Economic analysis under uncertainty of coal fired capture-ready power plants

This study assesses the feasibility of investing in capture ready (CR) coal-based power plants under uncertainty. It defines eighteen cases according to three routes for carbon capture (post, pre and oxy-combustion) and different levels of readiness. Due to the uncertain nature of the development of capture plants, this study applies a probabilistic analysis. Findings for the more likely scenario (median value) indicated that severe pre-investments in CR plants are the best choice only when the implementation of the capture occurs in the short term. In the long term, the investment decision favored the power plants not fully ready. Interestingly, under a less likely but possible scenario (the inferior limit of the probabilistic analysis) IGCC-Ready plants become the best option in the short term, and then oxy-combustion ready plants stand out. Hence, some policies such as those based on financing lowering the discount rate perceived by investors, and those based on fund to research and development, might create an investment environment favorable to CR plants. (C) 2012 Elsevier Ltd. All rights reserved.