reliable energy ashgabat chris cook
TRANSCRIPT
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Funding Caspian Energy Infrastructure
A Caspian Energy Grid
Chris Cook
Ashgabat December 2014
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Reliable & Stable Transmission – Problem
'Caspian Energy Grid' = Caspian region energy transportation/ generation & transmission infrastructure
Existing legacy infrastructure fragmented, fragile & grossly inefficient (<20% output efficiency)
Huge carbon fuel waste between producer & consumer
Competition between Caspian regional producers for sales of energy-as-a-commodity
Market volatility & ongoing bank capital shortage means conventional funding almost impossible
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Reliable & Stable Transmission – Solution
Least Carbon Fuel Cost Principle - minimise carbon fuel system input for given electricity, heat or power output
$ 100s billion investment in
- efficiency upgrade of legacy gas transportation & heat/power generation
- existing legacy power grid
- next generation gas to power & efficient grid transmission eg HVDC
Question - how can Caspian Energy Grid upgrade/ development be funded?
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Funding the Grid
Prepay Energy Credit
- energy consumers or investors pay forward at a discount
- pre-dates modern debt/equity finance capital
- re-emerging in use eg $85bn prepay transaction by Sinopec with Rosneft
Energy Loans
- investors lend $, € or other agreed currency
- Energy Loan denominated in energy eg MWhrs or MMbtu
- Project repays loan by purchasing energy credits at the energy market price in $, € or agreed currency
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Funding the Grid
Value Proposition
- consumers buy in advance cheaper & lock in price
- producers obtain interest free credit & lock in price
- investors obtain energy return & sell to consumers
Requirements
- physical energy market & pricing benchmark
- accounting system
- framework of trust - “Clearing Union”
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Caspian Energy Grid Market Platform
Caspian Energy Grid(Custodian)
Caspian Energy Grid(Custodian)
Investors
Caspian EnergyGrid Users
Service Providers
%Prepay
Use Fee
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Energy-as-a-Service – Value Propositions
Producers/Generators & Consumers - share cost of Caspian Energy Grid through agreed use payment
Service Providers - receive agreed entitlement as %age of use fees - balance of use fees available to investors
Investors - buy energy prepay credits at a discount
Consumers – pay for energy delivered using conventional payment or energy prepay credits
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Proof of Concept – KAT Core
KAT = Kazakhstan, Azerbaijan, Turkmenistan
Turkmenistan littoral Gas to Power generation hub
- state of the art Combined Cycle Gas Turbines (CCGT)
- c 60% efficiency
High Voltage Direct Current (HVDC) subsea triangle
- Turkmenistan – Kazakhstan (eg Atirau)
- Turkmenistan – Azerbaijan (eg Baku)
- Azerbaijan - Kazakhstan
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Marchwood (UK) – 58% efficient CCGT
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BritNed and NorNed HVDC Connections
BritNed 260km - 600MW NorNed 580km - 600MW
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Caspian Energy Grid – KAT Core
Turkmen Gas/ Power Hub
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Caspian Energy Grid - Outcomes
Turkmenistan exports power to Caspian littoral statesEnergy savings fund development of Caspian Energy GridTurkmenistan conserves gas which is then available for
generation or exportAzerbaijan & Kazakhstan reduce local carbon fuel requirement
and release fuels for exportCaspian energy market & pricing benchmarkMinimise funding costs: energy loans bear no compound interestIncreased resilience - Grid also capable of carrying regional
renewable energy power & load balancing
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Proposal & Next Steps
Wimpole Consortium – led by major global energy engineer/ manufacturer
Two proposed proofs of concept- KAT Core proposal- re-powering of existing legacy gas transmission infrastructure