Caledonia Clean Energy Project

Feasibility Study Findings

#newclimateforCCS

Stephen KerrProject Director

Caledonia Clean Energy Project is a Key UK CCS Infrastructure Investment

• Completed extensive Feasibility Study over 2 yearslargely Scottish / UK Government funding

• Natural Gas with CO2 capture clean power project• Options from 500MWe to 1300MWe• Reliable and flexible clean power

• Study undertaken with industry leading supply chain partners

• CO2 transportation and storage solution developable at lowest cost and risk in UK

• Deliverable in 2025 with CfD at competitive priceless than energy from offshore wind on a comparable basis

CCS power cheaper

than offshore wind!

Cameron says

“I told you so”

Key Findings

CCEP Meets Energy System Challenges

• A natural gas-fired plant with flexible output and CO2 capture, to integrate with renewablesRamp rates up to 88 MW / minute with carbon capture. Minimal impact in 50%-100% op. range

• CCEP as “anchor tenant” for infrastructure improves CCS industrial cluster economics by at least 100%

• Suitable pipeline infrastructure to reach CO2 storage capacity already exists (p.s. saves money)

CCEP is Technically and Financially Feasible

• Technical feasibility: Power plant & CO2 capture system are proven technologies with commercial warranties

Opportunity to add innovative technology later with shared infrastructure at lower cost

• Significantly Lower Initial Delivery Risk: existing pipelines & well defined storage improves financability

CCEP Can Be Financially Attractive for Government, Consumers and Investors

• CCEP can be built and financed with reasonable returns at an attractive power price

• CCEP is dispatchable and provides firm energy while also supporting changing grid conditions through flexible operation

CCEP’s Other Socio-Economic Benefits

• Major contribution to UK and Scottish economies through local content, Gross Value Added, short-term and long-term jobs

Project DescriptionTechnologies, Site & Infrastructure

CCEP Overview

CCEP - Grangemouth

Captain Sandstone

Range of Analysis

• Summit Power Caledonia Clean Energy Project (CCEP or the Project) could export up to 1,385 MW of low-carbon electrical power to the electrical grid and, depending on the configuration, could economically capture 3.1 million tonnes of carbon dioxide per annum for undersea storage, and enhanced oil recovery applications.

• Fourteen economic scenarios are presented, built on the different technical configurations of power generation, CO2 capture, CO2 transportation and storage and results in a comprehensive set of combinations based on the different technical configurations. It is recommended that two configurations are further advanced to maintain option value.

• The findings confirm that CCEP represents an economically and technical viable project. CCEP demonstrates scenarios that can be delivered in the £80 to £90/MWhr Strike Price range (2012 prices) with key changes in commercial approach to make the Project investable.

• Other technical and commercial opportunities remain to further reduce the Strike Price.

Key Commercial Changes

• Four key policy / commercial changes could reduce Strike Prices by as much as £60 - £80/MWhr from the prior CCS Competition levels

• Socialised development and regulated charging model for CO2 Transportation & storage, reducing cost and risk up to [£35/MWhr lower]

• Provide appropriate Contract for Difference (CfD) contract terms and tenor (at least 20 years) to underpin investment up to [£24/MWhr lower]*

• Optimise flexible dispatch/capacity factor of plant up to [£15/MWhr lower]*

• Reduce commercial risk arising from definition of clean electricity generation and cost of residual carbon emissions up to [£6/MWhr lower]

* Dependant on approach to valuation of capacity, flexibility and ancillary services

New CfD Approach for Power CCS

Match revenue structure to the value of flexible low carbon dispatchable power

Capacity

Balancing ServicesEnergy

20 year CfD Term

Revenue

Stri

ke P

rice

£8

0 -

£9

0 M

Wh

r

AB

C

£2

5£

4

£

56

Contracting long term low carbon power capacity will reduce the price for other short term auctions (you cannot run a

capacity auction unless you have excess capacity)

Some balancing services should be contracted on a long term low carbon basis

“Energy” component price can be benchmarked to alternatives

Rates of return can be regulated

Sherlock talks

scarcity pricing,

volatility, climate:

Dr Watson

prescribes CCS

Sherlock Looking Concerned

Route Map of Scenarios

Range of Technologies Considered

NGCC with PCC SMR with Combined Cycle

CapSol NET Power

Scenario 1a - 2x1 Siemens 8000H

Scenario 1b - 2x1 Siemens 4000F

Scenario 1d - 2x1 Siemens 2000E with SF

Scenario 1e - 2x1 GE 9HA.02

Scenario 1g - 2x1 GE 9F.04

Scenario 1h - 1x1 Mitsuibishi M701F5

Scenario 3a - 3 SMR trains w/ H2-fired Siemens 8000H

Scenario 3b - 3 SMR trains w/ Siemens 8000H

and PCC

Scenario 5b - NetPower (600MW)Scenario 5a - NetPower (300MW)

Scenario 4a - CapSol StarGate 250 (1 module)

Scenario 4b - CapSol StarGate 250 (4

modules)

-

50.00

100.00

150.00

200.00

250.00

300.00

350.00

400.00

450.00

- 200 400 600 800 1,000 1,200 1,400 1,600

Full

Load

Aba

ted

Emis

sion

s CO

2 g

/ KW

hr

Export Generation MW

Unabated Gas CCGT Typical Emissions Range

NGCC with PCC Emissions Range

NetPower Allam Cycle Emissions Range

Emissions Range

Real world operating conditions

40 – 80 g/kwhr

Filling the gap with unabated fossil fuels means climate targets will not be met

Cluster Economics – Illustration of Impact on T&S Business Case

5 MPTA Capacity T&S system: Capex £600M : Opex £25M pa: Unrisked / Undiscounted

• Industry & Power Cluster: Industry ramp to 2MTPA (10yr contract): Power 3MTPA year 1 (40 year)

Cost: £11 / tonne Contracted Utilisation: 71% Full Recovery Price: £16 / tonne

• Power Only: Power 3MTPA year 1 (40 year)

Cost: £13 / tonne Contracted Utilisation: 60% Full Recovery Price: £22 / tonne

• Industry Only: Industry ramp to 5MTPA (each source 10yr contract)

Cost: £16 / tonne Contracted Utilisation: 50% Full Recovery Price: £32 / tonne

• Industry Only: Industry ramp to 2MTPA (each source 10yr contract)

Cost: £71 / tonne Contracted Utilisation: 11% Full Recovery Price: £632 / tonne

40

tim

es2 t

imes

Next Stage

Next Steps

• The next phase of the Project requires funding of a Pre-FEED to further refine and focus activities in line with developing UK deployment plan

• Work closely with Governments to identify policy, fiscal support and commercial models

• Develop real world business case for UK CCUS clusters – initially industry and power - pulling through hydrogen and low carbon products and services

• Develop appropriate CfD for real projects• Implement Industry CCUS approach• Implement Transport & Storage approach• Business Case and funding of UK Clusters

Caledonia Clean Energy Project

Contact:Stephen Kerrskerr@caledoniacleanenergyproject.com07500 797720

11 Rutland Square, Edinburgh