Life Cycle Cost Analysis of Upgrading Brown Coal

In Indonesia, coal is expected to become a major energy source as set on The National Energy Policy of Indonesian Presidential Decree No. 5, 2006. The potential of Indonesia's coal are low and moderate calorific coal which classified as brown coal. Due to the low heating value and the trend towards higher emissions, brown coal is difficult to be applied directly. Upgrading of Brown Coal (UBC) process increase the added value of brown coal so it can be able to meet the coal needs of domestic energy sources and exporting at a higher price. This study provides an overview of the opportunities of UBC implementation projections based on its life cycle cost (LCC) then make energy policy recommendations. LCC method was conducted to investigate an UBC plant with capacity of 5,000,000,000 ton/year. The investment cost of UBC plant is USD 557,055,967.50 with production cost of USD 92.35/ton. In this study, the UBC product prices selected was USD 93.94/ton (the average coal prices with calorific value of 6,052kcal/kg in 2010 – 2014). Annual Cash Flow (ACF) and Net Present Value (NPV) showed the positive value after production process, Internal Rate of Return (IRR) is 9.36 % and payback period (PBP) is 9 years of 20 years of lifetime project. Coal policy is needed for UBC process development and to prevent direct sales of brown coal to keep coal prices remained stable