Palm pilot leads the way

Finnish power solutions provider Wärtsilä is building the world’s largest palm oil fired power plant. At 100 MWe, the ItalGreen Energy II plant will demonstrate not only the technology used but also the favourable market conditions for renewable energy in Italy.

Wärtsilä is using its ten years of biofuel experience to build the world’s largest palm oil-fired power plant, a 100 MWe plant for Italian energy producer ItalGreen. With this latest order, received at the end of 2005, Wärtsilä and ItalGreen are beating their own world record for a power plant fuelled with biofuel.

In June 2005, the two companies commissioned ItalGreen’s third Wärtsilä 18V32 diesel generating set at ItalGreen’s Monopoli site, creating – at 24 MWe – the world’s largest biofuel fired plant. The good performance of this plant and the favourable conditions for renewable power under Italian law led ItalGreen to take another step into the history books with this latest order, this time for a 100 MWe plant, consisting of six Wärtsilä 18V46 generating sets.

ItalGreen is part of the Casa Olearia Italiana Group (COI), a world-leading supplier of household and commercial food oils. COI is situated in Monopoli, in the heart of Italy’s Puglia olive growing region. Its facility covers an area of 100 000 m2 (10 ha), and is used for the production of extra virgin olive oil, olive oil, and the refining of pomace oil and various seed oils. The site has over 100 stainless steel tanks storing some 60 000 t of oil and a packaging plant, for COI’s own brand and other international household and commercial brands. The facility is one of the largest in the world with four packaging lines, one of which has a phenomenal production capacity of 11 pieces per second.

Figure 1. In 2005, ItalGreen Energy commissioned the third Wärtsilä 18V32 diesel generating set at its Monopoli site, creating a 24 MWe biofuel fired plant
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For its part, ItalGreen produces biofuels, electricity and process steam at the COI site, using waste oils from the COI operation and imported oil as fuel; since Italian law limits the amount of biodiesel ItalGreen can produce, it also exports rapeseed oil to Germany for biodiesel production. The company has good access to Monopoli’s vegetable oil handling port, making it an ideal customer for a liquid biofuel power plant.

When fully commissioned in 2007, the ItalGreen II plant will burn vegetable oil, mainly imported palm oil from Southeast Asia. The economics of a biofuel plant in Italy are good, with competitive bio-oil prices and considerable government incentives to generate electricity using renewable power. Indeed, Wärtsilä has a total of six liquid biofuel projects and 200 MW under development in the country, although the ItalGreen II project is by far the largest.

Renewables in Italy

Power generating companies in Italy must either produce around three per cent (in 2006) of their power from renewable sources or they must buy green certificates to make up the shortfall. Many have encountered a shortfall and hence a lively market has been created for these certificates. As Marco Golinelli, vice president of power plants for Wärtsilä in Italy says, demand is high and therefore, so is the price, which now hovers around €95/MWh ($119/MWh).

In this way the low greenhouse gas emission power plants benefit twice from their investment; firstly from selling their electricity to the national grid, and secondly from trading their green certificates. As Golinelli says, “It’s a great opportunity!”

Of all the renewable opportunities in Italy, biofuel is a popular choice, since, according to Golinelli, “It is a programmable renewable resource. Electricity provided for the grid can be stable and programmed, not like solar and wind, which depend on weather conditions.”

Figure 2. ItalGreen produces biofuels, electricity and process steam at the Monopoli site in the heart of Italy’s Puglia olive growing region
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Furthermore, under Italian law, the price of electricity sold to the grid is set by the price of renewable electricity. “If you are renewable, or cogeneration, you get dispatched first. The renewable power builds the price,” says Golinelli. “And it is very advantageous to be dispatched first as you are running for much longer!”

There will also be an opportunity for such plants to participate in the European carbon credit scheme, selling carbon credits on the international carbon market. However, Golinelli says, “Carbon credits are considered a plus on top of the project, but for the moment, the legislation is not clear.” Given the political situation and the uncertainty over Italy’s carbon allocation plan, the carbon credit situation is not one that generators should bank on.

The fuel that makes the difference

“The customer is free to make his own [fuel] arrangements directly with the supplier, but for our plant’s feasibility study, we used the Rotterdam Exchange price of palm oil,” says Golinelli. At time of writing, the price was around €470/t. In its first year of operation, ItalGreen’s 24 MW plant used 24 000 t, although the plant extension was only completed in June 2005 and figures for a full year operation are not yet available. Wärtsilä estimates the plant will consume around 41 000 t/year under full baseload operation.

During the past decade, the price of palm oil has been clearly lower than for other vegetable oils. Thus palm oil has lately been the most interesting commodity to use as liquid biofuel. Palm oil is the world’s second most produced vegetable oil in terms of production volume after soybean oil. It has, however, always achieved higher trade levels than soybean oil.

The use of vegetable oil such as palm oil offers a carbon neutral power generating solution; no fossil fuel is consumed and no additional CO2 is introduced into the environment. A further environmental benefit is the reduction of SO2 to negligible levels. “But typically the NOx emissions are higher,” says Golinelli, “So you have to treat the emissions properly in order to satisfy the severe limits.”

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The Italian government has imposed very tight emission controls on plants burning liquid biofuels. Under Italian law, biofuel can be treated mechanically in any way. “If you press olives, you get olive oil, that is biofuel” says Golinelli. “But if you treat the olive oil in any way chemically, or with additives, it is not biofuel.” And then, of course, the plant would not harvest the rewards of the sale of its green certificates.

Since fuel cannot be treated chemically, acidic vegetable oils are not favoured by engine manufacturers as it can cause corrosion problems in parts of the fuel injection system. Nevertheless, vegetable oils such as palm and rapeseed oil are proven to be extremely well-suited for the purpose.

The experience built up by engine builders, such as Wärtsilä, in the use of filters, separators, preheaters and coolers place them uniquely in the forefront of the technology to develop optimal systems for extracting the maximum power with the least emission output. Overall, the ItalGreen project extension will be a tremendous showcase for the capabilities of biofuel plants. With a 100 MWe reference under its belt, Wärtsilä will show the world that palm oil is more than just a fuel additive for environmentally friendly cars, but a serious and profitable contender for new utility-scale power projects.

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