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Clean Coal Cheaper Than Previously Thought, Says Mineral Council

 

 

By Mark Ludlow

 

July 5, 2017 - The cost of building a next-generation coal fired-power station is almost $1 billion cheaper than previously thought, according to new reports commissioned by the Minerals Council of Australia.


Despite last month's Finkel Review warning investors were only interested in financing wind and solar projects - and Australia not building a new coal-fired power plant for the past 10 years - the Minerals Council said the reports by energy consultants Solstice Development Services and engineering company GHD showed a modern 1000 megawatt HELE (high-efficiency, low-emissions) or ultra supercritical power station could be built for $2.2 billion.


This is $900 million cheaper than earlier estimates and is based on savings accrued from using brownfield sites and sourcing specialised equipment from Asia, according to the reports.


The report found a smaller stand-alone 650 megawatt ultra supercritical coal-fired power station without cheaper equipment from China would cost about $2.6 billion.


The Minerals Council, which has been rallying against the Clean Energy Target recommended by the Finkel Review if it excludes coal, said the new reports showed HELE coal plants were a viable part of providing base load power in the National Electricity Market for decades to come.


"This demonstrates that HELE coal plants - which would have operating lives of several decades - are viable and affordable options for replacing Australia's existing ageing coal-fired power stations," said Minerals Council of Austarlia executive director Greg Evans.


The 550 page reports also challenged existing orthodoxy to claim black-coal was the lowest cost generation option at $40 - $78 per megawatt hour (in 2017 prices) on a long run marginal cost basis.


Other synchronous generation had higher wholesale costs including combined cycle gas as $69-$115 per megawatt hour and open cycle gas at $179-$430 per megawatt hour. The report claimed intermittent renewable energy had higher costs with $90-$171 per megawatt hour and wind at $64-$115 per megawatt hour.


"At assumed average capacity factors of 20 per cent and 37 per cent respectively for solar and wind, these technologies are not only more expensive but unsuitable without 'firming' or back-up generation ot emulate base load performance," the report found.


The option of combining wind or solar with batteries to allow for the equivalent to base load generation for 24 hours a day over a two to three day period was eight times more expensive than ultra supercritical black coal, the report said.


The previous cost of an ultra super critical power plant, without carbon capture and storage, was $3.1 billion, according to an Australian Power Generation Technology Report published in 2015.


The new GHD report said the current construction cost of a ultra supercritical power station - which burns coal at higher temperature and pressure to reduce carbon emissions - would be about $2.2 million per megawatt or $2.2 billion for a 1000 megawatt capacity power plant.


The two reports commissioned by the Minerals Council are expected to be questioned by some energy experts who believe the costs of renewable energy were falling fast which is why investors were backing new wind and solar projects over coal.


Minerals Council of Australia chief executive Brendan Pearson last month said he was confident a new HELE plant would be built in Australia in the next 10 years as older coal-fired power stations are retired from the NEM. 

 

It comes as "clean coal" proponents were dealt a blow last week with a $9.7 billion project in Kemper County in Mississippi in the United States  - which has been plagued by cost overruns and missed deadlines - giving up on developing coal gasification and it will burn natural gas instead.