ECONOMIC BENEFITS FROM AN INTRODUCTION OF CLEAN …eneken.ieej.or.jp/data/6461.pdf · 1,531 GW Coal 2,211 GW 940 GW 1,575 GW Other sources 2,310 GW 0 10 20 30 40 50 60 70 80 90 100

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


3

Source: ERIA Energy Outlook

I. COAL DEMAND IN EAS REGION


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


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


6

Macro Assumptions


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


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.


(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


8

Power Generation

Coal fired generation will still be dominant and its share will be around 60% in 2035.


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)


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


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


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%


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


13

II. CLEAN COAL TECHNOLOGIES


Clean Coal Technologies for power generation

7Sources: JCOAL, 2014 14


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.


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


Higher Thermal Efficiency

17

Sources: JCOAL, 2014 Note: HHV- Higher Heating Value; LHV; Lower Heating Value

LHV


Relationship b/t power plat efficiency & CO2 emission

18


A REGIONAL TREND- ASEAN & EAS

o Even with current USC, efficiency can be raised to over 40%

o With deployment of next-generation technologies like IGCC,power generation efficiency of over 50% can be attained.

19


20

III. ECONOMIC ASSESSMENT OF THE CCT


General assumptions for cost-benefit analysis

21

Values Remarks

Plant

Capacity 1,000 MW

Operation 25 years For cash flow purposes

Operation rate 80%

Thermal

efficiencies42.1% (USC), 41.1% (SC), 38.2% (subcritical)

LHV value from NEDO study “Promotion of high-

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.


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.


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


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

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

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


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

Capacity 1,000 MW

Coal CV / Price 4,000 Kcal/kg (GAR) / 50 USD/ton

Thermal Efficiency (LHV) 42.1% 41.1% 38.2%

Initial Cost (million USD) 1,931 1,897 1,787

Coal Consumption (tons/year) 3,578,263 3,665,326 3,943,583

CO2 Emission (tons/year) 5,102,914 5,227,073 5,623,893

Generation Cost (USD cent/kWh)

(@USD60/ton)

IRR= 9.5% 7.29 7.33 7.43

IRR=15.0% 8.79 8.80 8.81


(@USD50/ton)

IRR=9.5% 6.77 6.79 6.85

IRR=15.0% 8.27 8.26 8.24


(@USD40/ton)

IRR=9.5% 6.25 6.26 6.27

IRR=15.0% 7.75 7.73 7.66


26

IV. ECONOMIC, SOCIAL ANDENVIRONMENTAL BENEFITS


Potential investment benefits

27

Coal-fired power stations

Coal mines

Investments 2009-2035,

billion USD

Japan

USD 21 billion

Vietnam

USD 85 billion

South Korea

USD 55 billion

Indonesia

USD 82 billion

Australia

USD 20 billion Total EAS region

USD 1,803 billion

Malaysia

USD 39 billion

Philippines

USD 29 billionIndia

USD 629 billion

China

856 billion USD

$17

$66

$55

$0.1

$39

$0.1$5

$81

$104

$751

$41

$588

$186

$1,617


Employment creation

28

4,809

Coal increase,8,197

Natural gas,981

Nuclear, 1,429Hydro, 2,231

Others, 1,366

0

5,000

10,000

15,000

20,000

25,000

2005 2010 2015 2020 2025 2030 2035

To

tal g

en

era

tio

n in

EA

S r

eg

ion

[T

Wh/a

]

4,809

Coal increase,5,897

Natural gas,3,281

Nuclear, 1,429

Hydro, 2,231Others, 1,366

0

5,000

10,000

15,000

20,000

25,000

2005 2010 2015 2020 2025 2030 2035

To

tal g

en

era

tio

n in

EA

S r

eg

ion

[T

Wh/a

]

Electricity generation EAS region BAU case Electricity generation EAS region natural gas replacement case

2009 -

2035

Coal

generation

increase

Employment

per TWh

Job creation

in power

stations

Coal

demand

increaseJob creation

in coal mines

5,897

TWh

42

persons246,457

persons1,943

MT

Employment

in coal mines

75,767

persons

105,315

persons2,700

MT

8,197

TWh

42

persons342,568

persons

BAU

case

Gas

replacem

ent case

Employment

per MT

39

persons

39

persons

Forecast Forecast


Potential CO2 reduction by CCT

29 Source: IEA World Energy Outlook 2009,

Ecofys International Comparison of Fossil Power Ef f iciency and CO2 Intensity 2010


V. Conclusions

30

CCT is an useful technology to be able to use low rankedcoal, which has a plenty reserve in this region;

CCT needs large investment; thus lowering upfront cost willmake CCTS competitive;

About $US 1,803 billion investment potential from theintroduction of CTT & Coal Mines

Around haft million job will be created About 13.5 billion tons of CO2 reduction potentials Strengthen environmental standard is key to the up-take of

CCT technologies and deployment; Energy efficiency is vitally crucial for policy measures to

save energy and use it effectively.Contact : [email protected]


Documents

ECONOMIC BENEFITS FROM AN INTRODUCTION OF CLEAN …eneken.ieej.or.jp/data/6461.pdf · 1,531 GW Coal 2,211 GW 940 GW 1,575 GW Other sources 2,310 GW 0 10 20 30 40 50 60 70 80 90 100