Income risk of EU coal-fired power plants after Kyoto

Coal-fired power plants may enjoy a significant advantage relative to gas plants in terms of cheaper fuel cost. Still, this advantage may erode or even turn into disadvantage depending on CO2 emission allowance price. This price will presumably rise in both the Kyoto Protocol commitment period (2008-2012) and the first post-Kyoto years. Thus, in a carbon-constrained environment, coal plants face financial risks arising in their profit margins, which in turn hinge on their so-called "clean dark spread". These risks are further reinforced when the price of the output electricity is determined by natural gas-fired plants' marginal costs, which differ from coal plants' costs. We aim to assess the risks in coal plants' margins. We adopt parameter values estimated from empirical data. These in turn are derived from natural gas and electricity markets alongside the EU ETS market where emission allowances are traded. Monte Carlo simulation allows to compute the expected value and risk profile of coal-based electricity generation. We focus on the clean dark spread in both time periods under different future scenarios in the allowance market. Specifically, bottom 5% and 10% percentiles are derived. According to our results, certain future paths of the allowance price may impose significant risks on the clean dark spread obtained by coal plants.

Chemical equilibrium analysis and CFD simulation of coal combustion and NOx formation

A full two-fluid model of reacting gas-particle flows with an algebraic unified second-order moment (AUSM) turbulence-chemistry model is used to simulate Beijing coal combustion and NOx formation. The sub-models are the k-epsilon-kp two-phase turbulence model, the EBU-Arrhenius volatile and CO combustion model, the six-flux radiation model, coal devolatilization model and char combustion model. The blocking effect on NOx formation is discussed. In addition, the chemical equilibrium analysis is used to predict NOx concentration at different temperature. Results of CID simulation and chemical equilibrium analysis show that, optimizing air dynamic parameters can delay the NOx formation and decrease NOx emission, but it is effective only in a restricted range. In order to decrease NOx emission near to zero, the re-burning or other chemical methods must be used.

Release of Sulfur and Chlorine during Cofiring RDF and Coal in an Internally Circulating Fluidized Bed

An internally circulating fluidized bed (ICFB) was applied to investigate the behavior of chlorine and sulfur during cofiring RDF and coal. The pollutant emissions in the flue gas were measured by Fourier transform infrared (FTIR) spectrometry (Gasmet DX-3000). In the tests, the concentrations of the species CO, CO2, HCl, and SO2 were measured online. Results indicated when cofiring RDF and char, due to the higher content of chlorine in RDF, the formation of HCl significantly increases. The concentration of SO2 is relatively low because alkaline metal in the fuel ash can absorb SO2. The concentration of CO emission during firing pure RDF is relatively higher and fluctuates sharply. With the CaO addition, the sulfur absorption by calcium quickly increases, and the desulfuration ratio is bigger than the dechlorination ratio. The chemical equilibrium method is applied to predict the behavior of chlorine. Results show that gaseous HCl emission increases with increasing RDF fraction, and gaseous KCl and NaCl formation might occur.

Performance tuning - lessons from the coal face

Presentation slides as part of the Janet network end to end performance initiative workshop

The Economics of Gasification: A Market-Based Approach

This paper deals with the economics of gasification facilities in general and IGCC power plants in particular. Regarding the prospects of these systems, passing the technological test is one thing, passing the economic test can be quite another. In this respect, traditional valuations assume constant input and/or output prices. Since this is hardly realistic, we allow for uncertainty in prices. We naturally look at the markets where many of the products involved are regularly traded. Futures markets on commodities are particularly useful for valuing uncertain future cash flows. Thus, revenues and variable costs can be assessed by means of sound financial concepts and actual market data. On the other hand, these complex systems provide a number of flexibility options (e.g., to choose among several inputs, outputs, modes of operation, etc.). Typically, flexibility contributes significantly to the overall value of real assets. Indeed, maximization of the asset value requires the optimal exercise of any flexibility option available. Yet the economic value of flexibility is elusive, the more so under (price) uncertainty. And the right choice of input fuels and/or output products is a main concern for the facility managers. As a particular application, we deal with the valuation of input flexibility. We follow the Real Options approach. In addition to economic variables, we also address technical and environmental issues such as energy efficiency, utility performance characteristics and emissions (note that carbon constraints are looming). Lastly, a brief introduction to some stochastic processes suitable for valuation purposes is provided.