international coal prices and effect on power generation asok dasgupta

INTERNATIONAL COAL PRICES AND ITS EFFECTS ON POWER GENERATION

Asok DasguptaPresident- Independent Power

Producers Association of India (IPPAI)

Sri Lanka, Colombo: 1st March, 2012

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COST OF GENERATION OF ELECTRIC POWER THROUGH THERMAL(COAL)

GENERATION

UNIT COST OF ELECTRICITY=FIXED

COST+VARIABLE COST

CAPITAL COST COST OF MONEY

FIXED COST IS DEPENDENT ON

INSURANCE COST O&M COST DEPRECIATION

2nd Asia Energy Security Summit: Colombo, 1st March 2012

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These Costs Depend On:

Demand and Supply

PositionInflation Financial

Market


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Variable Cost Varies as per

Cost of Coal Cost of Consumables and Spares

THESE COSTS DEPEND ON DEMAND AND SUPPLY SITUATION OF COAL WHICH IN TURN

DEPEND ON DEMAND AND SUPPLY OF OTHER FUELS LIKE OIL,GAS AND NUCLEAR


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Characteristics of Coal

Coking Coal

For Steel Making

Non Coking Coal

For Power Generation

Calorific Value

Thermal Properties

of Coal

Carbon

Ash

Sulfur

Moisture

Volatile Matter

Composition


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• Heat Rate for Thermal Generation• Heat Input/Electricity Output• KCAL/KWH• Calorific Value• Heat Content Per Kg• KCAL/Kg

• VARIABLE COST=HEAT RATE/CALORIFIC VALUE =KG/KWH

– HIGHER THE CALORIFIC VALUE – LOWER THE INPUT OF COAL


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World Production of Coal


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DEPENDENCE ON COAL FOR POWER GENERATION

South Africa 93 % Israel 65%

Poland 90% Czech Republic 56%

China 79% Morocco 55%

Australia 76% Greece 55%

Kazakhstan 70% USA 45%

India 69% Germany 44%


Coal: Proved Reserves 2010Coal: Proved Reserves at end 2010 (Million Tonnes)

Anthracite Sub-bituminous

COUNTRIES and bituminus and lignite Total Share of Total R/P ratio

Australia 37100 39300 76400 8.9% 180

China 62200 52300 114500 13.3% 35

Czech Republic 192 908 1100 0.1% 22

Greece - 3020 3020 0.4% 44

India 56100 4500 60600 7.0% 106

Indonesia 1520 4009 5529 0.6% 18

Kazakhstan 21500 12100 33600 3.9% 303

Poland 4338 1371 5709 0.7% 43

South Africa 30156 - 30156 3.5% 119

US 108501 128794 237295 27.6% 241

Total World 404762 456176 860938 100.0% 118

of which: OECD 155926 222603 378529 44.0% 184

Non-OECD 248836 233573 482409 56.0% 92

European Union # 5101 51047 56148 6.5% 105

Former Soviet Union 86725 141309 228034 26.5% 452

Source of reserves data: Survey of Energy Resources, World Energy Council 2010.

2nd Asia Energy Security Summit: Colombo, 1st March 2012 9

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World Coal Production by Region 2008-2035 (Quadrillion Btu)


112nd Asia Energy Security Summit:

Colombo, 1st March 2012

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• It was forecasted that Coal, Natural Gas and Nuclear power will continue to hold their importance as a primary energy sources for electricity generation till 2015.

• Total world power generation demand(P) – 24980 TWh (2015) • A growth from 18,920 TWh in 2006.• Coal-fired power stations increasing their share in total generation from

40% in 2006 to 44% in 2015.

• Gas-fired generation dropping marginally from 20% to 19% in 2015, as a result of higher prices.

• Oil use in power generation continuing to decline from 6% to 4%

• Nuclear power suffering a fall in market share from 15% to 13% in 2015.

• Conversely renewable generation (including hydro) is expected to rise from 18% in 2006 to 20% in 2015


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Reasons for Continuation of Coal Use Despite Existing and Future Policies to Mitigate Greenhouse Gas Emission

Coal is plentiful, widely distributed and likely to be available

Coal has consistently outperformed oil and gas on an equivalent-energy basis, and despite a potential cost of carbon, coal is likely to remain the most affordable fuel for power generation in many developing and industrialised countries for several decades.

Coal is considered relatively affordable and has less price volatility compared to oil and gas.

The use of indigenous reserves or the ability to access a well-provided and affordable international market can enhance a country’s energy security and provide affordable reliable power to drive economies and development.

The greatest increase in the demand for coal will be in the developing countries, especially in developing Asia, where reserves are large and low-cost. OECD coal use is likely to grow modestly.


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World Coal Consumption increases by 50 per cent

(2008- 139 Quadrillion Btu2035 – 209 Quadrillion Btu)

As per International

Energy Outlook (IEO),



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World Coal Consumption by Region (1980-2035)


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In 2008, Coal accounted for 28 per cent of world energy consumption

World production of Coal in

2008

60% shipped to Electricity Producers

4% shipped to Residential & Commercial

Sector

36% shipped to Industrial consumers


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IEO projected that Electric Power Sector will witness a

decline in Coal’s share of total energy consumption for Power

GenerationFrom 43 per cent in 2008

To 37 per cent in 2010


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International Coal Trade Growth :21.2 quadrillion Btu in 2009 to

35.2 quadrillion Btu in 2035.

The share of total world coal consumption accounted for by internationally traded coal has increased from 15 percent in 2009 to a steady rate of 17 percent as per IEO projection.

Stability on share of coal trade primarily reflects the ability of the world’s largest coal consumers, China and India, to meet substantial portions of their future coal demand with domestic production.


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COAL SHARE OF WORLD ENERGY CONSUMPTION BY SECTOR 2008, 2020 AND 2035 (PERCENT)


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OECD COAL CONSUMPTION BY REGION 1980, 2008, 2020 & 2035

(Quadrillion Btu)


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NON-OECD COAL CONSUMPTION BY REGION 1980, 2008, 2020 & 2035

(Quadrillion Btu)


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International Coal Price


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AFTER THAT THE RISE WILL DEPEND ON POPULATION GROWTH


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International Coal Prices- Past & Present

Coal Prices in USD Per Metric Ton (Approx)Countries 2009 2010 2011 2012

Imp Exp Imp Exp Imp Exp Imp Exp

Australia -- $78.65 -- $78.8- $115

-- $117- $141

-- $115.14

China $73 -- -- -- $130 -- $120 --

India $38 -- $110 - $114

-- $98- $128.5

-- $79- $119

--

Indonesia -- $66.46 -- $75 -- $ 119.03 -- $111.58

South Africa -- -- -- $105.78 -- $106.3 -- $104.83

USA $63.91 $101.44 $71.77 $120.41 $86- $112

$139- $155.8

-- --


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AUSTRALIAN COAL INDEX


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AUSTRALIA Coal Price Change in 2011


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INDONESIAN COAL INDEX


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international coal prices and effect on power generation asok dasgupta

Technology

acountrys energy security

cost of generation

world energy council

world coal production

developing asia

continuation of coal

oecd coal use

survey of energy resources