Comparing Flexible CO₂ Capture in Gas- and Coal-Dominated Electricity Markets

Coal-fired power plants are a source of inexpensive, reliable electricity for many countries. Unfortunately, their high carbon dioxide (CO₂) emissions rates contribute significantly to global climate change. With the likelihood of future policies limiting CO₂ emissions, CO₂ capture and sequestration (CCS) could allow for the continued use of coal while low- and zero-emission generation sources are developed and implemented. This work compares the potential impact of flexibly operating CO₂ capture systems on the economic viability of using CCS in gas- and coal-dominated electricity markets. The comparison is made using a previously developed modeling framework to analyze two different markets: 1) a natural-gas dominated market (the Electric Reliability Council of Texas, or ERCOT) and 2) a coal-dominated market (the National Electricity Market, or NEM in Australia). The model uses performance and economic parameters for each power plant to determine the annual generation, CO₂ emissions, and operating profits for each plant for specified input fuel prices and CO₂ emissions costs. Previous studies of ERCOT found that flexible CO₂ capture operation could improve the economic viability of coal-fired power plants with CO₂ capture when there are opportunities to reduce CO₂ capture load and increase electrical output when electricity prices are high. The model was used to compare the implications of using CO₂ capture systems in the two electricity systems under CO₂ emissions penalties from 0–100 US dollars per metric ton of CO₂. Half the coal-fired power plants in each grid were selected to be considered for a CO₂ capture retrofit based on plant efficiency, whether or not SO₂ scrubbers are already installed on the plant, and the plant’s proximity to viable sequestration sites. Plants considered for CO₂ capture systems are compared with and without inflexible CO₂ capture as well as with two different flexible operation strategies. With more coal-fired power plants being dispatched as the marginal generator and setting the electricity price in the NEM, electricity prices increase faster due to CO₂ prices than in ERCOT where natural gas-plants typically set the electricity price. The model showed moderate CO₂ emissions reductions in ERCOT with CO₂ capture and no CO₂ price because increased costs at coal-fired power plants led to reduced generation. Without CO₂ prices, installing CO₂ capture on coal-fired power plants resulted in moderately reduced CO₂ emissions in ERCOT as the coal-fired power plants became more expensive and were replaced with less expensive natural gas-fired generators. Without changing the makeup of the plant fleet in NEM, a CO₂ price would not currently promote significant replacement of coal-fired power plants because there is minimal excess capacity with low CO₂ emissions rates that can displace existing coal-fired power plants. Additionally, retrofitting CO₂ capture onto half of the coal-based fleet in NEM did not reduce CO₂ emissions significantly without CO₂ costs being implemented because the plants with capture become more expensive and were replaced by the coal-fired power plants without CO₂ capture. Operating profits at NEM capture plants increased as CO₂ price increased much faster than capture plants in ERCOT. The higher rate of increasing profits for plants in NEM is due to the marginal generators in NEM being coal-based facilities with higher CO₂ emissions penalties than the natural gas-fired facilities that set electricity prices in ERCOT. Overall, coal-fired power plants were more profitable with CO₂ capture systems than without in both ERCOT and NEM when CO₂ prices were higher than USD25/ton.