Coal remains competitive in Asia

Coal will remain competitive in Asia, according to a new report from the IEA Clean Coal Centre (IEA CCC), which studied the competition between coal and natural gas in nine Asian countries: China, India, Thailand, Japan, South Korea, Malaysia, Indonesia, Philippines and Vietnam.

The report found that, while the cost of generation is the fundamental factor determining the relative competitiveness of coal- and natural gas-based generation, other factors should also be considered, such as the impacts of shale gas in the USA on Asian coal and natural gas markets.

According to the report, in China, India, Indonesia, Philippines, and South Korea, where coal-based generation is dominant, coal remains the most important fuel for power generation as it is cheap and available. Meanwhile, in other Southeast Asian countries, although natural gas is dominant in the generation mix, coal appears attractive primarily because of perceived domestic gas supply shortages and a rise in gas prices due to expensive LNG imports.

However, generation cost is not the only deciding factor when building new power generation capacity. For instance, in Indonesia, Malaysia and Vietnam, the low cost of gas makes gas power cheaper than coal-fired power. However, these countries are attempting to add more coal-fired capacity to meet their growing demand for electricity.

In contrast, in Japan, coal power is more economic than gas power, but the country is building more gas CCGT power plants than coal plants because of uncertainty about the Japanese government’s energy policy and the new carbon tax has put coal at a disadvantage.

“Asian energy markets are at an important crossroads,” the IEA CCC said in a press release. “Uncertainty about the reintroduction of Japanese nuclear plants and the recent implementation of carbon taxes and cap and trade in parts of Asia, means that this report provides important analysis and insight on coal's position in the spectrum of future investment decisions that will be faced by power station developers.”

Written by Jonathan Rowland.

Read the article online at: https://www.worldcoal.com/power/23032015/coal-remain-competitive-in-asia-ieaccc-coal2094/