Industrial facilities have several options available to support decarbonization goals such as efficiency improvements, alternative technologies or fuels (biomass or hydrogen), electrification, alternative power sources (solar, wind, nuclear) and carbon capture. Due to the abundance of novel technologies, there are challenges in selecting a path that will appropriately consider the inherent uncertainties and risks while meeting stakeholders’ goals and commitments. These considerations include but are not limited to technology readiness level (TRL), capital costs (CAPEX), operating costs (OPEX), project integration, time to deployment, operational complexity, levelized cost performance and execution/technical/commercial risks. This discussion does not delve into the various specific technologies, but rather highlights these considerations based on Fluor’s recent experience with decarbonization studies for a wide range of industries.
TRL
The TRL tracks the development of the technology from the identification of the basic concepts and principles (Level 1) through laboratory and pilot testing, to fully demonstrated commercial deployments (Level 9). Technologies with lower TRLs carry higher technical and commercial risks due to less mature performance, uncertainties about commercial scalability and the associated capital cost. An early academic development may have not yet considered the practical engineering scale-up required to commercially implement the technology. Claims based on early bench testing or simulations should be considered cautiously, considering the developer’s technical capabilities and experience with similar technologies, their track records of scaling early phase concepts into commercially proven applications and novelty of any process steps or equipment.
Evaluating novel technologies requires the ability to critically assess academic literature and developer claims to identify and quantify technical and commercial risks. This is not to suggest that a fully detailed assessment is required to screen options in the concept evaluation phase; it can be appropriate and useful to eliminate technologies from further consideration when they are objectively not a fit. Conversely, the right solution may not always be a single technology. Each project is unique, and a holistic view with a consistent evaluation basis for all opportunities is required to identify the best solution for the specific project.
CAPEX, OPEX and Economics
When comparing different technologies, it is important to collect information regarding the performance and other requirements. For example, existing facilities may face issues with plot space and site integration. Often, open literature on decarbonization technologies does not provide sufficient clarity regarding the evaluation basis and the relevant assumptions (location, labour costs, utility supply and costs), and if it does, for various reasons the basis may not be relevant to the project being considered. As a result, comparing technologies based on published levelized costs across different studies may lead to incorrect conclusions unless the cost basis can be normalized. A project-specific cost basis should be used when comparing CAPEX, OPEX and levelized costs to ensure a consistent basis for technology comparison and results that reflect economics as accurately as possible based on the region where the project is proposed.
If there are components of the cost estimate which would typically be scaled from reference historical data, scaling for low TRL technologies based on preliminary concepts which have no proven commercial reference will result in additional uncertainty. Hence, lower TRL technologies will require a higher contingency allowance. A Monte Carlo or other sensitivity assessment can evaluate the impact of technical and cost and execution uncertainties on the key economic parameters such as levelized costs, providing insight into how uncertainty in various elements of the technology will affect the CAPEX and OPEX.
When evaluating CAPEX, OPEX and economic metrics, it is important to ensure fair comparison against the “do nothing” option. There should be clear alignment on how government incentives, taxes and other credits are applied. It is also important to properly account for opportunity costs, such as reduced fuel expenses when using alternative fuels. If the technology requires novel specialized replaceable elements (like a specific catalyst or absorbent) then there should be consideration of supply chain risks to provide sufficient supply.
Project Integration
Each technology will require unique considerations for integration. The evaluation needs to consider the impact of the decarbonization unit on the whole project scope i.e. the “box” containing both the existing facility and the new decarbonization unit. “End of pipe” solutions may offer the simplest integration but must also consider utility requirements and tie-ins, plot space and plant interruption within the “box”. The evaluation must identify and understand how any features or optimizations within the decarbonization unit affect the performance and economics of the whole “box”.
Time to Deployment
The time to deployment is often a critical consideration. Lower TRL technologies will often have to navigate technology, intellectual property and commercial issues before they are ready for commercial scale deployment. Pursuit of less mature technologies will require the owner to facilitate pilot testing at their own facility or provide a gated process where the technology must be demonstrated at a pilot level before proceeding further, both of which will extend the time to deployment. Certain technologies, such as nuclear, may have additional considerations regarding approvals. The time to complete front end engineering and design, detailed engineering, procurement, construction and commissioning of first-of-a-kind plant can also take longer as unique solutions may be required. Finally, growth of the energy transition movement will stretch supply chain networks as projects will be competing for similar engineering resources, materials, equipment and labour, changing project risk profiles and critical paths.
Overall Evaluation Approach
Once all the considerations are identified, categorized and defined, a structured and systematic decision analysis approach such as a Kepner-Tregoe (KT) should be used to compare and rank options both qualitatively and quantitatively. A KT analysis can rapidly assess the impacts of different category weightings and scores in a quantitative fashion, which helps minimize the impact of biases. Areas where leading options score low are identified as risks for further evaluation and mitigation.
Summary
The process of evaluating and selecting decarbonization opportunities and emerging technologies has a wide range of considerations and requires the appropriate skill sets to execute, including: the technical ability to apply fundamental engineering and scientific analysis to vet technology vendors proposals and claims; practical engineering to understand how to migrate an emerging technology to a safe and operable commercial scale design; and cost-estimating experience and relevant historical cost data. Combining these skills with a project-specific evaluation basis will result in a credible assessment of the decarbonization opportunities.
Fluor is actively involved worldwide across various industries in guiding clients through the decarbonization component of the energy transition by identifying, evaluating and leveraging technologies which reduce greenhouse gas (GHG) emissions, improve energy efficiency and deliver cleaner, decarbonized projects. Through our technical and project expertise including technologies such as renewable fuels and green chemicals, hydrogen, clean power and energy storage, the battery value chain, carbon capture and reduction, and technology evaluation and development Fluor is able to able to help deliver certainty and reduced risks in deploying low TRL decarbonization technologies.
Authors:
Bernie Moore, Executive Process Director, Fluor Canada
Jonathan Webber, Principal Process Engineer, Fluor Canada
