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future coal utilization in malaysia - Expert Group on Clean Fossil ...

2005 APEC CLEAN FOSSIL ENERGY TECHNICAL AND POLICY SEMINAR

Cebu City Marriott Hotel ,Filipong>inong>a

26-29 th January 2005

FUTURE COAL UTILIZATION

IN MALAYSIA

By

Datuk Ir. (Dr.) Mohd Annas bong>inong> Mohd Nor

Chairman, Energy Commission

Malaysia


COAL FIRED POWER GENERATION IN MALAYSIA

1988: Commissionong>inong>g of 2x300 MW units at Kapar

(1.5 million tonne per annum )

2001: Commissionong>inong>g of additional 2x500 MW units (Kapar)

(2.5 million ton per annum)

• The development of ong>coalong> ong>utilizationong> has been slow song>inong>ce the first

generation ong>inong>dependent power producers (IPPs) ong>inong> the 1990’s.

• IPPs were more ong>inong>clong>inong>ed to buildong>inong>g gas-fired plants, due to the

availability of ong>inong>digenous gas supply and the lower ong>inong>vestment cost ong>inong>

buildong>inong>g those plants.


GENERATION MIX IN MALAYSIA

Total available capacity as at the end of 2003 : 19,296.7 MW

• New 2,100 MW Janamanjung ong>coalong> plant

• Two new gas-based IPP plants owned by

Teknologi Tenaga Perlis Consortium (TTPC)

ong>inong> Perlis and Prai Power ong>inong> Prai with total

ong>inong>stalled capacity of 1000 MW.

For electricity generation mix (2002 to 2003);

the share of:

• Natural gas declong>inong>ed to 65% from 69%.

• Coal ong>inong>creased from 14% to 24%.

• Hydropower and diesel oil decreased

margong>inong>ally to 6.3% and 1.5% respectively

• Fuel oil declong>inong>ed from 7.5% to 2.3% durong>inong>g

the same period.

Hydro

6.30%

Coal

24.60%

Fuel oil

2.30%

Diesel

1.50%

Gas

65.30%

Generation Mix ong>inong> Malaysia (2003)

In 2003, total electricity generation

registered at 82,4061.1 GWh, an ong>inong>creased

of 6.0 percent from 77,501.6 GWh ong>inong> 2002.


FUTURE COAL UTILIZATION IN MALAYSIA

• Coal fired power generation will ong>inong>crease at a higher rate than gas generation

Year

Capacity

(MW)

Commissionong>inong>g

Year

Estimated Max.

Annual

Consumption (Mtpa)

TNB Kapar Phase 1 600 1988 1.50

TNB Kapar Phase 2 1,000 2001 2.50

TNB Janamanjung 2,100 2003 6.00

Tanjung Bong>inong> Power– IPP 2,100 2006/2007 5.70

Jimah Energy Ventures - 1,400 2009 3.50

IPP

Total 7,200 19.20

• There are two operational ong>coalong> fired power plants, with combong>inong>ed capacity of 3,700 MW.

• Two new IPP ong>coalong> fired power plants will ong>inong>crease annual ong>coalong> consumption from 10

million tonne to about 19 million tonne ong>inong> 2010.


FUTURE COAL UTILIZATION IN MALAYSIA

• Table below shows the change ong>inong> generation mix.

Generation Mix by Fuel Type (1999-2010)

Year 1999 2003 2010

Coal 8% 24.6% 41%

Gas 73% 65.3% 49%

Oil 8% 3.8% 1%

Hydro/

renewables

11% 6.3% 9%

• Coal generation will grow from about 8% ong>inong> 1999 to about 41% ong>inong> 2010 whereas

percentage of gas-fired plants will be reduced to about 49%.

• Oil generation will be phased out, as oil will be utilized only as standby fuel.


THE NEWCOMERS IN COAL FIRED IN COAL FIRED GENERATION

SKS TANJUNG BIN POWER STATION

• The first unit is scheduled for commercial operations ong>inong> August 2006.

• Designed to burn bitumong>inong>ous ong>coalong> primarily with provisions for up to 30%

blendong>inong>g with sub-bitumong>inong>ous ong>coalong>.

• Estimated annual ong>coalong> consumption at 85% capacity factor is 5.25 Mtpa


JIMAH POWER STATION

• An IPP project by Jimah Energy Ventures

• Planned completion date for first unit: 2007

• Designed to burn bitumong>inong>ous ong>coalong> primarily with provisions

for up to 30% blendong>inong>g with sub-bitumong>inong>ous ong>coalong>

• Coal consumption at 85% capacity factor is expected to be

3.5 Mtpa.


ASH UTILIZATION

• Major part of the ash is beong>inong>g used by the cement

ong>inong>dustries.

• Other usage for various commercial applications

like road construction, ong>inong>ert chemical fillers and

lightweight aggregates is beong>inong>g looked ong>inong>to.


SOURCES OF COAL SUPPLIES

Imported ong>coalong>

• 40% from Australia

• 60% from Indonesia

Coal is procured through a

mixture of long-term contracts,

medium term contracts and

spot purchases.

For security of supply, long

term and medium terms

contracts are normally signed

with ong>coalong> producers or

ong>inong>ternational ong>coalong> traders


SOURCES OF COAL SUPPLIES

• Local ong>coalong>

– Found ong>inong> Sarawak and Sabah.

– The resources are estimated to be about one billion tonne (low-grade

lignite and sub-bitumong>inong>ous ong>coalong>)

– Only economical for use by mong>inong>e mouth power plant.

– The ong>coalong> deposits are still unexplored and most ong>inong>formation is from

prelimong>inong>ary surveys.

• Major constraong>inong>ts

– The deposits are of low grade and located ong>inong> the ong>inong>terior where

ong>inong>frastructure is lackong>inong>g.

– Development cost of these deposits is high.

– Stiff competition from other countries with bigger ong>coalong> resource and a

better-established ong>coalong> ong>inong>dustry.


LOCAL COAL PRODUCERS

• Global Mong>inong>erals Sdn Bhd (Pan Global ong>Groupong>) mong>inong>e at Merit Pila

Field.

– In 1999, it produced about 300,000 tonne most of which went to

Sejong>inong>gkat Power Plant (2 x 50 MW ong>coalong>-fired) ong>inong> Sarawak.

– Global Mong>inong>erals also had a contract to supply 120 ktpa of ong>coalong> to

Kapar.

– Delivery has been suspended over the last few years due to quality

problems.

• Meliau ong>coalong> deposit ong>inong> Sabah

– High quality bitumong>inong>ous ong>coalong>

– However, followong>inong>g the declaration as a forest reserve area around the

deposit, development could not be pursued.


ISSUES AND CHALLENGES

• Development costs, technology, environmental impact and security of supply are

major challenges ong>inong> the ong>utilizationong> of ong>coalong> ong>inong> the electricity supply ong>inong>dustry

STRATEGIES

– Coal supplies are from mixed sources and not over dependent on a song>inong>gle country,

supplier and port of loadong>inong>g to mitigate risk of shortfall ong>inong> supply.

– Only experienced ong>coalong> producers and suppliers are engaged

– Traders must have strong backong>inong>g of producers and proven experience ong>inong> ong>coalong> tradong>inong>g.

– The mong>inong>ong>inong>g ong>inong>frastructure must be capable of ensurong>inong>g adequate quality control.

– The contractong>inong>g parties for short term and long-term contracts must have strong

fong>inong>ancial backong>inong>g.


ISSUES AND CHALLENGES

• Recent upward trend ong>inong> ong>coalong> prices have been a major concern to ong>coalong>-base

power generators.

• Government of Malaysia has taken steps to ensure that its supply, pricong>inong>g,

shipment and all other related issues are monitored closely.

• COAL SUPPLY COMMITTEE

– Established ong>inong> 2003

– Energy Commission as Committee Secretariat

– Provides regular feedback to the Government on the use of ong>coalong> for electricity

generation.

– Comprises of Government representatives and ong>inong>dustry players.

– The Committee meets regularly to discuss issues related to ong>coalong>.


CONCLUSION

• To ensure the security and reliability of supply of electricity at

optimal cost, ong>coalong> has become an important primary fuel.

• The abundance of ong>coalong> ong>inong> neighbourong>inong>g countries like

Australia, Indonesia, Chong>inong>a and South Africa are among the

reasons why ong>coalong> is a good option for power generation.

• Advanced technology ong>inong> ong>coalong>-fired power generation has

improved the efficiency of energy conversion with less

undesirable emission to environment.


THANK YOU.

www.st.gov.my


Ir AHMAD FAUZI HASAN

Curriculum vitae:

Ir Ahmad Fauzi Hasan is the currently the Director of the Gas

Department of the Energy Commission, Malaysia. He a

professional engong>inong>eer with over 26 years workong>inong>g experience

with the government. His work ong>inong>cludes the development of

technical legislation and standards, licensong>inong>g of gas utilities

and certification of systems, equipment and technical

personnel of the gas supply and ong>utilizationong> ong>inong>dustry.

He received his Bachelor’s degree ong>inong> mechanical engong>inong>eerong>inong>g

from the University of Manchester UK and his master’s

degree from the University of Michigan USA.


2005 APEC CLEAN FOSSIL ENERGY TECHNICAL AND POLICY

SEMINAR

Cebu City Marriott Hotel ,Filipong>inong>a

26-29 th January 2005.

FUTURE COAL UTILIZATION IN MALAYSIA

By

Datuk Ir. (Dr.) Mohd Annas bong>inong> Mohd Nor

Chairman, The Energy Commission Malaysia

Session 5: 27 January 2004–1300 hr

INTRODUCTION

Let me first thank the organizer for givong>inong>g me the opportunity to

speak about the “Future Coal Utilization In Malaysia”.

COAL FIRED POWER GENERATION IN MALAYSIA

Coal ong>utilizationong> ong>inong> Malaysia started ong>inong> 1988 when the 2x300 MW ong>coalong>

fired units at Kapar was commissioned. The units’ consumption of

ong>coalong> was about 1.5 million ton per annum. In 2001, additional 2x500

MW units were commissioned, with the consumption of about 2.50

million ton per annum of ong>coalong>.

However, the development of ong>coalong> ong>utilizationong> has been slow song>inong>ce the

first generation ong>inong>dependent power producers (IPPs) ong>inong> the 1990’s.

IPPs were more ong>inong>clong>inong>ed to buildong>inong>g gas-fired plants, due to the


availability of ong>inong>digenous gas supply and the lower ong>inong>vestment cost ong>inong>

buildong>inong>g those plants.

GENERATION MIX IN MALAYSIA [1]

Malaysia’s total available capacity as at the end of 2003 was

19,296.7 MW, higher by 23 percent from 15,671.0 MW ong>inong> 2002. This

is attributed to the new of 2,100 MW Janamanjung ong>coalong> plant and two

new gas-based IPP plants owned by Teknologi Tenaga Perlis

Consortium (TTPC) ong>inong> Perlis and Prai Power ong>inong> Prai with ong>inong>stalled

capacity of 650 MW and 350 MW respectively.

In terms of electricity generation mix; the share of natural gas

declong>inong>ed to 65 percent from 69 percent. This was due to significant

ong>inong>creased ong>inong> share of ong>coalong> from 14 percent ong>inong> 2002 to 24 percent ong>inong>

2003. Shares of hydropower and diesel oil decreased margong>inong>ally to

6.3 percent and 1.5 percent respectively while share of fuel oil also

declong>inong>ed from 7.5 percent to 2.3 percent durong>inong>g the same period. In

2003, total electricity generation registered at 82,4061.1 GWh, an

ong>inong>creased of 6.0 percent from 77,501.6 GWh ong>inong> 2002.

[1] National Energy Balance 2003, Mong>inong>istry of Energy, Water and Communications Malaysia.

2


Figure 1: Generation Mix ong>inong> Malaysia (2003)

Hydro

6.30%

Fuel oil

2.30%

Diesel

1.50%

Coal

24.60%

Total :16,682 ktoe

Gas

65.30%

FUTURE COAL UTILIZATION IN MALAYSIA

It is expected that ong>coalong> fired power generation will ong>inong>crease at a

higher rate than gas generation. At present, there are two

operational ong>coalong> fired power plants, with combong>inong>ed capacity of 3,700

MW. With two more new IPP ong>coalong> fired power plants comong>inong>g up, we

will see an ong>inong>crease ong>inong> annual ong>coalong> consumption from 10 million tonne

to about 19 million tonne ong>inong> 2010.

3


Table 1: Existong>inong>g and planned ong>coalong> fired power plants.

Year Capacity

(MW)

Commissionong>inong>g

Year

Estimated

Max. Annual

Consumption

(Mtpa)

TNB Kapar Phase 1 600 1988 1.50

TNB Kapar Phase 2 1,000 2001 2.50

TNB Janamanjung 2,100 2000/2003 6.00

Tanjung Bong>inong> Power– 2,100 2005/2006 5.70

IPP

Jimah Energy

1,400 2006/2007 3.50

Ventures - IPP

(may be delayed

to 2010)

TOTAL 7,200 19.20

Source: TNB Fuel Services Sdn Bhd

Table 2: Projected Coal Demand Growth (mtpa)

Year Kapar Manjung Tg Bong>inong> Jimah Total demand

2003 4.00 3.20 - - 7.200

2004 4.00 6.00 - - 10.00

2005 4.00 6.00 - - 10.00

2006 4.00 6.00 0.50 - 10.50

2007 4.00 6.00 3.50 2.00 15.50

2008 4.00 6.00 5.25 3.50 18.75

2009 4.00 6.00 5.25 3.50 18.75

2010 4.00 6.00 5.25 3.50 18.75

Source: TNB Fuel Services Sdn Bhd

4


Table 3 below shows the change ong>inong> generation mix. Coal generation

will grow from about 8% ong>inong> 1999 to about 41% ong>inong> 2010 whereas

percentage of gas generation will be reduced to about 49%. Oil

generation will get phased out, as oil will be utilized only as standby

fuel.

Table 3: Generation Mix by Fuel Type (1999-2010)

Year 1999 2002 2010

Coal 8% 12% 41%

Gas 73% 71% 49%

Oil 8% 3%


Jimah Power Station

This is also an IPP project developed by Jimah Power located 120

km south west of Kuala Lumpur. It is designed to burn bitumong>inong>ous

ong>coalong> but with provisions for up to 30% blendong>inong>g with sub-bitumong>inong>ous

ong>coalong>, where ong>coalong> consumption at 85% capacity factor is expected to

be 3.5 Mtpa.

ASH UTILIZATION

Presently, ong>inong> Malaysia, major part of the ash is beong>inong>g used by the

cement ong>inong>dustries. Other usage for various commercial applications

like road construction, ong>inong>ert chemical fillers and lightweight

aggregates is beong>inong>g looked ong>inong>to.

SOURCES OF COAL SUPPLIES

Malaysia is importong>inong>g about 60% of ong>coalong> from Australia, 30% form

Indonesia and 5% each from Chong>inong>a and South Africa. Coal is

procured through a mixture of long-term contracts (5+5 yrs), medium

term contracts (3+3 yrs) and spot purchases. For security of supply,

long term and medium terms contracts are normally signed with ong>coalong>

producers or ong>inong>ternational ong>coalong> traders.

Coal resources ong>inong> Malaysia are found ong>inong> Sarawak and Sabah. The

resources are estimated to be about one billion tonne, most of which

are low-grade lignite and sub-bitumong>inong>ous ong>coalong>. These are likely to be

6


only economical for use by mong>inong>e mouth power plant. The ong>coalong>

deposits are still unexplored and most ong>inong>formation is from prelimong>inong>ary

surveys.

The major constraong>inong>t is that the deposits are of low grade and located

ong>inong> the ong>inong>terior where ong>inong>frastructure is lackong>inong>g. Development cost of

these deposits is high. Economic development of these deposits is

also facong>inong>g stiff competition from other countries such as Indonesia,

with bigger ong>coalong> resource and a better-established ong>coalong> ong>inong>dustry.

The present local ong>coalong> production comes from Global Mong>inong>erals Sdn

Bhd (Pan Global ong>Groupong>) mong>inong>e at Merit Pila Field. In 1999 it produced

about 300,000 tonne most of which went to Sejong>inong>gkat Power Plant (2

x 50 MW ong>coalong>-fired) ong>inong> Sarawak. Global Mong>inong>erals also had a contract

to supply 120 ktpa of ong>coalong> to Kapar. Delivery has however been

suspended over the last few years due to quality problems.

Meliau ong>coalong> deposit ong>inong> Sabah, with high quality bitumong>inong>ous ong>coalong>, is the

best prospect of local ong>coalong>. However, followong>inong>g the declaration as a

forest reserve area around the deposit, development could not be

pursued.

ISSUES AND CHALLENGES

Development costs, technology, environmental impact and security

of supply are major challenges ong>inong> the ong>utilizationong> of ong>coalong> ong>inong> the

electricity supply ong>inong>dustry. To cater with these risks, strategies had

7


een put ong>inong>to places. The ong>coalong> supplies are from mixed sources and

not over dependent on a song>inong>gle country, supplier and port of loadong>inong>g

to mitigate risk of shortfall ong>inong> supply. In addition, only experienced

ong>coalong> producers and suppliers are engaged, whereas the traders must

have strong backong>inong>g of producers and proven experience ong>inong> ong>coalong>

tradong>inong>g. The mong>inong>ong>inong>g ong>inong>frastructure must be capable of ensurong>inong>g

adequate quality control. Lastly, the fong>inong>ancial standong>inong>g, where the

contractong>inong>g parties for short term and long-term contracts must have

strong fong>inong>ancial backong>inong>g.

Recent upward trend ong>inong> ong>coalong> prices have been a major concern to

ong>coalong>-base power generators. Realizong>inong>g the importance of ong>coalong> ong>inong>

electricity generation, the Government of Malaysia has taken steps to

ensure that its supply, pricong>inong>g, shipment and all other related issues

are monitored closely. A Coal Supply Committee was established ong>inong>

2003 where Energy Commission is the Secretariat to provide regular

feedback to the Government on the use of ong>coalong> for electricity

generation. The Committee comprised Government representatives

and ong>inong>dustry players. The Committee meets regularly to discuss

issues related to ong>coalong>.

CONCLUSION

To ensure the security and reliability of supply of electricity at optimal

cost, ong>coalong> has become an important primary fuel. The abundance of

ong>coalong> ong>inong> neighbourong>inong>g countries like Australia, Indonesia, Chong>inong>a and

South Africa are among the reasons why ong>coalong> is a good option for

8


power generation. Furthermore, advanced technology ong>inong> ong>coalong>-fired

power generation has improved the efficiency of energy conversion

with less undesirable emission to environment. These will contribute

to make ong>coalong>-energy more affordable as well as acceptable.

Prepared by:

Energy Commission

January 2005

9

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