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If the answer’s gas, the question must be CCS .....
David Clarke CEOPresentation to Scottish Oil Club, April 2013
©2013 Energy Technologies Institute LLP - Subject to notes on page 1 1
©2013 Energy Technologies Institute LLP The information in this document is the property of Energy Technologies Institute LLP and may not be copied or communicated to a third party, or used for any purpose other than that for which it is supplied without the express written consent of Energy Technologies Institute LLP.This information is given in good faith based upon the latest information available to Energy Technologies Institute LLP, no warranty or representation is given concerning such information, which must not be taken as establishing any contractual or other commitment binding upon Energy Technologies Institute LLP or any of its subsidiary or associated companies.
What is the ETI?
• The Energy Technologies Institute (ETI) is a public-private partnership between global industries and UK Government
Delivering .....
• Strategic planning and system design at national energy system level – power, heat, transport and infrastructure
• Targeted investment in development, demonstration and de-risking of new technologies for affordable and secure energy
• Shared risk
©2013 Energy Technologies Institute LLP - Subject to notes on page 1 2
ETI headlines
24 projects completed
£208mprojects announced
51 projects across the portfolio completedannounced the portfolio
>10%project partners in
110partner organisations
15 countries -europe, north
Scotland
12
america, middle east, asia
2 1stprogramme associate -Hitachi
2equity holdings –supporting business d l t
2commercial product launches
©2013 Energy Technologies Institute LLP - Subject to notes on page 1 3
developments
ETI Project Portfolio – total £400m
9 Technology Programme areasProgramme areas
D li iDelivering...New knowledgeTechnology developmentTechnology developmentTechnology demonstrationReduced risk
©2013 Energy Technologies Institute LLP - Subject to notes on page 1 4
The energy policy ‘trilemma’
Sustainable CO2 emissions down ~18%Sustainable CO2 emissions down 18%<4% energy from renewables (2010)6 GW wind operational (+4 GW in construction)>4% biofuel in diesel (2010, ~15% sourced in UK)Targets –-34% CO2 by 2020-80% CO2 by 2050 15% of energy from renewable sources by 2020
Secure Affordable
15% of energy from renewable sources by 2020
30% imported in 2010 (net)>50% expected by 2020Targets –
Real prices continue to increaseDomestic oil up 90% since 2003Gas up 80%, Coal up 60%, Electricity up 40%Targets
Power from a portfolio of sourcesDiversity in fuel supply and conversionMarket leads on technology selection
Targets –Reduce the number of households in fuel poverty and eliminate fuel poverty in
©2013 Energy Technologies Institute LLP - Subject to notes on page 1 5
‘vulnerable households’
Scale of the UK challenge ....
62m people growing to 77m by 2050• 62m people ....................................................... growing to 77m by 2050
• 24m cars .......................................................... growing to 40m by 2050
• Over 380 ‘significant’ power stations many in remote locations• Over 380 significant power stations ................. many in remote locations
• Over 85GW generation capacity ....................... from 1MW to 3.8GW
• 24m domestic dwellings 80% will still be in use in 2050• 24m domestic dwellings .................................... 80% will still be in use in 2050total dwellings 38m by 2050
• Final users spent £124bn on energy in 2010 .... 9% of GDP
• 5.5m households in fuel poverty ........................ 70% are ‘vulnerable households’
©2013 Energy Technologies Institute LLP - Subject to notes on page 1 6
UK energy system today
©2013 Energy Technologies Institute LLP - Subject to notes on page 1 7
Why is gas so valuable for heat ?UK system has to cope with 6x heat demand swingUK system has to cope with 6x heat demand swing
Design point250
200
HeatElectricity
g pfor a GB heat delivery system
icity
(G
W)
150
Hea
t / E
lect
ri
100
H
50 Design pointfor a GB electricity
Heat demand
Electricity demand0
Jan 10 Apr 10 July 10 Oct 10
electricity delivery system
GB 2010 heat and electricity hourly demand variability - commercial & domestic
Electricity demand
©2013 Energy Technologies Institute LLP - Subject to notes on page 1 8
Data source: UKERC (2011)
GB 2010 heat and electricity hourly demand variability commercial & domestic
The challenge reaches everyone .....
>16,000 miles of transmission lines>380,000 miles of distribution lines½ million substations / transformer pointsSystem losses = 1 nuclear plant>176,000 miles of gas pipesg p p
• Some elements are over 100 years old
• ‘Like for like’ replacement costs total around p£200bnGeneration £65bnTransmission £30bn
GB electricity network –
Distribution £95bn
• ‘Like for like’ is not good enough to meet future needs
overhead and underground lines
future needs
• Power industry employs more than 2% of UK workforce
©2013 Energy Technologies Institute LLP - Subject to notes on page 1 9
What might the UK energy system look lik i 2050like in 2050 ......
• Decided by global developments – not just UK events, decisions and policy
– UK and global economy
– Industry and technology developments
– UK demand changes – scale and segmentation
Global socio political events– Global socio-political events
– International market confidence
– ..........
• The future is uncertain and we need an energy system design that allows for this
©2013 Energy Technologies Institute LLP - Subject to notes on page 1 10
gy y g
A “Perfect world” 2050 UK energy systemOptimised for minimum system cost and meeting UK 2050 emissionsOptimised for minimum system cost and meeting UK 2050 emissions targets
©2013 Energy Technologies Institute LLP - Subject to notes on page 1 11
ESME – ETI’s system design tool ....integrating power heat transport and infrastructureintegrating power, heat, transport and infrastructure providing national / regional system designs
©2013 Energy Technologies Institute LLP - Subject to notes on page 1 12
Effective national policy needs to focus thi hi h ill ‘ th di l’on things which will ‘move the dial’
• Focus on the ‘big levers’ is crucial to maximise impact of scarce resources - money, skills, supply-base and time
• Investment in innovation is critical to reduce costs
• Engagement of industry and consumers is essentialEngagement of industry and consumers is essential
• ETI view immediate development priorities for 2050 as ...– Efficiency (technology, consumer demand, storage)– CCS– Bioenergy– Nuclear– Offshore wind– Gas – power, heat, transport
©2013 Energy Technologies Institute LLP - Subject to notes on page 1 13
p , , p
Creating emissions headroomCCS and bioenergy are criticalCCS and bioenergy are critical
N t CO2 E i i
500
600Net CO2 Emissions
400
500
r
Aviation
Transport
200
300
CO
2/ye
ar
Buildings
100
200
Mt
Power
Industry
2009 (Historic)
2020 2030 2040 2050-100
0Industry
Biofuel (transport)CCS
©2013 Energy Technologies Institute LLP - Subject to notes on page 1 14
100DB v3.0 / Optimiser v3.0
Getting the UK energy system to 2050Incremental 2010 2050 cost of delivering national energy system whichIncremental 2010-2050 cost of delivering national energy system which meets CO2 targets
NPV £ bn2010-20502010-2050
©2013 Energy Technologies Institute LLP - Subject to notes on page 1 15
Societal level discount rate 3.5%
2050 UK system cost first appearances of major technologies in order of increasing effective
2010 £/Te CO2
first appearances of major technologies, in order of increasing effective carbon price
Marine
400
450
500 Marine
300
350
400
>£300/Te or >$480/Te Offshore Wind
150
200
250
Energy storage and distribution
Light vehicles (fuel cell / electrification)
50
100
150 Efficiency improvementAppliances, heating, buildings, vehicles, industry Nuclear CCS
00% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
UK Energy System CO2 Reduction
©2013 Energy Technologies Institute LLP - Subject to notes on page 1 16
UK legal target (2050)
UK Energy System CO2 Reduction(including aviation and shipping)
UK electricity generation capacity Optimised for lowest cost starting from today and incorporating plannedOptimised for lowest cost starting from today and incorporating planned plant closures and life extensions
• Timing new g etechnology availability to align with marketalign with market opportunity is key
©2013 Energy Technologies Institute LLP - Subject to notes on page 1 17
CCSA key lever particularly combined with bioenergyA key lever - particularly combined with bioenergyLong development time requires early start
• Potentially very wide use – Power– Hydrogen and ‘SyntheticHydrogen and Synthetic
Natural Gas’ (SNG) production
– Heavy industry
• ETI investing over £60m in enabling CCS for coal, gas and biomassand biomass– Storage appraisal– Measurement, Monitoring
and Verificationand Verification– Transport system design
tools– Improved separation
©2013 Energy Technologies Institute LLP - Subject to notes on page 1 18
p ptechnologies
Early demonstration start is essentialLongest lead time item is the most uncertain storageLongest lead time item is the most uncertain - storage
Power and Capture system (IGCC 700MW) ~£1,100mGas plant can be built ‘capture
ConstructFEEDApprovals
Gas plant can be built capture ready’
Transport systemRoute and planning Order Lay
p y£130-300m
Selection Appraise Drill Test License ConstructStorage system£140-250m
Selection Appraise Drill Test License Construct
~£70-90m (saline aquifer)
0 1 2 3 4 5 6 7 8 9 10Years
©2013 Energy Technologies Institute LLP - Subject to notes on page 1 19
Overall UK CO2 Storage Capacitydominated by saline aquifer stores- dominated by saline aquifer stores
- P50 capacity 78GT- UK requires about 15GT for 100years
• Total ‘technical’ capacity
60 Gt
8 Gt
5 Gt
– does not take economics and security of t i t60 Gt 3 Gt storage into
account
• Large number f t
2 Gt
of stores whose final assessed
Non‐Chalk Aquifers Chalk Aquifers Gas Gas Condensate Oil Units < 20 Mtcapacity is less than 20 Mt
©2013 Energy Technologies Institute LLP - Subject to notes on page 1 20
Where is the storage?
Northern North Sea
• Viable storage found in all areas studiedareas studied
• Storage is stacked and clustered – both oil & gas and aq ifer
Central North Sea
aquifer• Opportunities for ‘basin scale’
approachesSouthern North Sea
Key:Key:Black = coal-fired stationRoyal blue = gas-fired stationGreen = hydrocarbon unitLight Blue = closed aquifer
©2013 Energy Technologies Institute LLP - Subject to notes on page 1 21
Red = open aquifer
How much storage do we have?
©2013 Energy Technologies Institute LLP - Subject to notes on page 1 22
How much storage do we have?
GoldeneyeGas condensate
©2013 Energy Technologies Institute LLP - Subject to notes on page 1 23
How much storage do we have?
‘Defined Structures’
‘Cl d’
‘Open’
‘Closed’
©2013 Energy Technologies Institute LLP - Subject to notes on page 1 24
Storage capacitymust be committed in advance of needmust be committed in advance of need
Cumulative storage (Mt)
40yr storage
g ( )
requirement (ESME)
25yr requirement (ESME)(ESME)
Assumptions:– ESME decadal pathway analysis to 2050
©2013 Energy Technologies Institute LLP - Subject to notes on page 1 25
– ESME decadal pathway analysis to 2050– Storage Requirement = actual to date + 25/40 years for new assetsTotal UK Storage Requirement (100 years) ~ 15,000 Mt (P90)
Storage capacitymust be committed in advance of needmust be committed in advance of need
Cumulative storage (Mt)
40yr storage
g ( )
requirement (ESME)
25yr requirement (ESME)
ESME t t d (P90)
(ESME)
ESME amount stored (P90)
Assumptions:– ESME decadal pathway analysis to 2050
©2013 Energy Technologies Institute LLP - Subject to notes on page 1 26
– ESME decadal pathway analysis to 2050– Storage Requirement = actual to date + 25/40 years for new assetsTotal UK Storage Requirement (100 years) ~ 15,000 Mt (P90)
2050 pathway requires saline aquifers“viable” oil and gas alone unlikely to meet availabilityviable oil and gas alone unlikely to meet availability needs for capacity or timingCumulative storage (Mt)
40yr storage Viable Oil and Gas plus
g ( )
requirement (ESME) Viable Oil and Gas plus aquifers25yr requirement (ESME)
ESME t t d (P90)
(ESME)
ESME amount stored (P90)
Assumptions:– Based on UKSAP capacity for viable depleted oil & gas reservoirs with 5 year delay
©2013 Energy Technologies Institute LLP - Subject to notes on page 1 27
– Based on UKSAP capacity for viable depleted oil & gas reservoirs with 5 year delay– Availability based on DECC data for Close of Production (smoothed)– Additional 1,500 Mt appraised aquifer storage available by 2020 rising to 2,700 Mt by 2050
What do we need ?What do we need ?The energy investment jigsaw
Technology Capital
R l tiFirms Regulation
©2013 Energy Technologies Institute LLP - Subject to notes on page 1 28
How are we de-risking CCS ?
ETI R+D programmeCapture - gas and coal
Transport – ‘GCCS’ toolkit
Storage UK database
Investment housesProject developersAcceptable risk
ETI R D programmeETI / Ecofin
engagement and communication - building
investor confidenceStorage - UK databaseNational Grid Aquifer appraisalMMV system
pCompetitive returnsLong term stability
investor confidence
Technology Capital
HMG, The Crown Estate,
DECC / TSB R+D and pilot plant programme
Firms Regulation
RegulatorsCFD commitmentsStore liabilities
Project operatorsEquipment and service supply chain
Hub / Cluster strategiesMarine users
chainAcceptable riskCompetitive returnsLong term stability
DECC commercialisation
competition
©2013 Energy Technologies Institute LLP - Subject to notes on page 1 29
Long term stability competition
ETI informing the finance community, ti i t fidcreating investor confidence
Financial markets challenges
Policy credibility
Risks & theirRisks & their allocation
©2013 Energy Technologies Institute LLP - Subject to notes on page 1 30
www.eti.co.uk/downloads/literature/Ecofin_CCS_Report.pdf
Storage the longest lead time item...... the longest lead time item
and the greatest uncertainty
ETI supporting N ti l G id tNational Grid to appraise southern North sea aquifer
Reducing risk
Building investor confidenceconfidence
©2013 Energy Technologies Institute LLP - Subject to notes on page 1 31
DECC CCS demonstrator short list
PeterheadPeterheadPost Combustion 340MW (1180MW site) CCGT retrofitShell, SSE
C t i Cl E ( )•Goldeneye
Captain Clean Energy (reserve)Grangemouth570MW IGCC, 100% abated, depleted gas fieldSummit Power, Petrofac (CO2 Deepstore), National Grid, Siemens
Teeside Low Carbon (reserve)Pre combustion gasification (IGCC) 330MWe net 90%
•Hewett
Pre combustion gasification (IGCC) 330MWe net , 90% abated, depleted oil field + saline aquiferProgressive Energy, GDF Suez, Premier Oil, BOC
Whit RWhite RoseDraxOxyfuel 304MW SC Coal, 100% abatedAlstom, Drax, BOC, National Grid
©2013 Energy Technologies Institute LLP - Subject to notes on page 1 32
2050 UK system cost first appearances of major technologies in order of increasing effective
2010 £/Te CO2
first appearances of major technologies, in order of increasing effective carbon price
Marine
400
450
500 Marine
300
350
400
>£300/Te or >$480/Te Offshore Wind
150
200
250
Energy storage and distribution
Light vehicles (fuel cell / electrification)
50
100
150 Efficiency improvementAppliances, heating, buildings, vehicles, industry Nuclear CCS
00% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
UK Energy System CO2 Reduction
©2013 Energy Technologies Institute LLP - Subject to notes on page 1 33
UK legal target (2050)
UK Energy System CO2 Reduction(including aviation and shipping)
2050 UK system cost – without CCSfirst appearances of major technologies in order of increasing effective
2010 £/Te CO2
first appearances of major technologies, in order of increasing effective carbon price
No CCS Marine
400
450
500 No CCS Marine
300
350
400
Offshore Wind
>£300/Te or >$480/Te
150
200
250
Energy storage and distribution XLight vehicles (fuel cell / electrification)
Hydrogen (from CCS)
50
100
150 Efficiency improvementAppliances, heating, buildings, vehicles, industry
Hydrogen from electrolysis (no CCS H2 available)
XNuclear CCS
( )
00% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
UK Energy System CO2 Reduction
H2 available)
©2013 Energy Technologies Institute LLP - Subject to notes on page 1 34
UK legal target (2050)
UK Energy System CO2 Reduction(including aviation and shipping)
Offshore WindThe marginal power technology and an important hedgingThe marginal power technology and an important hedging option – cost reduction is critical
• DECC cost reduction task force has identified routes• DECC cost reduction task force has identified routes to achieving £100/MWh by 2020
– Contract and project structures – Financing and risk managementFinancing and risk management– Technology innovation
• ETI has already invested £40m in technology development projects to target further cost reductions
• ETI has launched £30m of new projects to developETI has launched £30m of new projects to develop next generation, low cost, deepwater floating platform and very long blade turbine technology
ETI T ti £90/MWh t 2020 th h l i• ETI Targeting ~£90/MWh post 2020 through applying these technologies in high wind speed areas off UK west coast
©2013 Energy Technologies Institute LLP - Subject to notes on page 1 35
(£100/MWh = 10p/KWh, £90/MWh = 9p/KWh)
Wind Turbine drive train test rig 15MW rig in supply from GE Power Systems (UK) and MTS (USA)15MW rig in supply from GE Power Systems (UK) and MTS (USA)£25m contract from ETICommercial operation 2013 at UK National Renewable Energy Centre
©2013 Energy Technologies Institute LLP - Subject to notes on page 1 36
Wind Turbine drive train test rig15MW rig in supply from GE Power Systems (UK) and MTS (USA)15MW rig in supply from GE Power Systems (UK) and MTS (USA)£25m contract from ETICommercial operation 2013 at UK National Renewable Energy Centre
©2013 Energy Technologies Institute LLP - Subject to notes on page 1 37
Floating wind turbineFEED study in delivery for ETI from Glosten using Alstom 6MW turbineFEED study in delivery for ETI from Glosten using Alstom 6MW turbineSite development ongoing at WaveHub off Cornwall
Tension Leg Platform (TLP) suitable for 60-120m water
New technology for wind applications New technology for wind applications
New technology for these (shallow) water depths (60-120m)
Spar Buoy (>120m water depth) already under test by Hywind
Semi-submersibles already under test in several Semi-submersibles already under test in several areas
TLP potentially has lower cost owing to less material in structure BUTmaterial in structure BUT ....
cost of cables, seabed interface and operation in shallow water with high tidal range all to be addressed
©2013 Energy Technologies Institute LLP - Subject to notes on page 1 38
addressed
‘Very long blade’ Next generation high performance wind turbine blade developmentNext generation high performance wind turbine blade development£15.5m contract from ETI with Blade DynamicsIn development for test from 2015
UK / US based entrepreneurial development team – small business
Technology and business development support from ETI - project financing, equity investmentfinancing, equity investment
©2013 Energy Technologies Institute LLP - Subject to notes on page 1 39
1MW marine tidal turbineDelivery led by Rolls Royce (Scotland) operational phase led by AlstomDelivery led by Rolls-Royce (Scotland), operational phase led by Alstom(UK)part of a £12.5m contract from ETIOperational from early 2013 at European Marine Energy Centre (Scotland)
©2013 Energy Technologies Institute LLP - Subject to notes on page 1 40
Meeting the UK 2050 targets Nuclear can be replaced by fossilsNuclear can be replaced by fossilsWithout CCS, fossil fuel use is drastically reduced and efficiency must further increase
2500
3000 Wave
Tidal Stream
Hydroir C
uto
nucl
ear
o C
CS
o bi
oo
targ
ets
2000
r
y
Solar
Wind
Nuclear
Di
No
No
No
No
1500
TWh/year Wet Waste
Dry Waste
Biomass
500
1000Coal
Gas
Biofuel Imports
A i i F l
0
500
2009 (Hi t i ) 2020 2030 2040 2050
Aviation Fuel
Petrol
Diesel
©2013 Energy Technologies Institute LLP - Subject to notes on page 1 41
2009 (Historic) 2020 2030 2040 2050
Making energy policy work for the UK
Energypower, heat, transport,
CapacitySkills, training,
infrastructureinfrastructure, science, R+D
Wealth creationgross value addedgross value added, direct employment, secondary jobs and impacts exports
©2013 Energy Technologies Institute LLP - Subject to notes on page 1 42
impacts, exports, inward investment
UK Energy policyMust support and be supported by ‘the bigger picture’Must support and be supported by the bigger picture Must operate in a global market
EnergyCapacitySkill t i i power, heat, transport,
infrastructureSkills, training, infrastructure, science, R+D
Stable regulationK li bilitiKnown liabilitiesProven value chains
Wealth creationgross value added
Proven value chains
gross value added, direct employment, secondary jobs and impacts exports inward
©2013 Energy Technologies Institute LLP - Subject to notes on page 1 43
impacts, exports, inward investment
UK energy policyWill it d li ?• Focus on the ‘big levers’ is crucial to
Will it deliver ?
maximise impact of scarce resources -money, skills, supply-base and time
Investment in innovation is critical to reduce• Investment in innovation is critical to reduce costs (£600bn npv saving to 2050)
• Engagement of industry and consumers isEngagement of industry and consumers is essential
• ETI are investing in the immediate development priorities for 2030 and 2050 ...– Efficiency (technology, consumer demand, storage)– CCS– Bioenergy– Nuclear– Offshore wind
©2013 Energy Technologies Institute LLP - Subject to notes on page 1 44
Offshore wind– Gas – power, heat, transport
For the latest ETI news and announcements email info@eti co uk
Energy Technologies Institute For all general enquiries telephone the ETI on 01509 202020 [email protected]
Holywell BuildingHolywell ParkLoughborough
202020.
For more information about the ETI visit www.eti.co.uk
The ETI can also be followed on Twitter at twitter.com/the_ETI
LoughboroughLE11 3UZ
©2013 Energy Technologies Institute LLP - Subject to notes on page 1 45