siew-framework for formulation of the fuel mix policy for power sector
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SINGAPORE INTERNATIONAL ENERGY WEEK
-----Energizing the World ----- with Clean Coal Technologies
31 October 2014
CONFIDENTIAL
Dato’ Abdul Razak bin Abdul Majid
Chairman, Energy Commission, Malaysia
As Malaysia advances towards a high-income economy, meeting the
increasing electricity demand will be a challenge
The country requires a fuel mix policy that would ensures long-term security of fuel supply
11,113 kWh
3,614 kWh
7,949 kWh
2,045 kWh
593 kWh 2,631 kWh
5,925 kWh
Electricity consumption per capita, 2009
CONFIDENTIAL
593 kWh
Energy Security
Energy
Security
Availability
of Energy
• If unavailable, no matter how much wealth one has one cannot obtain energy
supply.
• If available, but at extreme high price, not many can obtain energy supply.
Price of
Energy
Thus energy security or rather insecurity is the loss of welfare caused
by a change in price or availability*
*Source: IEA 2007, Energy Security and Climate Policy
CONFIDENTIAL
Agency Definition
International
Energy Agency
(IEA)
Uninterrupted physical availability of
energy at a price that is affordable,
while respecting environmental
concerns
Asia Pacific Energy
Research Center
(APERC)
Adequate energy supplies at
reasonable and stable prices to
sustain economic performance and
growth. APERC assess energy
security in terms of availability,
accessibility, acceptability and
affordability
World Bank
Sustainable production and use of
energy at reasonable cost in order to
facilitate economic growth and
improve the quality of peoples’ lives
United Nations
Development
Program (UNDP)
Continuous availability of energy in
varied forms, in sufficient quantities
and at reasonable prices
Commonly Used Definition for Fuel Security, Usually Takes Into
Account 4 Dimensions
Source: Frontier, MyPOWER
Electricity Supply Act
1990
An Act to provide for the
regulation of the electricity
supply industry, the supply
of electricity at reasonable
prices, the licensing of any
electrical installation, the
control of any electrical
installation, plant and
equipment with respect to
matters relating to the safety
of persons and the efficient
use of electricity and for
purposes connected
therewith.
CONFIDENTIAL
Recommended Fuel Security Definition
Following APERC’s definition, Frontier recommend a definition based on the 4 A’s of fuel security:
1. Availability • refers to the availability of both energy
resources and infrastructure.
2. Accessibility • refers to the reliability with which energy
can be accessed. Barriers to accessibility include political factors, economic factors and technological factors.
3. Affordability • refers to the cost of energy, the relative
importance of energy to the economy and the level of exposure to fuel price changes..
4. Acceptability • refers to environmental and social
considerations.
CONFIDENTIAL
Current Challenges on Fuel Security for Electricity Supply
• High dependence on depleting Peninsula gas supply
• Under investment and over-consumption due to gas pricing
• Limited reserve capacity in gas supply and aging, vulnerable
pipeline infrastructure
• Coal imports highly concentrated from Indonesia due to
limitations on tariff cost-pass through
• Frequent gas supply curtailment has led to increase usage
of high cost alternatives (distillate)
• Inability to pass-through tariffs for fuel security
• Increasing sensitivities to the environment
Affordability: cost to
users, and risk to the
economy (reliance)
Accessibility: barriers
and constraints (fuel
and supplier diversity)
Availability: resources
and infrastructure
Acceptability:
environmental, social
objectives
Situation perpetuates as MESI does not have an
actionable fuel mix/security policy*
* Based on New Energy Policy, fuel diversification policy is removed -- risk managed by ‘market’
Global Proven Natural Gas Reserves, by Region
Source: BP Statistical Review of World Energy CONFIDENTIAL
World Hard Coal/Brown Coal Reserves and Remaining Life*
CONFIDENTIAL
World Thermal Coal Market
Largest producer/
consumer, but small
trade
Biggest importers
Biggest exporters
Source: Frontier analysis of IEA
The Asia-Pacific thermal coal market relies heavily on exports from Indonesia and Australia and imports by the industrialised economies of East Asia: Japan, China, Taiwan and South Korea
Columbia, Russia and South Africa in particular are geographically poised to supply both the Atlantic and Asia-Pacific markets, and are therefore considered swing supplies
CONFIDENTIAL
Fuel Mix and HHI (2009) 2010 2010 2008
G7 Countries Coal Hydro Gas Nuclear Oil Total HHI Forest % of Land
Area* GDP per capita
(US$)** CO2 Emissions per
capita^
United States 45% 7% 23% 20% 1% 96.0% 0.30 33.0% 47153 17.96
United Kingdom 29% 1% 44% 19% 1% 94.2% 0.31 12.0% 36343 8.52
Japan 27% 7% 27% 27% 7% 95.5% 0.23 69.0% 42831 9.46
Italy 15% 17% 51% 0% 9% 92.2% 0.32 31.0% 34075 7.44
Germany 44% 3% 13% 23% 2% 85.1% 0.26 32.0% 40116 9.58
France 5% 11% 4% 76% 1% 97.3% 0.60 29.0% 39448 5.87
Canada 15% 60% 6% 15% 1% 98.1% 0.41 34.0% 46212 16.33
Non G7 Countries Coal Hydro Gas Nuclear Oil Total HHI Forest % of Land
Area* GDP per capita
(US$)** CO2 Emissions per
capita^
Australia 78% 5% 14% 0% 1% 97.4% 0.63 19.0% 50748 18.57
China 79% 17% 1% 2% 0% 99.2% 0.65 22.0% 4428 5.31
India 69% 12% 12% 2% 3% 97.8% 0.50 23.0% 1410 1.46
South Korea 46% 1% 16% 33% 4% 99.5% 0.35 63.0% 20757 10.48
Saudi Arabia 0% 0% 45% 0% 55% 100.0% 0.51 n.s 15836 16.57
Malaysia 31% 6% 61% 0% 2% 100.0% 0.47 62.0% 8373 7.57
Thailand 20% 5% 71% 0% 0% 96.0% 0.54 37.0% 4608 4.19
Indonesia 42% 7% 22% 0% 23% 94.0% 0.28 52.0% 2946 1.73
Vietnam 18% 36% 43% 0% 3% 100.0% 0.35 44.0% 1224 1.5
Fuel Mix for Power Generation
Sources: * Global Forest Resources Assessment, Food and Agriculture Organisation 2010 ** World Bank 2010 ^ World Bank 2008 CONFIDENTIAL
International Comparison on Other Countries HHI
Source: Frontier Economics CONFIDENTIAL
Historical fuel mix for electricity and HHI - Japan
Historical fuel mix for electricity and HHI - Indonesia
Historical fuel mix for electricity and HHI – South Korea
Historical fuel mix for electricity and HHI - Australia
CONFIDENTIAL
ES1
ES2
ES3
ES4
ES5
ES6
ES7
Global reserves-to-production ratios for gas, coal and oil.
Power sector reserve capacity.
HHI for fuel mix (i.e. gas, coal, oil, hydro) for the power sector.
HHI for fuel suppliers (i.e. domestic gas, Aus LNG, etc) for the power sector.
Net energy import dependence for gas, coal and oil for the power sector.
Gas, coal and oil stocks available to power sector.
CO2 emissions intensity for the power sector.
These Security Parameters are part of JPPPET plant up planning
7 Parameters for Formulating Fuel Mix Security
Emissions intensity of electricity, country comparisons 2009
World Bank Standard
(mg/Nm3) New Plant Proposal
(mg/Nm3)
Sulphur Dioxide 500 (emission) maximum 500 (emission)
Nitrogen Dioxide 500 (emission) maximum 500 (emission)
Carbon Monoxide 200 (emission) maximum 200 (emission)
Oxygen
Opacity
Stack Flue Gas Flow Rate 22m/sec (intermittent or short
term operation
Stack Flue Gas Temperature 135 degree C (performance coal)
CONFIDENTIAL
Aiming for fuel supply security through diversification
600mmscfd Gas (Gwh%)
900mmscfd Gas (Gwh%)
Unconstrained (Gwh%)
Singapore
China, Aust.
S.Korea
Thai, India
Indonesia
Japan
HHI
benchmark
• Existing plant costs based on SLA, PPAs; Future plant assumptions are based on Lab sessions with ST,TNB
• Fuel cost , Real basis, Coal at US$105/tonne, Gas at RM3/mmbtu increment every 6month until LNG price
• Load forecast based on ST figures as shared during Lab session
Source :Frontier, ST, MyPOWER, TNB
As presented and agreed at JPPPET on 10 April 2012 CONFIDENTIAL
LNG import prices to Japan and South Korea, crude oil import prices to
Japan
CONFIDENTIAL
Metalytics coal price projections (FOB)
CONFIDENTIAL
Difference in average generation cost reflective to the Base (sen
2011/12)
CONFIDENTIAL
The Future Will Be ‘Challenging’ – Unconstrained ‘Market’
* Nominal, inflation 3%
Source: Frontier, MyPOWER
Escalating Electricity
Tariff till 2018
• 30% higher than current
• Prices returns to competitive
path as sector diversifies
away from gas
Fuel Diversity beyond
2018
• Energy security benchmarks
shows vulnerability
Higher CO2 emission
intensity (tonnes/MWh)
Overpaying
Av. Tariffs
Coal Gas
Others
17% increase
Fuel Mix Share (%)
Unconstrained gas at USD 15/mmbtu
CONFIDENTIAL
1.5 1.4 1.3 1.2 1.1 1.0
Thank You
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