CCS to be cost neutral for new gas stations: UK

Market: Electricity
27/08/20

Adding carbon capture and storage (CCS) to a combined-cycle gas turbine (CCGT) commissioning in 2025 could be cost neutral over the lifetime of the plant, but the cost of such units would still be almost double that of onshore wind and solar, according to forecasts from the UK's Department for Business, Energy and Industrial Strategy (Beis).

Beis forecast the levelised cost of electricity (LCOE) for conventional CCGTs commissioning in 2025 and running for 25 years at £85/MWh in 2018 prices. It would also be £85/MWh for a CCGT with CCS.

This is based on carbon costs of £32/MWh for a conventional CCGT, and just £3/MWh for one with CCS, implying an average carbon price of £80-100/t over the 25-year lifetime. This is well above the current level of around £44/t, based on front-year EU emissions trading system (ETS) prices and the UK's additional £18/t carbon price support. Beis assumes the carbon price will rise above £200/t by 2050.

Construction costs for a CCGT with CCS are forecast to be £23/MWh, compared with £7/MWh for one without CCS. Assumed fuel costs are £40/MWh for CCGT but £45/MWh for one with CCS. CO2 transport and storage costs are just £3/MWh for a unit with CCS.

The LCOE for a CCGT with CCS is expected to remain similar for projects delivering out to 2040, whereas for units with unabated gas generation it rises to £125/MWh by 2040, as carbon costs are projected to rise to £70/MWh.

UK utility SSE is looking to build a CCGT with CCS in the mid-2020s.

The forecast LCOEs for renewables coming on line in 2025 are much lower, at £57/MWh for offshore wind, £46/MWh for onshore wind and £44/MWh for large-scale solar.

Such projects have no fuel or carbon costs, but higher construction costs at £27-31/MWh, and fixed operation and maintenance costs of £10-19/MWh, compared with £2/MWh for CCGTs.

The LCOE for new solar projects falls to £33/MWh by 2040, while onshore wind falls to £44/MWh and offshore wind to £40/MWh.

Offshore wind load factors are expected to rise to 51pc in 2025, 57pc in 2030 and 63pc in 2040. This comes as turbine sizes steadily rise from 9MW in 2020 to 20MW in 2040.

Offshore wind costs have fallen dramatically since the last report in 2016, when Beis was forecasting an LCOE of £106/MWh by 2025 and £103/MWh by 2030.

Its forecast for nuclear projects is unchanged from 2016, at £95/MWh in 2012 prices for projects coming on line in 2025.

Beis also calculated an "enhanced LCOE" which includes the wider system impacts of a technology, such as its ability to provide firm capacity and to help balance the system.

The enhanced LCOE falls to £40-65/MWh for a CCGT coming on line in 2025, compared with £61-73/MWh for one with CCS, £56-73/MWh for onshore wind, £53-66/MWh for large-scale solar and £69-85/MWh for offshore wind.

By Killian Staines

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