3.4 Regional specific factors

This update revises factors for moving the capital costs from the reference location to the location of interest and is described in section 3.4.1. The inclusion of region specific fuel information is described in section 3.4.2.

3.4.1 Development of regional cost indices

To support conversion of the reference case costs from USGC to location specific costs (expressed in US dollars) for the selected cities/countries, conversion indices were developed for three major cost elements. These include imported equipment and materials, locally sourced equipment and materials, and labour. The conversion indices were developed using data from Richardson Products’ International Cost Factor Location Manual 2009-2010 Edition. Land cost within a region is difficult to assess and is strongly dependent on the specific location within a region and the current land use. Therefore, the land cost transfer index, specifically used with the capital costs for the pipeline for CO2 transportation, was held constant and therefore assigned a transfer index of 1.00. The regional indices developed using these methods are listed in Table 3-3.

Table 3-3 Regional indices used to transfer projects from USGC to specific locations

Region Capital and O&M Costs
Equipment Materials Labour Land/ROW
ANZ
Australia 1.21 1.21 1.58 1.00
Asia
China 0.81 0.81 0.05 1.00
Japan 1.21 1.41 1.84 1.00
India
India 1.27 1.11 0.26 1.00
Europe
Euro Region (Germany) 1.19 1.16 1.33 1.00
Eastern Europe (Poland) 1.01 0.81 0.79 1.00
ME and Africa
Saudi Arabia 1.27 1.21 0.35 1.00
South Africa 1.27 1.11 1.04 1.00
Americas
Canada 1.08 1.01 2.16 1.00
United States 1.00 1.00 1.00 1.00
Brazil 1.16 1.16 0.97 1.00

The Imported Equipment and Materials index adds a factor for freight over USGC. Taxes and duties have been specifically excluded from the calculation.

The Locally Sourced Equipment and Material index represents the cost of the locally sourced items (expressed in US dollars) relative to USGC.

The labour index considers two key elements; the relative cost of labour (on a crew rate basis) and the relative labour productivity as compared to USGC.

In general, the equipment related to power projects was considered as an imported cost except in the case for countries with significant industry such as China.

The capital costs for power generation and capture were considered for the respective regions. Based on WorleyParsons experience, the China labour index was significantly greater than that previously reported and resulted in power plant capital costs greater than those typically reported. This higher than expected index is related to the urban locations used within the Richardson’s manual. Generally, the setting of most power plants is in rural areas, and as a result the labour index for China was reduced to a value more inline with the previous report of 0.05.

The reader is cautioned that the calculated indices are based on very specific locations/cities, generally major metropolitan areas, and can vary considerably, particularly with respect to labour, depending on the actual project location. Additionally, the type of labour used; non-union, union, or work camps, can greatly impact the labour costs within a given region. Further, the locally sourced equipment and materials and labour indices will vary with changes in currency exchange rates.

3.4.2 Regional coal type and fuel costs

In addition to the update of the regional factors, typical coal types for each of the regions were selected to be utilised in the economic analysis. The coal selections were based on the information provided in Projected Costs of Generating Electricity (IEA, 2010) and WorleyParsons’ experience. In general, obtaining the price paid by a generator for fuel is difficult and where this data is available, is found to vary significantly between facilities. The coal pricing approach for the regions was adopted from the Projected Costs of Generating Electricity in that for countries which produce coals, local coal prices were assumed while for non-coal producing countries international market prices were assumed. The local coal prices were determined through the review of the literature such as national energy surveys, the Projected Costs of Generating Electricity, and in the case of the United States, a database of delivered fuel costs. The regional natural gas prices were determined through similar methods. A summary of the coal types and coal and natural gas prices used in this study are provided in Table 3-4.

Table 3-4 Coal types and prices used for coal and natural gas per region

Region Coal Coal HeatingValue, HHV Coal price(US$/GJ) Natural gas price(US$/GJ)
ANZ
Australia Australian Black 24.8 1.451 7.585
Asia
China China Bituminous 24.1 3.582 4.535
Japan Australian Export, Bituminous 33.3 4.953 11.095
India
India High Ash Indian Bituminous 12.6 4.444 4.20
Europe
Euro Region (Germany) German Brown 10.5 1.375 9.765
Eastern Europe (Poland) Polish Brown 10.1 0.676 9.765
ME and Africa
Saudi Arabia NA NA NA 2.00
South Africa South African Coal 18.2 0.825 9.765
Americas
Canada Canadian Sub-bituminous 28.9 0.917 7.405
United States Bituminous IL No #6 27.1 2.618 7.405
Brazil High Ash Brazilian Bituminous 10.4 1.855 7.715

Notes:

1 Average of black coal prices, ‘Fuel resource, new entry and generation costs in the NEM,’ (ACIL Tasman, 2009).

2 Coal price assumed in the IEA publication in $/tonne, compares to average fuel price presented in paper, ‘CO2 capture from coal-fired power plants in China‘, (NZEC, 2009) of $3.50/GJ. Comparable to price reported by WorleyParsons China Office of $85-100/tonne.

3 Import price of coal to Japan in Q1- 2010.

4 Midrange of delivered coal price (range $48/t to $64/t) to power plants from ‘Coal Initiative Reports, A Resource and Technology Assessment of Coal Utilization in India’ (Chikkatur, 2008).

5 Coal and Natural Gas price assumed in ‘Projected Costs of Generating Electricity, 2010 Edition’ (IEA, 2010).

6 Data from WorleyParsons based on work in Eastern Europe.

7 EIA data, Low price is reasonable based on the vertical integration and coal fired generation in Canada; see Natural Resources of Canada, www.nrca.gc.ca

8 EIA average Form 923 (Power Plant Operations Report, delivered coal prices to power plants, EIA 2009e) data for 2009.