E Effi i i APECEnergy Efficiency in APEC A Focus on the...

E Effi i i APECEnergy Efficiency in APEC A Focus on the Power Sector

APERC Workshop at EWG35Iquitos, Peru

3 March, 2008

YONGHUN JUNGVice President

Asia Pacific Energy Research Centre

APERCAsia Pacific Energy Research Centre Tokyo 1

Beijing - June 29, 2007


Study Background

Needs for Energy Efficiency ImprovementRising energy pricesg gy p

Resource issueIncreasing energy import dependencyGlobal and local environmental concerns

Needs for the Power Sector’s Energy EfficiencyNeeds for the Power Sector s Energy Efficiency Improvement

The fastest growing energy source in final energyThe fastest growing energy source in final energyEase of policy implementation

Limited number of stakeholdersSubstantial and long-term energy saving potential


Energy Prices in Recent Years

Weather and demand surge as the biggest

0.060

WTIas the biggest contributors to the current increase in oil

i 0 040

0.050

Dubai

price

Widening price gap among oil,

0.030

0.040

$/10

00 k

cal

LNG to Korea

gap among oil, natural gas and coal

0.010

0.020LNG to Japan

LNG to USA

Steady increase in oil prices since the fourth

0.000

-200

0

-200

0

-200

0

-200

1

-200

1

-200

1

-200

2

-200

2

-200

2

-200

3

-200

3

-200

3

-200

4

-200

4

-200

4

-200

5

-200

5

-200

5

-200

6

-200

6

-200

6

-200

7

-200

7

Coal to Japan

the fourth quarter of 2003 Ja

n-

May

-

Sep-

Jan-

May

-

Sep-

Jan-

May

-

Sep

-

Jan-

May

-

Sep-

Jan-

May

-

Sep

-

Jan-

May

-

Sep-

Jan-

May

-

Sep-

Jan-

May

-

DUBAI in Tokyo market WTI (Market of NY) Henry Hub, La.LNG Import Price to Japan LNG Import Price to Korea LNG Import Price to USCoal Import Price to Japan


(Source) APERC Analysis (2006)

Energy Efficiency Policies in APEC Economies Australia

Energy Efficiency Opportunities Act 2006 and Regulation 2006 to

l t

Japan

New Energy Strategy calls for another 30 percent improvement

f i t it b 2030

USA

Implementation and plan for various measures for energy

encourage large energy users to take a more rigorous approach to energy management

China

of energy intensity by 2030.

Korea

I l t ti f d t

efficiency improvement– Energy efficiency standards

for appliances– Tax incentives for the China

Ten key projects for energy launched– Target to save 240 million

Implementation of a mandatory energy management audit

Implementation of no driving days for employees of public

purchase of efficient appliances and vehicles

– Promote energy efficiency and saving at federal agencies

– Target to save 240 million tonnes of coal equivalent

Top-1000 Enterprise Energy Conservation Action Plan

days for employees of public offices

Malaysia

– Establish renewable fuel standards

Viet Namlaunched– Target to save 100 million tce

by 2010

Implementation of demonstration projects for energy efficiency improvement in industry and commercial sectors.

UNDP and the Vietnam Ministry of Science and Technology will implement a project to raise the effectiveness of energy use atHong Kong, China

Issue of labels for 2,960 appliances.

New Zealand

Under the NZ Energy Strategy maximise the efficient use of

effectiveness of energy use at small and medium enterprises (SMEs)


Indonesia

Biofuels programme initiated.

maximise the efficient use of energy to safeguard affordability, economic productivity and the environment

APEC Final Energy Demand Outlook by Source (2002-2030)

Electricity demand to grow at the fastest rate of 3.1 percent per year

1980 2002 2010 2020 2030 80-02 2002-2010 2010-2020 2020-2030 2002-2030Total Final

Mtoe Growth rate (% per annum)

Total Final

Energy Demand

Coal 310.5 336.7 466.8 515.1 560.2 0.4 4.2 1 0.8 1.8

1.9 1.8 2.12 336.2 3 818.6 4 661.2 5 648.1 6 759.2 2.3 2.5

Oil 1 039.8 1 680.0 2 040.2 2 491.8 2 972.8 2.2 2.5 2 1.8 2.1

Gas 396.3 565.6 674.5 832.7 1 010.8 1.6 2.2 2.1 2 2.1

NRE 290.8 373.9 361.5 346.4 340.4 1.1 -0.4 -0.4 -0.2 -0.3

Electricity 290.4 693.3 935.9 1 254.2 1 640.3 4 3.8 3 2.7 3.1

H t 8 5 169 1 182 3 207 9 234 8 14 6 0 9 1 3 1 2 1 2Heat 8.5 169.1 182.3 207.9 234.8 14.6 0.9 1.3 1.2 1.2



Utilization of coal-fired power generation technology

60

50

55 Advancement/Ultra-Supercritcal PCC

45

50

y (L

HV) -

% Supercritical PCC

Supercritical CFBC/PFBCChinaJapan

Mexico - Construction

USA

JapanAustralia

Canada

China

35

40

al e

ffici

ency Subcritical PCC

Subcritical CFBC

Supercritical CFBC/PFBCChinaJapanRussia

Chi Vi t

USA PhilippinesChina

Japan

Vietnam - Construction

25

30Ther

m

Supercritical PCC

ChinaUSA/Japan

Vietnam

Ultra-supercritical PCCPressurized FBC

Construction

20

25

1950 1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010

Subcritical PCC Circulating FBC


Weighted average fossil fuel thermal efficiency

Developed economies Developing economies

CT

JPNROK45%

50%

cy (%

)

CHLMAL

THA

45%

50%

ncy

(%)

AUS

CDA

CTHKC

NZSIN

USA

30%

35%

40%

Ave

rage

The

rmal

Effi

cien

MEX

PEPRC

RP

THA

30%

35%

40%

Ave

rage

The

rmal

Effi

cien

20%

25%

30%

1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005

Wei

ghte

d A

BD

INA

PE

RUS

VN

20%

25%

1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005W

eigh

ted

1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005

Year Year


Averaged thermal efficiency of coal-fired power generation


45%

50%

55%

Ultra-Supercritical PCC

Supercritical CFBC Supercritical PCCSupercritical PFBC 45%

50%

55%

Ultra-Supercritical PCC

Supercritical CFBCSupercritical PCC

Supercritical PFBC

30%

35%

40%

erm

al E

ffici

ency

(%)

AUS

CDA

Supercritical CFBC

Sub-Critical PCCSub-Critical CFBC

30%

35%

40%

erm

al E

ffici

ency

(%)

CHL

Supercritical CFBC

Sub-Critical PCCSub-Critical CFBC

10%

15%

20%

25%Th CDA

CT

HKC

JPN

ROK

NZ10%

15%

20%

25%Th CHLINAMALMEXPEPRCRUSRP

10%1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005

Year

USA 10%1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005

Year

THAVN


Averaged thermal efficiency of gas-fired power generation


60%

70%

Advanced

60%

70%

Advanced

30%

40%

50%

mal

Effi

cien

cy (%

)

Gas Turbine

Steam Turbine

Gas Turbine Combined Cycle

Advanced

30%

40%

50%

rmal

Eff

icie

ncy

(%)

Gas Turbine

Steam Turbine

Gas Turbine Combined Cycle

Advanced

0%

10%

20%

1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005

Ther

AUSCDACTHKCJPNROKNZSIN

Gas Turbine

0%

10%

20%

1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005Th

e

BDCHLINAMALMEXPEPRCRUSRPTHA

Gas Turbine

YearUSA

YearTHAVN


System Losses – T&D Losses and Power Plant Own Use (1985-2005)

Transmission Losses Power Plant Own Use

VN25%

30%

25%

30%

HKC

MEX

PE

RUS

RP

15%

20%

mis

sion

Los

s (%

)

15%

20%

Ow

n U

se (%

)

AUSCDA

CHL

CT

INA

JPNROK

MALNZ

PRC SIN

THA

USA5%

10%Tran

s

AUSBD

CDACT

INA

JPNROK

MAL

MEX

PRCRUS

RP

SINTHAUSA5%

10%

O

BD0%

0 5000 10000 15000 20000 25000 30000 35000 40000GDP per Capita (2000 US$) * For Russ ia 1990-2005

CDA

CHLHKCNZPE

RP

VN0%0 5000 10000 15000 20000 25000 30000 35000 40000

GDP per Capita (2000 US$)* For Russ ia 1990-2005



Economics of Energy Efficiency Improvement

MB

MC

MC1 MC2

Marginal Cost (MC): Technology, andTechnology, and Scale Economy

Marginal Benefit (MB) E i t(MB): Environment (local pollution), Carbon-offset, and Energy PriceEnergy Price


Improvement in Efficiency

E1 E2

Performance Characteristics of Power Generation Technologies

Past Practice(Pulverized coal

Modern Plant(Pulverized coal

super critical Modern PlantFuture Plant

(IGCC with zero Natural Gas(Pulverized coalplant)

super criticalwith FGD and

SCR)

(IGCC)(

emissionstechnologies)

Combined Cycle

SO2 ( /M 3) 1500 7500 150 10 l 0 0SO2 (mg/Mm3) 1500-7500 150 10 or less 0 0

Nox (mg/Mm3) 500-1000 100 50 or less 50 or less 50 or less

Particulates(mg/Mm3) 200-350 50 10 or less 0 0

Th lThermalEfficiency (%) 25-35 37-44 45 43 55

CO2 (g/kWh) 900-1300 770-880 750 Near zero 350

Current CapitalCosts ($/kW) 500-700 900-1200 1200-1500 1500 < 600


(Source) World Bank (2003), “Technology Assessment of Clean Coal Technologies for China: Electric Power Production” and “Financing Clean Coal Technologies in China”

Technology Roadmap – Natural Gas

Higher firing temperature enables higher thermal efficiency

Gas Turbine Technology Evolution (GE)

70

50

60

cy, %

CombinedCycle

Combined

Class HClass F

30

40

l Effi

cien

c CombinedCycle

Single Cycle

Class E

10

20

Ther

ma

Single Cycle

0

0

2100 2200 2300 2400 2500 2600 2700


(Source) GE Homepage (2007)

Firing Temp, Deg F

APEC Coal Fired Power Generation & Fuel Consumption 2005 – Potential for Energy Efficiency Improvement

Coal Fired Power Generation & Thermal Efficiency

IND12000

14000

28

Thermal Efficiency

MALROK

CT

JPN

USA/CND

PRC

8000

10000

Btu

/kw

h)

42

37

32

4000

6000

He

at R

ate

(B

China’s savings for coal consumption through 5 % thermal efficiency improvement

=2 6x108 ton (24 % savings)

1, 10

2000

H =2.6x108 ton (24 % savings)

,

0 500 1000 1500 2000 2500

Power Generation (Twh)



APEC Gas Fired Power Generation & Fuel Consumption2005 – Potential for Energy Efficiency Improvement

Gas F i red Power Genera ti on & Therma l E f f i c i encyy

PRC

MAL9000

10000 Thermal Efficiency

MAL

IND

ROK

CT

JPNUSA/CND

6000

7000

8000

tu/

kw

h) 45

49

56

3000

4000

5000

at

Ra

te (

Bt

US/CDA’s natural gas savings thru 4 % thermal efficiency improvement= 16 BCM(10% savings)

0

1000

2000

3000

He

a

0

0 100 200 300 400 500 600 700 800 900

Power Genera t i on (Twh)



Cost and Benefit of Power Generation Efficiency Improvement – A Case Study of Turbine Retrofitting in China

Project Description– Retrofitting turbines of two units in

Project Assessment– Approximately 10% reduction of CO2,– Retrofitting turbines of two units in

the Pucheng coal-fired power plant in Shaanxi Province, ChinaCapacity and commissioning date

Approximately 10% reduction of CO2, NOx, and SOx emissions

– Capital investment for turbine29 57 million USD– Capacity and commissioning date

Unit 1 (330 MW): March 1996Unit 2 (330 MW): December 1997

29.57 million USD7.6 million USD/1% improvement of thermal efficiency

f1997– Thermal efficiency

Current: 34.5%

– Net revenue increase from reduced coal consumption

4.428 million USD/yearNew: 38.4%

– Turbine ManufactureCurrent Turbine: General

– Project life30 years

– ExpensesCurrent Turbine: General Turbine (Romania)New Turbine: Dongfong Turbine (China)

ExpensesNo O&M costs assumed (as it is reflected in the baseline case)

IRR


(China) – IRR8.1%

(Source) Mitsubishi Research Institute (2006), CDM Project Design Document Form

Barriers for Technology/Know-how Transfer for Power Generation

Economic barriers– High transaction costs– Lack of full cost pricing– Low rate of return

Lack of local infrastructureLack of local infrastructure

Lack of understanding of local needs

Institutional limitations

I d t i t l d d t d dInadequate environmental codes and standards


CDM Projects under Validation

Project Types

Fuel switching 5%

Energyconservation, 1%

Non-CO2reduction, 3% 12

Oth

Project Types Emissions Reduction Potential

Wind power, 4%Fuel switching, 5%

10

Others

biomass

Biomass

Methanerecovery, 31%

6

8

n to

n C

O2

utilisation

Hydro andwindBiomass

utilisation, 29%

Hydroelectric

4

mill

ion w ind

Methanerecovery

Hydroelectricpower, 27%

0

2Non-CO2reduction


2004

2005

2006

2007

2008

2009

2010

2011

2012

Source: Fujitomi (2005), “Current Situation of the CDM”, April 2005

JBIC’s Proposed Financial Support for Renovation of Coal-fired Power Generation in China

China ElectricityCouncil JBIC

Cooperation

PowerCoal Suppliers

J-CoalAdvice

Power Generation

Power Grids

Japanese Technology

Payment

Tech. SupplyPower Gridsgy

Supplierspp y

Carbon Credits

Payment

Carbon Credits BuyersEnergy Saving

CO2 Emissions Reduction


(Source) J-Coal (2007)

Scenario Analysis – Technology and Market Road MapEfficiency and Enviro-centric Combination Scenario

Bilateral public/private partnerships sought

EWG Demand-side

Regional power grid interconnection

Local/regional air quality declines - economic

APEC-wide environmental declaration endorsed

management declaration endorsed

Peripheral industrial capacity in developing economies enhanced

APEC-wide DSM tax

Yucca Mountain repository opens

CO2 leakage from storage repositories

slowdown

Sydney Declaration - 25% energy intensity improvement by 2030

Oil companies become major l i CCS

APEC-wide DSM tax implemented

by 2030

Price hike on fuels

2005 2010 2015 2020 2025 2030

players in CCS

Global Carbon market

Tax revenue used for technology transfer

Monju fast breeder reactor re-commissioned

UN framework on forest/land change endorsed

APEC-wide mandatory air quality standards

G8 Summit endorses declaration for the environment

EWG Peer Review on Energy

CCS Technologies are commercialised



gyEfficiency enacted

Technology and Market Road Map – The Future of CCS

Carbon Capture and Sequestration (CCS)ZeroGen, Australia (100MW)

CCS Technologies are

Progressive, United

gcommercialised

RWE-n Power, United Kingdom (1,000 MW)

Kingdom (800 MW)

CO2 leakage from storage repositories

Global Carbon market

S kP C d (300

RWE, Germany (400-450 MW)

2005 2010 2015 2020 2025 2030

Oil companies become major players in CCS

P F l U i d

FutureGen, United States (275 MW)

SaskPower, Canada (300 MW)

V tt nf ll G rm n (250PowerFuels, United Kingdom (900 MW)

E.On, United Kingdom (450 MW)

Vattenfall, Germany (250 MW)



Energy Savings Potential through Thermal Efficiency Improvement

2003 Savings in Coal Power Generation20302003 - Savings in Coal Power Generation(million TOE)

500

2030

350

400

450 Coal Consumption - 2005PRC: 1,122.1 million TOEUSA: 555.5 million TOERussia: 103.3 million TOE

13.3 %

200

250

300

16.6 %

40.3%20 0 % 19 5 % 12 8 %50

100

150

20.0 % 19.5 % 27.3 % 15.2 % 8.8 % 12.8 %

0

50

PRC USA RUS AUS CT INA ROK JPN OtherAPEC

TotalAPEC


Energy Savings Potential through Thermal Efficiency Improvement

2030 - Savings in Gas Power Generation( illi TOE)(million TOE)

140

Gas Consumption 2005

100

120Gas Consumption - 2005Russia: 349.6 million TOE USA: 507.7 million TOEJapan: 70.5 million TOE

28.2%60

80

9.7 %11.0 % 12.3 % 13.7 % 34.3 % 16.2 % 19.0 % 3.4 %

20

40

0RUS USA THA JPN MEX AUS VN CDA Other

APECTotal

APEC


Tentative Conclusions

How to mobilise financial sources is the key for implementing the power sector energy efficiency projects.

Incentives need to be provided to increase project viability.– Carbon price– Scale-economy through bundling projects

Institutional arrangements are necessary to create framework conducive of financial flows.

– ESCOs– Government commitment between host and investing economies


Way Forward

Fixing all the numbers

Complete the scenario exercise (to be included in the outlook)

Identify economy-specific barriers & policy implications

Extend the study to incorporate the end-use sector (next phase, 2009-2010)


APERCwww.ieej.or.jp/aperc


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