Asia Power Week 2017

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Is Coal Still King In South East Asia? (Room Amber 1)

SE Asian economies are rapidly expanding and are hungry for affordable electricity. The region is at an early stage of development with extremely low levels of per capita electricity consumption. To support economic growth and electrification targets, electricity demand in the region will increase by more than 5% annually in the next 15 years. While rest of the world is moving away from coal in the power sector, the pace of coal development in SE Asia has not even peaked. With the current pace developments, we expect coal demand growth to peak in 2020 before declining. In absolute terms, coal capacity additions will continue at 5 GW per year on average for several years contributing to over 40% of incremental capacity growth in the region. In this paper we will analyze the three main drivers for coal in SE Asia and discuss possible alternative scenarios. Economics: Historically, domestic piped-gas was the most competitive fuel option for power generation in the region. But gas resources are on the decline and the alternative to piped-gas is LNG which is more expensive. The cost of renewables have decreased but is still much higher than grid parity levels. Hence both gas and renewables either add to power tariffs or increase government subsidies in the power sector. Emissions: All countries in SE Asia have committed to COP21 emission reduction targets but their current NDC commitments are either low or not easily quantifiable. The contribution of power-sector to carbon emissions is less than 25% on average. Hence, the emission reduction efforts will likely be more focused on forestry and land-use rather than electricity. Technology: Coal power plant technologies have significantly improved. The region is increasingly embracing a much cleaner Ultra Super Critical coal technology with efficiencies of above 40% at HHV. The emission intensity is now much lower while the Levelised Cost of Electricity (LCOE) is comparable to the existing sub-critical coal technology.