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Thursday, November 10, 2011

NSW Government about to commit to Coal Seam Gas


On 17 November 2011, the NSW Government appears before a Parliamentary Committee inquiring into Coal Seam Gas.

The NSW Government submission strongly favours rapid development of coal seam gas. 
It has no place for solar or any other zero emission technology.

A hybrid solar/biomass gasification option - if costed very quickly - might persuade the Parliamentary Committee next Thursday to reject the NSW Government's submission to commit NSW to 250 years reliance on Coal Seam Gas.
At the least, it should defer a decision pending a more up-to-date analysis of alternative approaches to meeting future energy needs.
One such alternative approach - solar thermal gasification f biomass producing fuel for a Combined Cycle Gas Turbine (CCGT) power station is illustrated here - Providing Energy Without More CO2 Emissions.

Time is running out for real decisions that will determine the direction of the NSW energy industry throughout this century.

Extracts from -
NSW Government Submission to
Coal Seam Gas inquiry

The NSW Government believes that balanced co-existence of mining (including CSG) and agriculture is not only possible, it is essential. ...NSW gas consumption is projected to grow significantly from its current level of around 160 Petajoules (PJ) per annum to 550PJ pa in the next 20 years. Current possible NSW CSG reserves represent over 250 years of gas supply at that level. (Page 2)
The development of a coal seam gas industry in NSW resulting from technological innovation has created an opportunity for an abundant new cleaner energy resource which was largely unknown until recently. The coal seam gas industry has the potential to create thousands of regional jobs, and add billions of dollars to the State economy, reduce our dependence on imported petroleum for transport, and create new industries around the availability of gas as a feedstock. (Page 4)

Table 3: Costs of CSG and other energy sources


Technology
Capital
Cost
(A$/kW or
$’000/MW)
Total Cost or
LRMC
$ / MWh
Variable
Cost
$ / MWh
Black coal - super critical (SC)
1,900
45.99
1.20
Black coal - ultra super critical (USC)
2,400
54.00
1.20
Integrated gasification Combined Cycle (IGCC)
2,100
56.85
1.50
Combined Cycle Gas Turbine (CCGT)
1,050
58.38
4.85
Open Cycle Gas Turbine (OCGT)
750
522.64
7.50
Nuclear
3,500
76.13
2.00
Hydro
2,000
71.93
2.00
Solar thermal
5,000
224.37
1.50
Solar Photovoltaic (PV)
7,529
384.38
1.50
Wind
2,400
93.31
1.60
Biomass
2,200
70.34
3.00
Geothermal
5,000
87.42
2.00
Coal USC plus Carbon Capture & Storage (95%)
4,100
85.80
1.20
Gas CCGT plus Carbon Capture & Storage (95%)
2,850
112.69
1.20

Source: ACIL Tasman (May 2008), Projected energy prices in selected world regions
Notes:
  • Long Run Marginal Cost (LRMC) is defined as the cost of an incremental unit of generation capacity spread across each unit of electricity produced over the life of the station. LRMC includes capital cost, fuel cost, variable operating and maintenance costs.
  • Variable costs include fuel costs and variable component of operating and maintenance costs.
  • All costs are based on A$ 2008 and exclude a carbon price.

CSG based base load generation is in general less expensive compared to many other technologies and when a carbon price is included it also becomes more attractive than coal based power plants. (Pages 14-15)

1 comments:

Askgerbil said...

It appears the NSW Government incorrectly referenced the ACIL Tasman report. The table of costs includes what the NSW Government labelled as variable costs for each technology and the note below the table states that this includes fuel as well as the variable component of O&M costs.

However, the actual numbers in the table appear to be those ACIL Tasman provide only for the variable component of O&M – ie. not including fuel costs. This is an unfortunate mistake given that the inquiry is focussed on CSG, and a key issue therefore is the cost of the fuel in $/MWh. As it happens ACIL Tasman assumes CCGT gas prices of $3.90/GJ and peaking plant of $7.70/GJ which is reasonably close to current estimated prices for these types of plants in NSW (not surprising because ACIL Tasman has also made these estimates for AEMO).

It is, however, somewhat surprising that the NSW Government submission is referencing a 2008 ACIL Tasman study when there is the 2009 ACIL Tasman study specifically for Australia, and more recent pricing estimates for the Federal Government (in particular the EPRI 2010 study).

Most importantly, the key issues for what role CSG may play in NSW’s future generation mix are:
1. The future price of gas in Eastern Australia
2. The future price of carbon imposed on the industry
3. Possible progress in other technologies including renewables and CCS
4. Other possible regulatory interventions.

The key issue for future gas prices is likely that of whether we begin to export substantial amounts of CSG out of Queensland as LNG. This may well push domestic gas prices considerably higher than at present because suppliers will have the choice of selling locally or internationally (with current international prices significantly higher than domestic). As such, bringing more CSG to market in Queensland and NSW might actually increase domestic prices to the extent it drives greater LNG exports. Alternatively, it is possible that gas prices will be reduced because of the favourable economics that at least some CSG projects appear to exhibit.

Having said that, gas generation represents a mature, potentially quick to deploy and relatively low cost way to reduce emissions by comparison with coal-fired plant. However, its emission levels are still likely incompatible with avoiding dangerous global warming – that will require some combination of renewables and nuclear (and CCS if they can overcome the technical hurdles that it currently faces).

And if the NSW Government is sincere about their desire to reduce greenhouse gas emissions from electricity generation then one must ask why it decided to effectively subsidise NSW coal supplies to the NSW coal-fired power plants through its new mine development at Cobbora.