ECONOMIC BENEFITS FROM AN INTRODUCTION OF CLEAN COAL TECHNOLOGIES IN EAST ASIA Symposium on Sustainable Power Supply Mix in the Future 20 November 2015 @ Novotel Bangkok On Siam Square, Bangkok, Thailand HAN, Phoumin, Ph.D Energy Economist ERIA (Economic Research Institute for ASEAN and East Asia) IEEJ:December 2015, All Rights Reserved.
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ECONOMIC BENEFITS FROM AN INTRODUCTION OF CLEAN COAL
TECHNOLOGIES IN EAST ASIA
Symposium on Sustainable Power Supply Mix in the Future 20 November 2015 @ Novotel Bangkok On Siam Square, Bangkok, Thailand
HAN, Phoumin, Ph.D Energy Economist ERIA (Economic Research Institute for ASEAN and East Asia)
IEEJ:December 2015, All Rights Reserved.
2
OUTLINE OF PRESENTATION
I. RISING COAL DEMAND IN EAS REGION
II. CLEAN COAL TECHNOLOGIES
III. ECONOMIC ASSESSMENT OF CTT
IV. ECONOMIC, SOCIAL &ENVIRONMENTAL BENEFITS
V. CONCLUSIONS & IMPLICATIONS
IEEJ:December 2015, All Rights Reserved.
3
Source: ERIA Energy Outlook
I. COAL DEMAND IN EAS REGION
IEEJ:December 2015, All Rights Reserved.
4
Research Framework in 2014
ERIA Working Group for Analysis of Energy Saving Potential in East Asia
10 ASEAN Members Australia China, India, Japan, Korea, New Zealand
LEAP &
MICROFIT
E4CAST
(Hybrid type)
IEEJ
MODEL (econometrics)
MODEL ASSUMPTIONS
Socio-economic & Energy saving target with action plans
Energy outlook results, BAU and APS (including the EE target)
Energy saving potential = BAU – APS in terms of TPEC and TFEC
IEEJ:December 2015, All Rights Reserved.
5
Macro Assumptions
Car Ownership
0.09 vehicles/person in 2012, increases to 0.18 vehicles/person using vehicle data of 14 countries
Economic Growth 4.0 % P.A. from 2012 to 2035
Population Growth 0.6 % P.A. from 2011 to 2035 3.40 billion persons in 2012 to increase
to 3.91 billion in 2035
GDP per capita
4,120 US$/person (constant 2005 price and US$) in 2012 increases to 8,800 US$/person in 2035
Crude Oil Price (nominal price) Increase to about 200 US$/bbl in 2035
due to tight balance between demand and supply
Source: ERIA ESP WG Report 2015
IEEJ:December 2015, All Rights Reserved.
6
Macro Assumptions
Source: ERIA ESP WG Report 2015
GDP Growth Rate by Country Population Growth Rate by Country
New GDP growth assumption reflect the current government estimated GDP growth.
For example, Thailand average GDP growth rate has been used at 3.9 % to be consistent with
the NEW PDP 2015
IEEJ:December 2015, All Rights Reserved.
7
Energy Outlook Result (BAU)
Final Energy Consumption
0
1000
2000
3000
4000
5000
6000
1990 2012 2035
Coal Oil Gas Electricity Heat Other
2.1 times
(3.4% P.A.)
1.7 times
(2.3% P.A.)
Gas will mark the highest growth at 4.3% p.a., followed by electricity (3.4%) and oil (2.7%).
Consequently gas share will increase from 7% in 2012 to 11% in 2035. Electricity share will also increase from 20% to 25%. On the other
hand, coal share will decline from 22% in 2012 to 16% in 2035.
Source: ERIA ESP WG Report 2015
(MTOE)
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
1990 2012 2035
Coal Oil Gas Electricity Heat Other
Share by Energy in FEC
IEEJ:December 2015, All Rights Reserved.
8
Power Generation
Coal fired generation will still be dominant and its share will be around 60% in 2035.
Source: ERIA ESP WG Report 2015
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
1990 2012 2035
Coal Oil Gas Hydro Nuclear Geothermal Others
0
2000
4000
6000
8000
10000
12000
14000
16000
18000
20000
1990 2012 2035
Coal Oil Gas Hydro Nuclear Geothermal Others
4.0 times
(6.5% P.A.)
2.1 times
(3.3% P.A.)
(TWh)
IEEJ:December 2015, All Rights Reserved.
9
Source: ERIA Energy Outlook, 2014
Primary Energy Demand in EAS (MTOE)
Rising Coal Demand
-
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
9,000
10,000
1990 2000 2011 2015 2020 2025 2030 2035
Mto
e
Coal Oil Natural gas Nuclear Hydro Geothermal Others
ASEAN, together with China and India, has already shifted both economic growth gravity and energy demand to Asia;
EAS is projected to grow at a faster pace of 2.5 percent per year on average from 4,910 Mtoe in 2011 to 8,912 Mtoe in 2035;
Coal will still constitute the largest share of primary demand (above 50%).
In absolute term, coal consumption will increase by almost double from 2,507 Mtoe in 2011 to 4,155 Mtoe in 2035
IEEJ:December 2015, All Rights Reserved.
10
Estimate of Coal-Fired Power Plants in EAS
999 GW
1,531 GW
Coal2,211 GW
940 GW
1,575 GW
Othersources
2,310 GW
0
10
20
30
40
50
60
70
80
90
100
0
1,000
2,000
3,000
4,000
5,000
2011 2020 2035
Coal share
of
genera
tion c
apacity [
%]
Pow
er
genera
tion c
apacity [
GW
]
51.5% 49.3% 48.9%
1,939 GW
3,106 GW
4,521 GW
China
India
ASEAN
NZ, AUS, KORJapan
0
2,000
4,000
6,000
8,000
10,000
12,000
2011 2020 2035
Coa
l e
lectr
icity g
en
era
tio
n [T
Wh
]
69.9%
69.1%
64.9%13.3%
15.3%
20.8%
4.0%
5.8%
8.0%
7.5%
5.6%
3.2%
5.2%
4.1%
3.1%
5,364 TWh
7,544 TWh
11,406 TWh
Share of coal-fired power stations in the EAS region Coal-fired power generation by country
Coal
Capacity
CAGR
+3.4%
Coal
Generation
CAGR
+3.2%
Sources: IEA & ERIA, 2013
IEEJ:December 2015, All Rights Reserved.
11
Origin of Primary Energy Imports
Sources: ERIA, 2015
Qatar30%
Oman5%
Yemen4%UAE
3%Australia
14%
Malaysia14%
Indonesia10%
Brunei4%
Russia5%
Nigeria5%
Eq. Guinea2%
Others4%
Indonesia50%
Australia30%
Vietnam2%
China1% Russia
6%
S. Africa5%
Canada2%
US1%
Other3%
Saudi Arabia23%
United Arab Emirates
13%
Iraq8%Kuwait
7%
Qatar5%
Iran5%
Oman4%
Other Middle East
1%
Indonesia2%
Malaysia1%
Australia 1%
Other ASEAN+3
2%
Russia5%
Angola5%
Venezuela4%
Nigeria2%
Kazakhstan1%
Colombia1%
Congo1%
Others7%
Coal import origins EAS (2013) LNG import origins ASEAN+3 (2013) Crude oil import origins EAS (2013)
Middle East:
42%
Total: 684
million tonnes
Total: 163
million tonnesInter-EAS: 42%
Inter-EAS:
85%
Total: 928
million tonnes
Middle East:
66%
IEEJ:December 2015, All Rights Reserved.
12
Flow of Coal Exports/imports
Sources: IEA, 2012
80.1Mt
Other Asia477.4Mt
OECD Europe181.5Mt
Other Europe39.7Mt
Latin America21.1Mt
22.2Mt
10.0MtMt
3.9Mt
74.2Mt262.2Mt
37.9Mt
6.8Mt
OECD Europe181.5Mt
18.9Mt
50.4Mt
56.9Mt
3.1Mt
17.7Mt
10.0Mt
China10.6Mt
Russia109.4Mt
23.9Mt
9.8Mt
South Africa71.7Mt
7.8Mt
7.3Mt
8.1Mt
5.5Mt
10.8Mt
9.6MtIndonesia308.9Mt
6.7Mt
Africa/Middle East21.4Mt
North America23.5Mt
3.5Mt
USA34.1Mt
Colombia75.4Mt
Japan121.5Mt
Canada5.9Mt
Australia144.1Mt
3.4Mt
IEEJ:December 2015, All Rights Reserved.
13
II. CLEAN COAL TECHNOLOGIES
IEEJ:December 2015, All Rights Reserved.
Clean Coal Technologies for power generation
7Sources: JCOAL, 2014 14
IEEJ:December 2015, All Rights Reserved.
Schematic Overview of Typical Power Plant
15
De-NOx, De-SOxand ElectrostaticPrecipitator (ESP)
Gas-gas heater(GGH) is equippedto avoid whitesmoke from thestack by thewarming-up of theflue gas exhaustedfrom wet type De-sulfurizationequipment.
IEEJ:December 2015, All Rights Reserved.
Integrated Gas Combined Cycle (IGCC)
16
IGCC has been developed toimprove the powergeneration efficiency usinggasifier technology to turncoal into synthesis gas(syngas) for gas turbinepower generation.
The plant is called integratedbecause the syngas producedin the gasification section isused as fuel for the gasturbine, and the steamproduced by syngas cooler inthe gasification section andheat recovery steam is usedby steam turbine incombined cycle
efficiency coal-fired power stations in Indonesia”
Annual generation 7,008 GWh
Coal
specifications
Heating value 4,000 kcal/kg
CO2 emissions 1.43 kg-CO2/kg coalBased on IPCC 2006 default emission factors for
stationary combustion in the energy sector.
IEEJ:December 2015, All Rights Reserved.
Cost Components
22
LCOE consists of: base plant costs, desulphurization and denitrification
costs, financing & CO2 emission costs.
Plant costs are divided into following costs:
o Engineering, procurement and construction (EPC),
o Operation and maintenance (O&M), and
o fuel costs.
Financing costs are calculated to generate 9.5% IRR and 15% IRR. To
calculate cash flows over operation, electricity sales are set equal to
annual generation at 7,008 GWh for a period of 25 years,
CO2 emission costs were calculated at USD 10/ton-CO2.
IEEJ:December 2015, All Rights Reserved.
LCOE, excluding financing and CO2 costs
23
High EPC(USD 2,076
million)
Medium EPC
(USD 1,941 million)
Low EPC(USD 1,867
million)
High EPC(USD 2,043
million)
Medium EPC
(USD 1,908 million)
Low EPC(USD 1,796
million)
High EPC(USD 1,925
million)
Medium EPC
(USD 1,796 million)
Low EPC(USD 1,688
million)
High
(USD
60/ton)
5.39 5.27 5.20 5.46 5.34 5.23 5.68 5.55 5.45
Medium
(USD
50/ton)
4.87 4.74 4.68 4.93 4.80 4.69 5.10 4.97 4.87
Low
(USD
40/ton)
4.35 4.22 4.15 4.39 4.26 4.16 4.52 4.39 4.29
Co
al p
ric
es
Ultra-Supercritical
(42.1%)
Subcritical
(38.2%)
Supercritical
(41.1%)
2009 to 1st quarter 2014, coal prices for 4,200 kcal/kg coal ranged from USD 35/ton toUSD 63/ton. Thus, price scenarios were chosen at: USD 40/ton (low scenario), USD 50/ton(medium scenario), and USD 60/ton (high scenario)
Without financing cost, USC is more competitive in every coal price scenario
IEEJ:December 2015, All Rights Reserved.
24
1.08 1.06 0.990.71 0.72 0.72
3.06 3.14 3.380.26 0.27 0.29
0.15 0.150.172.02 1.99 1.88
1.50 1.47 1.380.73 0.75 0.80
0
2
4
6
8
10
12
14
EPC O&M Fuel deSOxdeNOx
FC CO2 EPC O&M Fuel deSOxdeNOx
FC CO2 EPC O&M Fuel deSOxdeNOx
FC CO2
US
Dce
nts
/kW
h
1.08 1.06 0.990.71 0.72 0.72
2.55 2.62 2.810.26 0.27 0.29
0.15 0.15 0.172.01 1.98 1.86
0.73 0.75 0.801.50 1.47 1.39
0
2
4
6
8
10
12
14
EPC O&M Fuel deSOxdeNOx
FC CO2 EPC O&M Fuel deSOxdeNOx
FC Co2 EPC O&M Fuel deSOxdeNOx
FC CO2
US
Dce
nts
/kW
h
1.08 1.06 0.990.71 0.72 0.72
2.04 2.09 2.250.26 0.27 0.29
0.15 0.15 0.172.00 1.97 1.84
1.50 1.47 1.390.73 0.75 0.80
0
2
4
6
8
10
12
14
EPC O&M Fuelcost
deSOx deNOx
Financingcost
CO2 EPC O&M Fuelcost
deSOxdeNOx
Financingcost
CO2 EPC O&M Fuelcost
deSOx deNOx
Financecost
CO2
US
Dce
nts
/kW
h
US
D 6
0/t
on
US
D 5
0/t
on
US
D 4
0/t
on
USC SC Subcritical
5.27 5.34 5.55
4.76 4.81 5.17
4.25 4.29 4.43
8.79 8.80 8.81
8.27 8.26 8.24
7.75 7.73 7.66
9.52 9.55 9.61
9.00 9.01 9.04
8.48 8.48 8.46
21 3
21 3
21 3
21 3
23 1
23 1
21 1
21 3
11 2
7.29
6.77
6.25
7.33
6.79
6.26
7.43
6.85
6.27
21 3
21 3
21 3
LCOE, with financing and CO2 costs If financing costs are set to generate 9.5% IRR, USC is again most competitive, even at USD 40/ton coal price;
However, as initial capital costs are higher, USC is less competitive when financing costs to generate 15% IRRare considered
IEEJ:December 2015, All Rights Reserved.
25
Generation Cost by Boiler Type & Coal Price Financing costs also account for a significant share of total generation costs, depending on IRR. USC loses cost-competitiveness when IRR is higher. For example, at coal prices of USD 50/ton, USC is most
cost-competitive when IRR is 9% (USDcent 6.77/kWh). However, when IRR is increased to 15%, USC is less cost-competitive than SC and subcritical (USDcent
8.27/kWh). Therefore, USC may be less viable in countries which do not have access to low-interest loans.
Boiler Type
Ultra Super Critical (USC) Super Critical (SC) Sub-critical