Increasing reliance on coal for generation capacity addition-

Power generation in Southeast Asia is heavily reliant on fossil fuels, with natural gas and coal dominating output. However, with dwindling supplies and rising export demand, natural gas has lost its inherent price advantage over coal. The move towards coal-based capacity is becoming prominent with coal-based power plants accounting for 75 per cent of the thermal capacity under construction at the end of 2012; most of these projects are located in Vietnam and Indonesia.

Given its abundance in the region, power generated from coal is not only comparatively cheap but is also more stable than other means of power generation, especially renewable sources. Hence, even though Southeast Asian economies are becoming conscious of the need for sustainable development and have plans to exploit renewable energy, it will be some time before coal is replaced as the dominant fuel for power generation.

Existing coal-based capacity

Proven reserves of coal in Southeast Asia are sufficient to sustain current production levels for 80 years, according to the German Federal Institute for Geosciences and Natural Resources. Indonesia is clearly the best endowed with coal deposits, being a net exporter of coal with reserves of nearly 28,979 million tonnes (mt). The country has relied heavily on this natural resource for fulfilling its energy needs, with its installed capacity of 46,104 MW at the end of 2013. Of the total power generated during 2013, 51.35 per cent came from coal.

Between 2005 and 2013, the installed capacity in Indonesia increased at an impressive compound annual growth rate (CAGR) of 7.5 per cent. This high growth rate can be attributed to the government’s Fast Track Programme Phase I (FTP I) introduced in 2006 to build 10,000 MW of coal-based power plants. Initially, FTP I was planned to be completed by 2009, but is now targeted for completion by the end of 2014. Under FTP I, state-owned utility PT Perusahaan Listrik Negara (PT PLN) was asked to develop 37 coal-fired steam power plants across Indonesia by 2011. Independent power producers (IPPs) have also contributed to this capacity addition, mainly through large-scale coal and geothermal projects, which bring higher profits.

Indonesia subsequently launched FTP II in 2009 to develop another 10 GW of capacity by 2014, comprising 40 per cent coal-based capacity. However, after several rounds of amendments, FTP II now aims to add almost 18 GW of capacity. FTP II has now been extended beyond 2014 with the addition of several large coal-based power plants, the cancellation of several natural gas-based power plants and delay in development of several geothermal plants.

In the Philippines, 67 per cent of the total installed capacity of over 17,000 MW is based on thermal fuels such as coal, oil, and gas. Since 2005, generation capacity based on oil has been on the decline while capacity based on coal and natural gas has been increasing. One of the largest upcoming coal-based plants in the country is the 1,200 MW expansion of the GN Power plant located in Mariveles, Bataan province, on Luzon island.

Malaysia and Vietnam also have significant coal-based capacity with expansion plans for the near future. While coal-based capacity made up nearly 26 per cent of Malaysia’s total installed capacity of 29,143 MW (as of 2012), it made up 21 per cent of the total installed capacity of 28,000 MW in Vietnam (as of 2013).

However, not all countries in the region have significant coal-based capacity. Cambodia, for instance, has very little coal-based capacity, which contributed less than 10 per cent to the total power generation of 1,770 GWh in 2013. Power generation in Thailand also does not rely significantly on coal, with most power plants based on natural gas, fuel oil, lignite, and diesel oil.

Upcoming capacity

Not surprisingly, Indonesia has drawn up massive coal-based capacity expansion plans because of the ready availability of the domestic fuel at relatively cheap prices. According to Indonesia’s latest 10-year power development plan (known as RUPTL 2012–21) prepared by PT PLN, over 57 GW of new capacity will be added between 2012 and 2021, of which over 36 GW is expected to be coal based. These include FTP I projects that are under construction as well as new projects planned under FTP II. Under FTP II, coal-based projects worth 4,080 MW are currently under construction. Of this, nearly 1,100 MW worth of capacity is being set up in the engineering, procurement, and construction mode, 70 MW on IPP basis, and 2,910 MW in the public–private partnership mode. The projects include the 1,200 MW Sumatera Selatan – 9, expected to be commissioned by 2018, the 1,000 MW Indramayu, expected to be commissioned in 2017, the 800 MW Jambi, expected to be commissioned in 2018–19, and the 600 MW Sumatera Selatan – 10, expected to be commissioned in 2017–18.

Vietnam, under the National Master Plan for Power Development for the 2011–20 Period with the Vision to 2030 (referred to as Power Master Plan VII), plans to achieve a target capacity of 70,100 MW by the end of 2020 and 116,900 MW by the end of 2030. As envisaged in the plan, total coal-based power capacity is expected to be around 36,000 MW by 2020, producing about 156 billion kWh, accounting for 46.8 per cent of total electricity production and consuming 67.3 mt of coal. By 2030, the total coal-based power capacity is envisaged to be about 75,000 MW, producing about 394 billion kWh, accounting for 56.4 per cent of total electricity production and consuming 171 mt of coal. Due to the limitation in domestic coal production, the country will consider building and putting power plants using imported coal into operation after 2015.

Similarly, power generation in Malaysia will continue to rely heavily on two conventional fuels, gas and coal, in the coming years. Given the recent breakdowns in gas infrastructure that have adversely affected power supply, the country plans to reduce its dependence on gas for electricity generation. Consequently, coal is expected to overtake gas as the dominant fuel by 2020.

The country is looking at an addition of over 16,000 MW in installed capacity up to 2024 to meet demand. Major upcoming coal-based projects include the 1,010 MW Manjung IV coal project and the 1,000 MW Tanjung Bin Energy coal project in peninsular Malaysia and the 600 MW Balingian coal-based plant in Sarawak.

The Philippines will also continue with thermal-based power generation in the near future. Between 2014 and 2020, a total capacity of 14,276 MW is planned to be added to the existing grid, of which around 9,700 MW will be added in the Luzon grid alone. Major coal-based projects planned in Luzon include the 300 MW RP Energy Phases I and II project, the 300 MW SLPGC Phase I project, and the 600 MW AES Masinloc Expansion I and II project. The 135 MW Concepcion coal-fired project (Phases I and II) will be a major project to be set up in the Visayan islands. The 300 MW ACP coal-fired power project, the 200 MW southern Mindanao coal project, and the 200 MW Steag coal expansion project are the other major coal-based projects coming up in Mindanao.

Even for Cambodia, much of the future addition is expected to take place in the hydro and coal segments. Large coal projects under construction include the 240 MW plant in Sihanoukville, to be commissioned in 2015, and the 135 MW plant, also in Sihanoukville, to be commissioned in 2017. Other coal projects in the pipeline include the 700MW coal power plant in Sihanoukville (II), Phases I, II, III, IV and V. Cumulatively, nearly 1,575 MW of coal-based capacity is expected to come up in the near future.

Coal-based capacity in Thailand is expected to remain small in the near future. Under Thailand’s Power Development Plan 2013–30, the Electricity Generating Authority of Thailand aims to add a net generation capacity of 38 GW by 2030. Approximately 50 per cent of this capacity addition will be fuelled by natural gas while around 25 per cent will be based on renewable energy sources. However, a large coal-based plant,  the 800 MW Krabi coal power project based on clean coal technology, is expected to be commissioned in June 2019. In the IPP domain, National Power Supply Company Limited’s 540 MW coal-based plant at Chachoengsao, which is to be commissioned in late 2016 or early 2017, is another upcoming coal-based project.

Conclusion

Power sector development plans for most Southeast Asian countries target coal-based capacity to meet future needs, with countries like Indonesia being abundant in high grade coal. These countries are also working on a number of initiatives on clean coal technologies, but not much progress has taken place in this regard, as apart from the Krabi coal power project in Thailand, no other project based on supercritical technology is yet on the anvil. Even though renewable power features prominently in these countries’ power surplus vision, the uncertainty and expense associated with these points to the continuing dominance of coal-based power generation in the region.