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Coal is pricing itself for extinction

Coal is pricing itself for extinction

Coal is pricing itself for extinction, even before any carbon tax

On September 2nd 2021, the benchmark spot price for thermal coal reached US$182 per ton. The previous all-time high was in July 2008 at US$184.50 but in the meantime the black hydrocarbon went as low as US$ 43.60 in January 2016 and again reached US$47.20 in August 2020. Over the last twelve months, the price of thermal coal has nearly quadrupled on international markets.

This unprecedented volatility has been caused by what seems now a perfect storm for the coal market: Australia, the second largest coal producer in the world, has been impacted by Covid and by Chinese ban on its production amid rising political tensions and a trade war; Indonesia, number one coal exporter, has been hit by an unusually wet summer monsoon due to la Niña in the Pacific and has restricted exports to keep its local market stocked, Russia, the third largest exporter in the world, has seen its shipments affected by floods, and finally India, the second largest importer of coal, is expected by ADB to have its GDP rebounding 11% by March 2022, and is heavily buying coal ahead of the dry season.

Since the peak of coal's share in the global energy mix in 2008, when coal accounted for 30% of global energy production, many countries have pledged to phase-out coal from their energy mix despite estimates that projected coal reserves to have the capacity to last for centuries at current consumption levels. The latest on the list were the Philippines and Indonesia, to declare a moratorium on new coal plants in 2021. As Sheikh Yamani, former Saudi Arabia Minister of Petroleum and Mineral Resources from 1995 to 2016, used to say: “The stone age didn’t end for want of stones”, the coal age will not end by a shortage of coal. 

What is often identified as the dirtiest fossil fuel has been responsible for over 30% of the global average temperature increase above pre-industrial levels according to the International Energy Agency (IEA). The continued closure of coal power plants in North America, Australia and Europe in the last 10 years has averted any new investments in coal mines around the world. In 2016, two of the largest US coal miners, Arch Coal and Peabody Energy has declared bankruptcy. Given the level of fatal accidents in its domestic coal mines, China has discouraged smaller mining operations and decreased its national extraction, putting even more pressure on international markets to supply its power sector.

Even if temporary, the actual coal price volatility could be a boon to demonstrate to utilities that not only the largest anthropogenic source of carbon dioxide is damaging the planet but also that it cannot be relied upon for 40 years investment decisions. A typical coal Power Purchase Agreement has its electricity purchase price indexed on the price of coal (except in very rare cases), the current surge of the (mostly imported) fossil fuel cost will have an inflationary impact on the utilities Profit & Loss account as well as on the Balance of Trade of the importing country.

For the power plant operator, as the fuel cost typically represents 60% of its operating costs, the 2021 spike is actually increasing its generation cost by a factor of 2.25x, pushing coal power kWh price much higher than intermittent renewable sources (solar and wind) + storage. For the utility, the typical Power Purchase Agreement being take-or-pay, it will force them to buy inflated coal electricity whatever is the international price of the commodity and will squeeze their profitability while their own selling contracts are mostly at a fixed price.

Even if this highly unpredictable and potentially leading to bankruptcy cost of coal energy don’t deter utilities from using it, maybe the coming carbon tax implemented by the EU will.

On July 14th 2021, the European Commission adopted a proposal for a new Carbon Border Adjustment Mechanism which will put a carbon price on imports of a targeted selection of products. This will ensure that European CO2 emission reductions efforts and targets contribute to a global emissions decline, instead of pushing carbon-intensive production outside of Europe. “It also aims to encourage industry outside of the EU and our international partners to take steps in the same direction” stated the European Commission in July 2021. This is the first time that the largest economic bloc on the planet decide to tax externalities. The potential impact of this EU Green Deal will be felt in the future by export oriented Southeast Asia economies and support their expected renewable energy push.

That would mean for countries like Cambodia, where 44% of its power came from coal in 2019 and 32% of its exports are going to the European Union, that the carbon contend of goods produced in Cambodia will have to be compensated for the portion higher than the ones produced in the EU. So not only Electricité du Cambodge (EDC), the local utility, could have to buy expensive and volatile coal power in the future but some of its clients exporting to the EU could be taxed on the carbon contend of its electricity.

Several of these clients, H&M, Adidas, Puma and Gap among others, have already sent a letter to the Cambodian government in August 2020 to raise the issue. As H&M stated “countries who see coal as a viable energy source for the future will lose out”. Neighboring Thailand, on the contrary, is putting net zero target in its Emission Strategy Plan and targets to reduce energy sector CO2 emissions by 60% before 2050 by pushing renewables share above 50% of its mix and replacing coal by LNG.

Only wind, hydro and solar energies offer an unbeatable power price stability over 25-30 years with fixed price PPAs (only the local currency portion could be indexed on local inflation in some instances), without any air or water pollution and without global warming impact. Wind and solar are already the lowest cost energy providers in China and Western countries. Time has come to leave coal as the energy of the XIXth century and to build the energy mix of the XXIst century.

Olivier Duguet

Chairman & CEO

The Blue Circle Pte Ltd

Time for wind power in Cambodia

Time for wind power in Cambodia

The time for wind power implementation in Cambodia has come.


According to the International Energy Agency (IEA), Southeast Asia’s energy demand has increased by more than 80% since 2000 and is expected to increase by another 60% by 2040. Electricity demand in the region was rising by 6% per year before the Covid-19 pandemic outbreak with some countries like Cambodia growing even faster. If the speed of the economic recovery in 2022 and beyond is still debatable, the rebound coming from a worldwide vaccination campaign and the return of household’s consumption leaves no doubt.

As the European Union is implementing the “Green Deal” and the United States are “Building back better” by accelerating investment in renewable energy to fight climate change and promote recovery jobs, some countries in Southeast Asia are planning to use the same roadmap. The United Nations Climate Change Conference (COP26) in Glasgow, Scotland in November of this year will see all Paris Agreement’s signatory governments (including those of ASEAN) re-emphasize their firm and binding commitment to lower their CO2 emissions according to the UN’s Race to Zero campaign.

The Blue Circle’s wind farm in Mui Ne, Vietnam

The Blue Circle’s wind farm in Mui Ne, Vietnam

According to energy consultant leading firm Rystad Energy, ASEAN countries are forecasted to build 6 GW of renewable power projects in 2021 and will increase their annual investment by up to 11 GW by 2025. The onshore wind projects build-up is expected to represent one third of all new renewable energy plants to come online in the region. In Vietnam alone, in a letter sent on March 22 to the Ministry of Industry and Trade (MOIT), Electricity of Vietnam (EVN) was reporting that 4,432 MW of new wind projects are being built this year (mainly in South Vietnam).

The last Power Development Plan presented to the Prime Minister in March was proposing a minimum of 11,320 MW of wind power to be installed by 2025 and 16,010 MW by 2030. Thailand, by implementing the rule to have Electric Vehicles representing 50% of all cars sold in Thailand by 2030, is crafting its New National Energy Plan with 6 to 10 GW of new wind power capacity installed by 2037. As of today, Vietnam and Thailand, Cambodia’s neighboring countries, have installed respectively 582 MW and 1,538 MW of wind power capacity already and are planning to install a minimum of 6,000 MW of new projects by 2025.

Comparatively, Cambodia has included in its 2030 Electrical Master Plan only 80 MW of wind energy by 2024. Even if the 2030 target of 17,677 MW total installed electrical generation capacity set in 2019 for the country were to be revised down by 30% following the pandemic, the wind power share would only represent a mere 0.64% of Cambodia’s total capacity installed in 2030. In the same timeframe, the Electrical Master Plan includes 1,740 MW of solar power to be installed by 2030, potentially representing 12.1% of Cambodia total capacity installed and plans to reach 540 MW before 2023.

As the Director-General of Electricité du Cambodge (EDC) and Minister, H.E. Keo Rattanak, stated on Jan 28th, 2019: “Renewable energies are not in competition with each other, each technology has its own merits and should be judged by its own characteristics”. All ASEAN countries with good wind and solar resources outside of Cambodia, namely the Philippines, Thailand and Vietnam, are expecting to tap into both solar PV and wind power opportunities to produce cheap renewable energy going forward. Energy consultant Rystad Energy is forecasting between 3 to 4 GW of equal yearly installation for solar PV and onshore wind in Southeast Asia in the next 5 years.

This convergence is not only banking on complementary load profiles between solar, peaking at midday, and wind, producing mostly during the later part of the day, but also on the convergence of costs. The last solar Feed-in-tariff in Vietnam (2020) was at 7 USc./kWh, the last direct solicited PPA signed by EDC (2019) was at 7.6 USc./ kWh, the wind Feed-in-tariff in Vietnam is at 8.5 USc./kWh until November 1stof this year before being revised down, the first wind PPA in Cambodia is already presented below 7 USc./kWh...

According to EVN, more than 1,300 MW of wind power projects will be connected to the grid by the end of the year in the Gia Lai and Dak Nong provinces located directly along the Cambodian border. Independent consultant 3i, in a study financed by the Australian government and released on July 15th, 2020, confirmed that Cambodia, in a Medium Wind Scenario, could install 1,185 MW by 2030 in 7 already identified windy zones. This capacity could represent 10% of the total Cambodian electricity generation in 2030, reaching an optimized cost of 6.86 USc./kWh and avoiding 10 Million tons of Co2 emissions. Regarding grid compatibility with different intermittent renewable generation levels, the study concluded that 10% of wind power in Cambodia’s energy mix would be manageable by EDC without heavy additional investments.

So, will Cambodia build back from the pandemic by adding wind power to its solar ambition? Will EDC go beyond a first 80 MW wind pilot project still to be implemented and follow its Mekong neighbors to tap into its wind national resource with a comprehensive plan? Now is the time.

Olivier Duguet
Chairman & CEO
The Blue Circle

Earth Day - 50 Years for Nothing?

Earth Day - 50 Years for Nothing?

Image: Markus Spiske

Image: Markus Spiske

These are contemplative times that we are living in. The world is seemingly holding itself up on fragile stilts, still trying to support itself despite a pandemic and major climate crises that seem to be building up. It is during these hours that it is vital to realise that every little effort done by every single one of us is integral to create a positive chain reaction for a healthier tomorrow. Just like how staying home and social distancing done individually are adding up to a greater cause, all our small efforts to help heal our Mother Earth can make a difference as well.

How is it that we have celebrated Earth Day for half a century and there is still much left to be desired when it comes to major actions and accomplishments to protect our planet? Perhaps the execution of measurable actions is not tallying with our intent. 

How can we fix this? We can start by identifying what we might be doing wrongly.


Mistake #1: Sorry, you might be recycling your items wrongly.

Not everything that looks recyclable actually is (this includes your to-go coffee cup that has a plastic film on the inside and toothpaste tubes that are made with more than one type of material).

How do we fix it?

As a rule of thumb, items created with multiple materials are not recyclable as each material requires its own way of recycling. All items - such as food cartons, cans and packaging - need to be thoroughly cleaned before dumping them into recycling bins. Only packaging and material with specific symbols are 100% recyclable. And no, plastic bags are not advised to be recycled. 


Mistake #2: Your call-to-actions might be falling on deaf ears.

Being climate change advocates is step zero towards making an impact, as shared words amongst friends and family do help to increase community spirit and grow the awareness of the condition of our planet and the ways of which that lessen impact. It is not enough to stop there as the key change-makers are the ones driving your city’s or country’s legislation. These are the people that can facilitate change on a bigger scale.

How do we fix it?

Write to your local town council or environmental agents to suggest ways of improving conservation around your estate. Social media makes contacting local authorities much easier, even if just to voice your concerns. Have a conversation with decision makers and game changers to move towards actual results - make the authorities work for you. Create petitions against mandates that impede climate change within your community, such as a lack of recycling bins on your community. Vote for sizable changes that benefit the community and the environment, such as the availability of shared electric cars and bicycles for your city. Move forward from being a change advocate to a change activist.


Mistake #3: Staying with non-renewable energy power suppliers.

Electrification is a development that is a necessity - it is something that most of us cannot stay away from. We need power to turn on our lights, to run our washers, to watch our television, to turn on our laptops, and so on. It is something that comes so naturally to a lot of people that most forget that while it is accessible, it is also a luxury. It is a luxury that is given to the privileged who can afford it and most of the time, we don’t stop to think about where our electricity comes from. Going on the internet also requires power. While we all are now staying at home and moving our activities online to activate climate change, why don’t we kill two birds with one stone by using a renewable energy source?

How to fix it?

Renewable energy is an excellent alternative to fossil fuels and is fundamentally sustainable and clean. Wind and solar power are the two supplies that are more accessible to most cities. Check your local energy supplier options to ascertain where your energy comes from. If you can switch to a renewable energy provider, why not do that?


If we march towards helping our earth in correct and impactful ways individually, hopefully in the next 50 years, our collective efforts will bear its fruits in bountiful ways. Then, perhaps, we can stop humming to the same tunes as we are now.

Vietnam: The Missed Wind Power Opportunity?

Vietnam: The Missed Wind Power Opportunity?

In November 2018, the Vietnam 14th National Assembly passed a new Planning Law, amending 37 existing regulations and codes, aiming at creating a unified legal system on planning activities. Instead of boosting construction and streamlining administrative procedures in a country infamous for its bureaucracy, the implementation of this new Planning Law stopped all inclusion approvals in the National Master Plans, a decision that stands until today. 

Without this key approval process, grid connection of about 1,645MW of wind power projects with Power Purchase Agreement (PPA) signed and construction permits of about 2,700MW of wind power projects without PPA (source EVN Jan. 2020) will not materialise.

Even if the legal situation is resolved and the Master Plan Approvals from the Prime Minister were to resume in the coming weeks, the situation looks unpromising as wind power projects typically take 16 months to be constructed and would face a worldwide shortage of turbines for delivery next year. As the 2018 wind feed-in-tariff (FiT) is only valid for projects entering commercial operations before November 1st 2021, any project entering construction now takes the risk not to have any fixed price for its electricity. 

New Planning Law impedes the materialisation of 4,345MW of wind energy in the country which could result in serious national power implications. Image: The Blue Circle (Dam Nai wind farm)

New Planning Law impedes the materialisation of 4,345MW of wind energy in the country which could result in serious national power implications. Image: The Blue Circle (Dam Nai wind farm)

“Wind power projects are not like solar which could be built in 6 months,” explains Olivier Duguet, Chief Executive Officer of The Blue Circle. ”We have to order turbines 10 months before delivery and have at least four to six months of construction time. Therefore, we need a minimum of two years of visibility on the FiT to invest, which is not the case today,” he adds. 

Vietnam has been the first country in Southeast Asia to establish a FiT to promote wind power development. It was set up in 2011 at US$7.8c./kWh at a time when the average turbine size was still under 2MW. During the following seven years, Vietnam has connected only 200MW of wind power to the national grid, prompting comments on the unattractive level of its tariff for wind. In the meantime, the Philippines have built 427MW and Thailand 1,018MW.

When Vietnam Prime Minister Mr. Nguyễn Xuân Phúc increased the wind power FiT in 2018 to US$8.5c./kWh, the expectations for a rapid expansion of wind power deployment in Vietnam were running high, given its 3,260 kilometers of coastline and the best wind resources of continental Southeast Asia. 

The country - especially its busy South - is hungry for power. Vietnam’s Ministry of Industry and Trade (MoIT) forecasted in July 2019 that electricity demand will exceed its supply by 6.6 billion kilowatt hours (kWh) annually in 2021 - increasing to 15 billion kWh annually by 2023. The country will need an average investment of US$6.7 billion a year to expand its power generation capacity by 10% every year between 2016 and 2030 according to the Ministry.

Given the urgency to avoid severe power shortage, Vietnam’s national utility, Electricite du Vietnam (EVN), became the leading buyer of solar energy in the ASEAN region in the last two years. By setting a FiT high enough to attract local and international investments, Vietnam has triggered a rush to build 4,460MW of solar projects in record time, representing now 44 per cent of Southeast Asia’s total solar installed capacity. This could have been followed by wind power in order to boost renewable and clean energy production in the South. However, the unfortunate turn of events around the new Planning Law implementation might lead to a missed opportunity for Vietnam to harness wind energy - a good, reliable and cheap source of local renewable energy. 

Whereas the world is turning to renewables as the primary source of electricity, Vietnam seems stuck with imported fossil fuels from the past, such as coal and gas, to power its growth.  

About The Blue Circle

Founded in 2013, The Blue Circle identifies, develops, finances, owns and operates renewable energy projects in complex and challenging geographies in the Asia-Pacific region. The Blue Circle uses the most advanced technology to build responsible and sustainable projects. With offices in Singapore, Ho Chi Minh City, Bangkok and Phnom Penh, The Blue Circle is the leading renewable energy company of Southeast Asia. Its team is committed to changing the world one green electron at a time. www.thebluecircle.sg

For further information, please contact:

Ain Aziz
Communications Manager
ain.aziz@thebluecircle.sg     
Tel: +65 6358 3414

Wind power in Cambodia is possible, says regional power producer

Wind power in Cambodia is possible, says regional power producer

As the world increasingly opens up to renewable energy, Southeast Asia Globespeaks to Olivier Duguet, CEO and co-founder of the Blue Circle, a renewable independent power producer based in Southeast Asia, to find out more about the region’s future energy path. The company has already begun work on a wind farm in Ninh Thuan province in South Vietnam – one of the largest in the region – and has its sights set on creating a similar farm in Cambodia

You’re going to open your first wind project in Cambodia next year. What are your expectations for this project?
That will only be the very first test phase of a much larger deployment of wind power in Cambodia. We have been working on this for the last four years. We came to an agreement with the government, with the Ministry of Mines and Energy, on sizing a first test phase of 13MW, meaning basically four turbines. So a small first phase mainly to demonstrate to EDC (Electricité du Cambodge) that it’s feasible; that it’s not impacting the grid. So that’s the purpose of this first phase, which we hope of course will lead to much more in the future on the same site. We have much more space with the same wind resource to build 200 to 300MW wind farms.

Regarding the land where the turbines will be situated – which is in Kampot province – have there been any issues or obstacles?
With wind power – different to solar – we are mainly looking at sites far from anybody. Far from any villages, schools, towns or whatever it is. So we have an agreement already with the owner of the land on the site to do these first four test turbines, but there is [also space to add] up to 15 more turbines in the future, so it’s already secured.

Just talking about Cambodia specifically, do you believe there are enough sites where wind can be effectively harnessed?
Definitely yes. We have been collecting data for [four years] so we now know exactly where we can go, how much [each site] will produce, and what are the economics now of the site. So to answer your question, yes. From our understanding of the Cambodian market we think that there’s largely a possibility of 500MW plus of commercial wind power potential in Cambodia.

Renewable energy options such as wind, solar and hydropower have been around for a long time, but it seems like now these are being pushed forward a lot more around the world, and to a certain extent in Southeast Asia. Why now?
Two reasons, I think. The first one is of course climate change – the need to fight climate change and the Paris Agreement – so it’s pushing global conscience and political will. And the second reason why it’s now reaching Southeast Asia is the declining costs of these technologies.

Your website states that “free-enterprise capitalism is the most powerful system for social cooperation and human progress ever conceived.” Do you believe that renewable energy development should be free from political interference?
It’s a more philosophical question, but you’re totally right to mention this. The energy sector [is] highly dependent on state regulation and state decisions. So yes, I think it’s better to leave the private sector to deal with the business decisions, but business decisions come after a political decision. 

Energy, I think, is a special case. It’s is a special sector because it has very long term assets, a long-term vision. You build a grid, you build power stations for fifty years or even more… and most of the time the most effective way to do it is to make long-term planning.

The free enterprise must comply with this long-term planning. That is my vision of it. So yes, we need political will, we need political decisions, and it comes back to the previous point. 

International awareness of [climate change] didn’t come in one day. We had [the Rio Earth Summit] before, we had the Kyoto Protocol, which died in 2012 so we had to renew it. Again, it took a long, long time for the global community to get a grasp on these issues. So it’s becoming more and more evident that we need to do something. That means moving the political decisions behind, because of course political decisions always come after what the general people think.

On a similar topic, how open have the governments and the state utility companies been in Southeast Asia to investing in renewable energy?
I used to joke about it, but each time we speak in the region with utilities or governments dealing with energy they always tell us there are three imperatives we need to comply with if we want to sell our electricity: price, price and price. 

For the moment in most of the cases, nearly all of the cases, the demand is there. The demand is there of course in Cambodia, Vietnam also, less so in Thailand maybe, of course not in Singapore…but with huge growth comes demand. So governments have to plan in advance to try to cope with the demand – and cope with the demand at the lowest price possible. That’s the reason why, unfortunately, Southeast Asia or maybe India, is the last place on Earth where we’re still talking about opening new coal power stations. The rest of the world is shutting them down. Why is it so? Because of price, price, price.

Because [governments] are under huge pressure – it’s a highly political decision. With the price of electricity it has a social impact, so they need to first cope with the demand at the lowest price possible, and then they’ll see if it’s green or not. Again, to come back to your question, the governments are keen to have renewable energy if it’s competitive, and if it’s at a lower price than fossil fuels.

Is Southeast Asia capable of producing good amounts of commercial wind?
If you look at wind power in the region the two main countries ahead of the other ones are Thailand and the Philippines for the moment. Vietnam is catching up very quickly, but the rest of the region has nothing. There is only one first project in Indonesia, which we jumped into this year, but otherwise nothing in the rest of Indonesia. Malaysia has nothing. Myanmar, nothing. In some cases it’s because of a lack of resources, for example in Malaysia there’s no wind, it’s not commercial wind I’d say. Indonesia, very difficult also, very low-resource. But Indochina, yes, there are definitely resources.

We are here for the long term, with a long-term view. We want to be a part of the future of the energy mix, and will stick with the projects. Down the road, we are convinced that the world will run on renewable energy.

http://sea-globe.com/the-blue-circle-wind-energy-possible-cambodia-southeast-asia-renewable-energy/