Cogeneration in Europe Issue 10 In this issue The decade of cogeneration in Europe Wärtsilä NSD Energy News is published four times a year for business friends and employees Countries throughout Europe are currently exploring the advantages offered by of Wärtsilä NSD. cogeneration technology as the EU gears up to promote its more widespread use. 4 Editorial Board: Stefan Fant, Jussi Heikkinen, Clas-Eirik Strand, Anci Sandås Editor: Anci Sandås English Editing: Andrew Gardiner Layout: Bock’s Office Please address correspondence to: Wärtsilä NSD, Anci Sandås P.O.Box 252, 65101 Vaasa, Finland e-mail: [email protected] ISSN 1456-3274 Information in this publication is subject to change without notice. © Wärtsilä NSD Corporation. Printed in June 2000. All rights reserved. Modigen Ltd – trading electricity for Wärtsilä NSD From saving Metra Corporation’s energy costs Modigen Ltd, a Wärtsilä NSD subsidiary, now offers electricity trading services to industrial companies and hotels. ......10 Energia-Tietola – Pure Energy for paper industry town Energia-Tietola is a new Pure Energy cogeneration plant recently supplied to the electricity and district heating utility of Valkeakoski, one of Finland’s main pulp and paper industry centres. A key advantage is independence from outside electricity suppliers. ....................................12 Meeting Turkey’s power needs Turkey needs some 3000 MW of new power generation annually for the next ten years to meet burgeoning demand. Innovative new ideas to help meet immediate needs include the “autoproducer” and “mobile power plant” concepts. .....14 Also in this issue CHP for the BSc’s! . 16 Reciprocating compressors in natural gas 96 MW Power Master to El Salvador . 29 underground storages in Germany . 24 Improved performance of Appointments . 29 the Wärtsilä 28SG. 18 Owners split Cummins Wärtsilä Wärtsilä NSD worldwide . 30 operations . 27 Energy Partner proves its worth Product Programme . 32 in Denmark . 20 Cogen takes off at Detroit airport. 28 Top quality in Colombia. 22 Diesel plant orders highlight Indian success . 28 2 - Wärtsilä NSD Dear Reader, The first International Cogeneration Conference on 1-2 February in Washington DC was a very positive experience. Organized by International Cogeneration Alliance ICA it attracted over 200 delegates from more than 20 countries. The voice of the cogeneration community was loud and clear – the future of power and heat generation lies in cogeneration. Many OECD countries have set a target of doubling the share of cogeneration in electricity production from about 10 % to 20 % by 2010. This means that about 200 GW of new cogeneration capacity should be built by then and annual demand for new cogeneration plants will be 20 GWe. Hence, more than 10 billion dollars will be invested in cogeneration facilities every year. These aggressive policies are the result of the carbon emission targets set in the Kyoto protocols. The OECD countries have promised to reduce greenhouse gas emissions by 8–12 %. About half of the reduction could be achieved by doubling the share of cogeneration in electricity production. To make a fast start towards this goal, several countries have taken various initiatives to promote cogeneration. Development started in the USA with the PURPA legislation in 1978, which gives cogenerators the right to sell power at a fair rate to the grid. The Scandinavian countries were the first to introduce the CO2 taxes at the beginning of 1990. This will now be followed by Germany and the UK, which will introduce new ecotax systems or CCL levies on traditional and less effective means of generation. The new taxes will make cogeneration the preferred and also the most competitive form of generation. This issue of Energy News presents some of the benefits and experience of cogeneration from the user’s point of view. It also shows the benefits of localized power production in the new liberalized electricity markets, where transmission tariffs make local plants the most economical option. So please, join the cogeneration community. It represents the future of power and heat generation for the whole world. Stefan Fant Group Vice President Power Plants Energy News - 3 Decentralized energy in focus The decade of cogeneration in Europe Cogeneration is already an established concept in the hospitals, universities, department stores, greenhouse Nordic countries and, increasingly, in other parts of complexes and industrial facilities in countries from Europe. The EU as a whole is now examining the Belgium to Spain. concept in detail with countries across the region passing new legislation that will radically change the The benefits in brief structure of local power and heat markets. Cogeneration Cogeneration is by no means the solution to all power offers undisputed advantages. But it remains to be seen needs. So what makes the method so popular? The whether all EU member states grasp them fully. reason is that the technology, according to COGEN Cogeneration, also called combined heat and power Europe, results in ‘win-win’ solutions to energy (CHP), is based on the simultaneous production and problems facing today’s industrial societies, and use of both electricity and heat. The concept, according especially those with access to natural gas. to COGEN Europe, the European Association for Conventional generation of electricity in large central promotion of cogeneration, is the most efficient way to power stations is normally only 30-40 % efficient deliver heating, cooling and electricity. Countries across (Figure 1). These electricity-only stations release large Europe have enthusiastically adopted the concept. amounts of energy as waste heat, normally via large Finland, Denmark and the Netherlands, for example, cooling towers or cooling with sea or river water. They today employ cogeneration extensively to provide are also typically located far from where the electricity electricity and district heat to local communities and is consumed, which therefore requires expensive industry, but the range of possible applications is transmission costs. More recent combined cycle limited only by the imagination. Examples include generation can improve the efficiency of such plants to Conventional system 35 % electricity or more Conventional Fuel 100 power station Up to 65 % losses CHP system Industry Up to 90 % electricity Commerce and heat Fuel 100 CHP system Domestic heating/ cooling 10 % losses Fig. 1 Why cogeneration. Source: COGEN Europe 4 - Wärtsilä NSD application. Provided this is done, cogeneration offers the following benefits: • Increased efficiency of energy conversion and energy efficiency at the point of use • Lower emissions to the environment, in particular of CO2, the main greenhouse gas • Large cost savings, providing additional competitiveness for industrial and commercial users, and offering affordable heat for domestic users • An opportunity to move towards more decentralized forms of electricity generation, where the plant is designed to meet the needs of local consumers, providing high efficiency, reducing transmission losses and increasing flexibility in system use • Improved local and general security of supply. Local generation, through cogeneration, can reduce the risk that consumers are left without supplies of electricity and/or heating. In addition, the reduced fuel need which cogeneration provides reduces dependency on imports, a 55 %, but this excludes losses for the transmission of key challenge for Europe’s energy future. electricity, which can be as great as 20 % of the delivered efficiency. The EU takes note By reusing the heat produced in electricity Calculated on a European scale, cogeneration still generation, the cogeneration plant can reach an accounts for only a fraction of installed capacity, efficiency of 90 % or more. Cogeneration, therefore, roughly 9 % according to COGEN Europe. A major offers energy savings ranging between 15-40 % when reason, of course, is the structure of the power market compared with the supply of electricity and heat from in large markets like Germany and France, where conventional power stations and boilers. centralized nuclear and coal-fired power plants are the The fundamental principle underlying cogeneration is norm. that, in order to maximize its many benefits, systems The benefits of cogeneration have not gone should be based according to the heat demand of the unnoticed by the EU Commission, however. The Energy News - 5 Decentralized energy in focus Investment opportunities Current use of cogeneration . 9 % Installed capacity . 65-70,000 MWe Current level of investment in cogeneration . 2-2.5 billion Euros/year EU target for 2010 . 18 % of all EU electricity to come from cogeneration If target reached, the installed capacity of cogeneration will be at least . 130,000 MWe Additional capacity is approx. 60-65,000 MWe Investment opportunity to reach the target . 50-60 billion Euros Equivalent to. approx. 5 billion Euros/year or . at least twice current activity In addition Reinvestment in existing plant will be . approx. 30 % of existing stock 20-25,000 MWe over 10 years Investment opportunity of . approx. 1.5 billion Euros/year Further investment opportunities in Eastern and Central Europe conservatively estimated to be . 1.5 + billion Euros/year THE OVERALL INVESTMENT OPPORTUNITY IS . 80-90 BILLION EUROS OR . 3-4 TIMES CURRENT ACTIVITY Fig. 2 Investment opportunities offered by cogeneration in Europe. Source: COGEN Europe Commission has identified cogeneration as