EBRD and Power Generation Efficiency in Russia; achievements and challenges ahead

EPG Conference, 19-20 September 2011, Moscow

Ioannis Papaioannou

Senior Engineer, Energy Efficiency & Climate Change

Contents

1. EBRD and Energy Efficiency

2. The main issues

3. How EBRD can help

4. Challenges ahead

Contents

1. EBRD and Energy Efficiency

2. The main issues

3. How EBRD can help

4. Challenges ahead

0

2

4

6

8

10

12

-5

5

15

25

35

45

55

65

Debt ABV Equity ABV Net Cumulative Business Volume

€ billion

What is the EBRD?

An

nu

al

bu

sin

es

s v

olu

me

(A

BV

)

Ne

t cu

mu

lativ

e b

us

ine

ss

vo

lum

e

Reconciled as at 31 March 2011

International financial institution, promotes transition to market economies in 29 countries from central Europe to central Asia

Owned by 61 countries and two inter-governmental institutions

Capital base of €30 billion

The EBRD is active in all its countries of operations

Central Asia

Central Europe and Baltics

Eastern Europe and Caucasus

Russia

South-Eastern Europe

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

'00 '01 '02 '03 '04 '05 '06 '07 '08 '09 10 11

% o

f Ann

ual B

usin

ess

Vol

ume

Turkey

Unaudited as at 31 March 2011

Launched in 2006. Results through to Q1 2011:

– EBRD’s sustainable energy investments to €6.6 billion, for total project value of €35 billion in 369 projects in 29 countries;

– Annual GHG emissions savings of 39.6 million tonnes CO2-eq p.a. (equivalent of more than Azerbaijan’s emissions)

SEI 6 areas of investment are:

1. Industrial Energy Efficiency

4. Renewable Energy Scale-up

2. Sustainable Energy Financing Facilities

5. Municipal Infrastructure Energy Efficiency

3. Power Sector Energy Efficiency

6. Carbon Markets Development

EBRD and Energy Efficiency The Sustainable Energy Initiative (SEI)

EBRD and Energy Efficiency The SEI Operational Approach

Working with

governments to support

development of strong

institutional and

regulatory frameworks

that incentivise

sustainable energy

Working with

governments to support

development of strong

institutional and

regulatory frameworks

that incentivise

sustainable energy

Technical assistance to

overcome barriers:

market analysis, energy

audits, training, awareness

raising; grant co-financing

to provide appropriate

incentives and address

affordability constraints

Technical assistance to

overcome barriers:

market analysis, energy

audits, training, awareness

raising; grant co-financing

to provide appropriate

incentives and address

affordability constraints

Projects with numerous

clients, public and private,

with a range of financing

instruments

Projects with numerous

clients, public and private,

with a range of financing

instruments

Via these three

parallel activities

SEI accounted for

24% of EBRD’s

total and 75% of

power sector

portfolio in 2010

Via these three

parallel activities

SEI accounted for

24% of EBRD’s

total and 75% of

power sector

portfolio in 2010

Contents

1. EBRD and Energy Efficiency

2. The main issues

3. Typical Projects

4. Challenges ahead

Some characteristics of the power system of Russia

Thermal Power Generation represents around 70% of installed capacity and electricity production

Gas is the primary fuel, but also coal has a significant share, and the prevailing policy is to continue with both gas and coal for the long term

There is an increasing demand for both electricity and heat

Some characteristics of the power system of Russia

Official GHG emissions in Russia (thousand ton CO2 eq)

Total emissions

GHG emissions (without LULUCF)

0

500,000

1,000,000

1,500,000

2,000,000

2,500,000

3,000,000

3,500,000

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

Gg

CO

2 e

qu

iva

len

t

CO2 Non-CO2 Total GHG

Official GHG emissions in Russia

Emissions by sector 2009

Agriculture

6.59%Waste

3.49%Other

0.00%Industrial

Processes

7.33%

Solv ents

0.03%

Energy

82.56%

Official GHG emissions in Russia

Energy related emissions 2009

1.A.1. Energy

industries

48.65%

1.A.3. Transport

11.16% 1.A.2. Man.

industries and

construction

7.43%

1.B. Fugitiv e

emissions

23.18%

1.A.5. Other

1.59%

1.A.4. Other

sectors

8.00%

EBRD funded a study in 2009

Market and Investment Needs Study (AF Consult, Finland) – To review and analyse the existing situation and general

technical condition of the main TPPs and CHPs in Russia, Ukraine, Kazakhstan and Mongolia;

– To assess at a preliminary level the needs for investment projects for rehabilitation, energy efficiency and environmental performance improvement;

– To review and assess the capabilities of local manufacturers of equipment;

– To prepare a long list of appropriate investment projects and sub-projects that could be implemented in coal fired and gas fired TPPs and CHPs together with an order of magnitude estimation of the investment costs.

Many old coal fired units, with more than 220,000 hours, with limited Rehabilitation Plans under “Capitalna Remont”

– Low achievable maximum load (~75% of nominal)

– Low availability (~60%) and reliability

– Low net efficiency (~ 32%) and high carbon (> 1.1 tonCO2/MWh)

– Poor Environmental performance (e.g. dust > 500 mg/Nm3)

Few new units have been installed in the last 25 years, and even these are not Best Available Techniques (BAT), with design and operational performance indicators of the 80’s, so

– Very few super-critical steam for coal fired plants

– Some Combined Cycle Gas Turbines (CCGT) for gas fired plants

The thermal power plants of Russia based on EBRD’s study of 2009

Most of the Russian and Ukrainian equipment manufacturers have not fully passed transition to market conditions and there is great scope to improve in order to approach their European peers, especially in terms of:

– Design and manufacturing technologies for overall achievable net efficiency

– Quality of materials and machining processes

– Customer service

There is great need for new state-of-the-art units as well as rehabilitation and modernisation of existing units, especially for:

– Coal preparation systems (conveyors, crushing, mixing etc.)

– Boilers (burners, economisers, super-heaters etc.)

– Reconstruction of turbine parts (cylinders, rotors, blades etc.)

– Reconstruction of generators (rotors, stators, excitation, cooling etc.)

– Installation of modern DCS systems

The thermal power plants of Russia based on EBRD’s study of 2009

Contents

1. EBRD and Energy Efficiency

2. The main issues

3. How EBRD can help

4. Challenges ahead

Technical Assistance to our clients

Free of charge Technical Assistance (TA) through donors funds

The overall aim of this advisory services is to assist both the Bank and its clients in the preparation of the most appropriate Rehabilitation or New Unit Programme

2 Framework Contracts, Call Off Notices; Technical Audits / Projects Review (Vattenfall, Germany and MWH, Italy)

– To review and analyse the condition of existing equipment and recent years performance;

– To review and analyse the necessary investment programme as a whole as well as the main projects it consists of in terms of technical and financial viability;

– To perform a conceptual technical and financial analysis of the investment projects and expected benefits, including achievable capacity and availability improvements, extension of lifetime, increase of energy efficiency, reduction of carbon emissions and improved environmental performance.

Technical Assistance to our clients

7 TA assignments have been completed up to now

– 2 of them in Russia, to review the clients’ investment programme and propose possible improvements

– 4 in Kazakhstan, one to analyse alternative heat and power supply options for a large city and three for modernisation of CHP plants

– 1 in Ukraine, to review alternative options for a new state of the art coal fired unit

Technical Assistance to our clients

How EBRD can help Two recent projects in Russia

USD 150 million loan to TGK-8 for the installation of a new 410 MW CCGT at Krasnodar CHP

Improve electricity operational efficiency from 32 to more than 55%

Natural gas savings of around 390 million Nm3 per year

Carbon emission savings of around 750,000 ton CO2 per year

USD 75 million loan to TGK-13 for the completion of a 185 MW / 270 Gcal coal fired cogeneration unit at Krasnoyarsk CHP-3

The unit will replace old and inefficient heat only boilers and electric boilers

Improve overall resource efficiency by around 15%

Carbon emission reduction of around 240,000 ton CO2 per year

New TA Framework for the Power Sector

At this moment tendering for 3-4 framework contracts of total value EUR 1.5 million for Technical and Efficiency Audits / Projects Review / Projects Preparation for

– Thermal Power Generation and Cogeneration plants of any technology and configuration;

– Hydropower generation;

– Grid connected renewable sources, i.e. wind, small hydro, biomass, solar, geothermal and waste to energy;

– Power Transmission systems, including lines, substations, SCADA systems etc.

– Gas and Power Distribution systems, including lines, substations, smart metering systems etc.

Contents

1. EBRD and Energy Efficiency

2. The main issues

3. How EBRD can help

4. Challenges ahead

IEA’s predictions for the power generation capacity for the “450 scenario”(450 ppm CO2eq in the atmosphere)

Some projected characteristics of the power system of Russia

Typical Dilemma for coal fired TPP

Investment Cost (EUR/kW)

Expected Lifetime

(years)

Net Efficiency

(%)

Availability

(%)

New Unit 1,000 – 1,500 35 > 40 85

Rehabilitation of Old Unit

250 – 400 10 – 15 Improvement of 3 – 5 percentage points to 35%

Improvement of 10 – 15 percentage points to 75%

Resource Efficiency Target Performance Indicators

Rehabilitation

Extend lifetime for 15 years

Improve availability by 10 pc points

Improve efficiency by 3-5 pc points

Improve environmental performance (what and how much?)

New Units

Electricity only

– Gas, CCGT only with efficiency > 52% (390 kgCO2/MWh)

– Coal, SC parameters with efficiency > 42% (860 kgCO2 /MWh)

CHP

– cogeneration efficiency > combined efficiency for separate generation > 80%

– Gas, GT open cycle or CCGT

– Coal, SC steam parameters

Resource Efficiency Advanced Coal Technologies

SC and USC PC combustion (commercially available, many units around the world)

– Higher investment is justified by efficiency and carbon benefits

– Target is for 375 bar and 700oC by 2020, net efficiency > 48%

IGCC (commercially available, only 5 units around the world)

– Specific use, high own consumption, net efficiency only 38 - 42%

CCS (still at development stage)

– Double investment cost, very high own consumption, so nearly double generation cost

– For Russia the “Carbon Capture Ready” concept seem appropriate

Resource Efficiency Typical Technical & Economic Characteristics

Type Investment Cost

(EUR/kW)

Net Efficiency

(%)

Carbon

kgCO2/MWh

Coal SC and USC Steam Cycle

1,000 to 1,500 Electricity only: 40-45

CHP – el: 30-35

- heat: 40-50

750 – 900

Gas Turbine with HRSG (open cycle)

600 to 850 Electricity only: 32-36

CHP – el: 32-36

- heat: 40-50

560 – 630

Gas Turbine Combined Cycle

800 to 1,200 Electricity only: 50-55

CHP – el: 30-40

- heat: 40-50

370 – 410

Key challenges

Need for improved performance requirements; resource efficiency pays back fast

Need for significant investments (many new units and many modernisations) in parallel with the privatisation and regulation improvements of the power generation sector

Need for international know-how transfer to the major manufacturers of equipment

Thank you

Ioannis Papaioannou

Senior Engineer, Energy Efficiency & Climate Change

EBRD, One Exchange Square, London EC2A 2JN

United Kingdom

Tel: +44 20 7338 7024

Fax: +44 20 7338 6942

Email: papaioai@ebrd.com