1.1 History and Project Outline

There is a frustrating challenge at the heart of most first-of-a-kind carbon capture projects. It is a challenge that impacts not only project developers and carbon capture technology providers, but also project financiers, regulators, and to some extent communities considering whether or not to host a carbon capture demonstration project in their vicinity.

1 Project developers and financiers

In order to secure funding for a carbon capture demonstration project, developers and financiers need to be able to accurately predict the costs involved in operating a carbon capture plant over the life of a demonstration project. This means being able to understand, for example, its impact in key areas of operating costs (OPEX) due to a reduction in thermal efficiency and steam, water and power consumption of the capture plant. One of the key risks related to the OPEX, as identified by one of Europe’s most advanced large scale integrated CCS project2, is that the actual outcome will not be the same as the forecasted cost, which could lead to:

  • Unacceptable OPEX if overestimated – leading to the risk of a project not proceeding,
  • Unforeseen additional costs if underestimated – financial risk during the operational phase.

2 Regulators and communities

Regulators and some communities considering hosting a capture plant project are also interested in this operational data, as they need to understand how much a project will cost, what resources it will require and any emissions that it may produce, before agreeing to permit a project. For many regulators’, charged with permitting the various aspects of these novel first of a kind capture projects, the challenge will likely prove complex. Despite the emergence of CCS-specific regulatory regimes, many of the elements and associated processes will require permitting and approval under existing models of environmental, planning and energy law. The regulator will be required to maintain the integrity and requirements of the regulatory permitting process, whilst simultaneously ensuring that the project proponent’s, or technology provider’s, intellectual property (IP) is protected. Furthermore, it will be important to establish good practices which enable high levels of transparency and inspire public confidence in the regulatory processes involved.

3 Carbon capture technology providers

The group that usually holds the information that everyone is so keen to access, analyse and evaluate (the carbon capture technology providers) has invested substantial resources to develop their technologies and, accordingly, are keen to protect valuable intellectual property.

With “off the shelf” technologies, like flue gas desulphurization (FGD), which have been newly-built or retrofitted on many occasions to power plants, this kind of operational performance data is readily available to use as benchmarks for financial models or to verify performance guarantees. However, with first-of-a-kind technologies like CCS, the need to protect the IP of technology providers has seen project developers, financiers and regulators having to deal with a lack of publically available data to properly assess both performance and cost.

Recognizing that “trust me I’m a carbon capture technology provider” does not substitute for an independent validation of the performance data, the Global CCS Institute has supported WorleyParsons to work with carbon capture project proponents Loy Yang Power and Energy Australia (formerly TruEnergy), and carbon capture technology provider Mitsubishi Heavy Industries (MHI), to go through a process to validate vendor data and create a methodology to assist power station owners with the validation of performance and potential revenue impacts for their facility operation, while protecting the potentially highly sensitive IP of the technology provider.

This report provides a methodology for the independent validation of impacts on plant performance and inputs for retrofit Post Combustion Capture (PCC) projects that can also be easily applied to green-field sites. This will assist with the valuation of performance risks and potential revenue impacts for facility operation. The report uses a case study based on a partial PCC retrofit at the Loy Yang A power station to explain the methodology, and details the results of that case study with the full support of the technology provider as well as the CCS project proponents3.

Importantly, both the methodology and results described in this report have been peer reviewed by a leading CCS capture technology expert who found the methodology to be a sound approach to providing operational performance data assurance while protecting technology vendor IP and providing the CCS community with confidence in the transparency of the assessment process. It is expected that this methodology can be adapted to provide the kind of assurance, cost and quality checks required to additionally satisfy project financing decisions, environmental and advanced permitting approvals.

The independent validation of the plant performance could contribute to a reduction of the currently-required risk premiums to finance the project execution of a large scale PCC plant as it identifies a methodology to independently validate and to reduce any perceived uncertainties in the performance of the first-of-its-kind plants.

2 ROAD | Maasvlakte CCS Project C.V. “Mitigating project risks”, 13 December 2011

3 This study has been performed by WorleyParsons together with the project proponents and carbon capture technology provider Mitsubishi Heavy Industries (MHI). Whilst MHI supplied PCC-process data to WorleyParsons, no confidential process data has been published in the public report. Any confidential data used in this public report has been normalized to show the relative impact of plant optimization