Challenges for Gasification
The widespread market penetration of gasification continues to face some challenges. Over the years, gasification challenges related to gasifier and supporting unit availability, operability, and maintainability have been addressed with substantial success, and new implementations of gasification will continue to improve in this area. At present, perhaps the most significant remaining challenge is the relatively high capital costs of gasification plants, particularly given the low capital investment required for natural gas combined cycle (NGCC)-based power production combined with low natural gas prices currently being experienced in the domestic market. Accordingly, technology that can decrease capital costs of gasification systems and plant supporting systems will be most important towards further deployment of gasification.
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-based power production must demonstrate cost-effectiveness relative to pulverized coal (PC) and natural gas power plants to support new plant development.
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; this is the current situation given recent natural gas price forecasts for the North American NG market.
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. 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.
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.
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 technological developments such as warm gas cleanup and advanced oxygen separation, 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 added to commodities production plants as a new way to produce synthesis gas (syngas) as a fertilizer or 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. The licensing process is subject to legal challenges, which tend to delay the process further and only increase costs associated with permitting. Regulatory and permitting agencies need to streamline the gasification licensing process and legislate predictable environmental regulations.