our country, investors put money in coal-burning thermal power plant
projects, which are relatively cheap at upfront cost. The reason for
their investment depends on the fact that imported coal is cheap in
longterm in investment reports. Is it correct? It is very difficult
to answer this question immediately as "True" or
immediately "False". Why hard? Because this is an high risk
gamble. Imported coal prices may increase- decrease over time
depending on the market supply-demand situation. The price at the
spot market of imported coal with the upper heat value of 6600 kcal/
kg HHV or 12,000 BTU / lb HHV can be as high as 160 US$ per metricTon
as it was appeared in previous years.
Australian coal (Australian thermal coal, 12000- btu / lb HHV, less
than 1 sulfur%, 14% ash, FOB Newcastle / Port Kembla, US Dollars per
metric ton) per ton is at 99 US $, South Africa 84 US $ (South
African coal export price, US Dollars per metric ton), the cheapest
is Columbia 6000 kcal / kg coal FOB price of imported US $ 78 per
So add 6-8% for
transport to your seaport.
fuel cost is around 3.1-3,3 UScent per kW-hr. We may end up 4,3-4,6
UScent marginal cost which is just coinciding with daily market price
of around 5 UScent. With the addition of amortization, that level is
around 6,2-6,6 UScent. However with the lower utilization factor,
capacity factor, amortization portion will add up more to reach 7-8
UScents whereas the prevailing domestic market electricity price is
around 5-6 US cents per kW-hour. The cost of imported coal
electricity production is above the market unit prices. So what
happens then? The producer declares "commercial victimization".
In a sense, they declare "force majeure", and stop
electricity generation. Imported coal tax was tied to a certain
formula with a new decision. If the prices on the ICE Rotterdam stock
exchange are below $ 70, the difference between $ 70 and prevailing
price in US$ will be taxed. It is currently around US$ 80. So at the
moment there is no tax on imported coal for power plants.
come to the actual price of imported coal. Market professionals
calculate the price of the fuel in US$ per "1 million British
Thermal Unit BTU (MMBTU)" at higher heat value (HHV). As of
November 2016, imported coal with 6000-6600 kcal / kg higher
heating value (HHV) or 12,000 BTU/lb HHV is today between FOB 78-99
US dollars at spot price of world markets quota RichardsBay- South
Africa, NewCastle- Australia or Rotterdam delivered in MetricTon. Add
transportation costs of 6-8% FOB-CIF at seaport delivery and then
recalculate your US$ price per 1 million BTU with surcharges. Simple
arithmetic yields you 4-5 US Dollars per MMBTU at today's prices.
the other hand, in the local Afşin-Elbistan open pit coal fields,
the price of 1000-1,150 kcal / kg (LHV) of low-value indigenous
lignite mine is 7.50-8.00 US per ton. This figure gives you 1.10
-1.20 US Dollars / MMBTU unit price. The central quarry in Manisa
Soma underground mine has a price for 2100 kcal / kg HHV
sub-bituminous domestic coal mine, as 24.00 US dollars per ton.
This gives you 2.00 US Dollars / MMBTU unit price. Also check the
prices of Çayırhan, Seyitömer, Kangal, Soma, Yatağan lignite
mines, the price is around 2.00-2.50 US$ per "1 million BTU".
The price of local lignite fuel in public power plants is very low.
Similarly in coal-based thermal power plants in the US, it is
expected that the price of coal will be below US$ 2,00 per MMBTU. On
the other hand, our domestic coal has high ash, too much water or
moisture. So, total output may be 10% lower than imported coal
pulverized coal firing power plants, but this will never change the
price advantage for domestic coal.
Imported coal prices in Russia cheap?", Russia's imported coal
sales prices have never been cheaper than the world's imported coal
prices. The Russians make their calculations very precise. For coal
they produce, they declare their coal price slightly lower than world
market prices at that delivery spot, often at the same price.
Imported coal may rise uncontrollably. You may have to shut down
playing with imported coal is a high risk gamble. Do not gamble,
take only calculated risks. You never get surprised by the local
coal. Build the domestic coal plant by yourself, do your design
yourself. Today, even if the smallest countries can make thermal
power plants themselves, we can and we do. However, we have been
condemned to foreign designs for years, depended on foreign project
finance. There is nothing secret in the design of the thermal power
plants. Now there are Turkish engineering companies to do the thermal
power plant construction, fabrication, basic and detail design. To
reduce your energy dependence, to have your supply security, you
should also have reasonable number of imported coal power plants.
But this amount should never rise to the levels that will increase
the current deficit. Imported coal plants must be built to be away
from forests, agriculture, sites, tourism areas.
of the imported coal power plants are established by the seaside, to
ensure cheap bulk transportation, as sea transportation is necessary.
According to my rule-off- thump humble calculations, for an imported
coal plant with a capacity of 1400+ MWe, we need to burn 700+ tons of
imported coal per hour based on different initial parameters. At the
seashore harbor 2-3 km away from the power plant, there must be at
least 500 thousand ton capacity coal stock area, at 30 days capacity
at full load. The transport capacity of coal bands could be 2000
tons per hour minimum.
cheapest imported coal is available now from Columbia. Imported cargo
from Columbia now costs 78 US Dollars per metric ton, plus a 6-8%
CIF carry price. If the coal stockpile is full, then bulk cargo
ships with 100 thousand tons capacity would be waiting for a month
and can not download. Since most plants do not work due to the price
of imported coal alone because cost is expensive. Cost of
electricity generation is high above prevailing market prices. So
producer declares themselves as "victim of commerce", sort
of "force majeure". So imported coal thermal power plants
do not work for weeks, 30-day capacity coal stockyard is full, coal
Cargo ships are waiting for a month for unloading order.
all of these real? What is the status of other imported coal plants
after all this? Sugözü, Çanakkale, İskenderun, Zonguldak imported
coal plants, do they work in this market conditions? Or did we lock
the imported coal plants? What are the conditions of the
investors who are installing the new imported coal power plants? What
is the status of the new investments in coal-fired thermal power
plants? Are they suddenly stopped?
power plants at seaside are explaining their status as technical
failure as the reason why they are not operating at full capacity.
There is a breakdown in the coal mills, a fault in the turbine
generator and they had to reach to complete stop. however they were
working last week despite their high cost against lower prevailing
market prices. They are now out of the system. Now we can track the
daily electricity generation of the individual plants through public
web site, seffaflik.epias.com.tr
from the web. Here you can see the latest data.
we are sure that they had passed through a period of relaxed imported
coal prices for the power plants. But for those months in which they
do not work, at least the prices now are higher than in the spring
months, they will soon suffer with greater harm.
coal is not cheap. It was never cheap in the past, it is a gamble, it
can be expensive. The US$ price per metric ton can be cheap if it
goes below 60 US$. Today imported coal is very expensive compared to
domestic coal unit prices per MMBTU. Do not look at what is
written in the popular media, do your own calculations, and see the
Direskeneli, is a graduate of METU Mechanical Engineering department
(1973). He worked in public, private enterprises, USA Turkish JV
companies (B&W, CSWI, AEP), in fabrication, basic and detail
design, marketing, sales and project management of thermal power
plants. He is currently working as freelance consultant/ energy
analyst with thermal power plants basic/ detail design software
expertise for private engineering companies, investors, universities
and research institutions. He is a member of ODTÜ Alumni and Chamber
of Turkish Mechanical Engineers Energy Working Group.
article is first released by the "EurasiaReview" news web
November 21, 2016