**1. Introduction**

Currently, coal-fired electricity generation plants with a total capacity of about 1700 GW account for over 41% of the electricity generation worldwide [1]. Coal-fired electricity generation is responsible for over 28% of global carbon dioxide (CO2) emissions [2], and scientific studies suggest that CO2 emissions are responsible for global warming and associated devastating public health and environmental impacts.

As the pressure to act against global warming is increasing, several coal-using countries have been working on their national plans to kick in global efforts to reduce CO2 emissions from their electricity generation sectors through development and deployment of high-efficiency, low-emission (HELE) coal-fired and renewable energy (RE) power generation technologies. HELE technologies utilize higher temperatures and pressures, compared to less-efficient subcritical technologies [3,4]. HELE electricity generating plants include supercritical (SC), ultra-supercritical (USC), advanced ultra-supercritical (A-USC), integrated gasification combined cycle (IGCC) and integrated gasification fuel cell (IGFC) technologies developed to increase the efficiency of coal-fired electricity generation plants, and thus reducing CO2 and other greenhouse gas (GHG) and non-GHG emissions. HELE units emit

**Citation:** Ali, H.; Phoumin, H.; Weller, S.R.; Suryadi, B. Cost–Benefit Analysis of HELE and Subcritical Coal-Fired Electricity Generation Technologies in Southeast Asia. *Sustainability* **2021**, *13*, 1591. https:// doi.org/10.3390/su13031591

Received: 4 December 2020 Accepted: 25 January 2021 Published: 2 February 2021

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25–33% less CO2 than the global average CO2 emissions from existing electricity generation fleets and up to 40% less than the oldest technologies [4]. Table 1 shows the efficiency ratings; CO2 intensity factors; and fuel consumption values for subcritical, SC, USC and A-USC power plants.

**Table 1.** HELE technologies: Low heating value (LHV)-based efficiency improvements, intensity factors and fuel consumption [5].


Every 1% improvement in the efficiency of coal-fired electricity generation plants results in a 2–3% reduction in CO2 emissions [6]. In this regard, since the year 2000, HELE power plants have already reduced global CO2 emissions by over 1 billion tons [7]. HELE technology is a vital first step to the carbon capture and storage (CCS). The International Energy Agency (IEA) Energy Technology Perspective (ETP) 2012 2 ◦C Scenario (2DS) indicates that to limit the average rise in global temperature to 2 ◦C, it is necessary to cut more than half of the energy sector-related CO2 emissions by 2050 (compared to 2009) [3]. Combined with CCS, HELE technologies are expected to cut global average CO2 emissions from coal-fired plants by as much as 90% to attain the 2DS by 2050 [5].

Southeast Asia consists of ten countries of the Association of Southeast Asian Nations (ASEAN): Brunei Darussalam, Indonesia, Cambodia, Lao People's Democratic Republic (PDR), Singapore, Malaysia, Philippines, Myanmar, Vietnam, and Thailand. ASEAN member countries have set a broad set of policies to fast-track the development of renewable electricity generation capacity. The region is aiming to generate 23% of its primary energy from RE sources by 2025, compared to 9.4% in 2014 [8]. While this upward trend towards RE is continuing, the vast availability of coal reserves in the region and its lower cost has made coal the largest and preferred source for electricity generation. The IEA forecasts that installed coal-fired electricity generation capacity will increase to around 160 GW by 2040, making a large contribution to growth in generation capacity of the region [9]. Additionally, coal-fired generation will overtake natural gas by 2040 to become the largest source of power capacity. Furthermore, the IEA confirms that low emission coal will be the generation of choice in the region and will provide 40% of electricity generation by 2040. There is a regional understanding among ASEAN nations that growing use of coal will necessitate a HELE technology energy pathway supported with renewables.

The levelized cost of electricity (LCOE) is often cited as a convenient summary measure of the overall competitiveness of different electricity generating technologies [10]. To influence the type of technology that project developers select in ASEAN countries, several LCOE studies focusing on RE technologies have been conducted [11–20]. Veldhuis et al. in [11], focused their study on LCOE of off-grid photovoltaic (PV) systems required to electrify Indonesian rural households and showed that off-grid PV systems are 19% cheaper as compared to electricity generation with diesel generator sets in most rural parts of Indonesia. In [12], Talavera et al. conducted a worldwide economic feasibility analysis of High Concentrator PV (HCPV) systems through the LCOE estimation. Blum et el. in [13], investigated the LCOE of isolated renewable hybrid mini-grid systems in Indonesia. In [16], Januar compared the economic viability of a 20 MW solar thermal and PV power plant in Rogkop, Indonesia, using the LCOE approach. Lau et al. in [17], presented a detailed analysis of PV grid parity based on the calculation of PV LCOE for the residential sector in Malaysia. In [18], the Asian Development Bank (ADB) conducted an LCOE analysis for REs for the greater Mekong sub-region (GMS) countries: Cambodia, Lao PDR, Myanmar, Thailand, and Viet Nam. Huber et al. in [19] concluded that the most economical options for electricity generation in the ASEAN region are hydro, biomass and geothermal. The study in [20] analyses LCOE of selected RE technologies in several ASEAN countries, and advises necessary policies to reach a significant competitive edge for those selected RE technologies.

The study conducted by Phuangpornpitak and Kumar [21] provides an in-depth analysis of the renewable hybrid mini-grid systems with solar PV, wind, battery and diesel that have been installed in the national parks of Thailand. In [22], Keeley and Managi have assessed the economic viability of renewable hybrid mini-grid systems in Indonesia.

There is also some limited work on LCOE focused at coal technologies and comparison of coal technologies with other electricity generation technologies for the Southeast Asian region. A cost–benefit analysis of US, SC and subcritical plants is carried out by the Economic Research Institute for ASEAN and East Asia (ERIA) in [23]. The ERIA's study confirms that USC is generally competitive against SC and subcritical plants. Also, the World Coal Association (WCA) and ASEAN Centre for Energy (ACE) report (herein called WCA report) suggests that various coal-fueled electricity generation technologies are the lowest LCOE option available for mass deployment in Southeast Asia [4].

The ASEAN governments are promoting HELE technologies as a key step towards CO2 mitigation. The ASEAN countries are thus making a transition from less efficient subcritical stations towards HELE coal-fueled facilities. Current research suggests that almost half of coal stations under construction or in development are expected to make use of advanced HELE coal-fired technology. The analysis also indicates that 23% of coal capacity currently under construction or in development is SC, while a further 29% of proposed projects have not finalized the technology choice [4]. HELE coal-fired technologies are more expensive to build than the subcritical technologies due to more expensive materials, complex boilers and precise control systems. High cost is a main restriction element for large-scale deployment of HELE technologies. By contrast, subcritical electricity generating plants have been traditionally preferred due to their lower upfront costs and shorter lead times. It is therefore highly likely that project developers end up accepting lower efficiency and poorer emission rates from subcritical coal-fired technology. On the other hand, to decarbonize the electricity sector by 2050 under 2DS, electricity generation from subcritical coal plants needs to be completely phased out by 2050 and following 2020, the more efficient CCS fitted HELE coal-fired plants are to be employed. The IEA thus recommends the implementation of national energy plans and policies to rapidly phase out construction and deployment of subcritical coal-fired plants [24]. Though the ASEAN is making a transition away from less efficient subcritical stations towards HELE coal-fueled facilities, current deployment progress is slow and subcritical units are still being deployed. Scope thus exists for necessary policy support to expedite transition from less efficient subcritical units to HELE units. The work in this paper is therefore aimed at demonstrating economic feasibility of HELE against subcritical, and finding a policy scenario that will result in the decline of subcritical coal-fired electricity generation even more rapidly, and shift new project investments towards being in favor of HELE technologies. This study is deemed important for ASEAN governments as a point of reference to formulate necessary policies and emission standards that expedite transition to HELE technologies, as well as to improve energy efficiency and reduce emissions.

This study is novel in the sense that we have included A-USC in this study, and under each scenario, a sensitivity analysis is performed to evaluate the uncertainty affecting the future coal prices on coal plants of a 20- and 25-year lifespan. Carbon pricing is an important policy tool to promote more energy-efficient, low-carbon technologies that emit less CO2 emissions [25]. Due to rising concerns of air pollution from coal power stations, implementation of air pollution control technologies and regulations are crucial for sustainable development [26]. The study thus seeks to answer the question as to which one of these approaches can best help to expedite deployments of HELE technologies in Southeast Asia or whether a mix of these approaches should be implemented. Based on the analysis of results, relevant policy recommendations are also discussed.

## **2. Methodology**

*2.1. LCOE*

The LCOE represents the lifetime average cost of electricity as a constant unit price (in USD per megawatt-hour (USD/MWh) for a specific electricity generation project; it is a commonly used metric to assess overall competitiveness of different electricity generation projects. This mainstream technique is therefore used in our study.

The LCOE is calculated by dividing the project's overall expected lifetime costs (including construction, fuel, financing, maintenance, insurance, taxes and incentives) with the project's lifetime expected power output (MWh) [4,27–29]. As the value of the dollar today does not have the same economic value as the dollar in future, to properly add costs that occur at different points in time, they are converted into "present value" terms through the use of "discounting". The present values of all expense are thus divided by the present value of electricity generation to compute the LCOE as:

$$LCOE = \frac{\sum\_{t=1}^{N} \frac{[I\_t + M\_t + F\_t]}{(1+r)^t}}{\sum\_{t=1}^{N} \frac{E\_t}{(1+r)^t}},\tag{1}$$

where:

*It* = Capital expenditure in the year *t* associated with the construction of the plant;

*Mt* = Non-fuel operating and maintenance costs in year *t;*

*Ft* = Fuel price expenditures in the year *t*;

*Et* = Net electricity production in MWh in the year *t*;

*N* = Economic lifetime in years;


If the net output of the plant is constant over the life of the plant, and if the operating, maintenance and fuel costs are also constant, Equation (1) can be reduced to:

$$LCOE = \frac{\text{CAPEX} \times \text{FCF} + \text{O\&M}\_{fizel}}{\text{CF} \times 8760} + \text{O\&M}\_{variable} + \Pi\_{fuel} \times HR\_{\prime} \tag{2}$$

where:

• *FCF* is the fixed charge factor. The factor turns capital costs into a uniform annual amount and is given by:

$$FCF = \frac{r(1+r)^N}{(1+r)^N - 1}.\tag{3}$$


In addition to emitting (contributing to climate change), coal-fired power plants are a major CO2 source of air pollution tied to heart and lung diseases. The toxic pollutants arising from coal power plants include sulphur oxides (SOx), nitrogen oxides (NOx), as well as mercury (Hg) and particulate matter (PM). Studies confirm that these emissions severely impact human health [30]. Our analysis suggests that the correct interpretation of LCOE results of coal-fired plants are blurred by the fact that a cost–benefit analysis does not reflect costs on society, such as CO2, SOx, NOx, etc. Since HELE power plants pollute less SOx, NOx and CO2 into the atmosphere than subcritical designs, their emission abatement, denitrification (deNOx) and desulphurization (deSOx) facilities and climate costs are expected to be less as compared to the subcritical plants of the same capacity. From the perception of global and ASEAN action on climate change, there is a clear imperative to make coal power generation sustainable by shifting incremental coal generation capacity under carbon pricing to make coal power generation more sustainable. Additionally, to improve public acceptance of the coal plants in the ASEAN region, there is a need to raise emission standards for coal plants in the region to the equivalent levels of the Organization of Economic Co-operation and Development (OECD) countries [26]. Therefore, we examine the role of carbon pricing and emission control technologies in transition to HELE technologies under four potential policy scenarios in Southeast Asia.

The cost of coal-fired electricity generation is heavily contingent on coal price. Since the Asian benchmark of thermal coal prices has been growing, based on (2), sensitivity of LCOE generation values is thus analyzed to evaluate the impact of rising coal prices in Southeast Asia on subcritical, SC, USC and A-USC coal-fired units with life spans of 20 and 25 years, under each scenario.
