technical considerations for power purchase agreements
TRANSCRIPT
Technical considerations for
Power Purchase Agreements
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Background
Fundamental shift in Gx asset creation in Africa
Private sector replacement of traditional Utility BOO
Special Purpose Vehicles (SPVs)
Project Finance
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Power Purchase Agreement Bankable
Balanced
Enduring
Background
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Setting the scene
Seller
Buyer Aurecon
A bit of context… • Policy, legislative, regulatory environment • Upstream (fuel), Gx, downstream (Tx, Dx, Retail) • Supply and demand forecasts • Baseload, mid-merit, peaking • Tariff • Willing to pay (Buyer) • Willing to sell (IPP) • Technology • Location • Understand Buyer/Seller needs
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Introduction to Power Purchase Agreements
• Agreement for sale and purchase of power (*) • Buyer or Off-Taker (Utility, Industrial Consumer) • Seller (Independent Power Producer, IPP) • Buyer primary roles • Take (reliable) energy • Make payment • Seller primary role • Make available capacity (MW) and energy (MWh) • Develop, fund, build, operate, maintain and decommission
(*) + Lender
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Technical Inputs • Specifications, testing and commissioning • Capacity, energy, availability (performance) • Tariff structure, grid connection and metering • Dispatch, O&M considerations • Integration with other project agreements
Financial • Term, currency, indexation, local content / participation • Tariff calculation, commercial damages Legal • Termination / transfer, warranties, remedies on default,
environmental (eg. carbon liabilities)
Key inputs
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Conversion technology • Gas turbines • Reciprocating engines • Traditional Rankine cycle
(Gas boiler and steam turbine) Cycle technology • Open cycle • Combined cycle
Gas power generation overview
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Gas power generation overview
TYPICAL COMBINED CYCLE (CC) CONFIGURATION
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Technology Intro Typ OC Size, MW (#)
Typ Efficiency OC/CC(*)
Recips Proven! 1 – 50 45 / 50+
Aero/Sml 1980’s 5 – 40 40 / 51
“E” class 1980’s 40 – 200 35 / 52
“F” class 1990’s 250 - 320 37 / 56
Advanced (G, H, J)
2000’s 300 – 450 40 / 60
(#) CC = ~+50%
(*) LHV Net
PPA considerations
• Dispatch • Grid evacuation • Environment • Redundancy • Modularity • Phasing • Gas availability
Technology selection
Technical considerations
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Configurations / options
Technical considerations
Config / Option Advantages / Applications Disadvantages Open Cycle (OC) • Peaking / mid-merit
• Low specific capex • Quick to market • Operationally flexible
• Lower efficiency
Combined Cycle (CC)
• Baseload / mid-merit • Efficient use of gas • Lower $/MWh (high C.F.)
• Longer to market • Longer start & ramping times
Options (power, flexibility)
• GT Power Augmentation • OC/CC selection (diverter valve and bypass stack) • Supplementary firing, fresh air firing • “Dual Fuel” (eg. Diesel back-up) • Ancillary services
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Ambient conditions
Performance considerations
PPA • Contracted capacity • Reference conditions • Dispatch and forecasting • Testing and
commissioning • COD • Tariff (energy component) • Grid rules
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Part load (turndown)
Performance considerations
PPA • Tariff (energy component) • Dispatch and forecasting • Commissioning and
ongoing testing • Technical specifications
(capability)
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Degradation
Performance considerations
PPA • Achieved capacity • Tariff (energy component
and any carbon related costs)
• Dispatch and forecasting • Ongoing testing
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• Ramping • Startup / shutdown (GTs) • Open cycle
• 10 - 25 mins • Combined Cycle
• Cold / Warm / Hot • 180 / 90 / 40 mins
• EOH penalty • Correction factors • Startup, interruptions, etc
Performance considerations
PPA • Dispatch and forecasting • Tariff (energy, starting
costs, fixed / var O&M components)
• Ongoing testing • Operating procedures • Grid rules
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• Technology curve (GTs) • Class, materials evolution • Continuous improvements
• Maintenance is cyclical • Equivalent operating hours (EOH) • Factorised for starts, trips, etc • [ABAC, AABAAC, etc] • EOH 8,000hr, 12,000hr, + • A = minor insp’n (<1 wk) • B = hot gas path insp’n (2-3 wk) • C = major overhaul (5-6 wk)
PPA • Dispatch and forecasting • Planned outages
(maintenance) and forecasting
• Tariff (energy, starting, fixed / var O&M components)
• Ongoing testing • Operating procedures
O&M considerations
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• Contractual • Long term service agreements • Defects and warranties • Balancing OEM, project and PPA
requirements • Technology transfer • Refurbished / rotational spares • Non-OEM refurbishment
• Fiscal • LTSA is/can be a very high cost component
O&M considerations
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• Fuel Supply Agreement • Take/Pay, Capacity/Energy • Responsibilities, warranties • Default and remedy provisions
• Grid Connection • Timely connection • Availability
• EPC Agreement • Performance, schedule, warranty
• O&M Agreement • Availability, degradation
PPA • Dispatch and forecasting • Minimum off-take • Planned maintenance • Tariff (energy component
flow-through) • Deemed energy • Legal provisions (FM,
default, warranties)
Other agreements
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Want more information?
Contact
Ashley Grohn Power Generation Leader +27 12 427 2323 [email protected]
Read more on our website!
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