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Carbon dioxide capture from coal-fired power plants : a real potions analysis

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dc.contributor.advisor Henry D. Jacoby, Howard J. Herzog and David G. Laughton. en_US
dc.contributor.author Sekar, Ram Chandra en_US
dc.contributor.other Massachusetts Institute of Technology. Dept. of Mechanical Engineering. en_US
dc.date.accessioned 2006-03-29T18:31:24Z
dc.date.available 2006-03-29T18:31:24Z
dc.date.copyright 2005 en_US
dc.date.issued 2005 en_US
dc.identifier.uri http://hdl.handle.net/1721.1/32292
dc.description Thesis (S.M.)--Massachusetts Institute of Technology, Engineering Systems Division, Technology and Policy Program; and, (S.M.)--Massachusetts Institute of Technology, Dept. of Mechanical Engineering, 2005. en_US
dc.description Includes bibliographical references. en_US
dc.description.abstract Investments in three coal-fired power generation technologies are valued using the "real options" valuation methodology in an uncertain carbon dioxide (CO2) price environment. The technologies evaluated are pulverized coal (PC), integrated coal gasification combined cycle (baseline IGCC), and IGCC with pre-investments that make future retrofit for CO2 capture less expensive (pre-investment IGCC). All coal-fired power plants can be retrofitted to capture CO2 and can be considered "capture-capable", even though the cost and technical difficulty to retrofit may vary greatly. However, initial design and investment that take into consideration such future retrofit, makes the transition easier and less expensive to accomplish. Plants that have such an initial design can be considered to be "capture-ready". Pre-investment IGCC can be considered to be "capture-ready" in comparison to PC and baseline IGCC on this basis. Furthermore, baseline IGCC could be taken as "capture-ready" in comparison to PC. Cash flow models for specific cases of these three technologies were developed based on literature studies. The problem was formulated such that CO2 price is the only uncertain cash flow variable. All cases were designed to have a constant net electric output before and after CO2 retrofit. As a result, electricity price uncertainty had no differential impact on the competitive positions of the different technologies. While coal price was taken to be constant, sensitivity analysis were conducted to show the impact of varying coal prices. Investment valuation was done using the "real options" approach. en_US
dc.description.abstract (cont.) This approach combines (i) Market Based Valuation (MBV) to valuing cash flow uncertainty, with (ii) Dynamic quantitative modeling of uncertainty, which helps model dynamic retrofit decision making. The thesis addresses three research questions: (i) What is the economic value of temporal flexibility in making the decision to retrofit CO2 capture equipment? (ii) How does the choice of valuation methodology (DCF v. MBV) impact the investment decision to become "capture-ready"? (iii) Among the coal-fired power plant technologies, which should a firm choose to invest in, given an uncertain CO2 policy? What are the economic factors that influence this choice? The answers to the research questions strongly depend on the input assumptions to the cash flow and CO2 price models, and the choice of representative cases of the technologies. For the specific cases analyzed in this thesis, it was found that investing in "capture-ready" power plants was not economically attractive. en_US
dc.description.statementofresponsibility by Ram Chandra Sekar. en_US
dc.format.extent 104 leaves en_US
dc.format.extent 4491657 bytes
dc.format.extent 4495770 bytes
dc.format.mimetype application/pdf
dc.format.mimetype application/pdf
dc.language.iso eng en_US
dc.publisher Massachusetts Institute of Technology en_US
dc.rights M.I.T. theses are protected by copyright. They may be viewed from this source for any purpose, but reproduction or distribution in any format is prohibited without written permission. See provided URL for inquiries about permission. en_US
dc.rights.uri http://dspace.mit.edu/handle/1721.1/7582
dc.subject Technology and Policy Program. en_US
dc.subject Mechanical Engineering. en_US
dc.title Carbon dioxide capture from coal-fired power plants : a real potions analysis en_US
dc.type Thesis en_US
dc.description.degree S.M. en_US
dc.contributor.department Massachusetts Institute of Technology. Technology and Policy Program. en_US
dc.contributor.department Massachusetts Institute of Technology. Dept. of Mechanical Engineering. en_US
dc.identifier.oclc 61343669 en_US


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