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Going nuclear

Countries in Southeast Asia hope nuclear power will cut energy-import bills, but the economics may not be as favourable as some might think, writes NJ Watson

THE Philippines is the latest Southeast Asian nation to put its faith in nuclear power as a means of reducing its energy-import bill. In June, the government said it had received an International Atomic Energy Agency (IAEA) report on the possibility of reviving its nuclear power industry by restarting the Bataan Nuclear Power Plant (BNPP), a 621-megawatt (MW) pressurised-water reactor mothballed in 1986. The government has submitted to the nuclear watchdog a total of eight proposals for projects to be funded by the IAEA Technical Cooperation Fund for 2009-10.

Also in June, Vietnam's parliament approved a law permitting the country to develop nuclear power for civilian purposes. The law provides a framework for the development of nuclear power plants, encouraging foreign investment in nuclear energy, and implementing safety and non-proliferation controls. State-run utility Electricity of Vietnam (EVN) aims to raise the country's total power-generating capacity by 15%, from 14 gigawatts (GW) to 100 GW by 2020.

Chietigj Bajpaee, an analyst at Global Insight, a consultancy, says the country's first two nuclear power plants, in southern Ninh Thuan province, on the central coast, should be operational by 2020. EVN expects nuclear power capacity to reach 8 GW by 2025.

Queuing up to help

"Numerous countries have expressed interest in tapping into Vietnam's nuclear-power sector, including Japan, France, South Korea, Russia, China, as well as Canada, India and the US," says Bajpaee. In May, Masashi Nakano, Japan's vice-minister of economy, trade and industry, signed an agreement with his Vietnamese counterpart, Do Huu Hao, to help the country construct its first nuclear plant.

Earlier this year, Thailand's government commissioned a three-year feasibility study to examine whether it can add 4 GW of nuclear capacity by 2020, as part of the 30 GW of extra power-generating capacity it believes will be needed by 2021.

Malaysia is also preparing an energy-policy study, to be completed before 2010, that will include the proposed use of nuclear power. In mid-March, the national power utility Tenaga Nasional, signed a preliminary agreement with Korea Electric Power (Kepco), to co-operate on adopting and selling Kepco's nuclear-power technologies.

Southeast Asia's first operational nuclear power plants, however, will be in Indonesia, which plans to have a reactor operating by 2016 or 2017. The government plans to call a tender later this year to identify an independent power producer to build and operate two 1 GW units on central Java, about 450 km east of the capital, Jakarta. Construction is due to begin in 2010. A tender to build another two units at the site is expected to be held in 2016, with the units scheduled to come on-line in 2023.

Powerful reasons

Unlike in Europe, nuclear power in Southeast Asia is not seen as a way to reduce carbon emissions, but as a way of improving energy security and keeping down energy-import costs – particularly important in light of the significant increases in demand expected over the next two decades.

The increase in capacity that Vietnam is forecast to require illustrates the scale of the problem. Under the government's power master plan, 48.7 GW of new generating capacity will come on line between 2006 and 2015. A further 120 GW is planned for between 2016 and 2025.

"These are colossal numbers, especially when measured against the country's existing capacity of just 12 GW," says Andrew Symon, Southeast Asia manager Menas Associates, a consultancy. "Many see them as ambitious targets and the reality's likely to be significantly less."

While Southeast Asia does have substantial indigenous energy resources, they are insufficient to meet demand. The region is already a net oil importer and the import gap is set to grow as consumption rises.

The problem could partially be solved by building the infrastructure needed to make more efficient use of the region's large reserves of natural gas; there are plans to build liquefied natural gas (LNG) import terminals in Singapore, Thailand (Bangkok region), the Philippines (Manila and Luzon) and Indonesia (Jakarta and Surabaya in Java).

Coal is still a widely used source of energy in the region and there are opportunities to increase the use of hydro-electric power, especially in the Mekong delta. But both coal and hydropower are subject to environmental constraints.

As a result, the region's governments see nuclear as the only alternative to meet demand in a cost-efficient manner. But the economics of nuclear power are still very much a matter of debate. Building nuclear power plants is capital intensive. The cost of building a new unit typically ranges from €1.7bn to €2.5bn, depending on the size and location. By way of comparison, Thailand announced plans in May to build two 800 megawatt gas-fired power stations at an expected cost of $1.1bn.

But proponents of atomic energy say that while nuclear power may be capital intensive, fuel costs are lower. The fuel cost for nuclear plants as a proportion of total output costs – that is, including non-fuel operations and maintenance costs, and amortised constructions costs – is about 10-12%. By comparison, the fuel component in coal-fired plants is about 25-30% and in combined-cycle natural-gas plants 60-65%.

However, Symon says that even this "does not tell the whole story. The processes involved in preparing the final nuclear fuel rods from the initially mined uranium oxide are also technologically challenging and expensive" – adding further to nuclear's operating costs. Then there is the time needed to build a nuclear power plant, which typically takes five to six years because of the size of the facility, the complexity of the technology and political problems associated with the environment and planning restrictions, compared with the two to three years for a gas plant.

There is also the question of where the nuclear fuel will come from. Southeast Asia lacks commercial reserves of uranium – the world's largest reserves are in Australia, Canada and Kazakhstan – although this may just be a reflection of the minimal exploration activity for the mineral that has taken place.

Indeed, according to data from Vietnam's environment and natural resources ministry, the country's uranium reserves may amount to hundreds of thousands of tonnes. The government says initial exploration and research by the department of geology and minerals warrants further formal investigation in Nong Son District in the central province of Quang Nam.

The ring of Fire

A potential drawback to nuclear power in the region is that many countries are on the so-called Pacific Ring of Fire, an area of active volcanoes and prone to earthquakes (see box). This makes this densely populated region a relatively dangerous place to build nuclear power stations.

Power from the centre of the earth

THE VOLCANOES and shifting tectonic plates of Southeast Asia's so-called Pacific Ring of Fire might not provide a suitable environment for a nuclear power station, but they are ideal for developing geothermal energy. And with the relentless rise in oil and gas prices, investors, companies and governments are pouring money into geothermal as an alternative energy source at an unprecedented rate, writes NJ Watson.

Last month, the government of Indonesia, one of the countries best suited to this type of electricity generation, said it planned to build geothermal plants with a combined generating capacity of 6.867 gigawatts (GW) over the next 10 years, at a cost of almost $20bn. Lester Brown, head of Washington-based Earth Policy Institute, told a conference in June that "Indonesia could run its economy entirely on geothermal energy and has not come close to tapping the full potential."

However, the country's development of the energy source, which involves drilling wells deep into the ground to use the steam and hot water below to power turbines, has proceeded very slowly as a result of frequent bouts of political and economic uncertainty. Over the last 20 years, the state has developed just 850 megawatts (MW) of geothermal power capacity, which equates to about 3% of its estimated 27 GW of geothermal potential.

Chevron, the world's largest private-sector producer of geothermal energy – with installed capacity of 1.273 GW accounting for more than half of all privately developed capacity – hopes to change that. In May, David Newell, manager of development at Chevron Geothermal & Power in Indonesia, was reported as saying the major is looking to double its geothermal production in Southeast Asia by 2020, through new projects and expansion of existing capacity.

Chevron Geothermal manages two geothermal projects in Indonesia – Darajat and Salak, both on the island of Java – which produce sufficient energy to supply 4 million homes. In June 2007, Chevron started commercial production at its 110 MW Darajat III geothermal power plant, bringing capacity at the Darajat site to 259 MW. The Salak project is among the largest in the world, with a geothermal generating capacity of 377 MW.

The state-owned oil and gas company, Pertamina, is also ramping up its geothermal capacity from 852 MW. According to Bambang Manumayoso, a manager in Pertamina's upstream directorate, the firm aims to become the world's third-largest geothermal producer by 2014, with production capacity of 1.035 GW.

The Philippines, meanwhile, has been active in developing its geothermal capacity over the past few decades and has become the world's second-biggest geothermal producer, behind the US. Geothermal power now accounts for around 18% of the country's electricity needs.

The Philippines aims to overtake the US as the world's largest producer by raising geothermal capacity from 1.931 GW to 3.131 GW by 2013. But significant barrier to such an ambitious expansion is that many geothermal fields are highly acidic – and, consequently, corrosive to pipes – because the volcanoes underlying them are still active.

The Philippines shares another problem with Indonesia in developing its geothermal capacity: the local environment. Many of the best sites to develop geothermal energy are within natural parks or protected by the Indigenous Peoples Rights Act. On 7 July, a lawyer representing a community of over 100 on the island of Negros filed a class action lawsuit before the Bacolod Regional Trial Court to stop a proposed geothermal project in the Mount Kanlaon Natural Park. Likewise, in Indonesia, a project to develop a 175 MW geothermal project in Bedugul, central Bali, is on hold because local residents object to it being on a sacred site and worry it could harm the island's water supply.

Another limiting factor of geothermal energy has been cost. Construction costs of geothermal plants can vary widely, depending on local conditions, but typically range from $1.1m to $3.0m per 1 MW of capacity, says ABS Energy Research, a consultancy. This is high compared with gas-fired generation, which can be as low as $0.5m per 1 MW. But geothermal's operating costs are lower because there is no cost of fuel – a growing attraction given the strength of fossil-fuel prices.n

 

 

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