Technical, Environmental, and Economic Assessment of Deploying Advanced Coal Power Technologies in the Chinese Context

Overview

At the beginning of this century, the prevalent electricity shortages in China resulted in a rapid expansion of power capacity, especially coal-power capacity. In 2006, coal-fired capacity accounted for about 78% of total capacity. The International Energy Agency (IEA) has projected that by 2015, China's coal power capacity will reach nearly twice what it is today. The bottom line is that electric power depends on coal in China.

However, largely because of its heavy coal use, China emits high amounts of carbon, sulfur, and other gases as well as heavy metal and fine particulate matter. China has a serious pollution and acid rain problem that is worsening. In addition, it is facing increasing international pressure to reduce greenhouse gases that are the primary gas contributing to global warming.

CO2 produced from the use of fossil fuels is the main anthropogenic greenhouse gas that results in global warming. While on a per capita basis the United States remains by far the largest emitter of CO2, China's rapid economic growth is rapidly increasing total CO2 emissions.

Domestic and international pressures on the Chinese government to reduce CO2 emissions is intensifying, requiring the country to shift its emphasis towards lower-carbon energy technologies and fuels. However, it will be very difficult to quickly change China's coal-dominated energy mix. The need, therefore, is for China to develop and deploy advanced coal-power technologies that can utilize China's vast coal supplies more cleanly.

The goal of this study is to evaluate the technical, environmental performance, and differences in capital cost and overall cost of electricity (COE) for a variety of advanced coal power technologies based on the technological and economic levels in 2006 in China. This paper explores the economic gaps between Integrated Gasification Combined Cycle (IGCC) - the technology most able to capture CO2 at a relatively low cost - and other advanced coal power technologies. The study compares twelve different power plant configurations using advanced coal power technologies.

COE is a function of the costs for capital, fuel, consumables, repair, labor, finance, technology, time frame, and site. More stringent environmental regulations often cause plants to add more equipment, lose potential capacity, and lose efficiency. Advanced technologies may have a higher capital cost and need to be incorporated into the facility; however, these technologies can reduce operating costs, thereby reducing production costs. In this study, the main variable is technology.

The study found pros and cons in the use of various advanced coal technologies. The cost of IGCC is almost twice as expensive as that of conventional sub-critical pulverized coal (PC) technologies. In recent years, the great demand for new power plants has made manufacturers stay in a highly competitive market, resulting in a rapid drop in PC equipment prices. China's low levy fee for polluters, lack of incentives for cleaner technologies, and current emission standards also discourage some advanced coal power technologies, such as IGCC.

Significant findings:

• Coal power capacity and production have increased dramatically in recent years in China. The power sector currently chooses ultra super-critical (USC) PC and super-critical (SC) PC for new capacity additions coupled with pollution control technologies, and 300MW circulating fluidized beds (CFB) as a supplement. Several IGCC demonstration power plants are being built and hold promise for the future. The development of clean, high efficiency power generation technologies has become an inevitable trend.
  
• The Chinese government offers a preferential price for electricity from power plants with flue-gas desulfurization (FGD) technology. Therefore, power plants with FGD remain competitive with other power plants. Currently, there is no incentive policy to encourage power plants to install NOx control equipment.
  
• Levying charges for emitting pollutants is not enough to encourage power plants to install pollution control equipment. Because of the current low levy fee, polluters prefer to pay charges for emitting pollutants.
  
• PC plants coupled with pollution control technologies, CFB, and IGCC can meet the SO2, NOx and particulate matter emissions requirements of the Chinese government today.
  
• While it is clear that compared with the other coal-fired plants, IGCC has the best environmental performance, because of the low levy fee on polluters, it is not obvious that IGCC can produce electricity more cleanly. The COE of IGCC is much higher than that of other advanced coal power technologies. Because it is not yet a mature technology, IGCC has higher capital costs, fuel costs, and repair costs. However, as China's pollution-control standards become more stringent, some technologies will become less attractive and others relatively more competitive.
  
• SC PC and USC PC power generation technology coupled with pollution control technologies can meet the requirements of China's current emission standard. They are highly efficient, technically mature, and cost-effective. At the same time, because of their high efficiency they can reduce CO2 emissions to some extent. From the point of view of efficiency, SC and USC units are good choices for the power industry.
  
• Currently, IGCC has no ability to compete with other advanced coal power technologies in the Chinese market. The development of IGCC is very slow around the world. In recent years, IGCC has been attracting more and more attention and support because of concerns about global warming. It is easier for IGCC to capture CO2 at relatively low cost. Even though IGCC technology cannot currently compete with conventional coal-fired power generation technologies, it will show its advantage and market competitiveness once the goal of CO2 emission reduction is set in the country. If China plans to deploy IGCC based on successful demonstration during the Eleventh Five Year Plan, major economic hurdles will have to be overcome. Incentive policies are needed to deploy IGCC in China.