SlideShare a Scribd company logo
1 of 32
Download to read offline
Data for modelling early
retirement of coal plants
Isabella Suarez
March 2024
Supporting the development of financing
instruments
transitionzero.org | @transitionzero
Empowering our partners
with open data products to
shape a clean energy future
2
We are a climate analytics not-for-profit established in 2021.
We build open energy transition products without usability
compromises and partner with mission-aligned organisations
to help scale a global standard for energy transition planning.
| About Us
Table of Contents
transitionzero.org | @transitionzero 3
04
09
16
30
About the CAT tool
Methodology
Highlights and Findings from Indonesia & the
Philippines
Policy Guidance
4
transitionzero.org | @transitionzero
About CAT
A background on the who, what, why and
how of the Coal Asset Transition (CAT) tool
transitionzero.org | @transitionzero
The Coal Asset Transition (CAT) tool provides
foundational economic, financial and
environmental plant-level data to analyse the
impact and potential for coal plant refinancing.
5
| About CAT
Indonesia: released October 2022,
to be updated in 2024
Pakistan: under development
Philippines: released January
2024
transitionzero.org | @transitionzero 6
| About CAT
Inputs Outputs
Metrics
Boiler Type
Retirement cost
($ and $/MW)
Retirement years
Renewable Energy Replacement cost
($, $/MWh, and $/tCO2)
SR & LR profitability ($/MWh)
Carbon (CO2) emissions
saving (tCO2)
Jobs lost from closure and
gained from clean replacement
Age
Capacity
Coal type & source
Reserve Margin
Efficiency
Emission intensity & factor
Average Generation
Average Fuel cost
CAPEX
O&M cost
Estimated PSA Tariff
Existing jobs
Technological
Specifications
Operational
Cash Flows
Social
CAT tool metrics
CAT provides metrics based on the asset's technological specifications,
cash flows, operations, and environmental performance.
Cost of abatement
($/tCO2)
transitionzero.org | @transitionzero 7
High-level screening to
identify regions to prioritise
for phase-out based on
various screening metrics
The development of insights and
policy recommendations for
GFANZ’s Managed Phaseout of
Coal in Asia-Pacific report.
Asset-level deep dives into
financial metrics, operating
costs, and environmental
and social externalities
Bankers and investors have used
CAT data as the starting point for
discounted cash flow analysis.
Identifying candidates for coal
phase-out at the asset level
based on criteria most
important to the end user
Carbon Trust’s Supporting a rapid,
just and equitable transition away
from coal report, analysing eligible
coal assets in the province of
Odisha, India.
Use cases
CAT is a foundational dataset that can support a range of use cases
| About CAT
transitionzero.org | @transitionzero 8
Web dashboard updated
to facilitate easier user
interaction with our data
Dataset download (excel
sheet) with data points by plant
Output formats
Learn more about the CAT tool and explore the data in its different forms and
functions
Methodology document
detailing the sources and
methods used for each
metric and market
COMING SOON DOWNLOAD HERE DOWNLOAD HERE
| About CAT
9
transitionzero.org | @transitionzero
Methodology and data quality
Breaking down the CAT methodology, the
data collection process, and the data gaps
and limitations
transitionzero.org | @transitionzero 10
Sale & purchase of energy
and capacity
● Energy payment
● Capacity payment
● Dependable capacity
● Tariff setting
Term/contract period
● Operational term
● COD date
| About CAT
Components of PPA
PPAs come in various forms, but typically has the following key components
Plant operation
● Dispatch terms (by utility
or company)
● Minimum offtake
Fuel supply
● Dedicated upstream supply
● Upstream fuel contract
● Midstream transport contract
● Cost pass through
● Heat-rate
Termination &
abandonment
● Extension or renewal
● Option to purchase
● Abandonment liabilities
Assessing the cost of early retirement for coal-fired power plants is
based on the financial value of a plant, which will form the basis for
negotiations on buy-out prices.
Estimating the financial value of coal plants is typically done
from two different perspectives:
01. Assessing the remaining investment value of the asset using
un-recuperated capital expenditure
02. Assessing the value of future revenue streams.
Generally, the first view could undervalue the asset by omitting its
potential to bring future revenues and supra-normal profits. The
second perspective is employed for CAT, as we feel it gives a fairer
value for initial negotiations. The future revenue streams are
underpinned by data from existing PSAs for each plant.
transitionzero.org | @transitionzero 11
Estimating the cost of buy-out
Buying-out coal is dependent on a variety of factors
Cost of early retirement =
Years of early
retirement
x Annual generation
x (PSA tariff - Fuel cost - Carbon cost)
Year of early retirement = Number of years of buy-out in an early retirement
scenario, capped at a maximum of 5 years. Philippine coal plants have many
PSAs with remaining durations ranging from 1 to 28 years. The maximum 5
year buy-out is assigned to reflect the possibility that buy-outs will be
negotiated per PSA.
PSA tariff = Estimated tariff price per unit of electricity generated ($/MWh),
based on PSA data from 2020 to 2023
Fuel cost = Three year average fuel cost ($/MWh)
Carbon cost = Three year average carbon cost ($/MWh)
Methodology and data
| Methodology and data
transitionzero.org | @transitionzero 12
PPA data – filling in the blanks
How we treat missing data depends on the market structure,
power market design, and phase of market liberalisation
| Methodology and data
Country PPA data availability
China PPAs details are seldom publicly available.
Japan PPAs details are seldom publicly available.
Vietnam PPAs details are seldom publicly available.
Indonesia
PPAs details are sometimes reported by regulators
or on media articles, however, such data points
may be unreliable and are hard to verify.
South Korea
PPAs details are sometimes reported by regulators
or on media articles. Data collection is likely to be a
challenge.
India
Decent - PPAs details are sometimes reported by
regulators or on media articles. Data collection is
likely to be a challenge.
Philippines
Availability of regulated power supply agreements
(PSAs) published by utilities give a sense of prices.
For Indonesia
● Regulated market: Less transparent PPAs
● Regional split: 9 regions, namely Sumatra, Java-Bali, Kalimantan,
Sulawesi (Sulbagsel, Sulbagut), Papua, North Papua, Maluku,
North Maluku, Nusa Tengara
● Type of plant and pricing structure
01. Mine-mouth
02. PLN-owned or IPP-owned
03. Captive plant
transitionzero.org | @transitionzero 13
PPA data – filling in the blanks
Methodology
PLN-owned
plants
IPP-owned
plants
Captive
plants
PPA Price TZ methodology
Indonesia
| Methodology and data
Reported PPA price Based on the reported PPA price in media reports etc
Pre-2020: 30 years
Post-2020: 25 years
Unknown PPA price (CFPP)
Based on PLN reported cost of production, adjusted by year of operations and regional
scaling
Unknown PPA price (Mine-Mouth)
Based on PLN reported cost of production, adjusted by year of operations and regional
scaling. Further aligned to other mine-mouth plants
Pre-2020: 35 years
Post-2020: 30 years
Reported PPA price Based on the reported PPA price in media reports etc
Pre-2020: 30 years
Post-2020: 25 years
Unknown PPA price (CFPP)
Discounted off regional BPP, adjusted by year of operations and known price in the
region
Unknown PPA price (Mine-Mouth)
Discounted off regional BPP, adjusted by year of operations and known price in the
region. Further aligned to other mine-mouth plants
Pre-2020: 35 years
Post-2020: 30 years
Unknown PPA price
Discounted off regional BPP, adjusted by year of operations and known price in the
region. Assumed to be more expensive than PLTUs
Pre-2020: 30 years
Post-2020: 25 years
transitionzero.org | @transitionzero 14
PSA data – filling in the blanks
Philippines
PSA (Full)
Description
Complete price and monthly
generation data for PSA from
January 2020 to December 2023
–
76 PSAs
Treatment of
Data Gap
Coverage
PSA (Partial) TZ methodology
Some available PSA price and
generation data points from January
2020 to December 2023
No data points on price and monthly generation available for the
period of January 2020 to April 2023
Average Generation: Minimum generation listed in the PSA. If
unavailable, it is estimated using the typical capacity factors
depending on the contract term (baseload: 80%; mid-merit: 45%,
peaking: 20%)
Price: Since the tariff may deviate significantly from the “estimated
tariff” at the point of ERC approval, the PSA price is estimated using
the average of available PSAs signed under the same coal plant.
16 PSAs
If rate and generation were
unavailable, the month’s data is
omitted so as to not introduce bias.
If one is available, the missing data is
calculated using generation cost.
108 PSAs
NOTE: 9 PSAs having no reported price or generation despite being include by the DU/EC in their PSPP, are assumed to have not yet entered into force.
DUs with only 1 PSA set to expire are assumed to have a 3 year extension.
Data on the monthly generation charge, actual monthly generation,
PSA start date, and PSA end date are collected from Power Supply
Procurement Plans (PSPPs) and PSAs for the full analysis period.
| Methodology and data
15
transitionzero.org | @transitionzero
Key Findings
From our CAT Indonesia dataset
transitionzero.org | @transitionzero 16
| Methodology and data
Average PPA Tariff
As of October 2022
Coal plants are way more expensive than
marginal cost of US$30/MWh.
For newer coal plants, such as PLTU Jawa 7
(2019/2020) with reported PPA tariffs at
US$43/MWh, capital recovery becomes a
problem, unless there is a cost
pass-through scheme.
Average tariffs in
Indonesia are estimated
at US$65/MWh
Captive plants are the most expensive plants, followed by CFPP
and mine-mouth plants
transitionzero.org | @transitionzero 17
| Methodology and data
Tariffs across plant types
As of October 2022
US$51
/MWh
US$59
/MWh
US$82
/MWh
Regional breakdown of plant tariffs
As of October 2022
transitionzero.org | @transitionzero 18
| Methodology and data
Cost of Early Coal Retirement
PPA prices can be used to calculate cost of early retirement
2030
US$4.6 billion
For 9.2 GW
2050
US$27.5 billion
for 43.4 GW
Undepreciated
asset
value/capital
cost approach
2030
US$48 billion
For 5.5 GW
2050
US$94 billion for
38.6 GW
Buy-out of
remaining PPA
value
Max buy-out years:
10 years
19
transitionzero.org | @transitionzero
Use Cases
Data for the many different considerations
in the pursuit of coal refinancing
transitionzero.org | @transitionzero 20
| Use Cases
By reserve margin
As a Screening Tool
Sumatra (2021):
34.8%
Subregion:
Aceh: 6%
Kalimantan (2021): 45%
Subregion:
South Kalimantan: -9%
Java-Bali (2021):
59.5%
Subregion:
West Java: 3%
Sulawesi (2021):
30-40%
Maluku (2021):
38%
North Maluku (2021):
20%
Papua (2021):
3 to 59%
West Papua (2021):
17%
Java-Bali has the highest
reserve margin, making it a
region of interest for
priority coal plant
retirement
transitionzero.org | @transitionzero 21
By PPA Value
As a Screening Tool
Despite having the highest
reserve margin, Java-Bali
also has the youngest
coal plants, making
retiring them costly.
Sumatra:
US$502 million
(US$18-1,123 million)
Kalimantan:
US$705 million
(US$174-1,343 million)
Java-Bali:
US$3,735 million
(US$360-14,484 million)
Sulawesi:
US$1,486 million
(US$264-3,648 million)
Maluku:
US$1,123 million
(US$18-1,123 million)
North Maluku:
US$3,117 million
(US$759-4,990 million)
Papua:
US$329 million
(US$312-364 million)
| Use Cases
transitionzero.org | @transitionzero 22
Competing priorities and
interests will need to be
reconciled.
Total capacity for closure
varies depending on
criteria used for
selection. It is important
to recognise that
priorities will affect the
metrics used to assess
assets.
Benchmarking across assets
| Use Cases
transitionzero.org | @transitionzero 23
Benchmarking across assets
Competing priorities and
interests will need to be
reconciled.
Total capacity for closure
varies depending on
criteria used for
selection. It is important
to recognise that
priorities will affect the
metrics used to assess
assets.
| Use Cases
transitionzero.org | @transitionzero 24
Use Case #2: Benchmarking across assets
Competing priorities and
interests will need to be
reconciled.
Total capacity for closure
varies depending on
criteria used for
selection. It is important
to recognise that
priorities will affect the
metrics used to assess
assets.
| Use Cases
transitionzero.org | @transitionzero 25
Benchmarking across assets
Competing priorities and
interests will need to be
reconciled.
Total capacity for closure
varies depending on
criteria used for
selection. It is important
to recognise that
priorities will affect the
metrics used to assess
assets.
| Use Cases
transitionzero.org | @transitionzero 26
Benchmarking across assets
Competing priorities and
interests will need to be
reconciled.
Total capacity for closure
varies depending on
criteria used for
selection. It is important
to recognise that
priorities will affect the
metrics used to assess
assets.
| Use Cases
transitionzero.org | @transitionzero 27
| Use Case
Estimating emissions impact from coal retirement
Comparison of 2 scenarios prioritising a different metric for retirement
Retire 10% of cheapest plants
by PPA value
Dirtiest coal plant in Indonesia:
PLTU Asam Asam plant in Kalimantan (1.38
kgCO2/kWh)
Emissions reduction potential:
26.5 MtCO2 (14% of total coal plant emissions)
21 units representing 4.25 GW
6 units in Kalimantan, 7 units in Java-Bali, 8 in
Sumatra
21 units representing 977 MW
2 units are CFPP, 4 units are mine-mouth units, 15
units are mine mouth plants
Cheapest coal plant in Indonesia:
Captive Sinar Mas Lontar plant in Sumatra (US$52
million, 111 MW)
Emissions reduction potential:
4.4 MtCO2 (2% of total coal plant emissions)
Retire 10% of dirtiest coal plants
by emissions intensity
Cost of buy-out: US$12.15 billion Cost of buy-out: US$2.0 billion
transitionzero.org | @transitionzero 28
Asset Level Analysis
PLTU Asam-Asam Unit 1&2 in Kalimantan
Considerations
| Use Case
Operating since 2000
Subcritical PC boiler
Lignite burning
130 MW
Financial value:
US$450 million
Emissions savings from early retirement:
5.13 MtCO2
Financial saving from early retirement*: US$51
million
PLN-owned Kalimantan grid South Kalimantan
Kalimantan grid reserve margin:
45%
South Kalimantan grid reserve margin:
-9%
Net profitability:
US$65/MWh
Water cost:
US$2.13/MWh
Air cost:
US$39.28/MWh
Capacity factor: 78%
Estimated number of jobs lost from plant closure:
169 direct jobs
Basic Statistics
29
transitionzero.org | @transitionzero
Policy Guidance
How CAT data can be used for transition
planning and coal retirement scheduling
transitionzero.org | @transitionzero 30
Early coal retirement mechanisms will
be required to align with Paris
Agreement targets.
Across the developing world, this will need
to be supported by climate finance, both
domestic and international. This may
necessitate a stronger signal from
government and the markets that coal
is on its way out.
System-level thinning is vital to
balancing competing factors when
planning for coal plant retirement.
Motivate early action on voluntary
retirements. While coal plants are
profitable assets now, it will not be long
before the risk of asset stranding will arise.
A successful early coal retirement scheme
will have to motivate owners to act early
to prevent a chaotic energy transition in
the power sector.
At the same time, ensuring fair use of
the proceeds and protection of
communities are critical to ensure an
equitable and effective transition.
Any early coal retirement mechanisms
will have to reflect country
characteristics to be successful. A one
size fits all approach is unlikely to work in
Southeast Asia. Accounting for resource
adequacy is top of mind for countries with
growing demand and historical reliance on
coal.
Deal structures will differ due to
unique plant-level characteristics, as
seen in the case studies. Ownership
(private or public) is one factor that
contributes significantly.
| Policy Guidance
Policy Guidance
01 02 03
Considerations for moving forward with coal retirements
Contact
Isabella Suarez
Southeast Asia Lead
isabella.suarez@transitionzero.org
May 2024
Coal off, solar on
transitionzero.org | @transitionzero
By the numbers
32
● The average abatement cost to buy and
replace coal plants is $140/tCO2
, comprising
$41/tCO2
to 'buy-out' supply agreements 5
years early and $99/tCO2
to replace them with
solar plus storage. The high marginal abatement
cost stems from high profitability in Power Supply
Agreements (PSAs) within the country's current
tariff structure, which include fuel cost
pass-throughs that see consumers bearing the
cost of high fuel prices and not benefiting from
savings when prices drop. TransitionZero’s CAT tool
shows a wide range in buy-out costs alone,
between $0.02 million/MW to $2.8 million/MW, or
$1/tCO2
to $145/tCO2
. Nonetheless, the primary
cost of phasing out coal lies in replacing it with
clean, dispatchable alternatives like solar PV and
battery storage which are necessary to meet grid
stability and increasing demand.
Our analysis of the CAT Philippines
dataset found
| Key Findings
Abatement cost from ‘buying out’ PSAs and replacing coal capacity with
solar PV plus four hours of battery storage
Cost of replacing capacity with Solar
+ Storage
Cost of PSA buy-out for early
retirement
$/tCO
2

More Related Content

Similar to TransitionZero: Data for modelling early retirement of coal plants

Vietnam – Green Growth – 2015
Vietnam – Green Growth – 2015Vietnam – Green Growth – 2015
Vietnam – Green Growth – 2015Dr. Oliver Massmann
 
Photovoltaic Grid Parity Monitor - Utility Scale - 1
Photovoltaic Grid Parity Monitor - Utility Scale - 1Photovoltaic Grid Parity Monitor - Utility Scale - 1
Photovoltaic Grid Parity Monitor - Utility Scale - 1Leonardo ENERGY
 
Pat scheme a blessing in disguise (tata strategic thought note)
Pat scheme   a blessing in disguise (tata strategic thought note)Pat scheme   a blessing in disguise (tata strategic thought note)
Pat scheme a blessing in disguise (tata strategic thought note)Manan Agrawal
 
Perform Achieve Trade Scheme
Perform Achieve Trade SchemePerform Achieve Trade Scheme
Perform Achieve Trade SchemeSlide2Mona2
 
Renewable Energy - Recent Initiatives
Renewable Energy - Recent InitiativesRenewable Energy - Recent Initiatives
Renewable Energy - Recent InitiativesSaurabh Mehta
 
Taiwan Carbon Nanotubes Market Size, Share, Industry Trends, 2030
Taiwan Carbon Nanotubes Market Size, Share, Industry Trends, 2030Taiwan Carbon Nanotubes Market Size, Share, Industry Trends, 2030
Taiwan Carbon Nanotubes Market Size, Share, Industry Trends, 2030Chem Analyst Pvt Ltd
 
Formulation of Net Metering Policy for Odisha to boost rooftop Solar Projects
Formulation of Net Metering Policy for Odisha to boost rooftop Solar ProjectsFormulation of Net Metering Policy for Odisha to boost rooftop Solar Projects
Formulation of Net Metering Policy for Odisha to boost rooftop Solar ProjectsBikash Kumar Mallick
 
Mylene Capongol, Department of Energy - Philippine Experience in Furthering R...
Mylene Capongol, Department of Energy - Philippine Experience in Furthering R...Mylene Capongol, Department of Energy - Philippine Experience in Furthering R...
Mylene Capongol, Department of Energy - Philippine Experience in Furthering R...OECD Environment
 
NGERS and Data Capture Systems: Reporting Requirements
NGERS and Data Capture Systems:  Reporting RequirementsNGERS and Data Capture Systems:  Reporting Requirements
NGERS and Data Capture Systems: Reporting RequirementsMicheal Axelsen
 
Esci rec presentation 13 feb 2013
Esci rec presentation   13 feb 2013Esci rec presentation   13 feb 2013
Esci rec presentation 13 feb 2013Sandeep Melana
 
Energy Malaysia Volume 5 (1)
Energy Malaysia Volume 5 (1)Energy Malaysia Volume 5 (1)
Energy Malaysia Volume 5 (1)Nieza Noordin
 
CRESPAI Presentation
CRESPAI PresentationCRESPAI Presentation
CRESPAI PresentationRamesh Goel
 
The case for net metering in Country 'X'
The case for net metering in Country 'X'The case for net metering in Country 'X'
The case for net metering in Country 'X'Joseph Saviour
 
EEI Strategic Issues Forum - Integration of DER: California and New York
EEI Strategic Issues Forum - Integration of DER: California and New YorkEEI Strategic Issues Forum - Integration of DER: California and New York
EEI Strategic Issues Forum - Integration of DER: California and New YorkScottMadden, Inc.
 
Gas Utility Infrastructure Investments
Gas Utility Infrastructure InvestmentsGas Utility Infrastructure Investments
Gas Utility Infrastructure InvestmentsScottMadden, Inc.
 
slEconomics., Electricity sector tariff reforms in Thailand. Stephen Labson 2014
slEconomics., Electricity sector tariff reforms in Thailand. Stephen Labson 2014slEconomics., Electricity sector tariff reforms in Thailand. Stephen Labson 2014
slEconomics., Electricity sector tariff reforms in Thailand. Stephen Labson 2014Stephen Labson
 
Smart Grid vijay SGF-19042014 vijay Presentation
Smart Grid vijay SGF-19042014 vijay PresentationSmart Grid vijay SGF-19042014 vijay Presentation
Smart Grid vijay SGF-19042014 vijay PresentationVijay Menghani
 
IEA-RETD REMOTE PROSUMERS 20150624
IEA-RETD REMOTE PROSUMERS  20150624IEA-RETD REMOTE PROSUMERS  20150624
IEA-RETD REMOTE PROSUMERS 20150624IEA_RETD
 

Similar to TransitionZero: Data for modelling early retirement of coal plants (20)

Vietnam – Green Growth – 2015
Vietnam – Green Growth – 2015Vietnam – Green Growth – 2015
Vietnam – Green Growth – 2015
 
Photovoltaic Grid Parity Monitor - Utility Scale - 1
Photovoltaic Grid Parity Monitor - Utility Scale - 1Photovoltaic Grid Parity Monitor - Utility Scale - 1
Photovoltaic Grid Parity Monitor - Utility Scale - 1
 
Pat scheme a blessing in disguise (tata strategic thought note)
Pat scheme   a blessing in disguise (tata strategic thought note)Pat scheme   a blessing in disguise (tata strategic thought note)
Pat scheme a blessing in disguise (tata strategic thought note)
 
Perform Achieve Trade Scheme
Perform Achieve Trade SchemePerform Achieve Trade Scheme
Perform Achieve Trade Scheme
 
Renewable Energy - Recent Initiatives
Renewable Energy - Recent InitiativesRenewable Energy - Recent Initiatives
Renewable Energy - Recent Initiatives
 
Taiwan Carbon Nanotubes Market Size, Share, Industry Trends, 2030
Taiwan Carbon Nanotubes Market Size, Share, Industry Trends, 2030Taiwan Carbon Nanotubes Market Size, Share, Industry Trends, 2030
Taiwan Carbon Nanotubes Market Size, Share, Industry Trends, 2030
 
Formulation of Net Metering Policy for Odisha to boost rooftop Solar Projects
Formulation of Net Metering Policy for Odisha to boost rooftop Solar ProjectsFormulation of Net Metering Policy for Odisha to boost rooftop Solar Projects
Formulation of Net Metering Policy for Odisha to boost rooftop Solar Projects
 
Mylene Capongol, Department of Energy - Philippine Experience in Furthering R...
Mylene Capongol, Department of Energy - Philippine Experience in Furthering R...Mylene Capongol, Department of Energy - Philippine Experience in Furthering R...
Mylene Capongol, Department of Energy - Philippine Experience in Furthering R...
 
NGERS and Data Capture Systems: Reporting Requirements
NGERS and Data Capture Systems:  Reporting RequirementsNGERS and Data Capture Systems:  Reporting Requirements
NGERS and Data Capture Systems: Reporting Requirements
 
Esci rec presentation 13 feb 2013
Esci rec presentation   13 feb 2013Esci rec presentation   13 feb 2013
Esci rec presentation 13 feb 2013
 
Energy Malaysia Volume 5 (1)
Energy Malaysia Volume 5 (1)Energy Malaysia Volume 5 (1)
Energy Malaysia Volume 5 (1)
 
Small Power Generation Plant
Small Power Generation PlantSmall Power Generation Plant
Small Power Generation Plant
 
CRESPAI Presentation
CRESPAI PresentationCRESPAI Presentation
CRESPAI Presentation
 
The case for net metering in Country 'X'
The case for net metering in Country 'X'The case for net metering in Country 'X'
The case for net metering in Country 'X'
 
EEI Strategic Issues Forum - Integration of DER: California and New York
EEI Strategic Issues Forum - Integration of DER: California and New YorkEEI Strategic Issues Forum - Integration of DER: California and New York
EEI Strategic Issues Forum - Integration of DER: California and New York
 
Gas Utility Infrastructure Investments
Gas Utility Infrastructure InvestmentsGas Utility Infrastructure Investments
Gas Utility Infrastructure Investments
 
slEconomics., Electricity sector tariff reforms in Thailand. Stephen Labson 2014
slEconomics., Electricity sector tariff reforms in Thailand. Stephen Labson 2014slEconomics., Electricity sector tariff reforms in Thailand. Stephen Labson 2014
slEconomics., Electricity sector tariff reforms in Thailand. Stephen Labson 2014
 
Report Energy Efficiency in India: PAT Scheme - The Way Ahead
Report Energy Efficiency in India: PAT Scheme - The Way AheadReport Energy Efficiency in India: PAT Scheme - The Way Ahead
Report Energy Efficiency in India: PAT Scheme - The Way Ahead
 
Smart Grid vijay SGF-19042014 vijay Presentation
Smart Grid vijay SGF-19042014 vijay PresentationSmart Grid vijay SGF-19042014 vijay Presentation
Smart Grid vijay SGF-19042014 vijay Presentation
 
IEA-RETD REMOTE PROSUMERS 20150624
IEA-RETD REMOTE PROSUMERS  20150624IEA-RETD REMOTE PROSUMERS  20150624
IEA-RETD REMOTE PROSUMERS 20150624
 

More from Just Energy Transition in Coal Regions Knowledge Hub

More from Just Energy Transition in Coal Regions Knowledge Hub (18)

Sustainability by Design: Assessment Tool for Just Energy Transition Plans
Sustainability by Design: Assessment Tool for Just Energy Transition PlansSustainability by Design: Assessment Tool for Just Energy Transition Plans
Sustainability by Design: Assessment Tool for Just Energy Transition Plans
 
PPCA: Coal Transition Commission - Next Steps and Deliverables
PPCA: Coal Transition Commission - Next Steps and DeliverablesPPCA: Coal Transition Commission - Next Steps and Deliverables
PPCA: Coal Transition Commission - Next Steps and Deliverables
 
Climate & Company: An Overview of Coal Transition Mechanisms
Climate & Company: An Overview of Coal Transition MechanismsClimate & Company: An Overview of Coal Transition Mechanisms
Climate & Company: An Overview of Coal Transition Mechanisms
 
Skilling, Upskilling and Reskilling for a Just Transition in Coal Regions - E...
Skilling, Upskilling and Reskilling for a Just Transition in Coal Regions - E...Skilling, Upskilling and Reskilling for a Just Transition in Coal Regions - E...
Skilling, Upskilling and Reskilling for a Just Transition in Coal Regions - E...
 
Gendering the debate: Just transition for all - Expert Exchange 2
Gendering the debate: Just transition for all - Expert Exchange 2Gendering the debate: Just transition for all - Expert Exchange 2
Gendering the debate: Just transition for all - Expert Exchange 2
 
Economic diversification in South Africa
Economic diversification in South AfricaEconomic diversification in South Africa
Economic diversification in South Africa
 
Groundwork insights on economic diversification
Groundwork insights on economic diversificationGroundwork insights on economic diversification
Groundwork insights on economic diversification
 
Policies in lignite coal phasing-out regions, Germany
Policies in lignite coal phasing-out regions, GermanyPolicies in lignite coal phasing-out regions, Germany
Policies in lignite coal phasing-out regions, Germany
 
Structural change through coal phase-out in Germany
Structural change through coal phase-out in GermanyStructural change through coal phase-out in Germany
Structural change through coal phase-out in Germany
 
Just transition in Ukraine: War and new challenges
Just transition in Ukraine: War and new challengesJust transition in Ukraine: War and new challenges
Just transition in Ukraine: War and new challenges
 
Financing a just transition beyond coal
Financing a just transition beyond coalFinancing a just transition beyond coal
Financing a just transition beyond coal
 
RE:START strategy: Just transition insights from Czechia
RE:START strategy: Just transition insights from CzechiaRE:START strategy: Just transition insights from Czechia
RE:START strategy: Just transition insights from Czechia
 
Just transition insights from Thailand
Just transition insights from ThailandJust transition insights from Thailand
Just transition insights from Thailand
 
Private industrial park's green choice, Mongolia
Private industrial park's green choice, MongoliaPrivate industrial park's green choice, Mongolia
Private industrial park's green choice, Mongolia
 
Bappenas: Best practices of coal mining industries, Indonesia
Bappenas: Best practices of coal mining industries, IndonesiaBappenas: Best practices of coal mining industries, Indonesia
Bappenas: Best practices of coal mining industries, Indonesia
 
Just transition insights from Mpumalanga, South Africa
Just transition insights from Mpumalanga, South AfricaJust transition insights from Mpumalanga, South Africa
Just transition insights from Mpumalanga, South Africa
 
Tierra Digna: Just transition insights from Colombia
Tierra Digna: Just transition insights from ColombiaTierra Digna: Just transition insights from Colombia
Tierra Digna: Just transition insights from Colombia
 
Just transition insights from Chile
Just transition insights from ChileJust transition insights from Chile
Just transition insights from Chile
 

Recently uploaded

Characterizing wildlife trafficking and associated crime.
Characterizing wildlife trafficking and associated crime.Characterizing wildlife trafficking and associated crime.
Characterizing wildlife trafficking and associated crime.Christina Parmionova
 
“Bee engaged with Youth”. World Bee Day 2024; May. 20th.
“Bee engaged with Youth”. World Bee Day 2024; May. 20th.“Bee engaged with Youth”. World Bee Day 2024; May. 20th.
“Bee engaged with Youth”. World Bee Day 2024; May. 20th.Christina Parmionova
 
Help set up SERUDS Orphanage virtual classroom
Help set up SERUDS Orphanage virtual classroomHelp set up SERUDS Orphanage virtual classroom
Help set up SERUDS Orphanage virtual classroomSERUDS INDIA
 
Rocky Mount Greenville Willson Regional Transit Plan
Rocky Mount Greenville Willson Regional Transit PlanRocky Mount Greenville Willson Regional Transit Plan
Rocky Mount Greenville Willson Regional Transit PlanRobert Hiett
 
World Wildlife Crime Report 2024 - Introduction
World Wildlife Crime Report 2024 - IntroductionWorld Wildlife Crime Report 2024 - Introduction
World Wildlife Crime Report 2024 - IntroductionChristina Parmionova
 
Low Atmospheric Pressure Stunning is not a humane alternative to Carbon Dioxi...
Low Atmospheric Pressure Stunning is not a humane alternative to Carbon Dioxi...Low Atmospheric Pressure Stunning is not a humane alternative to Carbon Dioxi...
Low Atmospheric Pressure Stunning is not a humane alternative to Carbon Dioxi...Harm Kiezebrink
 
2024: The FAR - Federal Acquisition Regulations, Part 33
2024: The FAR - Federal Acquisition Regulations, Part 332024: The FAR - Federal Acquisition Regulations, Part 33
2024: The FAR - Federal Acquisition Regulations, Part 33JSchaus & Associates
 
Effective Financial Reporting - May 2024
Effective Financial Reporting - May 2024Effective Financial Reporting - May 2024
Effective Financial Reporting - May 2024FelixPerez547899
 
Medieval Iraq Demographic Factors Yale Historical Review
Medieval Iraq Demographic Factors Yale Historical ReviewMedieval Iraq Demographic Factors Yale Historical Review
Medieval Iraq Demographic Factors Yale Historical Reviewyalehistoricalreview
 
PPT Item # 5 -- Announcements Powerpoint
PPT Item # 5 -- Announcements PowerpointPPT Item # 5 -- Announcements Powerpoint
PPT Item # 5 -- Announcements Powerpointahcitycouncil
 
Electric vehicle infrastructure in rural areas
Electric vehicle infrastructure in rural areasElectric vehicle infrastructure in rural areas
Electric vehicle infrastructure in rural areasRPO America
 
Managing large-scale outbreaks at Farrow-to-Weaner Farms
Managing large-scale outbreaks at Farrow-to-Weaner FarmsManaging large-scale outbreaks at Farrow-to-Weaner Farms
Managing large-scale outbreaks at Farrow-to-Weaner FarmsHarm Kiezebrink
 
Item # 9- 2nd Qtr Financial & Inv. Report
Item # 9- 2nd Qtr Financial & Inv. ReportItem # 9- 2nd Qtr Financial & Inv. Report
Item # 9- 2nd Qtr Financial & Inv. Reportahcitycouncil
 
Harbin-Gross-Spring2022.pdf Yale Historical Review
Harbin-Gross-Spring2022.pdf Yale Historical ReviewHarbin-Gross-Spring2022.pdf Yale Historical Review
Harbin-Gross-Spring2022.pdf Yale Historical Reviewyalehistoricalreview
 
Families and Climate Change - iyf30 - IDF.2024 AGENDA PROGRAMME.
Families and Climate Change - iyf30 - IDF.2024 AGENDA PROGRAMME.Families and Climate Change - iyf30 - IDF.2024 AGENDA PROGRAMME.
Families and Climate Change - iyf30 - IDF.2024 AGENDA PROGRAMME.Christina Parmionova
 
Dawson City Rolling Ads for May 15 2024 Yukon
Dawson City Rolling Ads for May 15 2024 YukonDawson City Rolling Ads for May 15 2024 Yukon
Dawson City Rolling Ads for May 15 2024 Yukonpmenzies
 
Introduction to The Guidelines for the Long-term Sustainability of Outer Spac...
Introduction to The Guidelines for the Long-term Sustainability of Outer Spac...Introduction to The Guidelines for the Long-term Sustainability of Outer Spac...
Introduction to The Guidelines for the Long-term Sustainability of Outer Spac...VICTOR MAESTRE RAMIREZ
 
Plant health, safe trade and digital technology.
Plant health, safe trade and digital technology.Plant health, safe trade and digital technology.
Plant health, safe trade and digital technology.Christina Parmionova
 
International Day of Families - 15 May 2024 - UNDESA.
International Day of Families - 15 May 2024 - UNDESA.International Day of Families - 15 May 2024 - UNDESA.
International Day of Families - 15 May 2024 - UNDESA.Christina Parmionova
 

Recently uploaded (20)

Characterizing wildlife trafficking and associated crime.
Characterizing wildlife trafficking and associated crime.Characterizing wildlife trafficking and associated crime.
Characterizing wildlife trafficking and associated crime.
 
“Bee engaged with Youth”. World Bee Day 2024; May. 20th.
“Bee engaged with Youth”. World Bee Day 2024; May. 20th.“Bee engaged with Youth”. World Bee Day 2024; May. 20th.
“Bee engaged with Youth”. World Bee Day 2024; May. 20th.
 
Help set up SERUDS Orphanage virtual classroom
Help set up SERUDS Orphanage virtual classroomHelp set up SERUDS Orphanage virtual classroom
Help set up SERUDS Orphanage virtual classroom
 
Rocky Mount Greenville Willson Regional Transit Plan
Rocky Mount Greenville Willson Regional Transit PlanRocky Mount Greenville Willson Regional Transit Plan
Rocky Mount Greenville Willson Regional Transit Plan
 
World Wildlife Crime Report 2024 - Introduction
World Wildlife Crime Report 2024 - IntroductionWorld Wildlife Crime Report 2024 - Introduction
World Wildlife Crime Report 2024 - Introduction
 
Low Atmospheric Pressure Stunning is not a humane alternative to Carbon Dioxi...
Low Atmospheric Pressure Stunning is not a humane alternative to Carbon Dioxi...Low Atmospheric Pressure Stunning is not a humane alternative to Carbon Dioxi...
Low Atmospheric Pressure Stunning is not a humane alternative to Carbon Dioxi...
 
2024: The FAR - Federal Acquisition Regulations, Part 33
2024: The FAR - Federal Acquisition Regulations, Part 332024: The FAR - Federal Acquisition Regulations, Part 33
2024: The FAR - Federal Acquisition Regulations, Part 33
 
Effective Financial Reporting - May 2024
Effective Financial Reporting - May 2024Effective Financial Reporting - May 2024
Effective Financial Reporting - May 2024
 
How to Save a Place: Get the Word Out Far And Wide
How to Save a Place: Get the Word Out Far And WideHow to Save a Place: Get the Word Out Far And Wide
How to Save a Place: Get the Word Out Far And Wide
 
Medieval Iraq Demographic Factors Yale Historical Review
Medieval Iraq Demographic Factors Yale Historical ReviewMedieval Iraq Demographic Factors Yale Historical Review
Medieval Iraq Demographic Factors Yale Historical Review
 
PPT Item # 5 -- Announcements Powerpoint
PPT Item # 5 -- Announcements PowerpointPPT Item # 5 -- Announcements Powerpoint
PPT Item # 5 -- Announcements Powerpoint
 
Electric vehicle infrastructure in rural areas
Electric vehicle infrastructure in rural areasElectric vehicle infrastructure in rural areas
Electric vehicle infrastructure in rural areas
 
Managing large-scale outbreaks at Farrow-to-Weaner Farms
Managing large-scale outbreaks at Farrow-to-Weaner FarmsManaging large-scale outbreaks at Farrow-to-Weaner Farms
Managing large-scale outbreaks at Farrow-to-Weaner Farms
 
Item # 9- 2nd Qtr Financial & Inv. Report
Item # 9- 2nd Qtr Financial & Inv. ReportItem # 9- 2nd Qtr Financial & Inv. Report
Item # 9- 2nd Qtr Financial & Inv. Report
 
Harbin-Gross-Spring2022.pdf Yale Historical Review
Harbin-Gross-Spring2022.pdf Yale Historical ReviewHarbin-Gross-Spring2022.pdf Yale Historical Review
Harbin-Gross-Spring2022.pdf Yale Historical Review
 
Families and Climate Change - iyf30 - IDF.2024 AGENDA PROGRAMME.
Families and Climate Change - iyf30 - IDF.2024 AGENDA PROGRAMME.Families and Climate Change - iyf30 - IDF.2024 AGENDA PROGRAMME.
Families and Climate Change - iyf30 - IDF.2024 AGENDA PROGRAMME.
 
Dawson City Rolling Ads for May 15 2024 Yukon
Dawson City Rolling Ads for May 15 2024 YukonDawson City Rolling Ads for May 15 2024 Yukon
Dawson City Rolling Ads for May 15 2024 Yukon
 
Introduction to The Guidelines for the Long-term Sustainability of Outer Spac...
Introduction to The Guidelines for the Long-term Sustainability of Outer Spac...Introduction to The Guidelines for the Long-term Sustainability of Outer Spac...
Introduction to The Guidelines for the Long-term Sustainability of Outer Spac...
 
Plant health, safe trade and digital technology.
Plant health, safe trade and digital technology.Plant health, safe trade and digital technology.
Plant health, safe trade and digital technology.
 
International Day of Families - 15 May 2024 - UNDESA.
International Day of Families - 15 May 2024 - UNDESA.International Day of Families - 15 May 2024 - UNDESA.
International Day of Families - 15 May 2024 - UNDESA.
 

TransitionZero: Data for modelling early retirement of coal plants

  • 1. Data for modelling early retirement of coal plants Isabella Suarez March 2024 Supporting the development of financing instruments
  • 2. transitionzero.org | @transitionzero Empowering our partners with open data products to shape a clean energy future 2 We are a climate analytics not-for-profit established in 2021. We build open energy transition products without usability compromises and partner with mission-aligned organisations to help scale a global standard for energy transition planning. | About Us
  • 3. Table of Contents transitionzero.org | @transitionzero 3 04 09 16 30 About the CAT tool Methodology Highlights and Findings from Indonesia & the Philippines Policy Guidance
  • 4. 4 transitionzero.org | @transitionzero About CAT A background on the who, what, why and how of the Coal Asset Transition (CAT) tool
  • 5. transitionzero.org | @transitionzero The Coal Asset Transition (CAT) tool provides foundational economic, financial and environmental plant-level data to analyse the impact and potential for coal plant refinancing. 5 | About CAT Indonesia: released October 2022, to be updated in 2024 Pakistan: under development Philippines: released January 2024
  • 6. transitionzero.org | @transitionzero 6 | About CAT Inputs Outputs Metrics Boiler Type Retirement cost ($ and $/MW) Retirement years Renewable Energy Replacement cost ($, $/MWh, and $/tCO2) SR & LR profitability ($/MWh) Carbon (CO2) emissions saving (tCO2) Jobs lost from closure and gained from clean replacement Age Capacity Coal type & source Reserve Margin Efficiency Emission intensity & factor Average Generation Average Fuel cost CAPEX O&M cost Estimated PSA Tariff Existing jobs Technological Specifications Operational Cash Flows Social CAT tool metrics CAT provides metrics based on the asset's technological specifications, cash flows, operations, and environmental performance. Cost of abatement ($/tCO2)
  • 7. transitionzero.org | @transitionzero 7 High-level screening to identify regions to prioritise for phase-out based on various screening metrics The development of insights and policy recommendations for GFANZ’s Managed Phaseout of Coal in Asia-Pacific report. Asset-level deep dives into financial metrics, operating costs, and environmental and social externalities Bankers and investors have used CAT data as the starting point for discounted cash flow analysis. Identifying candidates for coal phase-out at the asset level based on criteria most important to the end user Carbon Trust’s Supporting a rapid, just and equitable transition away from coal report, analysing eligible coal assets in the province of Odisha, India. Use cases CAT is a foundational dataset that can support a range of use cases | About CAT
  • 8. transitionzero.org | @transitionzero 8 Web dashboard updated to facilitate easier user interaction with our data Dataset download (excel sheet) with data points by plant Output formats Learn more about the CAT tool and explore the data in its different forms and functions Methodology document detailing the sources and methods used for each metric and market COMING SOON DOWNLOAD HERE DOWNLOAD HERE | About CAT
  • 9. 9 transitionzero.org | @transitionzero Methodology and data quality Breaking down the CAT methodology, the data collection process, and the data gaps and limitations
  • 10. transitionzero.org | @transitionzero 10 Sale & purchase of energy and capacity ● Energy payment ● Capacity payment ● Dependable capacity ● Tariff setting Term/contract period ● Operational term ● COD date | About CAT Components of PPA PPAs come in various forms, but typically has the following key components Plant operation ● Dispatch terms (by utility or company) ● Minimum offtake Fuel supply ● Dedicated upstream supply ● Upstream fuel contract ● Midstream transport contract ● Cost pass through ● Heat-rate Termination & abandonment ● Extension or renewal ● Option to purchase ● Abandonment liabilities
  • 11. Assessing the cost of early retirement for coal-fired power plants is based on the financial value of a plant, which will form the basis for negotiations on buy-out prices. Estimating the financial value of coal plants is typically done from two different perspectives: 01. Assessing the remaining investment value of the asset using un-recuperated capital expenditure 02. Assessing the value of future revenue streams. Generally, the first view could undervalue the asset by omitting its potential to bring future revenues and supra-normal profits. The second perspective is employed for CAT, as we feel it gives a fairer value for initial negotiations. The future revenue streams are underpinned by data from existing PSAs for each plant. transitionzero.org | @transitionzero 11 Estimating the cost of buy-out Buying-out coal is dependent on a variety of factors Cost of early retirement = Years of early retirement x Annual generation x (PSA tariff - Fuel cost - Carbon cost) Year of early retirement = Number of years of buy-out in an early retirement scenario, capped at a maximum of 5 years. Philippine coal plants have many PSAs with remaining durations ranging from 1 to 28 years. The maximum 5 year buy-out is assigned to reflect the possibility that buy-outs will be negotiated per PSA. PSA tariff = Estimated tariff price per unit of electricity generated ($/MWh), based on PSA data from 2020 to 2023 Fuel cost = Three year average fuel cost ($/MWh) Carbon cost = Three year average carbon cost ($/MWh) Methodology and data | Methodology and data
  • 12. transitionzero.org | @transitionzero 12 PPA data – filling in the blanks How we treat missing data depends on the market structure, power market design, and phase of market liberalisation | Methodology and data Country PPA data availability China PPAs details are seldom publicly available. Japan PPAs details are seldom publicly available. Vietnam PPAs details are seldom publicly available. Indonesia PPAs details are sometimes reported by regulators or on media articles, however, such data points may be unreliable and are hard to verify. South Korea PPAs details are sometimes reported by regulators or on media articles. Data collection is likely to be a challenge. India Decent - PPAs details are sometimes reported by regulators or on media articles. Data collection is likely to be a challenge. Philippines Availability of regulated power supply agreements (PSAs) published by utilities give a sense of prices. For Indonesia ● Regulated market: Less transparent PPAs ● Regional split: 9 regions, namely Sumatra, Java-Bali, Kalimantan, Sulawesi (Sulbagsel, Sulbagut), Papua, North Papua, Maluku, North Maluku, Nusa Tengara ● Type of plant and pricing structure 01. Mine-mouth 02. PLN-owned or IPP-owned 03. Captive plant
  • 13. transitionzero.org | @transitionzero 13 PPA data – filling in the blanks Methodology PLN-owned plants IPP-owned plants Captive plants PPA Price TZ methodology Indonesia | Methodology and data Reported PPA price Based on the reported PPA price in media reports etc Pre-2020: 30 years Post-2020: 25 years Unknown PPA price (CFPP) Based on PLN reported cost of production, adjusted by year of operations and regional scaling Unknown PPA price (Mine-Mouth) Based on PLN reported cost of production, adjusted by year of operations and regional scaling. Further aligned to other mine-mouth plants Pre-2020: 35 years Post-2020: 30 years Reported PPA price Based on the reported PPA price in media reports etc Pre-2020: 30 years Post-2020: 25 years Unknown PPA price (CFPP) Discounted off regional BPP, adjusted by year of operations and known price in the region Unknown PPA price (Mine-Mouth) Discounted off regional BPP, adjusted by year of operations and known price in the region. Further aligned to other mine-mouth plants Pre-2020: 35 years Post-2020: 30 years Unknown PPA price Discounted off regional BPP, adjusted by year of operations and known price in the region. Assumed to be more expensive than PLTUs Pre-2020: 30 years Post-2020: 25 years
  • 14. transitionzero.org | @transitionzero 14 PSA data – filling in the blanks Philippines PSA (Full) Description Complete price and monthly generation data for PSA from January 2020 to December 2023 – 76 PSAs Treatment of Data Gap Coverage PSA (Partial) TZ methodology Some available PSA price and generation data points from January 2020 to December 2023 No data points on price and monthly generation available for the period of January 2020 to April 2023 Average Generation: Minimum generation listed in the PSA. If unavailable, it is estimated using the typical capacity factors depending on the contract term (baseload: 80%; mid-merit: 45%, peaking: 20%) Price: Since the tariff may deviate significantly from the “estimated tariff” at the point of ERC approval, the PSA price is estimated using the average of available PSAs signed under the same coal plant. 16 PSAs If rate and generation were unavailable, the month’s data is omitted so as to not introduce bias. If one is available, the missing data is calculated using generation cost. 108 PSAs NOTE: 9 PSAs having no reported price or generation despite being include by the DU/EC in their PSPP, are assumed to have not yet entered into force. DUs with only 1 PSA set to expire are assumed to have a 3 year extension. Data on the monthly generation charge, actual monthly generation, PSA start date, and PSA end date are collected from Power Supply Procurement Plans (PSPPs) and PSAs for the full analysis period. | Methodology and data
  • 15. 15 transitionzero.org | @transitionzero Key Findings From our CAT Indonesia dataset
  • 16. transitionzero.org | @transitionzero 16 | Methodology and data Average PPA Tariff As of October 2022 Coal plants are way more expensive than marginal cost of US$30/MWh. For newer coal plants, such as PLTU Jawa 7 (2019/2020) with reported PPA tariffs at US$43/MWh, capital recovery becomes a problem, unless there is a cost pass-through scheme. Average tariffs in Indonesia are estimated at US$65/MWh
  • 17. Captive plants are the most expensive plants, followed by CFPP and mine-mouth plants transitionzero.org | @transitionzero 17 | Methodology and data Tariffs across plant types As of October 2022 US$51 /MWh US$59 /MWh US$82 /MWh Regional breakdown of plant tariffs As of October 2022
  • 18. transitionzero.org | @transitionzero 18 | Methodology and data Cost of Early Coal Retirement PPA prices can be used to calculate cost of early retirement 2030 US$4.6 billion For 9.2 GW 2050 US$27.5 billion for 43.4 GW Undepreciated asset value/capital cost approach 2030 US$48 billion For 5.5 GW 2050 US$94 billion for 38.6 GW Buy-out of remaining PPA value Max buy-out years: 10 years
  • 19. 19 transitionzero.org | @transitionzero Use Cases Data for the many different considerations in the pursuit of coal refinancing
  • 20. transitionzero.org | @transitionzero 20 | Use Cases By reserve margin As a Screening Tool Sumatra (2021): 34.8% Subregion: Aceh: 6% Kalimantan (2021): 45% Subregion: South Kalimantan: -9% Java-Bali (2021): 59.5% Subregion: West Java: 3% Sulawesi (2021): 30-40% Maluku (2021): 38% North Maluku (2021): 20% Papua (2021): 3 to 59% West Papua (2021): 17% Java-Bali has the highest reserve margin, making it a region of interest for priority coal plant retirement
  • 21. transitionzero.org | @transitionzero 21 By PPA Value As a Screening Tool Despite having the highest reserve margin, Java-Bali also has the youngest coal plants, making retiring them costly. Sumatra: US$502 million (US$18-1,123 million) Kalimantan: US$705 million (US$174-1,343 million) Java-Bali: US$3,735 million (US$360-14,484 million) Sulawesi: US$1,486 million (US$264-3,648 million) Maluku: US$1,123 million (US$18-1,123 million) North Maluku: US$3,117 million (US$759-4,990 million) Papua: US$329 million (US$312-364 million) | Use Cases
  • 22. transitionzero.org | @transitionzero 22 Competing priorities and interests will need to be reconciled. Total capacity for closure varies depending on criteria used for selection. It is important to recognise that priorities will affect the metrics used to assess assets. Benchmarking across assets | Use Cases
  • 23. transitionzero.org | @transitionzero 23 Benchmarking across assets Competing priorities and interests will need to be reconciled. Total capacity for closure varies depending on criteria used for selection. It is important to recognise that priorities will affect the metrics used to assess assets. | Use Cases
  • 24. transitionzero.org | @transitionzero 24 Use Case #2: Benchmarking across assets Competing priorities and interests will need to be reconciled. Total capacity for closure varies depending on criteria used for selection. It is important to recognise that priorities will affect the metrics used to assess assets. | Use Cases
  • 25. transitionzero.org | @transitionzero 25 Benchmarking across assets Competing priorities and interests will need to be reconciled. Total capacity for closure varies depending on criteria used for selection. It is important to recognise that priorities will affect the metrics used to assess assets. | Use Cases
  • 26. transitionzero.org | @transitionzero 26 Benchmarking across assets Competing priorities and interests will need to be reconciled. Total capacity for closure varies depending on criteria used for selection. It is important to recognise that priorities will affect the metrics used to assess assets. | Use Cases
  • 27. transitionzero.org | @transitionzero 27 | Use Case Estimating emissions impact from coal retirement Comparison of 2 scenarios prioritising a different metric for retirement Retire 10% of cheapest plants by PPA value Dirtiest coal plant in Indonesia: PLTU Asam Asam plant in Kalimantan (1.38 kgCO2/kWh) Emissions reduction potential: 26.5 MtCO2 (14% of total coal plant emissions) 21 units representing 4.25 GW 6 units in Kalimantan, 7 units in Java-Bali, 8 in Sumatra 21 units representing 977 MW 2 units are CFPP, 4 units are mine-mouth units, 15 units are mine mouth plants Cheapest coal plant in Indonesia: Captive Sinar Mas Lontar plant in Sumatra (US$52 million, 111 MW) Emissions reduction potential: 4.4 MtCO2 (2% of total coal plant emissions) Retire 10% of dirtiest coal plants by emissions intensity Cost of buy-out: US$12.15 billion Cost of buy-out: US$2.0 billion
  • 28. transitionzero.org | @transitionzero 28 Asset Level Analysis PLTU Asam-Asam Unit 1&2 in Kalimantan Considerations | Use Case Operating since 2000 Subcritical PC boiler Lignite burning 130 MW Financial value: US$450 million Emissions savings from early retirement: 5.13 MtCO2 Financial saving from early retirement*: US$51 million PLN-owned Kalimantan grid South Kalimantan Kalimantan grid reserve margin: 45% South Kalimantan grid reserve margin: -9% Net profitability: US$65/MWh Water cost: US$2.13/MWh Air cost: US$39.28/MWh Capacity factor: 78% Estimated number of jobs lost from plant closure: 169 direct jobs Basic Statistics
  • 29. 29 transitionzero.org | @transitionzero Policy Guidance How CAT data can be used for transition planning and coal retirement scheduling
  • 30. transitionzero.org | @transitionzero 30 Early coal retirement mechanisms will be required to align with Paris Agreement targets. Across the developing world, this will need to be supported by climate finance, both domestic and international. This may necessitate a stronger signal from government and the markets that coal is on its way out. System-level thinning is vital to balancing competing factors when planning for coal plant retirement. Motivate early action on voluntary retirements. While coal plants are profitable assets now, it will not be long before the risk of asset stranding will arise. A successful early coal retirement scheme will have to motivate owners to act early to prevent a chaotic energy transition in the power sector. At the same time, ensuring fair use of the proceeds and protection of communities are critical to ensure an equitable and effective transition. Any early coal retirement mechanisms will have to reflect country characteristics to be successful. A one size fits all approach is unlikely to work in Southeast Asia. Accounting for resource adequacy is top of mind for countries with growing demand and historical reliance on coal. Deal structures will differ due to unique plant-level characteristics, as seen in the case studies. Ownership (private or public) is one factor that contributes significantly. | Policy Guidance Policy Guidance 01 02 03 Considerations for moving forward with coal retirements
  • 31. Contact Isabella Suarez Southeast Asia Lead isabella.suarez@transitionzero.org May 2024
  • 32. Coal off, solar on transitionzero.org | @transitionzero By the numbers 32 ● The average abatement cost to buy and replace coal plants is $140/tCO2 , comprising $41/tCO2 to 'buy-out' supply agreements 5 years early and $99/tCO2 to replace them with solar plus storage. The high marginal abatement cost stems from high profitability in Power Supply Agreements (PSAs) within the country's current tariff structure, which include fuel cost pass-throughs that see consumers bearing the cost of high fuel prices and not benefiting from savings when prices drop. TransitionZero’s CAT tool shows a wide range in buy-out costs alone, between $0.02 million/MW to $2.8 million/MW, or $1/tCO2 to $145/tCO2 . Nonetheless, the primary cost of phasing out coal lies in replacing it with clean, dispatchable alternatives like solar PV and battery storage which are necessary to meet grid stability and increasing demand. Our analysis of the CAT Philippines dataset found | Key Findings Abatement cost from ‘buying out’ PSAs and replacing coal capacity with solar PV plus four hours of battery storage Cost of replacing capacity with Solar + Storage Cost of PSA buy-out for early retirement $/tCO 2