No. 527: Using low quality coals for inexpensive fuel that can replace heavy oil (June 4, 2012)

Technology:

Plant capacity of thermal power generation is expected to grow 60% over the level in 2008 to about 5 billion kW in 2030 worldwide, and demand for fuel for thermal power generation is growing bigger rapidly. JGC, one of Japan’s leading engineering companies, developed a low-cost fuel for thermal power generation and plans to produce it beginning in 2015. It will build production facilities in Indonesia with an investment of 30 billion yen and market the new fuel in Japan and Asia at a 30-50% lower price than heavy oil.

Low quality coals cannot be used as fuel because they are hard to burn due to high moisture content. JGC’s technology crushes low quality coals and extracts moisture by processing the crushed low quality coals at elevated temperature and pressure, and subsequently processes it as liquid fuel with additives. If burnt, the new fuel produces the same heat value as heavy oil. Because Indonesia has lots of reserve of low quality coals, JGC wishes to construct a big plant with an annual production of one million tons that is enough to operate a plant with a 300,000 kW generation capacity for one year. The company plans to export the new fuel to Japan besides marketing it in Asian countries including Indonesia. In Japan, the consumption of heavy oil increased 88% over the level in 2010 to about 11 million tons in 2011.

Other Japanese companies are very active in utilizing low quality coals. Kobe Steel developed the mechanism to heat low quality coals and extract moisture. It is planning to build facilities to produce fuel for power plants by 2015 in Sumatra. IHI started to develop a technology to gasify low quality coals using the boiler of a thermal power plant for highly efficient generation. Mitsubishi Heavy is developing a technology to burn low quality coals efficiently. According to the estimate of the Japanese government, photovoltaic generation costs most to generate electricity. It costs 33.4-38.3 yen per kW, followed by oil that cost 20.8-22.4 yen, wind generation that costs 99-17.3 yen, and LNG that costs 10.7 yen. Coal-fired thermal power costs 9.5 yen and nuclear costs 8.9 yen.