Challenges

The widespread market penetration of gasification faces some challenges, mostly related to capital costs and availability. Technology that can decrease capital costs and increase availability will have a large effect, as will technologies which improve efficiencies and reduce operation and maintenance (O&M) costs

A 2002 NETL report draws on the views of the gasification industry leaders and presents their perspective on some of the major challenges to widespread acceptance and development of gasification-based power generation (integrated gasification combined cycle [IGCC]) technology. The top four concerns consist of three financial issues and one question of availability. Specifically, the economic concerns are:

• Higher capital costs than other power plants (natural gas combined cycle [NGCC], specifically).
• Doubts about plant commercial viability without subsidies (like tax credits, for example).
• Increased risks associated with up-front development costs (higher engineering development and design costs than a NGCC, for example).

In addition, respondents expressed concern with low plant availability in the early stages of operation.

Economic and Financial Challenges
Gasification, especially for new power generation, can be intimidating for investors because of its high costs. Although gasification is able to use relatively inexpensive and stably-priced fuels like coal, the cost to construct and operate a gasification plant can be significantly higher than an NGCC power plant. In order to ease investor apprehension, IGCC power plants must lower capital and operating costs through a combination of improved efficiency, integration and other technological advances. Gasification must be able to demonstrate that it is a viable alternative to pulverized coal (PC)and natural gas power plants before large scale

Research and development (R&D) to lower capital costs is inherently difficult. The most effective method of lowering capital costs is through market penetration and economy of scale, where each plant built benefits from the knowledge of previous plants. As infrastructures are put in place to manufacture and construct IGCC plants, costs will decrease. To this end, the way to lower capital costs is to promote the advantages of gasification enough that the higher capital costs are no longer a barrier. One major advantage of coal gasification is the historically steady price of coal compared with the volatile price and supply of natural gas. An increase in the price of natural gas would benefit the market acceptance of IGCC. However, the opposite is also true, and a low stable natural gas price will make acceptance more difficult. Gasification also offers environmental benefits (which do not yet affect financials, see below), feedstock flexibility, product flexibility (to reduce risk in changing markets), and high efficiency among other benefits discussed throughout the Advantages of Gasification section. As industry project developers become better able to assign monetary values to these benefits, economic models will begin to favor IGCC in more cases. Market-based incentives, such as a carbon dioxide (CO₂) cap-and-trade system, could further improve the economic model for IGCC.

Please refer to the Gasification Research and Development (R&D) section to learn about the R&D efforts taking place to improve efficiencies and the economics of gasification.

Improving the economics of gasification will make obtaining financing easier. Improving the perception of gasification, informing the public of the need for fuel diversity, and explaining some of gasification’s early difficulties will also help ramp up gasification investments.

Availability
One of the most important hurdles to overcome is increasing the availability of gasification plants. Gasification power plants do not have the well established industry track record of PC power plants. Potential investors and utilities have expressed concern that demonstration projects have not yet proven that a gasification plant can be reliable enough to meet consistent and growing demand. This issue is addressed through improving subsystem performance, effective design using appropriate redundancy, and time - with each passing year, operating gasification facilities such asTampa IGCC, Wabash IGCC, and Great Plains Synfuels Plant (GPSP) demonstrate more reliability and longevity. The GPSP has over 98% availability over more than 20 years. Refer to the section on gasification R&D efforts for increasing plant availability.

Integration
Currently, IGCC requires very specific turbine designs. Allowing IGCC plant flexibility in integrating with a wider variety of turbines would make IGCC more attractive by reducing capital costs. Integration as a whole—between turbines, heat recovery steam generators (HRSG), fuel cells, and other possible technologies, will help overcome some of the challenges facing gasification’s market penetration.

Another area of emphasis in lowering the capital costs of building a gasification plant is through integration with existing plants. For example, a gasifier could be retrofit to an existing pulverized coal facility. This would substantially lower the cost of entry, but brings its own set of challenges. The new gasification system would have to work around the old design and technology and operators would have to be trained in how to run a very different system. Gasification could also be fitted to chemical plants as a new way to produce synthesis gas (syngas) as a chemical synthesis feedstock.

Perception and Permitting
A barrier to some gasification investments is poor public-perception and understanding of the technology. There are social concerns relating to the use of coal as an energy source. However, coal is widely available in the United States and in large enough supply to last over 200 years at current consumption rates. Social barriers require the education of investors and the general public about gasification technology.

In addition, complex permitting issues are a challenge for gasification technology. For example, IGCC plants must currently meet multiple federal and state environmental rules and be licensed as electric generation units, syngas facilities, and co-production plants. This licensing process is much more complex than that for a coal or natural gas power plant and is a major challenge to IGCC development. Regulatory and permitting agencies need to streamline the gasification licensing process and legislate predictable environmental regulations.

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