Innovation and institutional change: the transition to a sustainable ...

Stability and transformation in the electricity system 99
technologies, especially gasification of coal, and techniques to reduce the
negative environmental impacts coal-fired power plants, such as
desulphurization. Research efforts on coal became second in size next to
nuclear research. Coal gasification technology 22 was developed by several oil
companies 23 , such as Shell, Texaco and British gas, as a future alternative to
oil as a source for its products and some test plants were operating in the
USA and Germany. Because of the environmental problems associated with
conventional coal-fired power plants the electricity sector started to explore
the potential of gasification. Coal gasification in combination with steam and
gas turbines (KV/STEG) was expected to give similar emissions of NOx and
SO2. After two years of exploration of the technological options, SEP
decided, on technical grounds, to use the technology developed by Shell
(Zon, 2000). Coal gasification was implemented in the nineties at a 250
MWe demonstration plant in Buggenum, total costs of 850 million guilders
were financed by the SEP. In the demonstration phase some major problems
occurred, mainly in the conventional part of the plant: the gas turbine.
Characteristics of the synthesis gas called for adaptations in the gas turbine.
The producer of the gas turbine, Siemens, invested tens of million guilders to
improve its operation. The Buggenum plant became operational in the
middle of the nineties as the first and largest coal gasification plant for
electricity generation in the world at that time was considered
technologically unique (Böttcher, 1999). After a demonstration period until
the end of 1997 the power plant became part of electricity production by the
SEP. In the transition period to a liberalised market, it became clear that the
plant was not competitive due to the high investment costs 24 . With the
dismantling of the SEP the plant became labelled among the stranded costs,
burdens that were to be distributed among power producers and
22 Gasification is the process of reacting a heated carbon source – whether biomass, coal, or
even low qualitiy grades like lignite, with oxygen and steam to produce syngas. Syngas – a
mixture of carbon monoxide and hydrogen – can also be produced from a range of other
feedstocks including tar sand, oil and natural gas. Syngas is used for electricity generation
as well as to make base chemicals for the petrochemicals industry (Source: website of
Shell, http://www.shell.com/royal-en/content/0,5028,25544-51272,00.html).
23 For example, Shell had invested several hundreds of millions US $ in the technique at its
laboratory in Amsterdam (KSLA), and in a test facility in Hamburg. Texaco had a facility
in operation in Coolwater, USA, for the production of hydrogen, with use of around 100
tonnes of coal per day. As gas prices were expected to rise in future years because of its
more acute finiteness as compared to oil and coal, oil companies saw opportunities to sell
the synthesis gas produced by gasificiation. This gas could in the long term also replace oil
as the basis for most of their products (Roggen, 2000; Zon, 2000).
24 According to the former director of Demkolec, KV/STEG could be competitive to
conventional coal-fired power plants with a capacity above 600 MW. A plant of that size
would require an investment of around 1250,- Euro per kW capacity (Zon, 2000).