Saturday, December 26, 2009

New Thermal Power Plant investment 4x660 MWe in Amasra County of BARTIN Province

Dear Colleagues, Dear Energy Professional,

I learnt the latest announcement of a new thermal power plant investment in Amasra County of Bartin Province, which will utilize a nearby relatively high LHV local bituminous mine. We understand that a local engineering company has already prepared the environmental impact assessment (EIA) study for the new investment project; it was recently released on the internet page of Bartin province for public information and awareness.

The local investor has applied to acquire 49-year long-term concession rights for exploitation of local bituminous proven coal reserves of approximately 573 million metric tons, to fire 932 tons of coal per hour in 4 boilers, at approximately 7000 hours of annual availability. Lower heating value of available bituminous coal is around 5800 kcal per kg (plus/ minus 10%).

The local Turkish investor company is planning to construct two new thermal power plants in the Gomu and TarlaAgzi villages of Amasra county, each to generate 2x660 MWe electricity based on pulverized coal firing technology and sell the generated electricity in IPP scheme.

They are preparing to apply to the Ministry of Environment for EIA approval prior to their investment license application from the Local Regulatory Board, EMRA.

However, since EIA permission has not been granted yet, prior to their EIA application, they will be organizing a "Public Information Meeting". Details are on their web site.

I am pleased to get such news on new energy investments in our local energy market, provided that

- They are designed environmentally friendly, to enable low CO2 emissions with CCS,
- They have E/Ps, FGD, CCS fully installed and operated,
- They have completed all obligations for Environmental Impact Assessment Reports,
- They receive their license from the Local Regulatory Board,
- They are designed by local engineering companies or in-house engineering as much as possible,
- They are fabricated in the local fabrication plants as much as possible,
- They are installed by our local contractors,
- They are commissioned and supervised by our local engineering power,
- They are operated by our own local staff, and
- Regularly checked by our own Labor force in programmed maintenance.

I sincerely feel that energy investors deserve all our support to complete those power plant investments. They deserve this since they risk their own property in order to get proper "Corporate Financing" at reasonable interest rates, and payment terms.

They will be investing 1,400 million Euros equivalent money, which is a huge sum to finance in our terms in the international markets. That will release the unit investment cost and will be approximately 800 US Dollars per installed kW electricity generation. Only Far East companies can declare such a low price. If the contract would be placed to a Chinese company, then we would expect poor design, poor performance, and all turnkey construction which means all employees from Mainland China, mostly soldiers or convicts, and with almost minimum wage. That decision will create no employment for the local population.

On the other hand, there is great risk in project finance of such investments due to public response. Those companies, who are ignorant of local workforce employment expectations, and neglecting local engineering contribution, neglecting environmental limitations, will surely deserve the highest level of local resistance in legal platforms.

They will have too much of a headache during project execution; therefore, the project finance institutions should make their risk assessments carefully; otherwise, they pay the consequences heavily.

I warn them not to make any technical mistakes in their power plant design, avoid incorrect selection of the necessary equipment, and wish them to operate the plant for many years, to generate electricity which will push our economic prosperity.

After reading the EIA Project Information Report on the web page, we are very uncomfortable since the said document is ill-prepared, full of technical mistakes, unprofessional charts, diagrams, and simple translation of documents without any project commitment.

We feel that they are not yet prepared on their behalf. There are not many project details; only already known general information is disclosed.

We learned that the output capacity is 2x660 MWe at each of two different sites in Bartin Province. We understand that they will install a seawater cooling system. This means they will not use much underground water. That is good for nearby ongoing agricultural activities. As a matter of fact, seawater cooling is also difficult to handle without any harm to sea life.

We do not know details of the manufacturer for the selected steam turbine, pulverized coal firing technology, cooling system, heat balance diagrams, fabrication, construction, site installation contractors, whether they are local or foreign, details of budget figures for each item, or the timetable for project execution.

It is my humble feeling that we should help and warn the investor not to repeat negative past examples in Antalya, Denizli, Yatagan, Yenikoy, Kemerkoy, Afsin Elbistan.

The local investor should feel comfortable that we shall be warning them in proper design, sourcing fabrication, site installation, logistics, and public approvals. We all expect that these energy investments will bring prosperity, employment and peace to the site.

Maximized local manpower, as well as maximized local engineering/ fabrication/ site installation capabilities should be employed.

After brief review of the project, we feel that we need answers to the following questions,

- We need to learn the OEM suppliers of the basic equipment,
- We need to know the details of steam turbine, steam generator, condenser, cooling system, coal mills, fans, pumps, E/P, FGD, CCS, I&C.
- Who will be making the basic design (Pulverized Coal firing Boiler, CMEC China?), who will be the fabricator, who will be the construction company for site installation?
- It is our understanding that they have not applied yet to EIA certification or to the Local regulatory board for licensing. What is the timetable?
- There should not be any deviation of the information they will be declaring in the local information meeting and the information they will be furnishing to the public administrations.
- We would be too pleased to learn the details of the boiler design, supplementary firing burners, burner management systems, and emission controls. Local emission limitations are not so stringent. They should be all in compliance with EU standards.
- We shall be too pleased to learn where they will be purchasing the cooling system design and equipment.
- We need to know who will be the site constructor, what is the budget figure? They should be local companies. Local labors should be employed at the construction site. If you promise to have employment for 1000 workers, then you should avoid the use of foreign workers.
- If a project does not create employment for the local people, it is our sincere feeling that there is no need for that project.
- If a project promises to utilize the local bituminous coal, hence there should be no change to the imported coal option in the long term.
- We need to know the project implementation period, the important milestones; we expect that 36-40 months could be a reasonable period.
- We need to know who will be making and paying the new 154 or 380 kV transmission line to the plant site.
- We need to know when the major equipment land transportation will be made; do we have sufficient roads/ seaports for that transportation, who will be making the road reinforcement to enable the transportation?
- Do they have long term electricity sale agreements with TETAS?
- Do they consider any capacity extension in the long term in 10-20 years time? Do they have enough space/ land for that extension??
- Do investors consider any IGCC application in future by gasification of indigenous bituminous coal mines based on clean coal technologies?
- We will be too pleased to learn if the local party is thinking to create a local engineering department to carry out necessary basic engineering in the long term.

I hope for all the best, and the success of the investors in their new venture. Your comments are always welcome.

Happy and Prosperous New Year and Merry Christmas to you all!
Haluk Direskeneli, Energy Analyst,
Hamburg, 26th December 2009

Monday, December 21, 2009

Sustainable energy provision for the city of Hamburg Germany

Dear Colleagues

Your writer is in Hamburg Germany for next two weeks. within his humble capacity he tried to bring together an overview of Energy Generation in Hamburg and environment. Below article is collected from Vattenfall internet site press releases.

The Free and Hanseatic City of Hamburg played a major role in establishing Vattenfall Europe as Germany’s third-largest producer of electricity and the largest supplier of district heat. Today, Hamburg and Berlin are the main centres of Vattenfall’s German business activities.

Vattenfall opened a representative office in Hamburg in 1996, two years before the German electricity market was deregulated, and began working in the German market. Through the next few years Vattenfall acquired HEW, and from that base went on to establish Vattenfall Europe as a major German energy company.

Today, Vattenfall produces electricity and heat for the industry and citizens of Hamburg, operating both the local electricity distribution network and the large district heating grid. Hamburg is also the centre of the Vattenfall group’s strategically important energy trading unit.

Sustainable development

Vattenfall’s task as an energy company is to provide its customers with energy; but we also see our role from a broader perspective. All energy generation has an impact on the environment and the operations we conduct have a major impact on society – globally, regionally and locally. Vattenfall supports sustainable development in society by managing the balance between secure energy supply and environmental and social consequences in a responsible way.

Vattenfall’s goal is to be a climate neutral company by 2050. For 2030 the target is to halve our CO2 emissions per kWh from energy generation compared with 1990. In order to achieve those goals, CO2 emissions from existing operations must be reduced while generation of electricity with very low CO2 emissions is being dramatically increased. The new electricity generation capacity needed to realise the climate vision will be derived from three sources: renewable energy (such as wind power, bio energy, ocean energy), coal power using the new CCS technology, and nuclear power.

Renewable energy

Waste incineration has delivered steam to the district heating system in Hamburg since 1931 and in 1953 a consortium in which HEW was a member initiated an early wind power testing plant. Today, Vattenfall is in the vanguard in the development of applications for new technologies based on biomass, wind and hydro power.

In Hamburg, the authorities have been faced with the problem of handling waste and sewage sludge from the city’s 1.7 million inhabitants along with waste from the city’s industries. The city also had to deal with the problem of having a high amount of unused and treated wood. In the search for a complete solution with broad and high social acceptance, located close to the city, the city came across a solution from Vattenfall.

Commissioned by the city of Hamburg, Vattenfall Europe (under the aegis of Vattenfall Europe Waste to Energy, formerly HEW Entsorgung) built two incineration plants in accordance with the highest environmental standards to handle waste and a sewage sludge and digester gas plant to handle sewage.

The last of the city’s problems – the large amount of contaminated wood – called for a biomass solution. In the vicinity of Hamburg’s harbour, Vattenfall designed and built a waste-to-energy facility on the site of the Müllverwertung Borsigstraße waste incineration plant. The biomass plant has a capacity to produce 80 MW heat and 20 MW electricity based on recycled wood, and can also handle treated wood.

Combined heat and power (CHP) plants, that is, plants that co-produce heat and electricity, preserve energy resources by using the fuel in a most efficient way and thereby decrease emissions per produced kilowatt hour. Up to 90 per cent fuel utilisation can be reached.

Hamburg’s currently largest CHP plant is Tiefstack with its recent addition, the new gas and steam plant (180 MW heat; 125 MW electricity). Biofuel or waste fuelled CHP plants in the Hamburg area also include Rugenberger Damm (70 MW heat; 7 MW electricity) and VERA (10 MW heat; 8 MW electricity).

Wind power
Powerfully investing in renewable energy production, Vattenfall has positioned itself as one of Europe’s leading generators of wind power, both offshore and onshore.

Its German wind power projects include the construction, jointly with other companies, of the “alpha ventus” offshore wind farm 45 kilometres off the coast of Borkum, the “DanTysk” project, with 80 five-megawatt wind power units 65 kilometres off the island of Sylt, and the “Borkum Riffgrund” offshore wind farm together with the Danish company Dong Energy.

On land, Vattenfall is cooperating with partners in replacing first generation wind power machines with more modern and higher capacity ones in already existing units, mainly in Schleswig-Holstein and Brandenburg.

Fuel cells
Fuel cells is another technology that may play an important role in the future. Vattenfall started early to test and evaluate stationary fuel cells for small combined heat and power plants, including a large (220 kWel/170 kWth) state-of-the-art fuel cell in Berlin, followed by a similar test in Hamburg. These fuel cells showed a high electrical efficiency, good heat utilisation and high availability and reliability levels. However, before a broad market introduction is possible, plant lifetime has to be higher and investment cost lower.

Coal remains essential
Renewable energy sources alone, however, cannot provide enough energy to cover the needs of society. Coal and nuclear power remain essential to cover the total need for electricity and heat. Germany’s decision to withdraw from nuclear power makes coal an even more essential source of base load power.

Vattenfall’s opinion is that coal is needed, but carbon dioxide emissions must be drastically reduced through continuously increasing the power plants’ degree of efficiency and utilising the new CCS (carbon capture and storage) technology as soon as it becomes mature enough. When CCS technology is ready for commercial use, CO2 emissions from coal-fired generation will be radically reduced.

One of the world’s most modern and efficient power plants for the supply of electricity and district heat (1600 MWe) is currently being built in Hamburg-Moorburg. It will replace the existing power plant in Hamburg-Wedel, which was built in 1962 and is planned to be shut down in 2013. Hamburg then needs a new base for its electricity and heat supply to secure energy supply for its citizens as well as for already established major industries and the city’s ability to attract new business.

Located on the Elbe River on a site that has been used for electricity generation since 1974, the Moorburg 1640 MWe coal-fired plant will make use of the latest available technology in its construction.

This new units A and B of the Hamburg Moorburg power plant will have an electrical output of 2 x 820 MW and will achieve an efficiency of 60 % at maximum district heat extraction.

Once in operation, the plant will meet roughly 85% of Hamburg’s electricity needs and 40% of its district heating needs. The plant is designed to incorporate CCS technology in the future.

Nuclear power plants

Vattenfall’s nuclear power plants Brunsbüttel and Krümmel have remained offline following scrams in 2007. The reasons for the scrams were remedied the same year, but as a result of time consuming refurbishments and modernization work as well as new demands that have been raised, Brunsbüttel has not yet been restarted. Krümmel was restarted in June 2009, but a new fault occurred in one of the two transformers that transmit the electricity from the plant on to the grid. Power production in Krümmel will now remain halted until both transformers have been replaced with new ones.

Such mishaps are, of course, most unfortunate. However, Vattenfall believes that nuclear power is needed as a stable base power source and calls for expansion of total nuclear power generation in markets where there is confidence in this source of energy. In Germany Vattenfall will utilise the production volume guaranteed by law for its present nuclear power plants.

Security always has top priority in Vattenfall’s nuclear power plants and our ambition is to secure world-class nuclear safety.

Centre of Trading

A growing share of Europe’s electricity trading is conducted on electricity exchanges, where producers, retailers, major industrial companies and financial players operate. Trading is conducted either through direct delivery on the spot market, or for future delivery in the futures market. The Nordic electricity exchange, Nord Pool, and the European Energy Exchange (EEX) in Germany are clearly the largest exchanges in terms of volume and the number of market participants.

Vattenfall Energy Trading in Hamburg is the most diverse company in the organisation with more than 20 nationalities. The company operates in the international energy markets in order to balance supply and demand, mitigate market risks, and fulfil the targets for sustainable energy. Electricity trading is a major activity, but the company trades the whole range of energy products such as gas, coal, oil, carbon emissions or renewable energy.

The trading unit utilises market-based solutions in order to reduce CO2 emissions and to strengthen renewable energies – in a cost-efficiently way and on a pan-European basis. It has a key role in securing the financial stability and profitability that constitute the basis for Vattenfall’s services to its customers.

Nature conservation projects

Finally, it may be worth mentioning that Vattenfall’s environmental foundation since many years provides considerable support for a great number of nature conservation projects in and around Hamburg. Many of these projects include environment education for children in conurbation areas to acquaint them with nature.

Your comments are always welcome.

Haluk Direskeneli, Hamburg based Energy Analyst for next two weeks

Saturday, December 12, 2009

The Ermenek Dam and Hydroelectric Power Plant

Dear Energy Professional, Dear Colleagues,

On Saturday, 12 December 2009, we had the opportunity to participate in the Panel on "Ermenek Dam and Hydroelectric Power Plant" at the Middle East Technical University Alumni Association in Visnelik Premises in Ankara, Turkey.

The 309 megawatt Ermenek hydropower project is currently under construction, and located on the Ermenek River, a tributary of the Göksu River in the province of Karaman. The Göksu River is one of the last free-flowing rivers in Turkey.

Its delta has been recognized as a Wetland of International Importance under the Ramsar Convention. Though there are plans for five further hydropower plants, there has been no basin-wide assessment of the cumulative impacts of Ermenek and the other projects.

The investment financing has been organized between the governments of Turkey and Austria in the framework of bilateral cooperation. The Turkish Water Works Public Institution DSI (Client) signed the contract in 2002, with the international consortium lead by local BM Holding, which acted as a leader within the consortium.

BM Holding Vice Chairman Özgür Çaglayan Kuyumcu (CE’1998), and Project Coordinator Hakan Kazanc (CE’1995), were the panel speakers. The Panel Moderator was Ms. Ozlem Izlem AYDIN (EnvE’2004).

The Panel speakers explained all phases of the hydroelectric dam construction. The project is the first of its kind where a Turkish contractor (BM Holding) is the Pilot Company in a large multi-national consortium.

The double curvature, asymmetrical, thin concrete arch dam body, which will have a height of 210 meters from the thalveg, is among the two highest dams in Turkey and the 6th highest in Europe. The dam is being constructed in an extremely deep and narrow gorge, having a width of less than 150 meters at its top, and as little as 5 meters at its bottom.

Owing further to the highly carstified geological structure of the project area, as well as to the obstructed access, limited only to the use of a Cable Crane across and into the valley, the project is easily rated as among the most demanding and technically complex construction undertakings in Turkey.

Upon completion, the project will hold an important place in the national energy generation, with a planned installed power of 309 MW.

The Project shall be completed in 5 years, where repayment shall commence at the end of 2.5 years. The Project will be built with 100% foreign project financing by Ermenek Consortium. The contract upfront value is EUR 539,635,747, and the total project cost to completion is currently estimated at approximately 700 million Euros.

The financing group includes ABN AMRO Bank, Bayerische Landesbank, Kreditanstalt für Wiederaufbau and Société Générale as joint lead arrangers, Bayerische Landesbank as agent of the banks, Bank Austria Creditanstalt Group as Co-Arranger and OeKB as facility agent. Hermes also provided reinsurance for the OeKB export credit.

Also included in BM’s scope of works is close to 1,000,000 LM of drilling and grouting works in addition to 68,140 meters of roads and 18,729 meters of tunnels.

Since the dam has a great reservoir at the back, hydro turbines will have greater availability in a year to generate power. We are happy to learn that there is also a great opportunity for flood protection of the nearby environment.

To meet our country's increasing energy demands, we need to have similar investments, and local contractors who can put their efforts towards finalizing the projects. In the end, we can say that, all we need is self-confidence, and the confidence of investors who will put money into other similar new projects, which will utilize the local hydro capacity.

Once again, we would like to congratulate the Construction Management and the Creditors who give money to make the project realized, and to the engineers/ employees who make the dam construction finalized.

Panel Presentation link is given on the title block of this blog.
Your comments are always welcome.
Haluk Direskeneli, Ankara based Energy Analyst

Thursday, December 10, 2009

The Need for Thermodynamics

Photo- Hatay iskenderun Energy Forum on 5th December 2009

Dear Energy Professional, Dear Colleagues,

If you are the Minister of Health, then it is expected that you should have a graduate degree from a leading University Medical School. Similarly, if you are the Minister of Justice, you should have a Law degree and many years of practice in courts. An engineer is not expected nor preferred to be a minister of Justice, or in Public Health. Such assignments can be possible theoretically but not desired or expected.

It is preferred that Foreign Ministers are to be graduates of International Politics of reputable universities, with further postgraduate degrees in the same field and multi language capabilities. Our new FM is a perfect choice due to his amazing university career. His book on "Strategic Dept" is an extraordinary intellectual output which describes our new political approach as “no-problems with neighbors”.

Likewise, our Minister in charge of the Treasury is another good choice with his graduate 4.0 GPA from the METU Industrial engineering department which was further reinforced with an MBA degree from a reputable U.S. business school.

On the other hand, anyone can be chosen as Minister of Energy and Natural Resources in our country. Reputable names of our political environment with post graduate degrees from Ankara University in the Department of Political Science have been assigned as Ministers of Energy in the past. No one asks, “Why? Are they capable?”

Even a lawyer was chosen as a Minister of Energy for three consecutive terms. During his term, we had arbitration disputes, and we paid costly consequences. During their time, they learned the energy business, but it proved to be a very costly education experience of the job.

Our previous Minister had a post graduate degree from METU Metallurgy Department. He knew metals, mining, metallurgy, and he had time to consume six years of the energy business in detail during his management.

I strongly advise that the Minister of Energy should have an engineering degree. He should also speak a foreign language, preferably English, and furthermore, his knowledge in Russian, Farsi, Arabic, and/or French is a plus. It is also preferable that he have a post graduate degree in international politics and international commercial law.

The most important item is that he should have taken undergraduate coursework on Thermodynamics, earning a top grade.

Last week I was in Hatay Iskenderun to participate and deliver a speech at an Energy Forum which was organized by the local branch of the Chamber of Turkish Electrical Engineers. The speech was presented on 5th December 2009, to an audience of more than 80 professionals. Most were local electrical engineers but also from other engineering disciplines as well.

By asking interactive questions, we had the opportunity to learn the experience and educational profile of the audience. We understood that all of them had received undergraduate courses on Thermodynamics since it is compulsory.

Our new Energy Minister is also a graduate of Istanbul Technical University and has a Graduate degree from the EE department, and he too for sure had compulsory Thermodynamics courses during his undergraduate years.

Please do note that the Energy Ministry is a public institution to serve but not a school nor a university. Any public employee, at all levels should have had sufficient graduate education. We should not reeducate the newcomers that “volt” is not “watt”, there is no such expression as “teravolt”, and “Megabyte” is not “Mega-Watt”.

We should not teach them the differences between power plants, CFB, IGCC, nor details of the Kyoto protocol. They should know that Nuclear Power plants are essentially thermal power plants with one cycle more in heat balance diagrams.

They should know that our country had no chance, no finance, no capability to build its own thermal power plants but all small East European countries have. At present, there are Far East companies appearing to build new imported coal firing thermal power plants on our shores at a fraction of international markets turnkey basis, complete with basic design, fabrication, outsourcing the key equipment, site construction, site installation, and even long-term operation.

One should know that we could not have our own nuclear power plant for the last 40 years since we could not build our own thermal power plants during the same period under our own engineering capability.

While we have unemployment complaints, how come we tolerate Far East companies bringing their own employees, mostly convicts/ soldiers, at minimum labor cost. It is not possible in Europe, Northern America, Russia, or in Arab Countries.

European countries require the foreign contractors to pay the minimum wage in European standards to their employees. That makes the competition fair. Our name is in the reference list of Far East contractors along with the least developed countries such as Sri Lanka / Bangladesh / Pakistan / Laos / Vietnam / Malaysia / Indonesia/ Central Africa / Sudan and Yemen. That is a real embarrassment to be on those lists.

If you can handle the basic design engineering and can do your own outsourcing, make the site construction in-house, use your local capabilities for site installation and external piping, under the prevailing international market figures, you can reduce your overall investment cost by about 25%.

Far East companies deliver technical drawing in their own language except the simple title block. Our engineers can not read them. Investors do not want to take operation risk. The new tendency is in making long-term operation contracts with the original contractors. It is the case now. This practice could be repeated in elsewhere soon. Local employment will be limited to the security posts at the main entrance of the plant.

European Trade unions protect the rights of their members. They also protect the local employment capabilities. Their political parties are very sensitive in these issues since they can not risk upsetting their voters; otherwise, they pay the consequences heavily.

If local trade unions cannot voice on these issues, then it becomes the responsibility of the Chambers of Engineers to speak up on behalf of local engineering for employment protection.

When we review the Environmental Impact Assessment reports, other than flora and fauna and all those unnecessary details, we read that the investment would create so many numbers of local employments. You feel happy that our countrymen will have employment; we shall have so many families and their dependants get money to survive.

When we complete the EIA report, and accept their application, we find that the investor places the final order to a Far East originated cheap design/ cheap supplier/ cheap contractor, and that cheap contractor brings thousands of employees (or convicts/ soldiers) to our land. The power plant supply also has a short lifespan due to poor material consumed during the project just to survive in the temporary acceptance period.

We should have continuous monitoring of Environmental Impact Assessment conditions during all phases of the project as well as periodical inspections during operation. That is a very serious issue.

We now have an unnecessary number of license applications for construction imported coal firing, new thermal power plants. Do we have the capability to have all of them on our beautiful shores?? Do we need them all??

How will they control their stack emissions, CO2 emissions, fly-ash dust emissions, or slug disposal? To what standards, to EU or to Local? Shouldn’t we have some reasonable limitations in numbers and capacities? Should we approve them all?

Energy is a very serious business. It is vital for the people. We should sincerely take all of those regulating procedures starting from licensing, continued in financing, tendering, environmental controls, construction and long-term operations. We need a qualified, experienced, highly educated public staff to monitor all these serious activities.

Honestly speaking, if I would be your Editor in a leading Newspaper in nationwide circulation, I would never allow a columnist to write an article on energy if he/she had no education in Thermodynamics in his/her undergrad university education.

Your comments are always welcome. Thank you and best regards.
Haluk Direskeneli, Hamburg based Energy Analyst
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