Methodology for the Development of Sustainable Power System in Developing Economies

Koh Siong Lee Work Completion Seminar

WORK COMPLETION SEMINAR

Koh Siong Lee

ABSTRACT SUMMARY OF THESIS

1 Summary

This research has been designed to address the most critical challenge the world is currently facing – Global Warming. In this research, a methodology was developed for the policy makers to systematically identify the most cost effective options in GHG emission reduction, especially for the developing countries. The methodology was applied in a developing economy to assess its effectiveness. As a case study in this research, the power system in Sabah was selected.

In this abstract, the key findings from the research were summarised.

2 Key Research Findings

2.1 Global Warming and GHG Emission Reduction

Global warming is currently a major problem to the world as it will have catastrophic effects to our living environment. It is anticipated that, as a result of global warming, the world will experience extreme conditions. The associated disturbances include flooding, drought, wildfire and ocean acidification. The ecosystems of the earth will be adversely affected. For 20% to 30% of plant and animal species, the risks of extinction of will increase. As a result, major negative changes in ecosystem structure, function, geographical ranges, and biodiversity are anticipated. Food supply will become scarce because of decrease in crop productivity. Changes in precipitation, temperature and mass losses from glaciers will reduce the availability of water supply. Human habitat will be adversely affected and reduced by rising sea level, eroding coast lines and frequent floods. Consequentially, all aspects of the society with economies closely linked with climate-sensitive resources or with locations subject to extreme weather conditions will be affected. Extreme climate

Of 9 Koh Siong Lee Work Completion Seminar conditions will also result in increased disease, injury and death. Therefore, the effects of global warming have to be mitigated. Otherwise, it will endanger our well beings and the continual anthropological survival.

The excessive emission of GHG and the increased concentration of GHG of the atmosphere had been identified as the main cause of global warming. Through the green house effect, the additional GHG within the atmosphere increases the amount of energy trapped within the atmosphere. The additional energy increases the average temperature of the atmosphere and surface of the earth. Therefore, the immediate challenge now is for the world to agree on and commit to reducing world GHG emission. Despite this grim consequence, the world has not been able to achieve a climate deal. One of the reasons is the argument between the developed countries and developing countries on their respective share of responsibility to address the issue. While the developed countries are responsible for the emission of most of the GHG currently in the atmosphere, the developing countries are catching up fast. In fact, the rate of GHG emission from the developing countries has now exceeded that of developed countries. Therefore, looking ahead, it is important that the GHG emission from both the developing and developed countries to be reduced in order to address the global warming issue.

2.2 Characteristics of Developing Countries

It was found that most of the GHG emission reduction technologies had been developed by the developed countries. A lot of progress in GHG emission reduction had been achieved in these countries. The developing countries, however, are lagging behind with little success. The following unique characteristics of developing countries were found to be related to the success rate in adopting low carbon power technologies: a. Expertise: Limited local expertise and research and development capacity in advance power technologies; b. Demand: Increasing power demand fuelled by continuous GDP growth. As a result, more new power plants with large capacity are built, as opposed to refurbishing of existing power plants. c. Financial: Lower per capita income; and d. Resources: Differing renewable energy resource endowment.

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2.3 Low Carbon Power Technologies

All existing power generation technologies with low carbon emission were investigated. Among these technologies, matured technologies suitable for deployment in a developing economy were selected for detailed analysis and application in the power system of Sabah. New technologies such as tidal energy, smart grid, fuel cell and nuclear fusion were excluded from this detailed analysis. These latest technologies are currently under development and are not matured for commercial deployment. The developing countries would not have the necessary technical expertise and financial means to carry out the required research and development works. The findings for each technology investigated were summarised below.

PV Panel: The technology of manufacturing PV cell and other system components are mature for mass production. The challenge is in the deployment with high penetration rate. At a high penetration rate, the distributed and intermitted nature of supply from PV panel will affect the stability of the power grid. Therefore, additional technology such as smart grid will need to be deployed for the power grid. From the emission perspective, PV panel is perceived to be a zero emission technology because it does not emit any GHG when generating electricity. However, a lot of energy is required in its manufacturing process. When this is taken into consideration, the average emission factor of PV is about 10% of the energy source used in the manufacturing process.

Based on the data from the power sector in Sabah, the emission factor of PV is around 48 g CO2 per kWh. The main hindrance of PV technology is the high capital cost. At the current rate of RM18,000 per kWp, the annualised cost is RM1,569 per kWp per year. This is equivalent to RM0.98 per kWh. When simulated with LEAP based on the actual data in Sabah, the actual cost of emission avoided was found to be extremely high at RM2,881 per ton CO2. In the scenario with the optimal PV penetration rate as projected in the Renewable Energy Policy, the average emission factor of the power sector in Sabah was reduced only marginally from 480 g CO 2 per kWh to 478 g

CO2 per kWh.

Wind Turbine: Wind turbine is a proven technology with successful major deployment in operation in the western countries. It has a zero emission factor generating electricity. However, it is not economically feasible in Malaysia because the average wind velocity here is low. The cost of electricity generation was estimated to be about RM1.28 per kWh, as a result of the low wind velocity and low plant factor. The high cost will prevent the technology from any significant deployment in Sabah and hence there will be negligible reduction in the average emission factor contributed by this technology.

Hydropower: Hydropower is based on proven technology with existing power plants in operation both locally and internationally. In Sabah, the potential for hydropower is huge as the estimated exploitable power is more than 1,900 MW. The average plant factor of the existing hydropower plant in Sabah is more than 80%. The emission factor of a hydropower plant is low. Based on the guideline set up by CDM, the emission factor of hydropower plant is 90 ton CO2 per kWh. From the financial perspective, hydropower was found to be very competitive. The generation cost was found to be RM0.11 per kWh. Hence, the cost of emission avoided was found to be very low at –RM40.45 per ton CO2. In the scenario whereby the hydropower was explored to the maximum, the average emission factor of the power sector in Sabah was reduced from 480 g CO2 per kWh to 435 g CO2 per kWh.

Advanced Gas Power Plant: The gas fired power plant has a long history, with commercial operation started in 1950. Many power plants are currently in operation worldwide. The latest class H turbine investigated in this research is an evolutional development based on this proven technology and is currently commercially available. Therefore, it is an accessible technology to the developing economies as a viable option for GHG emission reduction. Based on data from the IPCC tier 1 emission factors, the average emission from advanced power plant with class H turbine was calculated to be 335 g CO2 per kWh. In the scenario whereby the advanced gas plant was deployed together with the advanced coal power plant, the cost of emission avoided was found to be low at

RM74.16 per ton CO2. In this scenario, the average emission factor of the power sector in Sabah was reduced from 480 g CO2 per kWh to 365 g CO2 per kWh.

Advanced Coal Power Plant: The coal power plant is among the oldest power plant technologies. Today, it is still supplying to substantial portion of the world electricity demand. The technology is being continuously improved with the latest ultra critical PCC plant having an efficiency of up to 50%. It is an accessible technology to the developing economies as a viable option for GHG emission reduction. Based on data from the IPCC tier 1 emission factors, the average emission from advanced coal power plant was calculated to be 670 g CO2 per kWh. This is higher than the average emission factor of 480 g CO2 per kWh in Sabah. However, it is much lower than the emission factor of conventional coal power plant of 1,011 g CO2 per kWh. In the scenario whereby the advanced coal plant was deployed together with the advanced gas power plant, the cost of emission avoided was found to be low at RM74.16 per ton CO2. In this scenario, the average emission factor of the power sector in Sabah was reduced from 480 g CO2 per kWh to 365 g CO2 per kWh.

Coal Power Plant with CCS: Carbon capture and storage technology is among the latest technology that has been developed to reduce GHG emission and it is typical applied to the proven coal power plant technology. It is commercially available and represents an accessible technology to the developing economies as a viable option for GHG emission reduction. Based on data from the IPCC tier 1 emission factors, the average emission from advanced coal power plant was calculated to be 94 g CO2 per kWh. This is very low, considering that the average emission factor in

Sabah is 480 g CO2 per kWh and that of the PV panel is 48 g CO2 per kWh. In the scenario whereby the advanced coal plant with CCS was deployed together with the advanced gas power plant, the cost of emission avoided was found to be low at RM131.78 per ton CO2. In this scenario, the average emission factor of the power sector in Sabah was reduced from 480 g CO2 per kWh to 229 g CO2 per kWh.

Nuclear Power Plant: Nuclear power plant has been widely deployed throughout the world and the technology is commercially available. However, the merit of the technology is being disputed by the world because of the lack of permanent solution on the nuclear waste and the occasional nuclear accidents. Therefore, any deployment of the technology in Sabah is expected to meet with strong local resistance. Other than the nuclear waste issue, the nuclear power plant may be considered as a green technology because no GHG is released into the atmosphere in the electricity generation process. In the scenario whereby nuclear power plants are deployed in Sabah, the cost of emission avoided was found to be RM206.89 per ton CO2. In this scenario, the average emission factor of the power sector in Sabah was reduced from 480 g CO2 per kWh to 300 g CO2 per kWh.

Biomass Power Plant: Biomass power plant is based on existing proven combustion technology. It is commercially available and there are many plants currently in operation both locally and internationally. Therefore, it is an accessible technology to the developing economies as a viable option for GHG emission reduction. It is especially attractive in Sabah because of the large amount of biomass waste available from the palm oil industry. As the biomass is photosynthesised with CO2 from the atmosphere, the biomass power plant can be considered to have zero emission. In the scenario whereby the biomass power plant was deployed extensively, the cost of emission avoided was found to be low at RM23.40 per ton CO2. In this scenario, the average emission factor of the power sector in Sabah was reduced from 480 g CO2 per kWh to 349 g CO2 per kWh.

Energy Efficiency – Green Building: Lower energy consumption of buildings with green features can be achieved through proper design planning and the adoption of proven energy efficient products in the construction industry. It is proven to be effective with the actually post

Of 9 Koh Siong Lee Work Completion Seminar commissioning data from the LEO building and GEO building. Therefore, it is an accessible technology to the developing economies as a viable option for GHG emission reduction. Electricity may be generated from green building with the installation of BIPV. However, the key features of the green buildings are to save electricity, instead of generating electricity. Therefore, the average emission factor of the electricity saved from the green building is equivalent to the prevailing average emission factor of the power sector in Sabah, which is 480 g CO2 per kWh. In the scenario whereby green buildings were encouraged extensively, the cost of emission avoided was found to be RM232.12 per ton CO2. In this scenario, the average emission factor of the power sector in

Sabah was reduced from 480 g CO2 per kWh to 361 g CO2 per kWh.

Energy Efficiency – Industrial Sector: From the MIEEIP experience, the energy usage in the industrial sector can be reduced significantly by adopting readily available technology such as high efficiency motors and efficient processes. Therefore, it is an accessible technology to the developing economies as a viable option for GHG emission reduction. With the energy efficient measures, electricity is saved, instead of generated. Therefore, the average emission factor of the electricity saved is equivalent to the prevailing average emission factor of the power sector in

Sabah, which is 480 g CO2 per kWh. In the scenario whereby energy efficiency measures were encouraged extensively in the industrial sector, the cost of emission avoided was found to be extremely low at -RM245.19 per ton CO2. In this scenario, the average emission factor of the power sector in Sabah was reduced from 480 g CO2 per kWh to 326 g CO2 per kWh.

Energy Efficient Equipment – Compact Fluorescent Lamp: Energy efficient equipments, including the compact fluorescent lamps, are consumer products readily available off the shelves. Therefore, it is an accessible technology to the developing economies as a viable option for GHG emission reduction. The average emission factor of the electricity saved is equivalent to the prevailing average emission factor of the power sector in Sabah, which is 480 g CO2 per kWh. In the scenario whereby compact fluorescent lamps were used instead of incandescent lamps, the cost of emission avoided was found to be extremely low at –RM188.67 per ton CO2. In this scenario, the average emission factor of the power sector in Sabah was reduced from 480 g CO2 per kWh to 473 g CO2 per kWh.

Import from Bakun Hydropower: Importing electricity may be a viable option for GHG emission reduction if excess electricity with low emission factor is available from neighbouring regions. In this research, the excess electricity from Bakun hydropower plant is such an example. Long distance transmission line is a proven technology with many examples in operation worldwide.

Therefore, it is an accessible technology to the developing economies as a viable option for GHG emission reduction. Taking into consideration the transmission losses and the emission factor from

Bakun hydropower plant, the total emission factor of this option was found to be 92 g CO2 per kWh. In the scenario whereby electricity was imported from Bakun, the cost of emission avoided was found to be extremely low at –RM46.73 per ton CO2. In this scenario, the average emission factor of the power sector in Sabah was reduced from 480 g CO2 per kWh to 393 g CO2 per kWh.

2.4 Results from Iterative Leap Model

Through the iterative process as defined in the methodology, an optimal combination of all the low

GHG options was found. In the solution found, the emission factor was reduced from 480 g CO2 per kWh to 55 g CO2 per kWh. This is much lower than that achieved with any single option above. This represents a significant 88.5% reduction. The total GHG emission had been reduced from

132.711 million ton CO2 to 15.119 million ton CO2.

With the optimal solution, the emission reduction was achieved with minimum increase in the electricity cost. The average electricity cost was increased from RM0.20 per kWh to RM0.2468 per kWh. This represents a 23.4% increase in the price. Following the methodology, the most cost effective option was adopted at each iteration. As a result, the additional cost was kept to a minimum.

3 Analysis of National Energy Policy of Malaysia

The optimal solution found above satisfies the objectives set out in the national energy policy for fuel diversification, low environmental impact, cost effectiveness and fuel security. It can be implemented in a large scale to ensure adequate supply to meet the local demand. The proven technology will be able to ensure the stability of the supply. It is cost effective in comparison to the sole dependent on renewable energy technology. The cost is only marginally higher than that of the conventional power plant technology. It can also reduce the GHG emission significantly, consistent to the clean utilization and environmental objectives. An array of different technologies with differing energy sources had been included in the optimal solution. This is consistent with the fuel diversification and fuel security objective.

The various options investigated in this research were found to be more cost effective than the typical green technology such as renewable energy. Therefore, to achieve optimal GHG emission

Of 9 Koh Siong Lee Work Completion Seminar reduction, it is advisable for the policy makers to consider a wider range of technology options. For example, there is currently no incentive or legislation in the national energy policy to promote the use of the advanced combustion technology in power generation. A lot of emphasis in the energy policy is towards renewable energy such as the Green Technology Policy and SREP (Small Renewable Energy Policy).

Similarly, at the international level, little incentives are available in promoting the cost effective and proven technologies. Even the UNFCCC has yet to recognize CCS for the CDM [2]. With the cost effectiveness of the technologies, the advanced combustion technology will be able to deliver a significantly higher level of GHG emission reduction compared to other technologies such as renewable energy in the immediate short and medium terms, for an equivalent amount of budget allocated.

4 Significance of this Research

The main objective of this research was to develop a systematic methodology to assist the developing countries in addressing the challenges to meet the GHG emission reduction requirements within the known constraint and to meet their needs for development. From the results, the research has successfully meeting this key objective, with the following main contributions:

 Identification of common characteristics in developing economies which are the key constraints and considerations in the development of a sustainable power system;

 Identification of a wide array of options for the developing countries in GHG reduction technologies, in addition to the typical renewable energy option;

 Findings from the in depth study of these GHG reduction options based on real industry data of the power sector in Sabah, from the technical, financial and emission reduction perspective;

 A algorithm was developed to identify the optimal location and size of oil palm waste biomass power plant based on the availability of biomass waste, distance to power grid, transportation cost, cost of biomass waste, plant capital cost and plant operation cost.

 Development of a methodology that enables the policy makers to systematically identify the most cost effective combination of the available options in GHG emission reduction for developing countries

With these findings, the developing countries will be able to follow the methodology to systematically reduce their GHG emission, taking into the consideration of their constraints of limited technical competency and financial resources. They will be able to achieve the maximum GHG emission reduction with a fixed amount of financial allocation within their capabilities.

5 Conclusion

In conclusion, this research had successfully met the original objective of developing a systematic methodology to assist the developing countries in addressing the challenges to meet the GHG emission reduction requirements within the known constraint and their needs for development. With Sabah as a case study, an optimal solution was found following the methodology developed in this research. In the optimal solution, the GHG emission of the power sector in Sabah was reduced significantly with minimal additional cost.