Carbon capture could be six times more costly than wind and storage, analysis shows

The construction of new fossil fuel power stations paired with carbon capture and storage technologies could substantially increase the cost of power, with new analysis finding the technology up to six times more expensive than wind and solar, even when combined with energy storage.

The analysis has been undertaken by associate professor Bruce Mountain of the Victoria Energy Policy Centre at Victoria University and found that adding carbon capture and storage technologies to a new coal-fired generator could raise the levelised cost of electricity by between $90 and $125 per MWh.

With new coal and gas already more expensive than new wind and solar projects, the cost of storing the emissions from the fossil fuel technologies would further raise the costs, to the extent that it would be cheaper to build wind, solar and storage to achieve similar levels of dispatchability while producing zero-emissions electricity.

“Our analysis suggests carbon capture and storage is likely to cost at least six times as much as wind generation plus storage, with comparable dispatchability,” Mountain said.

Mountain found that the cost of producing electricity using a new black coal generator combined with carbon capture facilities would fall between $280 and $322 per MWh, while the range for a brown coal generator was even higher, falling between $314 and $363.

This compared to the cost of building a new wind farm, combined with 0.5MW of storage for each megawatt of generation capacity, of $44.90 per MWh.

The higher costs for fossil fuel power would be driven by both the cost of the additional infrastructure, as well as a substantial decrease in the operating efficiency of the coal-fired power stations. Crucially, Mountain said that there was a lack of working examples of carbon capture facilities being paired with electricity generation projects.

Mountain undertook a study of current research on the costs and performance of carbon capture and storage projects, saying there were limitations on the ability to accurately predict the cost of the technology as there were so few operating examples worldwide.  The study found that there were just two examples of carbon capture projects from fossil fuel power stations, and this meant there was limited available evidence on the costs of the technology.

“Making accurate cost estimates is not easy, as there are only two commercial-scale electricity generation projects using capture and storage in the world. One of those has already been mothballed and the second operates far below its design capacity,” Mountain added.

“There are other examples of carbon capture and storage in the oil extraction industry, but these are not dealing with emissions from electricity generation. New technologies may reduce capture costs in future, but none of these technologies appear to be anywhere close to commercialisation.”

The analysis was commissioned by the Australian Conservation Foundation, which said that the report’s findings raised questions about Morrison government plans to open up clean energy funding agencies, the Australian Renewable Energy Agency and the Clean Energy Finance Corporation to potentially funding carbon capture and storage projects. The Morrison government created a separate $50 million fund to support the development of carbon capture technologies through the federal budget handed down in October.

“Carbon capture faces huge technological and geological challenges, it does not cut emissions to the levels required to tackle climate change and is so expensive it can’t compete with cheaper and more effective renewable technologies,” climate change campaigner at the Australian Conservation Foundation Suzanne Harter said.

“Minister Angus Taylor must not repurpose the Australian Renewable Energy Agency and the Clean Energy Finance Corporation to add costly, unproven carbon capture and storage to their investment mandates.”

The Morrison government has included carbon capture and storage as one of five ‘priority technologies’ under the Technology Roadmap published in September. The government set a ‘stretch goal’ of reducing the cost of CCS to below $20 per tonne, but the new analysis suggests that current costs are around five to six-times this price target.

Australia has just one operating large-scale carbon capture and storage project, located at Chevron’s Gorgon LNG facility off the coast of Western Australia. The project is expected to store around 4 million tonnes of carbon dioxide annually but had faced commissioning delays.

The Gorgon project stores carbon captures during the extraction and processing of natural gas, and the project does not involve the capture of carbon emissions produced during the generation of electricity.