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Profissional Documentos
Cultura Documentos
Feasibility Study.
Establishment of a
Regional Project
Progressive Energy &
CNG Services
Clients: NEPIC
National Grid
Centrica
Date: 10/11/10
Issue: Vs 2.3
Final Report
Issue
2.3
Date Issue:
10/11/10
Project Title:
Prepared by:
Clients
Issue
Date of Issue
Notes
0.1
29/09/10
1.0
25/10/10
Internal review
2.0
28/10/10
Issued
2.1
29/10/10
Minor adjustments
2.2
01/11/10
Adjustment to Footers
2.3
10/11/10
Because this work includes for the assessment of a number of phenomena which are unquantifiable, the
judgements drawn in the report are offered as informed opinion. Accordingly Progressive Energy Ltd.
gives no undertaking or warrantee with respect to any losses or liabilities incurred by the use of
information contained therein.
Contents
1
Introduction .......................................................................................................................................... 14
3.1
Renewable Energy Incentives and Instruments ......................................................................... 16
3.2
Energy from Waste regulations and Issues ................................................................................ 18
3.3
Emissions Trading ...................................................................................................................... 19
3.4
The Gas Safety Management Regulations ................................................................................ 20
3.5
Other key regulations ................................................................................................................. 20
4 Feedstock ............................................................................................................................................ 21
4.1
The significance of Bio-SNG in the energy scene ...................................................................... 21
4.2
Pure Biomass resources ........................................................................................................... 22
4.3
Properties of pure biomass fuels .............................................................................................. 24
4.4
Waste materials .......................................................................................................................... 25
4.5
Total amount of Biomass resource for Bio-SNG production ...................................................... 28
4.6
Commercial considerations for pure biomass........................................................................... 28
4.7
Commercial considerations for wastes ....................................................................................... 29
4.8
Feedstock Conclusions .............................................................................................................. 31
5 Process and Technology Review ........................................................................................................ 32
5.1
Biomass reception, preparation and handling. ........................................................................... 32
5.2
Gasification ................................................................................................................................. 33
5.3
Gas Processing .......................................................................................................................... 39
5.4
Methanation ................................................................................................................................ 41
5.5
Gas conditioning, compression and metering ............................................................................ 42
5.6
Conclusions on Process and Technology .................................................................................. 43
6 Economic Assessment ........................................................................................................................ 44
6.1.1 Scale and operational assumptions........................................................................................ 44
6.1.2 Investment Cost assumptions ................................................................................................ 45
6.1.3 Operating Cost assumptions .................................................................................................. 48
6.1.4 Feedstock ............................................................................................................................... 48
6.1.5 Revenue Assumptions ............................................................................................................ 50
6.2
Levelised Cost analysis .............................................................................................................. 50
6.3
Sensitivity Analysis ..................................................................................................................... 54
6.3.1 Escalation ............................................................................................................................... 55
6.3.2 Impact of capital Cost, Opex, Fuel price, RHI and heat sales ................................................ 56
6.3.3 Comparison with an SRF fuelled electricity project ................................................................ 57
6.4
Financial conclusions ................................................................................................................. 58
7 Lifecycle carbon emissions and Cost of Carbon Analyses compared with alternatives ..................... 60
7.1
Lifecycle carbon emissions ......................................................................................................... 60
7.2
Cost of carbon abatement via Bio-SNG ..................................................................................... 64
8 Risk Assessment and Financing Considerations ................................................................................ 69
9
8.1
Conclusions from risk assessment and financing considerations .............................................. 74
Preliminary Scoping of a lead, beacon project .................................................................................... 75
9.1
Beacon Project configuration options ......................................................................................... 75
9.2
Location: The North East ............................................................................................................ 77
9.3
Site analysis................................................................................................................................ 78
9.4
Regional Feedstock .................................................................................................................... 83
10 Conclusions ......................................................................................................................................... 84
1 Executive Summary
Methane is an attractive heat and transport fuel vector. It is a clean and relatively low carbon intensity
fuel. It can be utilised efficiently and has established infrastructure and demand-side technologies (gas
boilers for heating and an increasingly wide range of available CNG vehicles). The UK has one of the
most extensive gas networks in the world. Bio-methane retains all the attributes of natural gas, with the
crucial advantage that the fuel is renewable, offering substantial Carbon Dioxide savings. Few other
renewable vectors are as fungible, with so few demand-side constraints. Biomethane can, and is being
produced via the upgrading of biogas from Anaerobic Digestion. However, in order to achieve a step
change in production capacity, alternative approaches such as via thermal routes (termed Bio-SNG) are
necessary. Whilst technically feasible, this approach is less mature than anaerobic digestion. Transition
from aspiration, to widespread operating facilities and infrastructure requires a detailed understanding of
the technical and commercial attributes of the full chain from feedstock supply through to delivery of grid
quality gas, as well as the development of the first crucial operating facility which provides the tangible
proof of concept for roll out. The chemical and processing industrial heritage in the North East, its natural
gas and services infrastructure and its track record of innovation make it an attractive region to locate
such a project.
This report provides a critical appraisal of the opportunity afforded by Bio-SNG, building on a review of
the issues associated with biomass sourcing, a detailed analysis of the technology options and
applicability for injection into the UK grid, as well as a financial appraisal. It draws on benchmarking data
to demonstrate the full lifecycle carbon dioxide savings and also demonstrates that the Bio-SNG route is
a very cost effective route for decarbonisation compared with other renewables. It provides proposals for
implementation pathways, specifically how a Bio-SNG demonstration could be established in the North
East.
Regulatory Position
Implementation of Bio-SNG will only take place with the appropriate tax, incentive and legislative
environment. Therefore it is critically important to establish the position that is pertinent to Bio-SNG
production on its own account, but also in comparison with the situation for other competitive users of
biogenic energy resources. The Renewable Obligation is most established instrument in the UK to
incentivise the use of biogenic resource, in this case for provision of electricity. In order to facilitate
expansion of renewable heat and Bio-SNG in particular, the forthcoming Renewable Heat Incentive must
be structured such that such projects are commercially attractive compared with electricity production.
In addition to the incentives structures, the regulatory environment must be clear and appropriate,
particularly with regard to: requirements for gas injection, emissions directives, and how the use of waste
as a feedstock is treated.
Feedstock
In contemplating the use of biomass for the production of Bio-SNG it must be appreciated that there are
competing uses for biomass in many industrial sectors building materials, chemicals, heating, electricity
generation, and transport bio-fuels. Estimates vary widely on the potential for the production and trading
of biomass fuels but government incentives for non-fossil energy are fuelling a growing demand, globally.
1
Global capacity for the production of bio-fuels has been estimated at 180EJ per annum a figure which is
only 18 times the UK total energy consumption of 10EJ/annum. The estimates of potential indigenous
2
biomass production vary, but range up to a figure of 60PJ/a of conventional woodfuels, and in the future
3
a further 60PJ, or more from energy crops . The UK waste streams also represent a considerable
potential biomass resource of the order of 300PJ. The UK gas consumption is around 4EJ per annum of
which approximately 30% is associated with domestic heating. Combinations of imported and indigenous
biomass together with waste-derived materials have the potential, therefore to make a significant
contribution to the overall domestic heating gas load.
Major users of biomass fuels are making strategic moves upstream in the biomass supply chain to secure
positions that will support the long term viability of their power sector investments.
It follows that
investment in Bio-SNG facilities will undoubtedly require similar initiatives by their owners or developers.
In evaluating the merit of investment in biomass power it is important to take into account the global
market influence created by a variety of government backed incentive schemes that promote biomass
power plant developments throughout the world.
From a technical perspective biomass fuels are generally less well understood than coal, and the
technologies that use biomass fuels are less well developed.
understand the properties of candidate biomass fuels in undertaking process design and specification,
especially with respect to fuel preparation and handling and gasifier operations. Standards do exist for
solid biofuels of all types, the EU has developed via CEN/335 a comprehensive approach to the
classification and standardisation of solid bio-fuels and this should be used in transactions between seller
and buyer and by process designers in order to assure reliable and certifiable operational conditions.
Waste materials represent a significant bio-energy resource, however, it should not be assumed that they
are readily available for use in energy applications. Much of the UK waste stream is under long term
disposal contracts with local authorities, however, commercial and industrial wastes are unlikely to be on
long term disposal contracts and are, in principle a potential resource.
necessary to go upstream in the supply chain to secure reliable supplies of suitable materials.
In
common with the standardisation of solid bio-fuels, similar standards and classifications exist under
1
18
1 Exajoule = 10 Joules
15
1 Petajoule = 10 Joules
3
Some estimates consider 550PJ of energy crops per annum a possibility, although this would require seismic
change in land usage and appropriate commercial drivers.
2
CEN/343 for the production of Solid Recovered Fuels (SRF) which too can be used to facilitate trade
between buyer and seller and to inform process design.
In summary, it is likely that the development of Bio-SNG facilities will require the developer to go
upstream into the supply chain for both grown and waste derived fuels, however, specification and quality
control are vital determinants of project success.
The essential first condition that must be satisfied is that feedstock specification and the process design
are matched; the gasifier in particular can not be omnivorous.
From a wide range of possible gasifier types the review closes in on the choice of oxygen blown direct
bubbling fluidised bed, either pressurised or un-pressurised.
informed by commercial analysis which shows the importance of waste-derived fuels. The fluidised bed
is capable of accepting both pure biomass and waste derived fuels, in contrast to the alternative entrained
flow gasifiers.
Indirect fluidised bed gasifiers give a significant and beneficial direct conversion to
methane in the gasifier, reducing therefore the process losses incurred in making SNG from synthesis
gas, as well as the potential to operate using air and/or steam rather than oxygen as an oxidant.
However, indirect gasifiers are less well developed and do risk the leakage of significant quantities of
nitrogen into the syngas, which in turn will reduce the CV and Wobbe index of the resulting SNG.
Achievement of pipeline gas quality has been taken as an indispensable condition. The indirect gasifiers
can give a level of methane in syngas in excess of 10%, however, for example, the High Temperature
Winkler direct fluidised bed can give in excess of 5% methane in syngas. This level of methane content
still gives reasonable conversion efficiencies to Bio-SNG of at least 65%. In view of the relative immaturity
of the technology and the risk of nitrogen migration the benefits of the indirect fluidised bed gasifiers are
considered to be marginal.
This viewpoint is further enhanced if the heat output from the plant is
valorised by the 2 ROC electricity regime or where possible as renewable heat under the RHI; with
optimisation of the process design, the associated electricity and potential heat sales are likely at least to
compensate for any small loss of conversion efficiency to Bio-SNG.
Downstream of the gasifier the gas processing operations are conventional technology: heat recovery
and power generation, gas scrubbing, water gas shift, methanation, conditioning and compression. (The
water gas shift reaction is required to adjust the molar ratios of carbon monoxide and hydrogen in the
syngas to the ideal conditions for methanation.) Whilst these processing elements are all conventional,
6
they are critical for ensuring pipeline quality gas. In general the GS(M)R specification should be attainable
by this process route, although the tight limit on hydrogen content may demand a higher gas recycle
through the methanation phase than would otherwise be required, and the stringent dewpoint
specification imposes drying requirements in light of the high moisture from the methanation reactor.
These investigations do not identify the optimised process configuration regarding energy consumption.
There is a balance to be struck between gasifier operating pressure, gas train pressures and
compression loads and the power consumption for Bio-SNG export.
conceptual design where more detailed information from equipment suppliers is required.
Financial Analysis
Two representative scales of facility are analysed at 50MWth and 300MWth input. These would produce
approximately 230GWh and 1400GWh of Bio-SNG per annum based on the assumed process
efficiencies. This represents sufficient gas for approximately 15-100,000 households or 25,000-150,000
passenger vehicles. Three of the larger facilities would supply 1% of the UK domestic gas market.
Dependent on the fuel type these facilities would require between 75-100,000 te pa of feedstock at the
small scale and 450-600,000 te pa at the large scale. With increasing scale, the challenges associated
with contracting sufficient fuel for the duration of the financing period of a plant increase.
The feedstock price is assumed to be 7/GJ for imported wood pellets, 5/GJ for a mix of imported and
indigenous woodchip and -1.50/GJ for processed Solid Recovered Fuel from mixed waste streams. The
woodfuel prices are 2010 figures, based on biomass prices for large scale electrical generation plants,
4
taken from the technical annexes issued by DECC in the February 2010 RHI review . The waste fuel
price is based on industry knowledge of SRF produced by Mechanical Biological Treatment with a
biogenic energy content of ~60%.
5
Using the investment and operational cost assumptions derived, the levelised cost of Bio-SNG in 2010
prices has been shown to range between 67-103/MWh for the small scale facility and 32-73/MWh for
the large scale facility dependent on the type feedstock used, with the waste based fuel being the
cheapest. Assuming the RHI at 40/MWh of biogenic fraction this equates to out turn gas prices of 4365/MWh at small scale and 8-33/MWh at the large scale. In conventional gas units, this analysis
suggests an out turn gas price of 123-185p/therm at small scale and at large scale 24, 63 and 96p/therm
for SRF, Woodchip and pellet feedstock respectively.
Biomass prices in the heat and electricity sectors in the UK, Department of Energy and Climate Change
(January 2010)
5
65-75Million for the small facility and 215-250Million for the large facility, depending on feedstock type.
7
Comparing these figures with a central case of 59p/therm gas (DECC ) shows that with the proposed
incentive regime, a large SRF fuelled facility has the potential to provide gas effectively, as could a facility
fuelled by a mix of SRF and biomass. At this scale, a mix of indigenously sourced woodchip and imported
woodchip might be competitive, but a facility fuelled by wood pellet is unlikely to be able to compete and
would need an increase of at least 15/MWh to the RHI to enable it to compete. At the smaller scale, BioSNG cannot be supplied competitively from any fuel. For a competitive demonstration facility at this scale,
the RHI would need to be increased by a further ~40/MWh, or else a capital grant of ~40M would be
necessary.
For the large scale facility operating on woodchip, a sensitivity analysis indicates that a change in capital
cost of 30% equates to a change in outturn Bio-SNG price of 35%. A 1.5/GJ change in biomass price
(30%) equates to nearly a 40% change in outturn Bio-SNG price. This implies for example that volatility in
international biomass shipping costs alone could readily effect a change of 0.5/GJ (6.5/te) on feedstock
and therefore 13% on Bio-SNG price. This particular sensitivity to biomass price represents a major risk
onwards for the life of the plant depending on the contracting basis. Conversely, whilst capital cost is an
important factor, the capital cost is fixed at financial close, so does not represent an ongoing risk to the
project.
Looking to the future, gas prices will increase, but it is contended that biomass prices are likely to
escalate broadly in line with raw energy costs due to both increased international demand for renewable
feedstocks, but also simply because of the displaced cost of energy (the only perturbation on this would
be a significant increase in the price of carbon, although natural gas is a relatively low carbon feedstock).
In isolation this would result in a somewhat increased competitive position for Bio-SNG since the fuel cost
is only a component of the total levelised cost. However, the extent of this effect will be ameliorated by
any increase in capital and operational costs over and above inflation due to both increases in energy
costs per se, and also supply/demand pressure for renewable energy.
A first of a kind, large scale Bio-SNG production facility from SRF is likely to be challenging to finance and
represents a substantial quantum of investment, yet this analysis indicates that scale is necessary to
provide an acceptable cost base. Therefore an alternative pathway is likely to be necessary. One route is
to find a more commercially attractive basis to develop a syngas platform, from which a slip stream of BioSNG production could be established.
By comparison, a 50MWth gasification plant configured to produce 13MWe using an SRF feedstock and
supported by two ROCS under the RO is more likely to be viable. Because such a case is still predicated
on some of the fundamental technical principles necessary for Bio-SNG production, it does not provide a
particularly attractive return, but might be an alternative pathway to demonstrating Bio-SNG production
using a slipstream from an otherwise commercially viable plant, therefore limiting the level of additional
6
Carbon savings
many types of feedstock, the lifecycle CO 2e savings of Bio-SNG compared with fossil fuel alternatives are
typically ~90%. This saving is similar for both conventional heating and transport applications. The annual
CO2e savings for three of the larger facilities operating on biomass is 1Mte of CO 2e per annum if used to
displace natural gas heating, and slightly higher if it displaces conventional transport fuel. If Biogas were
to displace a third of the domestic natural gas consumption and bio-SNG represented two thirds of that,
then the CO2e savings would be ~15Mte pa when fuelled by biomass.
This analysis also demonstrates that the savings for the Bio-SNG production route are very similar to
those achieved using direct biomass heating. Given that the Bio-SNG solution has much lower demandside constraints and therefore could achieve greater market penetration, it is an attractive route.
Strategically the UK needs to consider the most cost effective approach for decarbonising. An analysis
has been undertaken which considers the cost of decarbonising, based on the current and proposed
8
levels of renewable support subsidy considered to be adequate to achieve market penetration of the
particular technology.
For heating applications using natural gas as a counterfactual, Bio-SNG offers a cost per tonne of CO2e
abated of ~175/te. This compares very favourably with direct biomass combustion for domestic
applications (395/te), for small commercial applications (285/te) but is somewhat more expensive than
direct biomass combustion for large scale commercial applications at ~110/te. When using oil heating as
the counterfactual, the cost per tonne of CO2 saved reduces significantly to 135/te for Bio-SNG
compared with 305, 220 and 85 for the three cases discussed above. However it must be noted that
the appropriate counterfactual for Bio-SNG is natural gas, as the product can only be used where there is
a gas grid and where oil use is unlikely.
Analysis of the Greenhouse Gas Emissions for Thermochemical BioSNG Production and Use in the United
Kingdom Project Code NNFCC 10-009 Study funded by DECC and managed by NNFCC, North Energy Associates
(June 2010)
8
In deriving the cost of the emissions savings, the Governments Impact Assessments calculation is made on the
basis of dividing the NPV of the incentive by the total tonnes of CO2 abated. The analysis here is viewed from the
point of view of the direct cost to the consumer, ie the subsidy cost divided by the tonnes of CO 2 saved, and where
possible uses the full lifecycle emissions of CO2e.
9
Domestic Ground source heat pumps using grid electricity indicate 5500 cost per tonne of carbon
abated compared with natural gas using the recent EST report for a mid range installed unit, and over
850 when compared with oil. When using renewable electricity (2 ROC supported offshore wind) the
costs of CO2e abatement are ~460/te and 360/te respectively. Again on this basis, Bio-SNG competes
very effectively. If the adoption of electrical based solutions demands more grid reinforcement than would
be required to the gas network by Bio-SNG solutions, then the differential in cost per tonne of carbon
abated is likely to be even greater.
For transport applications, Bio-SNG is also significantly more cost effective than electrical solutions
(either using grid electricity - 1000/ te CO2e, or presuming hypothecated offshore wind derived
renewable electricity - 600/ te CO2e). However, this analysis does suggest that whilst Bio-SNG does
offer significant carbon savings for the transport sector, on a cost per tonne abated of 400/ te CO 2e, the
heating sector is a preferable end market.
Compared with decarbonisation in the electricity sector, Medium scale generation supported under the
FIT costs between 220 and 570/te depending on technology, offshore wind costs ~200/te, biomass
costs ~150/te and onshore wind costs ~100/te against a baseline of current grid average.
This
suggests that the Bio-SNG case is preferable when compared with decarbonisation via feed in Tariffs,
offshore wind and anaerobic digestion
With regards to the cost of carbon abated, the renewables routes are relatively expensive. Whilst the
current renewable incentive structures are based on a duration which is commensurate with project
funding, the risk for this type of project is that in time, it is the price of carbon which becomes the
dominant incentive mechanism. This will highlight the relatively expensive cost of carbon abatement via
renewables, and may drive a change in policy. Without the kind of support proposed under the RHI,
projects such as Bio-SNG would not be viable.
The other key driver for the adoption of renewables is to establish alternative and secure sources of
energy through diversity, and where possible, indigenous supply. In this regard the use of waste based
fuels to provide a gas substitute offers a very low cost fuel source on a per MWh basis compared with
other renewables.
10
Although the process elements utilised in the development would be proven in their own right, there are
significant technical interfaces between them that need to be managed as part of overall systems
integration.
This may require an innovative engineering and contracting approach, but it will be a
requirement to assure project funders that there is no significant residual technical risk inherent in such a
development.
The technical uncertainties implicit in the process integration will inevitably make project finance more
difficult and early development of a project financing strategy will be required in order to assure there will
not be a late in the day terminal event on this front.
Government incentive schemes offer the prospect of commercial viability with a plant that would not in
other circumstances be commercially viable; to that extent they are beneficial to non-fossil energy
developments including Bio-SNG.
exceptional upside return on investment. What influences the attitude of investors however is that current
support mechanisms offer no protection on the downside of the project risk profile. It follows that a
financing strategy needs to make provision for managing the downside risk that will be perceived by
investors.
demonstration facility might itself cost in the order of 70M, a sum which would in any case represent a
financing challenge.
The timeline for a demonstration facility also needs to be taken into account
especially in consideration of the competitive uses of the biomass resources and the timing of commercial
scale market penetration for BIO-SNG. Some of the investment risks could be mitigated by configuring a
Bio-SNG demonstration project on a syngas platform which is valorised mainly by another output product
such as electricity, with demonstration of Bio-SNG production via a slipstream. The financing of a BioSNG project is a challenging prospect, however, it is important to start work on a financing strategy at the
outset of any prospective development, recognising the hurdles that do exist and devising methods to
overcome them.
11
Given the right support package, a demonstration project at 50MWth (75-100,000 te pa of feedstock)
could be feasible, but the economies of scale mean that the level of support necessary is substantial. The
combination of technical and commercial attributes, in addition to the current renewables incentive
regimes make a project configured to produce electricity a potentially more attractive platform. The
development of this commercial foundation could allow the demonstration of a slip stream of Bio-SNG at
more moderate additional cost.
The chemical and processing industrial heritage in the North East, its natural gas and services
infrastructure, its transport links and its track record of innovation make it an attractive region to locate
such a project, particularly given the syngas projects already slated.
With regards to potential new project sites, a high level screening exercise was carried out focused on
primary attributes (access to a deep water port, rail head &/or road access, gas connection NTS, or if
sufficient capacity LTS, electrical grid connection, commodities, water, cooling etc and desirable attributes
sources of rich hydrocarbons to boost gas quality, oxygen supplies, syngas main to valorise intermediate,
& potential to link into CCS networks for carbon dioxide disposal). In Teesside, potential areas considered
were Seaton Port, Seal Sands, Clarence Port, Billingham Reach, Norton Bottoms, South Bank, Corus,
and Sembcorp. Many of these sites were generally suitable for either scale of facility, with good access
to intermediate pressure gas grid (17-40bar) with sufficient capacity. Probably the most favoured sites
would be Clarence Port and South Bank. Both these areas are part of re-development plans, and given
an appetite to progress, the commercial feasibility of project on these sites could be investigated in more
detail.
Potentially one of the issues in locating the project in Teesside is feedstock supply. With regard to pure
biomass, Teesside and the North East already has over 300,000te already in use (Wilton10 and co-firing
at Lynemouth) with over 2 million tonnes per annum required for projects slated for development in the
area (MGT, Gaia Power and BEI). With regard to waste, SITAs Haverton incinerator already processes
390,000te pa of waste with a recent contract award and expansion plan for a further 190,000 te pa. SITA
and Sembcorp have also announced a planned Wilton 11 (400,000 te pa of household and commercial
12
waste), the Ineos Bio facility will use 100,000 of SRF in the first phase and the proposed Air Products
gasification project will require 300,000 te pa. Combined these represent 1.4million tonnes of waste.
Many of these projects are still at the developmental stage and it is unlikely that all of these will progress
to completion, and also much of this feedstock would not be sourced locally, but it does indicate potential
pressure on resource. Conversely, some of these projects could provide a basis for a Bio-SNG
demonstration, given an appetite to drive forward a project by a Bio-SNG investor and an appetite on
behalf of the host site.
13
2 Introduction
Methane is an attractive heat and transport fuel vector. It is a clean and relatively low carbon intensity
fuel. It can be utilised efficiently and has established infrastructure and demand-side technologies (gas
boilers for heating and an increasingly wide range of available CNG vehicles). The UK has one of the
most extensive gas networks in the world. Bio-methane retains all the attributes of natural gas, with the
crucial advantage that the fuel is renewable, offering substantial Carbon Dioxide savings. Few other
renewable vectors are as fungible, with so few demand-side constraints.
Figure 2.1 Methane, Biomethane and its merits and production routes
Biomethane can, and is being produced via the upgrading of biogas from Anaerobic Digestion. However,
in order to achieve a step change in production capacity, alternative approaches such as via thermal
routes (termed Bio-SNG) are necessary.
14
The Bio-SNG approach accommodates a wider range of input feedstocks. It also converts the full calorific
value rather than only part of the biodegradable fraction. This also means that for Bio-SNG, the majority
of the mass and energy flow goes to the outturn product (gas). In anaerobic digestion, the majority of the
9
mass flow is to the residual digestate . For these reasons the Bio-SNG approach can be executed at
more substantial scale.
Whilst technically feasible, this approach is less mature than anaerobic digestion. Transition from
aspiration, to widespread operating facilities and infrastructure requires a detailed understanding of the
technical and commercial attributes of the full chain from feedstock supply through to delivery of grid
quality gas, as well as the development of the first crucial operating facility which provides the tangible
proof of concept for roll out. The chemical and processing industrial heritage in the North East, its natural
gas and services infrastructure and its track record of innovation make it an attractive region to locate
such a project.
This report lays out the key regulatory, feedstock, technical and economic issues, as well as the practical
considerations of a pathway from current status to an operating project.
Digestate is an important co-product from anaerobic digestion, and its beneficial use is vital as part of a
sustainable biological cycle. However it does impose significant constraints on scale and location of anaerobic
digestion projects.
15
been dropped in the process . The lesson to learn already from the brief history of the RO is that
incentive schemes are subject to constant adjustment, and changing political priorities. It follows that
developers must take advantage of the moment to secure a position because the longer a project takes to
develop the greater the potential for a change to the incentive landscape. The RO works by accredited
generators earning Renewable Obligation Certificate(s) for each MWh of renewable electricity exported;
electricity suppliers being obliged to sell a certain percentage of renewable electricity each year or else
pay the buy-out price for the shortfall. Funds arising from the buy-out are distributed to the generators
pro-rata to their relative renewables contributions.
. This Criterion has been noted again recently in the 2010 CSR with regard to FITS: 2.104 The efficiency of FeedIn Tariffs will be improved at the next formal review, rebalancing them in favour of more cost effective carbon
abatement technologies.
16
This becomes
important when the market seeks to direct biomass resources to the use that gives the greatest return for
the producer one sector may be disadvantaged relative to another. The RTFO only applies to a few
specific liquid fuel types and does encompass biogas for which the only support is the fuel duty
differential between methane and diesel/gasoline. The RTFO has had a chequered history, due to a
recent slowdown in targets, as well as a drafting error, the obligation has not generally provided a
bankable revenue stream.
by the 5 December 2010. The RED sets out targets for member states for the generation of energy from
renewable sources across all sectors, together with mandatory definitions of legal terms, units of
measurement and accounting.
compatible with the RED definitions etc. otherwise it will be illegal. Clearly, the obvious discrepancies
between the RTFO and the remainder of the UKs renewables instruments must be regularised at some
point. The RED includes a definition of biogas and it appears that Bio-SNG would fall within the terms set
11
out in the directive concerning its eligibility as a source of renewable energy . The RED also anticipates
11
Unlike the UK Energy Act 2008 which does have a definitional issue which is undergoing resolution.
17
the injection of methane from biogenic origins into the gas network and requires member states to
facilitate this activity. The RED sets specific sectoral targets including the achievement of 10% renewable
energy in surface transportation systems (a possible use of Bio-SNG) and encourages the use of wastederived materials by proposing double incentives for the use of energy derived from biogenic wastes.
produced by a gasifier still being regarded by the Environment Agency as a waste . The prevailing
wisdom from the Environment Agency is that the gas would continue to be a waste up to the point where
it is recovered i.e. burned. At face value this means that if Bio-SNG was to be produced from waste
and burned in a domestic heating appliance then the domestic heating appliance would need to comply
with the requirements of the WID.
unambiguously resolved before waste-derived fuels could be used in the production of Bio-SNG.
Accounting for the energy contributions from the fossil and non-fossil components of waste derived fuels
(i.e. miscellaneous biomass and various plastic rejects) is necessary in order to gain accreditation for
support for the bio-energy fraction under any of the renewables incentives listed above. To date this has
been a concern predominantly in the waste to electricity sector, but it is clearly going to be equally
important in a Bio-SNG development. Where a 100% biomass fuel is used it is a relatively simple matter
to assure the bio-energy content of the fuel and this can be achieved via an agreed fuel quality
management plan. With a heterogeneous waste derived fuel there are two possible methods to assess
bio-energy content in the fuel sampling and physical separation followed by classification and weighing,
or selective dissolution of biomass.
variability of waste-derived fuels is subject to significant error bands and uncertainty unless a large
number of samples is taken into consideration. Even then it would be practically impossible to guarantee
how much of the bio-energy had reported to the final Bio-SNG product stream, and how much had been
associated with incidental process heat losses. The practical way to measure the bio-energy content of
12
A recent EU Ruling at Lahti has set a precedent that a syngas may no longer be a waste. Whilst this is under
consideration in the UK, no such formal policy position has been set out as of the date of this report.
18
14
14
methodology for
determination of bio-energy content appears to be the favoured approach, it must be appreciated that
there is still some work to be undertaken before it is finally accepted by Ofgem as an appropriate
mechanism for accreditation of renewable energy content. Utilisation of C
14
heterogeneous fuels would entail some further work beyond that, but for Bio-SNG it is probably the only
practical methodology for establishing bio-energy contribution from a heterogeneous fuel.
Electricity plants running on waste-derived fuels can, under certain circumstances qualify for enhanced
capital allowances against corporation tax but this will also require operators to give evidence of biogenic
energy contribution for which C
14
somewhat obscure with respect to the Eu ETS, therefore it is recommended that early in the development
programme clarification should be sought concerning whether such a plant would be eligible / liable, and
also how the question of a percentage of fossil carbon in the feedstock should be handled. (Note that the
Bio-SNG plant will be a direct producer of carbon dioxide resulting from acid gas removal post shift and
pre methanation reactions. With a waste-derived fuel some of this will have a fossil origin.)
19
Bio-SNG production is the hydrogen content specified in the GS(M)R , however it may be possible to
achieve some derogation of this by examination of the methodology outlined in article 192 of Schedule 3
14
of the GS(M)R .
13
14
Unlike for anaerobic digestion derived biogas, for which oxygen content is one of the key challenges
The full GS(M)R can be obtained as a downloadable .pdf file from:
http://books.hse.gov.uk/hse/public/saleproduct.jsf?catalogueCode=9780717611591
20
4 Feedstock
Biomethane production via synthesis gas can be generated from any biomass fuel which can be gasified.
Potentially this encompasses pure biomasses such as woodchip, energy crops or biogenic co-products
from biodiesel production, crude bio-oil from wood pyrolysis, to discarded materials such as waste wood,
or processed wastes such as Solid Recovered Fuels. This review will provide a high level perspective on
fuel types and the technical implications on the process, as well as the commercial and sustainability
issues.
The use of bio-fuels for heating and lighting pre-dates the use of fossil fuels by thousands of years,
nevertheless a systematic knowledge base of the challenges posed by solid bio-fuels is not as widely
understood as is the case with fossil fuels, a fact attributable to the burgeoning use of fossil fuels as
exponentially increasing demand powered the industrial revolution across the globe. In the emerging
post-fossil epoch that is beginning now, producers and users of thermal power are considering the use of
biomass in applications in which the use of fossil hydrocarbons has been dominant electricity
generation, heating, transport fuels, organic chemicals, synthetic materials, and synthetic natural gas or
SNG.
The primary energy consumption of the United Kingdom is approximately 10 Exajoules per annum , of
which nearly 40% is supplied by natural gas, making gas the UKs largest single energy source, with an
extensive infrastructure and expertise base.
Figure 4.1
15
16
With the ever rising need to secure future energy diversity and reduce greenhouse gas emissions it could
be a considerable advantage if use could be made of the gas infrastructure and the expertise of the
efficient industry that has developed around it by the use of synthetic natural gas (SNG), including SNG
derived from renewable resources such as biomass Bio-SNG.
A certain amount of work has been accomplished to date on the quantities and prices of biomass fuels
17
that could be obtained both from indigenous sources and on international markets , and is collated in
Table 4-1
Fuel type
Indigenous
Import
Global
Energy crops
60 -550 PJ/a
<72 PJ/a
<180 EJ/a
< 60 PJ/a
250PJ/a
Forestry
and
Agricultural residues
Fuels
derived
from
slated
for
Unknown
electricity
< 300 PJ/a
Unlikely
N/A
wastes
Table 4-1
Energy crops are seen to present the largest potential resource amongst biomass fuels internationally,
but considerable uncertainty exists as to the rate at which the market can be developed, and critically in
the sustainability constraints which together with competition for land use will ultimately pose a limit their
development. Nevertheless, the theoretical capacity, globally, to produce energy crops of all types in a
recent study undertaken by E4Tech for DECC is estimated to be in the region of 180EJ per annum. In
the event that this market does develop over the next two decades then UK based companies could
expect to take a share of this resource subject to their ability to pay the landed price of the commodity,
however, the creation of a new global solid biofuels supply business in parallel with an emerging demand
17
e.g.Sustainability constraints on UK bioenergy development - Patricia Thornley a,_, Paul Upham b, Julia Tomei,
Energy Policy 37 (2009) 56235635 Tyndall Centre, Manchester University
22
for the solid biofuels remains a considerable challenge each depending upon the other with investment
decisions requiring certainty for both supplier and user.
Estimates vary for indigenous production capacity for energy crops ranging from 60 PJ to 550PJ per
annum depending upon the extent to which subsidies may be paid to growers to compensate for the lag
18
between planting and harvest and sales . It is interesting to note the implicit assumption that subsidies
for energy crops are required to get the supply chain established rather than to compensate for the
intrinsically higher cost base associated with energy crops pending the date when rising fuel prices could
be expected to reach and overtake these. An investor in a plant using solid biofuel crops ought therefore
to satisfy itself that the cost of producing energy crops is not disadvantageously indexed to the prevailing
cost of energy, or else gain satisfaction that support mechanisms would be sustained for a sufficient
period of production and operation to assure commercial viability for both producer and user.
Woodchip
In the UK, half of the commercial forestry is operated by the forestry commission, with the balance under
private management. Approximately 9 million green tonnes are extracted per annum for timber
production. Green timber is 50-55% moisture as harvested, although with seasoning can be reduced to
30% naturally over time, without additional heat. This material can be utilised as woodchip, although its
use is in direct competition with sawlog. Small roundwood is less valuable than sawlog, so woodchip can
be sourced from this material. Other than saw-wood, there is a variety of lower grade timber available
from forestry and the urban environment. In managing forestry, brash (removal of ancillary stems),
thinning (trees which are too small for extraction) and poor quality final crops, can be extracted. Many of
these are left on site, however, as the market for biomass fuels expands, these are a lower cost source of
timber. The arboricultural arisings in England, Scotland and Wales by Forest district, estimated to be
c.670,000
19
oven dried tonnes per annum (12PJ pa). Similarly, in the urban environment and on road and
rail-sides tree management gives rise to arboricultural arisings. These are usually chipped, and often
landfilled, but are increasingly being viewed as another energy biomass source.
Internationally woody biomass has the potential to be sourced from highly forested countries such as
Canada and Russia, with often distressed products being identified (such as beetle killed spruce). In the
UK over 250PJ of international woody biomass resources have been slated for use in electricity projects.
Whilst these resources are substantial, these commodities require extraction, haulage, shipping,
unloading and delivery into plant, noting that the energy density of biomass is low relative to fossil fuels.
As international jurisdictions develop renewable energy policies and seek to secure resources for their
energy needs, international competition for these fuels will become more intense.
18
19
Trends in the biomass to power market indicate that major users of solid biofuels are moving upstream in
the fuel supply chain in order to secure their future fuel deliveries. The recent take-over of the Dutch
company Essent by RWE was made for this specific purpose; RWE recognising that Essent had already
established a trading arm that is dedicated to the sourcing, transportation and trading of biomass fuels,
with a view to expansion of this business to meet the anticipated demand for biofuels.
With the
expanding demand for biofuels it is becoming increasingly clear that developers of biomass fuelled
facilities need to take overt measures to manage fuel supply uncertainties (price, quality, availability,
sustainability), at least for the purpose of constructing a bankable case for project finance.
20
It is frequently
pace of development in this area. The lack of development would be more reasonably attributable to the
novelty of the process and the small scale of the industry, rather than any fundamental technological
limitation.
understand the significant differences between biomass feedstocks and the more widely understood
properties of coals.
For gasification, the fuel properties of most interest are; fixed / volatile carbon, carbon, hydrogen, oxygen,
nitrogen, ash content, ash fusion temperature, and humidity.
Fixed carbon %
Ash content %. [DB]
Ash Fusion temperature (C)
Sulphur % [DAF]
Carbon % [DAF]
Hydrogen% [DAF]
Oxygen% [DAF]
Nitrogen% [DAF]
Water % [AR]
Table 4-2
In addition to these macroscopic properties that govern behaviour of the fuel in the gasifier process
design needs to be informed by an appreciation of the minor constituents in the fuel such as ash chemical
composition, levels of halogens, and volatile metals such as mercury and arsenic.
20
Industrial gasification means the production of syngas to a quality suitable for use in chemical processes.
24
Although many of the macroscopic properties of biomass are remarkably similar across a number of
species it is important to note that minor constituents can vary with the species
21
the environment and soils in which they are grown. (Scientific literature is prolific on the subject of mineral
take-up from the environment, with some plant species being especially effective in accumulating, lead,
zinc, mercury etc.) This is particularly important when considering the properties of biomass ashes,
which in themselves are notably dissimilar to coal ashes, both in the amount and also their chemical
composition. This has implications for chosen gasifier operating conditions especially with respect to ash
fusion temperatures and the volatile behaviour of certain alkali metal oxides at elevated temperatures.
Furthermore, gas processing operations may be sensitive to small levels of both alkali metals and heavy
metals in the de-activation of catalysts.
The European Commission recognised the need for a systematic basis to describe solid biofuels and in
2004 embarked upon a programme of work under CEN/335 entitled Solid Biofuels. The objective of the
work was to provide a scientifically informed basis for describing the properties of solid bio fuels for the
purpose of facilitating trade between producer and user, for informing process design, (esp. materials
handling), environmental permitting, communication with stakeholders and for quality management.
Over 98% of the potential UK indigenous biomass resource is from waste products . Municipal,
commercial and industrial wastes therefore provide a valuable and ubiquitous source of biomass fuel.
Combustible wastes arising from household collections, commercial-industrial waste and construction and
23
demolition . Whilst there is significant political pressure to increase recycling, analysis by Lee et al
clearly shows that even extensive recycling will still leave a substantial tranche of residual material for
which recycling is not possible. This data, Figure 4.2 shows that the residual waste from municipal
sources is predicted to be fairly constant at c.28million tonnes and from commercial/industrial sources at
50million tonnes. Of this c.17million and c.24million tonnes are considered to be biomass respectively.
The authors estimate this residual waste resource (biogenic and non-biogenic) to be ~700PJ from both
MWS and C&I streams. This full potential analysis does not account for existing uses for the residual
wastes, nor the availability of the streams (this is discussed in Section 4.7)
21
25
100
80
60
40
20
0
2005
2010
Bio Residual
Figure 4.2
2015
Non Bio Residual
2020
100
80
60
40
20
0
2005
Recycled
2010
Bio Residual
2015
Non Bio Residual
2020
Recycled
The production of Solid Recovered Fuel (SRF) from non-hazardous wastes creates the opportunity to
utilise waste derived fuels in thermal applications that are more sophisticated than the classical waste
disposal route via incineration; in particular SRF is being regarded increasingly by a number of producers
and users as a potential feedstock in gasification. Hence there is the potential for the transformation of
combustible wastes into syngas and its products including SNG.
The term SRF arises from work undertaken by the European Commission under CEN/343 to provide a
systematic basis for the classification and standardisation of fuels derived from non-hazardous wastes.
This work was undertaken in the anticipation that the energy content of non-hazardous wastes should be
exploited in pursuit of increased resource efficiency within the EU. CEN/343 therefore set out to define a
scientifically informed basis for describing the properties of waste derived fuels for the purpose of
facilitating trade between producer and user, for informing process design, environmental permitting,
24
It will be readily appreciated that it is not feasible to design a piece of sophisticated plant such as a
gasifier without tailoring the design to the known properties of the fuel. This is true for a conventional coal
gasifier and it is equally the case for a gasifier intended for operation on biomass or a waste-derived fuel.
Given the variable provenance and properties of waste materials it becomes an indispensable condition
that some method must be applied by which the physical and chemical properties of a waste-derived fuel
can be specified and assured, if they are to be used as a gasifier feedstock. The CEN/343 approach
provides a rigorous method to do this.
The properties of solid fuels which are of most interest in gasification are common, whether they are fossil
or biomass or waste. These include particle size and density, physical form, ash content, ash fusion point
and ash composition, humidity, and levels of halogens, sulphur, arsenic, and mercury. An operator of a
coal gasifier can control the inputs to its plant by using coal from well characterised sources, even
individual mines, backed up by standardised coal testing techniques that have been in use for decades.
The use of SRF in gasification introduces therefore the need for an equally effective means of fuel quality
assurance.
24
CEN/343 is now mandated for adoption by member states and is available from British Standards Institute.
26
In postulating the use of SRF for the production of Bio-SNG, it is necessary to understand the bio energy
content of the fuel. CEN/343 includes methods for making this determination, but they may not provide
the best method of biomass determination.
25
production of SNG, a proportion of the output would contain fossil carbon, and this would need
accounting for if incentives for renewable energy were to be claimed. The composition of a typical Solid
Recovered Fuel is shown in Table 4-3
Physical parameters
Particle form : Cubes
Particle size :
Unit
Ash content
Moisture content
Net calorific value (NCV)
Biomass fraction
26
% dm
27
% ar
MJ/kg ar
% GCV
Chemical parameters
Unit
Chlorine (Cl)
Sulphur (S)
Fluorine (F)
Bromine (Br)
Mercury (Hg)
Cadmium (Cd)
Thallium (Tl)
Total Group II metals
Antimony (Sb)
Arsenic (As)
Chromium (Cr)
Cobalt (Co)
Copper (Cu)
Lead (Pb)
Manganese (Mn)
Nickel (Ni)
Tin (Sn)
Vanadium (V)
Total Group III metals
Table 4-3
Value
28
% w/w
% w/w
% w/w
% w/w
mg/kg
mg/kg
mg/kg
mg/kg
mg/kg
mg/kg
mg/kg
mg/kg
mg/kg
mg/kg
mg/kg
mg/kg
mg/kg
mg/kg
mg/kg
Typical
0.26
0.15
0.02
0.01
0.49
1.26
<9
18
12
< 0.82
17.6
4.3
268
100
90
9.3
27
4.1
538
Test method
Limit
1.0
1.0
0.5
0.25
10
20
20
30
150
100
150
75
500
250
500
100
50
50
800
prCEN/TS 15408
prCEN/TS 15408
prCEN/TS 15408
prCEN/TS 15408
prCEN/TS 15411
prCEN/TS 15411
prCEN/TS 15411
prCEN/TS 15411
prCEN/TS 15411
prCEN/TS 15411
prCEN/TS 15411
prCEN/TS 15411
prCEN/TS 15411
prCEN/TS 15411
prCEN/TS 15411
prCEN/TS 15411
prCEN/TS 15411
prCEN/TS 15411
prCEN/TS 15411
Failure of waste gasification processes has been frequently exacerbated by not only the uncontrolled
variability of the fuel, but also by the failure of technology developers to appreciate the importance of this
issue in process design. Unlike a waste incinerator, a waste fired gasifier cannot be omnivorous; fuel
specification and plant design are inextricably linked.
25
14
C methods applied to the process output may give more reliable performance and be cheaper.
dry matter (dm)
27
as received (ar)
28
wet weight (w/w)
26
27
Figure 4.3
The growing demand for biomass in these applications will set the market price
globally. It is also evident that potential demand for biomass feedstocks across all of these sectors could
28
easily exceed global production capacity from the outset, a situation that paradoxically is only just
beginning to impact on crude oil prices at the end a century of exponentially increasing oil production from
a vast but finite resource.
Competing users of biomass feedstocks will set the market price, with
governmental support mechanisms for biomass electricity already having a dominant effect and being
29
The traded price of clean biomass fuels for biomass power generation is today in the range of 6 to 7
per GJ measured as net calorific or lower heating value, a price that would be unaffordable by operators
of biomass power stations without support through a variety of inward looking national support
30
mechanisms .
The relative generosity of the various national support mechanisms is not formally
coordinated throughout the EU, and it is most certainly uncoordinated globally. Asymmetry between
national support schemes for power generation from globally traded biofuels remains a significant
31
commercial threat to the viability of schemes that utilise such fuels . It is also the case that asymmetry of
support mechanisms across market sectors within the UK constitutes a business threat to any company
for whom consequent price distortions would affect their business case. (Users in receipt of the most
advantageous support will be market price makers, all others will be price takers.)
The effect of asymmetry in support mechanisms is to give one class of users a dominant position in the
fuel market In conditions of supply constraint this constitutes a lock-out to other potential users of a
biomass resource.
Hence in the domestic UK situation the Renewables Obligation (and the SRO and
NIRO) rewards electrical power generation more favourably than would the RTFO reward the use of an
equivalent amount of resource in the production of synthetic transport fuels. Accordingly the purchaser of
a biomass resource will seek to use it in the application yielding the greater added value power
generation. Developers of biomass to liquids plants will not move until an equivalence of incentives (at
least) would be forthcoming. In contemplating the development of an SNG facility, considerations of
analogous factors should be undertaken; these would include the impending Renewable Heat Incentive
(RHI), fuel costs, the specific SNG yield, power sales prices, and Bio-SNG selling price, together with
plant capital and operating costs.
See BWPI Federation Large-scale biomass threatens 8,700 UK jobs... ...and risks a 1% increase in UK
emissions http://www.wpif.org.uk/Make_Wood_Work_News.asp
30
Coal prices are in the region of 2 per GJ; the price differential to biomass being more than sufficient to
purchase carbon offsets or allowances with carbon trading at any price up to approximately 30 per tonne.
31
Note the way in which different approaches to support for transport biofuels in North America and UK
precipitated a sequence of events that seriously damaged the UK indigenous biofuels industry in 2008/9.
29
25 years. The over-riding principle that sits behind municipal waste management is that local authorities
need to have long term certainty over price and deliverability from their contractors; uncertainty (including
technical uncertainty) over reliability of off-take or price is usually unacceptable to them.
The economic driver in the commercial industrial waste market rests predominantly with the landfill tax;
hence a rational market exists in which operators seek the lowest cost of disposal for those materials that
do not command a revenue from recycling. Historically, the lowest cost of disposal has been given by
landfill, but with the inexorable increase in the level of landfill tax waste handlers are increasingly looking
to other forms of disposal that might be competitive. This has lead to an increasing interest in disposal of
combustible wastes via energy recovery facilities, whether by mass burn incineration or via production of
solid recovered fuels (SRF).
32
energy from waste facilities have the potential to secure Renewable Obligation
33
Certificates and hence benefit from additional power income . The potential of gasification to secure
double ROC eligibility has promoted development activity in this area, where a gasification project could
be commercially viable at a small scale given the additional revenues promised by double ROCS and a
gate fee for taking waste-derived fuels.
In the existing UK market the users of waste-derived fuels demand and are able to receive a gate fee in
the range of 20 to 50 per tonne, irrespective of the quality or energy value of the fuel. This is because
the next cheapest option available to producers is disposal via landfill. This represents a major benefit to
the fuel user, but there are already signs that the market is changing, with continental users offering to
pay a small cost per tonne, and UK producers exporting SRF to continental users in the face of an
increasing demand for the product. It follows that in creating a business case for the production of
syngas from SRF it would be a mistake to assume that the price of SRF will always be a large negative
number. Nevertheless, the cost benefit of SRF compared to energy crops means that the marginal
scales of commercially viable facilities running on these fuels are likely to be quite different. This may be
important for early Bio-SNG projects where the risk profile of a first-of-a-kind plant might prohibit
development at the scale required to ensure a commercial return when using bio-crop fuels.
32
Conditions include: either the use of an advanced thermal process such as gasification, or the achievement of
GQ CHP in a combined heat and power plant.
33
The RHI holds a similar promise, though the rules regarding eligibility are not yet defined.
30
Commercial viability will be influenced by governmental support in the renewables sector. It follows that
Bio-SNG developer should seek to ensure it is able to compete in the fuel market with other biomass
users.
The properties of biomass fuels should be understood and controlled to required quality levels, whether
virgin biomass, or recovered materials. Reliability of process plants will depend upon this.
In summary, it is likely that the development of Bio-SNG facilities will require the developer to go
upstream into the supply chain for both grown and waste derived fuels, however, specification and quality
control are vital determinants of project success.
31
configuration of a practical plant that could, subject to commercial considerations be deployed now at an
industrial scale.
Experience reveals that process developments are rarely founded on technological break-throughs;
rather it is normally the case that process developments are incremental and founded upon existing
proven techniques. The guiding principle in this review has been therefore, to establish whether existing
technologies could be employed for the entire process chain from fuel reception and preparation through
to Bio-SNG compression and delivery, and in a way that gives a good level of performance in comparison
with alternatives and with respect to efficiency, technical risk, commerciality and speed to market.
BALANCE OF PLANT
FUEL PREP
THERMOCHEMICAL
BREAKDOWN
INTERMEDIATE
PURIFICATION
INTERMEDIATE
CONDITIONING
METHANATION
Figure 5.1
POLISHING
PACKAGING
including
COMPRESSION
PRODUCT
Bio-SNG
A systematic process review therefore will begin with the fuel handling facilities - reception, storage,
preparation and feeding arrangements.
34
e.g. NNFCC project 09/008: Review of Technologies for Gasification of Biomass and Wastes: E4Tech June 2009
32
A key design consideration therefore is whether to import material of a defined specification and quality or
to manufacture the fuel on site from raw biomass or residues. On the one hand manufacture on site will
demand more space, more plant, a larger workforce and a significant parasitic energy consumption,
however on the other hand, bought-in ready to use fuel will be more costly, and could subject the plant to
greater supply chain vulnerability. Moreover biomass drying is likely to be a significant feature of the fuel
preparation process and could represent an economically effective use of waste heat from the gasification
process. A balanced judgement needs to be taken, therefore, on the fuel supply philosophy, taking into
account, the type of raw feedstock (lumber, waste wood, wood chip, pellets, miscellaneous biomass
residues, commercial / industrial waste etc.), the plant location, the space available, and the fuel supply
chain arrangements.
There is extensive expertise in the area of fuel reception, preparation and handling, however, it is a
common location for serious process malfunctions; due diligence experience reveals a consistent and
recurrent problem with fuel preparation, quality and feeding. It is vital, therefore at the design stage to
use proven and reliable designers, and equipment suppliers and to confirm that the process plant will
operate with the particular material specifications envisaged for fuelling the gasifier. Solids handling
systems must be designed in consideration of the particular properties of the materials in question; for
example it would be unwise to assume that woodchip will behave in a handling system in the same way
as wood pellets. CEN/335 goes some way to describing standard test methods that can be employed to
determine the critical handling attributes of particular solid biomass fuels.
5.2 GASIFICATION
There are fundamentally three main types of gasifier:
Fixed bed (down-draft and up-draft)
Entrained flow
Fluidised bed (direct and indirect heating)
Fixed bed biomass gasifiers are used extensively in some parts of the world in small, relatively crude
applications producing a low quality gas for small scale power generation. Fixed bed gasifiers are also
used at a large scale, however, the low carbon intensity of biomass fuels makes them unsuitable for use
in large scale fixed bed gasifiers, unless they are co-fired with coal. On this account it is proposed that
fixed bed gasifiers should be excluded from further consideration where the intent is to produce biosyngas at a moderate industrial scale.
33
Figure 5.2
35
Entrained flow gasifiers represent the state-ofthe-art for gasification of pulverised hard solid fuels such
as coal or petroleum coke, or liquids such as residual oils, but are unsuitable for raw biomass or wastederived fuels which can not be pulverised in the same manner as coal or coke. However, biomass can be
pre-treated by a process such as Torrefaction, which is in effect a low temperature pyrolysis stage for
manufacturing charcoal. Indeed the Choren Carbo-V gasifier undertakes this reaction within the process,
thereby utilising the energy value of both the volatile carbon that is evolved in a pyrolysis step and the
fixed carbon (charcoal) in an entrained gasification stage see Figure 5.3. The heat of the gasification
reaction in a gasifier is provided by the oxidation of part of the fuel, and in an entrained flow gasifier the
process is blown with oxygen rather than air. This is essential if it is required to minimise the nitrogen
levels in the syngas, a condition in SNG production that becomes paramount because it is very difficult
(i.e. costly) to separate nitrogen from the SNG later in the process train.
35
Olofsson et al, Initial Review and Evaluation of Process Technologies and Systems Suitable for Cost-Efficient
Medium-Scale Gasification for Biomass to Liquid Fuels (2005)
34
Figure 5.3
It will be readily appreciated that the pyrolysis and entrained flow gasification steps combine to create a
relatively complex plant, albeit one that is technically demonstrated at a significant scale by Choren. At
this point it should be appreciated that the principal aim of entrained flow gasifier concepts has been to
produce a good quality synthesis gas a mixture of carbon monoxide (CO) and hydrogen (H 2) and to
present these in a CO / H2 molar ratio that subsequently allows the efficient synthesis of more complex
molecules from these basic building blocks of organic chemistry. An efficient entrained flow gasifier will
produce very low levels of methane in the synthesis gas; methane production requires therefore the
conversion of synthesis gas via a methanation step. This consumes energy and is seen by some SNG
technology developers as a reason to pursue alternative gasification processes that provide a syngas
output that maximises the methane content of the syngas as it is produced from the gasifier.
Fluidised bed gasifiers. Fluidised bed gasifiers exhibit a number of variants bubbling beds, circulating
beds, indirect and direct heating, pressurised and un-pressurised, air blown or oxygen blown.
The
common feature of fluidised bed gasifiers is that they provide a hot aerated bed of granular solid material
into which the granulated fuel is injected. The fluidised bed provides a thermal flywheel whereby heat
transfer from the hot bed material is sufficient to dissociate the fuel into volatile components (syngas) and
ash. The gases are evolved from the top and the ash from the bottom. Conventionally, the heat of the
bed is maintained by burning part of the fuel in the bed itself and the products of combustion (water and
some carbon dioxide) are evolved with the syngas.
35
Figure 5.4
When the intent is ultimately to produce pipeline quality SNG it becomes necessary to use pure oxygen
for the gasifier in order to eliminate nitrogen from the resulting syngas, however, the cost of the
associated air separation unit that produces the oxygen represents a considerable burden on the plant
economic case. This has provided the incentive to develop new fluidised bed concepts in which the plant
is configured in such a way as to allow air firing to heat the bed material outside the gasification reactor
the so called indirect fluidised bed gasifiers.
significant quantity of methane in the syngas, however, it must be appreciated that indirect gasifiers are
still in development. To the extent that the syngas can be produced with a significant methane content
this represents a potential improvement in overall fuel energy conversion efficiency. The quest for a
significant methane content in the syngas has informed research and development into new gasification
concepts, notably indirect fluidised bed systems. These have the potential to achieve methane in syngas
36
levels in excess of 10%, thereby offering the promise of slightly improved overall SNG yields . It should
be appreciated, however, that methane produced in this way does not come alone; it is accompanied by
other longer chain alkanes and with a higher level of tars in the syngas. These need to be removed from
the gas stream and represent in their own way a potential energy loss from the system.
High pressure operation also favours the direct production of methane in the syngas, and there is already
some experience with the operation of pressurised fluid bed gasifiers such as the high temperature
Winkler process or HTW. The HTW gasifier has operational experience co-firing waste derived fuels with
pure biomass and at pressures of 30 bars at which a methane-in-syngas level of 8% (dry basis) can be
achieved.
36
This is because 10% of the gas production does not need to be converted to methane via the exothermic
catalytic reactions required to reform synthesis gas CO and H2
36
38
39
The selection of the Choren Carbo-V gasifier, or similar (N.B. oxygen blown)
40
These process choices are nevertheless uninformed by any commercial considerations. The use of
waste-derived fuels, even in co-firing with clean biomass has a significant and beneficial effect on the
overall cost effectiveness of Bio-SNG production.
technology that can accept waste-derived fuels; hence process selection is biased towards the choice of
fluidised bed gasification; entrained flow gasifiers being unsuited to such fuels.
In identifying a development pathway for the production of Bio-SNG Progressive Energy is inclined to the
view that selection of an indirect gasifier technology may not be an optimal course of action. Firstly the
possible prize, a slight increase in the overall efficiency of SNG production, may be insufficient
justification for delay in securing a market position that may arise from the relative novelty of this
technology. Secondly, efficient heat recovery from the gasifier and gas processing train can be used to
create non-fossil electricity which as an output is at least equal in value to Bio-SNG. Table 5-1illustrates
the key factors in this judgement where real world deliverability needs to be set against the theoretical
benefits of yet to be realised technical developments. Process choice, therefore should favour an oxygen
blown fluidised bed, and perhaps, if commercially justifiable the pressurised
41
There will be some variability of the syngas quality produced by the gasifier options discussed briefly
above, notably with respect to the tar loading in the raw syngas; with an entrained flow gasifier offering
the best quality on account of the intrinsically higher temperatures reached in such reactors. This is an
advantage but not necessarily a decisive advantage over fluidised bed systems; the gas cleaning
processes downstream should, in any event be designed to cope with a range of syngas qualities.
Beyond considerations of tar loading in the synthesis gas the next most sensitive issue for Bio-SNG
production is the presence of nitrogen. Nitrogen can be produced through fuel-bound nitrates and via the
residual levels of nitrogen to be found either in oxygen used in the gasifier or via the circulating bed
material within an air-blown indirect gasifier. In either case, a small amount of nitrogen passing through
37
Potential suppliers / technologies here include Udhe / Prenflo gasifier, and Choren entrained flow gasifier
Potential suppliers include Foster Wheeler, and Thyssen / HTW, Enerkem
39
Potential supplier would be Thyssen / pressurised HTW
40
Potential supplier Austrian Energy / indirect CFB, future development of indirect fluid bed by ICN.
41
It is more energy efficient to compress SNG than syngas and water vapour, therefore the process pressure is
most efficiently provided by high pressure gasification, followed by further SNG compression for export.
38
37
the system could reduce the Wobbe Index or Calorific value of the resulting Bio-SNG below the GS(M)R
limits for pipeline quality. This is a key issue that would require resolution as part of the selection and
specification process for a gasification technology.
Chemical Contamination
Tars ex unit
Options to minimise
pressurisation loads
Table 5-1
Pyrolysis to bio-oil
Fuel preparation
Entrained flow
Direct gasification
(fluidised bed)
Deployable at moderate
scale
Indirect gasification
Approach
Gasification of wastes: It should be appreciated that for a considerable period of time the pursuit of the
gasification of wastes has been focussed in the main not on the production of a quality syngas but in
pursuit of the following:
To assure destruction of hazardous chemicals at extreme temperatures
To produce fused ash streams in which heavy metals may be trapped
To take advantage of particular support mechanisms (e.g. the Renewables Obligation)
In an attempt to give lower emissions to the environment than conventional waste incineration
Accordingly it is important to understand that the technologies that are targeted at these objectives are
not necessarily focussed on the efficient production of a high quality syngas, which would be the overriding objective of a gasifier producing syngas for Bio-SNG synthesis. Hence waste gasification systems
are in general unsuitable for this application. The HTW gasifier has, however, a track record of successful
42
operation with waste-derived fuels . Relevant examples of gasification projects are shown in Appendix
1.
42
The British Gas -Lurgi (BGL) fixed bed slagging gasifier at Schwartezepumpe had also some considerable
operating experienced with waste derived fuels, but only when co-fired with >70% coal.
38
represented as follows:
CO + 3H2 CH4 + H2O - 217kJ/mole (1)
C02 + 4H2 CH4 + 2H20 - 175kJ/mole. (2)
The reaction takes place at elevated temperature over a catalyst, for which there are a number of material
options including nickel, iron, chromium and copper based catalysts, however, these are invariably
intolerant of even traces of heavy metals such as mercury, lead and arsenic and intolerant of small
particles of tar, or of sulphur and chlorine compounds. The main technical challenge posed by an SNG
facility is therefore the syngas cleaning that is required upstream of the methanation reactor.
Figure 5.5shows the practical scale of syngas quality improvement that must be achieved to enable
satisfactory catalyst life to be achieved.
3000
16
Raw
Engine
Synthesis
14
12
Contaminent mg/Nm3 gas
2500
2000
1500
10
1000
4
500
Tars
Tars
Figure 5.5
Particulate
Sulphur
Particulate Sulphur
Halides
Halides
Syngas quality ex-gasifier, requirement for use in engine and for synthesis
State-ofthe-art gas processing technologies are capable of achieving the necessary syngas quality, the
challenge being to do this economically on a process plant of relatively modest scale and at a reasonable
0
level of energy efficiency. The syngas leaving the gasifier will be at temperatures around 900 C and will
carry therefore a significant amount of sensible heat; this should be recovered efficiently for the
generation of steam for use in the process and for power generation to meet plant electricity demand.
39
Heat recovery from the hot syngas is straightforward, however, at temperatures below 300 C tars begin to
condense with the consequent risk of fouling, therefore direct heat recovery from the syngas should be
terminated at this temperature. Most gas cleaning techniques will require the syngas to be at a moderate
temperature, hence heat recovery and process re-heating form an important part of the process train
design.
Contaminant removal
Non-volatile particulates (ash and char) should be separated by means of conventional processes such
as cyclones and hot gas filters at a temperature above the tar dew point, in order to avoid fouling with
condensing tars. Thereafter syngas cleaning would most probably involve gas scrubbing in contact with a
liquid scrubbing medium. Conventionally syngas scrubbing would be via water based systems whereby
gas/water contact removes fine particulates and tars and provides a medium for the neutralisation and
absorption of incidental products of gasification such as HCl and ammonia.
scrubbing system needs to reduce the syngas temperature below the dew point of the lightest tar
fractions; this will also remove mercury vapour from the gas. The use of water based systems, however,
creates a large water demand, and a significant water treatment and waste water discharge burden. Oil
based syngas scrubbing techniques have been developed which can give effective tar and particulate
removal thereby offering the opportunity to reduce the significant penalties associated with tar scrubbing
via water-based scrubbing systems. Following the core gas scrubbing operations it will probably be
necessary to undertake further syngas cleaning steps to achieve the gas purity levels demanded by the
catalysts. This is a subject for detail design and specification to be derived via discussions with the gas
processing contractor and catalyst suppliers, but will involve guard filters and beds to polish the gas and
guard against process upsets.
a sour WGS catalyst should be considered for incorporation into the design .
reaction carbon monoxide in the syngas is reacted with steam to produce hydrogen and carbon dioxide:
CO + H2O H2 + CO2(3)
43
It should be appreciated, nevertheless, that not only are sour shift catalysts tolerant of hydrogen sulphide, they
do in fact rely upon a certain level of hydrogen sulphide in order to work. The threshold value of hydrogen
sulphide is 100ppm(v), a level that can readily be obtained with the sulphur levels existing in biomass or wastederived fuels. Nevertheless the fuel specification needs to ensure a certain minimum level of sulphur if a sour shift
catalyst is employed.
40
It will be readily appreciated that the water gas shift reaction can be used to trim the relative CO / H 2
concentrations in the syngas. The water gas shift reaction is strongly exothermic and the heat of reaction
can be used to assist in returning the syngas to the temperatures required for the methanation reaction to
0
Following the WGS the syngas would have the appropriate molar balance for the methanation reaction.
Some methanation process configurations however combine the shift and methanation catalytic reactions
wherein simultaneously with the occurrence of the shift reaction in the combined reactor system, carbon
monoxide and hydrogen are converted to methane and water. Steam formed by the methanation reaction
promotes the shift reaction to in turn, produce the hydrogen necessary to carry out the methanation
reaction. Elegant though this process arrangement appears to be, any hydrogen sulphide in the syngas
will poison the methanation catalyst. It follows that the hydrogen sulphide must be removed from the
synthesis gas following the WGS reaction and before methanation.
5.4 METHANATION
Methanation of syngas is an established process, and is not specific to bio-gases, nevertheless the
optimisation of the process design with respect to energy efficiency (esp. heat recovery and minimising
compression power) will be a significant process engineering exercise. Conventionally the methanation
41
reaction will take place over a three stage process in cylindrical vessels packed with 6mm diameter
sintered catalyst beads. Flow in the reactors may be radial or axial, but the critical design consideration is
the control of heat release in the catalyst bed in order to prevent catalyst de-activation at high
temperatures that may be obtained through the exothermic reaction. Catalysts may also be deactivated
by sulphur and chlorine compounds and by a low carbon monoxide to hydrogen ratio leading to elemental
carbon deposits. The methanation of synthesis gas will consume approximately 20% of the energy
potential of the gas, hence it is vital to ensure efficient recovery and use of this energy.
Process intensification
Process intensification holds the promise of achieving in small facilities the economies of scale normally
associated with large industrial facilities. A notable development in this area is the micro channel Fischer
Tropsch reactor that has been developed by Oxford catalysts for the synthesis of higher alkanes from a
natural gas feedstock, following steam reformation and WGS. The viability of this process at moderate
scale results from the significant reduction in the number of process vessels and heat exchangers, piping
and controls required, along with the high reaction rates and efficient heat recovery afforded by the microchannel concept. Discussions with Oxford catalysts established that there is every reason to expect that
the micro-channel reactor concept could be effective in the production of Bio-SNG.
demonstration of this, however, would entail considerable expense and a development programme of at
least two years. A balanced judgement therefore would be that the micro-channel reactor may well have
some merit for a future application, but in the meantime the use of conventional catalytic reactors is
feasible and carries no serious economy of scale disadvantage when deployed in a moderately sized
facility. Finally, micro channel reactors are likely to be even less tolerant than conventional catalytic beds
of contaminants in the gas stream.
The methanation process will not achieve 100% conversion of the hydrogen from the syngas and is likely
to exceed the GS(M)R pipeline specification regarding hydrogen content (<0.1% molar) without a further
processing step. It is conceivable that trimming the hydrogen content could be achieved by blending with
42
pipeline gas, or by membrane separation; however, it is suggested that the specification should be
questioned to see if a slightly higher hydrogen content could be accepted.
Compression to export pressure will depend upon where the gas is to be injected (National grid and/or
the LDZ).
Clearly, on account of the energy requirements associated with compression, the lowest
pressure option will give the greatest process efficiency. This could be a significant feature of Bio-SNG
plant location. Before the Bio-SNG could be exported via the gas network it would require odorising.
On account of commercial uplifts that would be necessary to make Bio-SNG viable, fiscal quality metering
will be required along with sampling and quality assurance for biogenic carbon content. Where wastederived fuels have been used then the only practical method of the determination of the proportions of
14
fossil / bio carbon is via a method based upon C . The fundamental principles of this technique are
currently under a process of accreditation with Ofgem in connection with electricity generation from
biomass.
43
6 Economic Assessment
Using best available information, the economic profile of bio-SNG projects is considered. Evaluation of
process economics is critically dependent on input assumptions. This builds on the technical review,
along with a perspective on costs and impact of existing, and proposed incentives. Plant economics for
such capital intensive processes are dependent on the state of the market, and costs associated with risk
transfer for equipment supplied under EPC contract structures. Similarly, the emergent state of the
biomass market supply chain, along with competitive uses, means that biomass fuel resources will be
volatile. Therefore appropriate sensitivity analyses are undertaken. Against these scenarios, the potential
project returns are evaluated. This review also compares (at a high level) the returns for a gasification
facility producing power.
This analysis assesses the cost of carbon abatement via this route, when compared with alternative direct
uses of biomass for heat and electricity as well as other carbon abatement approaches.
Whilst the facility does generate electricity recovered from the high grade heat, at the assumed SNG
efficiency, the heat suitable for power production is assumed to compensate for the parasitic loads,
including the ASU load (separation, oxygen compression) and sufficient CO2 compression for lockhopper inert blanket. In the event that an indirect gasification configuration is used, there would be no
ASU load, although it is likely that the system would operate at low or atmospheric pressure, therefore
impose syngas compression loads. Therefore it is assumed in either case there is no excess electricity for
export.
44
Parameter
Input
Energy rating (energy per hour)
Input fuel energy per annum
Biomass fuel (pellets, 16GJ/te) pa
Biomass fuel (Woodchip, 13GJ/te) pa
Solid Recovered fuel (18GJ/te) te pa
Operation Load factors (hrs pa)
44
Baseline Efficiency to SNG
Output
Bio-SNG MWth
Bio-SNG GJ/Hr
Bio-SNG therm/hr
3
Bio-SNG Nm /hr
Bio-SNG energy per annum
Equivalent Households
Equivalent Passenger Vehicles
Comparative Electrical facility (no SNG)
Small
Large
50MW th (180GJ/hr)
0.4TWhth (1.3PJ)
81,000 te pa
100,000 te pa
72,000te pa
7200
65%
300MWth (1080GJ/hr)
2.4 TWhth (8.6PJ)
486,000 te pa
600,000 te pa
432,000 te pa
7200
65%
32.5MWth
117
1110
3330
0.23 TWhth (0.84PJ)
~15,000
~25,000
12MWe (24%
efficiency assuming
gas engines)
Table 6-1 Project scale and output assumptions
195MWth
702
6,650
20,000
1.40 TWhth (5.05PJ)
~100,000
~150,000
90MWe (30% efficient
based on an IGCC
configuration)
grid/gas
connection
and
indirect
costs
(design,
development,
construction
The cost of performance guarantees being provided by an EPC cannot be readily ascertained at this
stage, as they will depend on both the detailed requirements of the funder, and also the EPCs appetite
for the sector combined with the ability to cascade the guarantees down the supply chain. Such
guarantees would form part of detail project negotiations, and are not included here. Final out-turn costs
are a function of the final design, the financing route and cost of risk transfer as well as general economic
issues including exchange rates, appetite for an EPC contractor to undertake the work and competition
for supply in a sector with an immature supply chain. The cost estimates below are developed using the
a range of data sources:
44
Based on Pellets or SRF. Where the fuel has higher moisture content (eg woodchips, modelled here at 25%), the
total efficiency can be higher when low grade waste heat is utilised to pre-dry the fuel prior to gasification. 65% is
considered a credible conversion efficiency using existing gasifier and methanation combinations.
45
Choren
Choren has a 50MWth (input) facility operating in Freiburg (shown in Appendix 1). This is based on an
entrained flow gasifier reconfigured for operation on 100% biomass (woodfuel). This facility is designed to
manufacture Syngas for conversion to BTL in a Fischer Tropsch reactor. The gasification train for this
facility has been completed and operated, with the F-T stages undergoing commissioning since mid 2010.
This is a facility which must provide a similarly high level of contaminant-free syngas to that demanded by
Bio-SNG. Choren estimate that the total investment for a 50MWth facility to produce hydrogen to be
45
67MEuro (56M) . Whilst this is clearly only an estimate, their experience at Freiburg will valuably inform
this figure, and it is a sound basis for the current cost for an entrained flow wood gasification system to
produce high quality hydrogen. Choren indicated an assumption that a Bio-SNG facility would be
90MEuro (75M), although they have no direct experience on this processing stage. Progressive Energy
is of the view that this addition for a methanation reactor is probably overly conservative, given that the
Hydrogen system will already have full shift reactors, sulphur removal, CO2 removal, and a high quality
syngas stream.
GobiGas
This facility is being built in two phases, both fuelled by wood pellets. The first phase is 32MWth (input)
based on indirect gasification (Repotec technology as used in Gussing), costing 75M (based on
contracting in 2010 for completion in 2012), although this is integrated with a district heating system. The
second phase at ~120MWth (input) designed to produce 80MWth Bio-SNG is anticipated to cost 150M,
but is not expected to commence build until 2015.
Enerkem
Enerkem is one of the few gasification companies successfully pursuing the gasification of waste using a
fluidised bed gasifier, to syngas of sufficiently high quality to convert catalytically to a biofuel. They have
a small scale (8MWth) facility fuelled by waste wood and are currently developing two municipal waste
facilities at 50MWth in Edmonton, Canada and Mississippi, US (shown in Appendix 1). These are
reported to cost $CAN80M (50M) and $US140M 88M) respectively, with the latter encompassing the
MSW pre-processing facility from raw waste. Whilst the outturn product is bioethanol, and not Bio-SNG,
both processes demand high quality, preconditioned syngas and catalytic reactor stage, and therefore the
costs are anticipated to be similar to that expected for a Bio-SNG plant.
The assumed investment cost for a 50MWth plant is ~65Million (2010) for a wood based facility. The
experience with waste gasification is even more limited, and different facilities often have substantially
different design intents (waste destruction through to efficient energy recovery). However, there are a
number of reasons why waste gasification is more challenging; the fuel is heterogeneous and therefore
may need enhanced material handling; the nature of waste imposes requirements on the gasification unit
itself; the fuel contains a wider range of chemical contaminants and therefore the gas processing must
45
46
handle this ; the risk margins demanded to cover the reduced experience. Therefore, for this analysis it
is assumed that a waste-based system (assuming offsite preparation of the MSW to SRF) will cost 15%
more than the pure biomass one, ie 75Million (2010). For a 300MWth (input) facility, the assumed
investment cost is 215M and 250M, for pure biomass and waste fuel facility respectively. Figure 6.1
shows the breakdown of costs for such a facility. Given the nature of these estimates, it is important to
undertake a sensitivity analysis of at least +30% in the downside case, recognising both the
underestimate in the baseline figures, and also the requirement for provision of performance risk
management within an EPC. It must be noted that whilst learning is often cited as a reason that
subsequent projects achieve a lower cost, Progressive is of the view that in novel projects such as these,
initial costings on early projects (ie prior to build) are typically underestimates of the final outturn costs,
negating any learning effect on early follow-on projects. At this stage it is presumed that the project will
not be leveraged at the outset (although there may be opportunity for refinancing after a track record of
successful commercial operation). The build time is assumed to be 3 years in both cases, although it may
be feasible to construct the smaller facility in a shorter period of time given substantial offsite manufacture
of components.
Small (000)
50MW th
65,000
75,000
Large (000)
300MWth
215,000
250,000
Indirects &
Contingency
Solid handling
& Prep
Utilities,
services,
connections
Gasification
Methanation,
Conditioning
Syngas
processing
46
Recognising however, that the most challenging part of the gas processing is not the bulk contaminant removal,
but the final ppm and ppb removal demanded by the catalysts, which is common to both biomass and waste fuels)
47
Costs 000s
Small (000)
Large (000)
Labour,
1,000
1,000
Maintenance
1,300
4,300
Insurance
400
1,300
Land Lease
100
200
500
1,500
3,300
8,300
650
2,300
25/te excl
power (3.5te/hr)
(21te/hr)
Consumables
250
1,000
Consumables SRF
500
2,000
600
3,600
te pa (20% ash)
te pa (20% ash)
Total Biomass
4,200
11,600
Total SRF
5,050
15,200
Fixed costs
Total
Oxygen (over the fence with power
supplied FOC)
6.1.4 Feedstock
SRF
Woodchip
Pellet
18 GJ/te
60%energy Bio
13 GJ/te
100%energy Bio
16 GJ/te
100%energy Bio
-27/te
-1.5 GJ/te
65/te
5.0 GJ/te
112/te
7 GJ/te
48
The biomass feedstock assumptions are shown in Table 6-4. These figures are based on a variety of
sources:
The SRF data is based on knowledge of the industry for contracting SRF of this type of biogenic content.
This is fuel which has been processed using biological drying. It must be noted that an SRF produced via
autoclaving would have a high biogenic content, but the energy penalty and therefore cost of processing
will be significantly higher.
Woodchip. There would probably need to be an onsite drying facility for woodchip, which would entail
additional investment cost, opex and electrical loads, although it is possible to use low grade heat for
drying which might not otherwise be usable. However assuming a fuel price based on energy content
(NCV), the additional drying using otherwise wasted heat is increasing the relative efficiency of the facility.
In this analysis, this is assumed to compensate for the necessary drying investment and operational
costs. The price assumption in Table 6-4 is from DECCs biomass fuel cost for large scale fuel
47
Pellets command a significantly higher price than woodchip; this is a function of both the higher
processing cost (energy required for drying to 10% moisture at the point of manufacture, along with the
electrical loads for hammer-milling and pelletising) as well as the enhanced out-turn product value due to
the enhanced fungibility compared with woodchip). .Again figures are taken from DECCs analysis.
Waste wood may offer an alterative, feedstock, having a biogenic content of ~90% by energy. The plant
would need to handle contamination with the same degree of robustness as the SRF facility, and
therefore would need to assume the same capital cost as the SRF facility. However, the ash disposal cost
would be lower. Initially the cost of the feedstock would be substantially lower than virgin biomass,
potentially at zero cost or even with a small gate fee. However the expectation is that feedstock cost
would increase substantially over time as demand for biomass increases and biomass combustion
facilities are constructed with the capability of co-firing waste wood with pure biomass. Securing waste
wood of this quantity would be challenging. Therefore, whilst this could be a useful interim fuel, it has not
been assumed as a base-case fuel.
The DECC analysis does not provide predicted outturn prices for bulk biomass for 2020, although
interestingly for biomass heating applications, biomass prices are assumed to decrease relative to fossil
fuels over a 2020 time frame. This is unlikely. In this analysis it is assumed that the escalation for
biomass is the same as for natural gas. This is a rationale assumption since the price will reflect, as a
minimum the fuel which is being replaced. Arguably as the price of carbon impacts then the value of low
carbon fuels may even increase faster than higher carbon intensity fuels.
47
Biomass prices in the heat and electricity sectors in the UK For the Department of Energy and Climate Change
January 2010 Ref: URN 10D/546 (Feb 2010)
49
As discussed, in this analysis, it is assumed that there is no residual power after servicing parasitic loads,
including oxygen demand but there will be low grade heat. However, it cannot be assumed this can be
sold in significant quantity, so is not considered in the base case. The impact of such sales, are however
explored as a sensitivity to the outturn price of Bio-SNG
The base case discount rate has been assumed to be 12% , with and a three year build. The costs are
all (2010 prices) and are shown real, and assume no escalation over RPI for each component. DECC
June 2010 data indicates a 2010 natural gas wholesale price of 59p/therm. The charts below show a
more realistic current band of natural gas prices of 40-60p/therm.
This analysis demonstrates that without the RHI, at the scales considered, Bio-SNG will not be feasible.
The disparity between the Bio-SNG cost and the wholesale Natural gas price is significant.
With the RHI, this analysis demonstrates that at the small scale, it is uneconomic to produce Bio-SNG
relying only on the slated RHI support level of 40/MWh. For a project of this scale RHI support would
need to be at least twice as high for the Bio-SNG to be competitive with natural gas. Alternatively, capital
grant support would need to be of the order of 35-45Million for either the SRF or woodchip facility to be
competitive.
At the larger scale, and with the currently proposed RHI support level, the SRF fuelled facility looks to be
competitive with natural gas, and if woodchip could be sourced at 5/GJ the cost of bio-SNG from imported
and indigenous woodchip could be close to competing at the upper band of gas prices. Operation on
wood pellets looks to remain uncompetitive even at this scale.
By way of comparison, this is not dissimilar from analysis of bio-SNG in the RHI documentation presented
by NERA (February 2010), after accounting for the increased scale in the NERA analysis, and combined
biomass-waste fuels.
48
In reality an early project would demand a higher discount rate reflecting the risk profile (maybe up to 15%, but
a mature technology might allow a lower discount rate say ~10%.This is also a function of the investors appetite
for risk in evaluating investment.
50
It must be noted that this analysis is a calculation of the levelised cost at a discount rate of 12% in order
to calculate an out turn cost of Bio-SNG. For an investor to have the appetite to invest, then there must be
a sufficiently attractive return. From this analysis it is clear that the only case which could have sufficient
scope for project return is a facility fuelled by SRF. On the assumption set given here, such a facility
provides a pre-tax unleveraged return of 14.5% to 17% for gas prices of 40 to 60p/therm respectively.
However, whether this is a sufficient return to entice investment depends on the risk profile, its
management and perception of ability to secure debt on refinancing in order to enhance the project value.
51
Small
Large
270
240
210
180
150
120
90
60
30
0
SRF
Figure 6.2
330
300
Woodchip
Levelised
of Bio-SNG
With
RHI
Levelised
CostCost
of Bio-SNG
without RHI
(p/therm)
Small
Pellet
at 40/MWh
Large
270
240
210
180
150
120
90
60
30
0
SRF
Figure 6.3
Woodchip
Pellet
52
100
Small
Large
90
80
70
60
50
40
30
20
10
0
SRF
Figure 6.4
Woodchip
Pellet
110
100
Small
Large
90
80
70
60
50
40
30
20
10
0
SRF
Figure 6.5
Woodchip
Pellet
53
The figures below show how the levelised cost is made up for the large scale project.
70
60
50
Bio-SNG
40
Incentive
Fuel
30
Opex
Capex
20
10
0
Figure 6.6 Levelised Cost Breakdown for Large SRF fuelled facility (RHI at 40/MWh bio)
70
60
50
Bio-SNG
40
Incentive
Fuel
30
Opex
Capex
20
10
0
Figure 6.7 Levelised Cost Breakdown for Large Woodchip fuelled facility (RHI at 40/MWh bio)
54
Figure 6.6 & Figure 6.7, show the cost breakdown (/MWh) for the large facilities. When fuelled by
woodchip, the capital cost and the biomass costs are both similar, and dominate over the operational
cost. At 40/MWh, the RHI is substantially more significant than either the capital or feedstock elements.
When fuelled by SRF, the capital cost dominates, since the fuel is no longer a cost but provides a small
contribution to the revenue stream. In this case, the lower biogenic fraction reduces the value of the RHI,
and although this is still an important factor in viability, the SRF case will be slightly less sensitive to the
absolute level of the RHI.
6.3.1 Escalation
The above analysis is real and considers 2010 gas prices. In the future, gas prices are likely to escalate
at a different rate from inflation, as may biomass prices. In its analysis for the RHI (February 2010)DECC
does not attempt to consider wholesale biomass prices out to 2020 for the purposes of large scale power
generation The prevalence and preference for long term contracts, with companies establishing bilateral
contracts with suppliers, makes it difficult to establish a clear relationship between price and feedstock
costs. There are also far more feedstock types, and fewer generators in the electricity sector, hence a
typical supply chain could not be constructed. Furthermore, it is more uncertain how this sector will
develop in the future.
Progressive Energy is of the view that biomass prices are likely to move at least in line with natural gas
(and may possibly increase faster if the pressure on biomass resources increases both in the UK and
internationally). This does conflict with the prevailing DECC view which believes biomass will become
cheaper relative to natural gas. Clearly DECCs position would indicate a long term decrease in Bio-SNG
outturn cost compared with prevailing gas prices, and therefore improvements in the economic outlook for
a project.
However, even if biomass prices were to increase in line with natural gas, and other costs were to remain
constant, the price of SNG would reduce relative to natural gas since the feedstock only represents ~50%
of the production cost. For example, using DECCs central case, natural gas is believed to increase by
15% by 2020 (in real terms) to ~68p therm. This would result in only an ~8% increase in the Bio-SNG
price ie 67p/therm for the woodchip case.
increase by 50% in real terms, resulting in only a 25% increase in the Bio-SNG Cost to 77p/therm
compared with a natural gas price of 97p/therm, ie still improving the economic outlook for Bio-SNG.
In reality the non-feedstock costs (investment and operational costs) are also likely to increase to a
degree (in light of prevailing energy price increases and an international appetite for low carbon projects),
somewhat softening this improvement.
55
6.3.2 Impact of capital Cost, Opex, Fuel price, RHI and heat sales
40.0
SRF
Woodchip
35.0
30.0
25.0
20.0
15.0
10.0
5.0
0.0
Base
Figure 6.8
Capex +30%
Opex +30%
Fuel +1.5/GJ
Fuel -1.5/GJ
RHI 50
Sensitivity analysis for large scale facility fuelled by SRF and woodchip.
Capital cost: As shown in Figure 6.8, an increase in capital cost of 30% would be significant for both
facilities, although as a proportion of the base case Bio-SNG price has a proportionately higher impact for
SRF. However, an SRF facility might still provide an acceptable outturn bio-SNG cost, whereas a
woodchip fuelled facility would not be feasible at the gas prices considered.
Operational cost: this is a less sensitive variable than capital cost, but clearly must be managed.
Fuel: For woodchip, +/-1.5/GJ represents a fluctuation of +/-19/te or +/-30% around a base case of
65/te. This variation has a significant impact on the outturn Bio-SNG cost. An increase of this level
would provide a Bio-SNG cost significantly beyond the gas prices considered . For SRF +/-1.5/GJ
represents a more significant fluctuation of +/-27/te or +/-100% around a base case gatefee of -27/te.
Whilst this is a sensitive variable, the bio-SNG cost could be viable even in the stress case.
RHI: The RHI is a very sensitive variable. Increasing this to 50/MWh would enable projects based on
both feedstock types to attain a competitive outturn Bio-SNG cost on the assumption set indicated, and
should provide sufficient project returns to attract investment for an SRF or SRF-Biomass blend facility.
56
Impact of heat sales. The sale of heat can provide a cost reduction for the Bio-SNG. Depending on the
level of RHI assumed for the heat offtake) 16-25/MWth), the biogenic content of the feedstock and the
displaced heat cost (assumed here to be 20/MWh), for the large scale facility, the impact on the
levelised cost of heat sales range between 0.16-0.23/MWth of Bio-SNG for each MWth of heat
delivered. The recoverable heat potentially available from the large scale facility could be significant,
depending on the grade of heat required, but in the case of low grade could be over 50MWth, so the
limiting factor is more likely to be the offtake requirement. For an offtake of 10MWth, this indicates the
bio-SNG cost could be reduced by ~2/MWth.
For this case, the estimated net output is 13MWe corresponding to a net conversion efficiency of 26%.
The capital cost can be reduced as there is no requirement for the water gas shift, the gas processing
does not need to be undertaken to the same level of contaminant removal and there is a small saving for
generators compared with the assumed cost for methanation. The total capital cost is assumed to be
70Million. The same operational costs are assumed. The availability is assumed to be somewhat higher
at 7600hrs. The build time is assumed to be 24months due to the simpler gas processing and packaged
generators which allow for offsite production line manufacture, compressing the build out time.
Using DECCs 2010 figures for wholesale electricity, consistent with the wholesale gas price of 59p/therm
assumed for the Bio-SNG analysis, (60/MWh) and 2 ROCS (50/ROC) and 60% biogenic fraction, the
pre-tax project return, assuming no leverage is 10% (real). Without carrying the additional costs
associated with pressurised, oxygen blown gasification (not required for reciprocating engine power
generation only) this return could be further increased. By comparison the Bio-SNG project gives a
project return of <5% at 59p/therm.
This demonstrates that commercially, a small syngas project is better configured to produce electricity
under the current RO regime, than producing bio-SNG under the proposed RHI at 40/MWh. It also
suggests that an appropriate development pathway for Bio-SNG demonstration could be a project
predicated on power generation with a slip stream for Bio-SNG production.
At the larger scale,using a Gas turbine at higher efficiencies, the capital cost is assumed to be 270M the
pre-tax unleveraged project returns for an electricity plant are likely to be in excess of 20%, even taking
more conservative, investment case, figures for ROCs and wholesale power. This shows that without an
increase in the RHI over and above the 40/MWh proposed, that electricity would remain a strongly
preferred investment case. An increase in RHI to 50/MWh would narrow the gap, although electricity is
57
probably still marginally preferable. However this would require a further level of analysis and costing
based around a specific project to confirm where the relative advantage lay in this case. It must also be
noted that there is more international activity based on gasification for power generation, the regulatory
regime and practice for connection is more established, and the RO support mechanism has a longer
track record with investors.
200
180
Small
Large
160
140
120
100
80
60
40
20
0
Bio-SNG (p/therm)
Electricity (/MWh)
Figure 6.9
Levelised cost of Bio-SNG supported by the RHI at 40/MWh and renewable
electricity supported by 2 ROCS as Advanced Gasification based on SRF with 60% biogenic
content
With the current assumed support level under the RHI of 40/MWh, a Bio-SNG Project at
50MWth will not be viable (on any of the fuels assessed). Either some form of capital grant or
subsidy enhancement is necessary for a small Bio-SNG Project to operate.
However at 300MWth the current support level is sufficient to enable competitively costed bioSNG project, particularly if fuelled fully or partially by a waste derived fuel. This indicates that
there could be a long term role for Bio-SNG commercially.
58
The issue is how to get from the current position to this scale of project in light of the technical
and commercial risks. This is particularly the case if the RHI does not transpire at the currently
proposed level.
Projects configured to generate electricity under the current banded RO regime are commercially
favourable at both scales, and particularly attractive at larger scale. A small project generating
electricity from SRF under the RO regime may offer a development route for Bio-SNG. By
leveraging the mature and favourable electricity support regime a syngas platform could be
established from which a Bio-SNG project could be developed.
In this case, the project may just be acceptable using waste fuels, although it is unlikely that a
private investor could countenance the risk for this level of reward without a longer term
perspective or desire to operate in the sector and ultimately develop a facility at larger scale.
In all cases it is clear that the use of virgin material can only have a limited role, and that the use
of waste is vital to maintain the projects commercial integrity. This financial analysis presumes
that the technical issues relating to Bio-SNG production, particularly from waste, can be
overcome. The international Bio-SNG projects currently being developed are predicated on
biomass. However, there are a number of international waste-to-syngas projects under
development for both GT/ICE power applications as well as bioliquids. If these succeed, then the
transition to Bio-SNG production presents no obviously insurmountable technical hurdles.
The use of waste wood may provide a shorter term development route; the enhanced level of
support due the high biogenic fraction offsets the reduced cost of the fuel, and may be slightly
less technically challenging. However, in a market increasingly seeking low cost biomass
feedstock, waste wood is likely to become increasingly valued, particularly for larger projects, and
less material is likely to be available.
The quantum of investment is significant even for the development project. In the current
financing climate this presents a challenge.
59
In analysing the latter, it is important to consider (a) the actual environmental footprint taking a whole
lifecycle analysis of the different pathways of production (primarily different fuel types) as compared with
alternative decarbonisation options, and (b) the cost per tonne of carbon abated by this route compared
with other decarbonisation options.
49
understanding of fuel types, process configurations, the emissions profile of the counterfactual cases, and
the methodology for such analysis, noting particularly the role of co-products and how they are valued.
Recently North Energy undertook an analysis for the National Non-Food Crop Centre for Bio-SNG
50
produced from a variety of different routes . The key observations from this analysis are summarised
below.
North Energy undertook the analysis using two methodologies: (a) based on the UK EA methodology
using the UK BEAT tool developed in 2008, and (b) based on the requirements of the Renewable Energy
Directive. The key difference between these two methodologies is how substitutions and credits are
treated. Inter alia, this encompasses how the carbon savings/penalties of co-products are valued, and
how displaced product pathways are handled for example what the presumed destination of a waste
product would have been, had it not been used for this application, and what the carbon profile of that
displaced route is considered to have been. It should be noted that ultimately the UK will need to
demonstrate savings based on the final agreed EU methodology for compliance with its Renewable
Energy Directive Targets.
49
Here the unit is correctly termed the Carbon dioxide equivalent (CO2e) emissions, as this also includes the
greenhouse gas impacts of other gases such as Methane and Nitrous oxides
50
Analysis of the Greenhouse Gas Emissions for Thermochemical BioSNG Production and Use in the United
Kingdom Project Code NNFCC 10-009 Study funded by DECC and managed by NNFCC North Energy Associates
(June 2010)
60
61
Figure 7.1 (Overleaf) Percentage Net Greenhouse Gas Emissions for Bio-SNG fired heating
relative to fossil fuel alternatives for (a) BEAT2 methodology and (b) EC RED methodology and,
Percentage Net Greenhouse Gas Emissions for Bio-SNG transport fuel relative to fossil fuel
alternatives for (c) BEAT2 methodology and (d) EC RED methodology (North Energy Associates,
June 2010)
The data shown illustrates that whilst the actual methodology does have an impact, the following broad
conclusions can be drawn:
The carbon savings in both the heating and transport sectors are similar
Bio-SNG from virgin biomass typically saves in excess of 90% by either methodology
In general production from pellets offers slightly lower savings due to energy used in the pellet
manufacture
In general imported feedstock offers slightly lower savings
In general wastes offer better savings due to the credits system (and this is where the difference
between the two methodologies is most stark)
The analysis of RDF (Refuse Derived Fuel) requires a further commentary. The RDF used in this analysis
is a high biomass RDF manufactured from mixed waste. The baseline RDF production route used in the
analysis is an autoclave system which uses significant quantities of process heat, which erodes the
greenhouse gas savings.
Treatment which would have a much lower specific energy consumption and would have a greenhouse
gas saving profile similar to that of cardboard RDF for the biogenic fraction. However in this case, the
biogenic fraction would only be 60% of the biogas, and therefore the greenhouse gas savings would be
~60% of that of cardboard RDF which would therefore offer greenhouse gas savings similar to the RDF
case shown, but for a different reason. This distinction is critical because the incentive structure would
only apply to the biogenic fraction, and the greenhouse gas saving per unit of incentive support remains
very high.
It is instructive to note that the detailed analysis here could be approximated by considering the savings
to be at least the full tailpipe emissions associated with individual fossil fuel pathways (ie without needing
to consider the full lifecycle analysis)
51
In all cases it is assumed that whilst the lifecycle analysis accounts for the emissions associated with
distribution, it is presumed that the existing infrastructure has sufficient capacity (gas and electricity) .
51
For example, here the lifecycle emissions of a gas boiler is 245kg/MWh and the emissions for Bio-SNG using
imported forestry residue is 30kg/MWh is a saving of 215kg/MWh. The tailpipe emission of natural gas is
185kg/MWh, so this emissions figure gives an approximate, but conservative savings estimate.
62
The key specific emissions, based on the North Energy lifecycle analysis are shown in Figures 8.2 and
8.3 for heating and transport applications respectively, demonstrating the substantial emissions savings
from biogenic fraction of the Bio-SNG. The relative saving for SRF will be reduced according to the
biogenic fraction.
200
180
160
140
120
100
80
60
40
20
0
Diesel
Gasoline
Bio-SNG
Figure 7.2 CO
per kilometre
in the transport
sectorfuels,
compared
with fossil fuel
2e emissions
Specific
emissions
for heating
for fossil
Bio-SNG
alternatives (EU RED methodology)
350
300
250
200
150
100
50
0
Oil boiler
Gas boiler
Figure 7.3 CO2e emissions in the heating sector compared with fossil fuel alternatives (EU RED
methodology)
63
A further important comparison was also made by North Energy comparing the greenhouse gas savings
for the direct use of biomass for heating with that via SNG. Using the RED methodology for forestry
residue woodchip feedstock, the specific emissions for direct heating is 13kgCO 2e/MWhth and the
emissions for Bio-SNG is 15kgCO2e/MWhth, compared with emissions from oil and gas heating at 313
and 245 kgCO2e/MWhth respectively. Therefore
compared with fossil fuel, and importantly the saving using Bio-SNG is essentially the same as using
direct heating, but with elimination of any demand-side modifications for the heat users via the SNG
route.
The annual CO2e savings for three of the larger facilities operating on biomass is 1Mte of CO 2e per
annum if used to displace natural gas heating, and slightly higher if it displaces conventional transport
fuel.
If Biogas were to displace a third of the domestic natural gas consumption and bio-SNG
represented two thirds of that, then the CO2e savings would be ~15Mte pa when fuelled by biomass.
Strategically the UK needs to consider the most cost effective approach for decarbonising. An analysis
has been undertaken which considers the cost of decarbonising, based on the current and proposed
52
particular technology.
In this analysis, it is assumed that the existing RO regime, the proposed RHI regime and the existing
transport fuel differentials are sufficient to bring about market penetration of the technologies supported,
that is to say, these incentives represent the necessary additional cost of delivered utility (heat, electricity
and motive power) to a consumer compared with the conventional fossil fuel alternatives. It is also
assumed that at present the cost of carbon under the EU ETS where it applies has simply been absorbed
into the baseline cost of electricity across the board, and due to free allowances does not at present
relate to the cost of avoiding carbon emissions. Furthermore it is assumed that the existing infrastructure
(both gas and electricity) have sufficient capacity and so no further investment is necessary specifically
due to the expansion of the carbon abatement pathway.
52
In deriving the cost of the emissions savings, the Governments Impact Assessments calculation is made on the
basis of dividing the NPV of the incentive by the total tonnes of CO2 abated [noting that the cost is discounted over
time, but the carbon abated is not]. The analysis here is viewed from the point of view of the direct cost to the
consumer, ie the subsidy cost divided by the tonnes of CO 2 saved, and where possible uses the full lifecycle
emissions of CO2e.
64
For the transport comparison, the vehicles assumed are the Passat Ecofuel running on Bio-SNG, the
same vehicle in the 1.4l gasoline version, and the Nissan Leaf as an electric vehicle. In each case, the
vehicle is assumed to travel 20,000km pa using the appropriate fuel efficiency, and accounts for the
appropriate Road tax, fuel duty including rebates, the additional incentive cost to provide the renewable
gas and electricity (Offshore wind) and in the case of electric vehicles the grant support (5000).
Separately the cost of carbon abatement for a range of electrical vectors is shown by way of comparison.
700
>5000
600
500
400
300
200
100
0
GSHP Grid
electricity
Figure 7.4
GSHP
renewable
electricity at
2ROC
Domestic
heating via
direct biomass
GSHP
renewable
electricity at
1ROC
Small
commercial via
direct biomass
Bio-SNG
Large
commercial via
direct biomass
65
Cost of Abatement
1200
1000
800
600
400
200
Figure 7.5
Bio-SNG
For heating applications using gas as a counterfactual, Bio-SNG offers a cost per tonne of CO2e abated
of ~175/te. This compares very favourably with direct biomass combustion for domestic applications
(395/te), for small commercial applications (285/te) but is somewhat more expensive than direct
biomass combustion for large scale commercial applications at ~110/te. When using oil heating as the
counterfactual, the cost per tonne of CO2 saved reduces significantly to 135/te for Bio-SNG compared
with 305, 220 and 85 for the three cases discussed above. However it must be noted that the
appropriate counterfactual for Bio-SNG is natural gas, as the product can only be used where there is a
gas grid and where oil use is unlikely.
Domestic Ground source heat pumps using grid electricity indicate 5500 cost per tonne of carbon
53
abated compared with natural gas using the recent EST report for a mid range installed unit , and over
850 when compared with oil. When using renewable electricity (2 ROC supported offshore wind) the
cost of CO2e abatement are ~460/te and 360/te respectively. Again on this basis, Bio-SNG competes
very effectively. If the adoption of electrical based solutions demands more grid reinforcement than would
be required to the gas network by Bio-SNG solutions, then the differential in cost per tonne of carbon
abated is likely to be even greater. This is likely to be the case since heat demand is seasonal, such that
the peak demand for heat can be three times the energy required for electricity and transport combined.
53
Getting warmer: a field trial of heat pumps EST Sept 2010. This indicates a typical System Efficiency from its
field trials of 2.4 (ie accounting for COP and system electrical loads). Whilst improved system efficiencies of eg 3.0
would reduce the cost per tonne of carbon abated, it is still significantly higher than for Bio-SNG.
66
Therefore significant supply of heat via electricity would demand significant additional generation plant
54
For transport applications, Bio-SNG is also significantly more cost effective than electrical solutions
(either using grid electricity - 1000/ te CO2e, or presuming hypothecated Offshore wind derived electricity
- 600/ te CO2e). However, this analysis does suggest that whilst Bio-SNG offers significant carbon
savings for the transport sector, on a cost per tonne abated of 400/ te CO 2e, the heating sector is a
preferable end market.
550
500
450
400
350
300
250
200
150
100
50
0
FIT: PV
FIT: Wind
FIT: Hydro
(0.1-5MWe) (0.1-0.5MW) (0.1-2MWe)
Offshire
wind
Anaerobic
Digestion
Bio-SNG
Biomass
combustion
Onshore
wind
Co-firing
Figure 7.6
Cost of carbon abated for Bio-SNG compared with renewable electricity generated
from various sources
Compared with decarbonisation in the electricity sector, Medium scale generation supported under the
FIT costs between 220 and 570/te depending on technology, offshore wind costs ~200/te, biomass
costs ~150/te and onshore wind costs ~100/te against a baseline of current grid average.
54
This
National Grid: Gas as an essential fuel in supporting the transition to a low carbon economy A discussion paper
by National Grid to support Ofgems RPI-X@20 project.
67
suggests that the Bio-SNG case is preferable when compared with decarbonisation via feed in Tariffs,
offshore wind and anaerobic digestion
With regards to the cost of carbon abated, the renewables routes are relatively expensive. Whilst the
current renewable incentive structures are based on a duration which is commensurate with project
funding, the risk for this type of project is that in time, it is the price of carbon which becomes the
dominant incentive mechanism. This will highlight the relatively expensive cost of carbon abatement via
renewables, and may drive a change in policy. Without the kind of support proposed under the RHI,
projects such as Bio-SNG would not be viable.
The other key national driver is to establish alternative and secure sources of energy through diversity,
and where possible, indigenous supply. In this regard the use of waste based fuels to provide a gas
substitute offers a very low cost fuel source on a per MWh basis compared with other renewables.
68
A well conceived project execution plan for a Bio-SNG development can take account of these risk areas
through a range of contractual and technical provisions, however, where novel process configurations are
developed, and with a dependency on the nascent biomass fuel supply market, then additional risk
factors will be introduced. (It is assumed that from the existence of established infrastructure etc., there is
negligible risk of getting Bio-SNG to market the market exists.) In addition it must be recognised that
that the market for renewable energy of all kinds is an artificial market, augmented by a variety of
government incentive schemes throughout the developed world, which being the products of political
intervention are liable to change with changing political priorities. Thus a Bio-SNG development strategy
needs to be clear from the outset how it would manage the following issues:
Political risk
Technology risk
Fuel supply risk
Resulting additional financing risks
Should there be any fundamental impediment posed by any of these issues then work on other aspects of
a development would be in vain.
Political risk is both domestic and international. Internationally the demand for and value of biomass
feedstocks is affected directly by the uncoordinated subsidies directed at the renewables industry by
55
national governments . Biomass fuel suppliers will naturally sell to the market offering the best price if
new and more valuable markets emerge. Where the viability of a full scale Bio-SNG facility depends
upon imported biomass it is clear that a fuel procurement strategy would need to be developed to secure
supply price and volume for a number of years. Similar concerns extend to domestically produced fuels,
55
In 2008 / 9 the uncoordinated support schemes for renewable transport fuels in the UK and the USA, together with
some loose legal definitions had the effect of decimating the UKs indigenous transport biofuels industry.
69
whether clean biomass or waste-derived materials since government support mechanisms across the
renewables sector, and with respect to carbon abatement generally continue to be incoherently variable
in some respects.
It is anticipated that the Renewable Heat Incentive may have the potential to provide the essential
increase in sales revenue that could make Bio-SNG production viable, however, it will be necessary to
verify that the uplifted revenues would be sustained for a sufficient number of years to assure an
acceptable project return; that is to say that the uplift would be Grandfathered from the date of
accreditation by Ofgem. It should be noted, however, that development expenditure prior to the date of
accreditation could be at risk of a change to the rules within the RHI. Given the substantial development
costs that a Bio-SNG development would entail, the developer should seek to minimise its peraccreditation risk exposure.
The technical approach proposed in this report envisages the use of conventional and proven process
operations, however, their integration into a Bio-SNG facility is, save for a small number of plants
currently under development
56
the process technologies that may be assembled into a Bio-SNG facility the whole plant would
undoubtedly be seen to be novel and unproven by suppliers of debt into project finance arrangements.
An objective assessment of technical risk will at the outset of a project design identify a degree of
technical uncertainty regarding integration of the various process operations comprising the complete
facility, however it is within the competence of a proficient process engineering industry to analyse and
resolve these issues to a level of certainty sufficient for an investment decision (however this costs effort
and money at the design stage). The question remains, however, as to whether the financial community
would be prepared to engage in detailed technical audit and verification of a proposed development or
whether they merely demand to witness a reference plant that provides a QED for the process concept.
Experience suggests that potential funding institutions would favour the latter, hence securing of project
finance for either a demonstration plant or a full scale facility is unlikely.
The perceptions of risk, and strategies for mitigation of risk have changed markedly over the last three
decades, driven largely by the development of philosophies in privatisation of utilities, corporate finance
and project finance. Prior to this, risk management in industrial developments was less formal and would
(wittingly or unwittingly) leave governments, company balance sheets and shareholders as the bank of
last resort. Modern norms
57
for project finance seek to devolve as many risks as possible via commercial
arrangements to contracting counterparties e.g. equipment suppliers, contractors, and banks whilst
demanding unequivocal delivery of performance guarantees. These trends undoubtedly facilitate the
efficient use of capital, and reduce the number of unanticipated cost over-runs but with the corollary that
under such circumstances it is more difficult, or even impossible to arrange project finance for first-of-akind energy projects. Thus contemporary norms for project finance sit uncomfortably with the emerging
56
57
demand to deploy new energy infrastructure that incorporates novel and unproven technologies or even
novel process configurations.
undertake large capital projects on balance sheet; the recent history of infrastructure developments being
undertaken with a combination of debt and corporate equity. In the post 2006/8 risk-averse banking
climate it is even more the case that conventional financing arrangements could only be used to deliver
infrastructure energy projects that use tried and tested (i.e. proven) technologies and designs. The
challenge therefore is to conceive project financing strategies that can accommodate first-of-a-kind
energy infrastructure projects such as facilities for the production of Bio-SNG.
It is commonly presumed by government and other stakeholders that given an adequate stimulus or
incentive the market will move to provide the technical innovation and development necessary to meet
the opportunity. For example, the banding in the Renewables Obligation is intended to doubly incentivise
the deployment of waste and biomass gasification facilities; to date there is little to show in terms of such
new technology plants being built and commissioned. This is equally the case for marine renewables and
58
to a lesser extent for offshore wind developments . As a strategy for bringing new biomass energy
infrastructure into commission the banding of the RO is clearly not having the intended effect, however,
an appreciation of human decision making in a climate of risk shows why this should not be a surprise.
59
In short, decision making within the energy industries is dominated by a reluctance to accept the
downside risks associated with technical novelty, feedstock insecurity and political vacillation; irrespective
of the magnitude of the projected returns. Moreover, economic analysis of most renewables projects,
including Bio-SNG shows that the enhanced income derived from support for renewables is required to
bring project income up to a level of marginal viability, with no premium for any unusual project risk.
Another popular misconception is that demonstration of a new technology would provide the essential
proof of concept to liberate funding from aspiring investment institutions. This has spawned a number of
government initiatives to promote the building of demonstration facilities
60
demonstration would be a sufficient condition to satisfy funding institutions in their requirement to invest
only in proven technologies. There are flaws with this line of reasoning. Firstly, demonstration projects
are likely (for reasons of cost and risk) to be a fraction of the required scale of facility that would be
deployed in a commercial plant; hence scale-up risks are still a material consideration. Secondly, the
period during which a demonstration plant is operated can in no way give an assurance of satisfactory
performance throughout an investment horizon for which project returns have been projected, for
example, a minimum of fifteen years.
58
Meeting the 2020 Renewable Energy Targets: Filling the Offshore Wind Financing Gap PWC July 2010. Clearly it is now
recognised by at least one of the major management consultants that pure financial incentives are in themselves
insufficient to ensure deployment of new energy infrastructure, and that innovative financing mechanisms are
required.
59
See The Utility Function of Risk, John von Neumann et al.
60
e.g. Defras New Technology Demonstrator programme, the Carbon Capture and Storage competition.
71
It is true that venture capital funds do invest in emerging technologies, but this is invariably at a much
smaller scale than would be required for a Bio-SNG plant and with the expectation of high returns and an
early exit for investors, coupled with the prospect of a global roll-out to a mass market; conditions that are
unlikely to be realised in energy infrastructure projects where a modest number of units would be
constructed and without any prospect of above-market returns. It is not surprising therefore that venture
capital funds have not yet sponsored a break-through in biomass energy generation technologies.
The result of even a successful venture capital funding or technology demonstration is the well known
investment valley of death, reflecting a state of technology development that is insufficient to attract
investment of further and necessary resources and in which under-resourced technology developers have
difficulty in fighting their way out of the corner in which they find themselves. It follows that in the absence
of any alternative financing strategy the first-of-a-kind risks must be taken by the project owner or investor
by means of a 100% equity position. A small scale, 50MWth Bio-SNG demonstration plant would cost in
the region of 70m, (and a full scale 500MWth facility in the region of 250m).
In a commercial
landscape where this could not be part funded via debt this leaves the owner/shareholder or developer
staking a large amount of capital on a single, sub-commercial demonstration project in the possibly
unrealistic hope that at some point in the future it would provide sufficient demonstration to attract project
finance. Unless it can be clearly identified at the outset that a demonstration plant offers a route to
securing project finance then it may be necessary to see what it takes to go straight to a full scale facility.
Few organisations have the balance sheet strength to contemplate this, and those that do would be faced
with the same internal investment committee justifications as would be posed by an external debt
provider. In short, the technology investment case would need to be compelling in order to secure a
positive decision by a corporation to invest.
Fuel supply risks are undoubtedly influenced by changes globally to the various support mechanisms of
national governments and by the ongoing evolution of world energy markets. Increasingly they are
influenced also by considerations of sustainability, with ever increasing requirements for users to
demonstrate that their biomass fuel supplies are responsibly sourced.
sources of biomass fuels will run the risk of being unsustainable in the future as this criterion is applied
more rigorously both to the existing inventory of biomass (mature woodland), or to farmed energy crops.
To manage fuel supply risks some major biomass power developers such as RWE are moving upstream
into the supply chain to secure producing assets, to gain a controlling position in the trading of biomass
fuels in this emerging market and to increase the diversity of sources globally. It may not be necessary to
compete with the likes of RWE; rather it may be preferable to enter into long term fuel supply contracts
with such powerful counter parties that are seeking to be market leaders in this area. Regarding the use
of waste-derived fuels it will be necessary to secure long term supply contracts with waste processors.
From the foregoing it may be concluded that the confirmation of the RHI at an adequate level of support
together with grandfathered rights may constitute necessary but insufficient conditions by which to justify
investment in Bio-SNG production. Some provisions would need to be made to tackle feedstock security,
72
as well as technology and construction risks. Feedstock security is a question that a Bio-SNG developer
can manage itself through development of its upstream business, by contracting with majors like RWE
that are active in this field, by futures trading etc., however, the management of technology and
contracting risks may be beyond the powers of the Bio-SNG developer to handle alone.
In its report Meeting the 2020 Renewable Energy Targets: Filling the Offshore Wind Financing Gap
PWC identifies investment barriers that impede the timely deployment of facilities required to meet the
UKs renewable energy targets. The problem identified in this report is not peculiar to offshore wind but
common across the sustainable energy sector; how to get substantial institutional investment into new
low-carbon energy infrastructure.
PWC sets out a number of possible scenarios in its report, but key
among them is the notion that a publicly administered infrastructure development fund should be created,
perhaps from a consumer levy, that could be used in qualifying projects for project funding through the
critical engineering, construction and commissioning phases. Refinancing of projects when they reach
stable operation would recycle money back to the fund for use on subsequent projects. However, the
intent is to create a body of operational experience, by means of this pump priming exercise that will
provide the necessary confidence for institutional investors to invest in future projects of the same type.
PWC suggests that the quid pro quo for a developer benefiting from this kind of funding assistance could
be a reduction in the level of ROC support post commissioning. To the extent that ROC support is likely
to form an essential part of a projects economic viability, Progressive Energy would argue that this would
constitute another barrier to renewables project developments. Nevertheless the PWC report sets out a
number of potential scenarios for overcoming the difficulties in financing new energy infrastructure: it can
be downloaded via the link referenced in Appendix 3.
To the extent that Bio-SNG (along with other significant sustainable energy sources) has the potential to
make an efficient contribution to renewable energy targets, it could be argued that the UK government
should be encouraged to understand that whilst the Renewables Obligation and the RHI are necessary
instruments, they are unlikely to be sufficient for the timely realisation of facilities on the ground, and that
some further measures - such as those proposed by PWC - need to be taken to manage technology and
construction risks on large capital projects.
73
74
Gasification
Syngas
scrubbing
Power
generation
Core project
5% Slipstream
Syngas
conditioning
Figure 9.1
Methanation
etc.
SNG comp.
& export
This process set-up would allow proof of concept for Bio-Syngas methanation, which may be seen as
valuable, however, one could make the observation that the methanation of synthesis gas (whatever its
origin) is a banal exercise and not really worthy of demonstration. Nevertheless, it should be noted that
catalyst manufacturers such a Johnson Matthey are undertaking developments of catalysts specifically for
syngas derived from biomass on the basis firstly that it may be possible to relax gas cleaning criteria if
tolerant catalysts could be identified and secondly that there could be as yet unknown traces of particular
contaminants in bio-syngas that need to be addressed.
demonstration at this scale, the up-scaling of the micro channel reactor concept entails minimal technical
risk since it would entail replication of the standard process module proven in the demonstration plant.
This development concept is a low risk, low cost step in the direction of meaningful volume production of
Bio-SNG, with the potential to make substantial progress via demonstration of a micro channel reactor.
However, it does rely on a third party producer of syngas, and the inherent technical and commercial risks
of the core project.
In
principle it would be viable to develop a 50MWth waste fired power plant for the production of electricity,
benefiting as it would from the double ROC banding for gasification. Along the lines set out in Figure 9.1.
it would be possible to fit a slipstream in due course for the evaluation and development of a syngas to
methane process train, possibly incorporating the micro channel reactors for both WGS and methanation
reactions. However this would demand that the primary gasification train produces syngas suitable for
methanation (for example oxygen blown), such that the primary electrical plant does not generate
sufficient value to support the project.
76
a full scale plant development, especially given the use of conventional process technologies. Either
way, these are unlikely to be projects that could be funded with project finance (equity plus debt), and the
developer would need to be able to justify the risk / reward balance as the equity holder in the project.
Again, a hybrid development approach could offer risk mitigation potential, by taking syngas at full scale
from a conventional fossil fuelled source for the production of fossil SNG. Subsequently the source of
fossil syngas could move to co-firing biomass. Alternatively a biomass gasifier could be developed later
on for a dedicated supply of Bio-syngas to the SNG facility. In Teesside the Progressive Energy Eston
Grange development within the Teesside carbon dioxide capture cluster
61
62
syngas for initial SNG production . The general concept is outlined in Figure 9.2.
Storage / EOR
Gasification
Syngas
scrubbing
Coal
(+ Poss future
biomass)
Future Biomass
Gasifier plant
Figure 9.2
CO2
capture
Power
generation
Methanation
etc.
Slipstream
Syngas
conditioning
A full scale Bio-SNG facility of 300MWth capacity would probably be built with two gasifier trains in order
to standardise on gasifier frame sizes and to offer a degree of system redundancy. These would feed a
single gas processing train in order to benefit from the economies of scale. It will be readily appreciated
therefore that migration from fossil syngas to bio-syngas could be accomplished in stages as each of the
biomass gasifier trains is brought on line.
See Appendix 4
It must be noted that the increased complexity for the host project imposed by the Bio-SNG addition may prove
challenging.
62
77
The North East also has a track record of innovation. There are already three syngas based projects
slated or in development. The Ineos Bio facility will take solid waste and convert it to bioethanol via
gasification to syngas and subsequent biological conversion. Air Products have recently announced their
intention to build a 49MWe waste fuelled power generation facility using gasification to produce a syngas,
provisionally for conversion in a Gas Turbine. Progressive Energy are developing a coal fuelled syngas
facility incorporating carbon capture and storage. Each of these facilities will produce a synthesis gas
which could, in principle be partially converted to a Synthetic Natural Gas. In the event that the North East
is successful in bidding for government support for Carbon capture and storage, there may also be the
possibility of integrating Carbon Capture for the residual CO2 (fossil or biogenic) which is emitted in the
process.
Figure 9.3 shows the sites considered in the Teesside region. These sites have been selected for the
attributes and that they have been and could be available. However, in the Teesside region there are a
number of projects under development with site deals and options being negotiated confidentiality. This
can only be explored as the project becomes more mature, as can the other important commercial
considerations associated with a particular site. As can be seen, Teesside has a wide range of potential
sites. Table 9-1shows the evaluation of the sites.
78
Figure 9.3
Site
Ref
Port
Road
Rail
Gas
Gas
NTS
LTS
Elec
Ser-
Cool-
vices
ing
Seaton Port
Seal Sands
B/C
Clarence Port
Billingham Reach
E/H
Norton Bottoms
South Bank
Pos
Corus
Priv
Sembcorp
Priv
Table 9-1
From this analysis, two sites were considered as most interesting; D and G, either side of the Tees,
primarily due to their proximity to port and transport infrastructure, as well as other facilities. These are
shown in Figure 9.4 As can be seen, neither area is currently constrained with regard to space, even for
a relatively large facility, although the exact footprint will depend critically on the level of fuel processing
required on the site, as well as logistic and storage arrangements. An investigation into the gas
79
infrastructure showed that both sites have reasonable accessibility to medium to high pressure gas mains
3
with sufficient capacity for 20,000Nm /hr (Figure 9.5). Both these sites are believed to form part of
regional development plans, specifically designed to encourage and enable development. These sites are
also relatively close to the slated syngas development projects under way, with Air Products and Ineos
Bio on the North side of the Tees, and the Eston Grange Project on the South. Figure 9.6show the
photographs on the sites considered. The facilities shown in Appendix 1 would not be out of place in
Teesside. In summary, it is clear that Teesside offers a range of potentially suitable sites for a project of
this type.
Figure 9.4
80
Figure 9.5
81
Figure 9.6
Biomass
Existing/in-build
te pa
Slated
te pa
Wilton 10
300,000
MGT Power
1,500,000
~200,000
BEI
400,000
Gaia Power
400,000
Ineos Bio
100,000
Haverton Ext
190,000
Wilton 11
400,000
Air Products
300,000
Lynemouth
co-
firing potential
Waste
Table 9-2
SITA, Haverton
390,000
83
10 Conclusions
Methane is an attractive heat and transport fuel vector. Bio-SNG is a production route which offers the
possibility of substantial scale renewable methane for injection into the grid and use in transport.
Transition from aspiration, to widespread operating facilities and infrastructure requires a detailed
understanding of the technical and commercial attributes of the full chain from feedstock supply through
to delivery of grid quality gas, as well as the development of the first crucial operating facility which
provides the tangible proof of concept for roll out.
Implementation of Bio-SNG will only take place with the appropriate tax, incentive and legislative
environment. Incentives must be structured such that such projects are commercially attractive compared
with competitive users of biogenic energy resources, and the regulatory environment must be clear and
appropriate.
Whilst there is substantial indigenous and international biomass resource in the form of pure biomass
and waste derived fuels, it must be appreciated that there are competing uses for biomass in many
industrial sectors building materials, chemicals, heating, electricity generation, and transport bio-fuels.
Securing feedstock on contracts of sufficient term and appropriate price for financing presents a
challenge, and it is likely that the development of Bio-SNG facilities will require the developer to go
upstream into the supply chain for both grown and waste derived fuels. From a technical perspective
biomass fuels are generally less well understood than fossil fuels, and the technologies that use biomass
fuels are less well developed, however, specification and quality control are vital determinants of project
success.
In principle, the major process operations required to produce Bio-SNG can be identified and assembled
from existing technology suppliers. This does not mean that a Bio-SNG development would be free from
technical risk, but it does mean that there is no fundamental process development required to create a
viable Bio-SNG platform. The essential first condition that must be satisfied is that feedstock specification
and the process design are matched. It is proposed in this work that established gasifier configurations
are adopted, such as direct fluidised beds, rather than emergent technologies.
Downstream of the
gasifier the gas processing operations are conventional technology: heat recovery and power generation,
gas scrubbing, water gas shift, methanation, conditioning and compression. Whilst these processing
elements are all conventional, they are critical for ensuring pipeline quality gas. In general the GS(M)R
specification should be attainable by this process route, although the tight limit on hydrogen content may
lead to unnecessary processing.
Two representative scales of facility at 50MWth and 300MWth input would produce approximately
230GWh and 1400GWh of Bio-SNG per annum. This represents sufficient gas for approximately 1584
100,000 households or 25,000-150,000 passenger vehicles. Three of the larger facilities would supply 1%
of the UK domestic gas market.
The levelised cost of Bio-SNG in 2010 prices has been shown to range between 67-103/MWh for the
small scale facility and 32-73/MWh for the large scale facility dependent on the type feedstock used,
with the waste based fuel being the cheapest. Assuming the RHI at 40/MWh of biogenic fraction this
equates to out turn gas prices of 123-185p/therm at small scale and at large scale 24-96p/therm for SRF,
Woodchip and pellet feedstock respectively. With the proposed incentive regime, a large SRF fuelled
facility has the potential to provide gas effectively. At this scale, a mix of indigenously sourced woodchip
and imported woodchip might be competitive, but a facility fuelled by wood pellet is unlikely to be able to
compete. At the smaller scale, Bio-SNG cannot be supplied competitively from any fuel. A gasification
facility configured to generate electricity is likely to be commercially preferable to one configured to
produce Bio-SNG, unless the Renewable Heat Incentive is significantly higher than the 40/MWh
proposed
Full lifecycle analysis of Bio-SNG production shows that for many types of feedstock, the lifecycle CO 2e
savings of Bio-SNG compared with fossil fuel alternatives are typically ~90%. This saving is similar for
both conventional heating and transport applications. This analysis also demonstrates that the savings for
the Bio-SNG production route are very similar to those achieved using direct biomass heating. Given that
the Bio-SNG solution has much lower demand-side constraints and therefore could achieve greater
market penetration, it is an attractive route.
Strategically the UK needs to consider the most cost effective approach for decarbonising. For heating
applications using natural gas as a counterfactual, Bio-SNG offers a cost per tonne of CO2e abated of
~175/te. This compares very favourably with direct biomass combustion for domestic applications
(395/te) and for small commercial applications (285/te), as well as with Ground source heat pumps
(5500/te). If the adoption of electrical based solutions demands more grid reinforcement than would be
required to the gas network by Bio-SNG solutions, then the differential in cost per tonne of carbon abated
is likely to be even greater. For transport applications, Bio-SNG is also significantly more cost effective
than electrical solutions, however, this analysis does suggest that on a cost per tonne abated, the heating
sector is a preferable end market.
The envisaged Bio-SNG facilities are in most respects conventional process engineering projects,
exhibiting the general risk profile that such developments entail. These can in the main be addressed
with a conventional contracting approach to risk management; however there are technology, fuel supply
and financing risks that need to be addressed. Government incentive schemes offer the prospect of
commercial viability with a plant that would not in other circumstances be commercially viable; to that
extent they are beneficial to non-fossil energy developments including Bio-SNG. The economic analysis
shows that they do not constitute an exceptional upside return on investment. What influences the
attitude of investors however is that current support mechanisms offer no protection on the downside of
85
the project risk profile. It follows that a financing strategy needs to make provision for managing the
downside risk that will be perceived by investors.
The chemical and processing industrial heritage in the North East, its natural gas and services
infrastructure, its transport links and its track record of innovation make it an attractive region to locate
such a project, particularly given the syngas projects already slated. High level site screening analysis
indicates that there are sites in the Teesside region suitable for either scale of facility with good transport
infrastructure, although there is potential pressure on feedstock resources in the region.
86
Appendix 1
Examples of Relevant Gasification Projects
Dakota
The largest SNG facility in the world, with 3GWth input capacity (producing ~200,000 Nm3/hr CH4),
fuelled by lignite. Started operation in 1984. Gasifiers: Lurgi Dry Ash with Rectisol gas cleaning. Has
Carbon capture fitted.
Gussing
Fuel: woodchip, 8MWth input to power. ~40,000 Gasifier and engine hours. Bio-SNG produced June
2009
87
Gobi Gas
Fuel: Wood pellets. Indirect gasifier. Phase 1: 32MWth input, Contracting 2010. Phase 2 (2015):
120MWth input, Technology undefined
88
Choren
50MWth facility fuelled by woodchip for the production of Biodiesel using Fischer Tropsch. Gasifier
operational, F-T in commissioning as of 2010.
89
90
91
Appendix 2
Extract from the Smartest Energy Informer, 02 August 2010
92
Guidance on determining whether gases fall within the criteria set out in Parts I
and II of Schedule 3
191 The characteristics of a gas which can be accepted into the network under normal conditions (Part I
of this Schedule), and those which may be authorised by the NEC (Part II of this Schedule) to prevent a
supply emergency, have been derived from work carried out by Dutton et al (see references section at the
end of this publication) on gas interchangeability. The work was carried out against a background of
declining gas supplies from the southern North Sea and replacement supplies being provided from an
increasing number of other sources. It was necessary to ensure that these new gas supplies were
interchangeable with existing supplies, and that established standards of appliance performance and
safety could be maintained without the need to adjust appliances.
192 Gases from diverse sources were burned on several types of gas appliance and their performance
observed. From this parameters were established within which gases could be safely consumed. This led
to the production of a 3-dimensional diagram together with equations for calculating the related indices for
gases that contained significant quantities of hydrogen, and a simplified 2-dimensional version of the
diagram for essentially hydrogen-free gases. As gases supplied to the UK are hydrogen-free, the 2dimensional diagram, modified to suit existing conditions, has been used. The diagram has axes of
Wobbe Number and equivalent mixture (propane plus nitrogen).
193 The following technique should be used to determine whether a particular gas composition complies
with these Regulations:
94
(a) The Wobbe Number (real, gross) is calculated by methods outlined in International Standard ISO
6976: Natural gas. Calculation of calorific values, density, relative density and Wobbe index from
composition 2nd Edition 1995, at standard conditions of 15C and 1.01325 bar.
(b) The equivalent composition of the gas (and hence the equivalent propane plus nitrogen) is calculated
as follows:
(i) the non-methane/propane hydrocarbons are converted to methane and propane in
accordance with Dutton, where:
n all isomeric forms of an alkane (eg, normal, iso and neo pentane) have the same
equivalence;
n alkenes and aromatic components have the same equivalence as the alkane of the same
carbon number;
(ii) all the inert gases are expressed as an amount of nitrogen which when added to the
amounts of methane and propane from (i) above, and normalised to 100%, gives a mixture
having the same Wobbe Number (real, gross) as the original gas.
The normalised mixture in (ii) is also the equivalent gas having the equivalent amounts of propane plus
nitrogen.
(c) Acceptable gas mixtures are those where the intersection of Wobbe Number and equivalent mixture
(propane plus nitrogen) lies within the envelope of gas conforming to Parts I or II of this Schedule
depending on the circumstances.
95
Appendix 4
The North East CCS Cluster
The proposed North East CCS Cluster is in the heartland of the UKs heavy process and chemical
industries. Design and pre-FEED engineering has been undertaken for all elements of the CCS chain and
key arrangements put in place to support a project plan which aims for first operation before the end of
2015.
Captured CO2 will be transported in a new pipeline for storage, and potential EOR, in an oil field in the
Central North Sea. The pipeline is routed to also allow storage in a saline aquifer with a CO 2 storage
capacity in excess of 1bte providing risk management to the storage element and allowing storage in a
large saline aquifer to be demonstrated. The offshore pipeline has been sized to accommodate additional
CO2 from Teesside and the wider North East.
Development work has been undertaken on two substantial anchor CO 2 capture sources either or both of
which could underpin the commercial development of the network, as well as provide demonstration of
pre-combustion capture at a scale of at least 400MWe. The facility at Teesside will be a new build syngas
plant which generates decarbonised hydrogen from coal for conversion to power in a CCGT (ie operating
as an IGCC) as well as for use by Industry in the area. At Lynemouth, configuring the existing coal power
station with pre-combustion capture provides demonstration of an IGCC retrofit with capture to an existing
coal power station. Each facility would capture in excess of 2.5million tonnes of CO 2 per annum.
The region has numerous substantial emitters of carbon dioxide which will be able to link into the core
CO2 infrastructure, either via capture from their existing facilities, or by the use of decarbonised feedstock
and fuel. Specific existing industrial players are actively pursuing the decarbonisation options that CO2
infrastructure would offer. Furthermore the network will enable inward investment into the UK by other
high carbon emitters from around Europe for whom the unique storage opportunities afforded by the
North Sea enables decarbonisation of their industry.
Offshore Infrastructure
96
97
63,64
However there are no clear reference plants for such Integrated Gasification
Combined Cycle Power Stations with capture. This first-of-a-kind risk makes the attraction of debt into
early projects challenging.
There are examples of CO2 storage in gas fields, oil fields and saline aquifers across the world, including
North Sea experience, although most injections are less than 1mte CO 2/yr.
uncertainties than the capture element and requires demonstration at large scale in the North Sea
environment for the different reservoir types available.
Hence technology exists, and whilst there are clearly substantial uncertainties, the challenge is for the
most developed options to move from the RD&D phase to early market applications. This is primarily an
issue of putting in place the appropriate commercial framework to enable the first of a kind risks and
uncertainties to be managed.
The captured CO2 can be stored, with the uncertainty being the scale of injection irrespective of reservoir
type. The UK has offshore oil fields, gas fields and saline aquifers which may be used for storage.
Storage in oil fields holds the prospect of providing the greatest value added as CO 2 injection can be
used to recover otherwise unrecoverable oil this is an established technique on-shore with c25-30mte
CO2 injected annually in oil fields in the USA for this purpose. However offshore experience is minimal at
present.
The Programme therefore needs to address the real first-of-a-kind uncertainties in the early CCS projects
even where the technology exists, notably full CCS chain reliability and large scale storage. It needs to be
on a basis which makes CCS a credible investment decision alongside renewables and gas CCGT.
Investment capital is limited for all candidate investors including the major utilities and so the
demonstration programme needs to be structured to enable debt to be secured, and such that the widest
possible range of investors can be involved, as has been achieved for renewables.
63
In contrast other capture technologies suitable for power generation (post combustion and oxyfuel) have only
operated at small scale and do require substantial scale up.
64
Pre-combustion capture can also be used to repower existing coal power stations to utilise cost effectively existing assets
with enhanced output compared with alternative refit options such as post-combustion.
98
In combination, the state of readiness of the technology and the opportunities for value creation support a
policy which seeks to introduce and deploy CCS in the UK as soon as possible. Clearly the current
financial environment limits what is affordable by consumers. However, even these first capture projects
will require less support than many other low carbon options.The overriding objective from this tranche of
4 CCS projects is not the demonstration of individual capture technologies, but must be to demonstrate
how to introduce CCS into the countrys economy to create long term value.
99