Analysis of Economic Feasibility of Integrated Gasification Combined Cycle(IGCC) as a Next Generation Power Supply in Korea

Abstract

This research attempts to evaluate the economic feasibility of a new power generation technology known as integrated gasification combined cycle(IGCC), considering various potential business conditions. The fact that IGCC has been defined as a new energy by New and Renewable Energy Promotion Act is taken into account to form an additional potential scenario of future governmental support in addition to normal economic sensitivity analysis. Evaluated at the current price of year 2008, result shows that IGCC project with net power capacity of 353MW is estimated to secure more than 10% of IRR (Internal Rate of Return) if wholesale power price (SMP) is determined above the level of 80Won/kWh under the current Cost Based Pool market system. Assuming IGCC socially accepted, environmentally friendly and energy efficient power source, combined impact of governmental support and changes in SMP are also examined. The possible application of FIT(Feed-in Tariff) and RPS(Renewable Portfolio Standards) for the promotion of IGCC is also examined.