If the answer’s gas, the question must be CCS · 2016. 8. 18. · If the answer’s gas, the question must be CCS ..... David Clarke CEO Presentation to Scottish Oil Club, April

If the answer’s gas, the question must be CCS .....

David Clarke CEOPresentation to Scottish Oil Club, April 2013

©2013 Energy Technologies Institute LLP - Subject to notes on page 1 1

©2013 Energy Technologies Institute LLP The information in this document is the property of Energy Technologies Institute LLP and may not be copied or communicated to a third party, or used for any purpose other than that for which it is supplied without the express written consent of Energy Technologies Institute LLP.This information is given in good faith based upon the latest information available to Energy Technologies Institute LLP, no warranty or representation is given concerning such information, which must not be taken as establishing any contractual or other commitment binding upon Energy Technologies Institute LLP or any of its subsidiary or associated companies.

What is the ETI?

• The Energy Technologies Institute (ETI) is a public-private partnership between global industries and UK Government

Delivering .....

• Strategic planning and system design at national energy system level – power, heat, transport and infrastructure

• Targeted investment in development, demonstration and de-risking of new technologies for affordable and secure energy

• Shared risk


ETI headlines

24 projects completed

£208mprojects announced

51 projects across the portfolio completedannounced the portfolio

>10%project partners in

110partner organisations

15 countries -europe, north

Scotland

12

america, middle east, asia

2 1stprogramme associate -Hitachi

2equity holdings –supporting business d l t

2commercial product launches


developments

ETI Project Portfolio – total £400m

9 Technology Programme areasProgramme areas

D li iDelivering...New knowledgeTechnology developmentTechnology developmentTechnology demonstrationReduced risk


The energy policy ‘trilemma’

Sustainable CO2 emissions down ~18%Sustainable CO2 emissions down 18%<4% energy from renewables (2010)6 GW wind operational (+4 GW in construction)>4% biofuel in diesel (2010, ~15% sourced in UK)Targets –-34% CO2 by 2020-80% CO2 by 2050 15% of energy from renewable sources by 2020

Secure Affordable

15% of energy from renewable sources by 2020

30% imported in 2010 (net)>50% expected by 2020Targets –

Real prices continue to increaseDomestic oil up 90% since 2003Gas up 80%, Coal up 60%, Electricity up 40%Targets

Power from a portfolio of sourcesDiversity in fuel supply and conversionMarket leads on technology selection

Targets –Reduce the number of households in fuel poverty and eliminate fuel poverty in


‘vulnerable households’

Scale of the UK challenge ....

62m people growing to 77m by 2050• 62m people ....................................................... growing to 77m by 2050

• 24m cars .......................................................... growing to 40m by 2050

• Over 380 ‘significant’ power stations many in remote locations• Over 380 significant power stations ................. many in remote locations

• Over 85GW generation capacity ....................... from 1MW to 3.8GW

• 24m domestic dwellings 80% will still be in use in 2050• 24m domestic dwellings .................................... 80% will still be in use in 2050total dwellings 38m by 2050

• Final users spent £124bn on energy in 2010 .... 9% of GDP

• 5.5m households in fuel poverty ........................ 70% are ‘vulnerable households’


UK energy system today


Why is gas so valuable for heat ?UK system has to cope with 6x heat demand swingUK system has to cope with 6x heat demand swing

Design point250

200

HeatElectricity

g pfor a GB heat delivery system

icity

(G

W)

150

Hea

t / E

lect

ri

100

H

50 Design pointfor a GB electricity

Heat demand

Electricity demand0

Jan 10 Apr 10 July 10 Oct 10

electricity delivery system

GB 2010 heat and electricity hourly demand variability - commercial & domestic

Electricity demand


Data source: UKERC (2011)

GB 2010 heat and electricity hourly demand variability commercial & domestic

The challenge reaches everyone .....

>16,000 miles of transmission lines>380,000 miles of distribution lines½ million substations / transformer pointsSystem losses = 1 nuclear plant>176,000 miles of gas pipesg p p

• Some elements are over 100 years old

• ‘Like for like’ replacement costs total around p£200bnGeneration £65bnTransmission £30bn

GB electricity network –

Distribution £95bn

• ‘Like for like’ is not good enough to meet future needs

overhead and underground lines

future needs

• Power industry employs more than 2% of UK workforce


What might the UK energy system look lik i 2050like in 2050 ......

• Decided by global developments – not just UK events, decisions and policy

– UK and global economy

– Industry and technology developments

– UK demand changes – scale and segmentation

Global socio political events– Global socio-political events

– International market confidence

– ..........

• The future is uncertain and we need an energy system design that allows for this


gy y g

A “Perfect world” 2050 UK energy systemOptimised for minimum system cost and meeting UK 2050 emissionsOptimised for minimum system cost and meeting UK 2050 emissions targets


ESME – ETI’s system design tool ....integrating power heat transport and infrastructureintegrating power, heat, transport and infrastructure providing national / regional system designs


Effective national policy needs to focus thi hi h ill ‘ th di l’on things which will ‘move the dial’

• Focus on the ‘big levers’ is crucial to maximise impact of scarce resources - money, skills, supply-base and time

• Investment in innovation is critical to reduce costs

• Engagement of industry and consumers is essentialEngagement of industry and consumers is essential

• ETI view immediate development priorities for 2050 as ...– Efficiency (technology, consumer demand, storage)– CCS– Bioenergy– Nuclear– Offshore wind– Gas – power, heat, transport


p , , p

Creating emissions headroomCCS and bioenergy are criticalCCS and bioenergy are critical

N t CO2 E i i

500

600Net CO2 Emissions

400

500

r

Aviation

Transport

200

300

CO

2/ye

ar

Buildings

100

200

Mt

Power

Industry

2009 (Historic)

2020 2030 2040 2050-100

0Industry

Biofuel (transport)CCS


100DB v3.0 / Optimiser v3.0

Getting the UK energy system to 2050Incremental 2010 2050 cost of delivering national energy system whichIncremental 2010-2050 cost of delivering national energy system which meets CO2 targets

NPV £ bn2010-20502010-2050


Societal level discount rate 3.5%

2050 UK system cost first appearances of major technologies in order of increasing effective

2010 £/Te CO2

first appearances of major technologies, in order of increasing effective carbon price

Marine

400

450

500 Marine

300

350

400

>£300/Te or >$480/Te Offshore Wind

150

200

250

Energy storage and distribution

Light vehicles (fuel cell / electrification)

50

100

150 Efficiency improvementAppliances, heating, buildings, vehicles, industry Nuclear CCS

00% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

UK Energy System CO2 Reduction


UK legal target (2050)

UK Energy System CO2 Reduction(including aviation and shipping)

UK electricity generation capacity Optimised for lowest cost starting from today and incorporating plannedOptimised for lowest cost starting from today and incorporating planned plant closures and life extensions

• Timing new g etechnology availability to align with marketalign with market opportunity is key


CCSA key lever particularly combined with bioenergyA key lever - particularly combined with bioenergyLong development time requires early start

• Potentially very wide use – Power– Hydrogen and ‘SyntheticHydrogen and Synthetic

Natural Gas’ (SNG) production

– Heavy industry

• ETI investing over £60m in enabling CCS for coal, gas and biomassand biomass– Storage appraisal– Measurement, Monitoring

and Verificationand Verification– Transport system design

tools– Improved separation


p ptechnologies

Early demonstration start is essentialLongest lead time item is the most uncertain storageLongest lead time item is the most uncertain - storage

Power and Capture system (IGCC 700MW) ~£1,100mGas plant can be built ‘capture

ConstructFEEDApprovals

Gas plant can be built capture ready’

Transport systemRoute and planning Order Lay

p y£130-300m

Selection Appraise Drill Test License ConstructStorage system£140-250m

Selection Appraise Drill Test License Construct

~£70-90m (saline aquifer)

0 1 2 3 4 5 6 7 8 9 10Years


Overall UK CO2 Storage Capacitydominated by saline aquifer stores- dominated by saline aquifer stores

- P50 capacity 78GT- UK requires about 15GT for 100years

• Total ‘technical’ capacity

60 Gt

8 Gt

5 Gt

– does not take economics and security of t i t60 Gt 3 Gt storage into

account

• Large number f t

2 Gt

of stores whose final assessed

Non‐Chalk Aquifers Chalk Aquifers Gas Gas Condensate Oil Units < 20 Mtcapacity is less than 20 Mt


Where is the storage?

Northern North Sea

• Viable storage found in all areas studiedareas studied

• Storage is stacked and clustered – both oil & gas and aq ifer

Central North Sea

aquifer• Opportunities for ‘basin scale’

approachesSouthern North Sea

Key:Key:Black = coal-fired stationRoyal blue = gas-fired stationGreen = hydrocarbon unitLight Blue = closed aquifer


Red = open aquifer

How much storage do we have?



GoldeneyeGas condensate



‘Defined Structures’

‘Cl d’

‘Open’

‘Closed’


Storage capacitymust be committed in advance of needmust be committed in advance of need

Cumulative storage (Mt)

40yr storage

g ( )

requirement (ESME)

25yr requirement (ESME)(ESME)

Assumptions:– ESME decadal pathway analysis to 2050


– ESME decadal pathway analysis to 2050– Storage Requirement = actual to date + 25/40 years for new assetsTotal UK Storage Requirement (100 years) ~ 15,000 Mt (P90)

Storage capacitymust be committed in advance of needmust be committed in advance of need

Cumulative storage (Mt)

40yr storage

g ( )

requirement (ESME)

25yr requirement (ESME)

ESME t t d (P90)

(ESME)

ESME amount stored (P90)

Assumptions:– ESME decadal pathway analysis to 2050


– ESME decadal pathway analysis to 2050– Storage Requirement = actual to date + 25/40 years for new assetsTotal UK Storage Requirement (100 years) ~ 15,000 Mt (P90)

2050 pathway requires saline aquifers“viable” oil and gas alone unlikely to meet availabilityviable oil and gas alone unlikely to meet availability needs for capacity or timingCumulative storage (Mt)

40yr storage Viable Oil and Gas plus

g ( )

requirement (ESME) Viable Oil and Gas plus aquifers25yr requirement (ESME)

ESME t t d (P90)

(ESME)

ESME amount stored (P90)

Assumptions:– Based on UKSAP capacity for viable depleted oil & gas reservoirs with 5 year delay


– Based on UKSAP capacity for viable depleted oil & gas reservoirs with 5 year delay– Availability based on DECC data for Close of Production (smoothed)– Additional 1,500 Mt appraised aquifer storage available by 2020 rising to 2,700 Mt by 2050

What do we need ?What do we need ?The energy investment jigsaw

Technology Capital

R l tiFirms Regulation


How are we de-risking CCS ?

ETI R+D programmeCapture - gas and coal

Transport – ‘GCCS’ toolkit

Storage UK database

Investment housesProject developersAcceptable risk

ETI R D programmeETI / Ecofin

engagement and communication - building

investor confidenceStorage - UK databaseNational Grid Aquifer appraisalMMV system

pCompetitive returnsLong term stability

investor confidence

Technology Capital

HMG, The Crown Estate,

DECC / TSB R+D and pilot plant programme

Firms Regulation

RegulatorsCFD commitmentsStore liabilities

Project operatorsEquipment and service supply chain

Hub / Cluster strategiesMarine users

chainAcceptable riskCompetitive returnsLong term stability

DECC commercialisation

competition


Long term stability competition

ETI informing the finance community, ti i t fidcreating investor confidence

Financial markets challenges

Policy credibility

Risks & theirRisks & their allocation


www.eti.co.uk/downloads/literature/Ecofin_CCS_Report.pdf

Storage the longest lead time item...... the longest lead time item

and the greatest uncertainty

ETI supporting N ti l G id tNational Grid to appraise southern North sea aquifer

Reducing risk

Building investor confidenceconfidence


DECC CCS demonstrator short list

PeterheadPeterheadPost Combustion 340MW (1180MW site) CCGT retrofitShell, SSE

C t i Cl E ( )•Goldeneye

Captain Clean Energy (reserve)Grangemouth570MW IGCC, 100% abated, depleted gas fieldSummit Power, Petrofac (CO2 Deepstore), National Grid, Siemens

Teeside Low Carbon (reserve)Pre combustion gasification (IGCC) 330MWe net 90%

•Hewett

Pre combustion gasification (IGCC) 330MWe net , 90% abated, depleted oil field + saline aquiferProgressive Energy, GDF Suez, Premier Oil, BOC

Whit RWhite RoseDraxOxyfuel 304MW SC Coal, 100% abatedAlstom, Drax, BOC, National Grid


2050 UK system cost first appearances of major technologies in order of increasing effective

2010 £/Te CO2


Marine

400

450

500 Marine

300

350

400

>£300/Te or >$480/Te Offshore Wind

150

200

250

Energy storage and distribution

Light vehicles (fuel cell / electrification)

50

100

150 Efficiency improvementAppliances, heating, buildings, vehicles, industry Nuclear CCS

00% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%





2050 UK system cost – without CCSfirst appearances of major technologies in order of increasing effective

2010 £/Te CO2


No CCS Marine

400

450

500 No CCS Marine

300

350

400

Offshore Wind

>£300/Te or >$480/Te

150

200

250

Energy storage and distribution XLight vehicles (fuel cell / electrification)

Hydrogen (from CCS)

50

100

150 Efficiency improvementAppliances, heating, buildings, vehicles, industry

Hydrogen from electrolysis (no CCS H2 available)

XNuclear CCS

( )

00% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%


H2 available)




Offshore WindThe marginal power technology and an important hedgingThe marginal power technology and an important hedging option – cost reduction is critical

• DECC cost reduction task force has identified routes• DECC cost reduction task force has identified routes to achieving £100/MWh by 2020

– Contract and project structures – Financing and risk managementFinancing and risk management– Technology innovation

• ETI has already invested £40m in technology development projects to target further cost reductions

• ETI has launched £30m of new projects to developETI has launched £30m of new projects to develop next generation, low cost, deepwater floating platform and very long blade turbine technology

ETI T ti £90/MWh t 2020 th h l i• ETI Targeting ~£90/MWh post 2020 through applying these technologies in high wind speed areas off UK west coast


(£100/MWh = 10p/KWh, £90/MWh = 9p/KWh)

Wind Turbine drive train test rig 15MW rig in supply from GE Power Systems (UK) and MTS (USA)15MW rig in supply from GE Power Systems (UK) and MTS (USA)£25m contract from ETICommercial operation 2013 at UK National Renewable Energy Centre


Wind Turbine drive train test rig15MW rig in supply from GE Power Systems (UK) and MTS (USA)15MW rig in supply from GE Power Systems (UK) and MTS (USA)£25m contract from ETICommercial operation 2013 at UK National Renewable Energy Centre


Floating wind turbineFEED study in delivery for ETI from Glosten using Alstom 6MW turbineFEED study in delivery for ETI from Glosten using Alstom 6MW turbineSite development ongoing at WaveHub off Cornwall

Tension Leg Platform (TLP) suitable for 60-120m water

New technology for wind applications New technology for wind applications

New technology for these (shallow) water depths (60-120m)

Spar Buoy (>120m water depth) already under test by Hywind

Semi-submersibles already under test in several Semi-submersibles already under test in several areas

TLP potentially has lower cost owing to less material in structure BUTmaterial in structure BUT ....

cost of cables, seabed interface and operation in shallow water with high tidal range all to be addressed


addressed

‘Very long blade’ Next generation high performance wind turbine blade developmentNext generation high performance wind turbine blade development£15.5m contract from ETI with Blade DynamicsIn development for test from 2015

UK / US based entrepreneurial development team – small business

Technology and business development support from ETI - project financing, equity investmentfinancing, equity investment


1MW marine tidal turbineDelivery led by Rolls Royce (Scotland) operational phase led by AlstomDelivery led by Rolls-Royce (Scotland), operational phase led by Alstom(UK)part of a £12.5m contract from ETIOperational from early 2013 at European Marine Energy Centre (Scotland)


Meeting the UK 2050 targets Nuclear can be replaced by fossilsNuclear can be replaced by fossilsWithout CCS, fossil fuel use is drastically reduced and efficiency must further increase

2500

3000 Wave

Tidal Stream

Hydroir C

uto

nucl

ear

o C

CS

o bi

oo

targ

ets

2000

r

y

Solar

Wind

Nuclear

Di

No

No

No

No

1500

TWh/year Wet Waste

Dry Waste

Biomass

500

1000Coal

Gas

Biofuel Imports

A i i F l

0

500

2009 (Hi t i ) 2020 2030 2040 2050

Aviation Fuel

Petrol

Diesel


2009 (Historic) 2020 2030 2040 2050

Making energy policy work for the UK

Energypower, heat, transport,

CapacitySkills, training,

infrastructureinfrastructure, science, R+D

Wealth creationgross value addedgross value added, direct employment, secondary jobs and impacts exports


impacts, exports, inward investment

UK Energy policyMust support and be supported by ‘the bigger picture’Must support and be supported by the bigger picture Must operate in a global market

EnergyCapacitySkill t i i power, heat, transport,

infrastructureSkills, training, infrastructure, science, R+D

Stable regulationK li bilitiKnown liabilitiesProven value chains

Wealth creationgross value added

Proven value chains

gross value added, direct employment, secondary jobs and impacts exports inward


impacts, exports, inward investment

UK energy policyWill it d li ?• Focus on the ‘big levers’ is crucial to

Will it deliver ?

maximise impact of scarce resources -money, skills, supply-base and time

Investment in innovation is critical to reduce• Investment in innovation is critical to reduce costs (£600bn npv saving to 2050)

• Engagement of industry and consumers isEngagement of industry and consumers is essential

• ETI are investing in the immediate development priorities for 2030 and 2050 ...– Efficiency (technology, consumer demand, storage)– CCS– Bioenergy– Nuclear– Offshore wind


Offshore wind– Gas – power, heat, transport

For the latest ETI news and announcements email info@eti co uk

Energy Technologies Institute For all general enquiries telephone the ETI on 01509 202020 [email protected]

Holywell BuildingHolywell ParkLoughborough

202020.

For more information about the ETI visit www.eti.co.uk

The ETI can also be followed on Twitter at twitter.com/the_ETI

LoughboroughLE11 3UZ


Documents

If the answer’s gas, the question must be CCS · 2016. 8. 18. · If the answer’s gas, the question must be CCS ..... David Clarke CEO Presentation to Scottish Oil Club, April