The Changing Economics of Coal Case Study: Tata Mundra Justin Guay, World Bank Annual Meetings...
-
Upload
meghan-lester -
Category
Documents
-
view
216 -
download
0
Transcript of The Changing Economics of Coal Case Study: Tata Mundra Justin Guay, World Bank Annual Meetings...
![Page 1: The Changing Economics of Coal Case Study: Tata Mundra Justin Guay, World Bank Annual Meetings September 21 st, 2011.](https://reader036.fdocuments.net/reader036/viewer/2022081515/56649f335503460f94c50030/html5/thumbnails/1.jpg)
The Changing Economics of Coal
Case Study: Tata Mundra
Justin Guay, World Bank Annual Meetings September 21st , 2011
![Page 2: The Changing Economics of Coal Case Study: Tata Mundra Justin Guay, World Bank Annual Meetings September 21 st, 2011.](https://reader036.fdocuments.net/reader036/viewer/2022081515/56649f335503460f94c50030/html5/thumbnails/2.jpg)
- Structural Drivers of Rising Coal Prices: oil prices, demand, and supply constraints
- Coal Price Behaviour in Key Markets: Surging and volatile
-The Fallout: Economically unviable power plants (Tata Mundra, Krishnapatnam)
Overview
![Page 3: The Changing Economics of Coal Case Study: Tata Mundra Justin Guay, World Bank Annual Meetings September 21 st, 2011.](https://reader036.fdocuments.net/reader036/viewer/2022081515/56649f335503460f94c50030/html5/thumbnails/3.jpg)
- Emerging Market Demand
- Supply constraints
- Oil Prices
Why Coal Prices Are Rising
![Page 4: The Changing Economics of Coal Case Study: Tata Mundra Justin Guay, World Bank Annual Meetings September 21 st, 2011.](https://reader036.fdocuments.net/reader036/viewer/2022081515/56649f335503460f94c50030/html5/thumbnails/4.jpg)
Source: IEA Coal Statistics 2011
0
20
40
60
80
100
120
140
160
China India Korea
% G
row
th in
De
ma
nd
Coal Consumption Growth 2000-2009Coal Consumption Growth 2000-2009
Strong Coal Demand in Emerging Asian Markets
![Page 5: The Changing Economics of Coal Case Study: Tata Mundra Justin Guay, World Bank Annual Meetings September 21 st, 2011.](https://reader036.fdocuments.net/reader036/viewer/2022081515/56649f335503460f94c50030/html5/thumbnails/5.jpg)
Stagnating Coal Production
Source: Heinberg and Fridley, Nature 2010 Source: IEA World Energy Outlook 2010
![Page 6: The Changing Economics of Coal Case Study: Tata Mundra Justin Guay, World Bank Annual Meetings September 21 st, 2011.](https://reader036.fdocuments.net/reader036/viewer/2022081515/56649f335503460f94c50030/html5/thumbnails/6.jpg)
Spot Prices During 2008 Oil Price Shocks
Source: US EIA
The Price of Coal is Volatile
![Page 7: The Changing Economics of Coal Case Study: Tata Mundra Justin Guay, World Bank Annual Meetings September 21 st, 2011.](https://reader036.fdocuments.net/reader036/viewer/2022081515/56649f335503460f94c50030/html5/thumbnails/7.jpg)
- In Key markets the price of coal rose saw 13% CAGR over the past decade
- Chinese prices rose 15% CAGR
- Export prices doubled from 2006-2011
Coal Prices Are Rising in all Major Markets
![Page 8: The Changing Economics of Coal Case Study: Tata Mundra Justin Guay, World Bank Annual Meetings September 21 st, 2011.](https://reader036.fdocuments.net/reader036/viewer/2022081515/56649f335503460f94c50030/html5/thumbnails/8.jpg)
Coal is Expensive
The Price of Coal rose at a 13% CAGR 2001-2008
Source: EIA http://www.eia.gov/emeu/international/stmforelec.html
15
35
55
75
95
115
135
155
Av
era
ge
Pri
ce
/To
n U
SD
India USA Chinese Taipei Poland Germany
Selected Steam Coal Prices 2001-2008Selected Steam Coal Prices 2001-2008
Average CAGR13%
![Page 9: The Changing Economics of Coal Case Study: Tata Mundra Justin Guay, World Bank Annual Meetings September 21 st, 2011.](https://reader036.fdocuments.net/reader036/viewer/2022081515/56649f335503460f94c50030/html5/thumbnails/9.jpg)
Chinese Coal Prices
The Price of Coal rose at a ~ 15% CAGR from 2001-2008
![Page 10: The Changing Economics of Coal Case Study: Tata Mundra Justin Guay, World Bank Annual Meetings September 21 st, 2011.](https://reader036.fdocuments.net/reader036/viewer/2022081515/56649f335503460f94c50030/html5/thumbnails/10.jpg)
Newcastle Benchmark Coal Prices 2006-2011
Internationally Traded Coal Doubled in Price from 2006-20011
![Page 11: The Changing Economics of Coal Case Study: Tata Mundra Justin Guay, World Bank Annual Meetings September 21 st, 2011.](https://reader036.fdocuments.net/reader036/viewer/2022081515/56649f335503460f94c50030/html5/thumbnails/11.jpg)
Coal Production in Asian Marine Markets
A 25% shortfall Provides Enormous Rent Seeking Opportunities
![Page 12: The Changing Economics of Coal Case Study: Tata Mundra Justin Guay, World Bank Annual Meetings September 21 st, 2011.](https://reader036.fdocuments.net/reader036/viewer/2022081515/56649f335503460f94c50030/html5/thumbnails/12.jpg)
- Indian Import Vulnerability
- Tata Electricity Impacts
- Unviable Coastal Coal Plants
The Fallout
![Page 13: The Changing Economics of Coal Case Study: Tata Mundra Justin Guay, World Bank Annual Meetings September 21 st, 2011.](https://reader036.fdocuments.net/reader036/viewer/2022081515/56649f335503460f94c50030/html5/thumbnails/13.jpg)
Indian Vulnerability to Import Price Surges
Source: Government of India Planning Commission
![Page 14: The Changing Economics of Coal Case Study: Tata Mundra Justin Guay, World Bank Annual Meetings September 21 st, 2011.](https://reader036.fdocuments.net/reader036/viewer/2022081515/56649f335503460f94c50030/html5/thumbnails/14.jpg)
Source: EIA http://www.eia.gov/emeu/international/stmforelec.html
10
15
20
25
30
35
40
45
50
55
60A
ve
rag
e P
ric
e/T
on
US
D
Indian Steam Coal Prices 2001-2011Indian Steam Coal Prices 2001-2011
CAGR4%
Imported Coal Cost Premium
CAGR35%
Indian Vulnerability to Import Price Surges
![Page 15: The Changing Economics of Coal Case Study: Tata Mundra Justin Guay, World Bank Annual Meetings September 21 st, 2011.](https://reader036.fdocuments.net/reader036/viewer/2022081515/56649f335503460f94c50030/html5/thumbnails/15.jpg)
Tata Plant Economics
0
1
2
3
4
5
6
7
8
9
10
$30/ton $60/ton $120/ton
$c
en
ts/k
wh
Coal Price Impact on Electricity PricesCoal Price Impact on Electricity Prices
20-60% Rise in Electricity Prices
O&M
Fuel Costs
![Page 16: The Changing Economics of Coal Case Study: Tata Mundra Justin Guay, World Bank Annual Meetings September 21 st, 2011.](https://reader036.fdocuments.net/reader036/viewer/2022081515/56649f335503460f94c50030/html5/thumbnails/16.jpg)
Unviable Coastal Coal Plants
4 GW Tata Mundra UMPP: - Faces losses of 270% - Forced to double rates charged to consumers - Even with requested price revision project unviable for at least the next five years. - Tata CEO on whether Mundra is viable at the moment:
“No. At this moment, we have tremendous impact due to imported coal on Mundra because the price of coal has increased multi-fold….Indonesia will not change its stance for Tata Power or for any other company…In fact, all the three countries exporting coal have changed rules in recent times. South Africa, Australia and Indonesia are in sync as far as exporting coal is concerned.”
4 GW Krishnapatnam UMPP: Construction halted immediately after Indonesian price revision.
$30 billion exposure to coal projects for Indian Banking Industry. Of this - 14 GW of projects face imported coal risk
![Page 17: The Changing Economics of Coal Case Study: Tata Mundra Justin Guay, World Bank Annual Meetings September 21 st, 2011.](https://reader036.fdocuments.net/reader036/viewer/2022081515/56649f335503460f94c50030/html5/thumbnails/17.jpg)
Thank you
Justin Guay, World Bank Annual Meetings September 21st , 2011