‘How to deliver clean and secure power and set an example of global relevance’

1. ‘How to deliver clean and secure power and set an example of global relevance’ Mike Farley 10.2.2009Scottish Engineering /UNITE conference

2. Nuclear Thermal Turbine & Generator Desalination Casting & Forging Construction Company update – Doosan Babcock and Doosan Heavy • Doosan Babcock Energy Limited is a subsidiary of Doosan Heavy Industries and Construction of South Korea, part of the Doosan Group, and a market leader in gas, coal, nuclear power generation and desalination • The company will offer Pre, Post combustion and Oxyfuel carbon capture and advanced supercritical boilers • Doosan Babcock Energy has been designated the Doosan global Centre of Excellence and R+D Centre for Boilers (including Clean coal and CCS) OxyCoalTM 2 40MW pilot in UK PostCombustion Doosan Babcock offers HTC Purenergy amine capture technology to its global customer base in the UK.

3. Doosan Babcock R+D Plus • R+D Plus Project developed after discussions in Korea and Glasgow between SDI and Doosan Heavy • Scottish Executive support to • accelerate the growth of the R&D Centre, • stretch the breadth of the R&D carried out • allow more speculative, longer-term work than otherwise possible • ensure Renfrew is the HQ and main hub • Project duration is 3-4 years, commencing August 2008 • Project value £10M, New products and services for sustainable power generation markets (UK, Europe and global) • Major contribution to the Scottish energy R+D scene • Main focus is Carbon dioxide capture

4. Best Available Advanced Supercritical Technology being supplied now Abatement of CO2 by efficiency improvement of Pulverised Coal Plant EON 50+ project at Wilhelmshaven being tendered now Plant efficiency % NCV 50 – 55% (Lower CO2 Emissions) (-29%) 55 50+ 50 46% Doosan BabcockASC Supercritical Boilers (-23%) 45 42% Meri PoriHemweg New Chinese Orders 40 38% Chinese fleet 38% UK fleet 35 Sub Critical Boilers 32% OlderPlants 30 Year 1960 1980 2000 2020

5. International Test Centre (ITC) for CO2 Capture - World Leader in CO2 Capture and Enhanced Oil Recovery Absorption Column, 14 ft-6 in ID x high 119 ft Stripper Column, 12 ft-6 in ID x 77 ft high Doosan Babcock partnership with HTC Purenergy In September 2008, Doosan Babcock signed an agreement with HTC Purenergy of Canada to licence the company’s technology for post-combustion capture of CO2. Doosan Babcock will offer the technology to its customer base in the UK, Europe, the Americas and China and will take advantage of the series of demonstration projects in which HTC Purenergy are involved Coal flue gas demonstration - Test Facilities at Boundary Dam ITC - Natural Gas flue gas capture Centre CCS1000 Modular Design 2008 Demonstration at SV Minerals - 50MW, includes new solvent (RS1), new packing material strategy, steam reduction

6. OxyCoal 2 - Demonstration of OxyCoalTM combustion system • £7.4M project • Convert Doosan Babcock’s full-scale burner test facility to oxyfuel firing • Oxygen supply • Flue gas recycle system (fans, ducts, cooler, heater, etc.) • Instrumentation • Design and build full-scale utility OxyCoalTM burner (40MW) • Derived from air-firing experience, CFD modelling and Oxyfuel R+D • Demonstrate a full-scale utility OxyCoalTM burner • Flame stability, combustion efficiency, emissions, flame shape, and heat transfer characteristics as function of %CO2 recycle and excess oxygen • Start-up, shut down, transition from air to oxyfuel, load change

7. OxyCoalTM 2 Project The substantial contributions of: • the Prime Sponsor • Sponsors • University participants are acknowledged by Doosan Babcock Vattenfall

8. Background • Deteriorating generation margin with major closures only a few years away (sooner in Scotland) and no adequate plans for replacements • Focus on large percentage of renewables seems to neglect issues due to intermittency • Clean coal and CCS alongside renewables can provide security of supplies and near zero emissions, at no greater cost • …..and represent a major economic opportunity for Scotland

9. CCS offers an opportunity for economic benefit on the scale of the oil industry • Global market for thermal power plant is 1041 Bn $ to 2015, 75% coal • Global CCS market will be £100Bn/year • Lord Oxburgh (former chairman of Shell) “CCS will be an industry as big as the oil industry world wide” • Scotland is well placed to benefit • Oil and gas industry • Edinburgh and Heriot Watt Universities and BGS Scotland • Consultancies including Mott Macdonald, SKM • Doosan Babcock for power plant boilers and carbon capture

10. The scale of the challenge for target emissions reductions (UKCCC) UK CCC Page 38, Figure 2.1

11. UKCCC Report Nov2008Overall judgement on global deployment of electricity technologies Page 54, Figure 2.10

12. Global power generation abatement in 2050 (IEA BLUE Map scenario) 80 CCS power projects/year (eg 28 x 800MW coal and 52 x 500MW gas) from about 2020 Page 71, Figure 2.23

13. Implications for Policy - UK and Scotland • Consenting process to require all large combustion plant/fossil fuel power plant emitting more than 1Mt CO2/yr to be built capture-and-storage-ready • Seek international agreement to make CCR mandatory for both coal and gas • UK CCS regulations in place by 2010 • Three coal and one gas large scale CCS demonstration projects in UK, operational by 2015 (an appropriate share to meet EU, G8 and IEA objectives and maintain a leadership position for UK industry) funded from EU 300M EUAs and auction revenues • Develop strong incentives by 2010, in addition to the carbon price, to support a second tranche of CCS projects (to be committed by 2015 and operational by 2020) • Development of a strategy to implement CCS on all CCR plants (coal and gas) on fast- track timescales • eg enabling legislation for an EPS of 150g/kwh for all plants (new and CCR) emitting above a tonnage threshold • must also recognise need to retain some older coal and gas power plants on the system to provide back up

14. A commensurate ambition for CCS in Scotland • Two CCS demonstrations in Scotland by 2015, one coal and one gas • 2.4GW advanced supercritical coal with CCS to replace Longannet by 2020 • 1.2 GW CCGT/CHP with CCS to replace Peterhead by 2020/5 • And one other 1GW plant to replace Torness - to be decided around 2018 • Delivers a power generation mix for Scotland that • Would be near- zero emissions by 2025 • Ensures security of supplies (gas issues) and firm power on demand (cf wind intermittency) • Sets an example that other major users of fossil fuels could copy • All should use CCS technologies from Scottish companies capable of exploiting the global market and generating economic benefit and employment here on a scale comparable to the oil and gas industry • Create many thousands of skilled jobs in construction and operation of CCS plants

15. Existingmix 2010…… Carbon Clean Scenario…. 2030 SKM, 2030 CCS and Renewables in Scotland - an Alternative Scenario “Carbon Clean” • We have modelled the electricity system in Scotland and looked at how to achieve • decarbonisation by 2025 • security of supplies • firm generation in response to demand • and a more economic mix • Principles • Sufficient capacity in Scotland to meet peak demand and export clean electricity • Utilise existing grid and power plant sites • Kick-start CCS as a basis for a major new industry in Scotland • Set an example to the world • Alternative Scenario “Carbon Clean” compared to Existing plant mix and the two Scenarios explored by SKM in their report of Nov 2008 for the Scottish Government

16. Generation Capacity Installed Existing Carbon Clean Scenario SKM

17. Intermittency of wind generation – impact has to be recognised • SKM report: “Combined Scottish wind generation output will be 10% or less for around 20% of the time (ie one in five winters on average will experience wind power levels of 10% or less at times of peak demand)” So for one winter in five or one day in five we must completely (90% or more) backup the wind capacity with firm power • Turner UKCCC report also recognises that renewables will need full backup by firm power but requires this to be clean • And the backup power generation must be able to follow daily variations in demand and balance the wind generation

18. -50% in 5 hours Almost zero wind generation on the coldest day of the winter

19. 70 60 50 40 30 20 10 0 Flexible fossil power needed to provide instant power to balance intermittency of renewables and variations in demand Germany, March 18th, 2007 (GW) Best Case Scenario for Wind generation in a day 70 60 50 40 Consumption (GW) Other Power 30 20 10 Wind Power 0 0 6 12 18 24 Time (h) Sources: VdN, UCTE

20. 70 60 50 40 30 20 10 0 Flexible fossil power needed to provide instant power to balance intermittency of renewables and variations in demand Germany, April 13th, 2007 (GW) Average day for Wind generation 70 60 50 40 Consumption (GW) Other Power 30 20 10 Wind Power 0 0 6 12 18 24 Time (h) Sources: VdN, UCTE

21. 70 60 50 40 30 20 10 0 Flexible fossil power needed to provide instant power to balance intermittency of renewables and variations in demand Germany, June 11th, 2007 Worst case scenario for Wind generation in a day (GW) 70 60 Flexible fossil power needed to provide instant power to balance intermittency of renewables and variations in demand 50 40 Consumption (GW) Other Power 30 20 10 Wind Power 0 0 6 12 18 24 Time (h) Sources: VdN, UCTE

22. De-rated generation capacity vs peak winter demand Existing Carbon Clean Scenario SKM Peak Demand- Average Winter

23. Annual Electricity Generation Exports Scottish demand Future demand

24. Emissions Intensity for Overall System Existing Carbon Clean Scenario SKM

25. Annual Emissions from Power Generation Existing Carbon Clean Scenario SKM - 90%

26. Demonstration Phase Requires Funding to Fill the Economic Gap Economic gap €/tonne CO2 Demonstration phase: CCS not economically viable. Public contribution necessary for some portion Commercial phase: CCS expected to be commercially viable, as costs and CO2 price reach similar levels Estimated costs of CCS Carbon price forecast; impact of new policy not included DEMO PHASE (~4GW) EARLY COMMERCIAL PHASE (~20 GW installed capacity) MATURE COMMERCIAL PHASE (~ 80 GW installed capacity) 26

27. Average Cost of Electricity Generation (COE) Existing Carbon Clean Scenario SKM

28. Early opportunities for CCS Demonstration – are we ready? • UK CCS competition –underway. SP are one of three short listed bidders • EU programme for 10-12 demos funded from 300M EUAs from the new entrant reserve • Call in late 2009 • EU proposed economic regeneration package has earmarked 250M euro for UK CCS • Early spend sought if package approved • EU voluntary agreement to spend 50% of Auction revenues on climate change mitigation and adaptation • RDAs, especially Yorkshire Forward, are developing CCS schemes • Conservatives policy statement “The low carbon economy – security, stability and green growth” proposes to fund • Pipeline networks • 5000MW of CCS Demonstration projects • CCS costs for additional coal power plant • We need more urgent action within Scotland to prepare for these opportunities

29. Tomorrow’s World How to deliver clean and secure power and set an example of global relevance Doosan Babcock are committed to development and global implementation of cleaner power plants - clean coal, clean gas, nuclear and renewables as rapidly as the market allows We can set an excellent example to other countries which will build fossil fuel power plant if we insist on building all coal and gas plants capture and storage ready in parallel with actions to demonstrate, and then implement, properly regulated and monitored CCS Thank you for your attention