In Focus
POWER UTILITY | Danielle Isaac, Indonesia

Is coal still important in Asia's renewables push?

Experts at Power-Gen Asia 2018 deliberated whether Asia is still in the path of coal, renewables, or the combination of both.

The global movement towards renewables has forced many countries to choose between the renewables path and the coal path, but experts debated whether countries in the Asia Pacific have already reached the crossroads as issues in both sides remain.

Director of electricity of Indonesia's Ministry of Energy and Mineral Resources (ESDM) Jisman P. Hutajulu noted that amidst the country's renewables push, coal will continue to be important. "Coal will be the baseload for the foreseeable future," he said at the "Coal vs Renewables" debate, Power-Gen Asia 2018 in Jakarta, Indonesia.

However, Hutajulu emphasised that Indonesia is trying to ensure that prices are affordable and plants' efficiency is up as they pursue the national renewable energy target of 40GW. "We hope that investment for renewable energy can come into Indonesia," he said.

The increasing scrutiny on coal is also highlighted by Japan's new rules that only allow ultra-supercritical plants to get investment. Coal developers are increasingly put under pressure by financial and political authorities to cut emissions.

Pascal Charriau, CEO of Enerdata, draws an example from Europe. "There is pressure on banks to account for CO2 emissions," he said.

However, Charriau noted that there are inconsistencies in the movement towards coal abandonment. Whilst EU banks claim to stop coal financing, more or less 90% of plants are still funded, he added.

Hideshi Kawamoto, deputy head of business headquarters at Mitsubishi Hitachi Power Systems (MHPS), confirmed this and said, "In order to reduce emissions, we use cutting-edge technology." However, instead of directly opposing pressure on coal, Kawamoto argued that there has to be "symbiosis" that has to exist between coal and renewables.

The low demand for coal raises questions on pricing, said Joseph Jacobelli, senior analyst at Bloomberg Intelligence. He drew examples from China's coal experience, wherein prices have still rebounded.

However, the analyst added that China does not have an issue with supply but with management instead, "Prices should come down."

Despite this, coal developers will not be gone for a while in Japan as they are still willing to supplement clean coal technology to other countries, Kawamoto said.

The demand for coal is still high in emerging markets in Asia, said Ian Fox, CEO of Leader Energy. "They are still somewhat reliant on coal and fuel, particularly for countries with domestic fuel reserves like Indonesia."

However, Fox admitted that he is personally hesitant to do more coal, "With a greenfield coal investment today, I will have to take a pause. When you try to monetise it, private equity firms, funds are backing away from coal."

Jacobelli presented a different picture and said the bulk of Asian countries are still concerned about affordability and consider it a priority over energy security, independence, and climate change. "Energy security is absolutely primordial in Japan, Korea, and even China," he said.

For now, Fox said, "Coal plants are gonna have to scale down and back up renewable plants for the time being." 

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