2.1 Key pre-feasibility findings

The key aspects proposed for Wandoan Power have not fundamentally changed from those originally developed in the preceding concept/scoping study phase.

A number of valuable insights have been gained with the following key findings:

Viability of technology confirmed

GE's technology for an IGCC plant with 90% CO2 capture is technically viable and can be deployed in Queensland at industrial scale as part of an integrated carbon capture and storage (CCS) project generating 341MW sent out at design temperature of 28° C with a CO 2 intensity of approximately 119 kg/MWh sent out. This CO2 intensity is significantly lower than that of conventional fossil fuel power generation technologies e.g. black coal at 850-950 kg/MWh and gas-fuelled CCGT at approximately 400 kg/MWh.

Gasification learnings identified

In the course of its pre-feasibility engineering work GE identified a number of key technical learnings which have direct applicability to Wandoan Power and could deliver cost reductions and/or performance benefits. Among these learnings:

  • Simplification of Zero Process Water Discharge (ZPWD) thermal section: A typical ZPWD Thermal Section contains three processes: evaporation, crystallisation, and salt drying. Since the Wandoan coal feedstock is a low chloride coal, the grey water blowdown flow-rate, its characteristic, and the ZPWD treatment effectiveness enable the Thermal Section to reduce from three to two processes: evaporation and salt drying. The elimination of crystallisation process reduces both capital and operating costs.
  • Syngas expander: A turbo expander was included in the project for generation of power utilising the required drop in pressure in the syngas stream leaving the Acid Gas Removal (AGR) enroute to the gas turbine. GE's application of a high-pressure gasifier design in the Wandoan configuration ultimately allows the expander to generate more power. Normal design for controlling pressure in the clean syngas off the AGR to the gas turbine would be regulating the drop across a control valve.
  • No air extraction: Gas turbine air extraction is commonly utilised for low-Btu, non-capture syngas fuel applications to maximise plant output by reducing the ASU main air compressor auxiliary load. Wandoan Power's high-hydrogen syngas fuel, resulting from 90% CO2 capture and high rating point ambient temperature for normal operation, allows for introduction of nitrogen for increased mass flow to the gas turbine, increasing the gas turbine output. The loss of gas turbine output due to air extraction would be higher than the ASU auxiliary load reduction so air extraction is not recommended.
  • Superheated medium pressure steam: The majority of the residual heat in the shift section is utilised to generate steam. The temperature profile between the first and second shift reactor is suitable to generate and superheat medium pressure steam, which is more valuable than low pressure steam. Sending medium pressure steam to the steam turbine allows the steam to expand across both the medium and low pressure sections of the turbine, thus producing more output than generation of only low pressure steam from the shift section.
  • Expanded radiant gasification train: An expanded-size gasifier and radiant syngas cooler was applied in the Wandoan pre-feasibility study. This product is capable of producing enough syngas to fully load a single 9F syngas Gas Turbine and achieve optimised steam make for 90% carbon capture. Compared with a US based 60Hz project the scale-up factor for the gasifier is approximately 1.4 and for the radiant syngas cooler is less than this value. This level of scale-up is considered to be manageable.

Potential site selected and investigated

The Wandoan area in Queensland was selected using traditional power station criteria (e.g. proximity to fuel, water, and transmission connection) and additionally because it is within a reasonable distance of prospective sites for CO2 storage.

A specific site near the town of Wandoan has been selected and secured with a purchase option agreement. This site has been evaluated and found to be suitable for location of the proposed power station from engineering, infrastructure and environmental perspectives.

Development approval strategy selected

Various options have been considered for obtaining the necessary project development approvals and an approval strategy has been selected which offers a good prospect of success.

Integrated stakeholder relations strategy agreed

The integrated Project Proponents and Funding Stakeholders have agreed that successful development of a CCS project requires exemplary management of stakeholder relations and this consensus has formed the basis for an agreed stakeholder relations strategy going forward.

Schedule for integrated CCS by 2017/18 developed

If the integrated Project is developed with CO2 storage exploration in parallel with power station design, then demonstration of integrated CCS could commence in 2017/18 at the earliest. It is expected that CTSCo will need a substantial quantity of CO2 with defined quality and availability for 'proving-up' geological storage resources through CO2 injection and plume monitoring. Such a source of CO2 is currently not available via existing production processes. Wandoan Power will be able to provide this necessary source of CO2 once it is operational.

If power station design is scheduled to commence only after a program of CO2 storage exploration has been undertaken (drilling and core analysis) then it would become very difficult to achieve a large-scale integrated CCS demonstration before 2020.

Capable EPC contractors identified and shortlisted

The project has investigated market interest in development of Wandoan Power through an exercise to procure the services of a major construction firm to undertake front-end engineering and design (FEED) during the feasibility study phase. A selection process has been designed to identify EPCs that are highly experienced and well qualified in design, procurement, construction and start-up of commercial scale, state-of-the-art, reliable and commercially proven and safe gasification and combined cycle plants.

Prospective EPCs have been assessed using specific selection criteria including: experience with and ability to manage large turn-key projects, general commercial approach, knowledge of local codes and labour, local presence, partnerships and alliances, on-site capabilities, financial strength, work history with the technology, quality management, workplace health and safety and environmental management

After considering a long list of ten candidates three firms have been shortlisted for further consideration. Any one of these three firms has the capability to complete FEED in conjunction with GE and then proceed to deliver the project under a lump sum turn-key contract.

EPC procurement strategy enables feasibility study budget to be reduced

This EPC procurement effort has enabled Wandoan Power to firm up its budget for the feasibility phase of the project. The target budget of $75 million over two years is significantly lower than earlier estimates developed during the scoping phase of this project. Finalisation of this budget can be undertaken once the outcome of the CCS Flagships Program is known.

Project funding explored

Wandoan Power has developed a model for funding the project which enables a combination of grant funding and commercial funding. For the commercial funding portion, the opportunity to access US Ex-Im Bank finance has been explored and it appears that there is a good prospect of securing a substantial debt facility provided that normal project finance arrangements are in place. These arrangements would need to address the fact that this demonstration project will require a revenue stream comparable with that required for scalable renewable energy projects such as large-scale solar thermal projects.

Alternative CO2 technologies compared

Stanwell and GE have surveyed various other industrial scale coal-fuelled CO2 capture projects under evaluation, definition or deployment. Globally, only one of the 37 projects (Kemper IGCC) is proceeding to construction. Many of the other proposed projects aim to demonstrate the partial capture of CO2 by retrofitting post combustion capture equipment to existing power station units. However, there are some issues which need to be better understood when comparing IGCC-based pre-combustion capture projects with post combustion capture projects:

  • Scale-up risk: Post combustion capture technologies have not been deployed at any significant scale with the largest deployments in the world to date being two 25MWe scale pilot projects. This means that the development of larger scale post combustion capture projects is subject to considerable schedule, cost and performance risk.
  • Integration: To date, most post combustion capture projects are proposed as add-on retrofits processing a small slipstream from existing pulverised coal power plants. This means that significant engineering development is still required to attain the high level of process integration required for existing or new plants if they are to achieve high levels of CO2 capture with acceptable levels of energy efficiency.
  • CO2 specification uncertainty: Uncertainty and potential volatility surround CO2 specification as post combustion capture processes have not yet been fully engineered for deployment at large scale with high levels of integration with power plants.

Stanwell has prepared a report surveying various large-scale, coal-fuelled power generation projects with carbon capture. In addition, Wandoan Power has also prepared a discussion paper on some of the issues of concern with regard to post combustion capture technology. These documents are provided as Appendix 1 and 2 respectively.

2.1.1 Project cost estimates and economic analysis

Key aspects of the pre-feasibility cost estimation and analysis are summarised below

Project capital cost estimated to -20% to +25% level of accuracy

Wandoan Power's pre-feasibility study estimate is that the Total Installed Cost of the IGCC power station with CO2 capture plant will be $3,773 million based on current costs and exchange rates. The estimate is generally to -20% to +25% accuracy. This means that the final capital cost is expected to be within a range from $3,020 million to $4,720 million.

WorleyParsons and GE have provided most of the information used to develop the estimated capital cost. Their work has been performed to a prescribed standard (AACE5Class 4) and is based on the assumption that the project would be built using a high level of onsite fabrication.

A major driver of the project's estimated capital cost is the high cost of doing work in a relatively remote Australian location. Preliminary engineering analysis by Worley Parsons and GE has identified some specific cost reduction opportunities including increased fabrication offsite, site layout adjustments and design enhancements. These cost reduction opportunities, worth in total approximately $200 million, have been taken into account by Wandoan Power in estimating the Total Installed Cost.

Further cost reduction may be achieved through some targeted cost reduction activities including value engineering of the design and construction approach (aiming for more modularisation) together with some trade-off analysis of potential alternative project locations and optimisation of scope versus performance requirements.

Comparative analysis

To assist various stakeholders to understand the Wandoan Power cost estimate in a way that supports comparative analysis across technologies and globally this report also presents a normalised cost estimate based on generic assumptions and publicly available information from a U.S. based IGCC project. This 'cost walk' exercise makes a number of stepped cost and performance adjustments to the publicly available project costs associated with the above-mentioned project, which were reported at the time of the analysis, to arrive at an estimated cost for single train 50 Hz project with 90% carbon capture located at Wandoan. Using a USD/AUD exchange rate of 1.00, results in an estimated Total Installed Cost for Wandoan Power of USD 3,067 million or USD 8,993 /kW. This figure is within the accuracy of Wandoan Power's pre-feasibility capital cost estimating range.

This 'cost walk' analysis indicates that a Wandoan sized 50Hz IGCC plant with 90% CO2 capture normalised to ISO conditions and located in the US gulf coast region would cost USD 4,798 / kW. The incremental site specific cost of building the plant in Australia at Wandoan adds USD 4,195 / kW. The difference reflects a variety of factors including site ambient conditions (significantly warmer), local logistical requirements and local construction costs.

Levellised cost of electricity

Wandoan Power's pre-feasibility study financial modelling indicates that if the project is developed with a grant funding contribution of $1,800 million applied to the construction phase then the project's levellised cost of electricity is $192/MWh in current dollars. As this figure includes the cost of procuring a CO2 offtake service from CTSCo (refer 6.2.1 below) and an assumed cost of capital, it gives an idea of the average revenue that the plant owners would have to achieve to break even.

This cost is higher than current electricity prices in Australia which are based on fossil fuel technologies with high carbon emissions. However, the estimated levellised cost is competitive with costs for other scalable low emission technologies such as solar thermal.

5 Association for the Advancement of Cost Engineering. For more information refer www.aacei.org.