SKODA has been a success story for the Czech Republic. With an improvement in both quality and image, the Czech car manufacturer plans to extend its plant. A new energy supply concept was of crucial importance not only to its extension plans but also to the whole relaunch of SKODA.
The SKODA AUTO (formerly SKODA a.a.s.) automotive factory at Mladá Boleslav has been producing cars for more than 100 years. Following the political opening of the Czech Republic, the road towards modern world market standards was embarked on jointly with Volkswagen AG as a western partner in 1990. With new models, which have received international acclaim because of their excellent quality, the production capacity will be increased, as originally planned, to just over 500 000 cars in the near future.
To do this effectively, SKODA has focused on its core business and outsourced other functions. One of these key functions was its energy supply.
SKODA took the decision to build a new cogeneration plant in 1995. Its plants were fairly old and technically obsolete and would not meet the emission limits that were to be introduced in the Czech Republic on January 1, 1999. Accordingly SKO-ENERGO, a Czech-German consortium, was founded and started its work. Energy and energy related services of SKO-ENERGO include:
•Heat (hot water, steam)
•Compressed air (6 bar, 12 bar)
•Purification of waste water with disposal of residues
•Discharge and purification of surface water
•Treatment of emulsions and disposal of residues
•Operation and maintenance of all relevant energy-supply and disposal plants
•District heat supply to Mladá Boleslav.
The new plant has been in operation since 1999, and is equipped with high-efficiency technology
In addition to integrating the existing plants into the new energy scheme, a wide range of energy-related services and products such as cooling and drinking water, gas and compressed air also had to be supplied to the SKODA works.
Moreover, SKO-ENERGO operates additional plants for the supply and waste management of the automotive works. They include a water works and purification plant, cooling water and natural gas reducing stations, heat and electricity distribution networks, each of them outside the power plant site proper.
At the time of its formation, SKODA operated a single industrial power plant on the site of the SKODA automotive factory in Mladá Boleslav (ÈR). SKODA AUTO performed the selection process typically used in the Volkswagen group in order to find the most suitable partner for this venture. It took this approach for electricity and heat supplies as well as a large number of other tasks. For example it decided would also outsource tasks such as compressed air supplies and waste water cleaning.
Competent companies were needed with a proven track record and the required expertise to provide an energy supply plant of such importance.
After completion of the selection process, SKODA AUTO decided to cooperate with an international consortium of two German and one Czech electricity utility. The consortium, lead-managed by RWE Energie AG includes Energieversorgung Ostbayern AG (OBAG), Regensburg, and Stredoceská Energetická a. s. (STE), Prague.
The automotive plant is located in the supply area of STE, the regional utility of central Bohemia. This enabled the consortium to pool western know-how and capital with the local knowledge of STE in a cooperative venture.
Another partner included in the cooperation was VW Kraftwerk GmbH (VWK) which operates, among other things, the power plant of the VW production facility at Wolfsburg and thus contributes valuable know-how in the field of industrial power supply.
A consortial enterprise structure (Table 1), with a comprehensive set of agreements was deliberately chosen, while placing special emphasis on the sustainability of the developed concepts, right from the beginning. This was necessary in order to put the various dimensions of this venture on a secure footing.
The corporate structure of the reorganized energy-supply segment at SKODA AUTO provides for two companies with limited liability under Czech law. These are both based in Mladá Boleslav: SKO-ENERGO-FIN s.r.o. as proprietary and financing company, and SKO-ENERGO s.r.o. as operating company. The allocation of shares is shown in Table 2.
Irrespective of this allocation of shares it has been agreed that important resolutions are passed unanimously. This ensures that both the business interests of SKODA AUTO and the individual partners will always be taken into account.
The existing cogeneration plant was basically designed to supply the SKODA automotive works and the city of Mladá Boleslav with heat. The combined heat and power process was thus designed to produce only a small amount of electricity since the factory’s electricity demand was largely met from the public grid.
The previous industrial power plant, which was 40 years old and operated until December 31, 1998, consisted of four lignite-fired intermediate pressure steam generators with a total installed steam output of about 220 t/h, two back-pressure turbine generator sets with an electrical capacity of 2 x 6 MWe as well as two natural gas-fired hot water boiler systems with an effective heat capacity of 2 x 58 MWth.
The new plant is designed to meet the entire energy demand (electricity and heat) of the SKODA works the whole year round, and to supply the 10 000 residential households in the city of Mladá Boleslav reliably with district heat. Electricity and heat demand as of 2000 was estimated at 415 million kWh/a (electricity) and 700 million kWh/a (heat).
The new plant has been in operation since January 1, 1999, and is equipped with optimized process technology ensuring high efficiency of CHP operation. It consists of two hard coal-fired high-pressure steam boiler systems with circulating fluidized bed combustion and a steam output of 140 t/h each; one natural gas-fired high pressure (HP) steam generator with a steam output of 60 t/h; and two controlled-extraction condensing turbine generator sets.
These turbines each have a capacity of 44.3 MWe in condensing operation or 35 MWe at a heat capacity of 70 MWth during quasi-back-pressure operation.
The political changes in the Czech Republic have led to a new attitude to environmental protection issues and in its wake new, complex environmental legislation which impose extremely strict emission limits. These new limits were already known in the planning phase and were reflected in the project design. Against this backdrop, SKO-ENERGO launched an ecological programme going beyond mere technical compliance with the emission limits.
The key objectives of SKO-ENERGO’s pollution control programme were:
•Reducing the emissions of particulates, SO2, NOx, CO and CO2: In addition to natural gas, since 1999 hard coal has also been burned instead of the previously used lignite. The new plant significantly reduces the emission of the greenhouse gas CO2.
•To gain information about pollution caused by the plant: Determining environmentally noxious emissions and an overview of compliance with the emission limits over the reference period required continuous measurements. Back in 1996, systems were installed in the old cogeneration plant for continuous measurements.In addition to hard coal and natural gas, residues from car production (used oil, paint, used tyres) are also to be used as fuels in the future, assuming that they are economically and ecologically sound.
•Reducing the concentration of pollutants in wastewater: The new state-of-the-art plants for purifiying wastewater from the paint shop has resulted in major improvements in the quality of the wastewater, which is either discharged into the urban sewage system, or alternatively to the river Jizera.
It is important that this costly programme of sustainable management has been perceived as a strategy for achieving and safeguarding lasting competitiveness. SKO-ENERGO is thus responding to current and future market trends in environmental protection and the environmental awareness of its customers.
This includes continuous, economic and ecological training of the employees of SKO-ENERGO in order to firmly establish the principle of sustainability within the company.
The “Local Agenda 21” action programme translated into practice worldwide is a reflection of the fact that there is a close link between economic, social and ecological development. The principle “think globally, act locally” has to be regarded as the most suitable way of triggering sustainable positive development. In connection with SKO-ENERGO, this comprehensive view is reflected by, among other things, the agreement to safeguard the jobs of 90 employees of the power plant.
The Climate Change Convention signed in Rio de Janeiro by 154 states and the EU in 1992 forms the basis for the climate policy instrument “Activities Implemented Jointly” (AIJ). It provides the basis to jointly carry out policies and measures for climate protection in an international context. The First Conference of the Parties took place in Berlin in 1995, where the resolution was passed to examine whether AIJ concept was applicable in a pilot phase.
Even though the SKODA CHP project was not started under this heading, it meets the requirements of an AIJ project since its design incorporates social and economic considerations, and also achieves emission reductions. It can therefore be regarded as a pilot project under the joint implementation trial phase. This power plant project is expected to be soon acknowledged as AIJ by the Czech and German environmental ministries.
For the Czech Republic, the complete relaunch of SKODA is a success story which will have a major impact on crucial decisions which will set the course for Czech privatization policy.
The energy supply concept was of crucial importance for the extension plans of the automotive plant and the outsourcing solution offers a good example for similar economic developments in central and eastern Europe in the future.
This is particularly the case since the energy supply concept, which must be regarded as a pilot project in many respects, not only provides a technical solution for the supply of energy but also supports the local labour market. The safeguarding of jobs and the improved environmental situation were as important as ensuring security of supplies in a region which is still politically unstable by international standards.
From the energy supply perspective, the approach chosen is a good example of technologically interesting project development in terms of fuel-switching and energy efficiency. The overall approach also shows that close alignment with the requirements and needs of customers, in this case SKODA AUTO, leads to highly specific energy solutions.
It demonstrates that a comprehensive multi-utility/multi-energy project does not necessarily require complete implementation from “a one-stop shop”. The consortium lead-managed by RWE Energie, which was responsible for business management and project coordination, and the cooperation with SKO-ENERGO has demonstrated the advantages of a partnership. This project provides a model for restructuring the eastern European economic zone.