In current months, there was a rise in arguments from skeptics suggesting that coal ought to proceed to play a big function in Southeast Asia’s power combine. They contend that phasing out coal would compromise the power safety, reliability, affordability, and sustainability of the area’s energy era.
Nonetheless, these critiques are based mostly on misconceptions that overstate coal as a safe power supply and mistakenly affiliate renewables deployment with grid instability. Consequently, they draw the misguided conclusion that coal ought to stay a key power supply, supported by unproven applied sciences like carbon seize and ammonia co-firing.
Finally, these assertions solely serve to delay the Affiliation of Southeast Asian Nations (Asean)’s transition from coal, hinder financing for actual local weather options, and stop nations from capturing the financial advantages of renewable power.
Vitality programs reliant on coal will not be inherently safe. The fluctuations of commodity markets can problem affordability throughout international power disruptions, lowering power safety. Asean nations needs to be nicely conscious of this because the area’s electrical energy sector was not spared from volatility through the current power disaster regardless of ample low cost coal provides.
As international coal costs trebled in 2022, members with coal-dependent energy programs have been particularly impacted. In Vietnam, a quadrupling of coal import costs pushed the working price of electrical energy past the retail tariff, leading to a 31 trillion Vietnamese dong (US$1.2 billion) loss for the nationwide utility. Within the Philippines, the price of era for key coal energy vegetation doubled and has but to revert to pre-crisis ranges. Since 2021, the Manila Electrical Firm (Meralco)’s electrical energy tariffs have risen from 8.75 Philippine pesos to 11.60 Philippine pesos (US$0.15 to US$0.20) per kilowatt-hour. In Cambodia, rising coal prices have halted a tariff discount plan that started in 2015.
These impacts persist. At US$144 per tonne, coal benchmarks stay nicely above their ten-year common of US$83 per tonne earlier than the disaster.
Coal proponents have argued that liquefied pure gasoline (LNG) poses dangers to power safety and value stability, overlooking the truth that coal faces the identical pitfalls. This vulnerability will worsen as Asean turns into a internet coal importer within the subsequent decade.
Happily, the area can chart a safer power future by integrating extra renewables into the ability system, initiating a phase-down of coal and lowering this vulnerability.
Minimal affect on grid reliability
Related stakeholders ought to take into account the affect of wind and photo voltaic penetration on the efficiency of nationwide grids. Nonetheless, the share of penetration throughout Asean member states is just too low to affect system operations meaningfully.
The Worldwide Vitality Company classifies nations into six phases based mostly on the share of photo voltaic and wind of their electrical energy combine and different grid-specific traits. Part 1 corresponds to a share of roughly below 5 per cent, Part 2 ranges from round 5 per cent to fifteen per cent, and Part 3 ranges from round 15 per cent to 25 per cent. Part 1 represents a stage the place the photo voltaic and wind share has no related affect on the ability system, Part 2 solely has minor impacts, and better phases current higher challenges.
Most Asean nations have roughly below 5 per cent of photo voltaic and wind power of their electricty combine, aside from Vietnam. This means that restricted photo voltaic and wind deployment throughout the area has not but considerably impacted energy system operations. Picture: Christopher Doleman/ IEEFA
Charting the ability combine throughout Asean illustrates that almost all nations are in Part 1 of renewable power integration, aside from Vietnam, which is in Part 3. This means that the restricted photo voltaic and wind deployment throughout the area has not but considerably impacted energy system operations. It additionally suggests there’s a substantial alternative to extend renewable capability with out compromising electrical reliability.
The Baseline State of affairs of the seventh Asean Vitality Outlook tasks that Asean would require 1,630 terawatt-hours (TWh) of era by 2030. In keeping with the Institute for Vitality Economics and Monetary Evaluation (IEEFA), a tripling of the area’s current photo voltaic and wind capability, working at present capability components, may allow photo voltaic and wind to satisfy over 10 per cent, or 163 TWh, of this requirement. This may lead to a Part 2 classification, indicating minor impacts on energy system operations. Even a sixfold improve to over 20 per cent (326 TWh) suggests average system impacts, equivalent to Part 3.
Accelerating the adoption of renewable power would require supportive insurance policies from Asean member governments. Whereas current reforms in Vietnam are encouraging, important coverage obstacles to scaling renewables stay, significantly in Indonesia. Favorable insurance policies that improve the bankability of renewables shall be integral to phasing out coal throughout the area.
Current commentaries supporting coal utilization in Asean recommend that the “fast retirement” of coal vegetation would jeopardize the area’s power safety. They argue that “phasing down” coal is extra applicable than “phasing out” coal, and that unproven transition applied sciences — together with carbon seize and ammonia co-firing — ought to qualify for sustainable finance.
Nonetheless, these arguments current a false dichotomy. The fact is that speedy adoption of renewables will cut back the necessity for coal over time, enhance power safety, and decrease electrical energy costs. Coal retirement mechanisms are designed to shorten coal plant lifetimes and substitute them with clear power, not shutter them in a single day. Transition intervals present ample time so as to add renewable capability, construct complementary storage, and evolve grid working protocols. Delaying will solely compress these important duties right into a more difficult timeframe. Formidable language in taxonomies emphasizing the necessity to “section out” coal is designed to stimulate funding flows in actual options and cut back capital prices for confirmed applied sciences.
Softening regional local weather ambitions based mostly on pro-coal narratives would solely delay the area’s publicity to unstable commodity markets, impede capital flows towards clear power, and stop nations from realizing the financial advantages of the power transition.
Christopher Doleman is IEEFA’s LNG/gasoline specialist, Asia. He beforehand spent 5 years on the Asia Pacific Vitality Analysis Centre in Japan figuring out collaborative alternatives throughout Asia Pacific Financial Cooperative (APEC) members to attain frequent power objectives.
