The magazine for the international power industry September 2013

Asian & Latin American Focus

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Offcial Media Partner

POWER-GEN Brasil 2013

POWER-GEN Asia 2013

ASIA’S SOLAR BOOM

INSIDE BRAZIL’S POWER SECTOR

VIETNAM’S MIXED MESSAGE

INTERCONNECTING LATIN AMERICA

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www.PowerEngineeringInt.com 1Power Engineering International September 2013

POWER ENGINEERING INTERNATIONAL

Contents

SEPTEMBER 2013/// VOLUME 21/// ISSUE 8

4 Industry Highlights

6 News Update

82 Diary

86 Project & Technology Update

96 Ad Index

Talking Point

16 Where and how to invest in Asia

With the economic growth of China and India slowing,

should power industry players and investors look at other

smaller Asian nations with booming economies?

Q&A

78 Benefts of turbocharger upgrade in Brazil

As ABB Turbocharging embarks on a major upgrade

contract in Brazil, the company’s Reinier Bakker outlines the

challenges and subsequent success stories of the upgrade

process.

POWER-GEN Europe Best Paper Award Winners

An article based on one of the winning papers from this year’s

POWER-GEN Europe Best Paper Awards is featured.

52 Cutting the cost of carbon capture

Supported amine sorbents (SAS) could make post-

combustion carbon capture less costly according to the

results of a simulation.

Features

22 Joined-up thinking behind Latin American links

Latin America has ambitions to establish a fully-integrated

electricity market, but creating such a sector is notoriously

diffcult. We look at the progress so far and ask what is a

realistic time-scale for this rapidly-developing region.

68 Versatile fow meter delivers boiler performance

How an in-depth testing programme demonstrated that

thermal mass fow meters provided the solution to help

maximize the operation of the boilers at the Guohua Ninghai

power plant in China.

On the cover Bangkok’s skyline at night

Credit: iStock

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Bogota: how Colombia is targeting

power links with its neightbours p.22

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2 www.PowerEngineeringInt.com

POWER ENGINEERING INTERNATIONAL

Contents

Meauring success: solar set for Asian boom p.34

Walking the torque: diesel gensets hold off gas p.74

Features

30 Austerity bursts the biopower bubble

Europe’s deteriorating economic conditions of recent

years have taken a toll on its biomass and biogas markets, as

many governments pull the plug on vital incentive

programmes.

34 Full of eastern promise for solar Asia offers massive potential for the development of solar

power according to one European company, which has

opened a new base in Thailand.

40 Inside view on Brazil’s power sector With Brazil being one of fastest-growing yet challenging

power markets in world, we hear from its regulator, its national

grid operator and the company leading the controversial

Belo Monte hydroelectric dam project.

46 Vietnam: land of challeges and opportunities

In order to achieve its ambitious capacity expansion goals

Vietnam will need to restructure its regulatory policies, power

tariffs and fuel linkages, as well as expand its fnancing and

attract foreign investment.

62 How India is beating the blackouts

A year on from the blackouts that made headlines worldwide,

we fnd out what steps India has taken to ensure they never

happen again.

74 Diesel gensets stave off gas rivals

How constant innovation and demand from emerging

markets are keeping diesel generation sets ahead of their

gas-powered competition.

SEPTEMBER 2013/// VOLUME 21/// ISSUE 8

Power Engineering International September 2013

Fuel for concern in Europe’s biopower market p.30

How Mumbai beat the blackouts p.62

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4 Power Engineering International September 2013 www.PowerEngineeringInt.com

Industry Highlights

Brazil is one of the most captivating

countries in the world; from the

golden beaches of Rio to its lush

Amazonian forest in the west. Yet, things are

not quite right in paradise.

Despite it being a paid-up member of

the exclusive BRIC nations club, and the

largest economy in the Latin American region

(and the sixth in the world), there is growing

concern over the sustainability of Brazil’s

economic growth. In a recent forecast from its

central bank, the economy is only expected

to grow 2.2 per cent this year, with a timid

0.4 percentage point rise next year. Standard

and Poor’s goes further. In a report released

last month by the rating agency, it foresees

three years of weak growth, based on modest

exports, declining private-sector investment,

and the possibility of lower household

spending. Clearly this Latin American nation is

facing challenging times.

A particular area of concern is the

reported drying up of the much-needed and

signifcant investment to overhaul Brazil’s major

infrastructure, which clearly has implications

for its power sector and its future development.

According to EPE, the government-run

energy research company, electricity demand

is expected to be more than 50 per cent

higher in 2021 than it was back in 2011. Thus

the Brazilian power market has huge potential

for investors and industry players alike.

The government also has a development

plan in place. Earlier this year, the government

confrmed that a jaw-dropping 110 GW would

have to be added to Brazil’s installed capacity

over the next 15 years to meet demand. To

put that in context, it represents twice the

current installed capacity and eight times the

potential of the 14 GW Itaipu hydroelectric

dam, jointly operated with Paraguay.

According to 2012 fgures from the

government, hydropower was responsible

for 86 per cent of overall power production.

And Marcio Zimmermann, the federal mining

and energy secretary, has made it clear that

“hydroelectricity is the fagship producer”, but

also emphasized that “greater investments

were needed in alternative sources”, such

as wind, thermoelectric, nuclear and solar to

create a “reliable generation mix”.

Yet, there is a current disconnect between

what is ‘wished for’ and what is actually

happening on the ground. As an example,

the government once again pushed back the

date of its A3 energy auctions by a month –

from 25 October to 18 November. The concern

this postponement raises is that developers

will face an even tighter schedule to get

successful projects up and running.

The pressing nature of the situation was

also perfectly illustrated in April, when the

government was forced to deny there was a

threat of power shortages during next year’s

World Cup because of a lack of suffcient

infrastructure to guarantee a reliable supply.

And that is without considering the Olympics

in 2016.

Hydropower will undoubtedly continue to

be the mainstay of Brazil’s power mix, as it is in

many other countries in the region. One of the

fagship projects underway is the 11.3 GW Belo

Monte dam, located in the Amazonian region

of Para. Norte Energia, the power company

heading up the project consortium, recently

confrmed that a third of civil works were now

complete and that it expects the facility to

come fully on line in 2019.

However, the installation of another large

hydroelectric facility alone will not help to

plug the widening gap between supply and

demand. In recent years, Brazil has suffered

quite severe droughts, which have led to

water levels plummeting in its reservoirs and

a corresponding fall in the outputs of the

hydroelectric dams. To counteract the supply

defcit old, ineffcient and in many cases dirty

oil-fred thermal plants are fred up, which are

also expensive to run. So clearly Brazil needs to

diversify its generation mix and to do this with

some haste. Renewable energies (excluding

large hydro) are important, but again you

run into the intermittency issue, so modern,

effcient gas-fred plants are essential, as is

new nuclear build.

I don’t want to say it’s all doom and gloom

for the Brazilian power sector because it’s not,

but we are in challenging times. And you know

what that means? It means there will plenty

to discuss and debate at the upcoming

POWER-GEN Brasil, which launches in Sao

Paulo later this month.

Electricity demand in Brazil is expected to be more than 50 per cent higher in 2021 than it was in 2011. Thus despite challenges, of which there are many, the power market here has huge potentialDr. Heather Johnstone

Associate Publisher

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6 Power Engineering International September 2013 www.PowerEngineeringInt.com

News Update

INTERVIEW

World Bank takes long view on renewables growth

Last month the World Bank released its

report ‘Sustainability for all – Global Tracking

Framework, which has as one of its objectives

the doubling of the share of renewable power

generation in the global energy mix by 2030.

It’s a report that looks set to be keenly

discussed at the World Energy Congress in

Daegu, South Korea, next month.

PEi spoke to Christopher Neal of the World

Bank’s Sustainable Energy Department and

put it to him that the doubling of renewable

power was an ambition that seems to be out

of step with economic realities, especially

when, to put it crudely, so many national

economies are ‘broke’.

Just a fortnight ago the Czech Republic

announced it was removing subsidies for

renewable power, while ahead of Germany’s

elections, Chancellor Merkel served notice

of her intent to reduce the subsidy available

for renewable power. In the short term,

such happenings might suggest doubling

renewables’ strength is not realistic.

“You’re right to say that the current

environment, with announcements being

made by European countries in the context of

the economic slump, is not encouraging, but

I think the longer term view is probably more

positive”, says Mr Neal, adding that the report

launched by Ban Ki-moon was designed

to drive the initiative, making progress

measurable, and targets achievable.

“In order to be able to double the share

of renewables in the global energy mix and

track, it you need a baseline, then agree on

defnitions and defne current status. It’s the

frst in a series that will come every two years,

put together by 15 agencies led by the World

Bank.”

“Initially it was found that 18 per cent of

global energy is renewable and that includes

biomass and hydropower. Doubling it to 36

per cent by 2030 is very ambitious and where

you really see the ambition is partly about

mobilising the investment to do it.”

A key element of the bank’s approach is in

helping to remove the barriers that currently

exist in hampering renewable energy potential

in various parts of the world.

The retreat from coal investment by bodies

such as the World Bank and European

Investment Bank is one aspect, as that

funding that might have at one time gone

into fossil fuels is now much reduced to those

generators, available only under limited

circumstances.

The signals being sent by the banks are

strong in terms of the overall global shift

towards a greener future.

“The energy sector directions paper –

discussed by the World Bank’s board in July

– specifes that the World Bank will provide

fnancing for greenfeld coal only in rare

circumstances and subject to strict criteria. The

language being used refects an emerging

consensus and also refects the orientations

that are expressed in the sustainable energy

for all initiative as well. If you want to double

renewables then implicitly you think that’s a

good thing to do and, indeed, it’s part of the

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8 Power Engineering International September 2013 www.PowerEngineeringInt.com

News Update

bank’s climate agenda too.” Neal says it isn’t

only an environmental factor that informs

the institution’s thinking – there is also a

market element in that countries that have

a high reliance on coal face generally fewer

obstacles in getting fnancing because the

technology for using coal is well understood.

“It’s commercialised, and lower in cost

than others, so the case for the bank getting

involved is not as strong as in some other

areas in the energy sector where there are

more obstacles to getting fnancing.”

By way of example Neal points to under-

utilised resources that could transform

much of Africa from an environmental and

economic perspective.

“We are looking to mobilise and exploit

some of the geothermal potential in the Rift

Valley area of East Africa, which lies under

13 countries in that geographical region.

Hydropower is another one; less than 10

per cent of hydropower potential in Africa is

exploited at present and that tends to be more

diffcult to fnd fnancing for in the longer term

and these are areas where we are focusing

our efforts.”

While Europe’s dysfunctional carbon

trading system’s problems are well

documented, Neal is glass-half-full about the

prospects for similar schemes as well as the

European initiative itself.

“I think it’s interesting what you say about

the Czech Republic and Germany also

and the subsidies being dropped left and

right, however China is launching a carbon

market, and there are carbon markets being

developed in subnational governments, for

example California, Quebec, Chile, Brazil,

Costa Rica and Colombia are all developing

some sort of carbon market, or emissions

trading or other forms, such as carbon taxes

in places like Turkey, South Africa and Mexico.”

China often gets a bad press, not unlike

what the USSR received during the Cold War

era, however the statistics compiled by the

World Bank offer a balanced view of its record

in promoting renewable power generation.

“The global tracking framework report- looks

at where the largest renewable investment is

being made, specifcally which countries are

spending the most on renewable energy and

effciency and China leads the pack in both.”

“There is often a very negative narrative

about China’s role in terms of carbon footprint

- and justifably so in one sense, as its grown

more than any other country - but everything

China does the magnitude is always bigger in

its impact than what anyone else does.”

“The fact remains it has also done more

in terms of energy effciency and renewable

energy expansion than any other country in

the world.”

“China has done more in term of renewable expansion than any other country”

EUROPE

Europe hit by more gas plant closures

Statkraft has decided to shut down two gas-

fred power plants in Germany, just six years

after they were commissioned.

The Norwegian frm has cited unproftability

for the decision to close 1200 MW of combined

capacity, putting the Knapsack and the

Herdecke plants in a ‘wet reserve’.

It comes not long after the decision earlier

this year to close the 510 MW Robert Frank

gas-fred plant in southern Germany.

Statkraft investor relations vice-president

Yngve Froeshaug said: “Short-term power

prices have continued to fall [in Germany],

worsening the margin between power and

gas prices. Due to this, our gas power plants

in Knapsack and Herdecke, for the time being,

are out of production – that is, in wet reserve.”

‘Wet reserve’ means the plants could be

restarted in a relatively short time “in case

market conditions change” Froeshaug added.

• Germany’s RWE is to close up to one ffth of its

gas-fred power capacity as low demand and

a surge in renewables have made the plants

unproftable.

The country’s second largest utility has

decided to take 954 MW of gas-fuelled power

offine until the end of 2014. RWE will idle two

gas turbines with a generation capacity

of 272 MW each at its Weisweiler power

plant. The utility will also mothball its 410 MW

Gersteinwerk-F gas plant for all of next year,

as well as another 410 MW gas unit at the

Gersteinwerk-G site, which will be offine from

April 1, 2014, until the end of that year.

• Meanwhile, Finland’s Fortum has decided to

close down a 750 MW coal-fred power plant

near Helsinki.

The ageing plant has long been a loss

maker and been deployed purely as a back-

up power facility to the Nordic grid in recent

times.

The decision will lead to a loss of 90 jobs,

with a dozen employees taking a retirement

option. The move is prompted partly due to

falling electricity prices in Europe, driven by

Germany’s shift toward renewable energy.

1309pei_8 8 8/27/13 11:24 AM

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10 Power Engineering International September 2013 www.PowerEngineeringInt.com

News UpdateINTERNATIONAL

Coal decommissioning market to hit $5.3bn

Greater environmental regulations and

increasingly competitive renewable energy

generation will lead to a surge in growth in

power plant decommissioning in the coal-

fred power sector in Europe and the US.

A report predicts that the market for

demolition and environmental remediation

services is set to expand as EU and US shut

coal plants, reaching $5.3bn between 2013

and 2020, as a result of continuing plant

closures.

The new research from analyst frm

Navigant Research predicts that the

“coming wave of retirements offers signifcant

opportunities to the companies that will carry

out the decommissioning processes”.

The report estimates the market for

decommissioning in Europe and the US will

grow from $455m in 2013 to $1.3bn in 2016,

before declining rapidly as the current feet of

ageing plants are closed.

The largest sector of the market is expected

to focus on environmental remediation,

which Navigant said will typically prove more

complex and costly than demolition, the costs

of which will be partially offset by the value of

the scrap materials that are collected.

AFRICA

Tender issued for Botswana power plant

In an effort to address power shortage

problems, the government of Botswana has

issued a tender notice inviting bids to develop

a 300 MW coal-fred power plant.

The Ministry of Minerals, Energy and Water

Resources said the government wants the

plant to deliver power to the grid by 2016 and

by 2019 at the latest.

This year, Botswana was hit by power cuts

after the new 600 MW Morupule B power

station was beset by diffculties and failed to

go into operation.

With the deadline for submissions slated

for November, the government expects to

determine its IPP procurement process from

January 2014.

UK and China to lead ten-fold global offshore wind surge

Africa’s largest gas-fred power plant at

The global offshore wind market will thrive

throughout this decade, with its capacity

rising from 5.5 GW last year to 51.2 GW in 2020,

according to a new report.

The analysis from research frm GlobalData

states that the UK will lead the way in new

installations, yet it adds that by 2020 China

will be the largest wind power market, as it

attempts to reduce its carbon footprint while

increasing electricity production in rural areas.

According to the report, China has

doubled its cumulative wind capacity every

year between 2006 and 2011, growing at a

compound annual growth rate of 76 per cent

from 2006 to 2012.

GlobalData says that China, along with

the US, Germany, UK, Italy, Spain and India,

accounted for 74 per cent of global installed

wind capacity last year.

The report says that the success of the

Chinese wind power market can be attributed

to a combination of market guidance and

government encouragement, after the

Chinese government introduced a number of

fnancial and regulatory initiatives to promote

renewable energy sources.

GlobalData’s power sector analyst, Swati

Singh, said: “Supportive government policies

that include an attractive concessional

program and the availability of low-cost

fnancing from government banks are the

main reasons for the growing wind power

market in China.”

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News UpdateMIDDLE EAST

Clean coal power plant for Dubai

As part of its strategy to get 12 per cent of its

power capacity from coal, Dubai is planning

to build a 1200 MW clean coal-fred plant.

State-owned Dubai Electricity and Water

Authority is seeking bidders to build what

would be the frst such project of its kind in the

Gulf Arab region.

The utility has issued a request for tenders

for the plant, which will be built in two phases

to generate 600 MW each when completed in

2020 and 2021 respectively, a statement from

Dewa said yesterday.

The move is part of an emerging trend

whereby Gulf nations are looking to diversify

their energy mix to preserve oil and gas

reserves for export, which generate signifcant

sums for their economies.

MIDDLE EAST

Iraq to import gas from Iran to run Baghdad plants

Iraq is to import gas from Iran to fuel two power

plants in Baghdad.

The two countries signed a four-year deal

that will see Iraq buy around 850m cubic feet

a day of natural gas, which will be used to

generate 2500 MW of power for the plants.

The gas will be imported via a $342m, 140-

mile pipeline that is currently being built and is

due for completion in two months.

The deal is believed to be worth $3.7 billion

a year to Iran and was signed in Baghdad by

Iraqi electricity minister Kareem al-Jumaili and

Iranian oil minister Rostam Qasemi.

Iraq’s own gas felds are underdeveloped

and the country currently cannot produce

enough gas to power its gas plants.

The International Energy Agency last year

predicted Iraq will need cumulative energy

investment of over $530 bn by 2022 – more

than $25 bn per year and a signifcant step

up from the estimated $9bn it invested in its

energy sector in 2011. The IEA added that

“catching up and keeping pace with rising

demand for electricity is critical” for Iraq.

“Power stations in Iraq produce more

electricity than ever before but prolonged

power cuts are still being experienced on a

daily basis in many parts of the country.”

1309pei_11 11 8/27/13 11:24 AM

12 Power Engineering International September 2013 www.PowerEngineeringInt.com

News UpdateLATIN AMERICA

Cemig to invest $621m in Brazil’s Renova Energia

Brazil’s Energetica de Minas Gerais (Cemig)

has agreed to invest around $621 million in

renewables developer Renova Energia.

The investment is being made as part of

the company’s strategy to focus on wind

power technology, along with other utilities,

including CPFL Energia and Tractebel Energia.

Cemig is expected to be a part of a

controlling group, along with Light Energia

and RR Participacoes, that will hold a 51 per

cent stake in Renova Energia, following the

completion of the agreement.

Analysts say the Brazilian utilities are

planning to focus on wind power technology,

which is expected to complement

hydroelectric projects in the country’s power

generation mix.

The wind power facilities are expected to

cater to the electricity needs of the country,

during the dry season.

Court blocks bid by Endsea Chile to build 740 MW coal plant

Endesa Chile is to appeal against a court

decision to reject its plans for a $1.4bn coal-

fred power plant in the Atacama region of the

country.

The 740 MW plant, which was intended

to support the Chilean mining sector in the

region, was rejected by a local court.

The decision follows a Chilean ministerial

committee’s decision to also appeal the

court’s ruling last week. The ruling voided

the committee’s approval to construct the

Punta Alcalde project, effectively blocking

development of the plant.

Endesa said it has “decided to appeal to

the Supreme Court to seek ratifcation of the

ministerial committee’s decision.”

The Punta Alcalde project, with two 370

MW units, would cover more than 10 per cent

of the current electricity demand on Chile’s

largest power grid, the central SIC.

CFE’s fnancial woes worsen as half-year losses hit $2.8bn

Mexico’s state-owned power company CFE

(Comision Federal de Electricidad), has

reported net losses of up to $2.8bn in the frst

half of 2013, as operating costs climbed.

The latest losses are almost triple those that

CFE suffered during the frst six months of 2012,

when they were in the region of $1bn.

In the quarterly report supplied to the

Mexican Stock Exchange, CFE attributed the

higher operating costs to more reliance on

fossil fuel-based generation.

According to BNAmericas, in the frst half

of this year, CFE reduced hydropower output

to 7.76 TWh compared to 16 TWh a year ago,

as part of it efforts to return dams to normal

water levels, which are still low since a severe

drought last year.

This resulted in the company having to

resort to more thermal generation to meet

demand.

NORTH AMERICA

EDF to pull out of US nuclear market due to shale boom

French power company EDF is to withdraw

from the US nuclear market because of the

way shale gas has altered the American

energy sector.

Instead, EDF will focus on developing its

renewables business in America. However, the

company has stressed that its nuclear intent

elsewhere in the world – particularly the UK –

remains strong.

EDF chief executive Henri Proglio said

the prospects for nuclear power in the US

had been dealt a major blow by the “true

revolution” of shale gas, which he said had

“completely reshaped the landscape of

electric power generation in favour of gas”.

He said the “spectacular fall of the price of

gas in the US, which was unimaginable a few

years ago, has made this form of energy ultra

competitive vis-a-vis all other forms of energy”.

“The circumstances for the development

of nuclear in the US are not favorable at the

moment. We are a major player in nuclear,

but we are not obsessed by nuclear. Our

development in the US will focus on renewable

energy – that will be our vector of growth in

the US.”

EDF is to pull out of Constellation Energy

Nuclear Group (CENG), which it half owns

as a joint venture with US energy company

Exelon. CENG operates fve US nuclear plants

with a total capacity of 3.9 GW.

It has agreed a put option that allows it

to sell CENG to Excelon between 2016 and

2022,at which time it will also receive an

exceptional dividend from CENG of $400m.

Proglio was speaking as EDF unveiled its

half-year results, which he said showed a

“good operating performance”.

EBITDA was €9.7bn, up 6.9 per cent on last

year, of which 6 per cent was organic growth.

On the back of the results, EDF has revised up

its operating performance targets for the year

to 3 per cent of organic growth.

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www.PowerEngineeringInt.com 13Power Engineering International September 2013

News UpdateNORTH AMERICA

New clean coal technology approved for US project

Hamon Research-Cottrell, a subsidiary of

Hamon Corporation, has received full notice

to proceed with the engineering, procurement

and installation of a Regenerative Activated

Coke Technology (ReACT) system at the 321

MW Wisconsin Public Service Weston coal-fred

power plant unit 3 in the US.

ReACT is an integrated multi-pollutant

control technology that removes SO2, NOx and

mercury from coal-fred plants by adsorption

with activated coke to attain emission levels

found at the best controlled coal-fred plants.

This system will reduce plant SO2 emissions

by more than 90 per cent, mercury by 90 per

cent or more, and NOx by more than 20 per

cent.

This technology simultaneously controls

multiple pollutants using only a fraction of

the water that conventional wet scrubbers

demand, while producing a saleable sulfuric

acid by-product commonly used in the

fertilizer, paper-making, and many other

industries.

Engineering and procurement activities

have already commenced and the project is

expected to be completed and in service by

December 31, 2016.

GE plans to turn down the tubine volume

GE is exploring the possibility of increasing the

power generation capacity of its wind turbines

while reducing noise levels.

The company, through its Global Research

Unit, is working alongside the US Department

of Energy’s Sandia National Laboratories.

GE said its scope of work was focused

on advancing wind turbine blade noise

prediction methods by performing tests on

airfoil level acoustic measurements in wind

tunnels.

Field measurements have also been done

to validate acceptable noise levels, and noise-

reducing operating modes were deployed in

the control system.

The company expects a one decibel

quieter rotor design may increase the energy

from by a turbine by 2 per cent a year.That

increase will add up to 5 GW of wind power,

given that around 240 GW of capacity is set

to be installed globally in the next fve years.

1309pei_13 13 8/27/13 11:24 AM

14 Power Engineering International September 2013 www.PowerEngineeringInt.com

News UpdateASIA PACIFIC

Mitsubishi Heavy to build 977 MW power plant in Thailand

Mitsubishi Heavy Industries (MHI) has received

a full-turnkey order for the construction of a

977 MW gas plant from Khanom Electricity

Generating Co, an independent power

producer in Thailand.

The gas-turbine combined-cycle (GTCC)

plant will comprise two trains of a 488.5 MW

power-generation unit, with both blocks slated

to go on-stream in June 2016.

MHI and Kegco, a wholly owned subsidiary

of Electricity Generating, also concluded a

long-term service agreement for the plant,

but MHI has not disclosed the value of the

contract.

Once the GTCC power plant, which will

be in Nakhon Si Thammarat’s Khanom district,

is completed, its output will be supplied

to the Electricity Generating Authority of

Thailand under a long-term power purchase

agreement.

The plant will have dual-fuel specifcations

enabling both natural-gas and diesel

combustion, and will consist mainly of two

Mitsubishi M701F5 gas turbines, two steam

turbines and two generators.

Civil and installation work at the

construction site will be handled by Sino-Thai

Engineering and Construction.

Wartsila wins frst contract in Australia

Gas engine supplier Wartsila has signed a ten-

year service agreement with Australia’s Energy

Developments to maintain the remote 53 MW

McArthur River Mine gas-fred power plant,

which is under construction in the Northern

Territory.

The contract marks Wartsila entry in the

Australian power market.

The McArthur River Mine plant is being built

to power the McArthur River zinc mine and is

currently projected to start operations ahead

of schedule before the end of this year.

Energy Developments has signed a 20-year

electricity supply agreement to sell the power

plant’s entire output to McArthur River Mine.

The mine is currently in the midst of a $360m

expansion that will increase zinc production

twofold, while prolonging the mine’s lifetime

until 2036.

Fears for renewable investment in Australia

The renewables sector in Australia fears a

A$4bn ($3.6bn) loss in investment should the

coalition win this month’s federal election.

The coalition’s climate change plan is also

$4 billion short of the funding required to meet

its promised 5 per cent cut in greenhouse

emissions by 2020, according to independent

think tank The Climate Institute.

Big investors are planning for the impact

if opposition leader Tony Abbott axes the

carbon price and dismantles the clean

energy fnance system. They expect that about

$4.1bn in private funding would be funnelled

away from large-scale renewable power,

starving the sector of capital due to regulatory

uncertainty and a lack of returns, according to

sources in the carbon fnance sector.

Clarke breaks into Bangladesh with Orient Power stake

Clarke Energy has acquired the Bangladesh

arm of Orient Power Systems and GE

Jenbacher has appointed Clarke Energy as

distributor and service provider for Jenbacher

gas engines in the country.

Bangladesh, with its large domestic

reserves of natural gas, has been an attractive

proposition for Clarke, and in a statement

the company pointed out that it “offers great

opportunities for reciprocating gas engine

technology, particularly for the independent

power producer and captive power plant

segments”.

Jenbacher has a successful track record

in Bangladesh with over 450 gas engines

installed to date in the country, each with an

electrical output of between 0.3-4.4MW.

This installed base helps to maintain

stable power supplies for the population and

industry.

The acquisition’s focus will be to develop

an advanced service infrastructure with in-

country parts stockholding, further train and

develop the Bangladesh service team and

to expand Jenbacher’s installed base in this

signifcant gas to power segment.

China pulls plug on coal plant over pollution concerns

China has responded to civic concerns about

air pollution and decided to scrap a 2000 MW

coal plant on the coast of the South China

Sea, 50 km from the major city of Shenzhen.

Some 43 members of the city’s People’s

Congress petitioned the administration to

cancel the project and not to allow the

construction of any new coal-fred power

plant anywhere within the city’s borders.

The administration reacted only a few

weeks later, asking Shenzhen Energy Group to

stop the power plant construction.

This is the frst project to be cancelled in

China mainly on the basis of concerns about

air pollution.

1309pei_14 14 8/27/13 11:25 AM

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1309pei_15 15 8/27/13 11:25 AM

16 Power Engineering International September 2013 www.PowerEngineeringInt.com

Charles Diestel, Vice-President, Samsung C&T, Singapore

Naturally, big markets such as China and India

are very tempting and should not be forgotten

even if their economies are slowing. Keep an

eye on them. Also though, carefully consider

the risks and diffculties of building power

plants in those countries versus the rewards.

For me, I would focus my efforts on

Southeast Asia countries.

Malaysia needs more and newer power

plants. Vietnam is growing rapidly and needs

the power, however breaking into the system

there might be somewhat challenging.

Myanmar is severely in need of

electrifcation – they know it and are opening

their doors by hosting power conferences

and seminars. The time is ripe for investing in

Myanmar for sure.

One should always check out the

Philippines as well and Thailand is always a

good place to do business as well.

Overlooked somewhat is Indonesia. They

need electricity for their 240 million people

and many islands. Indonesia is growing up

and becoming more transparent in their

business dealings. I believe their government

bonds are no longer considered ‘junk’ bonds,

although not Triple-A quite yet.

Talking Point

Should investors and power industry players be now targeting Asia’s smaller emerging economies?With the economic growth of Asia’s giants – China and India – slowing, is the time now right for power industry investors and players to focus their efforts on other Asian countries with booming economies, such as the Philippines, Indonesia and Malaysia?

1309pei_16 16 8/27/13 11:25 AM

www.PowerEngineeringInt.com 17Power Engineering International September 2013

Talking Point

Matthias Hiddemann, Regional Product Manager

Asia, Alstom Power, Malaysia

In general, from the OEM’s perspective there

are various drivers for the power markets.

Besides the economic growth and

environmental regulations, the variation

in the fuel supply and fuel price, as well

as the variation in the electricity price, the age

of the existing power generation equipment

and the liberalisation of the energy market

all have an impact on which kind of power

generation technology investments will take

place.

Within a specifc power market, existing

operators have to fulfl certain requirements:

they have to produce electricity at the lowest

possible costs for low electricity tariffs, the

power generation has to be reliable to ensure

each country’s energy security and the impact

on the environment has to be minimised.

OEMs have to take the situation of every

country’s power generation market and its

power generation suppliers into consideration.

As well as offerings for new power plants,

solutions for the already-installed power

generation base have to be available, such

as performance and emission improvements

or solutions to integrate the different power

generation technologies in the generation-

mix.

Moreover the identifcation of new trends

as well as the introduction of new technologies

has to be monitored and adequate products

meeting the requirements have to be

developed.

Within this environment it is mandatory

to be permanently present in each market,

independent from the actual economic

growth, in order to be up-to-date with the

market requirements and understand the

needs of power generation companies. Only

this enables the possibility to offer the right

solution or technology matching with the

differing market environments.

John Gustke, Managing Director, Ebery Asia,

Black & Veatch, Thailand

I think a more measured and stable view

of the power needs within each country is

important to keep in view, as well as long term

business relationships with stakeholders in

each country.

Opportunities for investment and

project participation in the power industry

in Southeast Asia have been, and remain,

strong. It’s important that a variety of

indicators are taken into consideration and

the right business approach for each market

is adopted.

Throughout Asia, there’s close to 700 million

people without electricity. Migration to cities

and industrialisation continues at pace and

with that comes rising power infrastructure

demands. The pace of development may

slow over time but there are many real and

pressing gaps throughout the region.

The two biggest effects of the China and

India slowdown will be a rise in competition

within the power sector throughout Asia

and also knock-on effects to the economic

health of China and India’s trading partners,

including the Southeast Asian markets under

discussion.

The need for power infrastructure, as

said, will still remain. With rising competition,

tightening margins and reduced access to

fnance, the question around how this will

happen will be brought under scrutiny. This

means power producers across Southeast

Asia will demand improved solutions on

how better to manage risk and schedule

and procure equipment, delivering much-

needed large scale projects on time without

sacrifcing quality.

Throughout the region, including China

and India, all power producers will continue

to ask how they can balance price without

sacrifcing quality. This is where the industry

must continue to focus, regardless of location.

So to summarise, I strongly believe the time

is ripe to invest in various Southeast Asian

countries, especially Myanmar, Indonesia,

and Malaysia. Of course, the ‘favour’ or

situation in each country needs to be studied

to know how to invest in a particular country.

For example, it may be benefcial to have

a local partner to guide you through the

country’s ways of doing business.

1309pei_17 17 8/27/13 11:25 AM

18 Power Engineering International September 2013 www.PowerEngineeringInt.com

Talking Point

Normen Kegler, Advisory Council Chairman, Independent Power Producers’ Forum

(IPPF), Hong Kong

For quite some time the power generation

sectors of China and India have shifted

away from foreign direct investment as

their respective market practice, regulatory

framework and tariff policies hardly

encourage traditional foreign independent

power producer investment.

The question is rather ‘how’ than ‘if’ foreign

direct investment will explore opportunities in

other markets in the region.

The days of the ‘classic’ IPP model appear

to be numbered as most countries in the

region have matured and gained direct

access to the capital, technologies and

expertise required to develop their power

generation sectors.

Foreign IPPs that are still successful and

proactive in the Chinese and Indian power

generation market currently demonstrate

business development models that indicate

the future role and shape of IPPs in the region.

They keep strong and multiple affliations

with domestic stakeholders and have

refned their capability to cater for advanced

technical and managerial demands in niche

segments to maintain their success. They pay

close attention to the advanced technologies

favoured by governments in their energy

policy development, as those determine the

market niches that an IPP can successfully

occupy without facing too much domestic

competition.

Some IPPs have engaged in local

supporting industries such as coal processing

and coal blending, thus deepening their

market integration.

Public private partnerships may allow for

a more effcient project risk management on

both sides. However, since the partners differ a

lot in their basic purposes and management

styles, such partnerships can be troublesome.

Generally, IPPs have learned to move along

with the host country rather than offering

prefabricated standard solutions that were

incorporated in their business models and

applied all around the world.

Therefore IPPs have become more

sustainable partners for addressing specifc

sets of requirements and therefore will continue

to play an important role in developing the

power generation markets in Asia.

Joseph Jacobelli, Senior Analyst - Pan Asia Utilities, Bloomberg LP, Hong Kong

We are indeed witnessing a slowdown in the

GDP growth rate of Asia’s two power giants.

China and India saw GDP growth averaging

9.2 cent and 7.4 per cent respectively over

the past three years while the expectation by

economists for the next three years is 7.4 per

cent and 5.8 per cent respectively.

At the same time, China’s energy

requirements are expected to rise threefold

or more in the coming 30 years while India’s

should be at an even higher rate: despite

its 1.35 billion people, China’s total installed

power generation capacity of 1142 GW is only

slightly smaller than that of the US and India’s

225 GW is currently less than 20 per cent of

China. As such, Asia’s two power giants still

offer great scope in terms of opportunities.

That said, overseas investors have not

been investing in power generation in both

countries. China has not been an attractive

market partly due to a lack of long-term power

purchasing agreements (PPAs). Power output

is typically agreed one year forward and the

tariff paid by the grid to the generators is set

by central authorities – all without a clear

mechanism to protect the generators from

fuel costs volatility. Moreover, overseas investors

have found it tough to be price competitive

versus the long established domestic giant

power generation groups. As such, today there

are barely any foreign developers in China.

India, unlike China, has offered long-

term PPAs. However, the fnancial strength, in

terms of the payment capability of the state

electricity boards, has been a challenge, as

has fuel availability. As such, just like China, few

foreign developers can be found.

A few Southeast Asia power industries have

attracted high overseas capital. The clear

winner, by the presence of foreign investors,

has been Thailand and more recently the

Philippines and Indonesia have seen good

levels of interest. Thailand has offered an open

and liberal approach to foreign investors in

the sector coupled with relatively consistent

and transparent rules and regulations. In the

near future most industry participants expect

this to continue if not even to accelerate.

1309pei_18 18 8/27/13 11:25 AM

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20 Power Engineering International September 2013 www.PowerEngineeringInt.com

Talking Point

Robert McGregor, Head of Power & Utilities, Asia, HSBC, Hong Kong

I don’t expect to see a meaningful change in

investment interest towards Southeast Asia – it

has always been there.

The advantages of the larger markets in

China and India were that they provided

economies of scale and room for multiple

participants – developers could see a

pipeline of opportunities extending into the

foreseeable future – a chance to build a

meaningful regional business. But, for various

reasons, the growth opportunities have rarely

translated into deliverable shareholder value

for the international players.

Even so, this will not result in a switch to

Southeast Asia. The scale opportunity has

never existed there – the smaller market sizes,

with different regulatory regimes, different fuel

mixes and different levels of IPP ownership

have always made it diffcult for international

developers to build a regional platform of any

size. So, Southeast Asia has always been an

asset-by-asset play on a country-by-country

basis and international developers have

always pursued different strategies in the

region versus in China and India.

But, as these international players look at

Southeast Asia today, they see the indigenous

power developers have become fnancially

stronger, technically more capable and

commercially much stronger than was the

case 15 years ago. An international developer

considering a Southeast Asian investment

strategy must take account of the enhanced

competition from EGCO, Ratchaburi and PTT

in Thailand; from 1MDB, Malakoff, Tenaga in

Malaysia; or from Aboitiz Power, First Gen and

Meralco Powergen in the Philippines.

So, even on an asset-by-asset basis, there is

nothing to suggest that international players

can simply switch attention to Southeast Asia

to deliver shareholder value. International

players need to re-evaluate strategies where

they get rich with Asia, and not from Asia –

and for me that applies whether you are in

China, in India or in Southeast Asia.

Markus Lorenzini, Head, Siemens Energy Sector, ASEAN-Pacifc Cluster, Indonesia

The ASEAN countries, together with China and

India, have been shifting the centre of gravity

of the global energy system toward Asia.

Ongoing urbanisation and industrialisation in

these countries have driven growth in energy

usage. This growth continued even through

the recent global economic crisis, which

prompted a fall in energy use at the global

level.

In recent years, ASEAN countries have been

placing increasing emphasis on improving

the effciency of energy use, in recognition

of the need to curb demand growth, reduce

energy imports and mitigate pollution.

Thailand, the Philippines and Malaysia,

especially, have shown a very positive trend

of new power generation, especially towards

innovative and highly-effcient technologies. In

addition, Thailand and the Philippines are also

investing in wind power and have established

tariff regimes that support investments in

renewable energy production.

ASEAN, particularly Indonesia, Thailand,

Malaysia and the Philippines, will have

continued growth and energy demand in the

next coming decades, where investors have

an attractive environment.

Dale Probasco, Managing Director, Navigant Consulting Inc, US

This is an interesting question and, for me,

the answer is somewhat dependent on a

company’s current position.

The sheer size of the markets in China and

India, even during a slower period of growth,

would dictate that a power company with a

current presence in either market is likely to

continue seeing benefts.

However, diversifcation into other markets

such as Malaysia, Thailand and the Philippines

may also be an option to protect against a

potential downturn in China or India.

Further, since global markets are often

dependent on each other, the impact of the

slowing of any economy is likely to be felt in

other areas, and we know there has already

been some slowdown in the Malaysian, Thai

and Philippine markets.

For power companies just establishing

their presence in Asia, it might be prudent to

start in a smaller market with growth which

can serve as a stepping stone into other

regional economies.

Visit www.PowerEngineeringInt.com

for more information i

1309pei_20 20 8/27/13 11:25 AM

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1309pei_21 21 8/27/13 11:25 AM

22 Power Engineering International September 2013 www.PowerEngineeringInt.com

It is one thing to talk the talk – quite another

to walk the walk. Energy experts cite this

popular refrain when asked how long it

will take for Latin America to build a fully-

integrated power market.

They stress many governments are

enthusiastic about pursuing such project

but have to negotiate an incredibly complex

political roadmap.

“In industry forums, politicians always

talk about the need for integration and

brotherhood in Latin America but in practice,

that goal is much more complicated to

achieve,” says Isaac Castillo, an independent

energy consultant who has worked on several

regional integration projects.

Echoing other observers, Castillo says

a basic electricity market is unlikely to be

ready until 2025, mainly due to technical and

political obstacles.

Maria del Carmen Tobar, a Lima-

based lawyer who oversees electricity grid

connections in Latin America for Baker

& McKenzie, agrees. “Finding more ways

to interconnect the power markets is an

important objective for Latin America,” she

says. “All the administrations have it on the

agenda but they don’t prioritise it. I see this

moving slowly with no signifcant progress until

ten years from now.”

According to observers, a string of

international accords, technical co-ordination

and studies to help governments understand

the economic gains that can stem from

integration are crucial to create a regional

and wholesale power market – something

that will not happen overnight.

Integration benefts questioned

That said, some countries are working to

link-up their electricity networks and have

made progress. Castillo cites Colombia

and Ecuador as notable examples. The two

neighbouring nations boast the Andean

Community’s (Comunidad Andina, CAN)

largest interconnected network, exchanging

up to 500 MW through two 230 kV transmission

lines. Ecuadorian power frm Centro Nacional

de Control de Energia and Colombian

counterpart XM trade electricity through

bilateral agreements.

“The connection between Ecuador and

Colombia has helped resolve supply defcits

in Ecuador and enabled Colombia to sell big

surpluses,” Castillo says.

In turn, Venezuela and Colombia are also

expected to increase electricity trade, due to

big supply defcits in southern Venezuela. In

2012, Colombia sold 478.4 GW to Venezuela,

up 92.3 per cent from 2011, say analysts.

Full market integration in Latin America

Latin America has ambitions to establish a fully-integrated electricity market, but creating such a market is notoriously diffcult. Ivan Castano looks at the progress so far and asks what is a realistic time-scale for this rapidly-developing region.

Making the Latin

American connection

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1309pei_22 22 8/27/13 11:25 AM

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1309pei_23 23 8/27/13 11:25 AM

24 Power Engineering International September 2013 www.PowerEngineeringInt.com

Full market integration in Latin America

The growing Colombia–Venezuela,

Colombia–Ecuador trade “shows there is

huge exchange potential in the region,”

Castillo says. “However, in the long term, we

are looking at big territories and countries

that have very different energy requirements

and for which the benefts of integration are

not equitable.”

Mexico to Colombia

Currently, Mexico and Guatemala swap

200 MW through a network connecting their

southern and northern borders. Mexican state-

owned power supplier CFE (Comision Federal

de Electricidad) and its Guatemalan peer

Inde (Instituto Nacional de Electrifcacion)

trade through a bilateral agreement via which

Guatemala buys most of the power.

According to Castillo, the CFE wants to

expand that exchange to gain access to

Central America’s largely integrated and

promising power market. However, Guatemala

has resisted such a move, arguing that the

Mexican connection should remain bilateral

and not regional. Panama and Colombia

are caught in a similar situation, with Panama

saying it does not want Central American

power frms to meddle in highly-complex

negotiations to merge their power markets.

Guatemala is also blocking Belize’s efforts

to access the Central American market.

Currently, Belize and Mexico exchange some

80 MW of power. “These countries have to lift

their barriers for integration to take place,”’

Castillo says. “There is going to have to be a lot

of talking and patience needed to convince

politicians that regional integration is better

than bilateral.”

Panama–Colombia stalemate

Investors looking to participate in a long-

planned, yet highly problematic, 600 km line to

link Panama and Colombia’s electricity grids

will also need patience.

The $500 million undertaking, which could

see both countries share up to 300 MW, is

frozen because of a political impasse.

Experts say Panama does not view the

project – which will require a high-voltage line

across the dense Darien forest that virtually

blocks road access to Colombia – as a priority,

not does it want to bankroll it.

However, there are talks for a third and fourth

investment partner to join the initiative, which

initially called for Panama and Colombia to

equally share construction costs. However, in

light of Panama’s reaction, several Colombian

and international investors have expressed

strong interest to help fnance the line.

Such investors include Colombian

generators ISA and Endesa Colombia,

says Castillo, who is confdent Panama will

eventually take part in the project “to avoid

looking bad politically” as investors continue

to pressure the government to fex its muscles.

Siepac nears completion

Despite their interest, Colombian generators

will have to wait before the Central American

market is big enough to turn a proft.

The $494 million Siepac (Sistema de

Interconexion Electrica de Paises de America

Central) network links Guatemala and

Panama through an 1800 km line starting in

Guatemala and passing through El Salvador,

Honduras, Nicaragua and Costa Rica. It is set

to have a trading capacity of 300 MW through

the gradual creation of a regional market.

The network is almost fnished except for

a 10 km portion between the towns of Parrita

and Palmar Norte in Southern Costa Rica

because of land-owner restrictions. However,

an alternative route is being studied and the

entire circuit is expected to be completed in

late 2014, observers say.

Interconnection is already taking place,

however, albeit at a tiny rate. Analysts say the

six countries share less than 1 per cent of

generation due to a lack of excess capacity.

They say Central American countries are

not investing enough to expand output for

export and that more co-ordination is needed

to boost interconnection rates. For this reason,

they do not expect the line will reach full

capacity until 2018. The little power traded in

Central America is being done through short-

term bilateral contracts and a spot market in

San Salvador. In the dry season, electricity can

sell for as much as $200/MWh.

Bogata: Colombia has made progress in trying to establish electricity linksCredit: David Knox

1309pei_24 24 8/27/13 11:25 AM

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1309pei_25 25 8/27/13 11:25 AM

26 Power Engineering International September 2013 www.PowerEngineeringInt.com

Latin American grid interconnection

Tim Stephure, a Latin America energy

consultant at IHS Global Insight, says linking

Central America will be diffcult. “All of these

countries have different regulations and tariff

regimes so there needs to be a stronger

regulatory framework and tariff mechanism

put into place. There are also a lot of power

cost discrepancies between the countries

and they need to fgure out how this cost will

be shared between them.”

Columbia–Chile study

In South America, an ambitious, $1.8 billion

project to connect Colombia to power-starved

Chile, dubbed Proyecto de Interconexion

Electrica Andina, is also on the cards.

According to Alejandro Bellorini, a senior

partner at Sigla Consultancy in Buenos Aires,

a regulatory harmonisation and infrastructure

study is underway and scheduled to be

completed in mid-2014.

The initiative will link Colombia with Ecuador,

Peru, Bolivia and Chile (an associated CAN

member) by expanding the existing Andean

electricity interconnection system (Sinea)

and striking a series of bilateral agreements

between the fve countries.

Last September, CAN energy ministers

agreed to back the project in a meeting in

Santiago de Chile. The summit was led by

the Andean electricity regulation committee

(Canrel), which will be in charge of setting up

a regulatory, legal and commercial framework

to eventually operate an Andean power

market. As part of the meeting, the ministers

also agreed to launch working groups to help

pursue and monitor the project.

“This is a very clear integration project

that will beneft, once achieved, all the

countries’ quality of life and improve their

competitiveness and productivity,” says

Peru’s former foreign relations minister and

chancellor, Jose Antonio Garcia Belaunde.

“All the countries involved are taking this

project with seriousness, responsibility and

with their eyes on the future,” Garcia adds.

Meanwhile, Gabriel Salazar, electricity

co-ordinator at the Latin American Energy

Organization in Quito, Ecuador, says current

interconnection infrastructure between

Colombia, Ecuador and Peru should help

the Andean project gain traction. Apart from

Colombia and Ecuador, Peru and Ecuador

exchange as much as 100 MW, he adds. “We

have much of the infrastructure. What we

need to do now is establish the political and

commercial framework to make this possible.”

He adds several multilateral agreements

within the CAN and between the CAN and

Chile will need to be hammered out before

the Interconexion Andina can take off. “There

is political interest to increase interconnections

between these countries. There are also power

stations being built in Colombia, Peru and

Ecuador to partly help Chile meet its growing

power demand.”

Ecuador and Peru’s exchange will also

need to be bolstered, Salazar says. More

important, however, will be the linking of Peru

and Chile, something currently on the table.

According to Tobar, Peru is negotiating

interconnection deals with both Brazil and

Chile. However, she says a Chilean agreement

will likely come frst because of the country’s

rising energy needs. Bereft of oil and natural

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www.PowerEngineeringInt.com 27Power Engineering International September 2013

Full market integration in Latin America

gas resources, fast-growing Chile is highly dependent on Argentinian gas

and other energy imports. Tobar does not expect a Peru–Chile accord

soon, however. “There is political will but very little push,” she explains.

Regarding Interconexion Andina, she adds South American nations

are prioritising self-supply projects to meet soaring demand so this goal

could delay the project.

Stephure agrees. “These [referring to CAN and South America] are fast-

growing economies so satisfying domestic demand and electrifcation

is a priority,” he says. “There are large amounts of people in Venezuela,

Colombia and Ecuador that don’t have electricity access. Subsidies are

also a big issue and sometimes you have historical political disputes

that can get in the way.”

Such is the case of Bolivia and Chile. Some analysts expect the two

countries’ strained relations – which stem from long-standing territorial

disputes – may stall negotiations to create the Interconexion Andina. This

is because Bolivia wants to raise the interconnection question with other

neighbours such as Brazil and Argentina before Chile, a political stance

that may complicate negotiations.

Mercosur expansion

In the Mercosur trading bloc of Brazil, Argentina, Uruguay and Paraguay

there are plans to expand Uruguay and Brazil’s 70 MW interconnection

grid with a new 500 kV line, with 500 MW of trading capacity. The project

faced several regulatory and political challenges, mainly because

Uruguay and Paraguay have different power frequencies, says Ramon

Mendez, director of Uruguayan electricity network management frm

Adme. However, a $200 million converter will help resolve that, with the

line expected to be completed early next year.

According to Mendez, Uruguay and Paraguay hope to sign bilateral

exchange agreements before their fedgling grid is ready. Uruguay too,

Guatemala: the country currently swaps 200 MW with Mexico

Credit: Jose A. Warletta

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28 Power Engineering International September 2013 www.PowerEngineeringInt.com

Full market integration in Latin America

hopes to eventually sell power to Brazil and increase trade with Argentina

and other Mercosur nations. This is mainly due a major incursion into

renewable power. Indeed, the small country, which sits atop Argentina,

plans to generate half of its power from renewable sources by 2016,

making it Latin America’s most ambitious nation in this regard.

As part of a $5.5 billion clean-energy expansion plan, the government

will work to install at least 500 MW of wind power generation capacity

and develop solar, biomass, mini-hydro and other microgeneration

projects. If all goes well, Uruguay could lead the world in terms of the

percentage of electricity it generates from renewable sources.

Meanwhile, a project to build two new hydropower stations (with

2000 MW of transmission capacity) feeding from the Uruguay River

straddling Argentina, Brazil and Uruguay aims to increase Argentina

and Brazil’s interconnection capacity to 4200 MW.

The scheme calls for the construction of one plant in Panambi

and another in Garabi, both Brazil–Argentina border towns. Both

countries have signed an agreement to pursue the project but future

fnancing diffculties – probably from the Argentinian side – could delay

construction, according Eduardo Lerner, an energy regulation professor

at the University of Buenos Aires and independent industry consultant.

Currently, Mercosur is Latin America’s largest power-trading network.

Brazil and Argentina share some 2200 MW through a hydropower

complex in Garabi that operates two 1100 MW transmission lines

connecting the Argentine town of Rincon de Santa Maria with Garabi.

Meanwhile, through Salto Grande, Argentina and Uruguay swap

1900 MW. Brazil and Paraguay also transfer some 3000 MW via the Itaipu

hydropower facility. Lastly, Argentina and Paraguay trade 1700 MW

through the Yacyreta hydro station and 800 MW via the Clorinda line.

According to Juan Jose Carrasco, executive director of Montevideo-

based regional integration commission (Cier), Mercosur members

trade electricity through a series of long-running government-to-

government bilateral contracts.

However, the exchange is irregular and happens mainly on an

“opportunity” basis. This is partly due to Argentina’s decision to stop

selling power to other countries during its 2002 recession, which saw

its energy supplies dwindled. As a result, other Mercosur members also

began concentrating on self-supply. Carrasco says Cier is lobbying for

trade to grow though a system of so-called border exchange points

that will enable Mercosur countries to sell power through volume and

price-based contracts that ensure supply security.

The scheme aims to boost the countries’ confdence in exchanging

power and to encourage the signing of frmer medium and long-term

trade contracts that will form the basis for a more active regional market

and eventually the establishment of wholesale market. That process will

take a while, says Mendez. “We share Cier’s vision but we are very far

from it,” he notes.

Time is also needed for other initiatives to take off. With so many

projects on the table, Stephure echoes other views that merging Latin

America’s electricity networks will happen at a snail’s pace.“The idea

is to integrate everything but there are many obstacles,” he says. “Cross-

border transmission is hard to accomplish and the required investment

to make it all work will be huge. Integration will be a slow process.”

Ivan Castano is a freelance journalist, specialising in energy.

Visit www.PowerEngineeringInt.com for more information i

Table 1: A breakdown of the SIEPAC interconnection

Country Length (approx. km) Total no.

sections

Total no.

towers

Total no.

substations

Substations

Guatemala 282.8 3 664 3 Aguacapa, Guatemala Norte & Panaluya

El Salvador 286 4 736 3 Ahuachapan, Nejapa & 15 de Septiembre

Honduras 270 4 727 2 Aguacaliente & Buenaventura

Nicaragua 308 3 755 2 Sandino & Ticuantepe

Costa Rica 493 5 1352 4 Canas, Parrita, Palmar Norte & Rio Claro

Panama 150.4 1 398 1 Veladero

Total 1790.2 20 4632 15

Source: Empresa Propietaria de la Red (EPR)

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30 Power Engineering International September 2013 www.PowerEngineeringInt.com

European biomass and biogas

Europe’s deteriorating economic conditions of recent years have taken a toll on its biomass and biogas markets, as many governments pull the plug on vital incentive programmes. Kelvin Ross examines the state of the market.

Just a few years ago, the European

biomass sector was expecting a

boom time and biogas, while

anticipating less dizzy highs, was

also looking forward to signifcant

growth.

The biomass industry had every reason

to be optimistic. As governments around the

world set renewable energy targets, biomass

was seen as something of a sure thing to

play its part in meeting countries’ low carbon

ambitions.

And when the operators of coal-fred

plants realised that they could extend the

life of power stations by converting them in

part to run on biomass fuel, then the outlook

looked even more promising.

But like so many other forms of power

generation – renewable or otherwise – both

biomass and biogas in Europe have taken a

hit from the economic crisis.

In times of austerity, the subsidy and

incentive programmes needed to drive

the biomass/biogas sector have proved

fnancially unsustainable and governments

have shelved many projects.

This market instability has also resulted

in the acquisition of several major market

players, such as AE&E, MWM and MW Power.

The biomass and biogas sector in Europe

breaks down as biomass holding 67.7 per

cent and biogas 32.3 per cent. Globally,

biomass accounts for 3 per cent of electricity

generation capacity, and half of this is

located in Europe.

Of the biomass segment, 62 per cent of

installed capacity is in power plants and

38 per cent in combined heat and power

(CHP) plants – percentages set to become

more balanced as the trend is slowly moving

towards CHP installations as they receive

better incentives than power plants.

The European market comprises more

than 50 companies with the major players

being Foster Wheeler, Metso, Andritz, GE

Jenbacher and MWM. Together these

companies hold 78 per cent of the market

for biomass and 77 per cent for biogas. Other

notable market participants included Perkins,

BWE Energy and Kohlbach.

Analysts at consultancy Frost & Sullivan

estimate that the current value of the

European biomass and biogas market is

€3.33 billion ($4.4 billion), and it is set to

experience a compound annual growth rate

(CAGR) of 2.5 per cent between now and

Austerity bursts bio bubble

Credit: Dreamstime

1309pei_30 30 8/27/13 11:25 AM

www.PowerEngineeringInt.com 31Power Engineering International September 2013

European biomass and biogas

o usey

ax

2017. They also forecast that the installed capacity base will reach

42,322.1 MW by 2017 witnessing a CAGR of 5.3 per cent for the same

period, “as the market tries to stabilise itself after the economic crisis

in the continent”.

However, the economic crisis has had its casualties in the sector,

the most recent being Tilbury power station in the UK.

Tilbury stopped generating electricity last month after 44 years of

operation as a coal plant and the last two years as the world’s frst 100

per cent biomass facility.

It opened in 1967 as a 1467 MW coal-fred plant and was

scheduled to close under the EU’s Large Combustion Plant (LCPD)

Directive, giving it 20 000 hours of operation from 1 January 2008.

However, in 2010 its operator RWE decided to begin converting it

to run on biomass for the remainder of its LCPD hours and it started

operating in this capacity in 2011.

The biomass plant had a capacity of 750 MW and RWE has

claimed that it delivered more than 10 per cent of the UK’s total

renewable electricity.

Once the LCPD deadline ran out on 14 August, RWE had planned

to close it for two years while it carried out a full-scale biomass

conversion, which the company said would have given Tilbury up to

12 more years of work.

However, the UK’s Department for Energy and Climate Change

revealed earlier this year that the project was ineligible for the

government’s Contracts for Difference, a new support mechanism

for low-carbon technologies, which forced RWE to take “the diffcult

decision not to proceed with the project, as it is no longer economically

viable”.

RWE stressed that “Tilbury remains an excellent site for power

generation” and said it was reviewing future plans for the site.

“The lessons learned from the successful biomass conversion

will be shared across the RWE Generation portfolio, as RWE remains

committed to exploring new energy technologies that can provide

energy solutions that are both affordable and sustainable.”

‘A successful experiment’

So is Tilbury a warning shot to other existing and potential biomass

plant operators. David Hostert of Bloomberg New Energy Finance says

its closure has “damped the mood” in the biomass industry and warns

that “projects that have been in limbo for the last four to fve years are

now even further away from fnancing.

However Ashay Abbhi, energy and environmental research analyst

at Frost & Sullivan and one of the authors behind a recent report,

Opportunities in the Biomass and Biogas Power Market in Europe, is

more positive on Tilbury and its legacy.

“Tilbury should be looked at as a successful experiment,” he says.

“It was a success in my view because it has given an alternative to the

large-scale production of power and it has given confdence to RWE

and a lot of other power corporations to go ahead [with biomass].”

He adds it has “set the tone” and become “a pioneer for such plants”.

However, in its report, Frost & Sullivan is less upbeat about the

wider European biomass and biogas markets, where it warns that

“deteriorating economic conditions have limited market expansion”.

“Countries have cut down or even stopped subsidies for power

generation from biomass and biogas, jeopardising the prospects of

plant owners,” it concludes. The report also highlights that a “lack of

steady raw material supply in the region poses another challenge”.

It states that “high-demand customers are willing to pay more to

keep their power plants running, which triggers a rise in feedstock and

equipment prices, affecting proftability. The withdrawal of government

incentive schemes further dampens revenues.”

Abbhi says: “Biopower plants are increasingly preferred as a

source for large-scale power generation owing to their low-capital

requirements. Their effciency, longer operational times and reliability

For more information, enter 17 at pei.hotims.com

The value of the European biomass and biogasmarket is estimated to be $4.4 billionSource: Siemens

www.schwarze-robitec.com

1309pei_31 31 8/27/13 11:25 AM

32 Power Engineering International September 2013 www.PowerEngineeringInt.com

further boost their popularity over other

sources of renewable power generation.”

But he warns that “government support

is necessary for technology development,

especially as constant innovation will enable

a reduction in capital expenditure”.

Abbhi states: “For now, the conversion of

coal power plants to biomass plants will be

the strongest market trend as it requires far

less investment than setting up a greenfeld

biopower plant.”

This would certainly seem to be borne

out in the UK: Drax, which operates Britain’s

largest coal plant, has a £700 million

programme underway to convert three of the

plant’s six units to biomass. Drax Group chief

executive Dorothy Thompson says: “We are in

the middle of a project to turn it from a coal

station that burns a little bit of biomass to a

biomass station that burns a little bit of coal.”

The frst unit is already in operation and

the second is expected to follow suit by the

end of 2014.

Drax will use wood pellets imported from

the US to fuel the units and is building four

silos – each bigger than London’s Royal

Albert Hall, in which to store them.

The company has also designed Britain’s

frst purpose-built rail freight wagon to carry

biomass imports to the plant from the ports

of Tyne, Hull and Immingham. At 18.9 metres

long with top doors stretching 18.2 metres

and bottom doors of 3.7 metres, the supersize

wagon has a capacity of 116 m3, allowing

a biomass load weighing 71.6 tonnes. Its

volume is almost 30 per cent bigger than any

freight wagon currently used in the UK.

Meanwhile, in the same week as Tilbury

ceased generating electricity, it was

announced that a new 40 MW biomass plant

is to be built on the site of a former sugar

factory in Lincolnshire, England.

Brigg renewable energy plant will be built

by Danish company BWSC – part of Japan’s

Mitsui Engineering & Shipbuilding – and is set

to be operational by 2016, when it will run on

locally-sourced straw.

This activity confrms the UK’s status as

the prime mover in the European biopower

market, along with Germany. But Frost &

Sullivan expects their dominance to “slowly

give way to opportunities in the developing

Central and Eastern Europe markets”, with

“Poland expected to be a hotspot”.

Abbhi says: “Poland has proper incentive

systems and it has not cut subsidies.

Companies are willing to invest, the

availability of wood chips is quite abundant

and if not, they are in close proximity.”

He says “the framework the government

has is quite impressive – Poland has all the

right ingredients for biomass to work”. He

concedes that “the economy could hamper

the growth, but is hasn’t thus far” and expects

Poland to become one of the biomass and

biogas leaders in Europe.

As of last year, Poland had a total installed

biopower capacity of 2662.9 MW, and Frost

& Sullivan expects the nation’s capacity to

reach 2864.1 MW by 2017.

Abbhi adds that more coal-to-biomass

conversions are expected in Poland for 2015,

which currently has one converted plant.

For other countries, the future is not

quite so rosy. Frost & Sullivan believes that

“Germany will observe sluggish growth with

reduced incentives and Spain’s growth will

be non-existent as the country abandons

A lack of steady raw materials is a

challenge for Europe’s biomass sector

Source: Dreamstime

European biomass and biogas

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1309pei_32 32 8/27/13 11:25 AM

www.PowerEngineeringInt.com 33Power Engineering International September 2013

European biomass and biogas

its incentive schemes for renewable power

generation”.

It also warns that many European countries

will turn their focus “towards developing other

forms of renewable energy to complete their

designated targets by 2020, as biopower

installations are becoming unsustainable

because of reduced incentives”.

Abbhi says that the future for the industry

“is a little bleak” although if the European

economy revives within the next fve years he

believes the investment will return.

However he warns that in the short-term,

“the initial investment is going to decrease

even further”.

He says the sector is suffering from

being overshadowed by other renewable

technologies such as solar and wind –

especially offshore wind.

“I think governments are not paying much

attention to it - it is not being given the credit

it is due.”,

Recent European biomass activity

GDF Suez has inaugurated a 205 MW

biomass power plant in southern Poland

which it claims is the biggest 100 per cent

biomass-fuelled facility in the world.

The plant at Polaneic is to provide

electricity for 600,000 households and is

powered by a mix of tree-farming product

and agri-fuels.

It is located at the site of the utility’s

existing 1780 MW coal/biomass co-fred

thermal plant, GDF Suez Energia Polska.

Construction of the plant, dubbed ‘the

Green Unit’, began in 2010, engineered

by Tractebel Engineering. Foster Wheeler

supplied a circulating fuidized bed boiler

believed to be the largest ever deployed at

a biomass power plant.

Meanwhile, Doosan Power Systems has

been awarded a major biomass conversion

and turbine upgrade project for E.ON’s coal-

fred Provence power plant in Gardanne,

France.

The project will help to create what

will become France’s largest biomass-

fred power plant to date. The new unit will

generate electricity from the combustion of

wood, including forest chips, green residues

and recovered timber, and will be converted

from the existing coal-fred Provence 4 unit.

It will provide 150 MW of power with base

production of more than 7500 hours per

year until 2034.

A proposed biomass-fred combined

heat and power (CHP) plant is slated to

be the UK Green Investment Bank’s frst

investment in Scotland.

The £465 million ($710 million) CHP

project will be developed at the Port of

Grangemouth by Forth Energy – a joint

venture between Forth Ports and SSE –

and received approval from the Scottish

government in June.

The CHP plant will use sustainably-

sourced, primarily imported wood fuel and

will have the capacity to generate 120 MW

of electricity and 200 MW of heat.

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1309pei_33 33 8/27/13 11:26 AM

34 Power Engineering International September 2013 www.PowerEngineeringInt.com

Solar power looks set to become

a greater part of the energy mix

in Asia.

Growing populations and

economies are pushing up

the demand for energy, and

governments throughout the region are

realising it will be impossible to satisfy this

demand through their already hard-pressed

power generation infrastructures and deliver

electricity at manageable cost.

With solar energy systems now more

affordable than ever, and solar irradiation

levels that are the envy of other regions of

the world that spend many months of the

year under gloomy skies, Asia is looking to

renewable energy, particularly solar, as the

way forward.

Factor in environmental concerns about

nuclear or fossil fuel, and the strong imperative

to substitute expensive diesel generators in

regions that are off grid, and Asia could be the

new powerhouse for the global solar industry,

leapfrogging other regions in terms of speed

of uptake.

With growth stalling in the traditional solar

power markets, the Asia-Pacifc (APAC) region

presents the industry with great opportunities:

by 2015, capacity in the region (excluding

China) is expected to reach 11 GW.

Good ft for challenges

Despite huge disparity between the countries

in the APAC region – from the highly developed

market of Japan, which is driving forward

solar investment as a way to escape reliance

on nuclear, to countries seeking to reduce

dependence on expensive power imports,

or, like India, struggling to get power to their

populations – the common denominator is

solar irradiation.

Solar energy is a good ft for many of the

imperatives across Asia. At one end of the

scale, it provides clean, green energy as

an alternative energy source. At the other,

it delivers power to the many people in the

region who have no access whatsoever to

national grids.

By moving straight from (often rickety)

diesel generators to solar, large parts of

the region can potentially bypass the step

of installing power gridlines, or upgrading

substandard infrastructure.

Markets in Asia are in fact developing in

two directions. Price is at the heart of both,

and is proving key to making solar such a

predominant part of the energy mix.

Some markets are still upheld by subsidies;

others are beginning to be driven by grid parity,

the cost level at which solar is competitive

with conventional sources of energy. This will

completely change the market dynamics as

solar is more able to stand on its own.

One reason why grid parity is now within

reach is that system costs for solar power

generation have fallen sharply in the past

three years, reducing the capital expenditure

of projects and making the move to solar an

increasingly viable option for many countries

to meet power needs.

The levelised cost of electricity for solar

is already in the range of $0.12–0.15/kWh,

making it more than able to match diesel

on cost. In the Philippines, for example, the

average electricity price is $0.26/kWh. If we

also consider the cost of carbon, this could

push up the price of fossil energy even

further, making solar energy even more cost-

competitive.

So how is the solar industry faring across

the region? How are manufacturers and

providers addressing the opportunities in such

disparate countries? We’ve highlighted a few

of the common trends and challenges.

Power alternatives in India

Like many countries in the region, India has

an infrastructure that is unable to keep pace

with energy demand. The historic blackout

in India in July 2012 was the greatest power

outage in history. Its impact was felt by over 600

million people, with an estimated capacity loss

of 32 GW.

India knows to its cost what will happen

if the country remains excessively reliant

on a centralised grid and fossil fuels. Given

the huge demand for electricity and the

country’s high irradiation levels, the outlook

for India’s solar market is highly positive.

Solar power in Asia

Credit: Dreamstime

Sunrise in the east

Asia could be heading for pole position in solar power uptake according to Tim Ryan at Norwegian company REC

34 Power Engineering International September 2013 www.PowerEngineeringInt.com

1309pei_34 34 8/27/13 11:26 AM

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36 Power Engineering International September 2013 www.PowerEngineeringInt.com

Solar power in Asia

There is strong growth in the utility-scale

solar market, with growing opportunities in

rooftop commercial and industrial markets, as

well as broad potential for offering solutions

to electrify remote spots and replace or

complement diesel installations, which are

nowhere near as cost-effcient as solar energy.

The cost of a unit power from an off-grid

solar system is $0.18 to $0.21 per kWh – lower

than power from diesel generators at $0.30

to $0.33 per kWh. Moreover, solar energy is

actually available when needed, during peak

hours – in strong contrast to grid power, where

an overloaded network can fail precisely

when it is needed most.

Despite the apparent logic of moving to

solar in regions that have little or no access

to grid power, a major challenge facing

would-be installers is the diffculty of securing

fnancing.

One reason is that this is still a young

market, and there is no single country-wide

feed-in-tariff to provide investors with a secure

ROI projection. However, as less experienced

players exit the market and best practices

begin to take hold, solar projects are likely

to have an easier time securing fnancing,

paving the way for a solar future in the country.

In addition, Indian anti-dumping tariffs are

creating uncertainty in the market, and this to

some extent is slowing investment.

Thailand’s ambitious targets

Another country aiming high with solar

power is Thailand. As things stand, Thailand

meets around half of its primary energy

needs through imports, so the country is

understandably keen to generate more of its

energy itself.

The aim is to have a quarter of energy

needs met by renewable sources, including

solar, by 2021. Thailand was one of the frst

countries in Asia to launch incentive schemes

to promote power generation from renewable

sources, and operates Power Purchase

Agreements guaranteeing premiums on feed-

in tariffs to incentivise new solar installations.

In contrast to India, the programmes

succeeded in creating stable, predictable

conditions (and revenue streams) for investors

to sell their solar-generated electricity into the

grid.

New policy packages were recently

approved to renew support for solar power

in the country, with preferential feed-in tariffs

for rooftop and ground-mounted solar

systems, demonstrating Thailand’s continued

commitment to scaling up the percentage

of power generated from renewable sources:

with the country targeting a solar generation

capacity of 2000 MW by 2022, it is therefore

no surprise the country is a magnet for solar

investment.

Japan’s appetite for renewables

At the other end of the scale is Japan. Prior

to the Fukushima nuclear disaster, Japan had

neglected solar and other renewable sources,

despite the country’s high levels of irradiation,

instead favouring nuclear power.

Since Fukushima, the country has had

a far greater appetite for renewable energy

programmes. New schemes are in place

with generous feed-in tariffs to promote solar

investment, and these measures are set to

take Japan into the top three solar markets

globally this year.

A report by Bloomberg New Energy

Finance predicts that Japan’s solar capacity

will double by the end of 2013, making it the

second fastest growing solar market in the

world after China.

Japan aims to cover around one ffth of

its energy mix through renewable sources in

the next decade. The feed-in tariffs are helping

promote investment in the sector, creating

excellent opportunities for industry players

right along the value chain.

What it takes to thrive

The huge price reductions that are spurring

solar uptake in Asia are inevitably creating

challenging conditions for the solar industry.

The main cost pressure for a long time has

been on module manufacturers due to

overcapacity. This is now easing.

System prices will continue to fall, but the

pace of reduction is likely to slow. Cost pressure

has now shifted away to other components in

the system, notably the inverter industry, where

we are seeing some consolidation, following

takeovers in 2013 of two of the top ten industry

players.

The systems business of REC has completed

more than 130 MW of systems designed and

executed by REC teams, and can handle

the full life cycle for the customer, from solar

panels to system design to EPC.

REC also arranges fnance solutions

and oversees long-term operations and

maintenance for the facilities we install.

REC is convinced that a local presence

also makes all the difference to success in Asia.

REC has opened its own offce in Bangkok as

part of its commitment to capturing growth

opportunities in Thailand’s fast-growing

solar market. The company also has its own

offces in Japan and India, and employs over

1000 people at an integrated, state-of-the-art,

800 MW production facility in Singapore.

Since opening in 2010, the factory has

demonstrated via high standardisation and

automation that its production costs can

compete with any plant in the world. The

company also continues to invest in and build

our Asian sales and engineering teams to

meet rising demand.

Work still to do

Solar energy may already have gained

traction in Asian markets, but there is some

way to go before it can unleash its full power.

Financing, for instance, remains a

stumbling block. Even though the fnance

REC solar panels being assembled in SingaporeCredit: REC

1309pei_36 36 8/27/13 11:26 AM

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38 Power Engineering International September 2013 www.PowerEngineeringInt.com

Solar power in Asia

community has understood and is beginning

to embrace solar, and no longer views solar

energy initiatives as excessively risky, no

investment will be forthcoming without robust

evidence to demonstrate ROI commensurate

with the risk of the project and the length of

its term.

This means presenting a solid business

case and long-term performance data.

Investors will therefore prefer installations with

high quality, high-performing solar panels from

a manufacturer who is fnancially stable and

certain to stay around.

We are proud that REC fulfls these

requirements: we produce high-performing

solar panels in our Singapore plant and

offer an industry-leading product and power

output warranty. REC is well positioned to

manage these challenging market conditions

and has a strong fnancial position compared

to our industry peers.

REC, as an environmentally responsible

company, also feels much more can be

done to improve energy effciency in Asia.

Measures can be small-scale and still be

effective – everything from improved insulation

in housing, to educating people on both the

private and commercial levels as to why and

how they should save energy.

This will slow the energy demand, ease the

strain on hard-pressed grids, and make for an

environmentally sustainable solution.

Another challenge for the industry – not

just in Asia – is the dependence on subsidies.

Subsidies do have a vital role to play in

getting a country to the position on its solar

development trajectory where it would like to

be. This holds true for a variety of countries

across the Asia region, where energy policies

and incentive programmes such as those

in Japan are bold in scale, framed by the

nuclear disaster of early 2011.

However, with prices now lower, solar

energy can increasingly compete without

subsidies. This is a challenge to many of the

players in the market – and inevitably many

will not survive once the fow of subsidies dries

up. To be viable into the future, solar will have

to work toward a world without subsidies, with

technology that is able to survive alone.

This is a key opportunity for the strong

players – and we count REC among them – to

show the value of solar.

Making solar mainstream

Much work also remains on overcoming the

reluctance of utility companies to accept

solar power. This may in fact be more of an

issue in advanced markets such as Japan

rather than in the emerging economies in

Asia; utility companies in these countries,

casting around for innovative ways to resolve

energy challenges, are only too aware that

a completely fresh approach, such as solar,

is an answer. Could Asian utilities leapfrog

their equivalent companies in Europe, and

fully embrace smart grids? As solar energy

gains more ground in markets such as India,

there will be myriad smaller, distributed power

generation facilities – some in previously un-

electrifed spots – feeding power into the grid,

and smart grid technology provides greater

fexibility for handling these complex network

topologies with infeeds from many small-scale

sources. New approaches to demand-side

management and power storage will also be

key in better managing the peaks in energy

consumption.

These solutions take solar energy to a

new level. The industry will create value by

providing customers with complete solutions

for their energy needs. Manufacturers who

have acquired broad experience with

projects in strong markets in Europe, and can

contribute their experience and expertise

in new emerging markets looking for fresh

approaches, are those who are likely to reap

the benefts as Asia’s journey to solar energy

gathers speed.

Tim Ryan is senior vice-president of Sales

for the Asia Pacifc region at REC, For more

information, visit www.recgroup.com.

Silicone production at REC’s plant in Singapore

Credit: REC

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Brazilian electricity sector

40 www.PowerEngineeringInt.comPower Engineering International September 2013

Brazilian electricity sector

As one of the BRIC nations,

Brazil is a major emerging

economy in the world. It is

also the largest economy in

the Latin Amercian region.

However, more recently

conerns have been raised over its continued

economic growth.

According to a recent forecast from its

cental bank, the economy is only expected

to grow 2.2 per cent this year, with a slight

rise to 2.6 per cent next year, although Guido

Mantega, Brazil’s fnance minister, gave a

positive signal last month, reporting that

economic growth accelerated in the second

quarter from the beginning of the year.

Like most countries, its electricity sector

will play a fundamental role in helping Brazil’s

continue its economic development. Here,

on our behalf, Focus Reports spoke to key

stakeholders in the sector: ANEEL, the regulator

of the electricity sector, Norte Energia, which

heads up the consortium building the

11.3 GW Belo Monte dam in the Amazon, and

ONS, which operates the national grid.

Romeu Rufno, President, ANEEL

ANEEL’s hydro development vision indicates

a bright future for hydro, but what about the

exploitation of other renewable sources?

Brazil is one of the best places on earth to

invest in renewable and green energies, and

our mission is to achieve this goal. In addition

to our unique hydro resource we have great

potential to utilise other renewables.

PROINFA – a renewable energy incentive

programme – was established because of

the government’s fundamental desire to grow

these energies. It has been very successful,

enabling wind, solar and biomass to all

become more competitive in energy auctions.

Recent work by EPE – the state-owned

energy research company – show that wind

power has the potential to generate close to

The electricity sector in Brazil is undoubtedly one of the most exciting and dynamic in world, yet it is also one of the most challenging. We get an insider’s view of the sector from its regulator, the company leading the controversial Belo Monte hydroelectric dam project and the national grid operator.

Brazil’s power sector: An inside view

The construction of the 11.3 GW Belo Monte hydroelectric dam in the Amazon is in full swing

Credit: R. Santos/Norte Energia

1309pei_40 40 8/27/13 11:26 AM

www.PowerEngineeringInt.com 41Power Engineering International September 2013

Brazilian electricity sector

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350 GW, which represents nearly three times

the current total level of power generation in

Brazil. Wind auctions to date have shown real

promise, so it is only a matter of time before

success for the wind industry is realised.

Solar energy is still at an early stage in its

development, yet it has incredible potential.

Our country, particularly in the north, has

a fantastic solar potential all year round.

Investing in solar plants in these areas

undoubtedly represents a secure investment.

We just need to provide the appropriate

regulation to develop this market.

Biomass is already strong here. Brazil is a big

producer of sugarcane, so biomass derived

from this industry – bagasse – is a source of

power that refects our cultural roots. It will

grow along with thermal plants as they look

for alternative sources to fuel their turbines.

Overall, renewable energies will grow in the

future. I believe we will soon conduct auctions

by source and by region, which will enable

these energies to fourish rapidly. Managing

auctions in this manner is fundamental to the

sustainability of our energy matrix.

ANEEL has many responsibilities. Nonetheless,

one of its most important roles is to establish

electricity tariffs. How is this done?

ANEEL’s role in determining electricity

tariffs is highly transparent. A large part of

establishing a tariff focuses on the concession

contract and defning the time of concession

granted for the company winning the

auction, as well as the tariffs applied across

this period.

For instance, the last tariff introduced

for distribution companies took a year. We

consulted with all stakeholders to assess which

regulation improvements should be applied

to the tariffs. This regulation provides the basis

for the tariffs. When dealing with specifc

companies, tariff readjustments are made

when consumers need to be compensated or

to avoid price variations over time.

In the end, we at ANEEL are the guardians

of the regulations developed by governmental

bodies to consolidate and establish fair rules

for the sector. Regulatory stability is our priority.

Brazil is recognised as having one of the

highest electricity tariffs in the world. Can

these tariffs be reduced?

It is clear that our electric power tariffs are

too high, particularly given the tax burden on

consumers. In this sense, one third of the fnal

electricity tariff represents the cost of state and

federal taxes: ICMS taxes on the circulation of

merchandises and services; COFINS [social

security contribution] and the PIS Program for

social integration. Another third corresponds

to the actual cost of generating the electricity,

and the fnal third corresponds to transmission

and distribution costs.

Brazil has 63 distribution companies

covering very different geographical areas.

For instance, Brasilia is one concession area

that is extremely privileged – its market is

highly concentrated, with a high per-capita

consumption but a small transmission area.

Therefore tariffs there are below average. In

contrast, if we take Celpa, in the Para region,

it has a diffuse population, resulting in a large

transmission area. This, and its low per-capita

consumption, increases tariffs substantially.

In real numbers, the best concession area

has half the cost of the worst. In some states,

the ICMS reaches up to 42 per cent of the

total electricity price. We must, therefore,work

towards reducing these taxes as much as

possible because in the end it is our citizens

who suffer.

With so many decisions to be taken in regard

to the future of Brazil’s electric power mix,

what will ANEEL be focusing on over the next

fve years?

Romeu Rufno

President of ANEEL

1309pei_41 41 8/27/13 11:26 AM

42 www.PowerEngineeringInt.comPower Engineering International September 2013

Brazilian electricity sector

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Brazil still lacks good electricity supply

services, and it must be our priority to improve

this situation. Other countries have invested

in underground electrical lines, bringing

safety and reliability, as well as reducing the

system’s environmental burden. We must work

to accomplish similar results and show the

rest of the world why Brazil is the sixth largest

economy in the world.

In addition to this goal, ANEEL will remain

a strong regulatory agency, implementing

the government directives, ensuring that new

regulations are adhered to and providing a

fair electric power market for all stakeholders,

including all our citizens.

We shall remain the guardians of Brazil’s

energy policy and collaborate with other

government and non-government bodies to

focus on improving the sector. This is ANEEL’s

key aim.

Duilio Diniz de Figueiredo,

President, Norte Energia

How is your wealth of industry experience

helping to ensure that Belo Monte’s starts

operations on schedule?

In my 42 years of experience in the power

sector, I have seen frst-hand the reforms

and adaptations that our industry and Brazil

have gone through. At the beginning of

my career, Brazil was behind in technology

and innovation, but today I can proudly say

that we have some of the most advanced

technology and are capable of managing

some of the most complex hydro projects

ever seen.

Belo Monte defnes my appetite for new

challenges and I am honoured to be part

of such a marvelous project, which is a

momentous part of Brazil’s legacy for future

generations.

With a capacity of 11.3 GW, Belo Monte will

be the third largest hydroelectric dam in the

world. What does it represent for Brazil?

Belo Monte is in the Para region, which in

fact is bigger than many European countries.

Our municipal area – Altamira – is almost as

big as Portugal.

Even though 90 per cent of the construction

work for Belo Monte takes place in Victoria

de Xingu, which has 10 000 inhabitants, it

is the Altamira area, which has seen the

biggest changes. Prior to our arrival, Altamira

had 100 000 inhabitants.

However, this region is logistically

challenging because the river does not have

a linear shape and is surrounded by dense

tropical forest. To ease the movement of

materials, we constructed a port to reduce

the costs incurred by transporting goods by

land.

New laws for hydropower projects and

Norte Energia’s vision to improve the region

go hand-in-hand with the government’s

sustainable development plan for the

regions, resulting in environmental and social

compensations being awarded over time.

Because of this a council was established

– the Regional Plan for Sustainable

Development of the Xingu – where all

stakeholders, including federal and state

government and local communities are

represented. Norte Energia is one out of 30

representatives with the right to vote. Given

we have one of 30 votes in this council, other

stakeholders have key infuence over the

shaping of this project.

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www.PowerEngineeringInt.com 43Power Engineering International September 2013

Brazilian electricity sector

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Could you outline the above-mentioned

compensations to elaborate on the social

and environmental benefts of Belo Monte?

Compensation for the communities and

funding for environmental protection are

signifcant, and cover health, education,

public safety, sanitation and housing, as well

as the local fora and fauna.

In terms of health, Altamira will receive a

modern 100-bed hospital. We will also make

improvements to the local hospital at Sao

Rafael, transforming it into a maternity hospital.

Norte Energia also donated 11 ambulances

and four rescue boat teams, which will provide

a fast response to communities living along

the river. Furthermore, malaria is a serious

threat in this region, so our health teams have

been involved in addressing this problem.

From January to June this year, malaria

incidents fell by 77 per cent, compared to the

same period in 2011.

With regard to our education plan, 44

schools have been built and 22 are under

construction. These new facilities, built to

national standards, will give 8500 students the

chance to have a solid education.

Since 2010, Norte Energia has established

new job location services helping communities

fnd a position on the construction site. This has

helped to register over 25 000 people, out of

which only 6000 are migrants.

Our participation has also improved the

regions sanitary conditions and infrastructure.

Around $250 million will be invested in water

and sewage networks connecting Altamira to

Vitoria do Xingu. New neighbourhoods have

also been constructed. By 2014, this will total

4100 living units.

One key component of our activities in this

region is our local support for indigenous tribes.

We have put real emphasis and priority on

the matter of preserving these communities,

their cultural identity, ethnic development,

and protection of their land. We will assist

them with a tailor-made programme, covering

health, education, environmental protection,

infrastructure and territorial management.

We are fully aware of their expectations and

are doing our best efforts to meet their land,

culture and freedom requirements.

Norte Energia has also invested in 14

environmental programmes to protect the

region’s unique wildlife and plants. Beyond

species protection, we are undertaking a

number of scientifc studies, with the aim

of taking real steps forwards in terms of our

understanding. This will help further protect the

future of the natural fauna and fora. We have,

for example, undertaken a fsh biotelemetry

project, using combined acoustic and radio

telemetry, to learn more about their migration

and behavioral patterns before and after Belo

Monte was initiated.

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Overall these actions highlight Norte

Energia’s care for local communities, which is

underpined by our belief that hydropower is

a powerful source of multilateral development

for a region.

If we were to meet again in fve years’ time,

how would you like us to view Norte Energia?

Norte Energia should not be seen only

as a generator of electricity. It is also a social

development tool, promoting education,

health, public sanitation, public safety and

environmental development. We have invested

more than $500 million in environmental and

social projects in the area, as well as supporting

neighbouring communities. By the end of the

Belo Monte project, the investment is expected

to reach $1.8 billion. Our investments are a

testimony to our belief in the development

potential of this region.

In fve or six years, the region will be

transformed and Belo Monte will be part of the

landscape. Hence, the biggest transformation

will be social, granting families’ dignity, and for

the frst time will give locals better opportunities

in life.

Hermes Chipp, General Director,

ONS

A country’s electricity transmission network

represents its backbone, ensuring supply

and sustainability. What are your views on the

Brazilian transmission system?

In Brazil, the transmission grid does not

simply connect generation sites to load

centres: rather it is a fundamental tool to

enable us to take advantage of the diversity

of hydrological behavior of the country’s

river basins, and thereby maximise the use of

available hydro resources.

The expansion of new hydro projects in

the Amazon region brought with them the

challenge of transporting their power over a

distance of 2500 km to the major load centres,

located in the southeast and northeast of the

country. Therefore, HVDC technology was the

obvious solution. Our engineering capabilities,

technology used and expertise in high-voltage

transmission make Brazil highly competitive in

this domain.

In recent years, the country has achieved

landmarks in the integration of electric power

systems. The states of Acre and Rondonia

were integrated into the grid in 2009 and, this

year, we will complete the interconnection of

Amazonas and Amapa. We expect to integrate

the last remaining state, Roraima, by 2016.

Innovation is a fundamental part of being

able to establish a highly-effcient and

reliable power system. What is the status of

technology developments in this area?

Due to the unique characteristics of the

Brazilian power system, it was necessary

to develop our own solutions to manage

the country’s energy resources. CEPEL, the

electric power research centre, together

with our major universities, play an important

role in the development of tools to achieve

optimisation.

The Brazilian power sector closely follows

the international development of technologies

for control centres and grid management,

and many fruitful national and international

partnerships have helped us to reach a high

standard in power system operation.

Controlling the operations of generation and

transmission companies is a very challenging

For more information, enter 26 at pei.hotims.com

1309pei_44 44 8/27/13 11:26 AM

www.PowerEngineeringInt.com 45Power Engineering International September 2013

Brazilian electricity sector

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task. How has ONS been successful in this

initiative, and what are the measures that

need to be taken to assist these companies?

ONS is pleased to be a member of the

GO 15 ‘Reliable and Sustainable Power

Grids’, comprising major grid operators from

rigth across the globe. The main aim of this

special association is to discuss the necessary

transition and adaptation of power systems

to make grids more effcient through new

technologies and to discuss the future of

energy markets.

Together these operators represent more

than 70 per cent of the world’s electricity

demand and are discussing above all else

what reforms need to happen to increase the

participation of renewable energies for the

sustainability of their own energy models.

What we are observing today is that

operators that own their grid have total control

over what their equipment achieves. Here, in

Brazil, this is not the situation. Nowadays we rely

on 25 grid codes and our objective is always

to build on and improve these procedures, in

order to help us control and coordinate our

complex grid.

Collaboration is a must in any industry and

should be embraced to enable the sharing

of experience, and even assets. This is exactly

what GO 15 aims to do. These representatives

are CEOs with clear ideas about the necessary

reforms that need to be put in place to

improve grid reliability right across the globe.

Therefore bilateral agreements have been

signed and currently we are in an agreement

process with Spain for wind technology

transfer in return for our expertsie in HVDC.

In conclusion, what would you say are the

future priorities and ambitions of ONS?

Our frst priority is to achieve our institutional

mission, which is to guarantee the economic

and reliable supply of power to all consumers,

taking into account the increasing operational

complexity of the power system because

of the diversity of energy resources and the

continental size of the transmission grid.

Secondly, our ambition is to be up to

date with new technological advances in

power system operation, such as smart grids,

demand-side management, solar panels

and electrical vehicles. All these issues will

very soon become part of ONS’ day-to-day

reality.

In partnership with Focus Reports, we will be

publishing an in-depth report on the Brazilian

electricity sector this year – scheduled for the

November issue. For more information on

Focus Reports, visit www.focusreports.net

Visit www.PowerEngineeringInt.com

for more information i

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Hermes Chipp

General Director of ONS

1309pei_45 45 8/27/13 11:26 AM

46 Power Engineering International September 2013 www.PowerEngineeringInt.com

Vietnam’s economy has been

transformed by ongoing

market-oriented reforms

and recent rapid economic

growth of over 7 per cent

between 1990 and 2011.

GDP has increased from $6.4 billion in 1990 to

$141.6 billion in 2012. Demand for electricity

in Vietnam is now at an all-time high due

to the rapid growth in the last decade and

expansion of the country’s economy. Many

challenges have stood in the way of improving

the country’s power system. Between 2007 and

2012 an average of less than 2000 MW were

added annually, which was not enough to

meet current demand, and with government

projections of over 50 000 MW needed by

2020, Vietnam must address issues hampering

the development of its power sector.

Vietnam

For the past decade Vietnam has witnessed GDP growth in excess of 7 per cent, but this has not been matched by an increase in generation capacity. In order to achieve its ambitious capacity expansion goals Vietnam will need to restructure its regulatory policies, power tariffs and fuel linkages, as well as expand its fnancing and attract foreign investment, argues Ravi Krishnan.

A land of both opportunities and challenges

Son La Dam: power generation in Vietnam

is dominated by hydro and natural gas

Credit: Alstom

5% Others & Imported

35% Hydro 37% Gas & Oil

23% Coal

Figure 1: A breakdown of Vietnam’s current fuel mix

1309pei_46 46 8/27/13 11:26 AM

www.PowerEngineeringInt.com 47Power Engineering International September 2013

Vietnam

For more information, enter 28 at pei.hotims.com

Figure 2: Structure of Vietnam’s power industry

Ministry of Industry and Trade

• Policy Making

• Development guidelines

• Industry regulator

Prime Minister

Final approval of policies

and guidelines

Independent Power PLants

(IPPs)

• Local IPP developers

• Foreign IPP developers

Independent Power

Distribution Companies

Develop and operate rural

low-voltage networks

Rural Customers

• Rural cooperatives

• Rural households

10 million Customers

• Industrial & commercial

• Urban households

Electricity of Vietnam

• Generation: 50.7%

• Transmission: 100%

• Distribution: 95%

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customers

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48 Power Engineering International September 2013 www.PowerEngineeringInt.com

Vietnam

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The Vietnamese government is in the process of deregulating

the power industry which will increase competition and effciency

in the marketplace. While advances have already been made, the

full realisation of a competitive retail market is not expected until

2022. Other contributing factors to the current shortfalls in capacity

addition that must still be overcome are the shortage in domestic coal

production, high prices for imported coals, administered natural gas

prices discouraging investment, and water scarcity.

Low-reserve margins

Vietnam currently has approximately 23,000 MW of installed capacity

and its annual power production is approximately 115 000 GWh.

Vietnam has one of the lowest electricity consumption rates in Asia

at just over 1000 kWh per capita. The current annual GDP growth

rate is approximately 6 per cent, however the growth of electricity

consumption is 12 per cent per year. This gap will continue to widen

if construction of new power plant capacity does not increase. In the

fve-year span from 2007 to 2012, the total power generation capacity

of Vietnam increased by 9500 MW. Yearly additions averaged under

2000 MW, which is well short of the average annual target of 4000 MW.

Looking forward, the power demand is projected to increase

about 4100 MW every year between 2013 and 2015 based on an

annual 7 per cent average GDP growth. The shortfall in power supply

is especially prevalent at times of peak demand. Thirty-fve per cent

of the country’s installed capacity is provided by hydroelectric power

plants which exacerbates the already poor situation during the dry

season. One recent example was the 2010 drought, which resulted

in signifcantly reduced availability at hydroelectric power plants,

which in turn caused rolling blackouts and periodic load shedding,

particularly in the major cities.

Not keeping up with demand

Vietnam’s ambitious plans to increase power capacity are marked

by a proposed rapid build-out of thermal power plants. The long-term

target by the government is to achieve 75,000 MW by 2020. According

to the base case scenario of the 7th Power Development Plan, the

overall domestic power demand is forecasted to increase by 14–16 per

cent annually in 2011–15, and by over 11.5 per cent per year between

2016 and 2020.

On the other hand, the growth rate of the total power supply in

the periods of 2011–15, and 2016–2020 are at least required to reach

about 14 per cent and 10 per cent respectively. Within the eight

years from now, Vietnam must construct an additional 53,000 MW

to meet this goal. New coal-fred capacity requirement is targeted at

28,000 MW by 2020. New oil- and gas-fred capacity is targeted at

14,700 MW by 2020. In 2020, the frst nuclear power plant with the

designed productivity of 2000 MW in Ninh Thuan will commence

operation. As per the Power Development Plan, by 2030, coal-based

generation will increase to 56 per cent while hydropower and gas will

drop by 15 per cent and 13 per cent.

Challenges to overcome

The bulk of Vietnam’s power challenges stem directly from how

the country’s power sector is structured. The power industry is still

dominated by public ownership. In its attempt to increase private

1309pei_48 48 8/27/13 11:26 AM

www.PowerEngineeringInt.com 49Power Engineering International September 2013

Vietnam

sector participation, the country split its power sector operations

into three state-owned companies in the mid-1990s: PetroVietnam,

Vinacomin (former Vinacoal), and Electricity of Vietnam (EVN). Today,

EVN and its affliates generate 80 per cent of the nation’s electricity, 40

per cent of which come from hydropower.

EVN is a state-owned enterprise which reports directly to the prime

minister, and is currently the major producer of electricity. EVN also

holds a practical monopoly on electricity transmission and distribution.

This makes it effectively the controller of the existing energy businesses

and prevents introduction of new players.

In 2006, the government approved a roadmap for establishing a

competitive power market and began to restructure the sector, starting

with establishing EVN as a private holding company.

This restructuring involves a move from the system of state-owned

firms having direct market control to a system in which the energy

supply and demand is decided by the market. The restructuring is

intended to encourage fair and efficient competition, and some

results have been achieved. Private investors are being encouraged

to participate in power generation projects and trade in petroleum

products. Prices are being benchmarked against international prices

in the downstream market for coal, and benchmarking of oil and gas

is planned to be established by 2015.

In accordance with the Vietnam Electricity Law, a roadmap

has been set up that includes three phases for power market

development. The first phase for a competitive power generation

market, commenced in 2009, and is slated for completion in 2014. This

will be followed by the second phase, beginning in 2014 and ending

in 2022, establishing a competitive market in bulk power. Finally, the

third phase is the introduction of a competitive retail power market,

scheduled to take place from the year 2022.

The process of deregulation has been plagued by continuous

delays due to bureaucracy and hold-ups in generating units in

installing the required systems and processes to enable collection and

processing of information to calculate their power prices

One of the biggest challenges for Vietnam is to satisfy the swelling

coal requirement. A country that in 2008 produced 40 million tonnes of

coal a year and exported nearly 80 per cent of it will witness a growing

domestic demand for coal but cannot guarantee its future supply. The

coal requirement for 2020 and 2030 will be around 78 million tonnes

and 170 million tonnes respectively based on current projections.

Vietnam’s indigenous supply of coal increases only 5–8 per cent

annually. Inadequate domestic supply will continue to challenge

capacity expansion issues. It is estimated that over 30 billion tonnes

are located in the northern Red River basin, but these are untapped

because the region is one of the country’s largest rice-growing area.

Additionally, Vietnam does not have the capital to develop new mines.

Another reason cited is the high cost of producing Vietnam’s primary

coal anthracite at $230/tonnes compared with an average $110/

tonne for steam or thermal coal.

Imported sub-bituminous coal from Indonesia is the most likely

source of coal to meet domestic shortfall. However, use of imported

fuel will require tariff revisions. Either EVN has to implement a retail tariff

mechanism that passes these costs to consumers or else government

guarantees are needed. Domestic supply of coal is becoming more

expensive and likely to be reaching production limits by 2020. Therefore,

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50 Power Engineering International September 2013 www.PowerEngineeringInt.com

Vietnam

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the government needs to develop policy that

adjusts power prices to refect the cost and a

reasonable rate of return for private producers.

Additionally, Vietnam’s ability to take equity

positions in overseas coal mines is limited.

The government strictly regulates electricity

retail prices, with adjustments recommended

by the Ministry of Trade and Industry (MoIT)

and requiring approval by the prime minister.

A unifed tariff is applicable across the

country and is low in comparison with other

regional countries. Both average urban and

rural residential rates are cross subsidized

by higher rates for industry, commerce, and

foreign consumers.

To attract more investment from the private

sector in developing IPP projects, MoIT and

EVN have been working on a roadmap for

price increases and gradual elimination of

government’s control. Any initiative to increase

tariff rates can be politically risky for the

government. To harness foreign fuels, EVNs

average tariff needs to be 30–35 per cent

higher than current levels to make EVN a secure

counter-party. Subsidies and price ceilings can

potentially make EVN a risky off-taker.

Natural gas prospects are presently

impacted by depressed prices paid to

developers and poor pipeline infrastructure.

Furthermore, meeting future power generation

targets will be subject to gas volume and supply

confrmation from southeast and southwest

Vietnam. The policy of maintaining the low gas

price tends to discourage investment in gas

exploration and development.

As a result, gas supply will not be suffcient

for economic development in the coming

years, especially after 2015. Vietnam needs to

make structural changes such as:

• Instituteacomprehensivenational

natural gas policy;

• Establishacomprehensivegaslaw;

• Openaccessandwholesalecompetition;

• Removegaspricecontrols;

• Reducepressureongasdemand.

Today, power generation in Vietnam

is dominated by hydro and natural gas.

However, looking into the future, this southeast

nation’s current Power Development Plan

(PDP) is setting its sights on coal-fred power

generation with proposed rapid build-out of

thermal power plants.

Faster commissioning

The long-term forecast as per Vietnam’s Master

Year 2007 2008 2009 2010 2011 2012

Total installed capacities (MW) 12,510 13,850 15,539 18,540 20,040 22,044

Increase on previous year (MW) 240 1340 1689 3001 1500 2004

Growth in Vietnamese generating capacity, 2007-12

1309pei_50 50 8/27/13 11:27 AM

www.PowerEngineeringInt.com 51Power Engineering International September 2013

Vietnam

Plan VII is targeting 75,000 MW of installed

capacity by 2020 and 158,000 MW by 2030.

Power projects will have to be commissioned

at signifcantly faster rates as capacity grew by

only 12,000 MW in the last ten years.

Several challenges will need to be

overcome, including diversifying its energy

mix, securing future fuel supplies, increasing

domestic coal production, power tariff

revisions, raising investor capital to build new

projects and controlling corruption. Due to

subsidies, domestically-produced coal and

natural gas are priced substantially lower than

imports, which are at international levels. Dual

pricing makes it diffcult to determine the true

cost of electricity. Further, electricity tariffs are

still regulated by the central government, and

are underpinned by significant cross-subsidies.

This causes distortions in the energy market

system dissuading international investment.

Additionally, the dominance of state-

owned enterprises makes them effective

controllers of the existing energy businesses

and prevents the introduction of new players.

Therefore, along with the deregulation,

additional measures such as monopoly

prevention, equitisation, and privatisation

are needed in order to develop an effcient

energy market.

About the author Ravi Krishnan is managing

director of Krishnan & Associates Incorporated,

a US-based market advisory frm providing

market information, analysis, regulatory and

technology assessments on various global

energy markets. For more information, visit

www.krishnaninc.com.

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52 Power Engineering International September 2013 www.PowerEngineeringInt.com

Using current technology to

capture the carbon in fue gas

at fossil fuel power plants would

increase the cost of electricity

they produce by between 35

per cent and 85 per cent, but

a simulation shows that using supported

amine sorbents (SASs) instead could be a less

expensive solution.

SASs would reduce these facilities’ capital

expenditure on a capture facility because

the adsorber which contains these materials

would be about 60 per cent smaller in volume

than the absorber that would be required if

the monoethanolamine (MEA) solutions of

today’s technology were used to perform the

same task. This is because the SAS system

avoids the slow mass transfer associated with

dissolution and diffusion in the liquid in the

MEA system. And these cost savings come on

top of energy savings.

Today capture and compression costs

contribute to around 80 per cent of the total

cost of carbon capture and storage (CCS)[1].

But excluding compression, thermal energy

consumption and other operational costs

dominate capture costs, as shown in Figure

1, and the capital expenditure, 28 per cent, is

mainly made up of the cost of the absorption

unit, covering almost 50 per cent of the total

CAPEX.

Figure 2 breaks down the energy

requirement fraction (44 per cent of the total

cost of CO2 capture) into contributions for

reaction or desorption heat, sensible heat and

solvent evaporation.

A large part of the energy requirement

of an MEA process arises in the heating

of the amine solution from the absorption

temperature to the desorption temperature,

and in the evaporation of solvent in the

desorber column, so replacing the water

phase with an SAS greatly reduces the energy

required for regeneration. An adsorption-

based capture process could reduce the

net energy requirement for CO2 capture from

roughly 3.3 GJ/tonneCO2

(GJ/tCO2)[4] to

below 2 GJ/tCO2, assuming that 75 per cent

of the heat contained by the regenerated

sorbent is recovered for heating the sorbent

before it enters the desorber.

If co-adsorption of water can be prevented

and no water has to be evaporated in the

desorber, the process energy requirement

could even be 1.7 GJ/tCO2.

Another advantage of using SAS

would be the reduction of the emissions

of toxic degradation compounds such as

nitrosamines and nitramines.

Cost-effective carbon capture

Supported amine sorbents (SAS) could make post-combustion carbon capture less costly. So says A. B. M. Heesink, R. Veneman, G. Magneschi and D. W. F. Brilman, who outline a conducted simulation that points to this conclusion.

Cutting the cost of carbon capture

Figure 1: Typical cost breakdown for MEA-based

carbon capture[2,3]

Figure 2: Typical energy breakdown for NEA-based

carbon capture[2,3]

Cost breakdown

28% OPEX (other)

28% CAPEX 44% Energy req.

45% Sensible heat

15% Evaporation

Energy requirement

36% Reaction heat

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1309pei_53 53 8/27/13 11:27 AM

54 Power Engineering International September 2013 www.PowerEngineeringInt.com

Cost-effective carbon capture

Simulation

Our simulation employed DNV KEMA Energy

& Sustainability’s Spence® fowsheeting tool,

which determines power plant performance

accurately. Data about the sorbent has

come from SAS that the University of

Twente in the Netherlands has produced

through the physical impregnation of

polymethylmethacrylate, (PMMA) in this case

Diaion™ HP-2MG, with tetraethylenepentamine

(TEPA) and polyethyleneIimine (PEI) of different

molecular weights and chain lengths.

Our analysis calculated the effciency of

a typical natural gas-fred combined-cycle

(NGCC) plant of 446 MWe and a ultra

supercritical pulverised coal (PC) plant of

1069 MWe, each equipped with either an

MEA-based capture facility or an SAS-based

one, providing four cases. The analysis

compared the amount of energy consumed

per kg of CO2 captured in each case.

SAS characteristics

SAS consist of a support material of high

surface area with amine functional groups on

their surface[5]. The university’s sorbent material

had a CO2 capacity of 3.8 mol/kg sorbent [6].

Figure 3 shows adsorption isobars for a

typical developed sorbent. The sample was

heated from 40ºC to 140ºC at a rate of 0.1

K/min in fractions by volume of 1 per cent, 5

per cent, 10 per cent and 80 per cent CO2

atmosphere (balance N2) at a total fow rate

of 100 ml/min. From the selected adsorption

and regeneration conditions the sorbent

operating capacities were calculated for CO2

capture at NGCC and PC plants.

Flue gas from an NGCC plant typically

contains 4–7 per cent of CO2 by volume,

whereas from a PC plant it contains 10 to 15

per cent.

The sorbent working capacity is the

difference between the CO2 loading under

adsorption conditions and the loading under

desorption conditions. During capture, when

the fue gas contains 10 per cent of CO2 by

volume and desorbing is at 130ºC, working

capacities of around 3.1 mol/kg can be

achieved with the developed sorbent. For

capture from fue gas containing 5 per cent

CO2, working capacities of about 2.6 mol/kg

can be achieved under these conditions.

Process analysis

The Spence fowsheeting tool calculated how

much thermal energy each case of power

plant would require for regeneration of the

solvent or sorbent and what the resulting drop

in power from the plant would be. This thermal

energy would come from low-pressure steam

at 4.6 bara (460 kPa) for the NGCC plant and

3.5 bara for the PC fred plant.

Table 1 shows general information about

the carbon capture facility. The boundary

of interest of the system excludes CO2

transport and storage systems but includes

compression.

The models

The modelled MEA-based capture facility was a

standard regenerative absorption-desorption

system, with a net thermal energy input of

3 GJ/CO2. Values for the heat requirement of

leading absorption technologies are between

2.7–3.3 GJ/tCO2[4]. Operational assumptions

for the absorber and desorber column were

110 kPa and 40ºC, and 170 kPa and 118ºC,

respectively. The fue gas side pressure drop

was 8.15 kPa for the PC system and 4 kPa for

the NGCC system.

The electrical energy requirement of the

capture facility came from three types of

equipment: the fue gas blower, the pumps to

circulate the absorption liquid and the CO2

product compression equipment.

The SAS model was also a regenerative

system in which sorbent material circulated

between the adsorber and desorber columns,

the operating temperatures in which were

60ºC and 130ºC, respectively, and the pressure

atmospheric in both cases.

Calculation of the thermal energy input

of this facility relied on the work of Li et al[7]

and sums the desorption heat, equal to

1.5 GJ/tCO2[8], and the sensible heat required

to raise the sorbent from the adsorption

temperature to the desorption temperature,

Figure 3: Adsorption isobars for 1 per cent, 5 per cent, 10 per cent and 80 per cent of CO2 by volume

(Ptotal

= 100 kPa). The sorbent was 38 per cent by weight TEPA on PMMA

Parameters NGCC PC

Flue gas CO2 content (vol.%) 4.4 13.7

CO2 captured (kg/s) 38.0 202.3

Capture effciency (%) 90 90

CO2 purity (%) 95 95

Pressure CO2 product stream (bar) 110 110

Table 1: Capture plant data for selected cases

1309pei_54 54 8/27/13 11:27 AM

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56 Power Engineering International September 2013 www.PowerEngineeringInt.com

Cost-effective carbon capture

which depends on the heat capacity of

the sorbent (1.5 KJ/kg/K), the temperature

difference between the adsorption and

desorber columns (70 K) and the cyclic CO2

capacity of the sorbent.

Figure 4 shows the net thermal energy

requirement of the process as a function of

sorbent working capacity. For the selected

adsorption and regeneration conditions,

this is about 1.7 GJ/tCO2 at sorbent working

capacities of 2.6–3.1 mol/kg when heat

integration is applied, or 40 per cent lower

than in MEA-based systems with advanced

stripper confgurations – typically 3 GJ/tCO2.

At working capacities higher than 2 mol/

kg the reaction heat dominates the thermal

energy demand. Furthermore, increasing the

sorbent working capacity beyond 4 mol/kg

does not improve the overall performance.

Heat integration (lean/rich heat

exchanger) is more important in aqueous

solvent based processes, as fgure 5 shows.

In the calculations underlying Figure 4 the

assumption was made that 75 per cent of the

sensible heat required for heating the sorbent

can be recovered. Possible co-adsorption of

water in the adsorber column was not taken

into account.

The calculation of the electrical energy

required summed the energy consumed by

the fue gas blower, sorbent circulation and

CO2 compression. Generally compression of

captured carbon accounts for 20–25 per cent

of the total electrical energy requirement[9]. The

experimental work at the University of Twente

shows sorbent regeneration at elevated

pressure of up to 1000 kPa can further improve

the energy effciency of an SAS-based capture

process in a CCS setting. Releasing CO2 at 500

kPa, for example, would reduce the electrical

energy required for compression signifcantly

and eliminate one compression stage.

The fue gas side pressure drop in the

absorber depends strongly on the type

of contactor chosen. Fixed bed operation

leads to very high pressure drops and is not

a realistic option. Moving bed and fuidisation

technologies are more suitable options.

From an ongoing process optimisation

study by Veneman et al[6] the most promising

option appears to be a countercurrent gas-–

solid (G–S) trickle bed contactor. The pressure

drop for this contactor is estimated to be

around 6.4 kPa. Our energy calculations used

a value of 7.5 kPa. On the regenerator side the

pressure drop is less critical and a (staged)

fuid bed confguration might be a more cost-

effective option.

The installation of a capture facility at a

power plant results in a decrease in electrical

power output because steam is extracted

from the plant for the regeneration of the

solvent or sorbent. Table 2 shows the effect.

However, the lower thermal energy

requirement of the SAS-based process means

the loss in gross power is less than in the case

of a solvent-based process.

A PC power plant emits 2.7 times more CO2

per MWh than an NGCC plant, so application

of carbon capture at a PC plant has a higher

impact on the power output.

Figure 6 plots the energy demand in

GJ/tCO2 of the capture facility for each case.

The columns labelled ‘Thermo min. work’ show

the thermodynamic minimum amount of work

required for CO2 separation and compression

to 11,000 kPa.

The desorption energy fraction is related to

the decrease in the electrical energy output

of the power plant caused by the extraction

Figure 4: Thermal energy input for an SAS facility in a process simulation. Heat integration yields 75 per cent

of the energy needed to raise the sorbent temperature from that of adsorption to that of desorption.

Figure 5: Importance of capture plant heat integration for MEA and SAS. For MEA it is assumed that the

pinch in the rich-lean heat exchanger is 10ºC

1309pei_56 56 8/27/13 11:27 AM

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58 Power Engineering International September 2013 www.PowerEngineeringInt.com

Cost-effective carbon capture

of low-pressure steam for the regeneration of

sorbent/solvent. The electrical energy fraction

includes energy for the circulation of sorbent

or solvent and the power demand of the fue

gas blower. The ‘compression energy’ fraction

is related to the power consumption of the

CO2 compressor.

Figure 6 shows that an SAS-based capture

facility at an NGCC plant would be 32 per

cent more effcient than an MEA-based one.

For a PC plant an SAS-based plant is 35 per

cent more effcient.

Additional savings could be reached by

further reduction of the fue gas side pressure

drop and possibly via high-pressure sorbent

regeneration, which could save up to 10 per

cent of the CO2 compression energy. A value

of 65 kJ/molCO2 for the reaction heat was

assumed here, typical for secondary amines.

The values reported by Gray et al of 47.5 and

51.6 kJ/molCO2 for immobilised PEI would

reduce the reaction heat contribution by

another 0.3–0.4 GJ/tCO2 to below 1.5 GJ/tCO

2

and reduce the overall energy consumption by

0.1 GJ/tCO2.

Process design & CAPEX

Figure 7 shows the breakdown of purchased

equipment costs for an MEA-based capture

unit at a 500 MWe PC plant (excluding the CO2

compressor). Almost 30 per cent of the costs is

associated with the absorber[10]. The size of the

absorber is predominantly determined by the

residence time of the fue gas.

The application of SAS could potentially

reduce the size of the absorber column

because G–S systems have a higher overall

mass transfer rate.

For conventional MEA scrubbers, overall

mass transfer rates depend on the type of

packing but are 10-2 to 10-1 (kLa/s)[11]. Typical

values for G–S systems are 101 kGa/s [12]. So

CO2 uptake rates are expected to be higher

than for the MEA benchmark technology,

even though CO2 absorption is signifcantly

enhanced by the chemical reaction

between CO2 and the dissolved MEA.

The enhancement factor EA can be as

high as 102. This means an SAS-based facility

could be equipped with an adsorption

Figure 6: Electricity consumption for capture facilities studied

Plant Data NGCC PC

No capture MEA SAS No capture MEA SAS

Heat input (MWth) 756.7 756.7 756.7 2307.3 2307.3 2307.3

Gross power (MWe) 452.4 408.2 431.1 1116.7 935.9 1031.8

Net power (MWe) 445.5 384.2 403.8 1068.6 804 897

Power plant auxiliaries (MWe) 6 5.1 5.6 45.9 46 45.9

Capture plant electricity demand (MWe) - 6 7.3 - 19.9 14.2

CO2 Compression (MWe) - 12.1 13.6 - 64.5 72.9

Power output reduction (MWe) - 61.3 41.7 264.6 171.6

Net plant effciency (%) 58.9 50.8 53.4 46.3 34.8 38.9

Effciency penalty (%-points) - 8.1 5.5 - 11.5 7.4

Emitted CO2 (kg/s) 42.2 4.2 4.2 224.8 22.5 22.5

Captured CO2 (kg/s) 0 38 38 0 202.3 202.3

Emission rate (tCO2/MWh) 0.34 0.04 0.04 0.76 0.10 0.09

CO2 capture energy requirement (GJ

el/tCO

2) - 1.61 1.10 - 1.31 0.85

Table 2: Simulation results

1309pei_58 58 8/27/13 11:27 AM

www.PowerEngineeringInt.com 59Power Engineering International September 2013

Cost-effective carbon capture

column smaller than the absorption

column of an MEA-based facility.

When applying SAS, a G–S trickle fow

reactor could perform as well as a CO2

adsorber. It allows for counter-current G–S

contacting and can be operated at gas

velocities equal to or higher than those

in an MEA scrubber, without resulting in

unacceptable pressure drops. Preliminary

sizing of a G–S trickle fow adsorber was

performed using the hydrodynamic model for

trickle fow reactors developed by Dudukovic

et al[13].

Table 3 compares SAS and MEA systems

for productivity, pressure drop in view of

electricity consumption for the fue gas blower,

Figure 7: Breakdown of the costs of purchased

equipment of an MEA-based capture facility

(excluding the compressor) at a 500 MWe coal

fred power plant[10]

Technical comparison (MEA) Fisher et al[10] (SAS) current work

Flue gas fow rate (m3/s) 576.4 579.2

CO2 captured (kg/s) 115.2 115.2

Solvent/Sorbent capacity (mol/kg) 0.96 3.6

Solvent/Sorbent fow rate (kg/s) 2739 873

Ab-/adsorber volume (m3) 4713 2387

Number of ab-/adsorption units 4 2

Ab-/adsorber dimensionheight: 15 metres,

diameter: 10 metresheight 11 metres,

diameter: 12 metres

Adsorber productivity (mol/m3/s) 0.56 1.2

Gas velocity (m/s) 1.83 2.55

Pressure drop (kPa) 10.3 6.42

NTU 2.2 3.32

HTU (m) 6.82 3.04

(EA)k

ma/(s) 0.27 0.84

Table 3: Design for absorber or adsorber for capturing 90 per cent of the CO2 emitted by a

500 MWe PC-fred power plant

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60 Power Engineering International September 2013 www.PowerEngineeringInt.com

Cost-effective carbon capture

and operating velocity in view of the footprint

of the absorber/adsorber. Productivity was

defned as the amount of CO2 captured per

second per m3 of installed reactor volume,

which is a measure of compactness and,

therefore, of capital expenditure.

Expectations are that a gas-solid trickle

bed adsorber would outperform an MEA

scrubber column in productivity (1.20 mol/

m3/s versus 0.56 mol/m3/s). The total installed

reactor volume is expected to be two to three

times smaller primarily because of the higher

mass transfer rates in trickle bed reactors.

Recommendations

Table 4 compares a sorbent-based capture

process with state-of-the-art capture

technology that employs aqueous amine

solvents.

Co-adsorption of water by a sorbent results

in extra energy consumption during capture

and complicates sorbent regeneration

because CO2–water separation would

be needed. However, frst measurements

performed by the University of Twente have

shown that CO2 capacity is not negatively

affected by the presence of water.

A second recommendation is to determine

possible sorbent degradation by traces of

NOx and SOx in the fue gas, as well as the

potential presence of nitrosamines and

nitramines in the treated fue gas and, with this,

the need for a washing section.

The mechanical stability of the sorbent

should also be examined to determine the

maximum number of cycles that can be

attained with a single batch.

Sorbent regeneration under elevated

pressure needs further examination too.

Pressurised regeneration would enable further

energy savings as CO2 compression would

consume less energy and one compression

stage can be omitted.

A fnal recommendation is to prepare a

conceptual design of a full-scale sorbent-

based carbon capture unit to provide a more

detailed estimate of what the savings will be in

energy and capital expenditure.

Parameter/feature Aqueous amine

solvent (reference)SAS

Energy consumption +/- ++

Potential for further energy savings +/-+ (high-pressure regeneration)

Solvents / sorbents handling +/- -

Solvent/sorbent degradation +/- +/-

Bare equipment costs (CAPEX) +/- +

Emissions of toxic nitrosamines/ nitramines

+/- (not known)

Table 4: Comparison of aqueous amine solvents and SAS

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www.PowerEngineeringInt.com 61Power Engineering International September 2013

Cost-effective carbon capture

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References

1.Brunetti A, Scura F, Barbieri G, Drioli E,

Membrane technologies for CO2 separation,

J. of Membrane Science, 359 (2010) 115-125.

2. Abu-Zahra M R M, Schneiders L H J, Niederer

J P M, Feron P H M, Versteeg G F, CO2 capture

from power plants: Part I. A parametric

study of the technical performance based

on monoethanolamine, Int. Journal of

Greenhouse Gas Control, 1 (2007), 37-46

3. Abu-Zahra M R M, Niederer J P M, Feron P

H M, Versteeg G F, CO2 capture from power

plants. Part II. A parametric study of the

economical performance based on mono-

ethanolamine, Int. Journal of Greenhouse

Gas Control, 1 (2007), 135-142

4. Mathieu P, The IPCC special report on

carbon dioxide capture and storage, ECOS

2006: Proceedings of the 19th International

Conference on Effciency, Cost, Optimisation,

Simulation and Environmental Impact of

Energy Systems, Vols 1-3, (2006) 1611-1617.

5. Ebner A D, Gray M L, Chisholm N G, Black Q T,

Mumford D D, Nicholson MA, Ritter JA, Suitability

of a solid amine sorbent for CO2 capture by

pressure swing adsorption, Industrial and

Engineering Chemistry Research, 50 (2011)

5634-5641.

6. Veneman R, Li Z S, Hogendoorn J A, Kersten

S R A, Brilman D W F, Continuous CO2 capture

in a circulating fuidised bed using supported

amine sorbents, Chemical Engineering

Journal, (2012).

7. Li Z S, Cai N S, Croiset E, Process analysis

of CO2 capture from fue gas using

carbonation/calcination cycles, AIChE J, 54

(2008) 1912-1925.

8. Fauth D J, Gray M L, Pennline H W, Krutka H

M, Sjostrom S, Ault A M, Investigation of porous

silica supported mixed-amine sorbents for

post-combustion CO2 capture, Energy and

Fuels, 26 (2012) 2483-2496.

9. Rochelle G, Chen E, Freeman S, Van Wagener

D, Xu Q, Voice A, Aqueous piperazine as the

new standard for CO2 capture technology,

Chemical Engineering Journal, (2011).

10. Fisher K S, Beitler C, Rueter C, Searcy K,

Rochelle D G, Jassim D M, Integrating MEA

regeneration with CO2 compression and

peaking to reduce CO2 capture costs,

DOE/NETL report, Contract No. DE-FG02-

04ER84111, (2005).

11. Jassim M S, Rochelle G, Eimer D, Ramshaw

C, Carbon dioxide absorption and desorption

in aqueous MEA solutions in a rotating

packed bed, Industrial and Engineering

Chemistry Research, 46 (2007) 2823-2833

12. Kiel J H A, Prins W, van Swaaij W P M,

Mass Transfer between gas and particles

in a gas solid trickle fow reactor, Chemical

Engineering Science, 48 (1993), 117-125

13. Dudukovic A P, Nikacevic N M, Petrovic D

L, Predojevic Z J, Solids holdup and pressure

drop in gas fowing solids-fxed bed contactors,

Industrial & Engineering Chemistry Research,

42 (2003), 2530-2535.

A. B. M. Heesink and G. Magneschi are from

DNV KEMA, based in the Netherlands, and

R. Veneman and D. W. F. Brilman are researcher

at the Dutch University of Twente.

This article is based on a Best Paper Awards

winner at POWER-GEN Europe 2013.

1309pei_61 61 8/27/13 11:27 AM

62 Power Engineering International September 2013 www.PowerEngineeringInt.com

India grid development

A year after the world’s most

extensive blackout, India

has avoided a repetition

and can claim to have

addressed many of the

issues that led to it.

The blackouts last July occurred in the

northern and northeastern regional grids and

affected an estimated 600 million people,

although the widespread use of backup

generators in a country familiar with rolling

blackouts did soften the impact.

The outage resulted from an unanticipated

imbalance between regions, caused by a

combination of extreme weather, human error,

underinvestment and poor regulation and

system management.

“The power grid failure refected an

extreme situation created by drought, which

resulted in very heavy electricity demand for

agricultural irrigation pumps combined with

low hydro power production, as well as poor

power demand management for the states

linked to the grid,” says Rajiv Biswas, Asia

chief economist at consultancy IHS Global.

The result was to expose weak links such as

inadequate fail-safe systems for preventing

cascading failures and a lack of proper

outage planning – all in a cash-strapped

transmission system that has historically been

at a disadvantage to generators in competing

for already scarce funds.

Since then, according to Harish Agarwal,

chief executive of Supreme & Co, a

Kolkata-based power infrastructure supplier,

the government has been tackling these

issues with a variety of measures, including

a “tightening of the grid frequency band

to ensure states don’t overdraw, auditing

protection systems to improve grid health,

power ‘islands’ and demand management”.

Biswas says since the blackout, there had

been “much closer management of supply

and demand for power by Power Grid Corp

of India Ltd (PGCIL) together with the states in

line with planned schedules”, which had so far

helped avert another grid collapse. Attention

has also been paid to the fnancial health

of distributors, which have frequently been

squeezed by political considerations and

upon which the sector depends for income.

In addition, considerable funds are being

pumped into grid development. “Power

Grid is undertaking a large-scale investment

programme over the current fve-year plan

period ending in 2017, with an estimated

$18 billion of new investment planned to

double its transmission capacity and upgrade

its existing transmission networks,” says Biswas.

By early next year, the southern grid – which

is currently connected to the rest of India’s

grid by HVDC links – will be fully connected at

AC level. And India is upgrading nearly 1700

critical electricity transmission stations and is

installing high-voltage lines to transmit power

over long distances.

“One of the key investments PGCIL is

undertaking to deal with peak load capacity

India grid development

The shortcomings of India’s electricity infrastructure were thrown into sharp focus by last year’s blackouts. Twelve months on, Jeremy Bowden discovers that multi-billion programmes have been initiated to ensure the country’s lights stay on.

Beating the blackouts

Since last year’s blackout there has been much closermanagement of supply and demand of power in India

Credit: PGCIL

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64 Power Engineering International September 2013 www.PowerEngineeringInt.com

India grid development

shortages is to create a national energy

transmission grid by linking the grid for

southern India with the four regional grids

in the north, which are already connected,”

said Biswas. This is intended to better manage

peak load shortages and is expected to be

implemented by early 2014, according to

India’s Power Minister, Jyotiraditya Scindia.

Inter-regional power transmission capacity

is estimated to increase from 27,750 MW in

2012 to 65,550 MW by 2017, along with almost

140,000 km of transmission lines.

According to Suba Arunkumar at

consultancy Frost & Sullivan, PGCIL is

planning on spending “one trillion rupees on

improving the infrastructure and grid system

to ensure such blackouts do not happen

in future”. The company is developing 11

high-capacity transmission corridors to

connect power from various projects across

India’s electricity producers to the network.

However, it is politically diffcult to secure

right-of-way for new transmission lines, so

power utilities have focused on upgrading

existing corridors.

Rohit Pandit, director of the Indian Electrical

& Electronics Manufacturers’ Association

(IEEMA), says the focus for power sector

investment over the years has typically been

in the generation segment, and more money

needs to go to the grid to keep pace.

Generating capacity is expanding rapidly,

despite coal shortages and other constraints.

In the last fscal year, the target was

16,500 MW, which at 20,450 MW was exceeded

by a third, according to Power Minister Scindia,

who forecasts a rise from a 228 GW demand

now to 400 GW by 2022 and 800 GW by 2032.

This will be driven by increases in per capita

consumption, which is currently very low

at around 600 kWh – compared to a world

average of 2700 kWh – as well as expanding

to include 300 million unconnected citizens.

In July 2012, there was a gap of about

9 per cent between the country’s energy

requirement and the amount available,

according to India’s Central Electricity

Authority (CEA). “Based on the statistics as of

31 March 2013, the gap remains stable, and

not growing,” notes Arunkumar.

However, increasing network capacity will

be critical, because most of India’s demand

is growing in the western states, while most of

the suitable locations for new plants are in the

east. PGCIL has embarked on a signifcant

fnancing programme for the new investment,

including new debt issuance, as well as new

equity raising, according to Biswas.

Pandit notes that what is being achieved

is currently ahead of schedule: “From April

2012 to June 2013, the actual achievement

has been a total of 20,009 km of transmission

lines against a target of 19,118 km for this

period. Similarly, from April 2012 to June 2013,

the actual achievement has been a total of

72,700 MVA of sub-stations against a target of

33,319 MVA.”

Balancing state grids

According to Biswas and Agarwal, since the

July 2012 grid failure, there has been much

more careful management by PGCIL of power

supply and demand by individual states linked

to the grid, to avoid situations where states are

either supplying or drawing power signifcantly

different to planned power schedules.

To help manage demand more effectively

at state level, larger penalties under the

availability based tariff (ABT) system, known

as unscheduled interchange (UI) rates, have

been introduced by the Central Electricity

Regulatory Commission (CERC) for state

distribution companies that inaccurately

estimate their daily call on the grid.

In addition, states must also make those

estimates more accurate, narrowing the

required frequency band – which is an

indication of how close a grid is to balancing

supply and demand – to to 49.7–50.2 Hz from

the existing 49.5–50.2 Hz. If power is overdrawn,

then band volatility rises. CERC has also been

pushed to cap market prices to ensure no one

can take advantage of system vulnerabilities.

Mumbai: the city avoided the July 2012

blackout thanks to its use of ‘islanding’

Credit: MERC

1309pei_64 64 8/27/13 11:27 AM

www.PowerEngineeringInt.com 65Power Engineering International September 2013

India grid development

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“India plans to have an integrated national

grid. The target frequency prescribed by the

Indian Electricity Rule is 50 Hz”, says Agarwal.

All states are now participants in the central

ABT scheduling mechanism.

These changes had been proposed in

draft form in March before the blackouts,

and now that they are implemented,

should provide strong fnancial incentives to

discourage states from providing the sort of

faky estimates that led to the mismatch in

supply and demand last year.

To ensure accurate estimates and a

narrow frequency band, states must be able

to quickly react to changes in supply and

demand within their area by changing power

output or shedding load, rather than just

increasing their call on the wider grid. India’s

power minister has authorised the national

transmission authorities to shut down power

fow to states which deviate too far from

their estimated grid call. So far this year the

government says states are responding well to

the new fnancial discipline.

However, transmission and distribution

losses in the Indian power sector remain high,

at levels estimated to be around 26 to 28 per

cent of total electricity generated, compared

to a range of around 4 to 8 per cent in most

developed economies, according to Biswas.

India’s electricity grid reform programme

– R-APDRP – has committed $3.7 billion

to strengthen the distribution system and

mitigate losses. Under the programme, if a

utility cannot reduce ineffciency losses by 15

per cent, its grant will be reduced.

PGCIL power pact

Every year PGCIL signs an agreement with the

Ministry of Power, indicating its role, and state

utilities make arrangements with PGCIL, which

is steadily increasing its share of the transmis-

sion network, as state distribution companies

(Discoms) fail to make required investments.

“PGCIL is planning to boost its market

share to 70 per cent from the existing 50 per

cent by 2017, by increasing spending on

strengthening infrastructure,” says Arunkumar.

Revenue is also expected to rise sharply

according to senior PGCIL management,

who claim a doubling of expenditure on

transmission projects in the fve years to March,

2017, will quadruple income once completed.

PGCIL continues to be dependent on

India’s state generators and distribution

companies (discomms) for business. Should

producers fail to meet expansion targets,

as has been the case for the last 50 years,

PGCIL could fall short of its investment target,

according to local observers.

Chetan Varma, general manager of PGCIL,

says that the present state of distribution

companies “is due to high losses, old and

unreliable distribution network and ineffcient

metering, billing and collection effciency”.

To improve the picture, he explains “central

government schemes like APDRP and R-APDRP

for urban and semi-urban area and RGGVY

for rural areas were envisaged and are under

implementation” and they are all “aimed to

improve the technical and fnancial condi-

tions of the distribution companies”.

Pandit says: “The poor fnancial state of

state discoms is a major hindrance in up

gradation of the power infrastructure at the

state level.”

Politically-motivated electricity pricing has

lowered rates and dried up revenue, thereby

1309pei_65 65 8/27/13 11:27 AM

66 Power Engineering International September 2013 www.PowerEngineeringInt.com

India grid development

limiting funds to invest in the grid. “Clearly, coal

shortage and the poor fnancial health of

discoms have slowed down the sector. There

has been fnancial shortage for key projects,

resulting in less investment,” says Biswas.

Recently, indexation of coal prices and

reforms steps have been announced to

make discoms fnancially viable, he adds.

The central government is also helping state

governments with over $5 billion in fnance to

expand distribution.

Arunkumar says funding had not been a

major constraint on transmission investments

in the last year, although Pandit cautions

that projects often failed to be completed.

Help has also come from outside India, with,

for example, the Asian Development Bank

planning a second loan to upgrade state

power grids in India to help solar plants

sell electricity. Such intervention can speed

capacity development as it saves developers

the cost of connecting to the grid individually.

Smart grid roll out

The R-APDRP electricity reform programme

should help pave the way for a successful

smart grid rollout. India’s Ministry of Power has

invested in smart grid projects, but so far a

mix of power theft, supply shortfalls, and inef-

fciency in metering and bill collection are

making it rather pointless.

Despite this, the India Smart Grid Task Force

is seeking government approval for 14 smart

grid pilots to develop a proven blueprint that

can be rolled out nationally, says Varma. He

says PGCIL is developing a consumer-utility

interactive pilot smart grid/city project in

Pondicherry. “A smart grid control centre has

been established. Under this pilot, already 650

consumers are covered under advanced

metering infrastructure solution, which will

enable demand management.”

While smart grids could play a part in

the future, without more peak-load plants,

India’s immediate need is for demand-side

management (DSM) to offset peak demand

and load growth.

“The 12th Five Year Plan targets a reduction

in the energy consumption of small and

medium enterprises [SMEs] by 5.75 per cent

in energy intensive manufacturing process,”

says Arunkumar. “Efforts to implement energy

effcient manufacturing process are enforced

in these energy intensive SMEs.”

However, many of the DSM initiatives are

from IPPs. For example, Tata Power in Mumbai

has launched thermal energy storage and

DSM initiatives that has supported peak

load shifting by high end consumers. “These

initiatives have helped the participating

industries to reduce electricity consumption

by 30 to 40 per cent,” says Arunkumar.

Greater use of HVDC will also help

strengthen India’s national grid. Varma says:

“HVDC systems have always been known

for their higher effciency and improved

economics for long distance bulk power

transmission. In addition, they also provides

controllability of power fow, enhancing system

stability, maintaining grid parameters, and

facilitating integration of renewables from

different resource areas.”

He adds HVDC will “play a major role” in

the growing interconnections and envisaged

synchronisation of the southern region.

The blackouts have shown that even

within India’s large, interconnected grid, it

is useful to have some local generation in

case of emergency, and this is major driver

of distributed generation. “Large companies

have started introducing micro-grids due to the

persistent power outages in most urban areas.

The proliferation of micro-grids in both rural

communities and new urban developments

could therefore play a signifcant role in

addressing India’s electricity shortages over

the next decade,” says Biswas.

Mumbai avoided the 2012 blackout and

uses a scheme called “islanding” to avoid

large outages, by ensuring it has enough

local generation to allow it to disconnect from

the grid and keep essential services running.

Now Delhi is considering a similar islanding

scheme.

Visit www.PowerEngineeringInt.com for more information i

The India Smart Grid Task Force is trying to get 14 polot schemes off the ground

Credit: MERC

ELECRAMA 2014

While India has set aside huge

investments to upgrade to new

technology in its T&D segment, the

forthcoming ELECRAMA 2014, to be held

8-12 January next year in Bangalore, will

offer major opportunities to visitors to

experience frsthand wide-ranging, world-

class domestic electrical products at

competitive prices.

ELECRAMA is India’s largest T&D Power

Sector equipment exhibition and IEEMA’s

biennial fagship event.

The concurrent events at ELECRAMA

2014 will also allow stakeholders from the

global power, transmission and distribution

sectors to participate and present their

views.

The TRAFOTECH 2014 event will provide

transformer designers, manufacturers, users

and consultants with a common platform

to review the latest advances and future

trends, share operational experiences and

discuss the requirements of transformers for

smart grid systems.

For more information, visit www.

elecrama.com.

1309pei_66 66 8/27/13 11:27 AM

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1309pei_67 67 8/27/13 11:27 AM

68 Power Engineering International September 2013 www.PowerEngineeringInt.com

To meet China’s growing need for

electric power generation, the

Guohua Ninghai power plant of

Shanghai has a total planned

operating capacity of 4 x 600 MW.

The plant is in the Ninghai

township, Ningbo city, in Zhejiang province,

and serves the region’s electricity needs.

The Ninghai plant relies on coal-fred

steam-driven turbines to generate electricity,

with six sets of HP-983 medium speed coal

mills supporting a tangentially corner-fred

boiler. This makes the plant’s large production

operations complex.

Coal is frst fed from silos at the plant to mill

pulverizers, which grind the coal into a fne

powder. A fan blends and forces a primary

fow of mixed ambient ‘cold’ air and pre-

heated ‘hot’ air into the coal mill.

This air is mixed with the coal powder

creating a combustion air supply for the

furnace heating water in the boiler. The boiler

produces steam to drive power-generating

turbines. The plant’s sophisticated, energy-

effcient boiler technology requires accurate

and responsive air fow measurement for its

control system.

Critical requirements

The boiler’s steam production effciency is

controlled by adjusting a precise fow of

blended primary ambient air and pre-heated

air which fow from separate ducts.

Each of the duct air fows is controlled by

louvered dampers located inside the ducts.

The primary air, which is a precise blend of

cold and hot air, fows into the coal mills and

afterwards to the boiler.

Accurate, responsive and reliable air fow

measurement is critical to the automated

control of the dampers and the effciency of

the boiler, which also ensures safe operation

of the boiler and reduces plant operation

energy costs.

Boiler optimisation

Hu Yaqi and Steve Craig explain how an in depth testing programme demonstrated that thermal mass fow meters provided the solution to help maximize the operation of the boilers at the Guohua Ninghai power plant in China.

Versatile fow meter delivers boiler performance

The four-unit Guohua Ninghai power plant utilises

complex and effcient tangentially corner-fred boilers

1309pei_68 68 8/27/13 11:27 AM

TO THE RESCUE

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70 Power Engineering International September 2013 www.PowerEngineeringInt.com

Boiler optimisation

The temperature of the pre-heated air fed

to the boiler is 270°C (518°F) and the primary

ambient air temperature is 30°C.

The size of the primary air duct is 1200 x

1200 mm (47x47 inches), the pre-heated air

duct has the same dimensions (1200 x 1200

mm), and the ambient forced draft air duct is

500 x 800 mm.

The air fow to the coal mills and into the

boiler is controlled by the plant’s distributed

control system (DCS), which requires accurate

and responsive air fow measurement data to

control the dampers and keep the primary air

fow to the coal mill entrance at precise and

effcient levels. Figure 1 shows the primary air

duct at the entrance to the coal mill.

Engineers from the China Electric Power

Research Institute (CEPRI) and the Guohua

Ninghai power plant researched several

fow meter technologies for accuracy and

responsive performance, as well as the

overall suitability for the unique application

conditions in their air feed lines.

Then they further considered existing

installations and reference applications at

other power plants in China. From these

criteria they narrowed their choices to two

technologies for further evaluation, thermal

mass fow meters – also known as thermal

dispersion - and averaging pitot tube fow

meter (or differential pressure, dP).

Both of these technologies were further

evaluated and compared with actual on-site

installed performance testing. With the large

duct sizes involved, the technologies were

deployed in a multi-point design.

The engineers determined that the key

criteria for the fow meter technology ultimately

selected would be the one that was most

accurate, responsive and impervious to large

temperature fuctuations that allowed them to

best control the air fow automatically via the

dampers in the ducts using the plant’s DCS.

These application criteria can be diffcult to

achieve because of the large cross-sectional

Figure 1: Confguration of primary air duct at the coal mill entrance

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1309pei_70 70 8/27/13 11:28 AM

area of the air ducts and the temperature stratifcation in the primary air

duct caused by the mixing of the pre-heated and ambient air.

For the fow measurement test programme, the two different types of

fow meters were installed on coal mills C and D, which feed boiler 3.

Thermal mass fow meters with multiple sensing points were installed in

each of the pre-heated and ambient air ducts. This installation eliminates

the large temperature fuctuations that are present in the main primary

air duct because of the mixing of the pre-heated and ambient air. It also

provides a more precise and responsive damper control within the air

ducts.

The averaging Pitot tube fow meter was installed in the main primary

air duct downstream from the preheated and ambient air ducts.

The output readings from the two thermal mass fow meters were

compared to the averaging Pitot tube fow meter and to the changes

in the dampers.

Based on the result of the test programme, the thermal mass fow

meters provided the best system control. The thermal mass fow meters

on the duct for boiler 3 provided an accurate and responsive output of

the air fow rate, which was consistent with the damper positioning. See

Figure 2 for the air fow measurements recorded at mill D.

Both the averaging pitot tube fow meter and the thermal mass fow

meter tracked the damper positioning changes in this test and their

air fow readings were within 1 per cent accuracy of each other. While

the averaging pitot tube fow meter provided a similar accuracy and

was responsive, its accuracy was adversely affected when the air fow

pressure dropped.

The tests showed the fow rate output of the thermal mass fow meter

matched the set position of the cold and hot air dampers, and the

thermal mass fow meter provided the response time required of the

automatic control feedback loop within the DCS.

The thermal mass fow meter’s responsiveness was enhanced by an

anticipator algorithm programmed into the DCS. The DCS’ PID parameter

proportion factor was adjusted from 0.3 to 0.4 and the integration

factor was reduced from 300 to 150. The accuracy performance of the

averaging pitot tube fow meter, however, was greatly degraded by low

air pressure conditions and low air fows.

Due to the low pressure in the test the averaging pitot tube fow meter

installed on mill C did not track well with the damper position changes.

Boiler optimisation

FCI MT86 Series fow meters

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1309pei_71 71 8/27/13 11:28 AM

72 Power Engineering International September 2013 www.PowerEngineeringInt.com

In addition, averaging pitot tube fow meters

require signifcantly more maintenance

because their sensor design includes small

air inlets, which can clog in the fy ash laden

air fow inside the ducts. A plus for the thermal

mass fow meters is they do not have small air

inlets nor any moving parts, so they impervious

to the fy ash laden air fow conditions

and do not require routine or preventative

maintenance.

After completion of the test programme,

Fluid Components International’s (FCI) Model

MT86 Series multi-point thermal mass fow

meters (see image on p.71) were selected

for installation at the Guohua Ninghai power

station.

Maximising effciency

After testing and evaluating both fow meter

technologies, the engineers from CEPRI and

the Guohua Ninghai power plant solved the

challenge of fnding the most accurate air

fow measurement technology which would

be responsive enough for automatic damper

control of the mix of preheated and ambient

air fowing into the coal mills.

The FCI thermal mass fow meters air fow

accuracy and responsiveness provided the

necessary fow data to automatically control

the dampers and maximise the effciency

of Boiler 3. Their non-clogging sensors and

rugged design ensured the lowest overall

maintenance and longest service life.

Hu Yaqi is an automation & process control

engineer at Zhejiang Guohua Zheneng

Power Generation Company Limited in

China and Steve Craig is senior engineer

at Fluid Components International LLC (FCI)

in the US. For more information, visit www.

fuidcomponents.com.

Visit www.PowerEngineeringInt.com for more information i

Boiler optimisation

The solution: MT Series fow meters

These precision air fow meters are installed

and operating around the world in numerous

electric power generation plants in similar

applications because of their accurate,

stable and reliable fow measurement over

wide temperatures and variable pressures.

The FCI Model MT86 Series meters can

be supplied with up to eight discrete thermal

mass fow sensors.

These sensors can be installed along a

single probe assembly or on multiple probes,

whatever is optimal for the application and

installation conditions.

An MT Series fow meter is ideal for

use in both thermal and nuclear power

generation applications, as well as in other

heavy process or manufacturing industries

with large diameter pipes or large duct

applications. It provides very high air and

gas fow measurement performance in

applications such as these coal-fred

combustion air systems, as well as in HVAC

systems, fues, and stacks.

MT Series fow meters are highly versatile,

with a wide turndown range available from

5:1 to 1000:1 and fow sensitivity from 0.25 SFPS

(0.08 NMPS) to 150 SFPS. With its smart digital

fow transmitter and advanced thermal

dispersion fow sensing element(s), the MT86

Series, and its sister product MT91, meet a

wide range of environmental monitoring

requirements worldwide, including CEMS

and QAL1.

They have a no-moving parts design

with no orifces to plug or foul, FCI’s thermal

mass fow sensing technology places

two thermowell protected platinum RTD

temperature sensors in the process stream.

One RTD is heated while the other senses the

actual process temperature. The temperature

differential between these two sensors is

measured and is directly proportional to the

mass fow rate of the fuid. The sensor outputs

are fully temperature compensated resulting in

high accuracy and repeatability in changing

media and ambient installation conditions.

Outputs include multiple 4–20 mA and relays

and units can be powered by either AC mains

(85–265 Vac) or 24 Vdc.

Thermal dispersion principle of operationxxxxx

Figure 2: Test data for the thermal mass fow meter

1309pei_72 72 8/27/13 11:28 AM

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1309pei_73 73 8/27/13 11:28 AM

A diesel genset from FPT Industrial: the Italian frm

predicts “a dominant role” for diesel gensets.

Credit: FPT

Diesel genset market

Diesel innovates as gas closes gapThe global diesel generator set market is more than holding its own against gas rivals, boosted by demand in emerging countries and technology innovation.

According to a new report,

the global diesel genset

market will grow and be

worth $41 billion by 2018

despite competition from

natural gas gensets.

The analysis by Navigant Research of

the US found that diesel gensets will remain

“one of the least expensive, most reliable

technologies available today” for commercial

facilities like hospitals and data centres that

require “mission-critical power in the event of

a grid outage”.

Navigant says in the short term, countries

with strong economic and/or population

growth rates that increasingly suffer blackouts

– such as Nigeria, India, Chile and South

Africa – will continue to drive diesel sales.

The report highlights India as an example

of a country where industries have become

highly dependent on diesel due to power

outages spanning as much as 16 hours per

day, making them more vulnerable to price

volatility. The market for diesel gensets in

India is growing at a rapid pace and recent

data expects its total revenues to pass $3.3

billion by the end of 2018. Southern India

accounts for most diesel genset sales, with

Bangaloreand Chennai the foremost users.

Yet Navigant Research warns that diesel’s

grip on the market is gradually waning.

“Although providers of diesel gensets can

expect to see continued growth over the next

several years, they face rising competition

from natural gas gensets,” says Dexter

Gauntlett, a Navigant research analyst.

“Over the next decade, the increase

in unconventional gas resources and

tightening emissions regulations for stationary

generators will favour clean-burning natural

gas systems over their diesel counterparts in

North America.”

And Navigant says that globally, gas

gensets are “poised for rapid growth,

particularly in markets where inexpensive

natural gas is widely available”. Navigant

forecasts that natural gas genset installations

will reach 13.2 GW per year by 2018 and

produce nearly $45 billion in cumulative

revenue between now and then.

Nonetheless the diesel genset market

continues to thrive because of the growing

energy needs of so many developing

countries and the ease of which diesel

solutions can address these needs.

On top of that, the diesel genset

technology is still evolving apace, as vendors

develop next-generation generators in a

bid to differentiate their products to get a

competitive edge.

The companies that dominate the market

include Caterpillar, Cummins and Kohler

while other players include Siemens, GE,

Mitsubishi Heavy Industries and FPT Industrial.

Some manufacturers are developing

generators with comprehensive control and

Power Engineering International September 2013 www.PowerEngineeringInt.com74

1309pei_74 74 8/27/13 11:28 AM

CAT, CATERPILLAR, their respective logos, “Caterpillar Yellow,” the “Power Edge” trade dress, as well as corporate

and product identity used herein, are trademarks of Caterpillar and may not be used without permission.

© 2013 Caterpillar. All Rights Reserved.

The Cat® team shares your focus on protecting your customers – and your

good name. You’ll have a total power solution that delivers the 100 percent

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alian frm

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1309pei_75 75 8/27/13 11:28 AM

76 www.PowerEngineeringInt.comPower Engineering International September 2013

Diesel genset market

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monitoring systems, which can improve the overall effciency of the

equipment, while others are trying to offer user-friendly generators,

where end-users can easily operate the generators irrespective of

whether or not they possess proper technical knowledge.

FPT Industrial is the power generation arm of Italy’s FIAT Industrial

Group and manufactures a range of gensets. Its diesel products are

made in four dedicated power generation facilities: Sete Lagoas in

Brazil; Fecamp in France; Pregnana Milanese in Italy and Chongqing

in China.

The company agrees that the current hotspots for diesel gensets

are in emerging markets. “The bulk of new opportunities are coming

from Asian countries, the Middle East and select African countries,”

says Douwe Hilarius, FPT’s marketing & communication manager.

“In general, developing and modernising countries will have a

signifcant increase in demand for gensets due to the fact that GDP

and infrastructure investments will grow.”

And he sees no sign of the popularity of gensets waning. “Overall,

the worldwide market is increasing. Highly developed regions like

Japan, North America and Europe are mature markets and they

have lower growing rates because of the robustness and capillary

of the electricity grid.”

“In the long term, gensets will continue to exist and to play a

dominant role in the energy supplying industry.”

Hilarius says geography will also be the key factor in where gas

may take over from diesel as the genset of choice.

“Gas gensets are an increasing market where there is high gas

availability at low prices – North America, Russia and China have

those features and they are expected to grow respectively at 5 per

cent, 10 per cent and 20 per cent yearly to 2015.”

However he adds “diesel will continue to play a dominant role

in stand-by application due to better performance in terms of load

acceptance and lower installation cost.”

Are there any innovations that diesel manufacturers can employ

to keep ahead?

“Genset manufacturers have to pursue innovations that allow a

reduction in total cost of ownership. Working on energy effciency

and power controls to reduce operating cost will be the key topics

within the genset industry,” says Hilarius.

Visit www.PowerEngineeringInt.com

for more information i

The Cummins C1000 D5 genset.

Credit: Cummins

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1309pei_76 76 8/27/13 11:28 AM

www.PowerEngineeringInt.com 77Power Engineering International September-October 2013

Diesel genset market

For more information, enter 47 at pei.hotims.com

AUMA Riester GmbH & Co. KG

P.O. Box 1362 • 79373 Muellheim, Germany

Tel. +49 7631 809-0 • riester@auma.com

www.auma.com

High performance applications

Flexible, safe, modular

AUMA offer a complete range of multi-turn and part-turn

actuators as well as linear thrust units. The sophisticated

requirements of power plants are met with absolute

reliability in compliance with international regulations.

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Actuators for the power plant industry

Diesel at heart of innovation

Two recent projects highlight how diesel gensets are still the frst

choice for key projects in Europe and the US.

Caterpillar Incorporated won a deal to provide equipment for

emergency standby power generation at New York City’s historic

Grand Central Terminal.

The facility was outftted with two 2000 kW Cat 3516 diesel gensets

and paralleling switchgear to add signifcantly more backup

generating capacity.

The New York Power Authority (NYPA) managed the design,

procurement and installation of the two generators and switchgear.

The project for the Metropolitan Transportation Authority was

intended to provide an additional level of security to Grand Central

Terminal in case of problems on the electric power grid that could

affect the transportation hub’s electricity service.

The new backup generators accept ultra low-sulphur fuel,

in correlation with MTA’s air-permitting restrictions. Another NYPA

provision was that the generators, switchgear and load bank were

required to be completely factory tested to ensure all emergency

power, load sharing and paralleling capabilities were fully functioning

together prior to shipment, to avoid complications that could arise

in an underground rail tunnel. All components were transported to

Grand Central Terminal on rail cars and then reassembled on site.

Meanwhile, in a $21 million project, Mattala Rajapaksa

International Airport in Sri Lanka has installed a pair of Cummins

Power Generation diesel gensets to act as standby power provision

in the event of outages.

Project contractor China Harbour Engineering Company (CHEC)

installed two 939 kVA stand-alone Cummins Power Generation

C1000 D5 gensets.

Because the generator set for the airport’s cargo unit had to be

installed within the cargo building itself, noise management was a

key consideration. Soundproofng the genset to achieve a level of

70 decibels at a distance of 1 metre from the room proved to be an

effective solution.

Opened in March 2013, Mattala is the second international

airport in Sri Lanka that serves domestic and international fights.

It acts as a hub for air and sea cargo trans-shipments together

with Magampura Port and as the airport is located in the rural area

of Hambantota, it was crucial for the generators to be installed to

ensure continuous supply of power in the event of an emergency.

Grand Central TerminalCredit: MTA

1309pei_77 77 8/27/13 11:28 AM

78 Power Engineering International September 2013 www.PowerEngineeringInt.com

Q&A

As ABB Turbocharging embarks on a major upgrade contract in Brazil, the company’s Reinier Bakker outlines the challenges and subsequent success stories of the upgrade process.

New fuel-saving options offer rapid payback and payoff

ABB Turbocharging is carrying out major

upgrades to a series of power plants in Brazil.

The deal is part of the company’s collaboration

with Wärtsilä and will result in the upgrading of

30 turbochargers in a series of plants operated

by the Finnish frm.

“Every upgrade and every customer is

different”, says ABB Turbocharging’s senior

manager of OEM Service Sales, Reinier Bakker,

and here he outlines what makes the Brazilian

deal unique.

Q:

What role do upgrades play in a country such

as Brazil, which is heavily investing to expand

and rejuvenate its power systems?

A:

Upgrades play a big role. With these packages,

you have an upgrade of the installation with

an added beneft of fuel saving, and that’s

what everyone is looking at these days, so the

project essentially pays for itself. The return on

investment is typically three years.

Q:

Outline the upgrades you are carrying out in

Brazil?

A:

There is a conversion of something like 15

engines and these power plants supply to

the grid. We are talking about upgrading

30 cartridges and one spare cartridge on

multiple plants. So this upgrade is a great

way to meet – or even increase – productivity

above and beyond what you’d be able to

do in the engine. And for engine providers

who have to show their customers that their

engines will be as productive as possible,

this type of additional gain constitutes a real

advantage, especially for companies with

contracts stipulating productivity targets.

Q:

What is notable about the Brazil upgrades?

A:

The turbocharger stays on the engine –

basically everything happens inside the

turbocharger. The turbocharger and the

housing stay the same. You just take out the

cartridge, put your new cartridge in, and it is

done within one day. The deal is between ABB

Brazil and the engine builder in Brazil, and our

team will implement it all on the engine. Our

guys are also doing the regular maintenance,

but the turbochargers and engines

themselves are under an O&M agreement

with the engine builder.

Q:

Had this sale been long in the planning?

A:

Well, the customer had only our simulation,

and then all of a sudden, their Brazilian sales

organization put in an order for 31 cartridges

and wanted to know when we could supply.

The orders are all in, and the frst conversions

began in the summer. Normally, customers are

cautious about trying new solutions – a small

change here or there, to see how it goes. In

Brazil they want to combine this order with

an upcoming SIKO exchange, which is an

exchange of key rotating components at a

set time for safety reasons.

Q:

What did you frst learn in the process of

developing the upgrades?

A:

That we had to collaborate closely with the

engine builder to make the concept work. It

was our work together with the engine maker

– who was also interested in upgrades as an

option – that enabled us to see that with the

right modifcations to both the turbocharger

and the engine, we would in certain cases

be able to achieve up to 3 per cent in fuel

savings.

Q:

When did you put things in motion?

A:

We started with an upgrade in 2011 that

required a complete change on the engine,

and the engine OEM introduced Miller timing

with a new cam-shaft. Putting in a new

turbocharger made that possible. You almost

1309pei_78 78 8/27/13 11:28 AM

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80 Power Engineering International September 2013 www.PowerEngineeringInt.com

could say that a matching process was

implemented with the new turbocharger. And

practice confrmed our theory about these

new modifcations – we achieved over 2 per

cent fuel savings as a result of matching the

turbocharger and the engine together in a

completely new combination.

Q:

Outline the frst meetings between ABB

Turbocharging and the engine builder?

A:

There were two sessions in which we looked for

the frst time at the real technical, matching,

engine and turbocharger data to fnd out

what new operating values we would be

able to achieve. The turbocharger and the

engine need to ft together as well as possible

in the given environment, so you minimise

the amount of effciency lost through pipe

connections. So we worked a lot to optimise

the positioning of the turbocharger and our

work did confrm a new engine-turbocharger

combination in those two sessions, so they

were very productive.

Q:

What was the most crucial technical fnding to

come out of your talks?

A:

Probably that we needed to make sure that

our solution would operate within the right

boundary conditions. We didn’t know in detail

what our partners on the engine side wanted

to do in terms of tuning the engine and what

introducing Miller timing could bring with

respect to fuel savings.

Q:

How is speed margin affected by upgrades?

A:

A turbocharger is always designed to run at a

particular rotation speed, but it can operate

effciently at higher speeds – at least up to a

point. Speed margin is the range between

a turbocharger’s standard operating speed

and the maximum speed at which it can still

run effciently. When ambient temperature

increases to, say, 45°C from 23°C, the rotor

has to turn faster in order to pump the same

amount of air into the turbocharger. Speed

margin allows the turbocharger to increase

its rotation speed and pump more air into the

engine at varying temperatures. A power plant

at sea level will have a different turbocharger

specifcation than one at high altitude. In

practical terms, then, if you increase the speed

margin with an upgrade it means you have

more fexibility in the turbocharger operation

in different environments, including altitude

and temperature.

Q:

How signifcant is the drop in temperature

achieved through an upgrade?

A:

It’s a very signifcant drop. Normally, engines

run at a very constant temperature, and only

vary plus or minus 5°C. With an upgrade, you

can achieve a drop in temperature of up to

35°C. A signifcant drop would be -20°C, so fall

of -35°C is absolutely huge. If you’re able to

get the same engine output with a reduced

temperature, it will have a positive impact on

thermal fatigue, and it will also have a positive

effect on the fouling of the turbocharger.

Q:

Your frst upgrades happened outside of Brazil.

What sticks in your mind about the very frst

technical sessions for those upgrades?

A:

During those sessions with the engine maker,

we did simulations about the potential

improvements that could be reached with

the upgrades we were proposing. Those were

simulations on fuel savings, temperature

reduction and on pressure. Since it was our

frst upgrade project, there was no chance

to confrm the simulation with actual feld

measurements. Your frst couple of run-

throughs become your points of reference.

By now we know with the upgrades that

we’ve done just how accurate that frst

simulation was. So when we talk about doing

an upgrade, we’re talking about providing a

better turbocharging solution by simulating

both the old and new situation with a high

degree of accuracy.

Q:

When you say high degree, what sort of per

cent are you talking about?

A:

We were within 10 per cent of the actual

measurements of the simulated value. Actually,

the measurements were slightly better than the

simulation – and that is incredible. That is also

true for the temperature or fuel-savings curves,

they are measured as a function of the engine

load. So you simulate it at 50, 60, 70, 80, 90, 100

per cent of the possible load, and then you do

the measurement in the same way. And what

we saw was a good correlation between the

simulation and the measurements.

Q:

How do these fgures compare with a regular

overhaul?

A:

With a regular overhaul, you also get some

savings, as a result of cleaning the engine and

turbocharger. But here, in the measurements

that we did, we cleaned everything before

we began to measure our comparative data.

The 2 per cent fuel savings is calculated

through the comparison between the old

turbocharger once it had been cleaned

versus a clean, new one.

Q:

And what did doing the upgrade mean in

terms of operational benefts?

A:

It was an improvement in every way: lower fuel

consumption, higher speed margin and lower

engine exhaust temperature. The upgrade

enabled new, more fexible, wider boundary

conditions that allowed us to make changes

that were ultimately all good, and only good.

Visit www.PowerEngineeringInt.com

for more information i

Q&A

1309pei_80 80 8/27/13 11:28 AM

ADVANCING ASIAíS ENERGY FUTURE

2 ñ 4 October 2013

IMPACT Exhibition & Convention Centre

Bangkok, Thailand

www.powergenasia.com

OWNED AND PRODUCED BY: PRESENTED BY: SUPPORTED BY: OFFICIAL SUPPORTER: SUPPORTING ORGANIZATIONS:

Department of AlternativeEnergy Development and Effciency

POWER-GEN Asia, co-located with Renewable Energy World Asia, is the region’s leading exhibition and conference dedicated to the power generation, renewable energy and transmission and distribution industries.

Attracting 7,000 delegates and attendees from over 60 countries from South East Asia and around the world, nowhere else gives you the opportunity to reach and meet senior executives and industry professionals in one place at the same time, providing key networking and business opportunities.

The POWER-GEN Asia conference has become the major annual platform for the industry to discuss the topics and issues of today and is regularly contributed to with keynote speeches from Government Ministers and Governors of the region’s utility companies.

POWER-GEN ASIA INDUSTRIAL WATER DAY

For the frst time POWER-GEN Asia will include an Industrial Water Day on Thursday 3 October. You can register for this full conference track via the One Day Pass, for just $700. Visit www.powergenasia.com for further information.

JOINT OPENING KEYNOTE SESSION – WEDNESDAY 2 OCTOBER 2013 – 9AM

�� Dr. Twarath Sutabutr, Deputy Director-General, Department of Alternative Energy Development

and Effciency, Thailand

�� Mr. Soonchai Kumnoonsate, Governor of Electricity Generating Authority of Thailand, Thailand

�� Dr. Piyasvasti Amranand, Chairman, Energy for Environment Foundation, Thailand

�� Mr. Markus Lorenzini, Head of Energy Sector, ASEAN Pacifc Cluster, Siemens, Indonesia

TOPICS DISCUSSED AT THE CONFERENCE INCLUDE:

REGISTER TO ATTEND NOW AT: WWW.POWERGENASIA.COMJOIN US IN BANGKOK, THAILAND ON 2 - 4 OCTOBER 2013

EXHIBITION OPENING HOURS:

Wednesday 2 October 2013: 10:30 – 18:00

Thursday 3 October 2013: 10:00 – 18:00

Friday 4 October 2013: 10:00 – 16:00

LEADING INDUSTRY EXHIBITION

Discover new ideas, technologies and developments at

the region’s foremost exhibition for the conventional power

and renewable energy generation industries from leading

companies and suppliers from around the world.

REGISTER TO ATTEND POWER-GEN ASIA

�� Trends, Finance & Planning

�� Power Plant Technologies

�� Operation, Optimization & Servicing

�� Industrial Water

�� Environmental Challenges, Fuel Options &

Distributed Generation

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82 Power Engineering International September 2013 www.PowerEngineeringInt.com

DiaryDiary

Hydrogen & Fuel Cells Energy Summit30–31 October

Berlin, Germany

www.wplgroup.com/aci

November

RenewableUK Annual Conference & Exhibition5–6 November

Birmingham, UK

www.renewableuk.com

International VDI Conference: Operational Flexibility and Effciency Increase in Power Plants6–7 November

Berlin, Germany

www.vdi-international.com/powerplants

Nuclear Power International 201312–14 November

Orlando, US

www.nuclearpowerinternational.com

POWER-GEN International12–14 November

Orlando, US

www.power-gen.com

Renewable Energy World North America12–14 November

Orlando, FL, US

www.renewableenergyworld-events.com

POWER-GEN International Financial Forum13–14 November

Orlando, FL, US

www.powergenfnancialforum.com

VGB Conference – Challenges of Biomass Combustion13–14 November

Berlin, Germany

www.vgb.org

December

Global Energy 20133–5 December

Geneva, Switzerland

www.globalenergygeneva.com

2nd International Conference on Power Science and Engineering20–21 December

Paris, France

www.icpse.org

2014

January

International Conference on Electrical Energy and Networks4–5 January

Phuket, Thailand

www.iceen.org

World Future Energy Summit20–22 January

Abu Dhabi, UEA

www.worldfutureenergysummit.com

DistribuTECH Conference & Exhibition28–30 January

San Antonio, US

www.distributech.com

February

World Biomass Power Markets3–5 February

Amsterdam, the Netherlands

www.greenpowerconferences.com

VGB Conference – Maintenance in Power Plants19–20 February

Dresden, Germany

www.vgb.org

October

POWER-GEN Asia2–4 October

Bangkok, Thailand

www.powergenasia.com

Renewable Energy World Asia2–4 October

Bangkok, Thailand

www.renewableenergyworld-asia.com

Africa Electricity 20139–11 October

Johannesburg, South Africa

www.africaelectricity.com

COGENERATION DAYS 201313–15 October

Cestlice, Prague, Czech Republic

www.cogen.cz

22nd World Energy Congress13–17 October

Daegu, South Korea

www.daegu2013.kr

13th Annual Outage Restoration and Response Conference22–23 October

San Antonio, TX, US

www.marcusevans-conferences-

northamerican.com

Grid Analytics Europe 23–24 October

London, UK

www.gridanalytics-europe.com

Utilities Operations & Service Management28 October

San Diego, CA, US

www.wbresearch.com/utilitiesfeldservice/

Visit www.PowerEngineeringInt.com

for more informationi

1309pei_82 82 8/27/13 11:28 AM

POWERING INDIA’S GROWTH

Join experts from the Indian and international power industry for the joint annual POWER-GEN India & Central Asia,

Renewable Energy World India, HydroVision India and DistribuTECH India 2014 conference and exhibition as the event

returns to New Delhi under the theme Powering India’s Growth.

POWER-GEN India & Central Asia has an unrivalled reputation for attracting senior executives and industry leaders from

across the globe. This is your opportunity to impart your knowledge and experience and join this informative, quality event

reaching the region’s key decision makers.

We invite you to be a part of the rapid investment in India & Central Asia by speaking at this event and adding to the debate

about key implementation challenges for India’s electricity sector and long term sustainable energy supplies, as growth and

demand for power intensifes.

5-7 MAY 2014

PRAGATI MAIDAN

NEW DELHI, INDIA

POWER-GEN India & Central Asia

DistribuTECH India

Samantha Malcolm

Conference Manager T: +44 (0) 1992 656 619 E: samantham@pennwell.com

Renewable Energy World India HydroVision India

Amy Nash

Conference Manager T: +44 (0) 1992 656 621 E: amyn@pennwell.com

Event Organizer: Presented by: Supporting Organization:

www.power-genindia.com www.renewableenergyworldindia.com

www.distributechindia.com www.hydrovisionindia.com

CALL FOR PAPERSSUBMISSION DEADLINE: FRIDAY 25 OCTOBER 2013

FOR DETAILS ON SPONSORSHIP AND EXHIBITING OPPORTUNITIES

VISIT THE WEBSITE TODAY.

SUBMIT YOUR ABSTRACT TODAY:

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1309pei_83 83 8/27/13 11:28 AM

84 Power Engineering International September 2013 www.PowerEngineeringInt.com

Diary

VGB Conference – Maintenance of Wind Power Plants19–20 February

Dresden, Germany

www.vgb.org

Wave & Tidal 201426–27 February

Belfast, Northern Ireland

www.renewableuk.com

March

HydroVision Russia4–6 March 2014

Moscow, Russian Federation

www.hydrovision-russia.com

Russia Power4–6 March 2014

Moscow, Russian Federation

www.russia-power.org

EWEA 201410–13 March

Barcelona, Spain

www.ewea.org

POWER-GEN Africa17–19 March 2014

Cape Town, South Africa

www.powergenafrica.com

DristribuTECH Africa17–19 March 2014

Cape Town, South Africa

www.distributechafrica.com

2014 WTUI Conference23–26 March

Palm Springs, US

http://wtui.com

Intersolar China25–28 March

Beijing, PR China

www.intersolarchina.com

April

April Power & Electricity World Asia22–25 April

Singapore

www.terrapinn.com

Smart Electricity World Asia22–25 April

Singapore

www.terrapinn.com

May

DistribuTECH India5–7 May

New Delhi, India

www.distributechindia.com

HydroVision India5–7 May

New Delhi, India

www.hydrovisionindia.com

POWER-GEN India & Central Asia5–7 May

New Delhi, India

www.power-genindia.com

Renewable Energy World India5–7 May

New Delhi, India

www.renewableenergyworldindia.com

VGB Conference – Steam Turbines and Operation of Steam Turbines21–22 May

Koblenz, Germany

www.vgb.org

June

Eurelectric Annual Convention2–3 June

London, UK

www.eurelectric.org

Intersolar Europe3–6 June

Munich, Germany

www.intersolar.de/en/intersolar.html

POWER-GEN Europe 3–5 June

Cologne, Germany

www.powergeneurope.com

Renewable Energy World Europe 3–5 June

Cologne, Germany

www.renewableenergyworld-europe.com

IDEA’s 105th Annucla Conference & Trade Show8–11 June

Miami, US

www.districyenergy.com

July

Intersolar North America7–10 July

San Francisco, US

www.intersolar.us/en/intersolar.html

HydroVision International22–25 July

Nashville, US

www.hydroevent.com

August

COAL-GEN20–22 August

Charlotte, US

www.coal-gen.com

October

POWER-GEN Middle East19–20 October

Abu Dhabi, UAE

www.power-gen-middleeast.com

1309pei_84 84 8/27/13 11:28 AM

POWER GENERATION WEEK

NOVEMBER 12–14, 2013 | ORANGE COUNTY CONVENTION CENTER | ORLANDO, FL, USA

Covering every aspect of the power generation industry, POWER-GEN International, NUCLEAR POWER International,

Renewable Energy World Conference & Expo North America and POWER-GEN Financial Forum converge in 2013 to

form POWER GENERATION WEEK. Benef t from f ve days packed with pre-conference workshops, technical tours,

over 70 conference sessions, panel discussions, three exhibition days and multiple networking events. Like never

before, you’ll have access to nearly every facet of the market – all under one roof.

4 Events. 5 Days. 1 Roof.

Owned & Produced by Presented by Supported by

www.PowerGenerationWeek.com

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1309pei_85 85 8/27/13 11:28 AM

Metso wins deal for world’s biggest gas-to-liquids plant Metso has won a deal for the largest gas-to-

liquids plant in the world.

Qatar Shell has awarded a service contract

to Metso supporting an earlier delivery of

valves and intelligent positioners to the Pearl

gas to liquids (GTL) project in Ras Laffan

Industrial City.

Jointly developed by Qatar Petroleum and

Shell, Pearl GTL is the biggest such plant in the

world and the largest energy project in Qatar.

As part of the capital project, Metso

delivered more than 2500 valves and 1200

ND9000 positioners. As the plant is designed

to run 24 hours, Shell took advantage of

streamlining the spare part procurement

process to ensure competitive pricing and

speedy order delivery. The fve-year spare parts

agreement with Metso covers more than 1000

items.

Sami Alatalo, Metso service manager in

Doha, said the agreement “provides Shell and

their service contractor with a frm basis to

plan valve service actions with delivery times

and agreed prices”.

Project Update

Emerson upgrades Iberdrola CHP plant

US-based Emerson Process Management has

upgraded the control systems at Iberdrola’s

EnergyWorks Cartagena combined heat and

power plant in Spain with the latest version of

its Ovation expert control system.

The gas-fred plant is on the south eastern

coast and the 95 MW, combined-cycle

cogeneration facility supplies process steam

and power to a neighboring polycarbonate

factory.

The existing control systems needed to be

upgraded to improve plant responsiveness,

extend the life of the plant and maximise

production effciencies.

Plant manager Carlos González Costea

said: “We needed to use this opportunity to

upgrade our systems to enable the plant

to continue to provide effcient production.

However, this had to be balanced against our

obligation to maintain the supply of steam to

our customer.”

Emerson supplied four pairs of redundant

Ovation controllers, installed the operating

software and implemented the changeover

during a 10-day planned shutdown of the

plant.

The upgrade was scheduled in two phases

to minimise revenue lost due to the power

station being off-line and ensure a continuous

supply of steam to the plastics factory.

Since the project was completed, Emerson

says reliability and effciency has improved

and faster system response has enabled the

plant to react more quickly to changes in

demand.

The control systems are in two sections,

one covering the CHP plant and the other

covering the separate package boilers. While

the CHP plant was modernised, the package

boilers generated the steam required by the

plastics factory.

Steam generation then reverted to the CHP

plant during the upgrade of the package

boilers.

This allowed Emerson to ensure the steam

supply was uninterrupted and local operation

of auxiliary services was maintained.

“This was a particularly challenging

migration project with a very tight timeframe,”

said Bob Yeager, president of Emerson Process

Management’s Power & Water Solutions.

86 Power Engineering International September 2013 www.PowerEngineeringInt.com

Areva to provide fuel assemblies to nuclear plant in SwitzerlandFrench nuclear company Areva has been

awarded a contract for the fabrication of fuel

assemblies for fve reloads at Gosgen nuclear

power plant in Switzerland.

The company will deliver 180 fuel

assemblies to the plants owners, Swiss utility

Gosgen-Daniken, starting in 2018.

Areva was involved in the building of the

1020 MW plant – which produces district

heating as well as power – and has been

fabricating its fuel elements since it was

commissioned in 1979.

The company is currently retroftting

the reactor’s instrumentation and control

technology.

Gosgen is one of fve reactors operating

in Switerland. In 2011 following the Fukushima

disaster in Japan, the Swiss government

Gosgen: Areva will deliver 180 fuel assemblies

1309pei_86 86 8/27/13 11:28 AM

www.PowerEngineeringInt.com 87Power Engineering International September 2013

Mitsubishi Heavy clinches India and China contracts and completes SCR testing in US

Mitsubishi Heavy Industries (MHI) has won an order to supply core

components for two sets of a 660 MW supercritical coal-fred boiler

and steam turbine to be installed at an Indian power plant.

The components will be ftted in two new high-effciency coal fred

units at Chhabra power station, approximately 300 kilometers south-

southwest from Jaipur.

The plant is owned by RRVUNL and the new units are due to be

operational in 2016.

The boilers and turbine generators will be built and supplied by

L&T-MHI Boilers and L&T-MHI Turbine Generators, two joint ventures

set up by MHI in conjunction with Larsen & Toubro, India’s largest

construction company and heavy machinery manufacturer.

MHI will manufacture the core components of the boilers and

turbines while Mitsubishi Electric Corp will supply the core generator

components.

RRVUNL was formed in 2000 when the Rajasthan government

unbundled its state electricity board into fve companies, including

RRVUNL.

MHI has also won an order for a steam turbine with a capacity of

around 90 MW for a pulp and paper plant in China.

The plant in Rizhao, Shandong Province, is owned and operated

by Indonesian manufacturer Asia Symbol (Shandong) Pulp and

Paper.

MHI previously delivered two steam turbines to Rizhao plant in

2008 and the latest order is slated to go on-stream in 2015.

The turbine will be used primarily for in-house power generation

to accommodate demand associated with augmentation of the

plant facility.

• Meanwhile, Mitsubishi Power Systems Americas (MPSA), the

business base for MHI’s power systems operations in the US, has

successfully completed verifcation testing of a large-scale selective

catalytic NOx reduction (SCR) system.

The system is to be installed at an 800 MW large-size gas turbine

simple-cycle power generation plant.

The testing was carried out at the Marsh Landing Generating

Station in the San Francisco Bay Area, California, which operates on

four Siemens 200 MW gas turbines, and MPSA said its SCR system

reduced gas emissions, including nitrogen oxides (NOx) and

ammonia, within compliance limits.

MPSA said the testing marked “a milestone achievement for the

SCR system, demonstrating its capability to meet emission limits with

a 200 MW class simple-cycle gas turbine”.

MPSA said its SCR system “successfully demonstrated the ability

to keep within emission limits during quick starts and load changes

and with gas turbine loads across the entire zero to100 per cent

range”.

For more information, enter 52 at pei.hotims.com

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Braden’s full array of engineers (structural, mechanical,

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your retrofit design. Braden also installs complete

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1309pei_87 87 8/27/13 11:28 AM

88 Power Engineering International September 2013 www.PowerEngineeringInt.com

Project Update

Ingeteam to supply inverters to one of Africa’s largest photovoltaic plants Spanish electronics company Ingeteam is

to supply its 1 MW central inverters to one of

the largest photovoltaic plants in the African

continent.

The project, Jasper PV, is to be built by a

consortium formed by Iberdrola Engineering

and Construction South Africa and Group

Five, a South African construction company.

This plant is to have an installed output of

96 MW to be delivered to South Africa’s grid

via the 78 INGECON SUN PowerMax central

inverters which Ingeteam is to supply inside its

40ft, 2 MW power station shelters.

Ingeteam is also to provide the plant with

its INGECON EMS Plant Manager control

system, which will be responsible for ensuring

compliance with all requirements of the grid

operator and South African regulations.

The Jasper project will be equipped with

325 000 polycrystalline modules covering 180

hectares in the province of Northern Cape.

Underwater cable delivered for UK and Ireland HVDC link

ABB has announced delivery of what it calls the world’s highest

capacity high voltage direct current (HVDC) light underwater power

link to Eirgrid, the Irish transmission system operator.

The 500 MW cable is to operate as a link between Ireland and

the UK, and enables leveraging of wind energy and facilitates power

fows between the two countries and is based on voltage source

converter (VSC) technology.

The cable will enhance grid reliability and security of electricity

supplies and facilitates power trading between the two countries

and connects Ireland to the European grid.

As Ireland expands its wind power capacity, it can export surplus

electricity to the UK, and can import power when required.

A 262 km cable system connects Woodland in County Meath,

Ireland and Deeside in north Wales. The cables are equipped with

extruded polymeric insulation that provides strength and fexibility to

endure the severe conditions of the Irish Sea. HVDC Light’s ‘black start’

capability can help restore power quickly in the event of an outage,

without the aid of external energy sources.

HVDC Light is an evolution of HVDC technology that helps address

the needs of long distance underground and subsea transmission. It

is increasingly being deployed across many applications, including

integration of renewable energies from land-based and offshore

wind farms, mainland power supply to islands and offshore oil and

gas platforms, and interconnections, often across seas.

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1309pei_88 88 8/27/13 11:29 AM

Project Update

www.PowerEngineeringInt.com 89Power Engineering International September 2013

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GE celebrates Estonian wind turbine debut

GE has opened the 45 MW Paldiski wind farm

on the Pakri peninsula in north western Estonia.

With 18 GE 2.5-100 wind turbines, the wind

farm – operated by Eesti Energia and Nelja

Energia – marks the commercial debut of the

company’s wind turbine technology in the

country.

Cliff Harris, general manager of

GE Renewable Energy Europe, said:

“Advancements in serviceability and grid

integration from earlier GE turbine models

make the 2.5-100 turbine a great ft for Estonia’s

robust wind conditions.”

Estonia erected a record number of wind

turbines last year with a total capacity of 86

MW that resulted in an overall capacity of 269

MW.

1309pei_89 89 8/27/13 11:29 AM

90 Power Engineering International September 2013 www.PowerEngineeringInt.com

Chinese hydropower milestone for Voith

Voith has announced the commissioning of

the frst of three Francis turbine-generators with

an installed capacity of 784 MW, at Xiluodu

hydropower plant in China.

The Xiluodu plant, which lies on the Jinsha

River, experienced a successful 72-hour test

run prior to Voith’s handover to China Three

Gorges Corporation.

With 784 MW the output of the generator-

turbine unit in Xiluodu is higher than that of

the world’s largest hydropower plants and

consequently sets new standards, according

to Voith.

Upon completion, the total capacity of

the three Voith units for Xiluodu will be roughly

the same as the output of Germany’s largest

nuclear power plant.

Voith Hydro chairman Roland Munch

said the commissioning of the frst turbine

generator is a milestone towards the frst 1 GW

unit.

When Xiluodu is fully connected to the grid

in June 2014, it will have a nominal capacity

of 13.86 GW, making it the world’s third largest

hydropower plant.

Project Update

Malaysian utility breaks ‘four-minute mile’ of certifcation

Malaysia’s largest utility has achieved a

leading asset management certifcation.

Tenaga Nasional Berhad (TNB) has been

certifed by Lloyd’s Register to the Publicly

Available Specifcation PAS 55-1:2008 (PAS

55) – making it the frst company in South East

Asia to win the certifcation.

TNB is the largest electricity utility in

Malaysia and one of the biggest in Asia. It

is the national transmission system operator

responsible for the Malaysia’s main grid.

Its president Y.Bhg Datuk Seri Ir Azman

Mohd said: “In these modern and challenging

times, we have to make sure our ability is still

relevant in the industry.

“We must also strengthen our position to

progress and make TNB a company that is

dominant domestically and a champion

regionally. I believe PAS 55 is an enabler for

this ambition.”

“We are very proud to be the frst company

in South East Asia to achieve this certifcation.

He compared trying to achieve the

certifcation to “the four-minute mile,

which initially was thought of as physically

impossible”, and added: “Our certifcation

will set an example and I’m expecting many

more companies in the region to follow our

approach to achieve this milestone.”

Lloyd’s Register’s work in the certifcation

process involved a two-stage assessment

before recommending TNB’s transmission

division for certifcation. This process included

an examination of the design of TNB’s asset

management system and processes,

followed by a second review where the asset

management system was tested across the

company’s transmission division.

Mohd Azhar Sulaiman, managing director

of Lloyd’s Register Technical Services in Kuala

Lumpur, said: “As TNB is the frst company

in South East Asia to achieve this type of

certifcation, it sets a glowing example to other

businesses throughout the world that good

asset management is an important factor

in any business and should be recognised

from a company’s daily operations to the

boardroom agenda.”

1309pei_90 90 8/27/13 11:29 AM

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Technology Update

Vattenfall hails wind farm radar breakthroughSwedish energy company Vattenfall has

invested in innovative radar technology to

enable it to go ahead with extending one of

its offshore wind farms in the UK.

Vattenfall claims that its deal with

American frm C Speed marks the

world’s frst ever permanent installation

of a fully wind farm-capable radar

system.

The system, called C Speed LightWave

radar, is currently on trial at Manston Airport

in Kent, England, which is the nearest

airport to Vattenfall’s Kentish Flats offshore

wind farm.

Kentish Flats was built in 2005 and

comprises 30 Vestas turbines. Vattenfall

wants to add a further 17 turbines to the

site but there were concerns on the impact

this would have on air traffc at Manston,

which is mainly used by Dutch airline KLM

to fy to The Netherlands, France, Italy and

Portugal.

The airport is also to be used as a base

by BA for its Airbus A380, the world’s largest

passenger plane, where it will be used to

train pilots and cabin crew.

Vattenfall’s solution was to contract C

Speed to design and install its system at

the airport, where it is currently gathering

data. If it proves successful it will be the

frst time that a wind farm-capable radar

has been installed, integrated and then

submitted to regulator the Civil Aviation

Authority for approval.

Vattenfall’s project manager for Kentish

Flats, Goran Loman, said: “We gained

consent for this scheme earlier this year

on condition we tackle this radar issue

effectively. Vattenfall is confdent the C

Speed system will mitigate the potential

impact of our project on Manston Airport

and we look forward to getting the

condition discharged to allow the wind

farm and the airport to safely co-exist.”

He added: “If this technology works, as

we expect, it’s hoped the UK government

will be satisfed this issue has been dealt

with.”

Time for T? New T-pylon could debut at Hinkley Point

An innovative new electricity pylon could be

used for the frst time at the site of Hinkley Point

C new nuclear power station in the UK.

The T-pylon is the brainchild of Danish

engineering frm Bystrup and in 2011 won an

international design competition run by the

Royal Institute of British Architects to fnd a new-

look pylon for the 21st century.

It could make its operational debut as

part of the Hinkley Point C Connection, which

will run between Bridgwater and Avonmouth

in England and will carry electricity for the

southwest of the country.

The connection – which is to be built by

British transmission operator National Grid

– will include Hinkley Point C power station,

which EDF wants to build next door to existing

Hinkley reactors.

Communities living in the area feared

that the new 400,000 volt pylons needed

to carry the connection’s wires would be

much higher than those on the existing

132,000 volt line currently running along the

route.

However, at 36 metres high, the T-pylon is

nearly one third shorter than the traditional

400,000 volt lattice design and engineers

from National Grid are now working with

landscape experts to identify sections along

the connection’s route where the new pylon

would have the most beneft.

It will then be included in the next round

of public consultations on the connection in

September.

Peter Bryant, National Grid’s project

manager, said:“The steel lattice pylon has

served us well and will continue to be used

where appropriate but in September we’re

looking forward to hearing people’s views on

the T-pylon and where along the route it would

be the best choice.”

UK Energy Secretary Ed Davey said: “To

see T-pylon becoming a reality just 20 months

after winning the competition is a fantastic

achievement for National Grid and Bystrup.

He said the T-pylon was “a graceful, refned

structure ft for the needs of our low carbon,

21st century” and would give communities “a

radical departure from the traditional lattice”.

1309pei_92 92 8/27/13 11:29 AM

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94 Power Engineering International September 2013 www.PowerEngineeringInt.com

Technology Update

Green Energy picks Metso for African plant valve order Metso has won its 10th repeat order from

Norwegian company Green Energy Group

for its Neles rotary control valves and triple

eccentric disc valves.

The valves were tested in the company’s

geothermal pilot plant in Kenya, where they

will control the steamy process fow coming

from the boreholes drilled into the ground.

The loosened soil from the ground can

include silica and sand, which sets special

requirements on the valves to be able

provide accurate control ability in such rough

conditions. One of the challenges in these

applications is the silica scaling.

“Not many valves are able to operate in

this type of environment,” said Snorri Einarsson,

steam systems product manager at Green

Energy Group.

He added that “the next step will be to

get all the plants hooked up to the Metso

FieldCare Device and Asset Management

software to carry out predictive maintenance

with live monitoring of the valve performance”.

Green Energy Group delivers a power plant

system that is prefabricated in ready modules

and commissioned on-site in weeks. This year

the company is delivering four geothermal

power plants and has received an order for

fve more for next year.

ABB launches iPad wind energy app

ABB has launched a dedicated Wind Energy

Landscape app for iPads as a free download.

The app encapsulates ABB’s portfolio

of products and services for onshore and

offshore wind energy projects and was

developed originally by ABB for use on its

stands at renewable energy events.

However, the company said that it has

proved so popular that ABB has now decided

to make it available to the general public.

The app enables users to explore ABB’s

commercial wind power solutions from within

an interactive 360º virtual landscape. The user

is initially presented with the option to explore

any of the three virtual wind solution areas:

onshore, offshore (near), offshore (far).

After selecting their entry point, the

user is presented with a virtual landscape

containing all of ABB’s relevant wind solutions.

Each solution is ‘tagged’ with interactive icons

that indicate further information is available

for each subcomponent. Using traditional

touch screen gestures, the user can activate

the icons to reveal further product information.

The application uses animations to

describe some of the essential technical and

operational features of ABB’s products and

related services.

‘Most powerful wind test bench’ is operationalVestas has activated what it calls the ‘most

powerful test bench’ in the wind industry at its

global testing centre in Aarhus, Denmark.

The 20 MW test bench is capable of testing

the full nacelle of the V164-8.0 MW, validating

the performance, robustness and reliability of

the turbine over a simulated 25-year lifetime.

The test bench is 42 meters long and 9

meters wide. Its total weight, including the

motors, wind simulator and generators is

nearly 700 tonnes. Vestas installed 50 m deep

concrete foundations to support the weight.

Motors powering the bench produce 20 MW

- the equivalent of 26 820 brake horsepower,

and the torque exerted on the components

of the turbine can be up to a massive 18

meganewton metres.

The enormous test bench will stress the

drivetrain, including the gearbox, main shaft

and generator of the V164-8.0 MW - in a

controlled environment - reproducing the

harsh wind conditions in the North Sea, using

a comprehensive and rigorous test regime

based on experience and data gathered

from over 25 000 turbines.

Chief technology offcer Anders Vedel said:

“Vestas has invested in the industry’s most

powerful test bench to ensure the turbine

will perform in challenging conditions for 25

years.”

1309pei_94 94 8/27/13 11:29 AM

INVITATION TO EXHIBIT

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A three day event, POWER-GEN Africa serves the industry’s information and networking needs with a dedicated trade show foor featuring the prime movers in the conventional power and renewable energy industries. Additionally, a multi-track conference covering strategic, technical and renewable topics will feature commercial and practical solutions and experiences, for power industry businesses.

POWER-GEN Africa has quickly established itself as sub-Saharan Africa’s premier and leading event dedicated to the power generation industry, focusing on the current and future trends, as well as the needs and resources within this region of the world. Nowhere else provides you with the opportunity to reach and meet over 2,000 high-level industry professionals in one place, allowing networking, business and sales opportunities with key industry buyers and infuencers from around the continent.

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96 Power Engineering International September 2013 www.PowerEngineeringInt.com

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Fo r t he i ndu s t r y ’ s c a r e e r - m ind e d p r o f e s s i ona l s SUMMER 2013

A sup p l emen t t o P ennWe l l pub l i c a t i on s | w w w. P ennEne r g yJ O B S . c om

New Horizons:

The Growth of

Offshore Wind

Around the World

FROZEN ASSETS:

The Artic Push

in Offshore

Oil & Gas

INDUSTRY INSIGHTS

Offshore Energy: Mitigating Risk

TRAINING INSIGHTS

Empowering our Troops: AEP Career Initiatives for Veterans

ENERGY 101

Wave & Tidal Power

1308pejew_C1 1 8/20/13 2:58 PM

1308pejew_C2 2 8/20/13 2:58 PM

2 EDITOR’S LETTER

Offshore Energy: Towards the Great Horizon

Dorothy Davis Ballard, PennWell

3 NEW HORIZONS

The Growth of Offshore Wind Around the World

Dorothy Davis Ballard, PennWell

5 FROZEN ASSETS

The Artic Push in Offshore Oil & Gas

Hilton Price, PennWell

6 INDUSTRY INSIGHTS

Offshore Energy: Mitigating Risk

Matthew Gordon, Viking SeaTech

8 CAREER INSIGHTS

Regulatory Experts: Career Opportunities Galore

Volker Rathman, Collarini Energy Staffng

10 TRAINING INSIGHTS

Empowering our Troops: AEP Career

Initiatives for Veterans

Dorothy Davis Ballard, PennWell and Scott

Smith, American Electric Power

12 ENERGY 101

Wave & Tidal Power

PennEnergy.com

w w w . P e n n E n e r g y J O B S . c o m

SUMMER 2013

A PENNWELL PUBL ICAT ION

Stacey Schmidt, Publisher

staceys@pennwell.com

Dorothy Davis Ballard, Content Director

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Hilton Price, Editor

hiltonp@pennwell.com

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Daniel Greene, Production Manager

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1308pejew_1 1 8/20/13 2:57 PM

2 Summer 2013 | FOR JOB OPPORTUNITIES, VISIT www.PennEnergyJOBS.com | EnergyWorkforce

Ed i to r ’ s

Le t t e r

THE world’s oceans and vast waterways have always evoked feelings of wonder

and piqued the adventurous spirit. Teeming with life and uncharted depths,

these fuid bodies are awe inspiring in the way they are so vast and yet joining together

everything.

In the ancient world the challenge was to transverse these great expanses, to fare

into the horizon of the unknown for sustenance and wealth. Today, the world beyond

our shores holds the promise of new bounties. We turn again towards the great horizon,

abundant with the promise of resources to fuel all we have developed.

In this issue of Energy Workforce we delve into offshore energy as it is moving

ahead in great leaps and

bounds. We begin with an

overview of offshore wind

power on page 3, highlighting

the incredible global growth

of this industry as it moves

towards becoming a truly

competitive resource.

Next, we look to the

offshore oil & gas industry

and its renewed push into artic territories on page 5, followed by a timely editorial on

mitigating risk on page 6 as offshore exploration & production moves to tap these once

unreachable resources.

With a focus on career development, we hear from an industry expert on expanding

opportunities for regulatory experts on page 8 and speak with an executive of U.S.

energy major AEP about initiatives for veterans in energy on page 10.

We close this issue with another round from our Energy 101 series, this time a brief

introduction to the evolving wave and tidal power industry on page 12.

We hope you enjoy these insights and encourage you to keep us on your summer

reading list to stay ahead with the latest energy news, research, and jobs at PennEnergy.

com and PennEnergyJobs.com.

Carpe diem!

—Dorothy Davis Ballard

Towards the Great Horizon

“Today, the world beyond our shores holds

the promise of new bounties. We turn again

towards the great horizon, abundant with

resources to fuel all we have developed.”

1308pejew_2 2 8/20/13 2:57 PM

Cover STORY

EnergyWorkforce | FOR JOB OPPORTUNITIES, VISIT www.PennEnergyJOBS.com | Summer 2013 3

The Growth of Offshore

Wind Around the WorldBy Dorothy Davis Ballard

AS more countries around the

globe realize the potential of

offshore wind, new turbines

are being installed off of our coasts.

In 2012, 1,296 megawatts of new off-

shore capacity were installed — a 33

percent increase from 2011, according

to the Global Wind Energy Council

(GWEC). The world now has at least

5,415 MW of offshore wind energy gen-

erating around the globe.

Offshore wind represents about 2 per-

cent of global installed energy capacity,

but that number could, and is expect-

ed to, increase rapidly. This renewable

resource, which is able to generate far

more power than onshore wind tur-

bines, could meet Europe’s energy de-

mand seven times over, highlights the

GWEC. While in the United States, off-

shore wind has the potential to provide

four times the energy needed capaci-

ty needed.

Europe’s lead in offshore wind

Currently, more than 90 percent of the

globe’s offshore wind power is installed

off the coast of northern Europe in the

North, Baltic and Irish seas. There is

now also a solid presence in the Eng-

lish Channel. Last year, the United

Kingdom took the lead in new wind ca-

pacity, adding 854.20 MW of offshore

wind power assets. Denmark added 46.8

MW in 2012 and Belgium 184.5 MW.

As of this article, Europe has a to-

tal of 4,336 MW generating from 1,503

offshore wind turbines at wind farms

located across 10 countries. The Euro-

pean Union has set a goal to generate

20 percent of its electricity from renew-

able sources by 2020, and offshore wind

is slated to play a major role in making

that a reality.

In early July, the offshore wind

Sou

rce:

DO

NG

En

ergy

A/S

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4 Summer 2013 | FOR JOB OPPORTUNITIES, VISIT www.PennEnergyJOBS.com | EnergyWorkforce

industry celebrated a milestone: Dong

Energy inaugurated the world’s largest

offshore wind power facility. The proj-

ect, which includes 175 Siemens wind

turbines, is called London Array and lo-

cated 12.4 miles off the Kent and Essex

coast in the Thames estuary. It has a to-

tal capacity of 630 MW, enough to pow-

er 500,000 households.

The UK’s Department of Energy &

Climate Change recently approved an-

other major offshore wind project, which

will add to Europe’s expanding wind en-

ergy output. The 1.2 GW Triton Knoll

project will be led by RWE and located

off the Lincolnshire and Norfolk coast.

Along with supplying clean, alternative

energy, the project is expected to gener-

ate more than $5.5 billion of investment

in the region and create about 1,130 jobs.

Germany, too, has had its sights set

on the development of alternative ener-

gies like wind and solar as part of a na-

tional commitment towards the phase

out of nuclear power. The country add-

ed 80 MW of offshore wind energy to the

electric grid in 2012, and another six util-

ity scale offshore wind projects are under

construction. Petrofac, and Siemens En-

ergy also recently entered into a $53 mil-

lion contract to build two major offshore

wind projects in the North Sea off the

coast of Germany - one totaling 576 MW

and another set for 800 MW.

US makes commitment to offshore wind

North America is aiming to add some

6.5 GW of wind power this year, and the

United States is looking to be a major con-

tributor. While there are no offshore wind

farms in the U.S. at the moment, the fed-

eral government has recently completed

its frst-ever round of auctions

for offshore wind leases. Deep-

water Wind, a company based

in Rhode Island, came in with

the highest bid of $3.8 million

for two areas totaling more than

164,000 acres off the coasts of

Massachusetts and Rhode Is-

land. The auction was viewed

as a historic moment for the

U.S.’s future commitment to

clean energy.

The federal government is

expected to hold another auc-

tion in September for a possi-

ble wind project off the coast of

Virginia. Areas offshore Mary-

land, New Jersey and Massa-

chusetts have also been sited as possible

locations for future wind developments.

PensionDanmark announced in June

it will be funding $200 million in capi-

tal for the planned Cape Wind project

expected to include up to 130 Siemens

turbines of 3.6 MW each. If completed,

the project off the coast of Massachu-

setts’ Cape Cod would become one of

the world’s largest offshore wind farms.

Asia will boost wind output

According to the GWEC, Asia will con-

tinue to boost its wind energy output an-

nually, reaching 25.5 GW by 2017. When

it comes to offshore wind energy, Japan

reached 25.3 MW last year. Meanwhile,

South Korea reached 5 MW of offshore

wind generation.

China holds the third spot for most

offshore wind capacity, with 258.4 MW

installed. China is also home to the frst

commercial offshore wind project outside

Europe. The Shanghai Donghai Bridge

project was installed in 2010 and totals

102 MW. China hopes to have 5 GW

of offshore wind by 2015 and 30 GW by

2030, according to the GWEC.

Cheaper costs will drive demand

A major challenge for expanding off-

shore wind development is the current

high costs of the technology. Deep wa-

ters far offshore, higher waves and steeper

construction costs can make these proj-

ects somewhat cost prohibitive. Howev-

er, like other renewable energy sources

being developed around the globe, off-

shore wind technology is steadily improv-

ing to boost its overall return on invest-

ment. Investment remains strong across

the broader wind power industry with

2012 marking several milestones. It ap-

pears with continued cost reductions and

the growing push towards renewable re-

sources, offshore wind is positioned to be

a key player in meeting global energy de-

mand through the next decade. ⊗

Sou

rce:

DO

NG

En

ergy

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EnergyWorkforce | FOR JOB OPPORTUNITIES, VISIT www.PennEnergyJOBS.com | Summer 2013 5

Frozen Assets

Despite immense challenges, the Arctic can’t

keep away exploration and drilling.

By Hilton Price

WHEN U.S. arctic waters saw

a drillship for the frst time

in 2 decades, it seemed the

return to a bygone era of exploration

had begun. Although Shell was ready

to usher in a new age for exploration

in those icy waters, process hurdles,

equipment issues, and natural obstacles

left the company’s dream unrealized.

Immediately after, as word of techni-

cal violations added insult to injury, it

seemed potential reservoirs in U.S. arc-

tic waters would remain unexplored for

at least a little while longer.

The frigid waters of the arctic present

one of the greatest challenges for any ex-

ploration company. These natural hin-

drances, combined with ongoing legis-

lation from the countries that lay claim

to those waters, make it a massive un-

dertaking. Shell lost billions in its failed

2012 campaign, and as the season end-

ed the company announced it would not

attempt a return in 2013.

However public Shell’s struggle in

the region may be, it is only a set-back.

2014 looms, and there is still no word

whether Shell will attempt a return to

the Arctic, but it is looking likely.

Shell is planning specialized surveys

of the area, using ships deployed to ar-

eas in the Chukchi and Beaufort seas.

This kind of data collection will be in-

valuable to potential future exploration

campaigns, and could save Shell in both

cost and risk if it chooses to return.

The same success Shell is hoping for

in U.S. arctic waters is being realized by

other companies in other areas of the

tumultuous region.Offshore Norway is

proving successful for numerous compa-

nies exploring the area. In the UK, three

of the country’s “Big 6” energy compa-

nies are planning Arctic drilling. E.On,

Centrica, and RWE Npower are all ex-

pressing interest in the region.

Likewise, there is a growing interest

offshore Russia, where legislation is loos-

er than the U.S. and reservoir potential

just as high. Shell has turned its atten-

tion to this area. If the company is suc-

cessful there, it could affect U.S. arctic

drilling policy, and possibly open the re-

gion further in the future.

In the U.S., however, there is an-

other element that could swing the

pendulum the other way, and close

off the country to further arctic ex-

ploration. The U.S. shale exploration

boom is changing the global energy

landscape. The country is expected to

become a major exporter in the com-

ing decades, and successful produc-

tion of these unconventional resources

could affect the interest in traditional

exploration. It could end the return to

the U.S. arctic before it truly begins.

There is a growing call for environ-

mental stewardship, the same kind that

brought an end to U.S. arctic drilling

decades ago. That concern for our natu-

ral environments isn’t likely to fade. Any

company heading to the area must show

respect for the land, and for those who

fght for it, or risk an evaporation of sup-

port for its work in the region.

Arctic drilling is hardly over. In ar-

eas offshore Norway, it thrives as much

as ever. In U.S. arctic waters, the pro-

cess may be stalled, but across the

sea in Russia’s arctic waters, oppor-

tunities are increasing. Success there

could further push exploration inter-

est here, and possibly overcome the

fnancial and legal hurdles that stand

in the way.

Meanwhile, success with shale oil

and gas could turn U.S. interests away

from the arctic, and back on land. But

that isn’t stopping companies from re-

viewing the region, and critically an-

alyzing collected data. For an area of

the Earth where even basic exploration

means a multi-billion dollar campaign,

every move matters and every decision

is crucial. ⊗

1308pejew_5 5 8/20/13 2:57 PM

6 Summer 2013 | FOR JOB OPPORTUNITIES, VISIT www.PennEnergyJOBS.com | EnergyWorkforce

INDUSTRY Insights

Offshore Energy: Mitigating Risk

By offering an integrated offshore support package, variant

forms of risk can be avoided, according to Viking SeaTech

Survey’s General Manager Matthew Gordon.

By Matthew Gordon

POST-MACONDO, there has been

an increased focus on the miti-

gation of risk. The industry has

reviewed operational practices from top

to bottom. Everyone from the

operators to offshore specialists

has been affected by the major

incident. 

As a result, there has been an

increase in the contractual tug

of war between operators and

contractors in relation to the ac-

ceptance of risk and liabilities.

This has led to lengthy nego-

tiations as legal teams look to

reach middle ground, resulting

in increased administration,

time and cost.

It could be said that offering

an integrated and streamlined service re-

duces administration, costly contract ne-

gotiation and indemnities. Expanding in-

house services could not only hold the

key to unlocking cost savings, but also

to reducing risk in a risk wary industry.

Bringing new thinking to an old problem

Offshore service businesses are reinforc-

ing their position in the marketplace

by providing a fully integrated package.

Previously, smaller companies offered

a niche service that was considered sat-

isfactory twenty years ago. But as the

large corporations’ priorities adapt in

line with supply and demand, support

companies have risen to the task.

Viking SeaTech has looked at how

a new business stream can be injected

into a maturing and heavily saturated in-

dustry, in order to meet the changing re-

quirements of their clients.

By offering more services under a sin-

gle contract, including survey services,

we can provide a convenient package that

offers all the benefts, minus the opera-

tional burden.  Our integrated approach

supports our efforts to make rig-moving

safer, faster, cheaper and eas-

ier to execute. 

Reducing the

operational burden

Contract negotiations can

be time consuming; la-

bor intensive, costly and

can often impact project

scheduling. This is multi-

plied by having several con-

tracts to set up and manage

simultaneously.

An integrated approach

works towards removing

these barriers. It is highly advantageous

to the client to have a single contract in

place for service provision. This equates

to a single point of contact, invoice and

company-specifc set of terms and condi-

tions to manage.

The benefts of such a contracting ap-

proach are realized when an issue arises.

Instead of managing multiple contactors,

it takes one call to a single organization to

1308pejew_6 6 8/20/13 2:57 PM

EnergyWorkforce | FOR JOB OPPORTUNITIES, VISIT www.PennEnergyJOBS.com | Summer 2013 7

Matthew Gordon joined Viking SeaTech in November 2012 as General Manager, Viking SeaTech Survey. His role is to oversee the development of the newly created Survey division.  He is responsible for initial recruitment, project management and contracting, proft and loss.  Matthew joined the company from Subsea 7, where he was a Client Account Manager overseeing sales for the UK, Ireland and the Netherlands.  Previously, he was in a general management position with VERIPOS and a project engineer with Fugro.  He specializes in hydrographic survey positioning, project management, ROV and TDU operations, business development and personnel development. Matthew has an MSc in Management Studies from The Robert Gordon University and a BSc in Electronic Engineering from Glasgow Caledonian University.

remove the issue. If a single contractor is

working towards a shared goal, the time

taken to resolve the issues is also reduced. 

The rig moving food chain

Operational effciency is improved when

operators use the integrated approach,

and also removes the need for multiple

contractors. By having numerous disci-

plines working together in-house, com-

munication is strengthened and it is en-

tirely realistic to suggest that the risk to

client operations is reduced.

From a quality assurance perspective,

Viking SeaTech Survey is involved at ev-

ery stage of the life cycle, from design

to evaluation and through working with

other disciplines. This process identifes

errors that may not be uncovered until

much later in the job, resulting in proj-

ect delays and increased cost.

Eradicating the blame culture

Contractor confict can trouble clients.

We have found that the greatest issue for

our clients is managing multiple contrac-

tors, especially when they are in confict,

as this can often lead to spending vast

amounts of time acting as arbitrator.

This is understandably irksome and

often it is the client who pays for this in

the form of lost time and additional costs.

An Integrated service approach can re-

move much of the operational burden

and the single contractor can resolve

problems on the client’s behalf. This

approach allows the client to spend their

valuable time working on other things,

while we deal with the issue at hand. This

is becoming even more important as or-

ganizations become fatter and individ-

uals within those companies have more

responsibility, meaning that time is a pre-

cious commodity.

Bespoke options

Large frms have the option of using

the offshore support specialist for their

rig moving operations expertise. It may

seem obvious, but advising clients at the

earliest point in the process is fundamen-

tal to the success of the job at hand. Step-

ping in at the initial engineering and de-

sign stages makes things easier later in

the job. Once these specifcations have

been approved by the client, a list of ma-

rine procedures can be made. This step-

by-step guide advises as to how the boats

and personnel will move the rig from

start to fnish. 

Our potential clients may have fve

or six different options from multi-

ple contractors. To make the decision

easier, we tailor the options to ft the

client exactly. By offering multiple ser-

vices, operational burden is lifted and

risk is less likely. The more links in the

operational chain, the more things that

can go wrong. We are trying to bring it

down to just two links, us and the client.

Furthermore, uniform policies and pro-

cedures lead to a safer operation. A unit-

ed quality system that clearly informs all

personnel of operational methods will

drive a safer practice.

Looking to the future

The integrated service model brings end-

less possibilities. Removing the burden

for the operator is not only advantageous

in terms of costs, time and schedule, but

it can remove the incidence of risk within

an operation. Risk comes in many forms,

but can be reduced by using a stream-

lined business with one goal, the swift,

safe, coordinated and accurate comple-

tion of a contract. 

I foresee integrated services becom-

ing more common place as the indus-

try continues to adapt. The often long

and drawn out processes attached to

drawing up contracts between opera-

tors and contractors, and subsequent

legal associations, has proved costly in

the past. Integration will become the

norm once the industry realizes this

effcient business prototype is one to

be utilized. ⊗

Risk comes in many forms, but can be reduced by using

a streamlined business with one goal, the swift, safe,

coordinated and accurate completion of a contract.

1308pejew_7 7 8/20/13 2:57 PM

CAREER Insights

8 Summer 2013 | FOR JOB OPPORTUNITIES, VISIT www.PennEnergyJOBS.com | EnergyWorkforce

Regulatory Experts Career Opportunities Galore

Evolving regulatory systems in the petroleum industry

provides an emerging career path

By Volker Rathman, Collarini Energy Staffng

WITH the drilling moratorium

lifted, the oil and gas indus-

try is trying to fgure out how

to deal with the onslaught of new regu-

lations. The effects on the job markets

have already been felt: Thousands of

jobs in the offshore industry were tem-

porarily lost after the moratorium was

put in place in the wake of the Macondo

incident.

We say “temporarily,” since over time

many of these jobs will come back. This

is in no way belittling the effect the loss of

jobs has had on those involved and their

families. It is stating a belief that our in-

dustry is resilient and will come back –

stronger and better.

Well over 80 percent of this country’s

energy comes from hydrocarbons. No

number of alternative or renewable energy

sources will change that percentage quick-

ly. Oil and gas are here to stay; and, frank-

ly, the country needs us to produce hydro-

carbons for them, even if the importance

is not always realized by many Americans

outside of our industry.

So our take on the future job market

is positive. Regulations about to be dealt

with by the industry will have an increas-

ing effect on job creation, since many

1308pejew_8 8 8/20/13 2:57 PM

EnergyWorkforce | FOR JOB OPPORTUNITIES, VISIT www.PennEnergyJOBS.com | Summer 2013 9

more people will be needed to under-

stand what the new rules mean and to

develop the best practices to implement

them. Regulatory experts and analysts

may apply here!

The role of the regulatory analyst has

expanded in all sectors of the oil and gas

industry as a result of proposed, new and

revised legislation.

• A regulatory analyst’s position may in-

clude such responsibilities as:

• Preparing and submitting permitting

requests for all new operations activi-

ty and any revisions to prior approvals

• Monitoring and reporting gas and oil

production and inventory for compa-

ny-operated wells

• Managing and updating regulatory in-

formation and forms

• Interfacing with local, state and feder-

al regulatory agencies

An experienced analyst will have pri-

or regulatory permitting and reporting

experience for full cycle development

planning, drilling completion, workover

operations, and feld abandonment. The

role also requires knowledge of permitting

specifc to the governing agency and geo-

graphic area.

Additionally with conventional on-

shore drilling, the process of shale ex-

traction is regulated under a number of

laws, most notably at the federal level,

the Environmental Protection Agen-

cy, The Clean Water Act, The Safe

Drinking Water Act, and The Nation-

al Environmental Policy Act. While

the federal agencies administer a gen-

eral “one-size-fts-all” set of guidelines,

the regulatory bodies at the state and

local levels may be distinctly different

due to geographic location, hydrology,

population density, wildlife, climate

and local economics.

This stew of agencies and rules cre-

ates career opportunities for experts in

each area and for generalists keeping an

eye on the big picture and the interface

among all parties.

Experts in this feld will be needed in

the permitting processes. This will create

employment opportunities particularly in

the context of:

• Greenhouse gas and air emissions

• Noise pollution

• Erosion and sediment control and

• Environmental threats to endangered

and threatened species

We do not know how the regulatory

scene will play out. We are certain, how-

ever, that regulatory compliance needs

will not decrease; this could create a boon

for those professionals seeking a switch

in their careers.

Tis fast-growing sector of the indus-

try holds promise to any regulatory pro-

fessional due to the diversity of agency

interface, geographic variety and environ-

mental concerns. As industry technolog-

ical developments and practices improve

and legislative requirements continue to

evolve, so will the unique opportunities

in these regulatory roles. ⊗

Volker Rathmann is the President of Collarini Energy Staffng Inc. Prior to joining the frm

in 2001, he held the position of Chief Financial Offcer for INTEC Engineering, a provider

of specialized engineering services in global frontier and deepwater projects. Before INTEC

Engineering, Volker held a number of leading positions in operations, marketing and fnance

within the Daimler AG. Volker earned a Bachelor’s degree in business administration in

Berlin, Germany.

The role of the regulator y analyst has expanded

in all sectors of the oil and gas industr y as a

result of proposed, new and revised legislation.

1308pejew_9 9 8/20/13 2:57 PM

10 Summer 2013 | FOR JOB OPPORTUNITIES, VISIT www.PennEnergyJOBS.com | EnergyWorkforce

Empowering our Troops: AEP Career Initiatives for Veterans

HEADQUARTERED in Colum-

bus, Ohio, American Electric

Power (AEP) is one of the

largest electric utilities in the United

States, delivering electricity to more

than 5.3 million customers in 11 states.

AEP has a long history of community

engagement and has established itself

as one of the top employers for military

men and women.

As a leading utility, AEP partners

with veterans’ organizations and job pro-

grams, provides special benefts to vet-

eran employees, and supports veteran

employees and their families through

mentoring and recognition programs.

Recently, PennEnergy was invited to

learn more about AEP’s veterans’ ini-

tiatives and given the opportunity to

engage Scott Smith, AEP Senior Vice

President for Transmission Strategy and

Business Operations.

A former U.S. Army captain and com-

bat engineer, Smith serves as an execu-

tive sponsor for AEP’s Military Veteran

employee resource group. Smith collab-

orated with PennEnergy content direc-

tor, Dorothy Davis, to offer greater in-

sight into AEP’s veterans’ initiatives and

how they beneft our military heroes,

the energy industry, and the communi-

ties they serve.

PennEnergy (PE): What percentage of

AEP’s current workforce is represented

by veterans?

Scott Smith (Smith): Veterans com-

pose 10 percent of AEP’s workforce, with

1,770 military veterans working through-

out our 11-state service territory.

PE: When did AEP’s veteran outreach

initiatives begin and what prompted

them?

Smith: Though AEP has a long his-

tory of supporting military veterans, it

became even more pertinent in recent

years as we increasingly realized that the

skills military veterans could bring to the

workplace closely match the skills we are

seeking for new employees. Many vet-

erans have the job-related training we

need to operate equipment and to per-

form other technical functions, along

with the personal attributes we value,

including leadership skills, f lexibili-

ty, adaptability, dedication and team-

work. We also have recognized the

signifcance of building a skilled work-

force pipeline that will help us meet the

future needs of our ever-evolving indus-

try. With this in mind, we have placed

increasing attention on our military re-

cruiting efforts as well as on our compa-

ny pay and benefts policies that support

Reservists and National Guard members

who are called into active duty.

PE: What programs does AEP have

in place for helping to recruit and

transition veterans into civilian ener-

gy careers?

Smith: At AEP, we have taken a

number of approaches to target the vet-

eran community and transition them

to successful careers at AEP. For exam-

ple, instead of fltering through thou-

sands of resumes, which can be time

consuming, we work with veterans’ or-

ganizations and national and state jobs

programs to locate veterans who have

the skill sets that match utility jobs.

This spring, AEP hosted an open

house at the AEP Transmission train-

ing facility near Columbus, Ohio, for

an up-close and personal view of the

daily activities of linemen, station tech-

nicians, protection and control elec-

tricians and other jobs. The event,

co-sponsored with veterans groups,

TRAINING Insights

1308pejew_10 10 8/20/13 2:57 PM

EnergyWorkforce | FOR JOB OPPORTUNITIES, VISIT www.PennEnergyJOBS.com | Summer 2013 11

provided an orientation about the types

of careers available at AEP. Several AEP

military veterans served as mentors dur-

ing the event. AEP seeks out veterans at

traditional recruiting events, too. For ex-

ample, we participate in Hire Our He-

roes, a U.S. Chamber of Commerce-

sponsored job fair.

In addition, AEP is one of a handful of

utilities that directs ex-military job appli-

cants to an online “military occupational

specialty” decoder that translates military

skills, capabilities and training into civil-

ian terms. The decoder helps veterans

recognize the meaning and value that

their military skills and training have in

the civilian workforce.

PE: What impact has AEP’s veteran

program had on the company and its

service communities?

Smith: For 10 consecutive years, AEP

has been ranked among the top “mili-

tary friendly” employers in the country

by GI Jobs Magazine. Our program has

not only increased the number of veter-

ans in our ranks, but it has helped veter-

ans transition successfully through men-

toring and company support.

I serve as an executive sponsor for

our Military Veteran employee resource

group, which was launched on Veterans’

Day in 2012. The group not only men-

tors newcomers, but it also supports em-

ployees by assisting their families while

the employees are away on active duty.

The resource group partners with veter-

ans groups and sponsors events to honor

veterans throughout AEP’s 11-state ser-

vice territory. Ultimately, we want to show

our employees and our service commu-

nities that we value the service of veter-

ans who have fought to protect our free-

doms and want to help them secure the

economic prosperity, ongoing support,

and respect they deserve.

PE: How does AEP envision the role

of veterans in evolving energy industry?

Smith: When we look at the veter-

an community, we see a skilled, disci-

plined workforce that can help our in-

dustry succeed as we begin a period of

rapid infrastructure modernization and

expansion. Nationwide, utilities will

need to replace an estimated 200,000

skilled Baby Boomers expected to retire

in the next fve years – a third of the ener-

gy workforce. At the same time, utilities

across the U.S. are expected to invest $50

billion to modernize electric transmis-

sion infrastructure through 2020. This

estimate could surpass $100 billion if

additional investments are made to en-

hance communications and cyber secu-

rity capabilities.

Through 2020, AEP alone plans to

spend billions to build around 480 new or

enhanced transmission substations and

roughly 1,800 miles of new transmission

lines. We plan to rebuild another 3,900

miles of transmission lines between 2013

and 2015. We also are focused on prepar-

ing ourselves for success in a competi-

tive transmission business environment,

which will require us to move quickly and

fnish projects on time and on budget.

As a result, targeting military veter-

ans who are transitioning to civilian ca-

reers makes sense since their capabilities

match the qualities necessary for us to

succeed in a rapidly growing, competi-

tive transmission landscape.

PE: What is ahead for AEP’s veteran

initiatives?

Smith: As we seek to recruit more

veterans into our ranks, we have looked

at how we can best support this popu-

lation of employees, particularly those

who continue to serve. AEP recently an-

nounced it will make up the difference

between an employee’s military pay and

his or her AEP base wage when the em-

ployee is off work for required training.

Additionally, we are supporting indus-

try-wide efforts to leverage the talents of

the veteran community. AEP helped es-

tablish the Troops to Energy Jobs pro-

gram, a product of the Center for En-

ergy Workforce Development. The

Center recently published a 54-page na-

tional model to help energy companies

develop a comprehensive program for

military outreach, education, recruit-

ing and retention. Through such col-

laborative efforts, we are determined to

help more veterans by providing a road-

map to civilian employment in the en-

ergy industry. In turn, we are ensuring

that we have the skilled workforce need-

ed to continue generating and deliver-

ing the reliable electricity that is essen-

tial to American homes, businesses and

national security. ⊗

“When we look at the veteran communit y,

we see a skilled, disciplined workforce...”

To learn more visit: AEP – A Military Friendly Employer

For career resources in the power and petroleum sectors visit: PennEnergyJobs.com

1308pejew_11 11 8/20/13 2:57 PM

12 Summer 2013 | FOR JOB OPPORTUNITIES, VISIT www.PennEnergyJOBS.com | EnergyWorkforce

Energy 101: Wave & Tidal EnergyPennEnergy.com

WAVE and tidal energy is

a predictable form of re-

newable energy that uses

the power and movement of wave

and tidal fows to generate electric-

ity. With the use of underwater tidal

turbines, energy from the sea is cap-

tured to create a non-polluting form

of electricity. 

A dam approach with hydraulic

turbines is the most modern tech-

nology being used across the world

to harness  tidal power. Tidal dams

are most effective in bays with nar-

row openings. Gates and turbines are

installed at certain points along the

dam, and when an adequate differ-

ence in water elevation on the dif-

ferent sides of the barrage occurs,

the gates open, creating a “hydrostatic

head,” the Ocean Energy Council re-

ported. During this process, water fows

through the turbines to create electric-

ity. The technology used at tidal ener-

gy facilities is similar to that used at

traditional hydroelectric p ower plants.

Wave and tidal power is one of the

oldest forms of energy used by humans,

with tide mills used by the Spanish,

French and British as early as 787 A.D.

It’s estimated the world’s potential for

ocean tidal power is 64,000 megawatts

electric, the OEC reported. However,

tidal power has a low capacity, usually in

the range of 20 to 30 percent. The tech-

nology for tidal energy is also expensive,

though powerful. It is estimated that if

a barrage was placed across a high-tid-

al area of the Severn River in western

England, it could provide 10 percent of

the country’s electricity needs, accord-

ing to the OEC.

Growing popularity

Tidal and wave energy technology is ad-

vancing rapidly as more countries are

beginning to realize the renewable en-

ergy’s benefts.

In the United States alone, there are

about 2,110 terrawatt-hours of wave en-

ergy being generated each year. Yet, ac-

cording to the Renewable Northwest

Project, this is just 25 percent of how

much the U.S. could be generating on

its coasts from tidal power.

Using special buoys, turbines or

other means, the country is captur-

ing the power in waves and tides from

the ocean - power that can be more

predictable than wind. Because tidal

energy reacts to the gravitational pull

of the moon and sun, experts can pre-

dict their arrival centuries in advance.

Oregon and Washington experience

the strongest waves in the lower 48

states. In Washington’s Puget Sound,

the U.S. could develop wave and tidal

technology that could capture sever-

al hundred megawatts of tidal power.

The U.S. Department of Energy

also recently unveiled a foating off-

shore wind platform that uses under-

water turbines to capture tidal energy

and create electricity, Forbes report-

ed. Another wave project that includes

10 buoys is being tested off the coast of

Oregon. It is expected to generate 1.5

MW. U.S. regulators see projects like

this as a smart and valuable solution to

diversify the country’s energy mix with

greener technologies. These regulators

also see wave and tidal power as more

predictable than wind and solar.

The United Kingdom also sees tidal

power as a viable alternative to fossil fuel

power. The U.K. is seen as a world lead-

er in wave and tidal stream technologies

due to its abundance of marine energy

resource. It is estimated that tidal tech-

nologies could generate up to 300 MW

of power by 2020. However, overall po-

tential is between 25 and 30 gigawatts. ⊗

1308pejew_12 12 8/20/13 2:58 PM

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