Recent studies indicate new power generation in developing countries could more than double that of developed countries over the next 10 years.1 In correlation, decentralized power generation applications in developing countries are expected to significantly exceed those in developed countries. In fact, some base-case forecasts predict 129 GW of new decentralized combined heat and power (CHP) capacity through 2015 in five of the world’s largest regions.1 Russia and China are expected to lead this growth, with four times as much decentralized CHP capacity growth as Brazil, India and Mexico combined.1
As a result, power generation providers must deliver adequate breadth of technology and depth of experience in order to effectively partner with developing countries such as China and Russia as they navigate challenges associated with their emergence into the global economy. As the need for cleaner, more efficient forms of energy grows in these developing countries, power generation providers must create new technology and build new capacity to meet those needs.
The case for CHP and DE
Several factors combine to create large potential for CHP and distributed energy (DE) applications in Russia. The country’s power generation industry has experienced tremendous change over the last several years, moving away from controlled, fixed prices and 100% government ownership toward privatization of power- and heat-generating assets, distribution grids and open energy markets with flexible tariffs.
At the same time, Russia’s demand for power and heat is rapidly growing and pushing the limits of current production. Experts anticipate a 30% increase in demand over the next 15 years.1 Since the late 1990s, Russia’s reserve margins have grown increasingly thin to the point that, in some of the country’s largest cities, reserve margins reached single digits in recent winters.
Meanwhile, prices for gas and heat are becoming more dynamic. While there exists a high availability of natural gas in Russia, Gazprom and other major suppliers have contracted high volumes for export. The era of cheap and easily produced gas is drawing to a close, creating a tension between price controls and market forces that will strongly favour selection of highly efficient and flexible CHP systems for the future.
Most of Russia’s existing power and heat plants, built many years ago, have not been deeply modernized and still operate in traditional steam cycles with considerable thermal inertia. While these designs were effective solutions for many years, they are not the ideal for today’s dynamic situation, and, even in the medium term, cannot address the growing challenges inherent in the Russian power generation industry.
Coupled with the expected retirement of three quarters of Russia’s existing power generation capacity, slow-moving hydro and nuclear developments, these circumstances set the stage for large investment potential in the Russian power generation sector – approximately US$160 billion. Potential investors and current owner/operators are looking for different design solutions and approaches for power and district heating generation. They need high efficiency, flexibility, short construction cycle, small size and low-cost solutions to provide reliable heat and power for customers.
In highly populated areas such as Moscow and St Petersburg, the cost and limited availability of open land – paired with increasingly stringent environmental controls – limit opportunities for large power installations such as coal-fuelled plants. Also, the expansive distance between many Russian cities, especially in Siberia, the Far East and some parts of the Ural region, makes transmitting energy from central power plants inefficient. Small, local CHP and distributed energy installations offer much stronger alternatives.
Two suburbs of Moscow recently took this approach by installing six GE Energy aeroderivative gas turbines, each rated at 46 MW. GE Energy’s LM6000-PD Sprint aeroderivative gas turbines operate in cogeneration cycle to supply hot water to the district heating systems. Each power station produces 150 MWth per hour for district heating and 150 MW of power to the local grid. The additional capacity at these two stations helped reduce local heat and power deficits, allowing new construction to resume in the area.
The gas turbine can be used for on-site power where natural gas is available (GE Energy)
In a similar project, GE supplied OAO Territorial Generating Company No4 (TGK-4) with two aeroderivative gas turbine generator sets for its Belgorod TEC power station. As a follow-on order from two units shipped in 2006, the power station generates both heat and electrical power to reduce the cost of operation for the local power and district heating grid.
The two LM2500+ gas turbine generators are each rated at 30 MW and are equipped with a dry low-emissions system to reduce nitrogen oxide (NOx) emissions. The units operate in cogeneration cycle to provide a total of 60 MW of electrical power and hot water for district heating to the Belgorod residential area.
Outside of Russia’s residential areas, CHP and distributed energy technologies are playing an important role filling capacity deficits in the country’s highly industrial regions, especially in remote areas where connection to local grids is difficult or impossible.
Under challenging climatic conditions, five of GE’s Jenbacher gas engines provide an independent and cost-efficient power supply at the Severnaya Neft crude oil pumping station. Located in the vast arctic tundra close to the Arctic Circle, about 200 km north of the town of Usinsk, the station area lacks a public grid, requiring power generation to operate in island mode. Established in 1994, Severnaya Neft belongs to the Rosneft public limited company, which holds licences for 15 oilfields in the Komj and Netsky Autonomous Region in Russia.
The Severnaya Neft crude oil pumping station in northern Russia saves energy costs by using gas engines that run on ‘free’ flare gas from the oil production process (GE Jenbacher)
With the crude oil industry seeking to reduce its energy costs, using flare gas (a waste by-product of the oil production process) for on-site power generation is becoming an increasingly attractive option. In addition to the economic benefit, using this ‘free’ waste gas as an energy source decreases industrial emissions by avoiding the flaring or venting of the gases into the atmosphere.
Commissioned in May 2002, the Jenbacher engines provide more than 3.7 MW of electrical output and about 2.2 MW of thermal output. The generated electricity covers the customer’s total power requirement, and the heat provided by the cogeneration units is used for field operations and the workers’ camp.
The availability of natural gas in Russia means that gas turbines are expected to be the leading distributed power generation technology, closely followed by steam turbines and combined-cycle gas turbine plants. Approximately 40% of decentralized CHP is expected to be developed in each of the 50 MW+ and 15-49 MW size ranges.1 Gas engine sales will also benefit from the expansion of distributed power generation in Russia.
The case for CHP and DE
The People’s Republic of China is the world’s most heavily populated country, with an estimated 1.3 billion people. It is the second-largest consumer of energy and emitter of greenhouse gases. China’s rapidly growing economy has spurred record growth in electricity demand over the last 10 years. In fact, power demand in China has grown annually at double-digit rates since as far back as 1990.
Nearly 30 GW of new capacity is needed each year to match demand inflation in China.2 The country’s government acknowledges that much of this added capacity must come from CHP and other forms of decentralized energy. In fact, China’s 11th Five Year Plan, the government’s aggressive blueprint for economic and social development through 2010, includes strict milestones – and accountability – for cogeneration, improvements in energy efficiency and their ability to more profitably support the country’s rapidly growing economy. The Five-Year Plan demands a 20% reduction in energy consumption for one unit of gross domestic product by 2010 – the equivalent of an annual 4% decrease in energy use.3 In short, the Chinese government must adopt policies to reduce energy consumption while maintaining sustainable development. China will require technological support, and government officials say that learning the latest technologies will come from international co-operation and partnering with global companies.
China already generates approximately 15% of its power from decentralized sources. And almost 50% of Chinese cities have central steam or hot water systems, making them attractive targets for cogeneration schemes. Both shares are expected to grow. High case scenarios for China show that growth may even exceed that of Russia, with approximately 77 GW of new decentralized CHP capacity by 2015.1
Despite this, adoption of distributed energy and cogeneration strategies has been relatively slow.4 This is due to several factors. High coal and gas prices coupled with artificially low electricity tariffs exacerbate the economic challenges of specific projects. Continuing government control and slow energy industry liberalization create regulatory uncertainty within the electricity sector. Suspicions of technology dependability and maintainability still exist, and grid interconnection issues persist.
Expected developments over the next few years, however, should accelerate incorporation of distributed energy and cogeneration into China’s energy portfolio. Capital and tax incentives (from sources such as the World Bank) are making the economics more attractive. Rising electricity tariffs and increased natural gas availability due to pipeline extension are also making new investments more feasible. Greater policy consistency and market restructuring, wider acceptance of proven technology, feasibility studies and demonstration projects all make distributed energy and cogeneration systems more inviting investments. Occasional severe power shortages in some provinces serve to highlight the need for enhanced control of energy costs as well as sustainability from locally generated energy.
A large population (1.263 billion and growing rapidly) and a massive land area (5,955,690 square miles or 9,585,000 km2) suggest that China is ideal for the development of air transport. At present, China has 147 airports. By 2010 (the end of the 11th Five-Year Plan), China expects to have 186 airports, including three national hubs, seven regional hubs, 24 medium hubs, 28 medium airports and 124 small-size airports. Total projected capital investment for this expansion is US$17.7 billion.
CHP technologies provide a reliable and efficient solution for the continuous power demands that are sure to accompany the development of China’s airports. Many cities around the globe have discovered the benefits of generating a unique airport power supply that guarantees heat and cold air for passenger terminals and electricity for airport security and navigation – even in the face of local blackouts (see box ‘CHP for airports old and new’).
There also exist significant pressures in China to tackle severe atmospheric pollution and alleviate potential consequences of global warming on the country’s weather and agriculture. Increasing concerns over the environment and fossil fuel reserves make it necessary to better use all available energy sources. Using a greater amount of renewable energy sources, such as biogas, for power generation is gaining international attention (see box ‘CHP for sewage plants’).
In China, coking plants and steel mills are being operationally and legislatively challenged by increasing raw material costs, power quality and reliability concerns as well as environmental regulations. As companies are exploring new ways to improve plant efficiency and effectiveness, GE is introducing new ways to manage costs and meet future regulatory mandates.
Concerned with profitability, coking plant owners seek ways to turn coke oven gas (COG) into energy, increase plant efficiency and reduce pollutant emissions. Major modifications are required for these plants to more effectively use COG to support their profit and environmental goals. However, with rising coal prices, they cannot afford excessive upfront investments in technology or equipment. Also, environmental pressures from the government include stricter requirements for COG exhausting, which could result in plant shut-down for non-compliance.
High-efficiency, high-capacity gas turbines with flexible fuel capability (GE) help coking plant owners convert coke oven gas to valuable energy. Under an agreement with the Eurofo International Group, GE will modify two Frame 6B gas turbines, enabling them to burn purified coke oven gas for power generation. The units will be installed at a new Eurofo combined-cycle plant in Xiaoyi city, Shanxi Province.
Likewise, one of the greatest challenges to the steel industry is how to effectively address increasing emissions regulation while controlling spiralling operating costs. This challenge has grown as many countries and local governments are accelerating self-generation requirements and compliance target dates. China’s steel mills seek solutions to reduce the costs of raw materials, energy and maintenance, which impact their profitability. In addition, steel mills need the ability to produce their own power and not have production reduced by limits imposed by the national grid during peak hours.
Greater use of blast furnace gas – a by-product of steel production – to fuel their energy needs will help the mills increase efficiency and, as with coking plants, enable a cleaner use of the gas and eliminate the need to expel it into the environment. BFG flares can be captured with higher efficiency, lower emission solutions to recycle energy back into the steel plant or for on-site use or possible sale to other agencies.
The case for CHP in developing markets is strong and clearly gaining ground. As countries such as Russia and China continue to work toward more prominent positions within the global economy, they will require cleaner, more efficient forms of energy. Power generation providers who offer a wide range of advanced technology solutions backed by proven experience will quickly emerge as the most capable partners in responding to power demands of these rapidly growing populations and industries.
Jason Byars is Manager, Combined Heat and Power, at GE Energy, Atlanta, Georgia, US.
1. Decentralised Power Generation Opportunities in Emerging Markets: Too Big to Ignore’, Delta Energy and Environment, November 2005.
2. ‘The Dragon Awakens’, COSPP March-April 2006.
3. The Stanley Foundation Policy Analysis Brief, China’s Energy Security and Its Grand Strategy, September 2006.
4. World Survey of Decentralized Energy 2006, WADE, May 2006.
CHP for airports old and new
With the growth of new airport building (China alone plans 40 new airports by the end of the decade), the potential for CHP in enormous. Two examples from the West show what can be done.
The Greater Toronto Airport Authority’s (GTAA) board of directors voted in January 2004 to proceed with construction of an on-site cogeneration facility after province-wide electricity deregulation. Constructed in 2004-05, the combined-cycle power plant provides electrical power, cooling and heating for the Lester B Pearson International Airport in Toronto. Total capacity of the plant is 117 MW and is optimized to achieve low-cost operation and reliable power delivery. The plant features two of GE Energy’s 43 MW natural gas-fired turbines and one steam turbine. It also includes two heat recovery (‘once-through’) steam generators (HRSG) built with HP and LP steam circuits, as well as supplemental burners, SCR and CO systems for emissions control.
A first of its kind in Canada, this plant was built on federally owned land and, thanks in part to the quick delivery and ease of installation of the turbines, was fully operational a full two months ahead of schedule. Current airport peak demand of 38 MW (expected to grow to 65-70 MW by 2015) is completely satisfied by this plant with excess power being sold by GTAA.
New York City’s John F. Kennedy airport also operates an on-site gas-fired cogeneration facility. With two gas turbines, the plant generates more than enough electricity for the entire airport, with an output of some 90 MW – enough to power a small city – as well as thermal energy from the capture of waste heat. The thermal energy produced is sufficient to heat and cool all of the passenger terminals and other facilities in the Central Terminal Area.
Both of these projects have demonstrated the long-term strategic and financial viability of cogeneration at public infrastructure developments such as airports They also contribute to local and regional efforts to curtail their greenhouse gas emissions. Furthermore, by generating their own electricity, airport authorities have successfully insulated themselves from the harmful effects of any potential electricity interruptions or blackouts in the future.
CHP for sewage plants
Sewage gas, a type of biogas generated from anaerobic digestion of the organic substance sewage sludge, represents a superior alternative to composting such type of biomass. Sewage sludge is created as a waste product in the mechanical, biological or chemical cleaning stage of sewage treatment plants. The sludge is dried, then transferred to a digester where an anaerobic fermentation process takes place. The fermentation produces sewage gas, consisting of 60%-70% methane and 30%-40% carbon dioxide. This composition makes sewage gas highly suitable for combustion in gas engines.
Since the late 1970s, GE Energy’s Jenbacher gas engine division has been developing technology to use alternative fuels, including sewage gas.
Combined with cogeneration systems instead of electricity-only generation, the use of sewage gas represents an even more attractive solution – ecologically and economically. With combined power and heat generation, the exhaust gas heat that is produced as a by-product of power generation, is captured and used, enabling overall fuel efficiencies of more than 90%. At the sewage treatment plant the generated thermal energy can be used for either heating the sewage sludge or to offset the plant’s other heating requirements. The generated electrical power can be utilized for both the running of the treatment plant and to support the public power grid.
To date, the Jenbacher team has delivered more than 300 gas engines to sewage plants all over the world.