An ETI report found building a demonstration plant and then three full-scale projects could result in the levelised cost of energy for CCS enabled gas generation reducing by up to 45 per cent.
By comparison it found that improving sequestration technology – even to the point where it’s operating at its maximum theoretically efficiency – could only reduce costs by five to ten per cent.
The ETI calculated the levelised cost of energy for a demonstration plant would be around £150/MWh. It said the cost would fall by £44/MWh for the first full-scale plant due to economies of scale, the avoidance of contingency measures and a more efficient build.
The sharing of pipeline and storage would mean the second full-scale plant would be cost nearly £15/MWh less. Lower costs of capital due to reduced risk would bring down costs by a further £13/MWh for the third plant.
According to the report increasing the efficiency of carbon capture technology could only cut costs by around £10/MWh.
CCS strategy manager for ETI Den Gammer said: “Our analysis shows that cost reduction through sequential deployments of existing technology can drive down costs by as much as 45 per cent largely through a combination of economies of scale, infrastructure sharing and risk reductions through deployment.
“Cost reduction can only be achieved through commercial scale deployment in the UK, investment in infrastructure including storage sites and by having a policy environment that is attractive for CCS investors.”
Last year a £1 billion competition to develop a demonstration plant was axed by the government at the last moment. The decision was widely criticised, with a report by the Energy and Climate Change Committee saying it was “damaging both to the relationship between Government and the industry, and to investment into the UK”.
Appearing in before the Liaison Committee in January prime minister David Cameron justified the cancellation on the basis of price, citing a figure of £170/MWh for CCS enabled generation. Despite the decision the government says it still supports the development of CCS in the UK.
Gammer added: “Investment in anchor projects provides a transport and storage infrastructure for subsequent projects to build on and paves the way for the introduction of higher risk emerging technologies once the overall CCS risk is reduced.
“A strategy of waiting for global technology advances to reduce costs and risks will not address UK specific costs and risks in transport and storage.”