The Combined Heat & Power (CHP) story - Baltics

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The Combined Heat & Power (CHP) story - Baltics

  1. 1. The Combined Heat & Power (CHP) story - Baltics
  2. 2. 2 Content CHP – energy for the future Sustainability Global potential Pricing Fortum – Next Generation Energy Company Fortum’s vision for the future A C D E F
  3. 3. CHP – energy for the future 3
  4. 4. 4 CHP – a simple and safe technique with great benefits
  5. 5. 5 Economically viable in small scale: Electricity One plant – multiple products Renewables competitive to fossil fuels Fuel flexibilityEfficient use of resources Large global potential Main advantages of CHP Overview
  6. 6. 66 Main advantages of CHP Efficient use of resources Losses 25 Losses 48 CHP production 75% efficiency Separate production 52% efficiency Fuel 100 Fuel 100 Electricity 25 Heat 50 Electricity 17 Heat 35
  7. 7. 7 Main advantages of CHP Economically viable in small scale with potential for economy of scale CHP
  8. 8. 8 Non-renewable Forestry biomass Agro biomass Bio oilsWaste Main advantages of CHP Fuel flexibility
  9. 9. 99 Main advantages of CHP Renewables competitive to fossil fuels • Reduced environmental impact • Avoids cost of CO2 emissions • Reduces transportation and shortage risks • Offers a more stable and competitive price
  10. 10. Chapter 2 Sustainability 10
  11. 11. March 2009 0 10 20 30 40 50 60 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 TWh 2006 After investment programme 2007 Consistently towards CO2-free energy production Fortum’s electricity production in the Nordic countries 2008 Hållbar utveckling 201011 Other production (Peat, gas, coal, other) CO2 -free production (nuclear, hydro power, and bio mass)
  12. 12. Researching new fuels 12 • Bio-fuels, residual products, waste • Low cost, abundant, sustainable • Meeting plant specifications • Bio-fuels needs to fulfil EU-criteria • Fuels for electricity needs to qualify for • green certificates • chemical legislation
  13. 13. Research and progress bio-fuels 13 Residual products from biodiesel Lignin Animal oilsPellets Pine tar oilPyrolitic oils Olive stones Salix
  14. 14. 14 Secure Security of supply Sustainable Simple Competitive Meets the demands of customers and society
  15. 15. 15 The sustainable waste • Enables a more sustainable society • Local fuel from recycled materials • Turns cost into commodity • No need for landfill • Reduces methane by reducing landfills
  16. 16. European Commission climate targets 16 20-20-20 until 2020 Reduce green house gas emissions with 20 % Increase usage of renewable energy to Increase energy efficiency and energy savings with 20 % 20 %
  17. 17. Chapter 3 Global potential 17
  18. 18. 18 China Russia India Europe North America Global demand for 4,800 GW new capacity until 2030 18 Source: IEA WEO 2009, reference scenario Primary energy demand 2007-2030 Electricity consumption growth 2007-2030 Electricity capacity additions 2008-2030 (GW) China Russia India Europe North America
  19. 19. 1919 CHP meets the global challenges Organic growth potential in emerging markets Significant growth potential globally Enables the use of local fuels (bio, waste) Synergy opportunities in the growing bio energy and bio fuel markets EU’s LCP Directive to drive new CHP investment potential further CO2 issue will increase CHP’s Competitiveness
  20. 20. 20 Estimated distribution of potential increase Small scale CHP >100 Desalination >250 Industrial CHP >500 District heating >500 >1,350 An average CHP plant equals 2 TWhe Main advantages of CHP Large global potential for CHP Heat Elec- tricity 2,000 TWhe 1,000 large plants Today >3,350 TWhe 1,675 large plants Tomorrow CHP output (approx. distribution)
  21. 21. 21 Supply – demand balance of solid biomass Current Potential Wood Agro Estimated bio fuel potential by 2020 (TWh fuel) 869 193 Source: Pöyry analysis 2010
  22. 22. 22 Current EU target Estimated waste to energy potential by 2020 Waste incinerated today and potential 26 311 1000 tn/a 73 035
  23. 23. Chapter 5 Pricing 23
  24. 24. 2424 Heat pricing Regulatory approval of heat prices from ex ante to ex post Protection towards excessive heat prices Different regulators approach Most common approach - cost based pricing District heating pricing approaches vary in different European countries
  25. 25. 2525 Heat pricing Incentivizing productivity improvements and investments Simple, straight forward and high quality DH competitive with alternatives over time DH competitive with alternatives over time Promotion of alternative based pricing based on several advantages
  26. 26. 2626 Heat pricing • Provides incentives for energy efficiency actions • Secures reasonable returns on invested capital • Market prices for both heat and electricity • fair for customers and companies, • allows to cover costs of necessary investments • sustainable in a long term • predictable and do not create additional costs The most important aim of DH industry is to create a pricing approach that is:
  27. 27. 2727 Energy efficient buildings and district heating • Important with understanding of global system perspective. • Promotion of alternative space heating solutions will decrease the potential for energy efficient CHP production. • Decreasing heat demand will reduce heat sales specially during spring and autumn time. Peak hours will decrease and respectively share of fixed costs will increase. • Any measures leading to increased condensing electricity production or heat-only production should be carefully considered. • Obligatory connection to district heating is not recommended
  28. 28. Chapter 6 Fortum – Next Generation Energy Company 28
  29. 29. 29 Fortum’s emissions among the lowest in Europe Source: PWC & Enerpresse, Novembre 2010 Changement climatique et Électricité g CO2/kWh electricity, 2009 Average 346 g/kWh 0 200 400 600 800 1000 1200 DEI Drax RWE CEZ SSE EDP Enel Vattenfall E.ON Dong UnionFenosa GDFSUEZEurope Iberdrola Fortumtotal EDF PVO Verbund FortumEU Statkraft 41155 CO2-free electricity production 2010 •66% of total electricity production •86% of electricity production in the EU • The majority of the capacity of the ongoing investment programme in the EU is CO2-free. Source: PWC & Enerpresse, Novembre 2010 Changement climatique et Électricité, Fortum Note: Fortum’s specific emission of the power generation in 2010 in the EU were 84 g/kWh and in total 189 g/kWh, 86 % (91 %) emission free in EU and 66 % (69 %) emission free overall. Figures for all other companies include only European generation.
  30. 30. Mission 3030 Our mission and strategy Strategy Create solid earnings growth in Russia Leverage the strong Nordic core Build platform for future growth Competence in CO2 free nuclear, hydro and energy efficient CHP production, and operating in competitive energy markets Fortum’s purpose is to create energy that improves life for present and future generations. We provide sustainable solutions that fulfill the needs for low emissions, resource efficiency and energy supply security, and deliver excellent value to our shareholders.
  31. 31. 31 CHP cornerstone of Fortum’s strategy 31 • Corner stone in Fortum’s strategy • Competitive • Resource efficient • Has potential for further growth • Will enable the sustainable society
  32. 32. 32 CHP is part of Fortum’s past, present and future strategy Kuusamo Uimaharju Joensuu Nokia Suomenoja Kirkniemi Naantali Kauttua Tartu Jelgava Ganibu Pärnu Klajpeda (under construction) Częstochowa Świebodzice Brista City KVV6/Stockholm/ CHP Hässelby HögdalenCity KVV1/Stockholm Bytom Zabrze
  33. 33. 33 Cases (3/4) Pärnu, Estonia • Fueled by local bio fuels such as chips, wood residues from local industries, and peat • Provides the City of Pärnu with district heating • Constructed without accidents • Benifits local industry
  34. 34. Fortum Klaipėda
  35. 35. CHP – a simple and safe technique with great benefits
  36. 36. Overview • At the moment ”Fortum Heat Lietuva” owns 95% of ”Fortum Klaipeda” shares, other 5 % - AB Klaipėdos energija • Total planned investment - EUR 130 million • Power plant capacity for heat power will consist of 50 MW from fuels incineration plus 14 MW during Winter time from flue gas condenser. It planned to produce 140 GWh of electricity and about 380 GWh of heat power
  37. 37. Overview • Capacity – 50 MW of heat and 20 MW of electricity • Klaipėda CHP plant will use biofuels as well as municipal and industrial waste as fuel, producing both heat energy that will be supplied to Klaipeda city, covering 40% of Klaipeda’s heat demand, and electricity that will be sold in the national grid Klaipeda CHP plant will use the latest available technologies that will secure maximum efficiency of fuel consumption as well as from flue gas cleaning • Planned commissioning – 2013 Annual reduction of CO2 emissions - by 96000 tons
  38. 38. Steam boiler of a grate type 85MW • Steam pressure - 47 bars, temperature - 400º C, • Steam generation capacity - 105 t/h • Steam turbine and generator 20MW Annual output will be generated: • about 400 GWh thermal energy • about 140 GWh electrical power Fuel types which are being used at CHP • Biomass fuel (wooden chips) - 75’000 tons • Public utilities waste - 115 -130’000 tons • Industrial waste - 50’000 tons Public utilities waste from Klaipėda region after the primary screening on the locations of their collection or after the secondary screening Fuel types
  39. 39. Benefits for Klaipėda region • Reduces dependence on imported fuels (natural gas) when supplying heat to Klaipeda city, whereas 40% of heat from total needed for the city will be produced in this CHP plant. • Reduced dependence on imported fuel (gas) • More stable heat tariff • Reduced expenses for construction of new waste dumps and management of the existing ones since the amount of waste reduces by 4 to 5 times as a result of waste burning process • Reduced impact on the formation of the greenhouse gas effect since the gas originating from waste dumps (shale gas) has a much greater impact on the increase of the greenhouse effect than CO2 gas
  40. 40. Construction in Klaipėda
  41. 41. 41 Great business opportunities for the CHP business • CHP especially suitable in densely populated areas • 40 % of EU’s energy is used for heating • Demand for electricity will increase when replacing other types of energy • Demand for heating is expected to decrease only very slow • Even small CHP plants more and more profitable in the future
  42. 42. 42 Continue to strive for resource efficient carbon free production What does Fortum want? Push the development towards the sustainable society Continue the integration towards a European market R&D on sustainable energy sources
  43. 43. Chapter 7 Fortum’s vision for the future 43
  44. 44. 4444 * CCS decreases plant output (energy efficiency), while at the same time reducing CO2 emissions dramatically. If applied to bio-CHP, “negative” emissions = removing CO2 from the atmosphere ** Extremely low utilization (<5%) of uranium energy content in LWR with final deposition of spent fuel. However, huge improvement potential both with CHP mode and Generation IV (breeder) technologies Towards a solar economy High Low Finite Infinite Efficiency Resources Condensing CHP Solar Coal IGCC CHP Coal CHP CCGT CHP CCS * Bio fuels CHP Nuclear tomorrow** Nuclear today ** Coal condensing Gas condensing CCS * Solar CSP Hydro Photo- voltaic Osmosis Wind Wave Large CO2 emissions Zero emissions
  45. 45. 4545 Fuel flexibility enables transition towards solar economy and sustainability • CHP a driving force away from fossil fuels • Renewable local fuels are advantageous over fossil fuels • Reduced environmental impact • Fuel flexibility enables the use of local fuels and renewable fuels • Reduces the need for fuel transportations
  46. 46. Smart Heat – a research project for the sustainable energy system of the future 46 Electricity, heat, cooling, and gas in one integrated system where we always make use of surplus energy The sustainable energy system of the future We use energy that would otherwise be lost, and use it when it is needed 1. Enables more solar and wind power 2. Increased integration between the heating and electricity systems 1. Heat and cold storage 2. Increased share of local production in buildings 3. Smart grids 4. Electric vehicles and bio gas vehicles We make use of all local energy 1. Recycling turns household waste into electricity, heat, and biogas 1 2 3 4 5 6 7 7 2 1 5 6 3 4
  47. 47. Pyrolysis could be a fast track for fuel switching 47 • Oil is produced by low oxygen burning • Pyrolysis can be obtained by utilising the heat from existing CHP-plants • Fortum is part of a R&D consortium which has piloted a CHP-integrated production method • Next step will be a construction of a demo-plant • Pyrolysis oil can replace heating oil in existing heat boilers • Pyrolysis oil can be upgraded into traffic fuels or value-added bio chemicals.

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