The Role of Low-Carbon Fuels in Clean Energy
Transitions of the Power Sector
Dr. Paolo Frankl, Head Renewable Energy Division
The 15th IEEJ Global Energy Webinar
Thursday 18 November 2021

Context• Governments around the world are faced with the challenge ofensuring electricity security and meeting growing electricity uses
while simultaneously cutting emissions.
• Massive deployment of solar PV and wind requires a significant
expansion of all flexible resources, including low-carbon dispatchable
power plants, energy storage, demand response & grids.
• Thermal generation from fossil fuels currently provides key flexibility
services that contribute to security of electricity supply.
• Using low-carbon hydrogen and ammonia in fossil fuel power plants
is an additional tool for decarbonising the power sector, while
simultaneously maintaining flexibility services of existing fleets.

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Global dispatchable capacity by fuel, 2019

Others16 %Hydropower
29 %

Gas
27 %
Coal
28 %

Page 2Fossil fleets have technical lifetimes that extend well into the future
Cumulative capacity by 2019 and expected retirement of the existing fleet by 2050 based on technical lifetime (GW)

Fossil fuel based generation was responsible for 13.7 Gt of CO2 emissions in 2019 globally.
This generation must be decarbonized to be on track to achieve long-term climate targets
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Low-C fuels can decarbonise existing fossil generation• Three major options for decarbonisingfossil fuel electricity generation- Early retirement / reduced operation- CCUS retrofit to power plants- Co-firing with low-carbon fuels• Technology is progressing rapidly- Small gas turbines already operating
at >90% share of hydrogen- 20% co-firing with coal tested withammonia at pilot scale- Large-scale projects with higher cofiring rates are under development

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Using low-C fuels can lead to significant reduction in GHG emissions
Indicative life-cycle GHG emissions of coal and ammonia for different production routes

International standards are required to ensure that use of low carbon fuels lead to global emission cuts.
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Production costs of low-carbon fuels must decrease further

1000

USD/tNH3

Indicative production costs for low-carbon ammonia for today and 2030

8006004002000Low-carbon fuel ammonia is expected to be significantly more expensive than coal in 2030 in the SDS.
Production costs in 2030 are within commodity price ranges (USD 160-700/t) in recent years
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Transport is a key component of total supply cost of low-carbon fuels

USD/GJ

Supply cost of low-C hydrogen and ammonia based on pipeline or marine transport
35302520Transport
15Liquefaction
Low-C fuel1050Hydrogen

Ammonia

Low-C fuels pipeline transport 1 000 km

HydrogenAmmonia

Low-C fuels marine transport 10 000 km

Ammonia is more expensive to produce than hydrogen, but its supply costs are lower if shipped over a long distance
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Detailed analysis of selected low-carbon fuel supply chains
Analysed supply chains for the production and use of low-C fuels in thermal power plants

Examined cases: Importing low-carbon fuels to an advanced economy (Japan);
Importing low-carbon ammonia to an emerging economy (Indonesia);
Using domestically produced low-carbon hydrogen in an emerging economy (India).
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Japan: Cost increase is moderated by carbon price and energy market
Energy market value and LCOE of low-carbon ammonia co-firing for Japan in the SDS 2030

Gap withcarbon priceGap in baseload
operation

Gap in peak load
operationGap
w/ocarbon
price*Energy value is based on 2019
wholesale energy price duration
curve in Japan, adjusted with USD
82/tCO2 carbon price for advanced
economies in the SDS in 2030.

In an efficient wholesale electricity market, co-firing of low-carbon ammonia can have a better business casefor peak load than baseload operation. The capacity market can offer an additional source of revenue
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Page 9Indonesia: Co-firing of low-carbon fuels remains an expensive option in 2030
LCOEs in 2030 for an existing coal power plant in Indonesia
co-firing imported low-carbon ammonia from Saudi Arabia under different shares and operating regimes

CF 70%

CF15%

CF 70%

CF15%

CF = Capacity factor.

Co-firing with low-carbon fuels is a possible long-term option for emerging economies in Southeast Asia, after
having mobilised other flexibility resources like grids and interconnections, storage and demand response
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India has excellent renewable resources to produce low-carbon fuels
2.50

20

USD/GJ

USD/kg H2Production cost estimates for electrolytic hydrogen from a mix of wind and solar PV in 2030

2.00

151.5010

Water
Curtailment
Windelectricity
Solarelectricity
Electrolysis

1.00
50.50
0.00

0TaltalMagallanes

ChileGujarat

Karnataka

Rajasthan

PortAqaba,Abu Dhabi
Headland, Saudi Arabia
Australia

India

India has the potential to use low-carbon fuels domestically produced at low cost from wind and solar,transported by pipeline
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Page 11Major expansion of supply infrastructure is needed
Demand for low-carbon ammonia for different co-firing modes in a 10 GWe coal fleet.

Co-firing 60% of ammonia in a coal fleet of just 10 GWe would also require massive
expansion of the current electrolyser and CO2 storage capacities.
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Conclusions• Using low-carbon hydrogen and ammonia in fossil fuel power plants can play an important role to help ensure
electricity security in clean energy transitions. Their value depends on system contexts and regional conditions• Low-carbon fuels have an especially important potential in countries or regions where the thermal fleet is young, or
when the availability of other low-carbon dispatchable resources is constrained, such as in East and Southeast Asia
• Diverse supply routes for low-carbon fuels can enhance security of supply and cost predictability• International rules and standards are necessary to achieve measurable life-cycle emission reductions• A portfolio of policies is required to reduce production costs and improve system value of low carbon fuels in thepower sector• Developing markets for low-carbon fuels and their supply chains by 2030 will establish significant opportunities inmany countries and sectors of the economy

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Contact:report@tky.ieej.or.jp