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Retrofitting coal plants to burn ammonia is ‘too expensive’
5/10/2022
News
Japanese utilities are exploring the case for retrofitting their existing coal power plants to enable co-firing of coal with ammonia to reduce CO2 emissions. However, ammonia-coal co-firing is unlikely to become an economically viable path for Japan to reduce power sector emissions, according to a new report by BloombergNEF (BNEF).
In its report BNEF estimates the levelised cost of electricity (LCOE) for a retrofitted coal power plant in Japan using a 50% clean ammonia co-firing ratio would be at least $136/MWh in 2030. By 2050, the LCOE of a retrofitted coal power plant running 100% on clean ammonia is expected to be at least $168/MWh. These values are more expensive than the LCOE of renewable alternatives such as offshore wind, onshore wind or solar with co-located batteries, the report says.
Ammonia co-firing technology would require a significant rise in Japan’s carbon tax to make the technology economically viable, according to BNEF’s analysis, which shows that at least $300/t of CO2 would be needed to make clean ammonia co-firing at a 20% blend rate economically viable in 2030. By 2050, the carbon price needed to make 100% ammonia-fuelled retrofitted coal plants economically viable could be reduced to around $159/t of CO2. These values are far higher than Japan’s current ‘tax for climate change mitigation’, which is set at below $3/t of CO2.
‘Retrofitting coal plants to burn ammonia is too expensive, especially with a high co-firing ratio,’ says Isshu Kikuma, analyst at BNEF and lead author of the report. ‘Japan would be better served accelerating the deployment of renewable energy to decarbonise its power sector. Coal power generation is currently used to provide baseload power, but this should not be the case for ammonia co-firing technology given its poor economics.’
Reduction in CO2 emissions is the main advantage of ammonia co-firing at coal power plants – but burning ammonia can lead to emissions of other greenhouse gases such as nitrous oxide. Since ammonia molecules include nitrogen, ammonia combustion generates nitrous oxide, whose global warming potential is 273 times larger than that of CO2 for a 100-year timescale. BNEF’s analysis also found that a coal power plant retrofitted to co-fire ammonia at 50% or lower blend rates still emits more CO2 than a natural gas-fuelled combined-cycle gas turbine power plant.
Scaling coal retrofits with ammonia would also risk Japan’s energy security due to the high domestic cost of clean ammonia production, and the high volume of ammonia that retrofitted coal plants would require, notes the report. The Japanese government’s proposed 2050 ammonia demand target is 30 times the current domestic ammonia market.
Kikuma concludes: ‘Japan is better off in prioritising the limited supply of high-cost clean ammonia for decarbonisation of applications such as fertiliser production where no other decarbonisation options exist.’
