The Asia-Pacific region is marked by increasing demand for electricity. This demand is driven by the growing population and economic development of the region. GlobalData estimates that the region will constitute around 57% of the global increase in power demand during the 2013 – 2020 period.
The rise in electricity demand in the region provides a strong impetus to the construction of coal-fired power plants to generate power economically and exploit huge coal reserves. Thermal power is the dominant source of power generation in the region, with coal constituting more than 70% of the total installed thermal capacity in the region. The region constituted around 94% of global coal-fired capacity additions during the period 2005 – 2012 and this scenario is expected to continue during 2013 – 2020. The Asia-Pacific coal-fired power generation capacity market is primarily dominated and driven by China and India.
According to GlobalData estimates, China accounted for around 42% of global coal-fired capacity in 2012. The country’s coal-fired capacity is expected to increase from 775.6 GW in 2013 to 1074.4 GW by 2020. China has around 13% of the global coal reserves. This means that electricity generation in the country will remain highly dependent on this resource. There are planned capacity additions of 300 GW over the 12th Five Year Plan, which spans the period 2011 – 2015. There has been continuous replacement of old and less efficient subcritical coal-fired power plants with supercritical (SC) and ultra-supercritical (USC) technology. China closed down 70 GW of small-scale, outdated, thermal power capacity between 2006 and 2010 in an attempt to reduce emissions and coal imports.
At present, coal-fired units installed with a capacity greater than 300 MW constitute around 70% of the overall operating coal fleet in the country. Under the 12th Five Year Plan, the government aims to decrease the average coal consumption of power plants from 333 g/kWh in 2010 to 325 g/kWh in 2015.
The government has been increasingly focused on replacing low capacity, conventional, coal-fired power plants with advanced, large capacity plants. This has been accompanied with a mandate that all coal-fired power plants with a capacity greater than 600 MW be based on SC and USC technology. The replacement of old, inefficient, units with SC and USC units does not simply provide lower emissions and higher efficiency. It also provides for bulk increase in capacity addition.
The cost of construction of SC and USC units in China has reduced as a result of economies of scale: the cost of building a USC power plant in China is a third less than the cost of building a less efficient coal-fired power plant in the US.
China is also starting to use new power generation technologies for coal, such as integrated gasification combined cycle (IGCC) and carbon capture and storage (CCS). These technologies not only provide power generation with a higher efficiency but also help to control emissions. The country is currently planning to develop a 350 MW capacity large scale coal-fired CCS demonstration project by 2015. China has joined with Alstom to implement CCS technology in the country. As of May 2012, there were six large-scale integrated projects proposed in China.
The country also has several IGCC demonstration plants under construction, with at least seven more IGCC plants in the planning stages. The country’s GreenGen project, which is the first commercial-scale demonstration project, aims to merge IGCC and CCS technologies. The project was initiated in 2009 and is a US$ 1 billion venture involving a consortium of seven Chinese enterprises, led by Huaneng and including Datang, Huadian and Shenhua. Phase I of the project, a 250 MW IGCC power plant, became operational in December 2012. The work on Phase II of the project, a smaller pilot plant generating electricity from hydrogen along with CO2 capture, has already begun.
Potential for growth
The growth of coal capacity in China will likely be restricted by new, ambient air emission standards that came into effect in January 2012. The new standards limit sulfur dioxide (SO2) emissions from new coal-fired power plants to 100 mg per normal cubic metre (mg/Nm3) and 200 mg/Nm3 for existing coal-fired power plants.
The new standards are now more stringent and place China in line with US emission standards. The government has given existing power plants a period of two and a half years to implement these new standards. The country’s extensive use of coal for electricity generation has significantly increased the country’s carbon footprint, making China the largest emitter of greenhouse gases in the world. Because of this, the government has been promoting the use of gas for power generation in order to lower emissions.
In addition to the new standards, rising coal prices and lower electricity tariffs have been taking a toll on the financial health of the Chinese utilities and making the sector less attractive for private investment. In the past, although coal prices increased considerably, there was no corresponding increase in electricity tariffs by the government. This resulted in financial losses for many coal-fired power plants. Even though coal prices are currently low and the government has increased electricity tariffs, this has not proved much of a help for utilities making a loss.
To read part 2 of the article, please click here.
Written by Shivanshu Agnihotri, GlobalData. This article was first published in the July 2013 issue of World Coal.
Read the article online at: https://www.worldcoal.com/coal/03092013/powering_the_asia_pacific_part_1_2/