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Japan’s coal plants under renewed scrutiny
TRANSITION X URGED IN PH
JAPAN
PHILIPPINES XXX
Japan remains the third largest importer of coal.
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apanese policy remains keen on ensuring long-term energy security and competitively priced hydrocarbons imports with coal fitting the bill for decades, according to APAC Energy Buzz by Wood Mackenzie Asia Pacific Vice Chair, Gavin Thompson. This follows on from a report that the Japanese government is planning to suspend many of its least efficient coal plants by 2030. Japan today remains the world’s third largest importer of coal. Wood Mackenzie’s Dr. Frank Yu noted that there has been no formal change to the existing policy announced, and its achievability and whether it would really represent a U-turn on coal should be considered. The speculation around what plants may be closed has been focused on Japan’s pre-1995 coal-fired fleet but it is more likely that all lower efficiency plants could be targeted, the report said. This shows a significant proportion of the current mix, with around 24GW of currently operating coal plants being considered as "low efficiency" plants. Should these plants close by 2030, then Japan’s power mix has little option but to become more reliant on nuclear and imported liquefied natural gas (LNG). ‘Lost’ coal generation could reach around 160 TWh by 2030 whilst nuclear would have to be increased and gas would fill most of the resultant gap.
By 2030, up to an additional 13 Mt of LNG could be required to help fill the gap. Any issue with nuclear restarts and LNG demand could be higher still and will inevitably push generation costs up significantly. Japan is also expected to build over 50GW of renewables capacity out to 2030, including a major increase in offshore wind. However, high costs in Japan could make an accelerated rampup challenging. Despite this, Thompson noted that Japan is one of the few countries in the G20 that continues to develop new coal-fired power plants. Around 6.1GW of ultra-supercritical and integrated gasification combined cycle coal plants are currently under construction. Higher operational efficiencies, paired with a significant volume of newer units, would clearly support a continued role for coal in Japan’s power mix. This would also allow the government to continue to push towards its existing 2030 targets to reduce the share of coal in the energy mix to around 25%. With a mature economy and falling population, Japan’s carbon emissions in the longterm are slated to decline, but are still not falling quickly enough to meet the country’s Nationally Determined Contributions (NDCs) under the Paris Agreement. Japan’s NDC goal is to reduce emissions by 26% below 2013 level by 2030. This target is unlikely to be met without a significant and sustained shift in the energy mix towards zero-carbon energy. Thompson adds that a more aggressive push to close ageing and less efficient plants would mean Japan will have to ramp up gas, nuclear and renewables, but at what pace and what magnitude of switching remains unclear and would be determined by the timing of plant closures. This would come at huge cost and is likely to also face acute opposition from Japanese industries.
xxx Reliance on coal has led to price surges
The Philippines couldtosee electricity prices Asian Power talked YTLcheaper Power International and a more competitive and Yeoh reliable power Berhad’s CEO Tan Sri Francis about thesector in a post-pandemic era, if it switched its reliance company’s largest projects. on coal power for renewables and if the country could a transition plan through auctions, Tell uscreate about the company’s most stellar according to an Institute Energy Economics power projects to datefor and where they are and Financial Analysis (IEEFA) report. located. report found that the focus baseload AtThe present, we are constructing theon first oil shale coal and reliance on imported fuel have mine mouth power plant with a capacityled of to 2x price surges forutilising consumers that can only be 235 MW (net) the circulating fluidised tempered force technology majeure is invoked. Without bed boilersif(CFB) in the Hashemite force majeure, per kilowatt-hour would Kingdom of Jordan. The project isrates located at rise 15% in Luzon and 5% in the Visayas. Attarat um Guhdran which is 110 km southeast energy finance analyst Sara Jane it is of IEEFA’s Amman. At a total investment of US$2.1b, Ahmed explained that, although Meralco the largest private sector project in Jordan to date attributed the recent electricity instability a and is expected to meet 15% of Jordan’sto annual spike in residential power consumption due electricity demand. Attarat Power Company to risingwhich temperatures, it may have instead (APCO) is the project company has entered been due to an over-reliance on intractable(PPA) into a 30-year Power Purchase Agreement fossil fuelJordanian plants that are notutility flexible enough with the national and single to meet consumer needs. Ahmed suggested that buyer, NEPCO for the sale of the entire electric the Department Financeoutput. and theThe National capacity and net of electrical other Economic Authority could push project weDevelopment are currently developing is in Cirebon for an economic recovery by strengthening Regency, West Java, Indonesia. The 2 x 660the MW country’s electricity market efficient new (net) coal-fired power plantwith will utilise state-ofrenewable energy technologies, whilstThe reducing the-art ultra-supercritical technology. project the cost of electricity. company, PT Tanjung Jati Power Company has IEEFA recommended reforms, such as(PPA) modular executed a Power Purchase Agreement systems/grid upgrades, implementing the Green with PT PLN (Persero) in December 2015. We Energy Tariff, moratorium onnew newopportunities inflexible are always onathe lookout for power, expediting the launch of Energy Virtual in generation whether it is bidding for existing One-Stop Shops, and introducing assets or investing in new projects.competition.
AUSTRALIA
Green hydrogen to support Australian renewables’ growth The increasing viability of the technology as a complement to renewable energy has seen substantial growth opportunities for the green hydrogen sector in Australia over the coming years, according to a report from Fitch Solutions. The rapidly-falling costs of renewables is said to push production costs of hydrogen down and drive adoption of the technology. As a result, Australia has a high potential to scale up the development of green hydrogen and reach cost parity given the growth in its renewables capacity, which has already depressed electricity prices in recent years. Green hydrogen will also support Australia’s ongoing renewables growth momentum, particularly as the sector has become increasingly saturated. Regulators have warned of grid stability problems if renewables capacity continues to increase substantially over the coming years. They have mooted several different solutions but they all remain contentious. The Australian Energy Market Operator is now
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looking to batteries and large-scale storage facilities as a long-term solution. Green hydrogen would be a viable alternative as it can act as a form of energy storage for excess renewables generation. Furthermore, this could also be exported to other markets, which would create additional demand for renewables, unlocking more capacity growth previously bound by domestic market constraints. The development of clean hydrogen production, an export hub and investments into R&D and demonstration projects is also backed by funding and support from the government on both the federal and state levels. At present, Australia has one of the world’s largest electrolyser pipelines, at over 11GW, which continues to expand. Whilst most of these projects remain in the pre-construction/planning stages, Fitch’s outlook remains bullish given ongoing progress and continued support from the government, particularly as many states remain keen to support renewables growth.
Australia leads global project pipeline
Source: Various sources, Fitch Solutions
