IEEJ:June 18 IEEJ18 where n is the service life of the equipment. Utility and feedstock is the of fuel (electricity) and feedstock (water) used in the

Transcription

1 IEEJ:June 18 IEEJ18 Evaluation of the Economics of Renewable Supply in the APEC Region Sichao Kan* Yoshiaki Shibata** This paper presents the economics of renewable in APEC region. With the reduction of renewable electricity, innovation of electrolyzer, liquefier, storage, shipping, and other relevant technologies the fuel of imported renewable for power generation was estimated to be JPY 51-69/Nm3 around. To reach the government target (JPY /Nm3), acceleration of reduction over all the supply chain processes is required. Fuel cell vehicle supply using domestic renewable electricity could be as low as 8JPY/Nm3 around. Keywords :, Renewable Energy, APEC 1. Background and purpose is expected to contribute not only to decarbonizing the energy system, but also to improve energy security as it can be produced from diverse energy sources. When considering the supply of CO2-free to Japan from overseas, the APEC region, with its diverse energy resources, is expected to become a source of. Importing from APEC region will also help Japan to reduce its dependence on the Middle East for energy supply. This study focuses on CO2-free produced by renewable energy (hereafter, "renewable"). By estimating the production of renewable in major APEC economies. as well as the of transport and delivery of, this study analyzes the economics of importing renewable to Japan. It also compares the economics of imported renewable with that produced by domestic renewable sources. 2. Method of evaluating the economics of renewable supplies 2.1 Assumed supply chain Two supply routes of renewable can be assumed: domestic production and import from overseas. The for domestic production of consists of the for production and domestic delivery. The for imported consists of the for production, transportation and storage in the producer economy, international transportation, use of receiving s, and domestic delivery. * Senior Researcher, The Institute of Energy Economics, Japan Inui Bldg. Kachidoki, Kachidoki, Chuo-ku, Tokyo 4-54 ** Group Manager, Senior Economist, The Institute of Energy Economics, Japan This study assumes that liquefied, for which data are relatively accessible, is used as the energy carrier for storage and international and domestic transportation and delivery, and that pipelines are used for transportation of in producer economies. Figure 1 shows the flow from the production site to a receiving in Japan. production site pipeline liquefier exporting storage tank & other facilities ship Figure 1 supply chain 2.2 Method of estimating s The s in each phase of the supply chain include CAPEX (initial investment), operation and maintenance (O&M), and utility and feedstock ( for electricity, water, etc.) The unit of for each process is calculated using the equation: Unit of (yen/nm 3 ) =levelized equipment + levelized O&M + levelized financing + utility and feedstock The levelized is calculated as follows: 1 receiving

2 IEEJ:June 18 IEEJ18 where n is the service life of the equipment. Utility and feedstock is the of fuel (electricity) and feedstock (water) used in the process of producing, liquefying, and transporting. The for domestic s and transportation within Japan is derived from the result of existing study 1). 3. Preconditions 3.1 Assumed renewable producer economy Based on the condition of renewable energy resources in the APEC region, the assumption on economies capable of supplying renewable and the renewable technologies used for producing is shown in Table 1. Table 1 Renewable producer economies and the renewable technologies used 3.2 CAPEX, O&M, and financing The CAPEX, O&M, and financing are assumed to be the same for all economies. Further, a reference and a reduction are assumed. The assumptions of the reference described in References 1 5 are used as the reference for this study. In the same references (Reference 1-5), if reduction measures are discussed, the results are used to the reduction in this study. Financing and utility and feedstock are assumed to be the same for both s. (1) Electrolyzer Wind power Solar PV Hydropower Australia Canada Chile China Mexico New Zealand Russia United States Japan CAPEX assumption of electrolyzer is based on the polymert electrolyte membrane (PEM) electrolysis unit. The technical spec and assumptions for the large PEM water electrolysis unit, the values from a US DOE study ( and Fuel Cells Program of the US Department of Energy (DOE)) are used 2). The values for the reduction are also based on the low- discussed in the same study (Reference 2) ). Table 2 Major assumptions for the PEM water electrolysis unit Item Unit Reference Cost reduction Plant capacity kg-h2/day 5, Per-unit power consumption kwh/kg-h Service life year Initial investment million US dol Operation & maintenance %/equipment Exchange 15 Source: Reference 2), the World Bank, etc. 8.5% 121 It is assumed that the entire renewable electricity output will be used for producing. Thus, the of electricity supply for the water electrolysis will be the renewable power generation. Further, the utilization (=annual operation hours/87 hours) of the water electrolysis unit will equal the capacity factor of the renewable power generation facility. (2) Transportation, liquefaction, and storage of The technical specs for the pipeline (including the compressor), liquefier, exporting/receiving, and liquid ship are derived from the studies by the US DOE and the New Energy and Industrial Technology Development Organization (NEDO) 1 5). For electricity supply to the pipeline, liquefier, and exporting/receiving, the use of grid electricity is assumed. Table 3 Assumptions for the calculation of transportation pipeline liquefier Exporting Preconditions Reference Compressor capacity (kg-h2/day) Number of compressors (units) Pipeline length (km) Compressor (million dollars/unit) Pipeline (million dollars/km) Annual operation & maintenance (%/total CAPEX) Electricity load (kw) Liquefier capacity (kg-h2/day) Number of liquefiers (units) Liquefying efficiency (kwh/kg-h2) Unit price of liquefier (million dollars/unit) Annual operation & maintenance (%/total CAPEX) Size of liquid storage tank(m3/unit) 5, Number of tanks (units) 4 Electricity load (kw) 6, Total initial investment (million dollars) 878 To power plant () To station () 194, Cost reduction Annual operation & maintenance (%/total CAPEX) 1.9% Size tank(m3/tank) Number of tanks (tanks/ship) BOG (Boil-off Gas) (%/day) Ship speed (km/h), 4.2% ship Number of days for cargo handling (loading/unloading total) (number of days) Unit price (million dollars/ship) Receiving () Domestic delivery 8% 19,5 5, % Source: Assumptions based on References 1 5

3 IEEJ:June 18 IEEJ18 For the assumptions of the unit price of exporting and receiving in reduction in this study, the result of the maximum reduction till 5 in Reference 1 is used. (3) Financing A discount of 5%, tax of 1.4%, 15-year depreciation period, and equity ratio of % are assumed. For the currency exchange, the average for 15 is used. 3.3 Utility and feedstock The mass production of renewable is assumed to start around, and thus, renewable power generation and the of the grid electricity consumed in the liquefaction, transportation, and storage of are estimated for. using hydropower is less ly. If the generation of solar PV continues to decrease in the future, production using solar PV could be competitive against hydropower in economies such as Chile, Mexico, and the US where solar radiation condition is good. The renewable production of Japan is the highest in the APEC region. 7 5 Other Mexico Solar Renewable power Figure 2 Renewable production in selected APEC economies Australia Equipment and operation & maintenance Japan Wind Japan Solar PV Table 4 Estimated utility and feedstock s Wind power Solar PV Hydropower Utilization Utilization Water supply Utilization ($/m3) Grid electricity supply Australia.49 %.38 22% Canada.34 54% Chile.44 27%.27 25% 1..3 China.44 24%.29 17%.33 41% Mexico.41 27%.31 22% New Zealand.51 38%.34 52% Russia.55 39%.42. United States.5 34%. 21% Japan.66 21%.58 15% Source: Estimated based on References 6) ) and other materials The of renewable power generation in the future is calculated based on the current CAPEX, O&M, capacity factor, and reduction trend in the future 6 8). For some economies, the generation is adjusted according to the announced electricity sales price. For Japan, the target price considered by the Renewable Energy Price Committee is used. The of grid electricity is estimated based on the current level of electricity tariffs and the average generation in the future in each economy. The unit price of water for producing is set by referring to the industrial water price of each economy. 4. Results 4.1 Reference (1) production According to the results (Figure 2), production (2) Supply of import renewable Figure 3 shows the supply of import renewable for power generation in Japan Rquired supply price to be competitive with oil-fired thermal power LNG-fired thermal Figure 3 Supply of import renewable for power generation According to an existing study, the supply price of required to make power generation reach the same level as the oil-fired thermal power price in (38.5 yen/kwh) is estimated to be 52.6 yen/nm 3 4).As the supply of import renewable will be yen/nm 3 (Figure 3), the sources of that can meet the required price t will be limited to produced by using hydropower in Canada, New Zealand, and China. (3) Economics of domestic renewable The comparison of the supply of imported renewable and domestic renewable is conducted Coal-fired thermal Domestic delivery Domestic receiving International transportation Exporting pipeline production

4 IEEJ:June 18 IEEJ18 at the stage before the domestic delivery of. That is, the production for domestic renewable is compared with the of imported renewable up to arrival at the domestic receiving shown in Figure 3. It can be seen that domestic renewable can be competitive with imported renewable because for power expanded to produced using solar PV. However, to achieve the target price of yen/nm 3 around set under the Stgic Road Map for and Fuel Cells of the Ministry of Economy, Trade and Industry 11), further reduction is required over the whole the supply chain. domestic produced there is no for transportation, liquefaction, storage, and exporting at the producing economy, as well as no for international transportation and receiving (Figure 4). (2) Domestic renewable for fuel cell vehicles The production of domestic renewable is around yen/nm 3 under reference (Figure 4) but can be reduced to around yen/nm 3 in the reduction (Figure 6) Japan Wind Japan Solar PV receiving International transportation Exporting pipeline Figure 4 Cost comparison between domestic and imported renewable Wind Solar PV stations (incl. domestic delivery) liquefaction production Figure 6 Cost of supply for FCV using domestic renewable ( reduction effect included) It is considered that the of stations 4.2 Cost reduction The economic viability of renewable under the reduction is discussed by looking at 2 cases: power generation, and domestic renewable as fuel for fuel cell vehicles (FCVs). (1) Imported renewable for power generation Figure 5 shows the supply of imported renewable in the reduction. including domestic delivery can be reduced to approx. yen/nm 3 (with liquefied as the carrier) through economies of scale and the learning effect 1). Further, as the domestic liquefaction will be 8.3 yen/nm 3 (calculated based on the conditions in Tables 3 and 4), the supply of domestic renewable as FCV fuel can be reduced to as low as 79.7 yen/nm 3 (Figure 6). 5. Conclusion The supply of imported renewable to be 7 5 Required price to be competitive with oilfired thermal power METI's target price Domestic delivery Domestic receiving International transportation Exporting pipeline production used for domestic power generation is considerably high even in (51 69 yen/nm 3 ), and only the produced from hydropower in Canada, New Zealand, or China can compete with oil-fired thermal power. The sources of that can compete with oil-fired thermal power will expand to include solar PV-derived if the of water electrolysis and Figure 5 Imported under the reduction In the reduction, the sources of imported renewable that can compete with oil-fired thermal transportation is reduced. However, further reduction is required for imported renewable to reach the government's target price of yen/nm 3. On the other hand, the of domestic renewable could be competitive with that of import

5 IEEJ:June 18 IEEJ18 renewable. Driven by reduction of water electrolysis, the of domestic renewable can be reduced to as low as 51 yen/nm 3. If the of stations is also reduced to the maximum extent, the supply for FCV from domestic renewable sources could be just under 8 yen/nm 3. This study compiles the results of parts of the joint study with the Asia Pacific Energy Research Centre (APERC). References 1) NEDO, Advancement of Technologies and Utilization Project, Analysis and Development of as an Energy Carrier, Economic Evaluation and Characteristic Analyses for Energy Carrier Systems, commissioned to the Institute of Applied Energy (16). 2) DOE, Production Cost from PEM Electrolysis, DOE and Fuel Cells Program Record, mentation.html (date accessed: October 28, 17) 3) NEDO, Feasibility Study to Realize a Future Energy System ( Supply Chain) Using Carbon-free Fuel Derived from Low Rank Coal, commissioned to Kawasaki Heavy Industries, Ltd. (12). 4) NEDO, Zero Emission Coal Firing Technology Development Project, Investigation of Possibility of Use of Clean Coal Technology (Feasibility Study of a Project Promoting Utilization of Low Rank Coal, Investigation of Improvement of the Value Chain of Production from Australian Low Rank Coal), commissioned to Kawasaki Heavy Industries, Ltd. (15). 5) DOE, DOE and Fuel Cells Program: System Analysis, (date accessed: October 28, 17). 6) IRENA, The Power to Change: Solar and Wind Cost Reduction Potential to 25 (16). 7) Fraunhofer ISE, Current and Future Cost of Photovoltaics. Long-term Scenarios for Market Development, System Prices and LCOE of Utility-Scale PV Systems (15). 8) Agora Energiewende, Future Cost of On-shore Wind (17), of_wind/agora_future-cost-of-wind_web.pdf (date accessed: October 28, 17). 9) IEA, Energy Prices and Taxes, Volume 16, Issue 4 (16). ) APERC, APEC Energy Demand and Supply Outlook 6 th Edition (16). 11) and Fuel Cells Stgy Office, and Fuel Cell Stgy Roadmap - Accelerating Efforts to Achieve a Energy Society) (16). 12) IEA, Technology Roadmap and Fuel Cells, (15). 13) Renewable Energy Price Committee, Opinions regarding Procurement Price for 17 and Beyond (16). 14) Yoshiaki Shibata, Analysis of Economics of Renewable Production, No. 2, Issue 41, IEEJ Energy Economics (15). Contact :report@tky.ieej.o