Energy Solutions for Tomorrow Issue 13 in This Issue
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Energy solutions for tomorrow Issue 13 In this issue Drivers and trends in the energy business Wärtsilä Energy News is published for business Decentralisation is no longer the dream of environmentalists and small equipment suppliers. friends and employees of Wärtsilä. Distributed energy has arrived, as this analysis of the drivers behind the energy business in Editorial Board: Pekka Ahlqvist, Jussi the UK and EU shows. 4 Heikkinen, Lars Gustaf Martin, Maria Hällund Editor: Maria Strand / Maria Hällund English Editing: Andrew Gardiner Renewables - the ins and outs of biofuels Layout: Bock’s Office Biofuels, what exactly are they and where do they fit in the fuel spectrum today? . 8 Please address correspondence to: Wärtsilä Finland Oy, Maria Strand P.O.Box 252, 65101 Vaasa, Finland Wärtsilä expands into biopower e-mail: [email protected] Wärtsilä recently acquired Sermet Oy, a leading Finnish supplier of small and medium-sized ISSN 1456-3274 boiler plants running on biofuels, oil and gas. 12 Information in this publication is subject to change without notice. © Wärtsilä Corporation. Printed in November 2001. All rights reserved. The Western energy and power crisis: after the storm? The USA avoided the worst-scenario blackouts and brownouts last summer predicted by analysts and generators. But where does that leave the US electricity market?. 14 Also in this issue Wärtsilä to supply largest gas- fired Interview with KPLC . 31 Wärtsilä 220SG power plant reduces power plant using reciprocating Bausch & Lomb’s energy costs . 40 Power for extreme conditions . 32 engines in the USA . 16 Power and heat for arctic Siberia. 41 Fast-track power for Wärtsilä 20V34SG – experience Brazilian textile factory. 35 Bangladeshi IPP wins ISO environmental from the first installation . 18 and quality certification . 42 Fast-track gas conversion improves WPM – birth of a modular efficiency and lowers NO emissions in Recognition for Wärtsilä’s first power solution . 22 x Portuguese plant. 36 Environmental Report . 43 New OCP pipeline opens oil production Power for remote petrochemical Wärtsilä technical papers bottlenecks in Ecuador . 24 plant in Venezuela . 37 at conferences worldwide . 44 Occidental Eden Yuturi, Ecuador . 27 Wärtsilä Power Commodore – prince of Appointments . 45 Kipevu II low-cost energy in Kenya . 28 barges . 38 Product Programme . 48 2 - Energy News Issue 13 Dear Reader, Wärtsilä’s engines offer high electrical efficiency directly from the prime mover, without additional steam cycles. They form an ideal foundation for power generation as they are capable of true multifuel combustion of most oils and gases, and accept very demanding load characteristics without major impacts on maintenance costs and lifetime. Compared to a global average electricity generation efficiency of close to 30 %, Wärtsilä’s power plants reach between 40…50 % depending on fuel and engine type. Such high efficiency makes it possible to reduce CO2 emissions, since less fuel is needed to produce a given amount of electricity. Simultaneous cogeneration of heat and power, a standard option in all our products, reduces emissions still further, as fuel is saved in the heat boilers. Modern Wärtsilä power plants can be equipped with ultra-effective flue gas cleaners for reduction of NOx and SOx – recent gas power plants delivered in the USA go down to a NOx level of 5 ppm. Our new Orimulsion-fired Power Master plants reach the World Bank emission guidelines in all respects. Wärtsilä has made a strategic decision to expand its power plant business to include renewable energy. There are strong political drivers for this business. European Union directives, for example, call for an increase in the use of renewable energy sources from6%to12%oftotal energy consumption before the year 2010, and therefore this business is expected to grow rapidly over the next years. New laws and tariffs for renewable energy have already passed the legislators in EU countries; a good example is Germany, where a new law guarantees a well paid electrical load for biomass-fired electricity up to a plant output of 20 MWe. Wärtsilä enters the biopower business by acquiring proven technology, which we will distribute through our global network. We will initially offer modular boiler plants in the range of 1...15 MWth and power plants in the range of 1…10 MWe, burning mainly wood based fuels. Later both the fuel spectrum and power output ranges will be expanded. Even though recent incidents and developments have created some uncertainty in the marketplace, energy will increasingly be needed in various forms in the future, and we in Wärtsilä are firm believers in distributed energy and in combined heat and power generation. Pekka Ahlqvist Group Vice President Power plants Energy News - 3 Issue 13 Energy solutions for tomorrow Drivers and trends in the energy business The energy business has undergone paybacks penetrate the decision a wave of changes since barrier. liberalisation started during the Society passes on general second half of the 1980s. Large concern for the environment to the utilities are struggling and energy business through political re-engineering their businesses. decisions calling for continuously Independent Power Producers (IPP) stricter emission norms and have made strong inroads but regulations. Digital equipment investors are now wondering how requires a standard of reliable to invest in projects without a power quality not obtainable with contracted long-term off-taker. earlier power systems. New Decentralisation is no longer the competitive solutions are needed as dream of environmentalists and the use of information technology small equipment suppliers; new becomes more widespread. small-scale power plant products To take an example, let us see are frequently being launched on how money drives the technological the market. Companies like ABB choices. have left the big plant markets to concentrate on distributed How money drives generation. the energy business What lies behind these incidents Firstly, normal banking principles and trends? In this article we take a apply in the new free markets. All look at the patterns and structures power plant projects are behind the scenes and offer some investments, and if a reasonably predictions for the future. short payback with controllable risks is not available, there will be Main business drivers no project. There are two main groups of Secondly, power prices depend business behaviour drives in the on demand and supply. If there is energy business: demand and oversupply, as in most of Europe at technology. In the first case, the moment, prices will fall until a population growth and society’s certain ‘level of economic pain’ is continuous efforts to improve living reached in the system. If there is a standards maintain a constant lack of power, as in the USA during increasing need for power through the last few summers, prices will go industrial growth, automation and up. Electricity is not regulated by increasing domestic consumption. utility governance, but becomes a On the other hand ‘money’ free trading commodity limited only dictates the technological choice by certain transport restrictions. since, in deregulated markets, only The law of supply and demand projects with short, controllable-risk together with the payback rule will, 4 - Energy News Issue 13 Size classification everyday life in all free markets Distributed generation DG market around the world in the future. Stationary Portable Note that the decision of Micro 0 - 200 kWe 10 GWe 10 GWe industrial companies to become power producers is motivated by Mini 200-1000 kWe 12 GWe purely economic factors. Besides Small 1 - 60 MWe 24 GWe being more economical, distributed Utility market cogeneration also offers potential Medium 60 - 300 MWe 20 GWe for an overall reduction in Large above 300 MWe 80 GWe atmospheric emissions. So far cogeneration plants have not Table 1. Power plant size classes and approximate market sizes in 2000. enjoyed any direct benefits on lowering nationwide emissions. at least for the near future, create a European countries, where this has Equipment suppliers have started fluctuating investment movement in been made visible, transmission to engineer solutions for specific the markets. Investment will boom costs make up almost half of the needs in the load segment. when power is lacking, whereas industrial electricity costs. Examples include products for peak little or nothing will be built for A power plant, connected shaving, or to ensure high power some time when supply becomes directly to the local electrical and availability for Internet centres etc. adequate, or perhaps after a period heat loads, can reach a total of over-investment. This ‘low- efficiency of 60-90 % depending on Probable future growth areas frequency swinging’ will have a life the heat load. Nor does it need to Analysing the technology drivers cycle in the region of 10 years as pay for using the main grid. and trends in detail, as in the the system seeks economic A new business opportunity? Yes, money driver example above, one equilibrium. but not really new any more, since can start to draw conclusions on the search for suitable heat loads probable growth areas in the energy Smaller is more efficient started some ten years ago in business. Let us examine the During the era of monopolistic Europe, and thousands of small situation from the fuel perspective. utilities, most industrialised industrial plants have now been countries had a national grid and a Natural gas products number of large coal, hydro, An obvious growth area is natural nuclear and gas-fired plants. These gas products. The reasons are formed an optimum power fairly simple and apply both to structure for the utilities to gas turbines (including manage. combi-cycles) and Today’s different market reciprocating engines: conditions reveal some • Good availability of large new business clean fuel for many opportunities in the years to come present systems. • Easy, clean, Although large power high-efficiency plants can run on cheap, combustion poor quality fuels (e.g.