Zero-carbon, gas-fired power plants would be a game changer for the world's energy business and climate. Importantly, an August 2012 U.S. Department of Energy study on the life cycle costs of gas generation suggests that the game changer is nearer than most think.
While most assume that the cost of installing and operating carbon capture technology is prohibitively expensive, DOE suggests otherwise. See page 59 of this study for DOE's 8.1 cents per kwh estimate:
That 8.1 cents for zero-carbon, natural gas electricity is affordable, when measured against today's electric rates. For example, the national average price of residential electricity service is about 12 cents per kilowatt-hour, and the national average for all customer classes is 10.18 cents per kilowatt-hour, as of June 2012.
At 8.1 cents a gas-fired power plant with CCS, a zero-carbon plant, would be able to provide generation that would allow a full residential retail rate of 12 cents or even less in many parts of the country, because many electric systems charge residential customers less than 4 cents per kilowatt-hour for transmission and distribution services.
Adding to the impressive and tantalizing quality of DOE's cost analysis for gas with CCS is the gas price assumption that DOE used to calculate the 8.1 cents number. DOE cannot be accused of cooking the books, when it plugged a gas price number of more than $5.50 cents per thousand cubic feet into its calcualation that produced its 8.1 cents estimate.
Today gas costs about $3.00 for a thousand cubic feet and the use of that price in the calculation probably would have pushed the cost of gas with CCS to about 6 cents per kilowatt-hour. That would be an attractive price indeed.
DOE put new gas powered generation without CCS at 5.3 cents in its study, so the price difference in gas-fired generation without CCS and with CCS is 2.8 cents per killowatt-hour. That differential could be closed further with economies of scale and research and development.
It is also important to note that zero-air pollution wind energy today can be produced in many parts of the country for 5 cents per kilowatt-hour so that gas with CCS would be about 2 to 3 cents more per kilowatt-hour than wind.
To stabilize climate emissions the world is going to need much substantially increased wind, low-carbon gas, gas with CCS, as well as coal with CCS, energy efficiency, solar, nuclear generation, and more. What is encouraging about the DOE study is that the price of the innovation needed in CCS for gas is already reasonable and likely to fall further. Environmental and economic opportunity lies ahead.
But questions abound. Will the gas industry realize it has a major, long-term business opportunity, and even necessity, and push forward the development of gas with CCS and birthing zero-carbon gas? Will the environmental community realize it too must embrace CCS and zero-carbon gas?