The coal early retirement program makes no sense: Why aren’t the oldest & dirtiest power plants retired first?
Coal early retirement program is getting more attention in the news. The earliest initiative was announced by Asian Development Bank (ADB), back in 2021, through its program called: Energy Transition Finance (ETM). Let me cite the definition from their website:
“ETM is a scalable, collaborative initiative developed in partnership with developing member countries that will leverage a market-based approach to accelerate the transition from fossil fuels to clean energy. Public and private investments — from governments, multilateral banks, private sector investors, philanthropies, and long-term investors — will finance country-specific ETM funds to retire coal power assets on an earlier schedule than if they remained with their current owners.” (ADB)
Sounds complicated, but in essence, this multilateral bank wants to finance coal-fired powerplant (CFPP) owner in order to shut down their asset, earlier than the planned lifetime. On the surface, the concept of early retirement sounds appealing, even noble for me. Because, if successful, it means being able to cut emissions significantly.
Just imagine, a 1 GW CFPP emits 6 million tonnes of CO2 each year; cutting the lifetime, say, from 30 years to 20 years means avoiding 60 Mt CO2 emissions. A significant achievement considering Indonesia energy sector emits 600 Mt CO2 in 2021 (IEA, 2022).
Recently, ADB announced their first ETM project in November 2022. ADB signed MOU with PLN, Indonesian Investment Authority (INA), and Cirebon Electric Power (CEP) to retire the Cirebon-1, a 660 MW coal powerplant. Let’s see the profile of this CFPP:
Source: Cirebon power, Gem.wiki
Don’t you see something strange here? Look at the year of Commercial Operating Date (COD): it was 2012, meaning this plant is about 10 years old. I would say it’s a young CFPP, considering a typical lifetime of 25–30 years. And for those who are familiar with Indonesia power system, there a bunch of much older CFPPs. Of course, this raises questions:
Why did ADB choose Cirebon-1? What is the basis for the selection? Why not choose the much older CFPP? PLN clearly knows which CFPP is suitable for retirement, why does PLN seem to be silent?
Before criticizing much further, let’s understand the engineering basis: What should be an ideal indicator for retiring a powerplant?
First, we must agree that the main goal of CFPP early retirement is emission reduction. So, the search objective is focusing to find the most polluting powerplants for the same unit of electricity output (highest CO2/kWh). Unfortunately, PLN does not release such data for its powerplant fleet.
No problem, let’s us our logic. I derive indicators to identify a good candidate for retirement, as follows:
Thermal efficiency. This is relatively straight forward. A CFPP having low efficiency means that it takes more coal input for the same electricity output. As a result, low efficiency CFPP also emits more emissions, consumes more water, and overall, more costly to operate.
Technology. Thermal efficiency figure sometimes not easy to find. Alternatively, we can estimate by the boiler technology a CFPP uses. Boiler technology has been developing for decades: starting from sub-critical boiler, then evolved into super-critical boiler where it can sustain higher temperature, and finally the most advanced today is the ultra super-critical boiler. Each of which has an efficiency of around 35%, 40%, 45%, respectively.
Availability factor. This parameter indicates how many hours a powerplant online/ready to supply electricity in a year. A CFPP with low availability factor is suitable for retirement since it has poor reliability and higher maintenance expenses.
Cost to shut down. The development of a power plant requires a large capital investment. If the generator is retired earlier than the scheduled lifetime, it means that there will be unrealized projected revenue. In general, the loss will be very costly for a young CFPP.
The factors mentioned above can be condensed into a single parameter: the age. An aging CFPP relies on sub-critical technology, runs on poor efficiency and reliability, and financially speaking, has paid back the investment, making it a suitable candidate for retirement program.
This approach is nothing new nor advance technique. In fact, there are research papers suggesting assessment methods to prioritise CFPP retirement based on multiple variables. For example, Cui et all recommends assessment based on technical attributes, profitability and environmental impacts. Implementing the strategy will result in least cost for the grid system and higher effectiveness in achieving climate goals.
In our case, simply by arranging CFPP based on its age, we can derive a reasonable selection mechanism for selecting CFPP candidates. The following table shows the list of CFPP and its coresponding age.
Aging CFPPs should be priority for PLN and ADB in the ETM program. There are 4.4 GW CFPP which are more than 25 years old, such as Suralaya, Paiton, Ombilin, and Bukit Asam. These CFPPs do not even need early retirement program. Just retire it today, it bears minimum cost to PLN.
However, the facts say otherwise, Cirebon-1 was chosen!
Now I hope you understand the illogical decision of choosing Cirebon-1, which is only 12 years old, as the pilot project for ETM program. From any technical aspect that we examine, the decision to prioritize the new CFPP for retirement rather than the older ones, cannot be understood logically.
ADB says the reason of selecting Cirebon-1 is: “The project company already has an active corporate social responsibility program, is engaged with the community, and is therefore suited to ensure the coal plant will be retired with strong just transition considerations.”
On the other hand, there are various reports related to the the people of Cirebon due to bad air pollution and the health impact to the surrounding community.
Stranger still, there are several CFPPs built since the 80s, such as Suralaya units 1–4 and Bukit Asam. They are over 35 years old! The plant still relies on sub-critical boilers, which are certainly very wasteful and polluting. Why does PLN still maintain these CFPP?
PLN can shut them down today, without further ado, without costing a penny. And at the same time, PLN complains that the main obstacle to not building renewable power plants is the issue of oversupplied capacity. Again, it makes no sense.
We could scrutinize further: Why didn’t PLN’s powerplants prioritized first, but instead had IPPs? PLN has a long-term PPA contract with IPP. Shutting down an IPP power plant early means complex legal and financial processes. Still, this is what ADB is pursuing.
We as a society have the right to demand transparency from this process. Both ADB, PLN and the Government are obliged to disclose information and open for public consultation, especially if public funding is involved.
Coal early retirement is a good initiative that has the potential to accelerate the achievement of Net Zero Emissions. But without transparency and public support, the success of this program is questionable.
