Yesterday, I briefly gave an insight into the need for Jamaica to include coal in its energy mix if we want to be competitive on the international scene. Today I will present a simplified economic analysis, were I will present some numbers, which justify my claims to have coal as an integral part of the energy mix in Jamaica.
Economics of coal
I have made some basic assumptions and have not included a number of areas that would have normally been included in the creation of this economic analysis. My main reason is I did not include these in the analysis done for LNG and HFO and for a side by side comparison I have chosen to exclude these here.
- Depreciation
- Escalation in terms of fuel price adjustment in the future
- The effect on inflation.
- Devaluation .
Estimate shipping cost for coal @ US$15 per Metric Tonne
USA exported coal to Jamaica last yr at $53.54 per metric tonne not including shipping cost. It’s used mainly by Caribbean Cement Company its it coal fired Kilns.
The analysis is for the existing 381 MW plant that is currently on the table
| Installed Capacity (MW) | 381 |
| Rated output (MW) based on CF 90% | 342.9 |
| Uptime | 85% |
| # Days | 365 |
| Projected Run hrs | 7446 |
| Total Generated power (MWh) | 2,553,233.40 |
| Plant Rated Eff (APC) | 38% |
| Average Heat capacity (GJ/KG) | 3.05E-02 |
| Total volume of Coal Req (KG) | 674,106,489 |
| Total volume of Coal Req (TON) | 674,106 |
| Cost COAL US$/ (Ton)) | $ 69.00 |
| Total Fuel Cost /Annum (US$) | $ 46,513,348 |
| Fuel cost as % total cost | 75% |
| O&M Fixed | $ 10,691,622 |
| O&M variable | $ 11,412,953 |
| Est total annual cost | $ 68,617,923 |
| Fuel Cost / GJ | 5.95 |
| Fuel Cost / KWH | $ 0.0214 |
| Total Cost per KWH | $ 0.0316 |
| Interest payment | $78,754,363 |
| Total Annual Cost Incl Int Pay | $147,372,286 |
| Generated cost per Kwh | $0.0577 |
| Plant Est Cost | $1,117,854,000 |
| Loan amount | $1,017,854,000 |
| Ave weighted cost of borrowing | 6.60% |
| Length of loan yrs | 30 |
| ROI > 6.6%( After tax) | 8.50% |
| Tax Rate | 33.30% |
| EBT based on 33% Int rate | |
| Total Generation Revenue to meet ROI | $ 303,319,747.84 |
| Sale Price to JPS/ kWh | $ 0.1188 |
Oil imports.
Jamaica oil imports in 2011 was US$2.4B, down from its highest level of US$3.2B in 2008 , when bauxite plans were in operation.
The 2009 energy survey showed that in 2008 the use of imported oil was as follows.
- Bauxite – 34.6%
- Electricity generation – 23%
- Rail and road – 21.5%
If we were to assume the reduction of $0.8b was all due to bauxite and this has been moved to generation, with the coming on line of the West Kingston power plant, then we can put the share of oil for electricity generation at ~ 30%.
This means that the oil bill for utility electricity generation is about US$0.72b or J$80.28B at current rates.
With the 381 MW plant, this would represent almost 95% of base load and roughly 52.6% peak load in Jamaica.
If we further assume at that the ratio of base load to peak load is 0.58 : 1 , then it means the 42% of the power required would be supplied by existing fuel oil.
Peak loading occurs for 4 hrs per day, partial peak for 12 hrs and off peak the remaining 8 hrs.
Lets further assume that all the 42% of remaining load is supplied by imported fuel oil, that would put the fuel bill for generation at 42% x $80.28b or $33.72B
From the table above, I have estimated the annual fuel bill for the plant to be US$46.51m or J$5.185 B.
So the savings on fuel cost from using coal works out to be approximately $41.17B per annum.
The annual budget in Jamaica for 2014 was approx J$660b, so the savings from fuel alone represent approximately 6.2% on the budget.
That is money that goes straight to the bottom line and can be used to address environmental concerns as well as provide much need opportunities for Jamaicans.
Next : Environmental, Health and Safety Concerns
Credits : EISA, Index Mundi , JPSCo, MSTEM
Filed under: Energy |
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