By Siân Green

In May 2000, German power company Steag announced that it had received approval for the 1300 MW Iskenderun power project in Turkey. One month later, it had completed financing and had also signed supply contracts for the project.

Figure 1. The 1300 MW Iskenderun power plant will enter service in late 2003
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Iskenderun, a bituminous coal-fired plant that is due to come on-line in 2003, is important both for Turkey and for Steag. Power demand in Turkey is growing at an annual rate of approximately seven per cent, and to cover the increasing need for power, the country is vigorously implementing programmes to build new capacity. Iskenderun will be the country’s largest hard coal fired power plant.

For Essen-based Steag, this DM3.3 billion ($1.5 billion) project will be the largest investment ever made by the company. It is trying to increase its activities as a global independent power producer (IPP), and in 1998 completed the 150 MW Paipa power plant in Colombia, its first IPP project. On announcing the approval of the project, Steag CEO Dr. Jochen Melchior, said: “We intend to continue to avail ourselves of the opportunities and challenges in the world market as an independent power producer for the purpose of increasing the value of Steag.”

Steag has been active in Turkey for some time, and the company has now made the country one of its target markets. Work undertaken in the past in the country includes construction management, technical coordination, cost control and commissioning management. In 1998, Steag and Siemens Project Ventures, a unit of Siemens AG, Gemany, formed Iskenderun Enerji

Iskenderun is being constructed in the eastern Mediterranean region near Adana. It will have a net installed capacity of 1210 MW and will consume around 3.3 million t of high-grade coal every year. The plant’s socio-economic impacts will be considerable: some 5000 people will be involved in building the plant, and when it becomes operational, it will employ up to 250 full-time employees, including support and maintenance staff.

Along with a number of other generation and transmission projects that are under development, Iskenderun will help Turkey to improve its electricity supply infrastructure. The country, which wants accession to the European Union, is eager to develop its energy sector. At present, annual electricity output is 95 TWh while demand is expected to reach 130 TWh by 2001 and 270 TWh by 2010.

Generating revenues

The basis of the project is a 20-year power purchase agreement (PPA), under which Turkey-based Isken will supply power to TEAS, the government-owned Turkish utility company. TEAS will take delivery of power from the end of 2003 on a take or pay basis, with payments made in US$ and backed by a Turkish government guarantee. After 2003, Steag expects the plant to generate annual revenues of just under DM800 million with appropriate returns on capital employed.

Site preparation at Iskenderun began in May 2000 and construction of the power plant started approximately one month later. Engineering and procurement activities are now in progress by the international consortium responsible for the engineering, procurement and construction (EPC) contract. Activities at the site are currently focussed on levelling works, where approximately 2 million m3 of material will be excavated.

In June 2000, Isken awarded the EPC contract after financial closing and the signing of supply contracts. Commissioning work will begin in 2003, and commercial operation will begin at the end of that year. Isken will undertake the operation and maintenance of the plant.

Finance funds

The provision of financing for Iskenderun was completed on June 26, 2000. One quarter of the total investment for the plant, i.e., $350 million, will be financed by Steag from corporate funds. The balance, approximately $1.1bn, will be provided by a consortium of banks led by Dresdner Bank AG, Kreditanstalt f

The political risk for equity and loans is covered by a capital investment guarantee of the Federal Republic of Germany and by the export credit insurance agencies of the respective supplier countries, namely Germany, Austria and South Africa. On this basis, it was possible for Steag to obtain project financing on a non-recourse basis which limits the liability of the investors during the construction period to the amount of their own capital contribution.

Fuel supply

Bituminous coal procured from world markets will be imported and used at Iskenderun. A fuel supply contract for

3 million t of bituminous coal equivalent annually has been signed between Isken and RAG Trading and Rheinbraun Brennstoff for the entire duration of the PPA. Two to three times per month, coal will be delivered by 170 000 t freighters, and later by freighters of up to 240 000 t with a maximum length of 320 m, to the Bay of Iskenderun.

The coal will be landed by means of special floating trans-shipment facilities which will bring the coal to shore from the reloading facilities located 3.2 km offshore. The transshipment facilities, consisting of cranes, tugboats and barges, will be supplied by Oldendorff, a company based in L

The coal yard of the Iskenderun power plant has a capacity of 800 000 t. Around 450 t of coal will be consumed during one hour of power plant operation. An incoming conveyor system will bring the coal from the jetty to the coal yard.

An outgoing conveyor belt, with a capacity of 1000 t/h, will bring the coal from the stockyard to the bunkers of the coal mill and then to the furnace of the steam generators. The conveyor systems will be equipped with a set of magnetic separators, metal detectors, a belt weighing scale and a sampling plant.

Building Iskenderun

In June 2000, Steag awarded the EPC contract for Iskenderun to an international consortium comprising Siemens Power Generation Group (KWU), Germany’s Babcock Borsig Power and Gama-Tekfen of Turkey.

Figure 2. An aerial view of a completed Iskenderun: project company Isken chose a Siemens-led consortium to construct the project
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As the consortium leader, Siemens KWU is responsible for the entire planning of the new power plant, the supply of the two turbine-generator sets and the control and instrumentation system. It will also supply the mechanical and electrical equipment, the flue gas desulphurization (FGD) plant, coal and ash handling and various auxiliary systems. The value of Siemens’ part of the contract amounts to approximately $410 million.

Babcock Borsig Power is responsible for the Benson steam generator, which it manufactures under Siemens license, while the Turkish joint-venture Gama-Tekfen will carry out the civil works at the site. In addition, Steag-Encotec will supervise the EPC contractor on behalf of Isken, while Fichtner is acting as the independent engineer to the project on behalf of the lenders.

Siemens KWU has previously completed one other power plant in Turkey as the leader of an international consortium. In the early 1990s, the company participated in the development of the Ambar* combined cycle power plant which, at 1350 MW, was at that time the largest plant of its kind in Europe. Ambar* was also the first power plant to reach an efficiency level of 52.5 per cent, and as much as 53.2 per cent was achieved in peak-load duty.

Iskenderun will consist of two steam generation units, each with a capacity of 660 MW. Each unit will consist of a coal-fired boiler and a steam turbine-generator. Electricity from the plant will be supplied to the main TEAS grid at 380 kV. The plant will be seawater cooled, and it will be equipped with FGD equipment, electrostatic precipitators and an ash handling system to meet environmental standards specified by both Turkey and the World Bank. The net efficiency of the power plant at design point will be 40.2 per cent.

The boilers, supplied by Babcock Borsig Power, are single reheat once-through Benson type boilers. They will be wall-fired units equipped with 24 low-NOx burners. Each boiler is designed for a maximum continuous steam flow rating of 524.3 kg/s. At full load, the expected steam conditions at the superheater outlet are 185 bar[a] and 541°C, while at the reheater outlet the steam conditions will be 50.5 bar[a] and 539°C. Light fuel oil will be used for boiler start-up.

The steam turbine units will be of a single reheat tandem compound design with one high pressure (HP), one intermediate pressure (IP) and two low pressure (LP) sections. The HP section is single-flow barrel type with main steam conditions (at maximum continuous rating) of 176 bar, 524 kg/s and 538°C. The IP turbine is a double flow unit and will receive reheat steam at 49 bar and 538°C through two combined stop and control valves, expanding the steam in two flows to the crossover pipe.

Each LP turbine will be connected to a single-pass box-type surface condenser. These will be connected in series to the circulating seawater system.

Environmental compliance

Figure 3. Sectional view of the steam generator at Iskenderun
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Advanced environmental protection technology will be used at Iskenderun. Each boiler will be equipped with an electrostatic precipitator (ESP) to remove particulates from the flue gas. With a fly ash removal efficiency of up to 99.5 per cent, the dust contained in the flue gas will be reduced to 50 mg/Nm3.

Following dust elimination in the ESP, the flue gases are cleaned in the FGD plant to remove sulphur dioxide (SO2). The FGD plant will use limestone as the absorption agent, with gypsum formed as a by-product of the process. SO2 emissions will be less than 400 mg/Nm3. The cleaned flue gas will be discharged through a 150 m-high chimney.

During regular operation of the power plant, some 60 t/h of bituminous fly ash will be generated in the ESP, and around 20 t/h of gypsum in the FGD units. These residues can be sold for use in the cement production industry or to manufacture building materials. For example, the gypsum from the FGD plant can be used to make gypsum boards.

The possibilities for recycling the residues and waste produced by the Iskenderun power plant are currently being investigated. Isken is conducting negotiations with a number of cement factories located near the site. At the same time, a preliminary agreement has been concluded with a gypsum board manufacturer to set up a gypsum board factory nearby.

Turkey: an expanding market

Turkey has been one of the fastest growing power markets in the world for nearly two decades, thanks largely to a growing population, low per capita electricity consumption, rapid urbanization and strong economic growth. Projections by Turkey’s Electricity Generating and Transmission Corporation (TEAS) indicate that electricity consumption may be as high as ten per cent per year for the next 15 years. Electricity shortages and blackouts are already common in the country, mainly as a result of generation and distribution losses, which reach 20 per cent.

Increasing the country’s electricity generating capacity therefore is a top priority for Turkish energy officials. If forecasts prove correct – some analysts believe that they are too high – Turkey may need to triple its total electric power generating capacity by 2015. According to the Ministry of Energy and Natural Resources (MENR), this would require investments of $4-$4.5 billion per year, much of which would need to come from the private sector.

A major dilemma now faced by Turkey is how to invest in new electric power capacity while at the same time adhering to foreign debt ceilings mandated under lending rules set by the IMF. Conventional financing of major infrastructure projects would only increase the amount of foreign credit, thus MENR has conceived other options for financing projects. One option is the so-called Build, Operate and Transfer (BOT) model. First introduced in 1984, BOT projects have been plagued by legal problems. Several BOT plants currently are under construction, and in the coming years, many more power plant projects could be offered to the private sector under the BOT model, particularly given recent changes in Turkish law which reclassifies power projects as ‘commercial agreements’.