Why Renewable Energy is a More Affordable Solution Than Carbon Capture Technology for Power Sector: IEEFA Report

A report by the Institute for Energy Economics and Financial Analysis (IEEFA) has found that adding carbon capture and storage (CCS) to fossil-fired power plants will have unsustainable implications on electricity prices, affecting the public, businesses and governments.

The report says the economic case for CCS in the power sector is weak due to uncertainties around input costs, funding, technology failures and improvements in alternative renewable energy sources such as wind and solar.

The report also highlighted environmental concerns and the fact that the actual costs of deploying CCS and its cost trajectory remain unclear. With no new power plants having been built with CCS at a commercial scale, the cost of retrofitting existing plants will significantly increase facility capital expenditure, operating and fuel costs, affecting the case for investment.

Proponents of CCS provide low-cost forecasts that are a long way from estimates and do not include a range of other costs including transport, storage, monitoring and possible remediation or penalties. If funded through electricity prices, applying CCS could increase wholesale electricity prices, which would then be passed onto energy consumers.

The report compared the levelized costs of electricity (LCOEs) for thermal power generation with CCS and found them to be at least 1.5-2 times above current alternatives, which include renewable energy plus storage. Renewable energy sources and battery storage systems are expected to become more cost-competitive in the long-term.