World’s first coal carbon capture project set for startup this week

Source: Christa Marshall, E&E reporter • Posted: Wednesday, October 1, 2014

The world’s first large coal-fired generator refitted to capture the majority of its carbon dioxide emissions is ready for operations.

This week, Canadian utility SaskPower hosts officials from the Department of Energy and around the world as part of an official launch of the utility’s Boundary Dam carbon capture project, one of four initiatives cited by U.S. EPA in its proposed rule on power plants as an example of the viability of CO2 capture technology. The 110-megawatt coal plant in Saskatchewan already is capturing carbon dioxide as part of preliminary tests and will move to an approximately 90 percent capture rate of its overall CO2 this year after this week’s ribbon-cutting, said SaskPower CEO Robert Watson in an interview with ClimateWire.

“We fully anticipate to get to 90 percent within not too long at all,” Watson said. “It’s an incredible story against a lot of the naysayers.”

While not releasing official numbers, he said the capture unit on Unit 3 at the utility’s Boundary Dam power station is performing at “successful” ratios, meaning it is sapping an expected level of power to remove CO2, keeping the plant’s financial model intact. That parasitic load aspect of capture — where separating CO2 saps a power plant’s energy — has been problematic for other smaller tests.

If the $1.3 billion project continues to work as planned as things are scaled up, the utility will make a decision by early 2017 about whether to retrofit other coal units at its Boundary Dam Power Station with carbon controls, he said. “We fully expect to build the next one 20 to 30 percent cheaper than this one,” he said, adding that construction and testing have revealed ways to improve design and engineering.

It’s difficult to overstate Boundary Dam’s significance with the future of the global coal fleet. SaskPower’s project and Southern Co.’s Kemper Energy Facility in Mississippi are the only constructed coal-fired power plants in the world with equipment to capture CO2 at scale.

Kemper will not be ready for full operations until next year, however. Boundary Dam also is distinctive for being a retrofit, rather than a new plant — the unit equipped with CO2 controls in Saskatchewan is more than 40 years old and similar to other global pulverized coal plants. American Electric Power Co. Inc., an Ohio-based utility, attempted a CO2 test on a large coal plant in 2008 but never moved beyond an approximately 2 percent capture rate of the greenhouse gas before cancellation.

CO2 stored in several places

Boundary Dam is “important because it really deflates arguments that CCS isn’t available on power plants,” said John Thompson, director of the fossil transition project at the Clean Air Task Force. He noted that NRG’s recently announced Petra Nova carbon capture project in Texas also is a planned post-combustion plant that is moving ahead as part of a business decision for sold CO2.

The technology being used at Boundary Dam — an amine-based solution to strip CO2 from power plant flue gas after burning — is applicable to any coal-fired power plant in theory, regardless of the type of coal used, he said. That distinguishes the project from a gasification plant capturing CO2 before combustion like Kemper, which runs specifically on low-rank coals.

Watson says the first priority is to ensure that the plant is working, but he clearly is aiming for global recognition. This week, the utility is hosting a symposium in Canada to showcase Boundary Dam, with delegate attendance from 20 countries. In the past year and a half, there have been several utility memorandums of understanding signed with countries like the United Kingdom and Germany to share information on CCS technology and visits from Chinese and U.S. officials.

While most of the 1 million metric tons of annual CO2 captured from Boundary Dam will be sold to Cenovus as part of a 10-year enhanced oil recovery deal, some also will be stored outside of oil fields in deep underground rock formations as part of a research project supported by the Canadian and Saskatchewan governments.

“The southern part of Saskatchewan is truly becoming a worldwide center of excellence for CO2,” Watson said.

Yet there is skepticism that SaskPower will ever retrofit another plant with capture and serve as a wide-scale model for “clean” coal projects elsewhere in the world. In the United States, natural gas is still a cheaper option for most utilities and locations, according to some analysts.

“The two coal plants w/CCS in the United States under construction each have a government grant and are selling CO2 for enhanced oil recovery. Take away the subsidies for renewables and renewable mandates, [and] all those projects would dry up also,” said Howard Herzog, a senior research engineer at the Massachusetts Institute of Technology, in an email.

Herzog is releasing a paper next week concluding that “it remains to be seen whether the successful experience at unit 3 can be replicated at other units at Boundary Dam, let alone other locations.”

Similarly, Cheryl Wilson, an analyst at Bloomberg New Energy Finance, said that proposed U.S. EPA rules on existing plants are unlikely to incentivize much capture in the United States, except perhaps in states with a lot of coal and huge opportunities for enhanced oil recovery. “Furthermore, separate regulations for sulfur, nitrogen and mercury emissions are making the economics of existing coal plants challenging,” she said.

She pointed to a Bloomberg analysis of CCS this summer stating that little new investment is expected in Canada, either, as “the projects with government support have already reached final investment decision or been canceled.”

A financial experiment, as well

The reason, then, why Boundary Dam is moving forward is a unique combination of Canadian and locational circumstances, including the fact that SaskPower is sitting on a 300-year supply of inexpensive coal, with adequate oil fields nearby for long-term storage of CO2 (ClimateWire, March 15, 2013). That combination is similar to many other CCS proposals making it to the finish line, including Kemper in Mississippi.

Watson said SaskPower is viewing the plant as a financial decision, not just a climate one, as many byproducts, like fly ash from the plant, also can be sold along with the CO2.

The utility also is reacting to Canadian regulations that are not in place yet in the United States, he said. In 2012, Canada completed greenhouse gas restrictions on existing power plants similar to ones under consideration by U.S. EPA.

They essentially require power plants to meet the emissions profile of natural gas within 45 to 50 years of their commission dates. Many Canadian environmentalists say that timeline is too weak, but it is forcing SaskPower to turn to CO2 capture, Watson said.

“We would have had to shut down Boundary Dam within several years, or convert it,” Watson said. The utility chose conversion out of concern about gas price volatility, as part of a view that large nuclear and renewables were not compatible with the provincial grid. Ultimately, it concluded that a retrofit would be cheaper than a new gas build.

“The regulation was a very serious part of it,” Watson said about the capture decision.

Additionally, SaskPower is a Crown corporation, meaning it is owned by the people of Saskatchewan and is the only entity authorized to provide provincial power, providing a streamlined process to increase revenue and raise rates. The project further benefited from a $240 million government subsidy. “Companies elsewhere are competing with other suppliers,” Chris Severson-Baker, an analyst at the Pembina Institute, a Canada-based environmental think tank, told ClimateWire last year. “They don’t have that same way of passing along costs.”

SaskPower rates increased 2.7 percent on average between 2011 and 2015, the utility said, although that was not all related to the carbon capture. The only cost overrun at the plant was tied to the power plant itself, not the capture unit, noted Watson.

“The next thing we’ve got to try out is whether we can get it even more efficient and then determine what will be the final economics,” he said. “It will be working … that’s not an issue.”