Korea’s Bio-energy Perspective : Potential Collaboration...
Transcript of Korea’s Bio-energy Perspective : Potential Collaboration...
Copyright ⓒ 2012 Eco-Frontier Co. All rights reserved. 0
Biomass Asia Conference 2013, Malaysia, 21th May 2013
JP(Jae-Pil) Song / President of Southeast Asia Division
Korea’s Bio-energy Perspective : Potential Collaboration with Malaysia
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Contents
Contents Introduction of Eco-Frontier
Korea’s Bio-energy Perspective
Collaboration Experience in Global Market
Potential Collaboration with Malaysia
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Introduction to Eco-Frontier
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Eco-Frontier Introduction
Carbon credits business • Volumes: Over 20Mt of carbon credits • Project types: Energy efficiency, coal mine methane, biomass power, hydro power, landfill gas, HFC
Sustainable finance business • Advisory for sustainable funds at US$1.5 billion • Clients: Korea Development Bank AM, Samsung AM, Shinhan BNP Paribas, Hana UBS, Woori Bank, Industrial Bank of Korea, etc.
Biomass power business • Malaysia: 23MW + 150t/hr steam • China: 30MW, 60MW(fuel switching) • Korea: 40MW(fuel switching) • UK: 300MW (biomass power plant) • Others: Europe, Brazil and USA Global Brain & Business Group
Korea, Malaysia, Indonesia, China, USA, UK
Sustainability consulting business • Industry: Construction, petrochemical, pulp & paper, electronics, finance, etc. • Utility: Electricity, district heating, transportation, housing, landfill, etc. • Governments: Korea, Indonesia, World Bank, ASEM, etc.
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World Largest Biomass
Power Plant 300MW
USA (1) Eco-Frontier Global Capital Subsidiary for Green and Carbon Financing Asia Sustainability Research Alliance Joint venture for sustainable and responsible investment advisory service
Eco-Frontier has developed biomass power plants in Asia, and is developing the world largest biomass power plant(300MW) in the UK, which requires over 2Mt/yr of biomass pellets or wood chips.
Currently, Eco-Frontier is trying to develop biomass pellet business in Indonesia and Malaysia and is searching for more opportunities expending procurement capacity. The pellets can be supplied to Korean utility companies or the UK's biomass power plant project.
Global Carbon and Biomass Business
Global Carbon and Biomass Business of Eco-Frontier
Malaysia (1) Eco Biomass Energy Sdn Bhd Affiliate for POIC Biomass CHP
Indonesia (1) PT EcoPellet8
Biomass Pellet Development JV
Headquarter Seoul, Republic of Korea
China (1) Shandong Pingyuan Han Yuan Green Energy Biomass Power JV
UK (2) Biomass Power Plant Development stage Eco-Frontier Carbon Partners Subsidiary for Carbon Trading
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Clients & Partners (1)
Manufacturing and Service
Industry
Utility Industry
Government and Public
Sector
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Clients & Partners (2)
Bank, Insurance,
and Securities
Companies
Asset Management Companies
Other Partners
Samsung Life, Samsung Fire and Marine Insurance, Samsung Securities
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Company’s Core Competitiveness
Sales Network Owner and developer of biomass power plants in Asia and Europe Close relationship with Korean Gencos through sustainability consulting
Know-how Successful development of biomass power projects Development and production experience of biomass pellet projects
Technology Equipped with commercially proven pelletizing technology Networking with state of the art technology providers
Expertise Successful financing to overseas projects Expertise of biomass market status, trends and players
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Korea’s Bio-energy Perspective
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Main Policy Related with Low Carbon & Green Growth
Ex-President of the Republic of Korea. Lee, Myung-Bak
“Reducing GHG emissions” to cope with climate change issue (1) Expand supply and use of renewable energy (2) Enhance energy efficiency in the existing industry, etc.
Low Carbon
“Developing new momentum for economic growth” through climate change reaction (1) Expand R&D investment (2) Strength export competitiveness for climate-friendly industry, etc.
Green Growth
“Establishing infrastructure” for promoting Low Carbon & Green Growth (1) Promote green finance (2) East Asia climate partnership, etc.
Infrastructure
Declared 8.15 Vision of “Low Carbon & Green Growth” in 2008
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Target of reducing Greenhouse Gas (GHG)
2008.8 Low Carbon & Green Growth Vision declared
2009.1 17 new growth engine declared
2009.3 National strategy of green growth, five-year plan set by green growth committee
298
594
813
642 590 569
0
100
200
300
400
500
600
700
800
900
Emission (million tCO2e)
1990 2005 2020
Alt 1 Alt 2 Alt 3 BAU
2005 2020 2030 Annual average growth rate ’05〜’20 ’20〜’30
Total emission (million tCO2e) 594 (100%) 813 (137%) 888 (149%) 2.1% 0.9%
Emission per head (tCO2e/head) 12.3 16.4 18.2 - -
<Prospect of greenhouse gas emission and reduction goal>
2009.12 Low Carbon & Green Growth Law passed from the National assembly
Target of reducing GHG was set on 30% against BAU until 2020 ( in 2009.11) Highest band from the scope of 15~30% of BAU, recommended to developing countries by IPCC (Intergovernmental Panel on Climate Change )
2010.04 The Act put into effect
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Management system of Energy & Greenhouse gas
Management system of Energy & Greenhouse gas came into force according to Low Carbon & Green growth Law (2010.4.14)
Ministry of Environment : general check/evaluation
Responsible (each ministry *)
Choice of target company
(every June)
Set target of emission (every September)
Target Company
Submission of Reducing target
implementation plan (every December)
Necessary actions including
enforcement notice
Reporting Performance (March, a year after next year)
Regulation criteria of energy consumption and GHG emission
2010 2012 2014~
Greenhouse gas base [GHG 1000t] (company) 125 87.5 50
Greenhouse gas base [GHG1000 ton] (facility) 25 20 15
Energy base [TJ] (company) 500 350 200
energy base [TJ] (facility) 100 90 80
*) Ministry of Environment Ministry of Land Transport and Maritime Affairs Ministry of Knowledge Economy Ministry of Food, Agriculture, Forestry and Fisheries
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Korea’s NRE Policy – RPS (Renewable Portfolio Standard)
RPS background
2002 2012 2006 2008 2011
FIT Start 1st RPA Demo
RPS Legislation
RPS Implementation
2nd RPA Demo
2010 2009
Voluntary RPA 9 Power companies 2292MW Accomplishment
Voluntary RPA 2.7 billion USD subsidiary from Government 1331MW Accomplishment
13 Local Compliance Power Companies
2022
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RPS (Renewable Portfolio Standard) was adopted in 2012 RPS obligates major electric power companies having its generation capacity more than 500MW. Obligation ratio of electronic supply shall be increased every year up to 10% by 2012.
Obligatory electronic supply of renewable energy
= Total electricity supply of electronic business X Obligatory rate
2% 2.5% 3% 3.5%
4% 5%
6% 7%
8% 9%
10%
'12 '13 '14 '15 '16 '17 '18 '19 '20 '21 '22
Obligatory Rate
NRE Generation (BAU)
Korea’s NRE Policy – RPS (Renewable Portfolio Standard)
More than 5% difference
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Korean Major Coal Firing Power Companies
Korea Hydro and Nuclear Power Korea South-East Power Korea Midland Power
Korea Western Power Korea Southern Power Korea East-West Power
13 power companies have to comply with RPS ( more than 500MW) Governmental (6), Public Corp (2; K-Water, KHDC) IPP (5; SK E&S, GS EPS, GS Power, Posco Power, MPC)
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New/Renewable Energy Power Generation Mix Total Power Generation Mix
Korea Power Generation (500 Million MWh/annum)
Renewable energy portion was 3.1% of total power generation volume. Biomass Pellet was only 0.22% consumed for power.
Waste 59%
Hydro 26%
Solar 5%
Wind 5%
Biomass-gas 3%
Feul Cell 2%
Ocean 0.3%
Biomass-pellet 0.22%
Coal 40.3%
Newclear 31.1%
LNG 20.5%
Bunker 5.0%
New Renewable 3.1%
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Korea’s Bio-Energy Policy – RFS (under evaluation)
RFS (Renewable Fuel Standard) policy is under discussion . To promote renewable energy mix for transportation sector, renewable fuel shall be blended into transportation fuel in increasing amounts each year. The policy is under public hearing and planned to be implemented in 2014
2014 2015 2016 2017 2018 2019 2020 2021 (Target)
BD 3.0 BD3.5 BD4 BD4.5 BD5 BD7 BD 3.0 BD 3.0
E3 E3 E4 E5 E7 Bio Ethanol Pilot Project
Scenario
1
BD 2.5 BD3 BD3 BD3.5 BD4 BD5 BD 2.5 BD 2.5
E3 E3 E3 E4 E5 Bio Ethanol Pilot Project
Scenario
2
Phase in BE policy Phase in BD policy
Before 2012, 2% autonomous regulating by tax exemption
RFS is not ready for
implementation
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REC Incentive for Renewable Energy in Korea
REC weight value
Type
0.25 IGCC
0.5 Waste, LFG
1.0 Biomass, Hydro, Wind(Inland), RDF Whole firing, Waste Gasification, Tidal(Seawall)
1.5 Woody Biomass Whole-firing, Offshore Wind(within 5km)
2.5 Offshore Wind(over 5km, Tidal(Non-Seawall), Fuel Cell
Non-Solar REC Price (Incentive for 1MWh)
Volume (REC) Price (USD/REC)
REC weight value
0
20
40
60
80
100
120
0
5000
10000
15000
20000
25000
30000
35000
Volume Price-USD
One(1) MWh is equivalent to one(1) REC. In order to motivate compliance, Gov have penalties for the power companies that fail to reach the specified targets. Recently RECs price has upward trend because of increased demand in Korea.
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Non-Solar Vs Solar
REC Incentive for Solar Power in Korea
Year ‘12 ‘13 ‘14 ‘15 ’16~ Target (GWh) 276 723 1,156 1,577 1,577
Solar REC Price
0 20 40 60 80
100 120 140 160 180
200
2011.9 2012.4
2012.9 2013.4
Price (USD/REC)
The price of Solar RECs is higher than RECs, but currently has downward trend because of over supply.
And SRECs can be sold a variety of easy ways, such as on the spot market, at auction, or by negotiating long-term contracts.
Solar (Over
Supply)
• Absolute target • Low hurdle : Private, Small & Big company • Short Term construction period • Easy for financing
Non-Solar (Increased Demand)
• Relative ratio target • Relatively Big Scale • License/Permit issue • Long Term construction period • Difficulty in financing
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RPS Penalty for failed compliance
Target Accomplish Submit(2012)
Directly Construct
Sourcing from Outside
National REC
Solar 276,000 264,180 (95.7%)
63,502 (23.0%)
195,253 (70.7%)
5,425 (2.0%)
Non-Solar 6,144,279 3,890,047 (63.3%)
1,663,178 (27.1%)
332,426 (5.4%)
1,894,443 (30.8%)
Total 6,420,279 4,154,227 (64.7%)
1,726,680 (26.9%)
527,679 (8.2%)
1,899,868 (29.6%)
Penalty : Shortfall volume X Average REC Price X 1.5 = 24M USD just for 5 companies
13 companies has achieved about 65% of RPS target in 2012 and received huge penalties.
They are eager to find more REC sources from outside of Korea for the next compliance.
Shortfall Penalty
RPS Target Volume
What is easy & quick implementation of
possible bio-energy to achieve RPS
9.4
5.3
4
3.9 0.7 1
2
3
4
5 Unit : million USD
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Renewable Energy Power Cost – Shot Term(’12~’14)
Biomass (Co-firing)
0.04
Biomass (Whole)
0.14
RDF
0.15
Fuel Cell
0.24
Shot-Term Power Cost Unit : USD/kWh
Wind (Inland)
0.12
+
The Cheapest and the fastest way to achieve renewable energy generation by power company will be to arrange co-firing of Biomass Pellet.
The pellet can be co-fired with coal in boilers.
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Renewable Energy Power Cost – Long Term(’15~’22)
Biomass (Co-firing)
0.05
IGCC
0.14
Biomass
0.14
Offshore Wind (Grid)
0.15
Long-Term Power Cost Unit: USD/kWh
Wind (Inland)
0.11
RDF
0.15
Tidal (Non-
Seawall)
0.15
Offshore Wind
(Non-Grid)
0.17
Fuel Cell
0.24
Tidal (Seawall)
0.46
In the view of Long term period, co-firing with biomass pellet is solution to have most efficient way of RPS compliance.
+
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Current Coal Co-firing & Biomass Plant in Korea
Tae-An Coal Power Plant 1,2,7,8 Unit : Wood Pellet Co-firing 3%(150,000 ton/yr )Co-firing Bid
Dong-Hae Biomass Power Plant Capacity 30MW , Wood Chip/Pellet Whole firing Under Construction
Ha-Dong Coal Power Plant Unit1~4 : Wood Pellet Co-firing 3% (180,000 ton/yr) Co-firing Bid
Recently, Major Power companies has equipped and arranged wood pellet co-firing equipment. These are plan for co-firing at the current plant and for new biomass power plant construction.
Samchunpo Coal Power Plant Unit3,4 : Sludge Co-firing Operation
Yeo-Su Coal Power Plant Wood Pellet Co-firing (F/S) 10%(150,000 ton/Yr ) Co-firing
Dong-Hae Coal Power Plant Wood Pellet Co-Firing (Test) 10%(150,000 ton/yr) Co-firing Plan
Ceremony for Co-firing equipment completion
Dangjin Biomass Power Plant Capacity : 100MW, PKS& Wood Pellet Under Construction
Ground Break Ceremony for Biomass Power Plant
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Potential Pellet needs in Coal Power Plant
A. Boryeong Coal Power Plant Capacity : 5,800MW 5% : 1,631,000 ton/yr
B. Ha-Dong Coal Power Plant Total Capacity : 4,000MW 5% : 1,125,000 ton/yr
Pellet demand can be estimated by each scenario target ratio as follows. Considering NCV from Coal and wood pellet, obligation of 5% to five(5) major coal firing power companies will have a demand for 4.7Mt of biomass pellet per year.
C. Samchunpo Coal Power Plant Capacity : 3,240 MW 5% : 621,000 ton/yr
D. Dangjin Coal Power Plant Total Capacity : 3,000MW 5% : 843,750 ton/Yr
Unit : ,000(ton)
Power Plant
Capacity (MW)
Pellet Needs
RPS 1% RPS 3% RPS 5%
A 5,800 326,250 978,750 1,631,250 B 4,000 225,000 675,000 1,125,000 C 3,240 124,200 372,600 621,000 D 3,000 168,750 506,250 843,750
Others(Sum) 1,967 95,700 287,101 478,501 Total 18,007 939,900 2,819,701 4,699,501
0 500
1,000 1,500 2,000 2,500 3,000 3,500 4,000 4,500 5,000
RPS 1% RPS 3% RPS 5%
Pellet Demand
Others
D
C
B
A
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Korean Power Company Pellet Demand in 2020
500 million MWh
Coal 40%
5%
3% 1%
940 1%
Annual Electricity Production
RPS
Coal Power
Biomass Pellet For RPS
(Unit : ,000 ton/yr)
Pellet demand in 2020
4.7M ton/yr 2,820
4,700
200 million MWh
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Current Korean Pellet Market
Last year, industrial purpose wood pellet price was about USD 150/t CIF Korea.
The price level will have upward trend slowly as insufficient market supply compare to increased demand for the power companies who have a plan for co-firing this year.
Required volumes is estimated to be about 700,000 Mt this year.
Volume (ton) Price (USD/ton, CIF)
125
130
135
140
145
150
155
160
165
170
0
5,000
10,000
15,000
20,000
25,000
30,000
35,000
1 2 3 4 5 6 7 8 9 10 11 12
Volume(ton) Price (usd/ton, CIF)
2012 Average CIF Price : USD149/ton
Industrial Pellet Price & Volume (Import CIF Korea in 2012)
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Korea’s Collaboration Experiences in Global Market
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Biomass Power : China
Project Outline
Type: Biomass Power Generation
(Fuel: Cotton trunk, fast growing tree, mulberry trunk)
Site: Shandong, China
Total Investment: 50M USD
Size: Power 30MW
CER: 150,000 tons/yr x 10 years
ECF’s Share (Co-Developer): 13.5% (paid-in capital: 2.5M USD)
Supported by Minister of Environment in Korea
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Biomass Power : China
Development and Construction Partners
Operation Partners
Pre-Feasibility Study
Shandong Energy and Building Design Institute
Shandong Pingyuan Han Yuan Green Energy Co., Ltd.
(Project SPC)
Shareholders (33.4%)
GS EPS (31.5%)
Eco-Frontier (13.5%)
Pre-Feasibility Study Review
Jipyong&Jisung, Pöyry
Pre-Construction Consulting
Mott MacDonald
Construction PM
Mott MacDonald
EPC contractor
SEPCO 1
Shenzhen Han Yuan (55%)
Project Finance (66.6%)
Plant Operation
Project SPC
Fuel Supply
Fuel Supply SPC (JV of Project SPC &
Local Agri. Federation)
Power Purchase
Shandong Power Corp.
CER Purchase
Eco-Frontier Carbon Partners in UK
Advisor, Arranger, Agent, and Lender
Korea Development Bank
Feasibility Study
Korea Ratings, Lee&Ko, AON
ECA
Korea Trade Insurance Corp.
CDM Coordinator
Eco-Frontier
CDM Consultant
COWI
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Biomass Power : UK Biomass
Type
Location
Project Period
Total Investment
Biomass power
UK
Construction: 36 months Operation: 20+ years (years of ROC issuance)
GBP 500M+
2008.04 SPC established
2008.08 Land Agreement signed
2009.02 Grid Connection Agreement signed
2009.07 S36 Consent (approval for construction and operation)
2009.12 EPR Permit (approval for ops and pollution control)
2010.01 RO Preliminary Accreditation acquired
2010.01 FEPA Permit acquired (approval for BERTH construction)
2010.12 Generation License acquired
2011.07 Planning Permission (approval for power line installation) Project Development Agreement
between UK Developer & Eco-Frontier
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Biomass Power : UK Biomass
Project Participant
MGT TEESIDE
LTD
SPC
PPA Bid
vs.
FIT Counterparty
Offtaker
America Etc.
Biomass
Japan Korea
Logistics
• Korea Power Company • Biomass Provider • FI & CI
Investor
• Korea & International Bank
Bank
Power Company(Korea)
O&M
Global EPC
EPC
Co-Developer
MGT Power Eco-Frontier MGT Power Eco-Frontier
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Global Collaboration in Renewable Energy
Solar Power Wind Power
Site North America
Type 40MW Solar Power
Korea’s Role
O&M EPC Finance
Site North America (Columbia)
Type 200MW Wind Power
Korea’s Role
PM, O&M, Financing EPC
Site Portugal
Type Solar Power
Korea’s Role
Finance (34M$) from Global Infra Fund : Public+ Private Fund (Total 360 M$)
Site Korea
Type 5GW Offshore wind Power
Korea’s Role Co-Investment (50:50)
Foreign Role
Co-Investment (50:50) Technical Partner
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Korea’s Potential Collaboration Opportunity with Malaysia
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Development of Biomass Pellet as a Bio-Energy in Malaysia
Resources of Biomass Pellet
Wood Pellet from Short Rotation Coppice Plantation
Wood Pellet from Logging industry chain
EFB Pellet & PKS from Oil Palm Plantation
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Value Chain of Biomass Pellet Collaboration
JV for Biomass Pellet
O&M Marketing
Pellets from Planted Forest
(e.g. PFPP)
Pellets from SRC Plantation
(e.g. new forestation)
Pellets from Palm Residue
(e.g. oil palm frond)
Pellets from Timber Industries
Service companies
(logistics, storage,
maintenance, etc.)
Global Sales
Long & Short-term Off-Take Contract
Biomass power plants
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Project Development Process
Process Financing
Construction Operation
Establishing SPC
Project Development
Agreement
Project Screening
Collaboration and Co-Investment Scope for Biomass Pellet Project
Raw Material Land for Factory
Operation License/Permit
Co-Investment
Co-Marketing
1
2
3 Korea
Structuring of Project Whole Project Development
Co-Investment, Financing Co-Marketing and Off-taking
Further Development and Expanding Project
1 2 3
Malaysia
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Eco-Frontier effort to develop biomass pellet with Malaysia
1 2
5
4 3
6
7
FS cooperation with Local Companies
Eco-Frontier is under feasibility study to confirm the biomass pellet business opportunity with Malaysia.
Tanjung Manis Port Tanjung Manis Resources Pellet Mill @Sibu Logistics @Sibu
Ply wood mill @Sibu Samalaju Port Site CPO Mill of SOP Oil Plam Plantation of SOP
Meeting with Local partner
Plywood mill Meeting with Local
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Potential Collaboration between Malaysia and Korea
Korea
Malaysia
Experience in Global Bio-Energy Project
Financial Capability & Investment to Malaysia
Bio-Energy Market Demand
Huge Potential of Biomass Resources
Co-Project Development
Bio-Energy Supply to Korea
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Thank You for Your Kind Attention!!!
Dedicated to making a difference today for a better tomorrow, we contribute to the world’s sustainable development, help healthy growth of businesses, and improve people’s quality of life.
Copyright ⓒ 2012 Eco-Frontier. All Rights Reserved.
JP(Jae-Pil) Song, President of Branch Office Indonesia 6F DMC Hi-Tech Industry Center #1580, Sangam-dong, Mapo-gu, Seoul, Korea (121-835) Menara Hijau Bldg. Fl. 12 (SR 1204) JL. MT. Haryono Kav. 33 Jakarta 12770 E: [email protected] H: www.ecofrontier.com