MINE MOUTH POWER PLANT

DEVELOPMENT
TOWARDS ELECTRICITY COST
REDUCTION
Presented by:
Arnulfo A. Robles
Ismael U. Ocampo
&
Mars T. Ocampo
 Objectives of the Presentation

•To demonstrate that mine mouth power plant

development can greatly reduce the cost of
electricity and provide energy security for the
Philippines

•To show that a non-nuclear and alternative path

towards inclusive and sustainable economic
growth by transitioning from fossil coal fuel to
renewable biomass
 How can this be achieved?
1. Promote mine-mouth power plant installation among
Coal Operating Contract (COC) holders and energy
investors
2. Prioritize the dispatch in the electricity market of
mine-mouth power plants
3. Provide supply of electricity to host communities and
upgrade the benefits to host communities
4. Develop biomass farms for producing wood chips to
replace coal thus providing income to host
communities and nearby areas
 Table of Contents
• Mine mouth power plant as least cost electricity
generation option in North America, Thailand,
Indonesia, Laos, Mongolia and the Philippines
• The Power Plant Development of the Philippines
-Coal resource & distribution in relation to the
National Transmission Grid
-Installed capacity & electricity production cost
-Reduction of national average electricity rates
-Additional benefits to the Philippine economy
• Conclusion
• Policy Recommendations
Commercially Available Power Generation
Technologies (1/3)

• Oil and Gas Thermal (Rankin steam cycle)

• Piston Engine (SI gasoline, CI diesel)
• Nuclear Energy (e.g. PHWR)
• Open Cycle Gas Turbine (OCGT) – Brayton Cycle
• Combined Cycle GT (CCGT)
• Combined Heat and Power (CHP)
Commercially Available Power Generation
Technologies (2/3)

• Pulverized Coal (PC*)

• Advanced Coal (CFB*, PFB*, IGCC**)
• Geothermal Energy (vapor, flash, binary)
• Hydro Power (large, pumped, mini)
• Solar Energy (PV, CSP)
• Wind Energy (on-shore, off-shore)
----------
*Rankin Steam Cycle
**Combined Cycle (Brayton + Rankin Cycles)
Commercially Available Power Generation
Technologies (3/3)

• Biomass Energy (cogeneration, direct combustion,

gasification/pyrolysis, WTE)
• Ocean energy (OTEC, wave)
• Tidal Energy (single pool, modulated, dual pool)
• Fuel Cells (AFC, PAFC, PEM, MCFC, SOFC)
• Energy Storage Technologies (pumped hydro,
compressed air, utility scale battery, magnetic energy
storage, flywheel)
What is a Mine-Mouth Power Plant
(MMPP)?
- It is a coal-fired generating plant built in
proximity to its source of coal, a coal mine.

Semirara’s 2 x 7.5 MW Power Plant

What is the Most Favored Technology
Used in MMPP?
- For MMPP that use low-heating value lignite, it is the Supercritical
Circulating Fluidized Bed Combustion (SCFBC).
 Widely Used Coal-Fired Power
Technologies in Mine-Mouth Plants
Pulverised Coal-Fired Power Plant*
Circulating Fluidised Bed
Advance
Combustion (CFBC) * Subcritical Supercritical Ultra Supercritical
General Supercritical
<1990 1990 (USC) 2000
1995-2000
General Characteristics
Installed worldwide - 3 GW - 1,000 GW
Complexity Low Medium
Usage Base/medium load Base/medium load
Fuel range All coals, residuals, biomass All coals
Technical Parameters
Unit Size (2000) ≤460 MW 400-1,000 MW
Live stream pressure (Mpa) 16.5 ≥22.1 27.5-30 ≥30 Mpa
O
Live stream temperature ( C) 540 540-560 560-600 ≥600
Max. GT applied - -
Generating Efficiency (%) 48-50 43 38 41 44 46+
Environmental Parameters
Desulphurisation 90% 90%
SO2 emission (2000) 0.66kg/MWh 0.6kg/MWh
NOx emission (2000) 0.8kg/MWh 1.2kg/MWh
CO2 emission (2000) 860kg/MWh 760kg/MWh
Financial Parameter
Investment Costc (2000)** USD $1,120/kW USD $1,300/kW

* Including flue gas desulphurisation or desulphurisation by dolomite addition (CFBC).

** Converted from Euro to USD exchange rate in year 2000 at 1.12 Euro/USD
Source: Grammelis at al., 2002; Henderson, 2003, COORETEC, 2003, P. Lako, 2004

Table 1
 North America
•Canada
- Mainly in Ontario, Eastern Canada and in British Columbia,
Western Canada
- Mostly mine mouth due to distance to coast

•USA
- Mainly in Pennsylvania, Kentucky, West Virginia and
Wyoming which are in Eastern and Central US
- Mine mouth plants avoid long distance transport thereby
reducing cost by more than 50%
- Coal sent to Georgia from Wyoming costs USD 29 in 1995
while it costs USD 13 in 2015
 Western Canada
In western Canada, the main coal mines
include Boundary Dam, Paintearth, Poplar
River, Highvale, and Sheerness mines which
are all mine mouth operations. Combined,
these mines fuel approximately 60% of the
electricity generated in Alberta and
Saskatchewan.
Canada is home to 24 permitted coal mines –
19 of which are currently in operation. In
addition, there are many more projects in the
exploration phase or in the advanced stages of
regulatory approval. More than 90% of
Canada’s coal deposits are located in western
provinces – in British Columbia, Alberta and
Saskatchewan.
• British Columbia has 10 mines
• Alberta has 9 mines
• Saskatchewan has 3 mines
• Nova Scotia has 2 mines
 United States of America
• Wyoming, the nation’s leading coal
producer since 1986, provides about 40%
of America’s coal through the top 10
producing mines located in the Powder
River Basin. Most Wyoming coal is sub-
bituminous, which makes it an attractive
choice for power plants because it has less
sulfur and burns at around 8,400 to 8,800
BTUs per pound. Wyoming coal is
considered clean burning, which means it is
better for the environment. Wyoming coal
has steadily gained a growing share of the
nation’s total electricity over the past few
decades for a variety of reasons.
• It’s more affordable than Eastern coal and
other fuels.
• There are huge reserves in the state.
• Wyoming’s supply of coal is reliable.
• Wyoming’s low-sulfur coal can be produced
and used in compatibility with the nations’
environmental objectives.
 Jim Bridger Mine Mouth Power Plant,
Point of Rocks, Wyoming, USA
•The four Jim Bridger units (mine
mouth power plants) were built
between 1974 and 1979 to
accommodate the adjacent mine,
which also opened in 1974 under
the Bridger Coal Co. – a joint venture
between PacifiCorp and Idaho
Power Co.
•The plant supplies 2,100 megawatts
to consumers on the Pacific Coast, as
well as Idaho, Utah and Wyoming.
•More capacity and more reliability
means the Jim Bridger plant will
continue to help power cities
stretching all the way to the Pacific
Ocean from its isolated home next
to the Bridger mine.
Thailand
 Mae Moh Mine Mouth Power Plant,
Lampang Province,Thailand
• In 1953, an abundant lignite resource was
found at Mae Moh basin. That contributed
to the project to construct Mae Moh
lignite power plant. At first, two 75 MW
generators were installed, but as the
electricity demand has grown, the
Electricity Generating Authority of
Thailand (EGAT) has installed more
generating units.
• Mae Moh power plant consists of 13
generators with the total generating
capacity of 2,625 MW that can totally
provide an average annual energy output
of 15,450 million kWh.
• However, the generating units 1 and 2
were retired on March 1, 2000, while the
unit 3 was taken out of service on
September 13, 1999. As a result, the
current total generating capacity of Mae
Moh power plant is 2,400 MW.
 Mae Moh Power Plant
• Owned by Electricity Generating Authority of
Thailand or EGAT
- Constructed: 1976-1996
- Capacity: 2400 MW
- Lignite supply: 40K tons/day or 14.6
million tons/year
- Resource: 864 million tons
- Electricity production cost: 60 satang/kwh
or 1.6 US cents/kwh
- Now constructing 600 MW Unit of Ultra-
Supercritical to replace Subcritical Unit 4-7
Indonesia
 Indonesia Energy Policy

• The Indonesian government has a target to

push the country’s electrification rate up to
99.4% by 2024.
• A government program is under way to add
35GW of electricity generating capacity into the
national grid by 2019.
• Of this, 20GW is due to come from coal-fired
power plants.
• The 35GW program is the largest in the 70-
year history of Indonesian independence.
 Indonesia Mine Mouth Program
• Mine Mouth Power Plant to contribute
more than 10,000 MW out of 35,000 MW
to be constructed from 2010 to 2020
• Incentive to coal miners of 15-25% margin
over production cost with minimum of
USD 16.36 base price for GAR 3000 or
higher
• Pre-bidding estimate of installation cost by
PLN in 2014 was USD 1,104.40/kW
• Target mine mouth power plant by 2020 is
11,500 MW
PT Adaro Mine Mouth Power Plant,
South Kalimantan, Indonesia
Lao PDR
 Lao PDR
•The 2,504 MW Hongsa Mine Mouth
power project is the first and the
biggest lignite-fired power plant to be
developed in Lao PDR. The project is
being developed in Hongsa and
Muang Nguen Districts of Xayaboury
Province, Lao.
•Hongsa Power Company (HPC), a joint
venture formed in 2009 between
Banpu Power (BPP), Ratchaburi
Electricity Generating Holding (RATCH)
and Lao Holding State Enterprise
(LHSE), is the project developer.
•The investment on the power plant is
estimated to be $3.7bn.
•Construction of the plant started in
October 2010 and commercial
operations are expected o begin in
2016. It will be Lao PDR's highest-
capacity power plant, providing a
sustainable supply of energy for both
Lao PDR and Thailand.
 Lao PDR
•Hongsa Mine Mouth Power Plant
- Installed capacity: 2504 MW
- Construction period: 2010-2016
- Coal quality: 2500 kcal/kg
GAR
- Coal price: USD 8.10/ton
- Electricity price in 25-year power
supply contract with Thailand: 5.7
US cents/kWh
 Mongolia
•Prophecy Power Generation
LLC (“PPG”) is developing the
Chandgana coal-fired power
plant project which includes
the construction of a 600 MW
coal-fired mine-mouth power
plant consisting of four 150
MW units (4X150 MW) in two
phases. The proposed power
plant will be located 300 km
east of the capital city of
Ulaanbaatar next to the
Chandgana Tal coal deposit,
on which Chandgana Coal
LLC controls mining licenses
covering the deposit.
•In March 2013, Prophecy
secured a land use right
covering 532.4 hectares of
land to be used for Prophecy’s
proposed Chandgana Power
Plant from the Morun soum
government.
 Mongolia
• Under negotiation with government
for government guarantee of
revenue requirement
• Installed capacity: 600 MW
• Coal Supply: 3.6 million tons/year
• Coal Resource: 733 million tons
• Coal Price: USD 17.70/ton
 Philippines
• Semirara
- Capacity: 15 MW
- Constructed: 2014
- Electricity production cost: Php 3.55/kWh
- Purpose: not commercial, for mining
operations & host community use only

• PNOC-EC Isabela Coal Project

- Target start of construction of 50-100 MW
mine mouth plant was disapproved in 2015
pending company’s show of financial capability
 Semirara Mining & Power Corp.,
Philippines
• Semirara Mining and Power
Corporation is the largest coal
producer in the Philippines, and the
only power producer in the country that
owns and mines its own fuel source
(coal).
• It operates the largest and most
modern pit mine in the Philippines.
• Its truck and shovel operations can
produce 8 million metric tons of coal a
year.
• It has an installed generating capacity
of 600MW, with an additional 1,200MW
in the pipeline
.
• By integrating coal mining activities
and power operations, it created a
value chain that enables them to
transform low-value input into high-
value output in a continually efficient
and responsible manner.
 Semirara Mine Mouth Power Plant,
Semirara Island, Antique, Philippines

Semirara’s 2 x 7.5 MW Power Plant

PNOC-Exploration Corp., Philippines

• PNOC Exploration Corporation, the upstream oil, gas

and coal exploration and development arm of state-
owned Philippine National Oil Company, is currently
seeking partners to develop two mine-mouth coal-
fired power plants, one each in Isabela and in
Zamboanga Sibugay.
• The Isabela power plant is intended to utilize the
lignite coal within PNOC EC’s coal concession in the
area which has reserves estimated to be sufficient
for a 100MW station.
• The JV partner for the Isabela project will be
involved in the mine and power plant development
as well as in operating the power station and
marketing the generated electricity.
• Meanwhile, the proposed power project in
Zamboanga Sibugay will utilize the bituminous coal
reserves from PNOC EC’s Malangas coal mines. Coal
reserves from this area, which are estimated to be
sufficient for a 50-100 MW station, are of high
quality and suitable for blending with imported coal.
• The JV partner for the Zamboanga Sibugay project
will be involved in the development and operation
of the power plant as well as marketing the
generated electricity.
 MINE-MOUTH POWER PLANT
DEVELOPMENT IN THE PHILIPPINES
The 5.7 US cents per kWh price of electricity
sold to Thailand from the Hongsa mine-mouth
power plant in Lao PDR is a viable target for
mine-mouth power plants in the Philippines. If
this cost is doubled to include transmission,
distribution and other costs to deliver the
electricity to Filipino consumers, the price would
be only 11.14 US cents or just a little lower than
the 12 US cents that the average American
household pays for one kWh of electricity.
Figure 2
 Coal Resource, Reserves, GAD
(GHV, adb)
Table 2a. Potential Mine Mouth Power Plants in the Philippines - Reserves, Resources and Gross Heating Value
Coal Resource Coal Reserve Gross Heating Value (GAD*, kcal/kg) GAD, kcal/kg adb GAD, Btu/lb adb
NAME LOCATION
(M+I; million tons) (P+P, million tons) min max average average
1. IGUIG
Iguig Cagayan 336 47 2735 4627 3681 6626
2. CAUAYAN
Cauayan, Isabela " 23 2735 4627 3681 6626
3. SEMIRARA
Semirara, Antique 550 82 4988 5373 5180.5 9325
4. BATAN
Batan, Albay 17 4 5447 5853 5650 10170
5. CEBU
Central Cebu 40 4 5312 6282 5797 10435
6. TANDAG
Tandag, Surigao del Sur 209 48 2599 4555 3577 6439
7. BISLIG
Bislig, Surigao del Sur " 48 2599 4555 3577 6439
8. MANAY
Manay, Davao Oriental 1 2599 4555 3577 6439
9. LAKE SEBU
Lake Sebu, South Cotabato 230 69 3353 5437 4395 7911
10. MALANGAS
Malangas, Sibugay 45 23 5118 7351 6234.5 11222

* Gross Heating Value (GHV), air dry basis (ADB)

** Electricity Cost at 12% p.a. Project IRR Used in model 2735 4627 3681 6626
SOURCE OF DATA: Department of Energy
SOURCE OF INSTALLED CAPACITY and ELECTRICITY COST: Calculations by Mars Ocampo using a project finance model
Formula for Potential MW Capacity from
Mineable Reserve, GHV and Efficiency (Heat
Rate)

• The formula for calculating the potential

installed capacity from the coal reserves for a
25-year mine-mouth power plant is shown
below which assumes a CFBC thermal efficiency
of 34.39% (plant heat rate = 3412 / 34.39% =
9,921 Btu/kWh) and net capacity factor of 85%.

• MW = (Coal Reserve/25 x 10^6 x 10^3) x GHV x

2.2046 x (34.39% / 3412) / (365 x 24 x 85%) / 1000
 Coal Moisture and Sulfur (adb)
Table 2b. Potential Mine Mouth Power Plants in the Philippines - Moisture and Sulfur
Moisture (ADB, %) Total Sulfur (ADB, %)
NAME LOCATION
min max average min max average
1. IGUIG
Iguig Cagayan 17.56 25.16 21.36 0.32 2.3 1.31
2. CAUAYAN
Cauayan, Isabela 17.56 25.16 21.36 0.32 2.3 1.31
3. SEMIRARA
Semirara, Antique 17.86 20.5 19.18 0.32 3.5 1.91
4. BATAN
Batan, Albay 5.75 11.91 8.83 0.41 5.24 2.825
5. CEBU
Central Cebu 2.24 16.61 9.425 0.28 4.56 2.42
6. TANDAG
Tandag, Surigao del Sur 12.7 18.78 15.74 0.16 1.47 0.815
7. BISLIG
Bislig, Surigao del Sur 12.7 18.78 15.74 0.16 1.47 0.815
8. MANAY
Manay, Davao Oriental 12.7 18.78 15.74 0.16 1.47 0.815
9. LAKE SEBU
Lake Sebu, South Cotabato 10.1 36.1 23.1 0.26 5.48 2.87
10. MALANGAS
Malangas, Sibugay 1.57 5.86 3.715 0.32 1.1 0.71

Used in model 17.56 25.16 21.36 0.32 2.3 1.31

 Capacity and Electricity Cost
(at 1,850 $/kW)
Table 3a. Potential Mine Mouth Power Plants in the Philippines - Estimated Installed Capacity and Electricity Cost (at 1,850
$/kW)
Coal Reserve GHV, Btu/lb adb Installed Capacity Planned Capacity Electricity Cost Electricity Cost**
NAME LOCATION
million tons average MW MW USCentS / kWh PhP / kWh
1. IGUIG
Iguig Cagayan 47 6,626 169 200 7.67 3.61
2. CAUAYAN
Cauayan, Isabela 23 6,626 83 100 7.99 3.76
3. SEMIRARA
Semirara, Antique 82 9,325 414 600 7.17 3.37
4. BATAN
Batan, Albay 4 10,170 22 25 9.48 4.45
5. CEBU
Central Cebu 4 10,435 23 25 9.36 4.40
6. TANDAG
Tandag, Surigao del Sur 48 6,439 167 300 7.60 3.57
7. BISLIG
Bislig, Surigao del Sur 48 6,439 167 300 7.60 3.57
8. MANAY
Manay, Davao Oriental 1 6,439 3 35 9.22 4.33
9. LAKE SEBU
Lake Sebu, South Cotabato 69 7,911 296 300 7.25 3.41
10. MALANGAS
Malangas, Sibugay 23 11,222 140 100 7.21 3.39

1,484 1,985 7.49 3.52

 Cost Reduction at 1,850 $/kW
2014 Existing Power Plants (MW) Installed Dependable Grid Rate, P/kWh Grid Rate, cents/kWh
Luzon 12,940.1 11,515.3
Visayas 2,519.9 2,159.8
Mindanao 2,150.8 1,811.6
Total Philippines 17,610.8 15,486.7 5.425 11.540
Potential Mine-Mouth (25 years) % of Installed
Calculated Capacity from Reserves 1,828.0 10.4%
Planned Capacity from Proponents 1,985.0 11.3% 3.520 7.490

Total Installed Capacity 19,595.8 5.232 11.130

% Reduction in Grid Rate -3.56%

hours/year 8760
net capacity factor 85%
available hours/year 7446
plant life, years 25
tons/million ton 1000000
kgs/ton 1000
kW/MW 1000
thermal efficiency 34.39%
plant heat rate 9,921
target all-in capital cost, $/kW 1,850
Fixed O&M cost, $/kW/year 21.05
Variable O&M cost, $/MWh 4.53
G&A cost, $/year 465,000 $/kW/year 2.32
cost of fuel, $/mt 16.00
exchange rate, PhP/$ 47.00
 Capacity and Electricity Cost
(at 1,200 $/kW)
Table 3a. Potential Mine Mouth Power Plants in the Philippines - Estimated Installed Capacity and Electricity Cost (at 1,850
$/kW)
Coal Reserve GHV, Btu/lb adb Installed Capacity Planned Capacity Electricity Cost Electricity Cost**
NAME LOCATION
million tons average MW MW USCentS / kWh PhP / kWh
1. IGUIG
Iguig Cagayan 47 6,626 169 200 6.01 2.82
2. CAUAYAN
Cauayan, Isabela 23 6,626 83 100 6.33 2.97
3. SEMIRARA
Semirara, Antique 82 9,325 414 600 5.50 2.58
4. BATAN
Batan, Albay 4 10,170 22 25 7.81 3.67
5. CEBU
Central Cebu 4 10,435 23 25 7.70 3.62
6. TANDAG
Tandag, Surigao del Sur 48 6,439 167 300 5.93 2.79
7. BISLIG
Bislig, Surigao del Sur 48 6,439 167 300 5.93 2.79
8. MANAY
Manay, Davao Oriental 1 6,439 3 35 7.55 3.55
9. LAKE SEBU
Lake Sebu, South Cotabato 69 7,911 296 300 5.58 2.62
10. MALANGAS
Malangas, Sibugay 23 11,222 140 100 5.55 2.61

1,484 1,985 5.83 2.74

Cost Reduction at 1,200 $/kW
2014 Existing Power Plants (MW) Installed Dependable Grid Rate, P/kWh Grid Rate, cents/kWh
Luzon 12,940.1 11,515.3
Visayas 2,519.9 2,159.8
Mindanao 2,150.8 1,811.6
Total Philippines 17,610.8 15,486.7 5.425 11.540
Potential Mine-Mouth (25 years) % of Installed
Calculated Capacity from Reserves 1,828.0 10.4%
Planned Capacity from Proponents 1,985.0 11.3% 2.740 5.830

Total Installed Capacity 19,595.8 5.153 10.960

% Reduction in Grid Rate -5.01%

hours/year 8760
net capacity factor 85%
available hours/year 7446
plant life, years 25
tons/million ton 1000000
kgs/ton 1000
kW/MW 1000
thermal efficiency 34.39%
plant heat rate 9,921
target all-in capital cost, $/kW 1,200
Fixed O&M cost, $/kW/year 21.05
Variable O&M cost, $/MWh 4.42
G&A cost, $/year 465,000 $/kW/year 2.32
cost of fuel, $/mt 16.00
exchange rate, PhP/$ 47.00
 Cost of Delivered Electricity
Table 4. Electricity Cost Components and Annual Average Growth Rates (2004,
2014).
Volatility of Indonesian Price
Reference (HBA) 2009-2016
Figure 4
 CONCLUSIONS
Mine-mouth power development can greatly reduce the
cost of electricity and provide many additional benefits to
the Philippine economy, namely:
a. Savings in petroleum fuel use;
b. Savings in foreign exchange for imported coal;
c. Protection from coal supply disruption and coal price
volatility;
d. Potential to shift from coal to renewable energy; and
e. Enhance inclusive growth and sustainability of power
development.
 POLICY RECOMMENDATIONS
1. Priority dispatch for mine-mouth power plants.
2. Priority supply of electricity to host communities.
3. Upgrading benefits to host communities of
MMPPs.
4. Develop commercial agricultural farms and
industrial forest management areas for producing
biomass and wood chips to replace coal once it is
mined out or becomes economically non-viable
due to high cost of mining.
 THANK YOU
Arnulfo A. Robles
Ismael U. Ocampo
Mars T. Ocampo
COAL and Business Policy Forum 2016
November 16-17, 2016
New World Hotel