Last year, during the row over the Government's plans for the coal industry, "clean coal" technology enjoyed a brief flurry of publicity. The industry, echoed by HMIP's Director Dr David Slater, called for funding of a demonstration plant using integrated combined cycle and gasification (IGCC) technology. The pleas fell on deaf ears. The Government said that such a plant would cost twice as much as a gas-fired station, and arrive too late to save any pits (ENDS Report 218, pp 13-15 ).
No room in the market
Prospects for IGCC and other advanced coal combustion technologies sank back from view. National Power and PowerGen already owned more capacity than they can use, and saw no reason to pursue the clean coal option for many years.
The Government has now approved 22GW of new gas-fired capacity. Some of this may never be built, but National Power estimates that combined cycle gas turbines (CCGTs) will have cornered over 35% of the electricity market by around 2000. Meanwhile, Nuclear Electric will soon commission its Sizewell B reactor, and wants more new reactors to be sanctioned.
The upshot is that the two big privatised generators are resigned to a declining market share, even allowing for their own investments in over 7GW of CCGTs. Most coal-fired stations have a remaining life expectancy of over 10-15 years - but in the face of over-capacity in the market many face early closure. National Power has already shut some 6GW of redundant plant, and expects its coal-fired capacity to drop from 16 to 11GW by around 2000. PowerGen is offering a more bullish perspective - but in March mothballed over 1GW of capacity at Richborough, Ince and Fiddler's Ferry.
Both generators are well on course to meet their existing commitments under the Government's National Plan to cut SO2 and NOx emissions in line with the 1988 EC Directive on large combustion plant (LCP). Commissioning of flue gas desulphurisation (FGD) equipment at Drax and Ratcliffe-on-Soar power stations has begun (ENDS Report 228, pp 7-8 ). And PowerGen is opposing HMIP's efforts to get it to fit FGD to its 2,000MW Ferrybridge station, arguing that its new CCGTs will achieve the SO2 reductions required by the Plan.
OFFER muddies the water
The picture has now been clouded by electricity regulator OFFER. For some months, the generators have been under threat of referral to the Monopolies and Mergers Commission to force them to sell off plant to improve competition - but this was averted in February in a two-point deal with OFFER.
Firstly, the generators agreed to maintain their pool prices at 2.4p/kWh. This is well below the widely accepted 2.7p/kWh generating cost of CCGTs - at a stroke calling base-load supply contracts with independent generators into question, threatening to put proposed CCGTs on hold, and offering the prospect of some resurgence in the contribution of coal-fired plant.
The second aspect of the deal was an agreement by National Power and PowerGen to sell off 4,000MW and 2,000MW, respectively, of their coal or oil-fired plant within two years. OFFER has not stipulated which stations must be sold, but there is a danger that the generators will attempt to sell off "dead wood" - thus prolonging the life of inefficient stations.
The LCP Directive comes up for review in 1995, when the UK will come under pressure to agree to further emission cuts. This it is likely to do following the recent completion of a new Europe-wide UN protocol which requires the UK to reduce its SO2 emissions by 80% by 2010 from a 1980 baseline (ENDS Report 227, p 42 ). But new emission budgets may simply eat deeper into the excess of generating capacity - leaving IGCC and other advanced combustion technologies on the shelf.
A more immediate challenge to the generators comes from HMIP's requirements under integrated pollution control (IPC). National Power and PowerGen were due to submit their plans to upgrade some 30 existing stations to new plant standards by the end of March. However, there is some doubt whether the process will offer any dramatic developments.
The first hitch is that the Government hopes to sell off its remaining 40% stake in the generators later this year. The Treasury will be keen that HMIP should not spoil the party by adding to their environmental liabilities. Secondly, HMIP's "objective" - hedged with qualifications - is that stations should be upgraded to new plant limits by 2001. But the companies will almost certainly oppose any move to require further FGD retrofits to ageing stations on the grounds of excessive cost.
Neither National Power nor PowerGen will discuss their upgrading proposals, and their negotiations with HMIP will be conducted in secret. However, John Baker, National Power's Chief Executive, hinted at its strategy in February. In an important concession, he accepted that the overall emissions permitted his company under IPC may be lower than its allocation under the National Plan. And by 2001, he said, "all plants which run virtually continuously - that is at or near base load - will have to produce cleaned-up electricity irrespective of their design technology", with other coal or oil-fired plants likely to be forced to operate below a 50% load factor.
However, perhaps Mr Baker's most striking comment was to describe FGD as "yesterday's technology" - just three weeks after the unveiling of the first phase of National Power's huge £680 million FGD project at the Drax power station.
HMIP's Dr Slater has also frequently questioned whether FGD represents the "best practicable environmental option" (BPEO). For a new coal-fired plant, he says, "HMIP would want to see proposals along the lines of the best available technology - which is equivalent to the standards achievable by IGCC."
However, he is careful not to rule out other technologies, and does not expect a major new project for some time in the UK. However, a report prepared for HMIP by chemical engineer David White makes a strong case that IGCC is an available, proven technology - and is the BPEO by some margin.1 But Mr White warns that unless action is taken to force the uptake of new technologies, "inefficient combustion plant may be retained in the generating stock longer than necessary", supported by incremental investment in measures such as FGD which may be less cost-effective in the long term. HMIP stresses that the report was intended purely to inform its long-term strategy. Nevertheless, it raises many important questions about the future of the electricity industry.
IGCC is based on gasification of solid or liquid fuels in a stream of oxygen to produce "synthesis gas", a mixture of carbon monoxide and hydrogen. Sulphur in the fuel is converted to hydrogen sulphide which, says the report, can be absorbed with over 99% efficiency in a "standard oil refining process" to yield elemental sulphur - which could be sold to the chemical industry. The volume of gas requiring treatment is only 1% of that in a post-combustion FGD system.
The synthesis gas is then burned in a gas turbine. As with gas-fired CCGTs, NOx emissions are less than a tenth of those arising from direct combustion of coal. Gas turbines also boast a far higher thermal efficiency and hence lower carbon dioxide emissions. Gas-fired CCGTs currently have an efficiency of 50%, though Mr White expects this to rise to nearly 60% by 2000. IGCC systems have a lower efficiency of 42-44% because of the energy penalty incurred in the gasification step, but this is "confidently forecast" to rise to 50%. In contrast, conventional coal-fired plant is 32-38% efficient - and suffers an energy penalty when FGD and de-NOx processes are fitted.
Solid waste problem
The final area in which Mr White sees a clear advantage for IGCC is in solid waste. Ash from coal combustion may be classed as a hazardous waste under EC rules, and its disposal "will become an increasing cost burden to power plant operators", he says. Half of the UK's ash currently goes to landfill - a practice which the Netherlands has banned. Mr White sees the solid waste issue as the Achilles heel of advanced coal combustion technologies such as fluidised beds and British Coal's "topping cycle", a partial gasification system. There is "virtually no use", he says, for the mixed residue of limestone and slag from the process, and its disposal to landfill "flies in the face" of the principles of IPC.
The solid residue from a coal-fed IGCC plant is a glassy slag which, claims the report, is "totally benign and suitable for concrete or small aggregate". Oil or Orimulsion feedstocks leave a filter cake which contains sufficient heavy metals to be of potential interest to metal extraction companies.
Despite these benefits, the prospect for a coal-fed IGGC plant in the UK is remote. National Power has a £6 million stake in a 300MW demonstration project at Puertollano in Spain, in collaboration with other European generators. PowerGen's involvement in clean coal technology is limited to support for the topping cycle - which is further from commercialisation than IGCC. British Coal hopes to obtain £70-140 million funding for a 75MW demonstration unit, but the proposal is at a tentative stage. British Gas had been developing a gasification system at its Westfield site, but this has been sold and the company sees the USA as its main potential market.
Elsewhere in Europe, gasification is beginning to take off. In the lead is Demkolec's demonstration unit at Buggenum in the Netherlands. The £350 million, 250MW plant is financed by Dutch generating companies, and uses Shell's gasification technology. A three-year trial began in March - and if it goes well a 600MW full-scale project may be commissioned by 2002. The Dutch Government said several years ago that any new coal-fired capacity must be based on gasification.
In Denmark, a 50MW circulating fluidised bed unit is due to be commissioned in 1997, and generating company Elsam is considering a commercial-scale project. Within months, RWE Energie in Germany is due to begin building a 360MW demonstration plant near Cologne.
Facing a "sulphur crunch"
But increasingly, the focus is shifting from coal to liquid fuels - including Orimulsion, heavy fuel oil and high-sulphur refinery residues. The oil industry is heading towards a "sulphur crunch". Sulphur levels in crude are rising steadily - and the European Commission is preparing new limits on sulphur levels in oil products (ENDS Report 210, pp 12-14 ).
Most of the simple "conversion" steps have already been taken, and more and more sulphur is being concentrated at the heavier end of the barrel. Mr White's report for HMIP warns of "a growing availability of unmarketable residues". Furthermore, refineries which are forced to invest in "deep" conversion technologies have a higher demand for energy and also face a growing imbalance in hydrogen - needed for desulphurisation processes and for reducing aromatics levels in products.
IGCC offers an intriguing solution. The residues could be used to generate power for sale, and hydrogen could be recovered from the synthesis gas. Mr White describes the option as "a remarkable synergy between the two industries just waiting to be developed" - though in the face of resistance from the power sector and financiers "it may take legislative action on emission and waste control to trigger the change", he warns.
Such moves are already under way in Europe, with Italy in the lead. Its present annual consumption of 22 million tonnes of heavy fuel oil for power generation makes its emission targets under the LCP Directive impossible to meet without heavy investment in FGD. Instead, the Government has banned direct combustion of heavy fuel oil after 1998, and is encouraging refineries to develop IGCC systems by setting a guaranteed power price of over 5p/kWh. It has also approved 5,600MW of new residue-based capacity. Four of the 14 projects are well advanced, and are based on Texaco's gasification process.
Elsewhere, Shell expects to have a £1 billion project on stream at its Pernis refinery in the Netherlands by 1997. This will include a new hydrocracker, gasification unit and 85MW cogeneration power plant. Neste is considering similar action at its Porvoo refinery in Finland.
UK refiners are reluctant to discuss the potential of IGCC. But one industry source said that "it's being looked at by all of our competitors because of the declining markets for high-sulphur fuel oil." Some oil companies are resistant to the idea of forming close links with the electricity market, backed by concern over the difficulties of integrating power production with the complex demands of a refinery.
However, John Griffiths of Nykomb Synergetics says that power from a residue-fed IGCC would already be competitive. Nykomb, in association with UK firm Jacobs H&G, offers gasifier technology from other companies and brings it together as part of a consortium with turbine manufacturers and electricity companies. It has already been involved in two Italian projects, andanother in the Czech Republic. "We don't use any equipment that is not already in commercial use," says Mr Griffiths. "The Buggenum plant is a racing car version - what we're offering is a Model T Ford."
Mr White's report for HMIP also points out that the high cost of the Buggenum project - $1,935 per kW installed capacity - has been widely quoted by detractors of IGCC. However, he expects capital costs to come down steeply (see table ).
Nykomb claims that even on a greenfield site independent of a refinery, a 500MW IGCC plant running on Orimulsion could produce power at just 2.4p/kWh over a 25-year finance period. It has already prepared two feasibility studies for potential UK clients, including ICI's chlor-alkali business at Runcorn.
ICI has seen its fuel bills shoot up since electricity privatisation (ENDS Report 215, pp 6-7 ) - and is contemplating a 500MW Orimulsion-fed gasifier to secure a long-term, economic power supply. Once again, however, the UK's over-capacity of ageing plant may prove a stumbling block. An ICI source said that the company is "actively seeking" to buy some of the coal-fired capacity which the generators must shed under their agreement with OFFER - the most attractive option being to use the "twilight years" of PowerGen's Fiddler's Ferry station.
The prospects for Orimulsion in either IGGC or existing plant also depend on whether the Treasury decides to apply import duty to the fuel. The duty could increase fuel costs by 25% - and would "kill Orimulsion stone dead", according to Nykomb.
Rising gas prices
IGCC may also eventually make inroads into the power market on the back of gas-fired CCGTs. At present, the boom in gas-fired generation is a major deterrent to developers of alternative processes. But BP and Shell predict that gas prices will rise steeply after 1997. Many of the new CCGTs will be cushioned by 15-year gas supply contracts - but a question-mark hangs over the second half of their operating lives.
If gas prices rise in line with more pessimistic estimates, retrofitting a gasifier to the front end of a CCGT may become attractive - indeed, some countries require contingency for such a retrofit when consenting new gas-fired plant. No CCGT in the UK has been designed with retrofit in mind, but National Power sees the option as "a very good insurance policy".
Mr White identifies a further option for existing oil-fired stations such as those at Fawley, Pembroke and the Thames estuary. The existing steam plants could be repowered as the second stage of a combined cycle. "Pembroke would be a natural," he told ENDS, "as the station is surrounded by three oil refineries". However, ENDS understands that neither generator has considered such an option in its IPC upgrading plans - raising questions over the thoroughness of their technology reviews. National Power "does not believe that IGCC retrofits are a viable prospect".
In the face of resistance to change from the power industry, IGCC is unlikely to get off the drawing board without a strong regulatory push, combined with changes in the operation of the power market. But while cleaner combustion processes begin to blossom overseas, there is every prospect that the UK will be left waiting for the revolution to happen of its own accord. 1 Report No: DoE/HMIP/RR/93/067, Review of future of power generation and combustion.