Fig. 6-1 Effect of boiler scale and moisture content on the reduction of CO2 emission by the STD system installation.
7. Economic Evaluation
This evaluation has been made for No.2 unit (400MW), No.7 unit (600MW) and No.8 unit (625MW) of Suralaya and No.1 unit (300MW) of Labuhan respectively. Table 7-1 and 7-2 show assumptions of each case. Those tables contain annual reductions of coal purchase cost and depreciation period of STD.
Table 7-1 Economic overview of Labuhan No.1 unit and Suralaya No.2 unit
Table 7-2 Economic overview of Suralaya No.7 unit and No.8 unit
0 50,000 100,000 150,000 200,000 250,000 300,000
300 400 500 600 700
A nnua l C O 2 R e duc ti on ( t/ y )
Table 7-3 Precondition for Economical Evaluation
Table 7-4 Economic evaluation results of Labuhan No.1 unit and Suralaya No.2 unit
Table 7-5 Economic evaluation results of Suralaya No.7 unit and No.8 unit
*300MW at 15th year;
IRR 9.7% (coal: moisture content 31.6% and purchase cost US$73.23/t, CO2 credit price: US$30/t) IRR 10.6% (coal: moisture content 44% and purchase cost US$59.4/t, CO2 credit price: US$30/t)
*400MW at 15th year;
IRR 8.7% (coal: moisture content 43.6% and purchase cost US$59.4/t, CO2 credit price: US$30/t)
*600MW at 15th year;
IRR 6.3% (coal: moisture content 25% and purchase cost US$78.26/t, CO2 credit price: US$20/t) IRR 9.2% (coal: moisture content 25% and purchase cost US$78.26/t, CO2 credit price: US$30/t) IRR 10.1% (coal: moisture content 43.6% and purchase cost US$59.4/t, CO2 credit price: US$20/t) IRR 13.0% (coal: moisture content 43.6% and purchase cost US$59.4/t, CO2 credit price: US$30/t).
*625MW at 15th year;
IRR 8.5% (coal: moisture content 31.6% and purchase cost US$73.23/t, CO2 credit price: US$10/t) IRR 12% (coal: moisture content 31.6% and purchase cost US$73.23/t, CO2 credit price: US$20/t) IRR 15.3% (coal: moisture content 31.6% and purchase cost US$73.23/t, CO2 credit price: US$20/t)
JBIC Loan/Own Fund 85/15
JBIC Loan Interest （%/y） 1.9
Construction Period 2 years
Project Period including construction 17 years
Deprasiation （Year） Constant Persentage Method （15）
Termianl Value（％） 14.20
Currency Exchange US$1=\80
Coal Power Unit Power Capacity（MW) Drying (Coal Moisture ％）
Coal Cost (CIF US$/t）
CO2 Credit （US$/t） 0 10 20 30 0 10 20 30 0 10 20 30 IRR (％）
10 years after operation 1.86 5.03 2.77 6.04 0.52 3.76 15 yeard after operation 1.01 4.22 7.10 9.76 1.56 4.88 7.86 10.61 - 3.02 5.91 8.70
73.23 59.4 59.4
Labuhan Unit1 Suralaya Unit2
300 400
31.6→10 43.6→10 43.6→10
Coal Power Unit Power Capacity（MW) Drying (Coal Moisture ％）
Coal Cost (CIF US$/t）
CO2 Credit （US$/t） 0 10 20 30 0 10 20 30 0 10 20 30 0 10 20 30
IRR (％）
10 years after operation 0.90 4.40 1.71 5.47 8.93 3.62 7.7 11.5 1.27 4.99 8.41 15 yeard after operation - 3.90 7.10 9.23 2.66 6.98 10.14 13.1 4.79 8.58 12.02 15.2 3.16 6.61 9.73 12.63
78.26 59.4 73.23 59.4
Suralaya Unit7 Suralaya Unit8
600 625
25.1→10 43.6→10 31.6→10 43.6→10
The IRR reaches 12% only if the case of CO2 credit price is US$30/t, 44% moisture content and US$59.4/t purchase cost. The result indicated that higher moisture content 43.6% case is lower IRR than 31.6% moisture content due to a lot of STD facilities. In order to be performable facility, a high moisture content coal needed to be dried less than 10% moisture content and reduce a coal purchase cost. In US$20-30/t CO2 credit price case, IRR is grater than 10% and STD’s contribution to the power plant performance is significant. By this result, an introduction of STD for low rank coal is required to be optimized economical calculation, because of difference of power plant availability factor, efficiency and number of STD. Assuming the coal moisture content is 32%, 44%
and 10%, table 7-6 and 7-7 show the estimation of maximum number of STD and annual CO2 reduction for the PNL and IPP coal fired power plant which will be under operation by 2009.
Table 7-6 Estimation of maximum number of STD and annual CO2 reduction for PNL coal fired power plant
Table 7-7 Estimation of maximum number of STD and annual CO2 reduction for IPP coal fired power plant
In the case of 10% dried coal from 32% moisture content, estimated CO2 reduction is 2,020kton of PLN, 2,040kton of IPP and 4,060kton of total. Annual CO2 credit revenue is 40,600 thousand US$ with CO2 credit 10US$/t and 121,800 thousand US$ with CO2 credit 30US$/t. In the case of 10% dried coal from 44% moisture content, estimated CO2 reduction is 3,570kton of PNL, 3,200kton of IPP and 6,770kton of total. Annual CO2 credit revenue is 67,700 thousand US$ with CO2 credit 10US$/t and 231,000 thousand US$ with CO2 credit 30US$/t. Maximum number of STD is 155 and total project cost is 3,300 million US$. The cost down of STD by manufacturing STD in Indonesia will reduce investment cost and this will accelerate the introduction of STD.
8. Finance Scheme
STD Unit Capacity（MW) Unit No. Total Capacity（MW) Coal Moisture 32→10％ Coal Moisture 44→10％ Unit No.
660 2 1,320 261,360 399,166 8
625 1 625 121,979 188,495 4
600 4 2,400 463,056 722,300 14
400 6 2,400 396,264 703,290 18
350 3 1,050 160,842 304,125 6
330 3 990 145,926 285,117 6
315 7 2,205 314,391 632,009 14
300 4 1,200 164,736 342,140 8
Total 30 12,190 2,028,554 3,576,642 78
PLN（～2014年） Annual CO2 Reduction （ton）
Note: in the case of annual operation 7,920 hours (330 days)
STD Unit Capacity（MW) Unit No. Total Capacity（MW) Coal Moisture 32→10％ Coal Moisture 44→10％ Unit No.
1,000 2 2,000 430,408 614,590 14
815 1 815 169,213 248,687 6
660 5 3,300 653,400 997,915 25
650 2 1,300 256,388 392,830 10
615 2 1,230 238,986 370,654 8
400 2 800 132,088 234,430 6
300 4 1,200 164,736 342,140 8
Total 18 10,645 2,045,219 3,201,246 77
Note: in the case of annual operation 7,920 hours (330 days)
IPP(～2019年） Annual CO2 Reduction （ton）
Figure 8-1 JBIC Supplier’s Credit
The loan conditions will be decided under the OECD guideline In principle, maximum credit amount is 60% of the total project cost and interest rate is fixed based on the CIRR and repayment period. New finance scheme, in order to expedite bilateral offset credit, is desired to be introduced. Offset credit with off-take agreement made between the project owner and Japanese government will be a security for the loan and the offset credit will be sold to Japanese market by the government. Also new finance scheme will allow the lender to make a repayment in kind (repayment by offset credit ).The ECA finance is support for the export from Japan but this new finance scheme has the potential to create export as it is, as well.
Figure 8-2 2Draft scheme of Bilateral Carbon Offset Mechanism
Project of STD introduction Exporter
（Japanese）
Export
JBIC
Importer
Implementation
Foreign Financial Institute
Export Finance Loan
9．Methodology
Based on the approved methodology ACM0011, the total emission reductions were calculated as 123,262ton-CO2 and based on AM0061, the volume became -22,300ton-CO2. The big difference of the emission reduction is came from the difference of the choice of each baseline i.e. actual average emissions volume during latest 3years of the project company in the case of ACM0011 and best energy efficiency during latest 5years, from the viewpoint of the conservativeness, in the case of AM0061. The CDM methodology is developed under the consideration of strict conservativeness therefore it is difficult to apply this type of the energy conservation project as the emissions reduction merit is not so big. In the bilateral offset mechanism, more simple and flexible consideration on the emission reduction is required.
C-QUENCE is considered to be used as the tool for determination of the baseline. Data of specifications of non-treated coal to be used and specifications of the power plant is to be analyzed, simulated and calculated relative volume of the emissions. The emissions reduction is calculated using the data of specifications of dried coal and power plant. Now the margin of error of the system is +/-10%. This figure is going to be minimized after the collection and input relative data of coal as well as power plants in Indonesia to the system. If C-QUENCE will have the function of input/output data of CO2 emission intensity for power generation, emission factor of coals and so on in future, comparison between new methodology and CDM methodologies will be easier and also MRV will become easier and simplified.
10. The Issues on Bilateral Offset Mechanism
The results of interview of the officials from Indonesian Government such as the Indonesia National Council of Climate Change (DNPI) regarding to the issues on bilateral offset mechanism (BOM) between Japan and Indonesia are summarized as follows. The STD technology and its potential to reduce GHG emission at low rank coal power generation is appreciated and evaluated the effort in developing the drying technology to improve quality of Indonesian low rank coal to meet the coal market specification, which finally increases the power efficiency and reduces CO2 emission. Regarding the issue of adopting a new scheme out of CDM mechanism for the ST dryer project in Indonesia, there is a possibility to adopt new approaches to trade carbon, but must be accepted by the international community. Nevertheless, the BOM currently being promoted by Japan is one possible approach in GHG mitigation that may be adopted by Indonesia, but it must bring equal benefit to both parties, Indonesia and Japan. However, Indonesia has not developed the policy and scheme to adopt the BOM yet, there is in-depth discussion made to adopt the new mechanism, many things must be prepared. There is still a possibility for Indonesia to accept or adopt the scheme. But, the new mechanism should not against the United Notions mechanism and also the new scheme or model must be approved by the United Nations as an established system and accepted at the international level. It is important that these new offset mechanisms have a high level of integrity so as to be accepted by the international community. There are two aspects of technology development concerning this issue: firstly, efforts to improve quality of coal to meet the specification of the demand of energy market, in which simultaneously environmentally benign and secondly, cooperation of Indonesia and Japan through new collaboration in the carbon credit, namely BOM. The fact that Indonesia welcome and has no objection to BOM scheme needs to be emphasized, however, the scheme is currently being investigated because it should not be contradictory to the more important agreement which has been taken by Indonesia with other developing countries under a world organization. In other words, since Indonesia is the leader of the UNFCCC organization, Indonesia must be consistent in playing the role and taking stance in terms of implementing the policy in the field of carbon trade scheme cooperation. Thus, BOM scheme, which from the substantial aspect can be accepted as long as it does not oppose to the CDM pattern, can be implemented by the country. The only reason why Indonesia currently cannot implement the cooperation scheme with other countries soon is just because those