Biomass Risk Management       Darren Williams     Commercial Director        Eco2 Limited
Background • Swalec       • Joined generation business in 1993 • Energy Power Resources – 2006       • Biomass and waste e...
Is Biomass Riskier than Wind? • Both offer construction and fuel risk • Proven technologies available • Long term contract...
Key Biomass Risks   Three Key Risks:   •Fuel   •Fuel   •Fuel   •Other Risks        • Construction/Technology Risk        •...
Fuel – Key Risks •Is there enough? •What will the price be in the long term? •How do you get it to the plant at all times?...
Is there enough?                   Sleaford
What will the price be in the longterm?  •   In depth knowledge of the market  •   Needs third party confirmation  •   Lon...
How do you get it to the plant?• Need to fully explain the fuel logistics strategy• A track record of managing fuel for a ...
Counter Party Risk  • Wide range of fuels with wide range of    suppliers  • Some large scale suppliers in the market  • S...
Construction/Technology• Proven track record of technology on the  chosen fuel• Proven contractor within the biomass/waste...
Off-take Provisions • Key off-take risk is the Power Purchase Agreement      • Bankable counter party      • Guarantee Str...
Operating Risks • Long term Operations and Maintenance Contract • Operations and Maintenance Contractor – track   record •...
Is it all possible?  • Thankfully yes!
The UK biomass opportunityEversheds conference – July 2012
Agenda                                                                   PageSection 1      The Ernst & Young Environmenta...
Ernst & Young Energy Infrastructure Advisory teamWe are a market leading renewable energy                              Thi...
Ernst & Young Energy & Environmental FinanceOur EEIA team sits within the wider EMEIAInfrastructure Advisory team, allowin...
Infrastructure Advisory– our awards                          2011 Middle East Power                                       ...
Section 2The investment landscape forbiomassRef: 1009231
EY’s assessment of UK energy investment requirements                Replacement                                        Env...
Government is increasingly supportive of bio-energyCharles Hendry MP – 28 June 2012►    Biomass could meet 40% of the Gove...
What is the investment opportunity? Large scale (greater than 20MW) biomass - consented •Source: Department of Energy and ...
What are the challenges?Primary►    Regulatory support (RHI, ROCs, FITs, ECAs, CFDs, grandfathering………)►    Contract banka...
Section 3The impact on financing of CfDRef: 1009231
The proposed FiT CfD The key to achieving these objectives will be to bring forward the level of investment needed in new ...
Section 4The funding backdropRef: XX00000
Utility balance sheets remain constrained                                                                          Credit ...
Financing considerations – market backdrop                                          US, German and UK Government          ...
Project finance has become a less preferred choice►         Increasing trend towards:                                     ...
Biomass offers various business models for differentclasses of fundersInstitutional capital - >100MW / conversion         ...
Section 5SummaryRef: XX00000
SummaryBiomass investment opportunity► C.£10bn          of investment opportunity over the next few years► Many          r...
Ernst & Young LLPAssurance | Tax | Transactions | Advisorywww.ey.com/ukThe UK firm Ernst & Young LLP is a limited liabilit...
Biomass Technology      Paul Noble     2nd July 2012                     1
Context in today’s workshop•   Biomass Technology – Paul Noble•   Managing Project Risks – Darren Williams•   Financial Mo...
Contents1.   Biomass in the UK Energy Mix2.   Technology Review3.   Biomass Co-firing and Conversion4.   What is happening...
UK Bioenergy Strategy, April 2012“The potential scale of bioenergy deployment: although highlyuncertain, our analysis indi...
National Grid View, 2011                       5
Contents1.   Biomass in the UK Energy Mix2.   Technology Review3.   Biomass Co-firing and Conversion4.   What is happening...
Technology Map                                                              Infrastructure:                              E...
OVERALL CONTROL SYSTEM * - “PLANT” OR “STATION LEVEL” *                 FGT          ASH                                  ...
Biomass Technology for Power Generation1) Fuel Preparation and Processing:Separation, Drying, Pelletisation, Torrefaction2...
Project Development Process           GATE 1                 GATE 2                 GATE 3                     Design Basi...
Fuel Processing and StorageFuel/Raw Material ‘Field of Origin’                     Fuel/Raw Material Processing           ...
Combustion                            Typical Atmospheric (Bubbling)                            Fluidised Bed Combustion B...
Combustion Fuel Compatibility                                                            Existing Coal Boilers            ...
Contents1.   Biomass in the UK Energy Mix2.   Technology Review3.   Biomass Co-firing and Conversion4.   What is happening...
Typical Biomass Conversion Scope                                    NMI                                                   ...
Comparison of Biomass New Build and Conversion                     New Build Biomass              Biomass Conversion      ...
Biomass Conversion Example Risks (1)     Process                         Risks                                            ...
Biomass Conversion Example Risks (2)         Process                           Risks                                  Miti...
What is the Current Situation?                       Development /                         Planning    Construction Operat...
What of the future?Energy PolicyPower sector is characterised by large scale investments with longlead times and 10-15+ ye...
Attracting and Maintaining Institutional Investment: Biomass
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Slides from the Biomass workshop at the Eversheds event: Attracting and Maintaining Institutional Investment in Renewable Energy - 2nd July 2012

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Attracting and Maintaining Institutional Investment: Biomass

  1. 1. Biomass Risk Management Darren Williams Commercial Director Eco2 Limited
  2. 2. Background • Swalec • Joined generation business in 1993 • Energy Power Resources – 2006 • Biomass and waste energy • Ely Straw fired station project manager • Largest biomass generator in UK • Founding Director of Eco2 – 2002 • Wind – Dummuie, Betws, Hatton, Bogenlea • Landfill Gas • Tidal Energy Limited • Biomass – Western BioEnergy, Sleaford, Brigg and a further 8 biomass plants throughout UK and Europe under development
  3. 3. Is Biomass Riskier than Wind? • Both offer construction and fuel risk • Proven technologies available • Long term contracts achievable • A biomass plant has a team on site to make sure it runs 24 hours a day • Lots of projects with good operating history; but • DEBT FUNDERS ARE NOT SURE!
  4. 4. Key Biomass Risks Three Key Risks: •Fuel •Fuel •Fuel •Other Risks • Construction/Technology Risk • Offtake provisions • Operating Risks
  5. 5. Fuel – Key Risks •Is there enough? •What will the price be in the long term? •How do you get it to the plant at all times? •Counter Party Risks?
  6. 6. Is there enough? Sleaford
  7. 7. What will the price be in the longterm? • In depth knowledge of the market • Needs third party confirmation • Long term fuel contracts • Ability to utilise back up fuels
  8. 8. How do you get it to the plant?• Need to fully explain the fuel logistics strategy• A track record of managing fuel for a UK biomass plant• Appropriate contingency planning• No substitute for having done it before
  9. 9. Counter Party Risk • Wide range of fuels with wide range of suppliers • Some large scale suppliers in the market • Strength of counter part vs number of contracts
  10. 10. Construction/Technology• Proven track record of technology on the chosen fuel• Proven contractor within the biomass/waste sectors• Appropriate contract and guarantee structures • Liquidated Damages and Bonds• Parent Company Guarantees• Owner management of construction
  11. 11. Off-take Provisions • Key off-take risk is the Power Purchase Agreement • Bankable counter party • Guarantee Structures • Floor price or not? • Change of law • Ash and effluent provisions • Grid Connection
  12. 12. Operating Risks • Long term Operations and Maintenance Contract • Operations and Maintenance Contractor – track record • General Plant Management • Fuel and O&M contract interface • PPA management • Accounting function • Really important to understand who is going to do what and make sure it gets done
  13. 13. Is it all possible? • Thankfully yes!
  14. 14. The UK biomass opportunityEversheds conference – July 2012
  15. 15. Agenda PageSection 1 The Ernst & Young Environmental Finance team 3Section 2 The investment landscape for biomass 6Section 3 The impact on financing of CfD 11Section 4 The funding backdrop 13Section 5 Summary 20Ref: 1126192 Eversheds conference June 2012 2
  16. 16. Ernst & Young Energy Infrastructure Advisory teamWe are a market leading renewable energy This announcement appears as a matter of record only. This announcement appears as a matter of record only. This announcement appears as a matter of record only.corporate finance team, with over 60 Eco2 Lincs Limited H elus Energy pl i c SeaEnergy Plcdedicated professionals advising on has raised £115 million of senior debt funding to has disposed its offshore wind development subsidiary, construct and operate the Lincolnshire based 38 MWenergy and environmental finance straw fired has disposed of a 73M W f l uly-consented SeaEnergy Renewables Sleaford Renewable We are currently advising on: bi ass si om te Ltd to Energy Plant ► Over 5GW of renewable M&A The lending club consisted of NIBC Bank NV, The Royal for £28 million and 13% Bank of Scotland, Siemens Bank GmbH and Unicredit carried-interest Repsol transactions in Europe Bank AG for £50 million ► Over £300m of project financing for Ernst & Young acted as financial advisor to the shareholders of Ernst & Young acted as advisor t o Helius Ernst & Young acted as lead financial advisor to SeaEnergy Plc. renewable projects in Europe Eco2 Lincs Limited. Energy plc. In the last 15 months, we have: ► Disposed of four consented onshore wind farms in the UK This announcement appears as a mat t er of record only. August 2011 This announcement appears as a mat t er of record only. November 2010 This announcement appears as a mat t er of record only. March 2011 ► Secured c.£115m senior debt and a PPA for Sleaford biomass plant RES UK & Ireland Lt d Part nerships for Eaga plc Renewables Lt d UK Solar PV project financing ► Advised on PPAs for over 130MW of has disposed of a majority has raised additional funding has provided accounting, tax renewable energy capacity. stake of for its onshore wind and modelling services on development portfolio through Eagas £300m project financing ► Provided complex financial modelling Wadlow Energy Lt d the sale of a minority stake in of a portfolio of social housing and structuring services to the largest to the company to OPTrust rooftop solar PV installations solar project finance facility in the UK for an undisclosed sum (Eaga - £225m) Barclays Infrast ruct ure Funds Ernst & Young acted as lead advisor to the company and founder shareholders, HSBC Since 2005, we have: Ernst & Young acted as financial advisor to Environmental Infrastructure Fund and Ernst & Young provided accounting, tax RES UK & Ireland Ltd. Carbon Trust Enterprises Limited. and modelling services to Eaga plc. ► Raised project finance for over 785MW of renewable energy assets ► Advised on PPAs for over 1.1GW of renewable assets Financial Adviser of the Year - Renewable Energy  Financial Adviser of the Year – Power  Financial Adviser of the Year - Social InfrastructureRef: 1126192 Eversheds conference June 2012 3
  17. 17. Ernst & Young Energy & Environmental FinanceOur EEIA team sits within the wider EMEIAInfrastructure Advisory team, allowing usto understand financing trends across abroad range of asset classes. Global infrastructure advisory mandates closed – 2011 ► We have undertaken in excess of 800 Rank Financial adviser Deals Value ($m) infrastructure transactions that involved 1 Ernst & Young 31 $16,290 complex structuring in the project 2 PwC 19 $7,834 finance market. 3 KPMG 18 $6,051 ► We are lead advisor on a number of 4 HSBC 15 $16,469 ongoing high profile assignments 5 BNP Paribas 12 $19,495 ► We are currently advising on £10 billion of infrastructure project financings, Source: “Project Finance International” and “Infrastructure Journal” League Tables – 2011 including a number of high profile assignments in the energy and environment space This announcement appears as a matter of record only. ► We are consistently ranked number 1 in This announcement appears as a matter of record only. This announcement appears as a matter of record only. the project finance market ► Our awards is a reflection of our market leading position in the infrastructure financing space Ongoing Ongoing Ongoing Financial Advisor on the structuring and financing of £1.5bn Smart meter funding and commercial strategy Structuring and financing advice on £1.5bn major the £4bn Thames Tunnel project Financial Advisor infrastructure roll out Financial AdvisorRef: 1126192 Eversheds conference June 2012 4
  18. 18. Infrastructure Advisory– our awards 2011 Middle East Power Ernst & Young Deal of the Year 2011 No.1 by Global Sur IPP Mandates Won No.1 by Global PFI/PPP Deals closed 2005, 2007 & 2009 2009 & 2011 2009 Renewable Energy PPP Financial Advisor Advisor of Choice of the Year Ernst & Young 2011 Best Infrastructure Deal in CEE - Polish Airports State Enterprise’s PLN700mn fund 2010 No.1 by Global raising Mandates Won No.1 by Global and EMEA Mandates Won 2005 - 2009 2011 Best Project Finance Adviser in 2008 EMEA and CEE Best Advisory Firm – 2011 PPP Deal of the Year Financial Advisor of the Year – 2009 Best Project Finance House – Renewable Energy Europe Suffolk Waste PFI Renewables Financial Advisor European Transmission Deal of the Year - Robin Rigg OFTO Financial Adviser of the Year - Renewable Energy Financial Adviser of the Year - Power 2011 Best PPP Deal in the Middle East Financial Adviser of the Year - Social Infrastructure Overall Project Finance Firm of the Year: – Bahrain Housing UK Partnerships Awards 2012 Partnerships Awards 2012 Partnerships Awards 2012 Partnerships Awards 2012 2011 Asia-Pacific PPP Deal Best Local Government Project Team Best Waste/Energy/Water Project Project Grand Prix of the Year Adelaide Hospital South West Devon Energy from Waste PFI South West Devon Energy from Waste PFI Devon Waste Partnership Best Financial Adviser Eversheds conference June 2012 5
  19. 19. Section 2The investment landscape forbiomassRef: 1009231
  20. 20. EY’s assessment of UK energy investment requirements Replacement Environmental cycle targets Demand growthUK energy investment requirements to 2020 (£199bn) Generation investment £136bn Smart Other Power and meters 14% Nuclear gas 5% generation distribution 27% 2% Renewables generation Onshore 63% £136bn £85bn power Gas transmission generation 6% Generation 5% 68% Coal with Offshore power CCS transmission 5% 5%Ref: XX00000 Eversheds conference June 2012 7
  21. 21. Government is increasingly supportive of bio-energyCharles Hendry MP – 28 June 2012► Biomass could meet 40% of the Government’s 2020 renewables target and provide ‘sustainable, cost-effective and low-risk‘ energy generation as part of a balanced energy mix.DECC April 2012 (launch of the bio-energy strategy)► “[The] new biomass strategy targets a sector supporting 50,000 jobs and producing 11 per cent of UK energy by 2020”DECC RO Banding consultation (ongoing)► 1.5 ROCs► 0.5 ROC uplift for CHP maintained until April 2015► Co-firing and coal conversionGreen Investment Bank► Biomass waste a priority areaRenewable Heat Incentive► First of its kind support for renewable heat generationRef: XX00000 Eversheds conference June 2012 8
  22. 22. What is the investment opportunity? Large scale (greater than 20MW) biomass - consented •Source: Department of Energy and Climate Change/ EY proprietary knowledge Tansterne (25MW) - ► C.2GW ‘here and now’ investment opportunity GB Bio (Straw)Corpach (20MW) – ► Pipeline increases significantly for: Peel Tees Renewable Energy Plant ► Coal conversion (295MW) – MGTBillingham (45MW) – ► Co-firing upgrade Gaia Stallingborough (60MW) – RWE ► Pre-consent pipelinePollington (53MW)- - ► Sub 25MW CHP Dalkia Brigg (40MW) – Eco2 (Straw) ► Advanced Conversion TechnologyAnglesey (299MW) Stockton on Tees (50 MW) - Bio ► Biomass boiler market – Anglesey Energy Investments Aluminium ► Anaerobic digestion Immingham (50MW) Morgan Credit – Real Ventures ► Related supply chain upgrades (eg (25MW) upstream and midstream) Immingham Nevis (50MW) – (299MW) - Drax Welsh Power ► Investment opportunity could be in excess of Ridham CHP PlantPort Talbot (300MW) (25MW) – Evonik c.£10bn – Prenergy Avonmouth Sleaford (40MW) – (100MW) – Helius Bristol (150MW) – Eco 2 (Straw) E.ON Tilbury Green Power (65MW) – Express EnergyRef: XX00000 Eversheds conference June 2012 9
  23. 23. What are the challenges?Primary► Regulatory support (RHI, ROCs, FITs, ECAs, CFDs, grandfathering………)► Contract bankability ► fuel, fuel, fuel!!!! ► PPA, PPA, PPA!!!► Accessing financingPotentially► Sustainability agenda► Project returns► Technology risk► Construction risk► Operating riskRef: XX00000 Eversheds conference June 2012 10
  24. 24. Section 3The impact on financing of CfDRef: 1009231
  25. 25. The proposed FiT CfD The key to achieving these objectives will be to bring forward the level of investment needed in new low-carbon generation capacity and infrastructure at the required pace and through a combination of measures.Source: DECC ► Will investors be turned off by lack of power price ► Overlap of RO provides some continuity, but without exposure? absolute certainty on revenue ► Will 15 year tenor attract investors seeking long term, low ► Gross margin indexation linkeage RO and FiT CFD – risk returns? loss of natural hedge? ► Strike price mechanism? ► Competition against transport fuels (revenues linked to ► Guarantor between generator and supplier? oil price)Ref: XX00000
  26. 26. Section 4The funding backdropRef: XX00000
  27. 27. Utility balance sheets remain constrained Credit ratings trajectory – top 12Traditional corporate finance not up to the task integrated utilities► In 2001, 10 of the top 13 utilities in Europe were rated AA+ to A+ ► In 2012, one (EDF) is in that range► Downgrade to BBB category increases the cost of debt, and cost of doing business► Management of their balance sheets and off-book liabilities has become a key feature of Utility finance (IFRS eg lease accounting)► Utilities’ capacity to carry out renewable energy ambitions of Europe is constrained 2001 2012 BB+ BBB BBB+ A- A A+ AA- AARef: XX00000 Eversheds conference June 2012 14
  28. 28. Financing considerations – market backdrop US, German and UK Government Greek, Spanish and Port uguese Government Bond Yields Bond Yields 4.5 40.0 4.0 35.0 3.5 30.0 3.0 ) ) 25.0 Yield (% Yield (% 2.5 20.0 2.0 1.5 15.0 1.0 10.0 0.5 5.0 0.0 0.0 Mar -10 Mar -11 Mar -10 Mar -11 Mar -12 Mar -12 Nov-10 Nov-11 Nov-10 Nov-11 May-10 May-11 May-12 May-11 May-10 May-12 Jan-10 Sep-10 Jan-11 Sep-11 Jan-12 Sep-10 Jan-11 Sep-11 Jan-12 Jan-10 Jul-10 Jul-11 Jul-10 Jul-11 US Ger many UK Gr eece Spain Por tugal Source: Bloomberg Source: Bloomberg Key drivers Impacts ► Volatility in the financial ► Banks raising capital in a tough wholesale market or markets shrinking their balance sheets ► The ongoing Eurozone ► Project finance loans will attract steep capital weightings debt crisis ► Some banks may look to sell down their project finance ► Basel III portfolios to bolster ‘Tier 1’ capital ► Banks that are less well capitalised and/or lacking support from Government with ready access to the capital markets . have seen their cost of debt increaseRef: XX00000 Eversheds conference June 2012 15
  29. 29. Project finance has become a less preferred choice► Increasing trend towards: Global project f inance volume by f unding source 1. Club lending 350 2. Credit committee decision making driven by 300 relationships and geography 3. Mini-perm structures 250 Aggressive cash sweeps and restrictions on US$ bn 4. 200 payments to equity 150 5. Rise in margins (although offset by recent fall in the 100 long-term swap rate)► Major deals continue to be done (see graphic) 50 Source: Infrastructure Journal► Role of ECAs and Multilaterals key for overall funding 0 strategy and market approach 2005 2006 2007 2008 2009 2010 2011► Deals are being closed for biomass (Sleaford, Helius Equity Bonds Loans IFI Suppor t Cord) and more are in the pipelineRef: XX00000 Eversheds conference June 2012 16
  30. 30. Biomass offers various business models for differentclasses of fundersInstitutional capital - >100MW / conversion Fund model <100MW► Larger institutions/those with infrastructure experience ► The historic fund model of 20% carry and 2% can participate through in house teams (eg Ontario management charge is under pressure Pension Trust, Aviva) ► Smaller institutions/those without infrastructure► Typically looking for investment tickets >£50m, and in experience may be more suited to providing debt or some cases alongside another institution participating through such funds► Looking for long term stable yields to balance 25-30 year index linked liabilities ► Challenges► Equity investment currently provides exposure to 1. Availability of leverage power price risk - a challenge for institutions seeking stable revenues 2. Availability of ‘shovel ready’ projects 3. Investment scalability and flexibility► Challenges 1. Perception of renewables as an infrastructure Other forms of capital asset class ► Tax driven equity (EIS/VST) – sub 10MWs and RHI 2. Deal ticket size ► Project bonds - >50MW 3. Lack of residual asset value ► Non-utility corporates– all asset classes 4. Volatility in gross margin 5. Construction riskRef: XX00000 Eversheds conference June 2012 17
  31. 31. Section 5SummaryRef: XX00000
  32. 32. SummaryBiomass investment opportunity► C.£10bn of investment opportunity over the next few years► Many recent blockers have been removed► There are still significant risks that need to be worked through (fuel, offtake)Capital needs are huge► Biomass competing against other large scale energy infrastructure funding requirements (nuclear, offshore, CCGT, grid)► The UK generally needs to compete for limited fundsNew sources of capital are needed► Utilities cannot do it all / banks cannot project finance it all► Encouraging new sources of debt and equity is essentialNew capital requires new structures► Innovative structures are needed to access capital► CfDs could help achieve UK energy objectives if carefully structured but challenges remainRef: 1126192 Eversheds conference June 2012 19
  33. 33. Ernst & Young LLPAssurance | Tax | Transactions | Advisorywww.ey.com/ukThe UK firm Ernst & Young LLP is a limited liabilitypartnership registered in England and Waleswith registered number OC300001 and is a member firmof Ernst & Young Global Limited.Ernst & Young LLP, 1 More London Place, London SE1 2AF.© Ernst & Young LLP 2012. Published in the UK.All rights reserved. This document has been prepared by Ernst & Young. The information and opinions contained in this document are derived from public and private sources which we believe to be reliable and accurate but which, without further investigation, cannot be warranted as to their accuracy, completeness or correctness. This information is supplied on the condition that Ernst & Young, and any partner or employee of Ernst & Young, are not liable for any error or inaccuracy contained herein, whether negligently caused or otherwise, or for loss or damage suffered by any person due to such error, omission or inaccuracy as a result of such supply. In particular any numbers, initial valuations and schedules contained in this document are preliminary and are for discussion purposes only.Ref: 1126192
  34. 34. Biomass Technology Paul Noble 2nd July 2012 1
  35. 35. Context in today’s workshop• Biomass Technology – Paul Noble• Managing Project Risks – Darren Williams• Financial Modelling and funding structures of renewable projects – James Barrett-Miles
  36. 36. Contents1. Biomass in the UK Energy Mix2. Technology Review3. Biomass Co-firing and Conversion4. What is happening now?5. What of the future?
  37. 37. UK Bioenergy Strategy, April 2012“The potential scale of bioenergy deployment: although highlyuncertain, our analysis indicates that sustainably-sourced bioenergycould contribute by 2020 around 8-11% to the UK’s total primaryenergy demand and around 12% by 2050 (within a wide range of 8%-21%)”“Biomass in power generation currently accounts for less than 3% ofthe total electricity generation in the UK. Going forward our analysisindicates that biomass in power generation has an importanttransitional role which can contribute to the cost effective delivery ofour renewable targets. The range of biomass in power generation to2020, which are consistent with our principles, could be 20 to 40 TWhof delivered energy in 2020, accounting for 5% to 11% of total powergeneration” 4
  38. 38. National Grid View, 2011 5
  39. 39. Contents1. Biomass in the UK Energy Mix2. Technology Review3. Biomass Co-firing and Conversion4. What is happening now?
  40. 40. Technology Map Infrastructure: Electricity energy supply, services, land, generation logistics Coal Biomass CCGT Wind Energy from Waste PyrolysisWaste Gasification Separation Chemicals processes Reverse cracking Petrochemical processes Anaerobic digestion Biocatalysts Fischer-Tropsch Transesterification Algae Ethanol Biotechnology fermentation Enzymes Biofuels
  41. 41. OVERALL CONTROL SYSTEM * - “PLANT” OR “STATION LEVEL” * FGT ASH STEAM* STG* E* HV * BOILER GRID EQUIPMENT EQUIPMENT EQUIPMENT CONTROL CONTROL CONTROL FUEL CONVEYORS * STEAM * FUEL * FUEL FW * (NB - EFW-SINGLE STAGE) CON COOLING * STORE 1 STORE 2 (BIOMASS – 4/5 STAGE) (ACC) EQUIPMENT EQUIPMENT EQUIPMENT CONTROL CONTROL CONTROL DEMIN* WATER * FIRE (IF WET COOLING) FUEL DEMIN * EQUIPMENT PROTECTION* CONTROL EQUIPMENTFUEL DELIVERY CONTROL WATER RAW WATER – SUPPLY AND DISTRIBUTION (S & D) PIPING * COMPRESSED AIR - (S & D) * LV ELECTRICAL (S & D) * BUILDING SERVICES *
  42. 42. Biomass Technology for Power Generation1) Fuel Preparation and Processing:Separation, Drying, Pelletisation, Torrefaction2) Combustion:Grate Combustion – open flameFluidised Bed Combustion GroupsPulverised Fuel3) Low Oxygen ProcessingGasification or low oxygen processes including pyrolysis
  43. 43. Project Development Process GATE 1 GATE 2 GATE 3 Design BasisConcept Basic DesignScreening Concept Detailed development Front End DesignPre-Feasibility and finalisation EngineeringAssessment Design (FEED) Construction ProjectCost Estimate Definition Cost Estimate Cost Estimate -10% to +10%-20% to +50% -15 to +30% Engineering work to Early Stages of Final Contractor teamRanking of Options Design. performs much of theSelect preferred finalise the project For EPCM, the 3rd party engineering at this stageoption scope and engineer and the although for some items implementation tenderers, through supply the 3rd party engineer chain engagement, carry continues the out enough engineering to engineering to ‘issued for achieve +/- 10% capex construction’ stage
  44. 44. Fuel Processing and StorageFuel/Raw Material ‘Field of Origin’ Fuel/Raw Material Processing Density and moisture Storage variation 11
  45. 45. Combustion Typical Atmospheric (Bubbling) Fluidised Bed Combustion Boiler (AFBC)Typical Stoker Fired(Grate) Combustion Boiler 12
  46. 46. Combustion Fuel Compatibility Existing Coal Boilers - includes a range Stoker / Bubbling Fluidised Circulating Fuel of options such as Grate Bed Fluidised Bed co-milling and direct injection Straw Yes MSW Yes Wood Chip Yes YesWaste Wood Yes Yes YesWood Pellets Yes YesMilled Wood Yes Pellets 13
  47. 47. Contents1. Biomass in the UK Energy Mix2. Technology Review3. Biomass Co-firing and Conversion4. What is happening now?
  48. 48. Typical Biomass Conversion Scope NMI Conveyors andBoiler Day bin hoppers Pellet storage Road/Rail/Ship Milling receiving Pulverized fuel transport Controls including process controls Electrical, Civil, Structural, Mechanical, Fire Protection
  49. 49. Comparison of Biomass New Build and Conversion New Build Biomass Biomass Conversion Adjust Boiler to burn new fuel. Consider new or modified burners. Combustion designed for required fuel Consider heat transfer surfaceCharacteristics variability modifications Adjustments required following Emissions designed for required fuel assessment of fuel composition Treatment properties, and combustion characteristics Technology Guarantee straight forward Uncertain Contracting Approach EPC or multi-package EPC or multi-package
  50. 50. Biomass Conversion Example Risks (1) Process Risks MitigationsFire systems / Fire/explosion caused by build up of Lessons learnt captured.explosion dust Interface to be managed early on.prevention Fire Office/Independent Certifier Interface.Electrical Insufficient expansion of Load study.infrastructure infrastructure available on site.Road reception Incorrect design and specification Design & specificationRail reception Flow of pellets too slow or fast once Modify bunker to put extraction in. feeders replaced. Too much dust generated. Drainage failure & contamination.Storage / delivery Conveyor failure. Problems include Complete redundancy to be provided. Dual 100%conveyors power, control system, motors. systems.Storage Fire detection & storage design Design to meet code of practice. interface failure. Design in movement and turning of stock to reduce risk. Excessive CO2 levels, bacteria, fire Maintain relationship with silo providers as a fallback. risk.Reclaim conveyor Conveyor failure. Problems include Complete redundancy to be provided. Dual 100% power, control system, motors. systems.
  51. 51. Biomass Conversion Example Risks (2) Process Risks MitigationsMilling towers Fire & explosion Dust Control Systems. Design in easy access for cleaning floors, walls and ceilings (removing flammable fuel build).Milling equipment Power consumption excessive. Use equipment tested elsewhere. Understand loads. Reliability (particularly hammers). Use high quality equipment – assess supply chain.Pneumatic conveyor & Fire & explosion Dust Control Systems. interconnectionsintermediate storage between equipment.Furnace Exit Gas Poor Boiler Performance Detailed assessment. Internal BoilerTemperature redesignBoiler air systems Poor Boiler Performance Over fire air technologySlagging Deposition Poor Boiler Performance Provision for Furnace Wall BlowersBehaviourDust Control Systems Poor Boiler Performance Safety risksEmissions Control Out of compliance with permit to operate Detailed assessment of Boiler System
  52. 52. What is the Current Situation? Development / Planning Construction Operating New Build 2,010MW 175MW 275MW Conversion(including cofiring) 6,350MW 300MW 1200MW 19
  53. 53. What of the future?Energy PolicyPower sector is characterised by large scale investments with longlead times and 10-15+ year payback requiring 10-15+ year regulatoryclarity, stability and internal consistencyCCS plus Biomass – potential for negative emissionsTechnological advancement in the supply chain 20

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