depend on the technical and commercial circumstances. It is provided without liability and is subject to change without notice. Reproduction, use or disclosure to third parties, without express written authority, is strictly prohibited.
BIEE - JM - 30/09/2010 - P 3
Renewables 18 20
Biofuels 1 3
Nuclear 13 10
CCS 3 10
26
28
30
32
2007 2015 2020 2025 20302010
Source: International Energy Agency, "World abatement of energy-related CO2 emissions in the 450 Scenario," World Energy Outlook 2009
450 Scenario
Investment, investment, investment
Baseline $ 270 trn
“Blue Map” $ 46 trn$ 750 bn/yr
© ALSTOM 2010. All rights reserved. Information contained in this document is indicative only. No representation or warranty is given or should be relied on that it is complete or correct or will apply to any particular project. This will depend on the technical and commercial circumstances. It is provided without liability and is subject to change without notice. Reproduction, use or disclosure to third parties, without express written authority, is strictly prohibited.
BIEE - JM - 30/09/2010 - P 4
= 450ppm scenario$ 750 bn/yr
$ 1600 bn
2030
2050
60% of 2030
emissions from existing plants60% of 2030
plants still to be built
Source: International Energy Agency, Energy Technology Perspectives 2010
Agenda
The challenge
Meeting the challenge in the power sector
The policy framework
© ALSTOM 2010. All rights reserved. Information contained in this document is indicative only. No representation or warranty is given or should be relied on that it is complete or correct or will apply to any particular project. This will depend on the technical and commercial circumstances. It is provided without liability and is subject to change without notice. Reproduction, use or disclosure to third parties, without express written authority, is strictly prohibited.
BIEE - JM - 30/09/2010 - P 5
Conclusions
• Technology Mix
- Nuclear
- Renewables
• Production Efficiency
ALSTOMINVOLVEMENT
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Meeting the challenge in the power sector
© ALSTOM 2010. All rights reserved. Information contained in this document is indicative only. No representation or warranty is given or should be relied on that it is complete or correct or will apply to any particular project. This will depend on the technical and commercial circumstances. It is provided without liability and is subject to change without notice. Reproduction, use or disclosure to third parties, without express written authority, is strictly prohibited.
BIEE - JM - 30/09/2010 - P 6
• Production Efficiency
- Fuel Preparation/Retrofit
- New generation plants
- Energy management
• Carbon Capture and Storage
So
urc
e:
Pow
er
Sys
tem
s a
naly
sis
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Meeting the challenge:The full portfolio of technologies is needed
© ALSTOM 2010. All rights reserved. Information contained in this document is indicative only. No representation or warranty is given or should be relied on that it is complete or correct or will apply to any particular project. This will depend on the technical and commercial circumstances. It is provided without liability and is subject to change without notice. Reproduction, use or disclosure to third parties, without express written authority, is strictly prohibited.
BIEE - JM - 30/09/2010 - P 7
Gas Coal Oil
Hydro Nuclear (Conv. Island) Wind
Meeting the challenge
© ALSTOM 2010. All rights reserved. Information contained in this document is indicative only. No representation or warranty is given or should be relied on that it is complete or correct or will apply to any particular project. This will depend on the technical and commercial circumstances. It is provided without liability and is subject to change without notice. Reproduction, use or disclosure to third parties, without express written authority, is strictly prohibited.
BIEE - JM - 30/09/2010 - P 8
Source: EPRI, “Creating our future,“ 2009 Summer Seminar
Meeting the challenge
© ALSTOM 2010. All rights reserved. Information contained in this document is indicative only. No representation or warranty is given or should be relied on that it is complete or correct or will apply to any particular project. This will depend on the technical and commercial circumstances. It is provided without liability and is subject to change without notice. Reproduction, use or disclosure to third parties, without express written authority, is strictly prohibited.
BIEE - JM - 30/09/2010 - P 9
Source: EPRI, “Creating our future,“ 2009 Summer Seminar
Meeting the challenge: evolution of cost of CO2 avoided
€/ tonne CO2
50
60
70
80
90
Pu
bli
c f
un
din
g
© ALSTOM 2010. All rights reserved. Information contained in this document is indicative only. No representation or warranty is given or should be relied on that it is complete or correct or will apply to any particular project. This will depend on the technical and commercial circumstances. It is provided without liability and is subject to change without notice. Reproduction, use or disclosure to third parties, without express written authority, is strictly prohibited.
BIEE - JM - 30/09/2010 - P 10
Source: McKinsey & Company “CCS – assessing the economics” for the cost numbers; policy implications drawn by ZEP
Demo phase Early commercial phase Mature commercial phase
0
10
20
30
40
18
13
13
15
23Solar PV*
Ethanol
Wind Power
LNG
15Higher learning case
Assumption for CCS
Implied learning rates per doubled capacity; various periods
Meeting the challenge: learning rates
© ALSTOM 2010. All rights reserved. Information contained in this document is indicative only. No representation or warranty is given or should be relied on that it is complete or correct or will apply to any particular project. This will depend on the technical and commercial circumstances. It is provided without liability and is subject to change without notice. Reproduction, use or disclosure to third parties, without express written authority, is strictly prohibited.
BIEE - JM - 30/09/2010 - P 11
*Sources indicate learning rates between 18 and 23% for solar PV**Unweighted average of the learning curves, with Solar PV taken at 20.5, the midpoint between 18 and 23Source:Worldwatch Institute; IEA; IPCC; BTM consult; ABS; NREL; IIIEE; ABI; Drewry 2007; UC Berkeley ERG; Navigant consult; McKinsey analysis
3
6
12
12
13LNG
Average**
PV inverters
Solar thermal
7
12Base case
Lower learning caseSO2 and NOxcapture systems
100
1,000
CCS learning curves compared to other industries
Capital cost
2004 USD/W
Learning curve experience from renewables and
LNG as capacity is installed
13%
Implied learning curveper doubled capacity
• CCS differences: more mature component technologies
• CCS main opportunity areas15%
Capacity CAGR
15%
30%Ethanol1978–1996
LNG*1970–2000
© ALSTOM 2010. All rights reserved. Information contained in this document is indicative only. No representation or warranty is given or should be relied on that it is complete or correct or will apply to any particular project. This will depend on the technical and commercial circumstances. It is provided without liability and is subject to change without notice. Reproduction, use or disclosure to third parties, without express written authority, is strictly prohibited.
BIEE - JM - 30/09/2010 - P 12
1
10
1 10 100 1,000 10,000 100,000
*LNG capital cost measured in USD/t and capacity measured in bcm**Other sources indicate learning rates as low as 18% for solar PVSource: Worldwatch Institute; IEA; BTM consult; ABS; NREL; IIIEE; ABI; Drewry 2007; UC Berkeley ERG; Navigant consulting; McKinsey analysis
Cumulative capacity installed MW
3%
23%
13%
• CCS main opportunity areas
• Improving energy efficiency
• Standardization of capture technologies
65%
40%
52%
Solar Thermal1985–1991
Solar PV**1975–2003
Wind Power1981–2001
Wind Power1981–2001
1978–1996
6%
70%
PV inverters1995–2002
Performance is already there…
We Energies
Pleasant PrairieUSA - Coal - Chilled Ammonia
CO2 capture rate
CO2 purity
>99.9%90%
Parasitic load [%] on net efficiency
AEP Mountaineer USA - Coal - Chilled Ammonia
>99%90%
20
25
© ALSTOM 2010. All rights reserved. Information contained in this document is indicative only. No representation or warranty is given or should be relied on that it is complete or correct or will apply to any particular project. This will depend on the technical and commercial circumstances. It is provided without liability and is subject to change without notice. Reproduction, use or disclosure to third parties, without express written authority, is strictly prohibited.
BIEE - JM - 30/09/2010 - P 13
…and will continue to improve…
Vattenfall Schwarze PumpeGermany - Lignite & Bit. Coal - Oxy
Dow Chemical Co. CharlestonUSA - Coal -Advanced Amines
>99.7%
>99.5%90%
90%
Pilot phase Demo phase Commercial phase
Thermodynamic theoretical limit: assuming ideal separation and
compression processes*
Realistic limit
*Theoretical limit assumes ideal separation and compression processes (110bar): isentropic, no losses
15
20
10
… at a competitive cost
Typical cost of electricity OECD new low carbon power plant construction
22
24€/MWh
© ALSTOM 2010. All rights reserved. Information contained in this document is indicative only. No representation or warranty is given or should be relied on that it is complete or correct or will apply to any particular project. This will depend on the technical and commercial circumstances. It is provided without liability and is subject to change without notice. Reproduction, use or disclosure to third parties, without express written authority, is strictly prohibited.
BIEE - JM - 30/09/2010 - P 14
CCS is competitive with other decarbonized power sources
Hard
Coal withCCS
Gas with
CCS
Nuclear Hydro Geo-
thermal
Wind
Onshore
Wind
Offshore
Solar
Thermal
Solar PV
PSP
RoR
Source: Alstom Analysis
Agenda
The challenge
Meeting the challenge in the power sector
The policy framework
© ALSTOM 2010. All rights reserved. Information contained in this document is indicative only. No representation or warranty is given or should be relied on that it is complete or correct or will apply to any particular project. This will depend on the technical and commercial circumstances. It is provided without liability and is subject to change without notice. Reproduction, use or disclosure to third parties, without express written authority, is strictly prohibited.
BIEE - JM - 30/09/2010 - P 15
Conclusions
Policy framework for CCS
• Funding for large scale demos
• Global – linked cap & trade systems (EU, US, Australia)
• Regional – strategic plan for transport, storage
• National –- Regulation of CO2 storage, including liabilities
- Regulatory framework – foundation for a commercial offering
© ALSTOM 2010. All rights reserved. Information contained in this document is indicative only. No representation or warranty is given or should be relied on that it is complete or correct or will apply to any particular project. This will depend on the technical and commercial circumstances. It is provided without liability and is subject to change without notice. Reproduction, use or disclosure to third parties, without express written authority, is strictly prohibited.
BIEE - JM - 30/09/2010 - P 16
- Regulatory framework – foundation for a commercial offering
• National/Local –- Public acceptability
Policy framework for CCS
Risks:
• Commercial
• Policy & regulatory (too little too late; inappropriate approaches to e.g. knowledge sharing/IP; tilted playing field)
© ALSTOM 2010. All rights reserved. Information contained in this document is indicative only. No representation or warranty is given or should be relied on that it is complete or correct or will apply to any particular project. This will depend on the technical and commercial circumstances. It is provided without liability and is subject to change without notice. Reproduction, use or disclosure to third parties, without express written authority, is strictly prohibited.
BIEE - JM - 30/09/2010 - P 17
field)
• Political risk
• Absence of infrastructure
Agenda
The challenge
Meeting the challenge in the power sector
The policy framework
© ALSTOM 2010. All rights reserved. Information contained in this document is indicative only. No representation or warranty is given or should be relied on that it is complete or correct or will apply to any particular project. This will depend on the technical and commercial circumstances. It is provided without liability and is subject to change without notice. Reproduction, use or disclosure to third parties, without express written authority, is strictly prohibited.
BIEE - JM - 30/09/2010 - P 18
Conclusions
Conclusions
• Consensus over decarbonising power sector by 2030
• Technologically entirely feasible
• All technology solutions required
• Policy framework to facilitate:
© ALSTOM 2010. All rights reserved. Information contained in this document is indicative only. No representation or warranty is given or should be relied on that it is complete or correct or will apply to any particular project. This will depend on the technical and commercial circumstances. It is provided without liability and is subject to change without notice. Reproduction, use or disclosure to third parties, without express written authority, is strictly prohibited.
BIEE - JM - 30/09/2010 - P 19
• Policy framework to facilitate:
- Level playing field- Targeted support- Tackling co-dependencies- Better risk management- Effective global co-ordination
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