Marginal cost analysis of potential power plant deployment

Thesis (S.M. in Technology and Policy)--Massachusetts Institute of Technology, Engineering Systems Division; and, (M.C.P.)--Massachusetts Institute of Technology, Dept. of Urban Studies and Planning, 2010.This electronic version was submitted by the student author. The certified thesis is available in the Institute Archives and Special Collections.Cataloged from student submitted PDF version of thesis.Includes bibliographical references (p. 91-94).Carbon capture and sequestration (CCS) is a technology that can significantly reduce power sector greenhouse gas (GHG) emissions from coal-fired power plants. CCS technology is currently in development and requires higher construction and operating costs than is currently competitive in the private market. A question that policymakers and investors have is whether a CCS plant will operate economically and be able to sell their power output once built. One way of measuring this utilization rate is to calculate capacity factors of possible CCS power plants. To investigate the economics of CCS generation, a marginal cost dispatch model was developed to simulate the power grid in the Western Interconnection. Hypothetical generic advanced coal power plants with CCS were inserted into the power grid and annual capacity factor values were calculated for a variety of scenarios, including a carbon emission pricing policy. I demonstrate that CCS power plants, despite higher marginal costs due to the operating costs of the additional capture equipment, are competitive on a marginal cost basis with other generation on the power grid at modest carbon emissions prices. CCS power plants were able to achieve baseload level capacity factors with $10 to $30 per ton-CO2 prices. However, for investment in CCS power plants to be economically competitive requires that the higher capital costs be recovered over the plant lifetime, which only occurs at much higher carbon prices. To cover the capital costs of first-of-the-kind CCS power plants in the Western Interconnection, carbon emissions prices have been calculated to be much higher, in the range of $130 to $145 per ton-CO2 for most sites in the initial scenario. Two sites require carbon prices of $65 per ton-CO2 or less to cover capital costs. Capacity factors and the impact of carbon prices vary considerably by plant location because of differences in spare transmission capacity and local generation mix.by Gary Shu.M.C.P.S.M.in Technology and Polic