Generation from Fossil Fuels
The East Harbour fossil fuels report provides cost information on two types of coal-fired generation and four types of gas-fired generation. These are:
- Conventional pulverised coal with flue gas desulphurisation (FGD)1
- Integrated coal gasification combined cycle
- Gas combined cycle
- Advanced gas combined cycle
- Combustion turbine
- Advanced combustion turbine.
For the Energy Outlook, the gas-fired generation costs used were the average of those given in the East Harbour report for the gas combined cycle and the advanced gas combined cycle technologies.
For coal, the Energy Outlook used costs for pulverised coal plant without FGD. The capital cost for a pulverised coal plant without FGD is given by the East Harbour report as $416/kW less than with FGD.
The report provides a set of cost figures at a 5% discount rate and another set at a 10% discount rate. The Energy Outlook used the figures at the 10% discount rate.
The capital costs from the East Harbour report were adjusted for the Energy Outlook to allow for two factors. Firstly, the report used an exchange rate of NZ$1.00 = US$0.42 to calculate the cost in New Zealand of the imported component of the various plant options. These imported costs were adjusted to reflect the Energy Outlook exchange rate assumption of NZ$1.00 = US$0.50 using the methodology described in the East Harbour report. This was done by taking 80% of the capital cost to be imported and 67% of the non-fuel operating and maintenance cost.
Second, the load factor was altered from the 90% used in the fossil fuels report to 75%.
The resulting capital costs and operating and maintenance figures were used in the model where they were combined with their respective fuel costs calculated endogenously within the modelling process. To depict the costs in tabular form in the Energy Outlook, fuel costs were taken at $3.50/GJ for coal and from $4.00/GJ to $7.00/GJ for gas, excluding the carbon charge. Including the carbon charge raises the coal fuel cost by $1.48/GJ and the gas fuel cost by $0.80/GJ.
These fuel cost figures also differ from those used in the fossil fuels report. However here the fuel costs were not projections but merely provided to illustrate the full generation costs over a range of possible fuel cost outcomes.
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