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Consideration of Alternatives in SEAs of Power Plans

Strategic Environmental Assessment in the Mekong region SEA process and tools and lessons from the Mekong region energy sector | 26 May 2016

William Derbyshire Economic Consulting Associates [email protected]

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1. Developing a realistic baseline

Approach ¨ 

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Most recent published PDPs used to identify new power plants for each modelled country and demand forecasts to 2025 Adjustments made to the published PDPs for ¤  ¤  ¤ 

consistency between PDPs of exporting and importing countries removal of ‘excess’ capacity to avoid erroneous results delays in nuclear projects

Adjustments made to published PDPs – hydro export projects ¨ 

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A number of hydro power projects identified in the Cambodia and Lao PDPs as being for export, but not shown in the Thai and Vietnamese PDPs In these cases, we used the importing country PDPs (Thailand and Vietnam) as the ‘master’, and amended the exporting country PDPs (Cambodia and Lao PDR) to match

Adjustments made to published PDPs – removal of excess capacity ¨ 

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The Cambodian, Lao and Vietnamese PDPs would lead to very large capacity margins by 2025 Without adjustment, this results in ¤ 

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large hydro exports from Cambodia and Lao PDR to Thailand and Vietnam, which are far in excess of the expected imports in their national PDPs large exports of coal-fired generation from Vietnam to Thailand, which seems unlikely

A number of projects in these three countries were delayed to reduce this excess capacity

The baseline - generation mix by country ¨ 

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Capacity grows at 8% / 6.8 GW pa Growth in capacity is driven by Vietnam (60% of additional capacity) The capacity mix changes from gasdominated (48%) to a more balanced coal (21%), gas (33%) and hydro (27%) mix Renewables capacity increases >6x, but still remains fairly insignificant (9% in 2025)

Inter-connector flows: Current PDPs (2025) Myanmar

CSG

12.0

8.8 7.3 35.9 Lao PDR 4.4 Vietnam

Thailand 3.1 Cambodia TWh (only flows >1 TWh are shown)

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2. Designing the scenarios

Defining the scenarios 9

Current PDPs Most recent national Power Development Plans

Renewable Energy (RE) Increased renewables displace planned generating capacity

RE - Global Reduce global impacts by displacing coal-fired capacity

RE - Regional Reduce regional impacts by displacing large hydro and nuclear capacity

Energy Efficiency (EE) Increased EE reduces demand and delays need for new generating capacity

EE - Global Reduce global impacts by delaying coal-fired capacity

EE - Regional Reduce regional impacts by delaying large hydro and nuclear capacity

What are the scenarios? “Current PDPs” scenario ¤  ¤ 

existing national power development plans shows what we expect to happen if current policies are unchanged

“Renewable Energy” and “Energy Efficiency” alternative scenarios ¤  ¤ 

represent alternative power development paths allows assessment of the change in impacts compared to a continuation of current paths

Renewable and Efficiency scenarios displace planned conventional energy capacity

PLANNED GENERATION OUTPUT

Building the scenarios

Alternative scenarios displace conventional capacity with different quantities of renewable energy and energy efficiency

Energy efficiency Renewable Energy Conventional energy sources Current PDPs Scenario

Renewable Energy Scenario

Energy Efficiency Scenario

Global displacement case

Concerns and related energy Sources

Displacement Principles

•  Which conventional energy sources most affect global concerns about greenhouse gas emissions? •  Lignite •  Coal •  Gas

•  Remove lignite, coal and gas plants •  In order of the quantity of emissions they produce

Regional displacement case

Concerns and related energy Sources

Displacement Principles

•  Biodiversity and ecosystem integrity – primarily hydropower •  Livelihoods and food security – primarily hydropower •  Regional transboundary impacts – primarily hydro + nuclear •  Health – primarily nuclear +

•  Remove large hydropower, beginning with mainstream dams •  Changed hydrology has poorly understood impacts on downstream biodiversity and livelihoods, significant resettlement •  Remove nuclear power plants •  radioactive waste and potential nuclear accidents •  Remove lignite and coal plants •  SOx, NOx and particulate emissions

Selecting plants to displace ¨ 

Existing plants are not displaced or decommissioned early

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Planned new plants are displaced with commissioning dates Hydro: 2018 or later (+5 years) ¤  Thermal: 2017 or later (+4 years) (allowing for lead times for construction) ¤ 

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How much clean energy?

The alternatives must be realistic 16

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There is an obvious tendency to remove all harmful plants from the future generation mix But this is clearly unrealistic. Questions need to be asked on ¤  ¤ 

How large is the theoretical potential of clean energy? What are the constraints on realising the theoretical potential? n  n 

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Acceptability of (financial) costs Size of impacts on power systems

What pace of expansion does experience suggest is realistic?

Renewables are more costly 17

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Renewables generation still costs more than most conventional technologies This imposes limits on how much can be developed ¤ 

it is not realistic to assume electricity customers will accept a doubling of their bills!

Estimated costs for Vietnam. Assumes natural gas @ $5/MMBTU and coal @ $60/tonne

Solar and wind are intermittent and volatile – which raises total system costs 18

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Solar generates in the middle of the day but peak demand may be in the evenings ¤ 

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Wind generation can change very rapidly in a short time ¤ 

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Thermal plants need to adjust output quickly – many plants can’t do this and it increases the costs (wear and tear) of those that can

Thermal generators cannot go below a minimum output level ¤ 

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Thermal generation needs to be kept available to meet evening peaks but only runs for a short time

This can mean excess generation when renewables are running at full capacity and thermal generation cannot be reduced

More hydro, pumped storage, interconnections, batteries and electric cars may help – but these add cost and/or are not widespread as yet

Wind output by hour in Germany (2012) 19

Solar generation by hour in California (2014) 20

Excess generation and thermal ramping in Germany (June 2013) 21

Solar

Imports

Wind

Exports (excess)

Conventional

How much renewable energy capacity? ¨  ¨  ¨ 

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Estimate technical potential by country and type Estimate ‘untapped’ potential as at baseline date Assume deployment rate (as the share of technical potential that is realised) by type Initial assumptions resulted in unrealistically high levels of RE capacity – deployment rates adjusted downwards following consultations with stakeholders ¤  ¤ 



Concerns over costs Concerns over impacts on power system stability

Renewable energy assumptions

Capturing the costs of volatility 24

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To ensure reliable supply, we assumed that intermittent and volatile renewables must be backed-up by new gas-fired opencycle capacity equal to 50% of the installed wind and solar capacity ¤  ¤  ¤ 

Satisfied the ‘power planners’ that we recognised their concerns Further increases costs This may even understate back-up capacity needs!

What about energy efficiency? ¨ 

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EE potential in Thailand and Vietnam was estimated using published sources, Government plans and international benchmarks Cambodia and Lao PDR country representatives indicated that a 10% energy reduction against BAU by 2025 would be reasonable

TWh (2025) Viet Nam Industry Commercial Residential Supply side

Potential 84.0 15.5 5.0 46.4 -

Planned 8.0 - - 8.0 -

Remaining  76.0 15.5 5.0 38.4 17.1

Thailand Industry Commercial Residential Supply side

51.5 20.3 17.1 14.1 -

4.2 3.6 3.0 2.5 -

47.3 16.7 14.1 11.6 4.9

Cambodia

1.2

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1.2

Lao PDR

1.8

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1.8

TOTAL

138.5

12.2

126.4

Energy efficiency is not free – a cost had to be imputed

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3. Conclusions

Conclusions 28

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In comparing power plans it is common to claim ‘renewables can deliver 100% of requirements’ This ignores ¤  ¤  ¤ 

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resource limits cost constraints practicalities of system operation

Adjusting for these greatly reduces the impacts of alternatives but increases the credibility and acceptance of the results The same message holds for SEAs outside the power sector BE REALISTIC IN YOUR ASSUMPTIONS

Contact details 29

[email protected] +66 8 7056 8248