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Global power deals
A comprehensive review
March 2012
GERMANYS MUNICIPAL POWER
PROMISES SUSTAINABILITY
The positive view most Germans have of their
municipal utilities could prove key to their countrys
transition to a sustainable energy system.
FOREIGN INFLUENCE IN RUSSIAS
NUCLEAR SECTOR
As construction of Russias new Baltic nuclear power
plant gets underway, one foreign company and its
technology are playing a central role.
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www.peimagazine.com
Global power deals
A comprehensive review
March 2012
GERMANYS MUNICIPAL POWER
PROMISES SUSTAINABILITY
The positive view most Germans have of their
municipal utilities could prove key to their countrys
transition to a sustainable energy system.
FOREIGNINFLUENCEINRUSSIAS
NUCLEARSECTOR
As construction of Russias new Baltic nuclear power
plant gets underway, one foreign company and its
technology are playing a central role.
PennWell Global Energy Group, The Water Tower, Gunpowder Mill, Powdermill Lane, Waltham Abbey, Essex EN9 1BN, United Kingdom. Phone: +44 1992 656 600 Fax: +44 1992 656 700 www.peimagazine.com
Chief Editor Heather Johnstone peinews@pennwell.com Deputy Editor Kelvin Ross peinews@pennwell.com Associate Editor Nigel Blackaby peinews@pennwell.com Production Editor Piers Evans
Design Michael Wickers Production Daniel Greene Advertisement Sales Manager Anthony Orfeo anthonyo@pennwell.com Advertisement Sales Manager Asif Yusuf asify@pennwell.com
Studio Manager Karl Weber peiadverts@pennwell.com Group Publisher Ralph Boon Corporate Headquarters PennWell Corporation, 1421 S. Sheridan Road, Tulsa , OK 74112 USA Telephone: +1 918 835
3161 Fax: +1 918 831 9834 Sr. VP Audience Development and Book Publishing Gloria Adams Audience Development Manager Linda Thomas Chairman Frank T. Lauinger President/CEO Robert F. Biolchini
Circulation and subscriber enquiries P.O. Box 3264, Northbrook, IL 60065-3264 USA Tel: +1 847 559 7501 Fax: +1 847 291 4816 E-mail: pei@omeda.com
Power Engineering International, ISSN 1069-4994, is published eleven times a year by PennWell Global Energy Group, The Water Tower, Gunpowder Mill, Powdermill Lane, Waltham Abbey, Essex EN9 1BN, UK.
Tel: +44 1992 656 600. Fax: +44 1992 656 700. Copyright 2012 by PennWell Corporation, 1421 S. Sheridan Rd., Tulsa, OK 74112, USA. All rights reserved.
Subscriptions/circulation and reader enquiry ofce: Power Engineering International, PO BOX 3264, Northbrook, IL. 60065-3264, U.S.A. Paid annual subscription rates: Worldwide $60 Digital Version. E.U. $173,
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Power Engineering International, C/O Mercury Airfreight International Ltd. 365 Blair Road, Avenel, NJ 07001.
Power Engineering International is a registered trademark of PennWell Corporation. POSTMASTER: Send address changes to Power Engineering International, PO BOX 3264, Northbrook, IL. 60065-3264. U.S.A.
Member American Business Press Business Publications Audit3
Printed in the United Kingsom GST No. 12681315
Power Report
Global power M&A deals 18
The trends in mergers and acquisitions involving utilities are changing,
with radically different fortunes affecting not just East and West, but
also both sides of the Atlantic.
Features
Indias coal supply challenges 26
Indias desire to expand its coal red power generation base is
running up against fuel supply constraints from a state-dominated
coal sector lacking investment and hampered by environmental
regulations.
Sustainable power in Germany 32
The positive attitude most Germans have for their municipal utilities
or stadtwerke could prove key to their countrys transition to a
sustainable energy supply.
Opinion: Europes power sector 36
As POWER-GEN Europe celebrates its 20th anniversary, Nigel
Blackaby, its conference director, considers the trends that have
shaped the European power industry over the past two decades and
how current developments might inuence its evolution in the next
20 years.
Nuclear new build project 42
Alstom-Atomenergomash has signed a 875 million deal to supply and
install the critical components for Kaliningrads new nuclear power plant.
The rm explains why this is a landmark contract both for it and Russia.
Q&A: Carlos Pone, ABB 48
With its generation capacity set to double and new T&D nancing to
hit $10 billion, Africa offers vast power potential. Carlos Pone, ABBs
manager in South Africa, tells PEi why he expects Africa to be one of his
companys outstanding growth regions.
Maintanance, repair and overhaul 52
The international market for power plant MRO (maintenance, repair
and overhaul) is evolving fast, in response to global shifts in economic
power and the development of national energy policies aimed at
safeguarding the environment or enhancing energy security.
Regulars
Upfront 2
News Analysis 4
World News 8
Diary Dates 58
Genset Roundup 60
Equipment Roundup 62
PwCs recent Power Deals report
reveals how the power sectors
global M&A activity is undergoing
rapid changes (p.18)
C O N T E N T S
Volume 20 Issue 3 March 2012
Power Engineering International
www.peimagazine.com
UP FRONT
2 www.peimagazine.com
March 2012- PEi
T
his month nally saw the completion of the long-running merger
between Exelon Corporation, Americas biggest nuclear
power operator, and Constellation Energy Group. In the
PricewaterhouseCoopers (PwC) latest report that analyses merger and
acquisition (M&A) activity in the global power utilities sector, this $11.2
billion deal ranked third largest. For our cover story, we pick out the key
ndings of PwCs Power Deals report.
Traditionally, Europe and the US have been the dominant inuence
on M&A activity; this, at least for the latter, holds true. Last year, the
value of North American deals more than doubled compared to 2010
to hit close to $108 billion, with US companies leading the charge.
Europe, in contrast, saw the value of its M&A deals fall a massive
43 per cent, barely reaching $40 billion; similar to the values seen
back in 2009 at the height of the credit crunch.
Undoubtedly the continuing crisis in the eurozone will complicate
the dealmaking environment this year, and PwC believes that whether
M&A activity picks up in Europe will rest on the extent to which
economic growth signals can provide the condence to support
Eurozone strategies.
The report also highlights the growing inuence of Asia-Pacic
investors, in particular Chinese companies which are stepping up a
gear in their go abroad strategies. Another emerging trend highlighted
in the report is the growing interest in rapidly developing power markets
such as in Brazil.
Last year saw Chinas Three Gorges acquire a sizable stake
in Energias de Portugal, which has an extensive generation and
distribution presence in Brazil, while German utility E.ON conrmed
it was taking 10 per cent in MPX Energia, Brazils leading power
generation company.
Although PwC believes that the underlying fundamentals for a return
to the deal value highs of 200607 remain in place, condence in
the wider economic outlook will be pivotal to whether or not this is
achieved this year. For a complete picture of the dealmaking that was
conducted in the global power utilities sector last year and forecasts
for 2012, please read Kelvin Rosss comprehensive roundup on p.18.
Another country that appears to be actively looking outside its
borders is Russia. This month, gas giant Gazprom announced it was
planning to jointly invest in gas red power plants in northwest Europe,
with Danish utility Dong Energy, as part of an effort to move into new
markets, while Inter RAO UES, one of Russias biggest power companies
conrmed it is seeking to acquire power plants in both Europe and
Turkey. It also recently signed a 25-year contract to supply close to
100 billion kWh of electricity to China.
Russias trend of exploring new markets outside of its borders does
beg the question why, when you consider the size of Russia and its
desperate need for new generation capacity and the modernisation of
its existing assets, much of which is close to collapse.
I have recently returned from our Russia Power Conference and
Exhibition, which took place on 57 March in Moscow, and some
of the potential reasons behind this shift were highlighted during the
conference. It is well documented how Russias conventional electricity
sector has transformed itself almost beyond recognition in recent years
from a state-owned entity into a liberalised industrial sector subject to
market forces. Clearly this has created a lot of opportunities but equally
as many challenges.
Topping the list of power generators concerns is the lack of power tariff
reform and its impact on their potential return on investment. As prime
minister, Vladimir Putin was reticent to address tariff reform, and now
that he is once again president the power industry has little condence
that he will address this highly divisive issue. Without a realistic tariff
rise generators both domestic and foreign say investment in new
capacity and, arguably more important, the modernisation of existing
power assets, is uneconomical.
As Putin beds down in his new, old role it is unclear at the moment
whether the politicians and the Russian power industry can resolve this
key issue and take a step closer to creating a modern, efcient and
sustainable power system that bets the country.
US dominates global M&A, but
who is waiting in the wings?
Without a rise in the power tariff for
consumers many generators say it will not
be possible to build new capacity and
modernise Russias exisitng power assets
Kind regards,
Heather Johnstone, PhD
Chief Editor
PEi - Month 2008 www.peimagazine.com 3
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I
t has been a year since the devastating
earthquake and subsequent tsunami in
Japan killed 16 000 people and caused the
catastrophic nuclear meltdown at Fukushima.
For an industry that according to Yukiya
Amano, head of the International Atomic
Energy Agency (IAEA) had become a bit
complacent before Fukushima, the disaster
was its worst nightmare come true.
Elmo Collins of the US Nuclear Regulatory
Commission (NRC) says that watching the
events unfold on television felt like it happened
in our own back yard.
The headline after-effects of Fukushima are
well known: Japans nuclear power sector
is crippled and the country is in the midst of
an energy crisis, while Germany, Italy and
Switzerland have essentially withdrawn from
nuclear power.
There have been numerous public opinion
polls about nuclear power since Fukushima,
and guess what: they all conclude something
different. Depending on which one you read,
sentiment is either anti-, pro-, or apathetic to
nuclear. Six months ago the Germans and,
understandably, the Japanese were the most
anti-atomic nations. Now, Germans are said
to be uneasy about the costs to their energy
bills that the nuclear pullout will cost them.
In fact sociologist and political scientist
Piet Sellke of Stuttgart University believes
that if Germany had held a referendum on
nuclear, the country would still have its reactor
programme in place.
Meanwhile, the French are also said to
be strongly anti-nuclear, yet believe the risk
management of EDF is so robust that they
would rather live with the devil they know than
opt for a radical change in energy policy.
So on a global scale, how much has
changed in the 12 months since Fukushima?
From a statistical point of view, the answer is
not much. On the day before the earthquake
last year, there were 442 operational reactors
in 30 countries, 65 in the process of being
built and another 158 in the pipeline.
As of the beginning of this March 2012,
there were 436 reactors operating in the same
30 countries, and 65 are still in construction.
Those European countries that were pro-
nuclear, such as the Czech Republic, the UK
and Poland, remain so, while China, India and
the Gulf States of the Middle East are pushing
ahead with ambitious atomic agendas.
What has changed is there is a far more
measured approach to nuclear, with a greater-
than-ever emphasis on safety.
Stress tests have been carried out on
reactors across the world and with the results
of these tests in Europe due in June, what
happens next will be decisive. In Brussels this
month, at a debate to mark the rst anniversary
of Fukushima, British Conservative MEP Sajjad
Karim said the response to the tests should be
sensible, proportionate and based on facts,
warning that a hasty reaction could lead to
negative consequences for safety and energy
security.
The IAEAs Amano says Fukushima was
an important wake-up call that triggered
a nuclear safety renaissance. He says the
disaster exposed weaknesses in Japans
nuclear industry, including inadequate
preparation and responses to an emergency:
weaknesses that could be traced back to a
nuclear regulatory body that was not fully
independent from the promotional side.
A regulatory review has been underway
in Japan and countries across the world, with
the effect that nuclear power generation is
probably safer now than it has ever been.
Collins of the NRC says that the battle for
nuclear safety requires daily vigilance and
that a lengthy period of time without a nuclear
incident should not be equated to a time of
prolonged peace, but instead was a time of
increased risk.
This mindset was what was missing pre-
Fukushima, but it is now front and centre of the
agendas of everyone in the industry.
The biggest challenge will centre on not
the new reactors, which will incorporate post-
Fukushima designs, but those aging plants of
more than 20 years old which account for
80 per cent of the global nuclear eet.
These need to incorporate the safety features
of newer or future designs, especially if some
of them are to have an extended lifespan.
Peter Bradford, who previously worked
for the NRC and is a member of the China
Sustainable Energy Policy Council, says it
would be ideal if Fukushima could steer
us away from prophecies and towards a
sensible assessment of market economics,
climate science and nuclear risks. Then nuclear
power would serve the public, not the other
way around.
He may well get his wish. The new
regulatory and safety landscape of the
industry will put it in a strong position to take its
place in the energy policies of established and
emerging nuclear nations. While the last 12
months have seen the nuclear industry assume
a taking stock approach, the next year is likely
to be more decisive. By March 2013 we will
have a much clear idea of just what the true
after-effects of Fukushima will be.
ANALYSIS
BY KELVIN ROSS
4 www.peimagazine.com
March 2012 - PEi
A year on from Fukushima,
what has changed?
While Germany has taken its historic withdrawal decision, the rest of the nuclear world paused, took stock
and carried on. Yet an overhaul of regulatory and safety regimes means it is in better shape than ever.
Source: World Association of Nuclear Operators
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INTERNATIONAL
WORLD NEWS
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March 2012 - PEi
AES Corp, the rst US power
producer to enter China, about
two decades ago, is looking to
sell all or some of its assets there,
because it cannot pass on higher coal
costs in a state-regulated industry.
Sources said Virginia-based AES,
which has a market value of around
$10.5bn, has recently hired an in-
vestment bank to start the process.
A sale or sales is said to be
potentially be worth $300-400m.
Chinas sovereign wealth
fund China Investment Corp
acquired a 15 per cent stake
in AES for $1.6bn in 2009.
The likely exit, or scaling
down, underscores the challeng-
ing operating environment in
Chinas power industry, where
coal red power producers have
little control over electricity
prices, which are set by the state.
Chinese independent power
producers such as Huaneng Power
International Inc and Datang In-
ternational Power Generation,
which generate power but dont
own grid assets, have seen a sharp
dip in their business in recent
years as coal prices have surged.
And the prot outlook re-
mains murky this year in the ab-
sence of a tariff regime that al-
lows power producers to pass
on fuel costs to consumers.
Asia: The Desertec Foundation
and the Japan Renewable Energy
Foundation have signed a pact to
co-operate on developing an Asian
Super Grid. The two non-prot
organisations announced that they
will work on a project that would
interconnect the grids of Japan,
Korea, China, Mongolia and Russia.
Bangladesh: The countrys cabinet
committee has ratied an agreement
with Russia signed in November for
a nuclear power plant. The 2000
MW facility will be Bangladeshs rst
nuclear facility.
Cameroon: In conjunction with
Joule Africa, Cameroon is to develop
a $1bn hydroelectric project. The
project will increase the countrys
installed power generation capacity
by about 40 per cent and would
have an installed capacity of more
than 450 MW.
Indonesia: Wrtsil will supply a
new, gas fuelled power plant to
Indonesia. The plant is to be located
in Sei Gelam Jambi in Sumatra and
will be powered by 11, 20-cylinder
Wrtsil 34SG generator sets
in V-conguration, operating
on compressed natural gas and
providing an output of 110 MW.
Iraq: ABB has won a $60m contract
from Shell Gas Iraq to build a gas
power plant in the south of the
country. The Khor Al Zubair project is
part of an engineering, procurement
and construction contract to build
a 50 MW plant which will feed
electricity to the facilities of the
Basrah Gas Company.
Japan: The European Marine Energy
Centre in Scotland is to help Japan
develop its rst marine energy
test centre. The Orkney-based
EMEC has signed a memorandum
of understanding with the Ocean
Energy Association of Japan.
Jordan: Russian company
AtomStroyExport has offered Jordan
a deal for four nuclear power
reactors. If all four are built, 4000
MW of generating capacity would
be added to the grid, more than
doubling Jordans current capacity.
Kuwait: Alstom has been selected
by the Kuwait Ministry of Electricity
and Water to provide a fully
integrated Smart Grid solution.
The project includes an upgrade
of a town district control centres
energy management system, a new
integrated distribution management
system and an asset management
system.
First US power producer to
enter China now plans exit
European power grid operator TenneT
and Japans Mitsubishi Corp have
signed a letter of intent to join up for
two more offshore grid connections.
The connections, HelWin2
and DolWin2, are both located
in the German North Sea and are
of crucial importance for the in-
tegration of offshore wind farms
to the German onshore grid.
The projects have an invest-
ment volume of about $2.2bn and
an expected third-party equity
stake of around 340m ($443m).
Investment in Smart Grid cyber
security is expected to hit $14bn
by 2018 according to a new report.
But analysts at Pike Research
say that while utilities are planning
Smart Grid deployments at a greater
pace than ever before, cyber security
is still way behind the attackers.
Cyber security remains a check-
the-box exercise for many utilities,
with spending limited to whatever is
needed to survive compliance audits,
said Pike senior analyst Bob Lockhart.
But he added that more Smart
Grid technology companies are now
proactively seeking out security
vendors for assistance in building
cyber security into their products.
Qatar Electricity & Water Company
(QEWC) will continue its policy of
pursuing roles on power and water
projects outside of its home market.
Abdulsattar al-Rasheed, chief
executive ofcer of QEWCs Ras
Abu Fontas power plant, said that
the company agreed that it was
necessary to look to opportuni-
ties abroad. We have a stake in
a power plant in Jordan and also
one in Oman. Now we are com-
peting with Siemens in Dubai for
the Hassyan power plant, he said.
Smart Grid cyber
spend to hit $14bn
Saudi Electricity is looking for
companies to build and operate
a 1700 MW independent power
plant (IPP) running on fuel oil.
Expressions of interest in run-
ning the plant at Rabigh on
the west coast of the worlds
largest oil exporting country
will be submitted this month.
The Rabigh IPP2 plant is the
fourth of ve planned IPPs that will
add a total of around 11 000 MW of
power generation capacity. The other
three are under construction and in-
clude the 1200 MW Rabigh IPP1.
SEC will buy electric-
ity from the new company
under a power purchase agreement.
Saudi Electric plans 1700 MW oil plant
Investment in US wind farms and
wind energy businesses tumbled
38 per cent last year to $9.7bn, as
the economic climate worsened
for wind-power companies, which
are nding it increasingly dif-
cult to attract venture backers.
According to data from
Bloomberg New Energy Finance,
venture capitalists have practically
left the sector altogether.
They invested only $177.6m
in wind startups last year,
down 71 per cent from the
year before, BNEF found.
Wind power is bucking a broader
trend for clean energy, which is
experiencing a surge of investment.
Venture backers pumped $4.29bn
into the green tech industry in 2011,
up 13 per cent from the previous
year, according to the National
Venture Capital Association.
A key factor is a glut of
turbine production, fuelled by
investments over the last half-
decade in the US, Europe, and
Asia, and not enough demand.
Global purchases of turbines
will fall 14 per cent this year from
2010 and stay within 2011 levels
for two years, BNEF estimates.
That is hurting the biggest makers
of turbines such as Denmarks Vestas.
US wind market in difculty
Qatar targets overseas power projects
TenneT in wind
power pact with
Mitsubishi
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EUROPE
WORLD NEWS
The German government has
drafted legislation to cut solar
power subsidies, a move slammed
by the renewables industry.
Carsten Koernig, head of the BSW
Solar industry group, said the plan
was dangerous as it would destroy
investment security. We fear a rollback
in clean energy and climate policy at
a time when Germany wants to lead.
Germany, the worlds largest
solar market, wants to halve the
annual number of installations after
incentives for the industry pushed
capacity past government targets.
The draft bill, to be debated
later this month, would
drastically cut solar subsidies and
eliminate them altogether for
the largest photovoltaic plants.
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March 2012 - PEi
The European Commission is
to open talks with Russia and
Belarus in a bid to integrate
the Baltic States electricity
system with other parts of Europe.
Estonia, Latvia and Lithuania
are currently part of Russias
UPS IPS grid which was built
as part of the Soviet system.
While it is accepted that, in
the short term, Russias electricity
system is incompatible with that of
the rest of Europe Russia has no
means of auctioning interconnector
capacity the EC regards building
links to the Baltic electricity
island as a key stepping stone to
wider European energy security.
It would like to see the three
Baltic states link with Finland,
Poland, Germany, Denmark and
Sweden and there are also plans
for a north-south interconnector
between the Baltic states and
central and southeastern Europe.
Meanwhile, work has
started on the Baltic nuclear
power plant in Kaliningrad.
Two units of the VVER-1200
design are due to be commissioned
in 2017 and 2018, respectively.
The plant will not only
supply power to the Kaliningrad
region, but will also provide
energy exports to the Baltic
states and northwest Europe.
Bulgaria: The European Bank for
Reconstruction and Development has
given a 10m loan to Bulgaria to help
it promote energy efficiency measures
across the country.
Austria: Chancellor Werner Faymann
believes the European Union will
this year face pressure to abandon
nuclear power. He said he expects
anti-nuclear petitions to start in
at least six EU states. Petitions that
attract at least 1 million signatures
can seek legislative proposals from
the European Commission.
Europe: Italy and the Nordic regions
are leading the way in smart meter
deployments, according to technology
company Sentec. Research from the
company shows the countries have an
installed smart meter capacity of 94
per cent and 70 per cent respectively.
Europe: European Energy
Commissioner Gunther Oettinger has
said that national elections are bad
news for energy policies. With voting
this year in France, Russia and the US,
Oettinger said that power generation
and elections are not a good couple,
because energy policies are quite
complicated for an electoral debate.
Poland: Poland vetoed a plan backed
by 26 other EU states to set targets
to reduce greenhouse gas emissions
beyond 2020. Poland was the only
country to vote against plans to cut
emissions by 40 per cent by 2030, 60
per cent by 2040, and 80 per cent
by 2050.
Russia: Gas giant Gazprom and
Danish energy company Dong Energy
are planning to invest in power plants
in north west Europe. Gazprom said
the two companies agreed a plan of
action concerning existing gas red
power plants and the construction of
a new, modern steam-gas plant.
UK: A Green Investment Bank
will be based in Edinburgh with a
smaller ofce in London. The bank,
announced in 2010, will have an
initial 1 billion budget to help fund
renewable projects in the UK.
UK: Horizon Nuclear Power is in the
nal stages of selecting the design
for its proposed new nuclear power
station in Wales from the AP1000
from Westinghouse or the European
Pressurised Reactor from Areva.
UK: E.ON is to close its Kingsnorth
coal red power station in March
2013. The 1940 MW plant will have
reached the end of its allocated
running hours under the EUs Large
Combustion Plant Directive.
The largest biomass power station
in the world was shut down by
a re which engulfed several
thousand tonnes of wood pellets.
The 750 MW plant at
Tilbury in the UK, run by RWE
npower, had only been fully
operational for a few weeks when
the re broke out earlier this month.
Of the plants three units, one
is expected back online in April
while the other two, which were
directly affected by the re, are not
expected to be operational until July.
EC in talks with Russia to free
up Baltic electricity island
Polish utility Enea is considering a
joint venture with Polands largest
gas company gas PGNiG to build
a series of gas red power plants.
Enea chairman Maciej Owczarek
said that the companies were
considering building not one, but
several gas-red power plants.
Owczarek also said that Enea was
looking into shale gas opportunities
Poland has the largest reserves
of shale gas in Europe and is the
EUs most pro-shale advocate.
It would be unreasonable
for Enea to remain completely
disengaged from shale gas, he
said, but added: We shouldnt
rush with the decision.
Enea targets gas
joint venture deal
German fury at solar subsidy cuts plan
Scotland may extend the life of the
countrys two nuclear power plants
Torness and Hunterston, which are
operated by EDF to help the tran-
sition to producing all of its electric-
ity from renewable sources by 2020.
The Scottish government said
it still plans to phase out nuclear
power and rely on cleaner thermal
energy to reduce carbon emissions,
adding it was on track to meet
the target in eight years time.
This does not preclude extending
the operating life of Scotlands
existing nuclear stations to help
maintain security of supply over
the next decade, it said. Subject
to the relevant safety cases being
made, the government would not
oppose operating life extension
applications at these sites.
Scotlands nuclear policy
differs from that of the UK
government, which has agreed
to build more power stations as
part of its strategy of meeting EU
targets to cut carbon emissions.
EDF wants to extend the
operating life of Torness and
Hunterston by at least ve years.
Scotland may extend nuclear
plants to ease renewable switch
Ukraine has opened up its shale
gas reserves to exploration, a
move that could help reduce
its heavy dependence on increas-
ingly expensive gas imports from
its eastern neighbour Russia.
The Ukrainian government said
it would hold two tenders for rights
to explore for unconventional gas in
two vast areas, one in the east of the
country and the other in the west.
Ukraine is one of several European
countries eager to replicate
the shale gas boom in the US.
Ukraine green lights shale exploration
Fire shuts down
worlds biggest
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March 2012 - PEi
Several New Zealand renewable
power projects are scheduled
to begin construction this year.
Industrial Info is currently
tracking 25 New Zealand
renewable projects in the plan-
ning and engineering phase
that are scheduled to begin con-
struction from 2012 onwards.
The projects total more than
$4.87bn in investment value and
indicate that New Zea-
land is predominately invest-
ing in wind, geothermal and
hydro generation projects.
Hydropower currently accounts
for about 54 per cent of New Zea-
lands generation capacity. How-
ever, looking forward, it is wind
energy projects that lead in terms
of number and project invest-
ment value. There are currently
13 wind farms in the planning and
engineering phase, totalling more
than $3.2bn, that are scheduled
to begin construction in 2012-13.
There are eight major hydro
projects scheduled to begin con-
struction that total about $1.3bn,
and four proposed geothermal en-
ergy projects that represent more
than $920m in investment value.
The largest renewable energy
project in New Zealands develop-
ment pipeline is Genesis Energys
600 MW Castle Hill Windfarm.
Australia: AGL Energy is to take
full control of Australias largest
coal plant, buying out Japans Tepco
and investment funds for A$448m
($480m). AGL already owns a one-
third stake in the Loy Yang A power
station and an attached coal mine.
Australia: The countrys coal
industry has called on the New
South Wales state government to
establish a clear strategy for power
generation that includes developing
low emissions technology to provide
certainty for industry investment
and long-term government planning.
China: US-based Duke Energy and
Chinas Huaneng Group have signed
a three-year research co-operation
agreement on advanced coal and
carbon capture technologies for
Chinese power plants.
China: The government has
cancelled funding for an electricity
project in Sudan as it has lost
collateral for the loan, in the form of
oil supply, following the separation
of Sudan and South Sudan. Sudans
total oil resources have decreased
75 per cent after the separation with
oil-rich South Sudan.
India: Adani Enterprises has signed
ve deals to supply a total of
4 million tonnes of imported coal
to NTPC, Indias countrys largest
power company. Adani will supply
NTPCs 14 power stations across India
between this month and June 2012.
India: The government is set to
approve a plan to impose a 19 per
cent duty on power generation
imports to help local manufacturers
Bharat Heavy Electricals and Larsen
& Toubro compete for orders with
Chinese rivals.
Indonesia: Two new units have
been commissioned at Tanjung Jati
B coal red power plant in Central
Java. Operated by PT PLN, Indonesias
state-owned utility, the units will
provide 1320 MW of capacity.
Korea: Hitachi and its consortium
partner Daelim Industrial have
received a $745.7 million order to
install two energy-efcient coal red
facilities, with a generation capacity
of 1.05 million kilowatts each, at a
plant run by Korea Western Power.
Malaysia: Conglomerate Sime Darby
is considering buying the 1400
MW coal red Jimah power plant
for more than $364m. The plant is
held under Jimah Energy Ventures
Holdings, whose majority 70 per cent
shareholder is Jimah Teknik.
New Zealand to spend $4.8bn
on 25 renewables projects
An industry body for Japans
steelmakers, the nations biggest
electricity users, has urged the ear-
ly restart of nuclear power plants.
The Japan Iron and Steel
Federation fears that potential
power cuts and higher electricity
charges will further squeeze a sector
already reeling from the strong yen.
Big businesses have reacted
furiously to plans by Tokyo Electric
Power Co, or Tepco, to raise
charges, but had refrained from
calling for the restart of reactors,
wary of an angry response from
a public worried about nuclear
safety following the Fukushima
radiation crisis of year ago.
Japan steelmakers
urge nuclear start
Indonesian state electricity utility
PT PLN will start operations of a new
mine-mouth coal-red power plant
in South Kalimantan later this year.
This will be the countrys
third mine-mouth coal red
power plant and is estimated
to cost IDR1.3trn ($143m).
PLN intends to build three other
mine-mouth plants in Sumatra at an
estimated cost of IDR26tn ($2.86bn).
The plants include South Sumatra
9, South Sumatra and Jambi
and are aiming to achieve a total
capacity of 7300 MW by 2020
in a bid to optimise coal usage.
Indonesia plans trio of mine-mouth
power stations at a cost of $2.86bn
Alstom has clinched a $1.10bn
contract as part of a consortium
that will build a coal red power
plant in Tanjung Bin, Malaysia,
its second sizable power plant deal
in the country in less than a year.
The contract is for a
supercritical coal red plant.
These plants operate at a higher
temperature than regular coal plants,
which improves their efciency.
The other consortium
members are Malaysian building
materials company Mudajaya and
construction rm Shin Eversendai.
BP plans to withdraw from a venture
seeking Australian government funds
to build a solar power generation
project in the state of New South Wales.
Weve indicated that we wish
to leave the consortium and that
we wont be part of the new bid
process, said Jamie Jardine, a
Melbourne-based spokesman for BP.
BP, Fotowatio Renewable Ven-
tures and Pacic Hydro Pty,
which won A$306.5m ($329m) in
Australian funds last year to build
the Moree solar farm, missed a
December nancing deadline.
That prompted the government
to reopen the competition to other
bidders, including AGL Energy.
The solar industry faces
oversupply and price pres-
sures after Chinese competi-
tors increased production.
BP and its partners in the
proposed A$923 million solar
photovoltaic plant had failed to
sign power-supply agreements
needed to advance with the project.
The government has said the
Moree venture will still be eligible
to bid for the funds and show it is
BP quits Australian solar deal
as nancing deadline missed
Two 220 MW geothermal
power plants are to be built on
Sumatra Island in Indonesia by
GDF Suez and International
Power joint venture IPR-GDF.
The two companies, along with
project partners PT Supreme
Energy and Sumitomo Corporation,
today signed 30-year power purchase
agreements for the plants with PLN,
the state-owned utility of Indonesia.
IPR-GDF Suez Asia is one of
Indonesias leading power producers,
with 1280 MW of operating assets.
Two geothermal plants set for Sumatra
Alstom wins $1bn
Malaysian contract
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AMERICAS
WORLD NEWS
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March 2012 - PEi
A federal appeals court has ruled
that the owners of the San Juan
Generating Station, a huge coal
red power plant in New Mexico,
US must continue with plans to
install strong pollution controls.
Several Californian cities
purchase electricity from the plant.
The federal Environmental
Protection Agency ruled last year
that the plant was required to in-
stall strong selective catalytic
reduction, or SCR, equipment
to cut its yearly output of 16 000
tonnes of ozone, ne particulate
matter and other pollutants in
order to meet federal standards.
The plants owner, energy com-
pany PNM, is appealing the EPA
ruling, and the company and New
Mexico Governor Susana Marti-
nez had motioned to delay the
implementation of those con-
trols until the appeal is decided.
But the US 10th Circuit
Court of Appeals denied the
motion in a ruling that ran
to only a couple of sentences.
The ruling came on the heels
of a Sierra Club report that found
that at the same time PNM was
ghting the more costly pollu-
tion controls, it had dramatically
increased its rates and its prots,
while not meeting state energy-
efciency and renewables targets.
Argentina: Energy demand in
Argentina hit a new record when
it reached 396.4 GWh in February.
The previous record was 390.4 GWh,
which was reached on 21 January.
Brazil: The Ministry of Mines and
Energy has approved testing of units
1 and 2 at the Victor Baptista Adami
small-scale hydroelectric power
plant. Each unit has a capacity of
12.5 MW.
Brazil: GE plans to build a $35m wind
turbine assembly plant in Brazil.
The plant is due to be built during
the next 6 to 12 months. GE has
secured about one-fth of the supply
contracts for Brazilian wind projects.
Canada: Algonquin Power has
announced a 25 year power purchase
agreement with SaskPower for a
177 MW wind farm. The $355m
project will be in Chaplin,
Saskatchewan, and is due to be
completed by 2016.
Canada: Mustus Energy is to work
with Lockheed Martin to build a 41.5
MW biomass power plant in Alberta,
Canada. The project, which is due to
start this Spring and be completed by
2013, will provide enough energy to
power over 30 000 Canadian homes.
Chile: The Chilean government
wants to add 8000 MW of electricity
to the national grid by 2020, while
guaranteeing clean, secure and viable
energy supply. President Sebastian
Pinera said without clean electricity
Chile will not become a developed
country.
Mexico: Mexican wind power
capacity is set to rise from 569 MW
to about 2000 MW by the end of
this year. By 2014 the generation
will be over 2500 MW, said
Leopoldo Rodrguez, president of the
Mexican Association of Wind Energy.
Investment in Mexicos wind power
sector currently stands at $2bn.
US: First Solar Inc is to build a 26 MW
solar power plant for power producer
NRG Energy Inc in Arizona. The plant,
the Avra Valley solar project, will be
built by First Solar and use the US
companys thin lm panels mounted
on a tracker that tilts the panels to
follow the suns arc.
US: Tri-State has entered into a
20 year power purchase agreement
to buy electricity from the 67 MW
Colorado Highlands wind project. The
facility will be developed by Colorado
Highlands Wind, which is jointly
owned by Alliance Power and GE
Energy Financial Services.
US coal station mandated to
install pollution controls
Brazils largest non-government
electricity generation and distribution
utilities, CPFL, is to buy Bons Ventos
Geradora de Energia, a Brazilian
wind-power company, for $620m.
Bons Ventos owns four
wind farms which have a
licensed capacity of 157.5 MW.
The wind farms are located in
Brazils northeastern coast state
of Ceara and have contracts with
Eletrobras, Brazils state-con-
trolled electricity utility holding
company, to supply power for 20 years.
US power company Dominion
Resources is proposing to spend $1bn
to build a natural-gas powered power
plant in South-Central Virginia.
The Virginia based power
company said it plans to seek
State Corporation Commission ap-
proval for the plant, planned for
Brunswick County, later this year.
The proposed plant, with an
estimated capacity of more than
1.3 GW, is targeted for completion
in summer 2016 and is expected
to produce enough electricity to
power more than 325 000 homes.
The output would replace elec-
tricity from two coal red units that
are likely to be retired by 2016.
Dominion plans
$1bn gas plant
Wartsila has signed an operation &
maintenance agreement for the new
380 MW Suape II power plant in Brazil.
The plant is the biggest ever
built by Finlands Wartsila and is
equipped with 17 of the companys
20-cylinder, 46F engines. It was
inaugurated at the end of last year.
The three-year O&M deal is with
domestic power rm Energtica
Suape II and a Wartsila team will
be permanently on site to operate
and maintain the facility, which
is an intermediate-load plant de-
signed to feed electricity to the
national grid when uctuations in
the supply of hydropower create
a need for compensatory capacity.
Wartsila in O&M deal for biggest plant
Apple has revealed ambi-
tious plans to build Ameri-
cas largest solar panel farm.
The rm hopes to use renewable
energy to power a vast new data
centre in North Carolina using
the 100 acre array of panels.
The Maiden data centre helps power
Apples online operations, including
the iTunes store that delivers
music and apps to the rms users.
Our goal is to run the Maiden
facility with high percentage
renewable energy mix, and we
have major projects under way to
achieve this including building
the nations largest end user-owned
solar array and building the largest
non-utility fuel cell installation
in the United States, Apple said.
When completed, the 100-acre,
20 MW facility will supply 42 million
kWh of clean, renewable energy
annually. However, Apples site is
still dwarfed by the worlds largest
array, Golmud Solar Park in China,
which produces 200 MW of power.
The solar array was revealed as
part of a raft of green announcements
in Apples 2012 facilties report.
Apple set to build biggest US
solar farm to run data centre
Spanish utility Iberdrola has
completed the construction of
the 304 MW Blue Creek wind
farm located in the Van Wert
and Paulding Counties of Ohio.
The wind farm employs 152 units
of Gamesa G90 turbines which
each have a capacity of 2 MW.
Iberdrola signed a power pur-
chase agreement with US com-
pany FirstEnergy Solutions in Fe-
burary last year for 100 MW of
the total output of the Blue Creek
project over the next 20 years.
Iberdrola nishes 304 MW wind farm
CPFL pays $620m
for Brazilian
wind farm quartet
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COMPANIES
WORLD NEWS
16 Visit www.peimagazine.com for more news
March 2012 - PEi
Iraqs cabinet has approved the
award of a $363m contract to
build a 1014 MW gas power
plant at Baiji in Salah al-Din
governorate to Egypts Orascom
Construction Industries (OCI).
At present, we have received
cabinet approval, but have yet to
sign the nal contract. We expect to
sign in the near future, said OCI.
The gas red power plant will
be constructed on an engineering,
procurement and construction
basis. Baiji is 180 kilometres
north of Baghdad and is home to
the countrys largest oil renery.
The facility will comprise six
169 MW turbines. The ministry
secured the turbines from
Germanys Siemens and they are
not included in the construction
cost. The project is expected
to be completed in 21 months.
The power plant contract
has encouraged the Egyptian
company to bolster its presence in
Iraq. We have decided to target
Iraqs infrastructure development
programme, which has now become
a key focus for the group, said OCI.
As part of this strategy, OCI
has established a permanent
branch in Baghdad to pursue other
major projects in the country,
specically in power generation,
water, and large-scale oil and gas.
Babcock: The UK nuclear support
services company has opened an
ofce in Lyon where it will work
with EDFs nuclear decommissioning
and environmental division on the
dismantling of gas cooled graphite
reactors at Chinon and St Laurent.
E.ON: The UKs Department of
Energy has approved plans from
E.ON for a 150 MW biomass power
station in Bristol. The plant will be
fuelled mainly by imported wood,
energy crops and local waste wood.
ExxonMobil: ExxonMobil is in talks
over drilling for shale gas in Turkey.
Turkey is said to have 15 trillion
cubic metres of shale gas and the
countrys state energy company
TPAO has held discussions with
ExxonMobil on exploration.
Exelon: Constellation Energy and
Exelon Corp have completed their
$11.2bn merger. The deal was
announced last year but it took
until 12 March for all the required
regulatory approvals to be granted.
The deal was the third-biggest of
2011 in the US.
CEZ: Czech Republic company CEZ
returned a better-than-expected
new prot for 2011 of CZK 40.8bn
($2.1bn). It said its priority for 2012
was securing extra units at Temelin
nuclear power plant.
Gamesa: Gamesa is to sell four
wind farms in the US to Canadas
Algonquin Power & Utilities Corp for
$900m. The farms are Pocahontas
Prairie (80 MW) in Iowa; Sandy Ridge
(50 MW) in Pennsylvania; Senate
(150 MW) in Texas; and Minonk
(200 MW) in Illinois.
GE: GE is to overhaul an ageing
power station in Texas and turn it
into a combined cycle plant. When
the Marble Falls plant goes online,
due in 2014, it will be the rst
such plant in the Electric Reliability
Council of Texas region that meets
the latest Environmental Protection
Agency greenhouse gas regulations.
RWE: The company said it had taken
a $1bn hit in 2011 from the German
governments decision to withdraw
from nuclear power. The groups
operating result dropped 24 per cent
to 5.8bn.
Wartsila: Finlands Wartsila
will supply the engineering and
generating equipment for a
new power plant in Alaska. The
$106m order has been placed by
Alaksan utility Matanuska Electric
Association.
Egypts OCI gets approval for
$363m Iraq gas power plant
Indias Tata Power has formed
an equal joint venture with
South African coal producer Exxaro
Resources to develop and operate
power projects in the African nation.
Tata Power will form the new
company, named Cennergi, through
its unit Khopoli Investments.
Cennergi will initially focus
on renewable energy in South
Africa and will later have projects
in Botswana and Namibia.
Exxaro chief executive Sipho Nkosi
said: Cennergi has been created by
companies from developing nations
to serve developing nations. It
will play a key role in the African
electricity generation market.
Tata in power deal
for South Africa
SKF has secured a $52.25m
order from Danish wind tur-
bine manufacturer Vestas for the
delivery of main shaft solutions to
the Vestas V112-3MW turbine.
SKF president Tom John-
stone said: Our knowledge and
experience in wind energy
enabled us to develop a unique
solution for this new turbine. Wind
energy is a key industry for the
SKF Group and we continue to in-
vest in this business by developing
new solutions to enable more cost-
effective wind energy generation.
SKF provides solutions that
optimise the reliability and
performance of wind turbine designs.
SKF clinches $52m Vestas supply order
The Ashalim Sun PV consortium has
won a tender to build and operate a
30 MW solar photovoltaic power
plant in Israels southern Negev desert.
Ashalim Sun is a 50:50
joint venture between Clal Sun
and SunEdison, which is the
solar project development unit
of MEMC Electronic Materials.
The solar power plant, which will
begin to operate in the rst half of
2015, will be one of the largest of its
kind in the world, the ministry said.
This plant will be built
besides two thermal solar plants
in Ashalim, which will each
provide 110 MW of power.
Together, the three plants will
account for 2 per cent of Israels
electricity generation and repre-
sent a milestone on the way to
Israel achieving its goal of 10 per
cent of electricity production from
renewable resources by 2020.
Ashalim Sun will operate the
plant for 27 years, after which the
government will take ownership.
Ashalim Sun offered a price
of 0.5365 shekels (US14 cents)
per kilowatt hour of electricity.
Ashalim Sun wins tender for
Israeli desert solar project
ABB has signed a deal to partner with
Inocean to establish an engineering
services joint venture that specialises
in delivering offshore wind projects.
The new entity, ABB Inocean,
will be based in Gothenburg, Sweden.
ABB will own the majority
stake in the company, which
will undertake design, engineering
and project management activities.
The new organisation is
expected to strengthen ABBs
expertise in the offshore wind
power integration business.
ABB in joint venture with Inocean
Doosan Heavy
wins $1.3bn boiler
order in India
Doosan Heavy Industries &
Construction has announced
$1.3bn of orders to build ve
boilers for Indian power plants.
The 800 MW boilers will be
installed at NTPC facilities by 2016.
Three will be used at the Kudgi
power plant in Karnataka state in In-
dias southwest, and two in the Lara fa-
cility in Chhattisgarh, central India.
India is adding electricity
generating capacity to support
economic growth and may build
25 GW of plants a year until 2020.
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March 2012 - PEi
T
he landscape of mergers and acquisitions
(M&A) within the global power utilities
market is changing like never before.
And, for the rst time, traditionally dominant
regions are being outpaced by the worlds
emerging markets.
These are the conclusions of analysts at
PricewaterhouseCoopers (PwC) in their annual
Power Deals report, which examines M&A
trends over the past 12 months in the global
power utilities market. The report covers deals
involving power generation, transmission
and distribution, natural gas transmission,
distribution and storage, and energy retail.
Renewable energy deals are excluded (they
are featured in PwCs publication Renewables
Deals). And, for the rst time, the report looks
at projections for the coming year.
Firstly, lets look at the headline gures.
The worldwide total for M&A deals in the
power sector was $174.4 billion, up 16 per
cent year-on-year. Yet the number of deals
was down 13 per cent from 670 in 2010
to 583 last year. This broke down as 468
electricity deals and 115 involving gas. Of
the 583 total, 436 were domestic and 147
across borders.
A year ago, the value of deals had been
heading towards the highs of 200607, the
last peak of M&A activity before the credit
crunch suddenly kicked in. But at the start of
2012 this bounce-back has stalled, with deal
values currently near the credit crunch lows
of 2009.
What has caused this? One of the major
drivers is the crisis in the eurozone, which
PwC says will continue to cloud the deal
environment this year. The uncertainties over
the euro with Greeces debt crisis at their
heart caused M&A activity in the region
to shudder to a halt as investors reassessed
their options in the face of fears of recession
and the worst-case scenario of a complete
collapse of the currency.
European deals completed over 2011
totalled 142, a drop from the 190 of 2010.
The value of these deals was $39.8 billion,
a signicant fall from the 2010 gure of
$70.3 billion.
Yet the outlook for Europe is not so uniformly
bleak: while deal value in 2011 was much
lower than 2010, the number of deals is still
considerable and PwC says that companies
remain on the lookout for opportunities.
power
report
GLOBAL POWER M&A DEALS
Kelvin Ross, Deputy Editor
Mixed fortunes for
power deal players
The worldwide total for merger and acquisition deals in the power sector in 2011 was $174.4 billion, up 16 per cent from 2010. But the number of deals dropped from 670 in 2010 to 583 last year.
The trends in merger & acquisitions involving power utilities is changing, with radically divergent trends
apparent not just for East and West, but also for the two sides of the Atlantic.
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March 2012 - PEi
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power
report
EUROPES CRISIS SPURS DEALMAKING
A characteristic of European deals is the need for many utilities
to shed assets in a bid to revive balance sheets that are mired in
the red. The biggest European deal was E.ONs sale of Central
Networks to US company PPL Corporation for $6.5 billion, which
was part of E.ONs efforts to divest itself of assets worth 15 billion
($20 billion) by the end of next year. One of Europes biggest deals
this year is likely to be E.ONs sale of its gas transmission operation
in Germany, Open Grid Europe.
Fellow German utility RWE wants to claw back 9 billion and a
key stepping stone to this was the September sale of a 74.9 per cent
stake in German electricity transmission system operator Amprion.
Future deals to hit this target are likely to be the sale of its gas grid
operator in the Czech Republic, Net4Gas, a stake in its Berlin water
company Berlinwasser and parts or all of its Dea upstream gas
and oil business.
Meanwhile in Sweden, Vattenfall drew up a consolidation
blueprint with the ultimate aim of refocusing its business domestically
and in Germany. This strategy got underway with the agreed sale
of Nuon in Belgium to Italys Eni, and the sale of its Polish heat,
electricity distribution and network services to PGNiG and Tauron.
Vattenfall ended 2011 with a deal to sell its electricity and heating
distribution assets in Finland to a Goldman Sachs/3i consortium for
1.54 billion. A further deal of note was the decision by Frances
EDF to increase its stake in Italian company Edison to 78.95 per
cent at a cost of $6.3 billion.
Looking to the year ahead, PwC predicts that, unsurprisingly, the
eurozone crisis will continue to have an impact on M&A activity,
although not inevitably in a negative way.
It is unlikely to halt the divestment programmes of the major utility
companies, said the report.
The underlying fundamentals for such deals remain strong.
Companies need to continue to reposition their fuel and value chain
mix and to seek out growth markets. They have big investment
requirements and need to manage leverage. Debt markets remain
constrained and, as RWEs late 2011 share sale showed, the equity
markets are likely to only provide a part answer. Raising capital
from disposals remains an important priority and is likely to remain a
strong feature of power deals in 2012.
Indeed, PwC states that the eurozone crisis will act as a spur for
dealmaking, pointing to potential sales of state-owned assets in
Ireland and Italy, including the part-privatisation of Irish gas company
Bord Gais.
PwC also spotlights European power grid operator TenneT as being
a prime candidate for sell off. TenneT is struggling to cope with demands
being placed on it by the state to link Germanys many wind farms to the
grid, a move which is critical since the Merkel governments decision
to withdraw from nuclear power.
For those companies looking to ease balance sheet woes, joint
venture project and investment relationships are likely to gure
strongly in 2012. Last year RWE held talks with Gazprom about
the possibility of the two rms covering gas and coal red plant in
Germany, the Netherlands and the UK. This deal failed to come to
fruition in 2011 but PwC states that it remains a distinct possibility
for this year.
A further trend peculiar to Europe relates to energy prices, which
PwC says have become a hot issue as the cost of decarbonisation
PEi - March 2012 www.peimagazine.com 21
For more information, enter 11 at pei.hotims.com
power
report
GLOBAL POWER M&A DEALS
bites and the economic situation puts pressure
on customer budgets. PwC states that
concerns about energy prices have created
a trilemma in the triangle that has to be
balanced between affordability, sustainability
and security of supply. This is adding to the
uncertainty faced by dealmakers and investors.
CHINA LOOKS ABROAD
But the European trend of companies and
governments seeking to shed assets means
opportunities for other acquisition-hungry
regions of the world and, in particular, China.
The most notable deal was China Three
Gorges $3.5 billion bid for a 21.35 per
cent stake in Energias de Portugal (EDP) a
move PwC sees as symptomatic of increased
interest in expansion into overseas power
markets by Chinese generating companies.
The EDP deal will give China Three Gorges a
foothold in the boom market of Brazil, a tactic
mirrored by Chinas State Grid Corporations
bid for a 25 per cent stake in Portuguese
power grid company REN. But expansion
in the fast growing Brazilian market was an
Concerns about energy
prices have created a
trilemma in the triangle
that has to be balanced
between affordability,
sustainability and security
of supply
PwC believes that the crisis in the eurozone will act as a spur for dealmaking.
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March 2012 - PEi
power
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important focus for European companies as well. E.ON lost out to
China Three Gorges for the EDP deal. But this disappointment was
tempered when at the start of 2012 it entered into an agreement
to take a 10 per cent stake in Brazils MPX Energia. This deal is
expected to lead to major investment by both parties into new power
generation capacity. Meanwhile, Spains Iberdrola bought Brazilian
distribution company Elektro for $2.9 billion.
This year, Chinese companies appetite for western markets is
expected not only to continue but to intensify at some considerable
pace. And it is not just the Chinese who are pursuing this go
abroad strategy. Japans power sector may still be reeling from the
Fukushima disaster a year ago, but the countrys dealmakers are
working apace.
The second-largest Asia-Pacic deal of 2011 was the
$1.2 billion distress sale by Grifn Energy of two coal red power
plants in Australia to Kansai Electric Power and Sumitomo Corporation.
Marubeni Corporation clinched a 40 per cent stake in Queensland
gas distribution network Allgas, and Itochu Corporation bought a
33 per cent share of Belgian electricity rm T-Power.
Of course, the Japanese company most affected by last years
earthquake and tsunami is Fukushima operator Tokyo Electric Power
Company (Tepco), and on the M&A front its future is suitably cloudy.
The company has already started asset sales and these are likely to
accelerate this year.
The total number of deals transacted in the Asia-Pacic region in
2011 was 156, just a 3 per cent drop on the 160 done a year
earlier. The 2011 deal value was $14.1 billion, compared with
$19.7 billion.
NORTH AMERICA STAYS BUOYANT
If there is a constant between the 2011 M&A activity and that
of previous years, it is that the North American market remains
buoyant. American deals dominated the top ten as US companies
moved to gain scale. In the US, 117 M&A deals done last year, a
6 per cent increase of the 110 carried out in 2010. However, the
value of these deals has rocketed 119 per cent, from $49 billion in
2010 to $107.5 billion.
The year started with the $25.8 billion merger between Duke
Energy and Progress Energy and was followed by a strong ow
of other deals, including a proposed merger between Exelon and
Constellation and two mega mergers in the gas pipeline sector.
Indeed, it is the rst time that all-US deals accounted for six out of
the ten largest deals in the PwC report.
The Duke/Progress deal will create the largest utility group in
the US, with around 7.1 million electricity customers and 57 GW
of generating capacity from coal, oil, natural gas, nuclear and
renewables. But the biggest deal in the US or anywhere else
in the world was Kinder Morgans $37.9 billion purchase of
the gas pipeline assets of El Paso. PwC notes that the gas supply
glut in the US, caused by the expansion of shale and other forms
of unconventional gas, has changed the economics of power
generation and gas transportation.
Low gas prices combined with lower power demand have put
strains on power generation, it states. Many generation plants are
under-utilised in a changed supply-demand and price environment.
Sales of gas red plant have added to smaller deal ow. The
changed gas environment has created opportunities for, but has also
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PEi - March 2012 www.peimagazine.com 23
power
report
GLOBAL POWER M&A DEALS
put strains on, gas pipeline operators. Pipeline
businesses deliver stable cash ows, often high
yield, but the inter-regional differences that are
the basis of pipelines ows have been altered
in a different supply and price environment.
At the same time, more sources of supply
have required more pipeline investment. As a
result, greater spread and size is being sought
by companies. The Kinder Morgan/El Paso
deal highlighted this trend, says PwC.
Over the next nine months, buy
versus build will be the mantra for US
generation, according to PwC, as current
market conditions make this the more
economical option.
For more information, enter 13 at pei.hotims.com
The top ten global M&A deals in the power utilities sector are dominated by activity in the US. The Duke/Progress merger - number two on the list - will create the largest utility group in the US.
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24 www.peimagazine.com
March 2012 - PEi
power
report
GLOBAL POWER M&A DEALS
The quest for scale and balance will also
continue among US power rms. Last year saw
a rush of major deals as US companies sought
to strengthen balance sheets and rebalance
regulated versus non-regulated returns. These
deal imperatives, predicts PwC, will continue
into 2012. Scope remains for a continued ow
of deals in the US, but its strength will depend on
state regulators. The big 2011 US deals are still
to get over the nish line in terms of regulatory
clearance. Companies will be looking closely
at the reaction of regulators before weighing up
their next moves, states PwC.
Given that merger activity is now at the same
level as it was in 200809, it might be tempting
to draw some parallels between the nancial
climates of the two times, but PwC cautions
against this. The credit crunch, it states, had
a denite focus, centred around the Lehman
crash. The current crisis, however, lacks an
equivalent big event focus a rear view mirror
event that can be seen as a turning point.
Instead there is ongoing material uncertainty.
ROLLING UNCERTAINTY FOR 2012
It is this rolling uncertainty that PwC says will
characterise deals throughout the next nine
months. Dealmakers are facing a perfect storm
of a fragmented liquidity landscape, uncertain
bank nance and no end in sight for an easing
of debt issuance. And yet PwC considers the
credit-crunch advice of if you dont have to be
in the market, stay out of the market does not
apply in 2012.
While no one knows if things will be better or
worse in six months time, in this environment,
perhaps paradoxically, a complete brake
on dealmaking makes less sense. If a deal
is highly strategic and mission critical, then
parties may feel it is worth doing if it can get
done. With the uncertainty over how long the
constraints will persist, its a brave bet to stay
out of the markets just in the hope that things
will improve.
PwC concludes that 2011 saw the global
M&A deal landscape signicantly change. In
the past, Europe and the US were the dominant
inuence on deal activity, it states. Now two
other important inuences are coming right to
the fore the involvement of very active Asia-
Pacic investors and the pace of growth markets
such as Brazil. Were also seeing markets move
at different speeds and in different directions.
Growth in emerging markets is contrasting with
recession in Europe. These different speeds will
provide opportunities for buyers able to exploit
cross-continental value opportunities.
The number and value of M&A deals in the North American rose last year, with US transactions dominating the global top ten mergers for 2011
The crisis in the eurozone was a key factor in European M&A deals falling signicantly both in value and in number
While the value of deals in the Asia-Pacic fell dramatically, their number dipped only slightly from 2010s gures
South and Central America saw a signicant rise in both the value and number of deals
PEi - March 2012 www.peimagazine.com 25
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Indias coal supply challenges
26 www.peimagazine.com
March 2012 - PEi
C
oal shortages experienced by generators last year are likely
to be a sign of things to come as it becomes clear that
domestic production cannot expand fast enough to meet the
huge additional demand from the rapid power expansion underway
in India at the moment.
The shortfall is leaving many projects without secure domestic
supplies, which is leading to cancellations, rising imports and
attempts by project developers to capture supply by moving upstream
into mine development at home and abroad.
Casualties to-date include companies like Reliance and Adani
Power, both of which halted planned capacity expansion last
year. Experts say up to $36 billion of investment is under question,
representing around 35 GW, with developers worried that plants
under construction across India may sit idle on completion because of
a lack of affordable, reliable domestic coal.
Financiers and project developers had been piling into the sector as
power demand ballooned alongside Indias rapid economic growth
of recent years. But the uncertainty over coal supply has started to
rattle nancial backers, with the Reserve Bank of India suggesting
banks freeze lines of credit to what it described as a distressed
sector.
The move followed months of warnings from nancial analysts
that systemic defaults loomed on coal plant loans, which could have
a destabilising impact on the Indian banking sector due to high
exposure.
IMPORTS ON THE RISE
The domestic shortage is drawing in imports, and in 2011 India
overtook China as the worlds biggest coal importer, while it remains
both the third-largest consumer and producer in the world after China
and the US.
Ofcial gures are not yet out but analysts estimate India imported
about 81 million tonnes of steam coal for its power plants in 2011,
up about 30 per cent on the year (see Figure 1).
Fortunately demand for imports from China fell last year, dampening
upward pressure on international prices from Indias additional
purchases. A further 40 million tonnes are expected to be cut from
Chinas import total this year as up to 200 million tonnes of extra
Coal shortage threatens
Indias power expansion plans
Indias desire to expand its coal red power generation base is running up against fuel supply
constraints from a state-dominated coal sector lacking investment and hampered by environmental
regulations and labour disputes.
Jeremy Bowden
Coal is a mainstay of Indias electricity sector, but are domestic shortages and a growing reliance on imports threatening its power generation capacity development?
Indias coal supply challenges
PEi - March 2012 www.peimagazine.com 27
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Indias coal supply challenges
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March 2012 - PEi
domestic production is brought online twice that added in 2011.
Last year Indonesia was Indias largest supplier, providing an
estimated 64 million tonnes of steam coal. However, total Indian
purchases were lower than many forecasts for the second half of
the year because of slowing activity in its $1.7 trillion economy.
KPMG estimates a domestic shortfall of 189 million tonnes a year by
2015, while the government expects imports of 194 million tonnes
alongside production of 770 million in 2017.
The Indian government is now estimating a total gap between
supply and demand of 142 million tonnes for the whole 201112
scal year, against coking and steam imports expected at around
115 million tonnes suggesting imports are not entirely making up for
the shortfall. This represents a major constraint on economic growth,
as well as power output. Import prices, which are variously put at
20-40 per cent above domestic levels, add expense thereby making
power projects less competitive.
To reach a targeted average economic growth rate of 9 per cent
per year for the next ve years, the government acknowledges it must
remove obstacles to domestic coal development.
In the meantime, Sriprakash Jaiswal, the minister of coal, has asked
the Ministry of Power to freeze the capacity of conrmed coal-based
power projects at 63 450 MW for the next ve years against an
original target of 96 178 MW by 2017.
The uncertainty means projects not included in that 65 450 MW
are now being cancelled or postponed, according to the Central
Electricity Authority. To help cope with the additional demand for coal
from all these new plants albeit reduced from earlier expectations
by over 30 GW the Prime Ministers ofce recently agreed that
Coal India Limited (CIL) could peg minimum supply at 80 per cent of
full deliveries for plants built after March 2009, along with 90 per
cent to plants built earlier.
CILs chairman and managing director, Ms Zohra Chatterji said in
February that the company was able to meet at least 80 per cent of
these new plants demand without importing, and so it may not need
to buy in the international market, which it appears reluctant to do.
However, Sanford C. Bernstein & Company said in a recent report
that it believes CIL will have to boost imports on government orders
and the threat of penalties should deliveries fall below 80 per cent.
The additional costs of imports by CIL can then be spread evenly
among end-users, with only a marginal impact on price. Buying the
fuel from CIL also eliminates the nancial risk to power producers of
importing coal directly.
HEALTHY RESERVES
The problem is not one of reserves. India is continuing to expand
its proven reserve base (see Figure 2) despite steadily increasing
production, and at current production rates of around 600 million
tonnes a year it has over 300 years worth of supply.
CIL claims it is new environmental regulations, above all, that are
hindering output growth. In 2011, Dr Manmohan Singh, Indias
prime minister, passed an order from the Ministry of Environment and
Forests restricting new mines in areas covering about 40 per cent
of CILs reserves. The Ministry of Coal, however, has questioned the
moves legitimacy and is pushing for it to be reduced to cover just
10 per cent of reserves.
In addition, the new rules mean that about 218 mines started
before 1994, and previously exempt from regulations, now require
environmental clearance.
The Confederation of Indian Industry says it now takes an average
of seven years to receive environment and forest approvals to start
mining. Worried about such delays and unable to secure supplies
from CIL, some Indian businesses have begun acquiring coal mines in
Indonesia, Mozambique and South Africa, a trend many call Indias
coal rush.
CIL too is attempting to acquire mines in South Africa, the United
States and Australia, but with little success so far.
However, concerns are increasingly being voiced over security
of imported supplies, especially with the Indonesian government
proposing to restrict exports of certain coal grades representing
about 40 per cent of total exports from January 2014 from mines
including those owned by Indian companies.
Casualties of the new environmental regulations also include
companies like Madanpur South Coal Company, which has already
sunk over $600 million into expanding a power plant and steel
factory in Chattisnagarh state in central India, but can no longer
depend on an assured coal supply from nearby mines around which
the project had been based.
In a business as usual scenario, CILs Chatterji said her company
would meet its 464 million tonnes production target in 201213,
rising to 556 million tonnes by 201617. But if all environmental
clearances were obtained for upcoming projects the company could
produce at least 615 million tonnes by then.
In response, the Ministry of Environment and Forests assured CIL in
January that it would indeed fast-track mine approvals, particularly for
capacity being added to operational mines, to ensure production can
rise by at least 25 million tonnes per year.
CIL has also been attempting to move up its domestic coal
prices nearer to international levels to boost investment and fund a
substantial wage hike for its workers. But under pressure from power
120
Steam coal imports
Total imports
100
80
60
40
20
0
2008 2009 2010 2011
Figure 1: Indias imports of steam coal rose 30 per cent in 2011 Source: IEA, EIA
Indias coal supply challenges
PEi - March 2012 www.peimagazine.com 29
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Indias coal supply challenges
30 www.peimagazine.com
March 2012 - PEi
producers the government reversed direct rises last year, forcing CIL
to absorb the higher wage costs anyway. Instead CIL has upgraded
and standardised its coal classication system, which would have
raised the price of coal by 2540 per cent to prevailing international
levels, but it has been forced to limit price increases to certain grades
of coal.
Both coal and power industry groups are also opposing the
proposed introduction of a 5 per cent import duty. They claim
that levying such a tax will make it all but impossible for project
developers to supply power protably using imported coal even
when it is mixed with cheaper domestic supply unless power prices
are allowed to rise. A levy of Rs50 ($1.1) per tonne on domestic coal
producers designed to fund renewable development was introduced
last year.
Indias fuel shortages are further exacerbated by a lack of trucking
and reliable railway networks to transport coal inland from ports.
Thermal coal stocks at ports may be as much as 9 million tonnes,
according to a February Citigroup report. Moreover, CILs biggest
coal elds are located in remote regions where Maoist rebels operate.
The guerrillas are known to target business activities for extortion and
to disrupt roads and railway lines used to transport coal. They are
also suspected of involvement in coal theft.
COAL SECTOR REFORM
CIL claims to be the worlds biggest coal producer, and is responsible
for more than 80 per cent of Indias total consumption. Last October,
it raised Rs152 billion for the government through a 10 per cent
initial public offering. And at the end of February CIL became
Indias most highly valued company, overtaking Reliance Industries.
However, the Indian government appears to be shying away from
further bold market-oriented reforms of coal production, despite calls
for the dismantling of CILs dominant position in order to attract private
investment and stimulate output.
The government has, however, pushed forward with some demand-
side reforms, including expanding the number of end-users entitled to
buy coal directly from CIL, which critics claim could further increase
demand while doing nothing for output. The authorities will also make
public the reasons why some companies are granted or denied coal,
make e-auctions of coal more systematic CIL currently sells about
10 per cent of annual production through spot and forward e-auctions
every year and auction coal blocks only after all environmental
clearances have been secured.
But these measures are not expected to solve the problem without
further supply-side reforms to stimulate production, including the
creation of a sales platform for CIL, the sale of surplus production
from captive mines and allowing all approved end-users to import.
The government has also put on hold a proposal to allow private
mining rms to bid for auctions of coal blocks, because it claims
state ownership of coal resources is enshrined under the Coal Mines
Nationalisation Act of 1973.
Indias Association of Power Producers says that the moves, as
they stand, will make the situation worse, and hopes to persuade
the government to at least give power projects rst priority in coal
allocation and allow captive block owners to sell coal, although
it backs the move to keep independent miners out of coal block
auctions. It has also pushed the government to lobby Indonesia to
reduce coal prices, but with little effect.
LAST YEARS COAL SHORTAGES
CIL was reported to have reduced supply to some new plants by up to
50 per cent in 2011, and at one point several domestic newspapers
reported that 11 power projects with a combined capacity of
16 000 MW had only a days stock left, citing the Central Electricity
Authority. But Prasenjit Pal, deputy general manager at Indias biggest
generator, state-run NTPC Limited, puts last years problems down to
labour disputes and practices, along with heavy rains.
The main problem is CIL delivers in ts and starts, he said,
explaining that in the run-up to 31 March each year CIL ramps up
output to meet annual targets, which overloads the transportation
system. In March, power plants stock up on coal in expectation of a
slowing of deliveries in the following months, he added. Everyone
[at CIL] relaxes after the March annual target deadline; its a seasonal
variation, he said. NTPC is not seeing any major shortages now
there have been bottlenecks but it is not a long-term problem its
more of a logistical problem, he said.
For fuel supply agreements signed prior to 2009, 90 per cent
supply was assured and in some cases 95 per cent has been
delivered. This surplus could be made available to new plants. Pal
added that this will not constrain power output at these established
Indias cool reserves (million tonnes) as of 1 January 2012 Source: CIL
TYPE OF COAL PROVEN INDICATED INFERRED TOTAL
Prime coking 4614.35 698.71 0 5313.06
Medium coking 12 572.52 12 001.32 1880.23 26 454.07
Semi-coking 482.16 1003.29 221.68 1707.13
Sub-total coking 17 669.03 13 703.32 2101.91 33 474.26
Non-coking:- 95 738.76 12 368.44 31 488.11 250 895.31
Tertiary coal 593.81 99.34 799.49* 1492.64
Grand total 114 001.60 137471.10 34 389.51 285 862.21
280000
27500
270000
265000
260000
255000
250000
245000
240000
01 Jan 06 01 Jan 07 01 Jan 08 01 Jan 09 01 Jan 10
Reserves
Figure 2: Growth in Indias proven coal reserves (million tonnes), 2006-2010 Source: CIL
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Indias coal supply challenges
PEi - March 2012 www.peimagazine.com 31
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plants because utilisation rates rarely exceed 90 per cent over the
long term because of maintenance and other variations in output.
He said NTPC had not delayed or suspended any capacity
expansion that had achieved nancial clearance because of coal
shortages, and was not concerned over the coal ministers reported
call to halt further projects. NTPC is the biggest power generator in
the country with capacity of about 34 000 MW, most of which is
coal-based. It has a very high capacity utilisation record, but had
to cut power production in autumn 2011 by 4000 MW because
of coal shortages. Pal said a record dip in production below peak
demand of 13 per cent in December happened for reasons unrelated
to coal supply.
Pal acknowledged independent power producers (IPPs) were still
facing supply issues, and that imports were on the rise. Larger IPPs
are looking to secure fuel supply by acquiring mines for captive use...
some of the smaller ones are hard pressed, he said, especially as
their nancial backers were seeking secured coal supplies. He said
international prices averaged about 20 per cent above domestic
levels, leaving proposed projects without domestic supply commitment
at a major disadvantage.
THE MASSIVE CHALLENGE OF INDIAS DEVELOPMENT
This nancial year, CILs rst quarter and third quarter prots were
up 54 per cent and 64 per cent on year respectively, with output
recovering to 110 million tonnes in Q3 from 93 million tonnes in Q2,
which was hit by heavy monsoon rains. The additional prots should
help increase investment in new mines and equipment, provided
environmental obstacles can be overcome.
Overall CIL reported a 2.7 per cent drop in production to
approximately 291 million tonnes in the nine months to 31 December
2011, although surging nancial year-end production now means
CILs government-set production target of 440 million tonnes is
expected to be achieved. The production target for nancial year
201213 is to rise by 5.5 per cent to 464 million tonnes.
The minister of coal said at a press conference in January that
it was not possible to increase coal output overnight, but that CIL
was doing its best. He added that he had asked CIL to deliver all
remaining pithead stocks to help meet customer needs, and is pushing
for a rapid modernisation and restructuring of the company.
Coal dominates the power sectors of both the worlds developing
giants India and China. Even with a strong central government,
and single-minded drive for production growth, China has found
that producing and delivering sufcient coal to keep pace with
unprecedented jumps in demand for energy has been difcult. Indias
cumbersome democracy, with all its checks and balances attempting
to accommodate a range of interests not least environmental
concerns, is nding it all but impossible, despite healthy reserves.
The face-off between environmentalists and developers is and
will be a key battleground for Indian policymakers for some time
to come, and the government faces a massive challenge as it
attempts to guide this emerging economy through its current rapid
development phase.
Sustainable power in Germany
I
n Germany, the sale and distribution of power is characterised by
the involvement of many municipal rms, or stadtwerke. The 1400
members of their umbrella organisation the Berlin-based Verband
kommunaler Unternehmen (VKU) sold 55 per cent of electricity used
in Germany last year and 68 per cent of the natural gas. Stadtwerke
also delivered 70 per cent of drinking water and 50 per cent of direct
heating services.
The trust that Germans place in these companies is underscored by
a recent poll, which found 81 per cent of respondents had positive
feelings about their own municipal energy company. In stark contrast,
large companies and politicians scored only 26 per cent and 14 per
cent, respectively. Energy customers appreciate stadtwerke for offering
direct contact with them and common ownership. About 70 per cent
of the polls respondents felt that privatising them would be a bad idea.
Many stadtwerke own generation facilities and the capacity of these
plants currently only about a tenth of Germanys total is set to double
by 2020. About 3.5 GW is under construction and another 5 GW is
already under planning.
In line with Germanys ambitious clean energy goals,
renewable energy will fuel about a third of the capacity under
construction. Cogeneration of heat and power already makes up
63 per cent of the stadtwerke power portfolio. Although Germany
currently lags its neighbours Denmark and the Netherlands by generating
only an eighth of its electricity through cogeneration, the country aims to
double its combined heat and power (CHP) capacity by 2020.
THE POTENTIAL FOR MUNICIPAL CLEAN ENERGY
Many experts expect stadtwerke to play a growing role in a shift from
fossil fuels and nuclear power towards renewables. Stadtwerke can
help build up renewable capacity such as photovoltaic (PV) panels and
optimise its output via smart local control systems.
It is already clear that digesters and incinerators for biomass, farm
residuals and household waste operate best at a municipal scale.
Municipalities have the necessary experience and can accommodate
quantities and diversity of materials that digesters at individual farms are
often too small to handle without subsidies.
Municipal-scale digester systems are also large enough to achieve
levels of efciency and reliability beyond the smaller units typically
installed at farms. In addition, stadtwerke often have district heating
distribution systems that can transport heat released during electricity
production to customers.
Municipal power utilities could further contribute to transforming
Germanys power sector through installing charge points to help
electrify transport. Their cogeneration systems are also well suited to
compensating variable output from PV systems and wind turbines. In
addition, as stadtwerke are public owned they can make the necessary
long-term investments.
CHALLENGES TO EXPANDING MUNICIPAL POWER SUPPLY
Yet stadtwerke while well qualied for a larger role in energy supply
face inevitable challenges in the shift from fossil fuels to renewable
32 www.peimagazine.com
March 2012 - PEi
Municipal rms embrace
cleaner power
The positive attitude most Germans have for their municipal utilities or stadtwerke could prove
key to their countrys transition to a sustainable energy supply.
Dr Jacob Klimstra
Storing hot water in large tanks is a cheap way for stadtwerke to decouple heat and power generation from CHP plants Source: EVN
Sustainable power in Germany
PEi - March 2012 www.peimagazine.com 33
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Sustainable power in Germany
34 www.peimagazine.com
March 2012 - PEi
feedstocks. This transition is already creating problems for the German
electricity transmission system. In some periods, uctuating renewable
sources sometimes produce hardly any electricity, leaving conventional
and nuclear power plants to meet the bulk of electricity needs. But during
periods of high wind and strong sunshine, output from wind turbines and
roof-mounted PV systems creates congestion in the transmission grid.
Large German central power plants, with output controlled by the
transmission system operators (TSOs), are often no longer the main
producers of electricity. Yet these big power plants have to maintain the
balance between electricity production and consumption to safeguard
the 50 Hz frequency.
To compensate for a decline in their frequency control capacity, TSOs
are now seeking direct access to stadtwerke distributed generators to
manage their output. If stadtwerke lose full control over their generating
units, these plants are likely to run for fewer hours and to provide a lower
return on investment. Uncertainty over local power plants operating
hours clearly makes a further expansion of stadtwerke power capacity
less attractive.
Users of the electricity transmission system normally pay a fee to the
TSOs. Municipal cogeneration systems are currently exempt, as they
are designed to deliver electricity to local customers without using high-
voltage transmission lines. But German TSOs now want to levy this fee
on all grid-connected equipment and legislation to impose this is in
preparation. Local generators will also be expected to act like large
central generators during contingencies such as short circuits and power
plant failures.
CLEARING THE WAY FOR STADTWERKE
German engineering ingenuity is likely to overcome these challenges.
Stadtwerke are already installing large hot water reservoirs to decouple
their CHP systems electricity generation and heat production. Storing
heat in large water tanks is relatively cheap and very effective. Electricity
can thus be produced at high cogeneration efciency when renewable
energy output and demand for heat are both low.
Fear that reduced running hours could cut investment returns on
stadtwerke equipment could be relieved by establishing compensation
mechanisms for such back-up facilities. Rapid back-up generators for
Renewables
Combined heat and power
Conventional
Power capacity German stadwerke:
10165 MW (2010)
The electricity generation capacity of the German stadtwerke sector in 2010
A biogas plant with two 1.2 MW units run by a German municipal authority Source: MWM
Sustainable power in Germany
PEi - March 2012 www.peimagazine.com 35
renewable energy sources have a legitimate claim to remuneration and
are likely to be a permanent feature of the power system; solutions such
as batteries are not expected to cover electricity needs by charging in
summer and discharging in darker seasons, so natural gas and biogas
remain by far the best long-term energy storage solution. Gas red
equipment also offers outstanding agility for stabilising electricity systems.
Customers have been shown to greatly value the stadtwerke model
for providing heat and electricity. Stadtwerke can ensure long-term
strategy for a reliable, efcient, environment-friendly, affordable and
accountable energy supply. It is to be hoped that national policymakers
will understand and appreciate the benets of the stadtwerke concept
and facilitate its further expansion.
Jacob Klimstra will chair a session on the future of stadtwerke power provision
on 14 June 2012 at POWER-GEN Europe in Cologne, Germany.
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The interior of a German biogas plant Source: MWM
Customers have been shown to greatly value
the stadtwerke model for providing heat and
power. Stadtwerke can ensure long-term strategy
for a reliable, efcient, environment-friendly,
affordable and accountable energy supply
Opinion: Europes power sector
36 www.peimagazine.com
March 2012 - PEi
S
ignicant transformation has epitomised the power industry over
the past two decades. As the sector strives to balance the needs
of consumers, governments and the environment, few could
have predicted the shape of the current energy mix and even fewer
would have thought we would still be so reliant on fossil fuels. Looking
back, industry commentators agree the most signicant trend has been
the industrys shift from being largely state-owned, centrally controlled
and dominated by large integrated companies to that of a liberalised
environment.
The deregulation that began in the early nineties, led primarily
by the UK and Norway, has since spread throughout Europe. Some
would suggest this has led to lower prices for the consumer and
the introduction of efciencies into the marketplace. Others would
argue that energy costs for end-users have actually risen in real
terms, that there continues to be a lack of true competition, and that
wider market uncertainty still hampers long-term investment in plant
and infrastructure.
Certainly further deregulation, the green agenda, the integration
of renewables into the electricity system, plus new uses of electricity
such as electric vehicles, bring fresh challenges, but they also create
exciting new opportunities, as do increasingly rapid advances in plant,
storage and Smart Grid technologies. As always, huge questions
remain over the future of nuclear energy and other fossil fuels that have
an impact on the environment.
The choices we make about
these technologies and the
way in which we manage the
whole electricity infrastructure,
potentially impacts the global
economy and our way of life.
MARKET LIBERALISATION
The unbundling of generation,
transmission, distribution
and supply (retail), as well
as the creation of energy
trading markets have
driven efciencies into the
marketplace, primarily
in respect of technology
efciencies and lower
wholesale prices via energy trading. Specically, combined-cycle gas
turbine generation has continued to blossom, with major advances in
both efciency and size.
Gas turbine technology provides a means of constructing power
plants in a relatively short time and at much lower cost, with a lower
The European power industry
continues its revolution
As POWER-GEN Europe celebrates its 20th anniversary, Nigel Blackaby, its conference director,
considers the trends that have shaped the European power industry over the past two decades and
how current developments might inuence its evolution in the next 20 years.
European Unions climate goals heavily rely on the successful commercialisation of CCS technology Source: Doosan Power Systems
Nigel Blackaby, conference director, POWER-GEN Europe
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Opinion: Europes power sector
38 www.peimagazine.com
March 2012 - PEi
environmental impact and increased efciency of fuel conversion
into electricity. At the same time, the change in the marketplace and
introduction of competition have accelerated its adoption, since new
investors look for propositions with shorter lead times, greater certainty
of outcomes and easier permitting.
This boost was critical in redressing the effects that the stagnation
in power consumption of the late 1980s and resulting over-capacities
had in directing investment away from infrastructure towards mergers
and acquisitions. Indeed, many utilities delayed investment in new
plant until the impact of liberalisation became clear and a number
of equipment manufacturers suffered as a result. That said, investment
decisions continue to be clouded by a myriad of factors today.
INVESTMENT DECISIONS
In unbundled markets, companies must consider their investments
carefully because every plant has a technical life of 4050 years,
meaning there is always the risk of a competitor emerging with a better
technology. The climate debate has added to this uncertainty, with the
landmark Kyoto agreement of 1997 and the European Unions (EU)
20-20-20 targets established in 200708 driving a major and long-
lasting shift in focus to addressing concerns around carbon dioxide
(CO
2
) and other greenhouse gas (GHG) emissions.
Carbon reduction and renewable energy legislation has been
enacted in the majority of European countries, prompting an increase
in the number of wood and biomass burning plants, as well as greater
interest in carbon capture and storage (CCS) technology. The major
players have programmes to develop green energy production and
have accepted they must now build power plants on the basis of clean
power. The utilities are increasingly recognising renewables, especially
wind and solar, as being the way forward.
However, regulatory boundaries continue to change in respect of
GHG emission restrictions, emission limits and carbon pricing; the
cost and availability of fuels; and the opposing positions being taken
on the development of nuclear since Fukushima. Some would argue
that nuclear has not been a realistic alternative since the disasters at
Harrisburg (Three Mile Island) in the US and Chernobyl in the Ukraine,
that coal is cheap but dirty and that despite gas turbines (and combined-
cycle) having developed to high efciency and capacity, the historical
rise in the cost of oil, and as a consequence gas, has countered these
benets to some degree.
Likewise, although shale gas is having a major impact on lowering
gas prices and ensuring security of supply, especially in the US, it
is facing signicant opposition in Europe because of concerns
surrounding the environmental impact of fracking. It is argued that
if shale gas projects were properly executed, there would be minimal
impact, making development of standards a priority and work has
already been started in the US by the Environmental Protection Agency.
THE EVOLVING ENERGY MIX
Moving forward, the industry must look much more closely at the
energy mix, because each type of fuel resource will have its place and
there will no doubt be other technologies emerging. Wave and tidal
power, for example, could be complementary, as will energy storage
via improved battery technology and pumped hydro. Both storage
and conversion of whatever the end product might be will be hugely
important because renewables, such as wind and solar, introduce
an increasing amount of non-synchronous energy into the electricity
system. This creates operational issues in the form of frequency stability,
voltage stability and provision of reserve.
Several pumped storage plants are being constructed in countries
such as Switzerland, Germany and Austria, for example, while most
countries are looking at how to address the need for large-scale
storage. In a fully sustainable world, natural gas and biogas will offer
the most economical solution for peaking power, covering contingency
demand and for bridging seasonal differences. For the time being,
there is a sufcient supply of natural gas to act as a buffer.
There is also the issue of expanding the grid and deploying new
transmission lines to accommodate renewables, especially offshore
renewables, such as wind, which are traditionally located some
distance from the load centres. Obtaining the necessary permits and
public acceptance is currently proving difcult.
Similarly, doubts persist as to whether CCS is a realistic option,
given public opposition to transporting CO
2
via pipeline and storing
it underground. Using excess energy from solar or wind to transform
CO
2
into methane could provide a viable alternative. Meanwhile, ue
gas cleaning and other emission reduction technologies will remain an
important aspect of the clean energy mix.
BUILDING A FLEXIBLE AND SUSTAINABLE SYSTEM
Another key development will be the Smart Grid, which is currently
undergoing a tremendous amount of development work, and will be
extremely important to the operation of electricity systems in the future.
There will also be parallel development of wind, solar and wave, as
well as geothermal and storage. Of course, the nancial crisis of the
past three or four years has meant not just a slowdown in electricity
demand, but has led to a reduced appetite for investment in renewables.
Nevertheless, the long-term outlook for renewables is good and there is
optimism that the EUs 2020 renewables target can be met.
For some countries with hydropower, wind and solar energy, a
decarbonised power industry is entirely possible. But for others, such as
the UK, Germany and the Netherlands, it remains a much more distant
prospect. That does not mean the industry cannot reduce the use of fossil
fuel to a large extent. Natural gas will be required as a buffer for times
when there is little wind or solar energy available, while development
of coal red plants incorporating CCS will need to advance if the
industry is to able to utilise the large reserves of coal that remain in an
Further deregulation, the green agenda,
the integration of renewables into the power
system, plus new uses of electricity, such as
electric vehicles, bring fresh challenges, but
also create exciting opportunities
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Maintenance, repair & overhaul
56 www.peimagazine.com
March 2012 - PEi
This collaboration between SABO and Sempell is an example of
how a company such as Tyco can deliver a comprehensive service
package using its expertise in service and the power industry.
Shutdowns at the Doel plant are large-scale projects and require
efcient service to keep downtime to a minimum. A smooth, efcient
shutdown was a key priority for the on-site engineers.
SABO is a leader in maintenance services for power, oil & gas
and petrochemical environments and has been a preferred supplier
for Electrabel for more than 15 years. This is the rst time that SABO
and Sempell have collaborated, combining expertise gained from
decades of experience operating in the power sector. Both brands
met Electrabels requirements for international certication, including
EMAS (Environmental Management and Audit Scheme) and ISO
14001.
The Electrabel contract is likely to reach 2 million this year, with
major shutdowns required every two years and more minor shutdowns
annually. The nal site, Doel 1, was shutdown in November, and
required 32 service technicians on site 24 hours a day.
A NEW FOCUS ON NUCLEAR MAINTENANCE
The recently increased scrutiny on regular maintenance operations
has not troubled experienced MRO suppliers that already exceed
standard industry regulations and guidelines. In the nuclear industry,
plants undergo exhaustive maintenance and shutdowns every two
years to maintain the necessary high standards of safety when
working with nuclear fuel.
Recent questions over the future of nuclear, for instance, have
not affected Tycos commitment to the industry or its investment in
innovation and quality programmes. With 50 years of experience in
the nuclear sector, the power generation industry is a critical segment
of the Tyco Flow Control business. Through commitment to all areas
of the power industry, including manufacturing and production as
well as maintenance, repair and service support, Tyco aims to meet
the needs of a changing and evolving industry.
IS THE FUTURE RENEWABLE?
The solar market in South Europe in particular, in Portugal and
Spain continues to grow. As solar technology develops, power
stations are seeing higher temperatures and pressures requiring more
demanding valves. Molten salt stations require high temperatures
and pressures, and can be corrosive on valves and pipelines.
Concentrated solar power (CSP) plants can reach temperatures
exceeding 500 C when sunlight is reected effectively off the giant
surrounding mirrors.
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Maintenance, repair & overhaul
PEi - March 2012 www.peimagazine.com 57
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Storage of solar power has long been one of the challenges in
making it a viable energy source. In Spain, a landmark in CSP
technology was achieved in 2011, with a plant that keeps generating
electricity even after dark. The cooling of the molten salt overnight
generates power in a steam form, and can keep providing power for
up to 15 hours after the sun sets.
Breakthroughs such as this demonstrate the achievements that can be
reached and point to a viable future with renewable energy sources.
With its heavy investment and testing in solar power, Spain is currently
the only country on target to meet Europes 20 per cent desired cut in
CO
2
emissions by 2020.
MRO is yet to become established in the edging renewables
sector. Power plants are so new that accepted guidelines on how
often maintenance is required are still to be determined. But, as
technology develops and renewable power becomes more efcient,
it is likely that renewables will gradually become more of a focus for the
MRO industry. Regular summits now share knowledge, best practice
and technological advances within the industry as businesses and
suppliers at all stages of the chain collaborate and progress together.
Europes carbon dioxide (CO
2
) targets can only be met through
exploring new technologies; and feed-in tariffs continue to stimulate
interest and investment.
For the foreseeable future, renewable energy sources are unlikely
to overtake nuclear and conventional power plants as Europes
primary source of energy generation. But events move quickly. In line
with demanding CO
2
targets, stimulus packages and feed-in tariffs,
more than 150 billion was invested in renewable energy projects
in 2010
6
. Ongoing support in maintenance and repair services will
ensure efciency in power generation, and that investments in new
technologies deliver results in the long term.
REFERENCES
1. Financial Times, Berlin bets big on renewable energy, 8 June 2011
2. CEPEX seminar, The future of nuclear power in a post-Fukushima
world, 19 October 2011
3. Bundesministerium fr Umwelt, Naturschutz und Reaktorsicherheit
Gesetz zur Neuregelung des Rechtsrahmens fr die Frderung der
Stromerzeugung aus erneuerbaren Energien, August 2011
4. WWF, Positive Energy: how renewable energy can transform the
UK by 2030, 25 October 2011
5. World Wind Energy Association (WWEA) Half-year Report 2011,
July 2011
6. Bloomberg New Energy Finance Global Trends In Renewable
Energy Investment, 2011
DIARY DATES
58 www.peimagazine.com
March 2012 - PEi
April
The 5th Asian Conference on
Power and Energy Systems
2nd 4th April
Phuket, Thailand
www.iasted.org/conferences/
home-768.html
New Zealand Wind Energy
Conference
2nd 4th April
Hamilton, New Zealand
http://windenergy.org.nz
Indo-Power 2012
4th 6th April
Jakarta, Indonesia
www.indo-power.com
Renewable Energy Conference
11th 12th April
Halifax, Canada
www.energyevent.ca
EWEA 2012
16th 19th April
Copenhagen, Denmark
http://events.ewea.org/
annual2012
Smart Electricity World Asia
16th 19th April
Singapore
www.terrapinn.com
Power & Electricity World Asia
16th 20th April
Singapore
www.terrapinn.com
The Utility Show Asia
16th 20th April
Singapore
www.terrapinn.com
International Conference on Smart
Grids
18th 21st April
Porto, Portugal
http://www.smartgreens.org
HydroVision India
19th 21st April
New Delhi, India
www.hydropowerindia.com
POWER-GEN India &
Central Asia
19th 21st April
New Delhi, India
www.power-genindia.com
Renewable Energy World India
19th 21st April
New Dehli, India
www.renewableenergy
worldindia.com
Annual Asia Gas Congress 2012
19th 20th April
Beijing, China
www.cdmc.org
Nuclear Fuel Cycle Conference
23rd 25th April
Manchester, UK
www.icheme.org
May
International Solar Conference
11th May
Budapest, Hungary
http://renexpo-budapest.com
Power & Energy Africa 2012
15th 17th May
Bali, Indonesia
http://expogr.com/kenyaenergy
Renewable Energy Forum
10th 12th May
Nairobi, Kenya
http://ases.org
World Congress on Water,
Climate & Energy 2012
13th 18th May
Dublin, Ireland
www.iwa-wcedublin.org
GeoPower Mexico
15th May
Mexico City, Mexico
www.greenpowerconferences.com
Solar Power Mexico
15th 16th May
Mexico City, Mexico
www.greenpowerconferences.
com/solarmexico
Biogas Poland
15th 16th May
Warsaw, Poland
www.greenpowerconferences.com
Clean Power Asia
15th 17th May
Bali, Indonesia
www.cleanpower-asia.com
All Energy 2012
23rd 25th May
Aberdeen, UK
www.all-energy.co.uk
June
EURELECTRIC Annual Convention
& Conference
4th 5th June
Malta, Greece
www2.eurelectric.org
Asia Clean Energy Forum
4th 8th June
Manila, Philippines
www.asiacleanenergyforum.org
Windpower 2012
3rd 6th June
Atlanta, GA, USA
www.windpowerexpo.org
ASME Turbo Expo
11th 15th June
Copenhagen, Denmark
www.asmeconferences.org
Intersolar Europe
11th 15th June
Munich, Germany
www.intersolar.de
POWER-GEN Europe
12th 14th June
Cologne, Germany
www.powergeneurope.com
Renewable Energy World Europe
12th 14th June
Cologne, Germany
www.renewableenergyworld-
europe.com
Nuclear Power Europe
12th 14th June
Cologne, Germany
www.nuclearpower-europe.com
Inter Solar Europe
13th 15th June
Munich, Germany
http://conference.intersolar.de
World Clean Coal Week, India
Focus
14th 15th June
New Delhi, India
www.solarplaza.com
World CSP Asia Forum 2012
18th 21st June
Beijing, China
http://www.cspasia.org
Offshore Wind Risk Summit 2012
19th 20th June
Hamburg, Germany
www.windenergyupdate.com
20th European Biomass Conference
& Exhibition
18th 20th June
Milan, Italy
www.conference-biomass.com
Power and Energy Systems
25th 27th June
Naples, Italy
www.iasted.org
Global Wind Power Finance and
Investment Congress
26th 27th June
London, UK
www.greenpowerconferences.com
Ocean Energy 2012
26th 27th June
Brussels, Belgium
www.greenpowerconferences.com
July
Smart Electricity World Australia
2nd 4th July
Melbourne, Australia
www.terrapinn.com
The Utility Show Australasia
2nd 4th July
Melbourne, Australia
www.terrapinn.com
PEi - March 2012 www.peimagazine.com 59
DIARY DATES
UK-Pakistan Coal Conference
2012
3rd 5th July
Leeds, UK
http://store.leeds.ac.uk
HydroVision International
17th 20th July
Louisville, KY, USA
www.hydroevent.com
International Conference on Smart
Grid Systems
24th 26th July
Kuala Lumpur, Malaysia
www.icsgs.org
August
COAL-GEN
15th 17th August
Louisville, KY, USA
www.coal-gen.com
September
The Energy Event
11th 12th September
Birmingham, UK
www.theenergyevent.com
HUSUM WindEnergy
18th 22nd September
Husum, Germany
www.husumwindenergy.com
27th EU PVSEC
24th 28th September
Frankfurt, Germany
www.photovoltaic-conference.com
DistribuTECH Brasil
25th 27th September
Rio de Janeiro, Brazil
www.distributechbrasil.com
HydroVision Brasil
25th 27th September
Rio de Janeiro, Brazil
www.hydrovisionbrasil.com
RENEXPO
27th 30th September
Augsburg, Germany
www.renexpo.de
October
POWER-GEN Asia
3rd 5th October
Bangkok, Thailand
www.powergenasia.com
Renewable Energy World Asia
3rd 5th October
Bangkok, Thailand
www.renewableenergy
world-asia.com
VGB Congress Power Plants 2012
10th 12th October
Mannheim, Germany
www.vgb.org
Queensland Power & Gas
22nd 23rd October
Brisbane, Australia
www.terrapin.com
POWERCON 2012
23rd 26th October
Auckland, New Zealand
www.ieee.org
Renewable UK 2012
30th October 1 November
Glasgow, UK
www.renewable-uk.com/events/
annual-conference/
November
POWER-GEN Africa
6th 8th November
Johannesburg,
Republic of South Africa
www.powergenafrica.com
International Symposium on
Biomass and Waste
12th 15th November
Venice, Italy
www.venicesymposium.it
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To meet tourism demand in the
autonomous region of Tibet, the
Chinese government is launching
a project to build a new airport for
which Himoinsa has supplied three
generators suited to the high altitude
and extreme climatic conditions.
Himoinsa supplied three
generators: two 3-phase, 50 Hz,
1060 kVA generators and one 50 Hz,
1900 kVA generator, incorporating
Mitsubishi engines and Stamford
alternators, a Deep Sea controller,
battery charger, battery and cable
system, preheating water jacket, oil
pump, antifreeze and oil.
The generators are capable of
starting up within seven seconds of a
power failure and of providing more
than 250 hours of continuous energy
The new aireld also part of the
national plan to increase economic
investment in the area is 4500
meters above sea level, in one of the
most inaccessible areas in the world.
The construction and expansion of
Xigaze Airport is one of the largest
projects of Chinas Civil Aviation
Administration, and is regarded as
part of National Plan 11 that the
government has implemented to boost
the economy. The airport has received
an investment of 484 million Yuan and
its construction has been under way
for the last two years.
But the project faces the challenge
of having a stable power source
to provide a reliable and secure
electricity supply in this inaccessible
area. The altitude at which the
facilities are located is the single
most difcult factor hindering the
construction and supply of power.
Weather conditions are also
extremely harsh, with winter
temperatures averaging 6.3 C during
the day, and about -20C at night.
There is also a wide uctuation in
temperature and potential rainfall of
422.2mm.
To achieve an optimal energy
supply, the project required installation
of generators for the emergency
supply of electricity, mainly for airport
lighting, terminal building construction
and the headquarters building.
The airport environment required
generators that could be quickly
and easily started in adverse
weather conditions; heavy-duty
equipment with low energy loss at
high altitudes, capable of providing a
fast and efcient power supply. The
characteristics of the airport made it
necessary to have high power supply
reliability with guaranteed 24-hour
operation and 99% availability,
ensuring the supply of electricity
under extreme weather conditions
Himoinsa has supplied a product
that meets project requirements and
is also capable of working under
extreme conditions with the quality
typical of the brand. Himoinsas
equipment has obtained a certicate
of Quality Inspection and Supervision
of Machinery at high altitudes above
sea level, as well as an inspection
report issued by the Center for
Quality Inspection and Supervision
of machinery at high altitude above
sea level.
Indias Su-Kam Power Systems and
the USAs Kohler Power Systems are
introducing a range of diesel and gas
generator sets. The companies have
entered into a supply, distribution
marketing pact and have come up
with a Hybrid Solution (Inverter &
Genset) concept.
The unique features of the Hybrid
Concept are: more customisation
options and a lower carbon footprint;
priority-based load sharing between
inverter & DG sets; highly efcient and
effective under critical power situation.
The smallest genset in its category
comes with no external exhaust and
forms an ideal power backup solution.
The USP of the product is the graphic
user interface which regularly updates
the user on the voltage, frequency and
current being supplied to the load. It
also prevents blackouts by regularly
updating the user on the fuel level,
engine temperature, battery voltage,
engine oil pressure.
The rst products being launched in
the generators range is the
5 KVA diesel and 14 KW gas gensets.
Su-Kam, a leader in power back
systems in India with presence in
70 countries worldwide, provides an
extensive range of power back-up
solutions such as Inverters, UPS
systems, Generators and Solar
Solutions. Su-Kam has played an
inuential role in consolidating and
upgrading the inverter industry from
the unorganised sector to organised
sector, thereby adding immense value
to the power industry as a whole.
Cosworth has been contracted by
Rolls-Royce Distributed Generation
Systems to demonstrate the potential
of its market-leading heavy fuel
engine technology.
The companies have entered into
a research and development agree-
ment to further the development of
Cosworths super lightweight engine
technology for Rolls-Royce portable
and mobile power systems. Systems
will be targeted at land defence
applications that need smaller, lighter
weight solutions than are currently
available.
Unlike lightweight heavy fuel
engines offered by other suppli-
ers, Cosworths engines use true
compression ignition, which delivers
unbeatable fuel efciency, the ability
to run on a wide range of heavy fuels
such as diesel, JP5 and JP8 with
varying cetane and octane ratings,
and low maintenance.
Ryan Hood, business unit leader
at Cosworth, said: Cosworth is fully
committed to a long-term relation-
ship with Rolls-Royce.
The current focus is on a 2kW
ultra lightweight generator. The intent
is to develop an affordable volume
production engine that is around 70%
less mass than currently available
engines, with a better fuel consump-
tion rate.
Cosworth Group was founded
in 1958. With headquarters in
Northampton, UK, the company
employs 350 staff across Europe, the
USA and India.
Himoinsa supplies gensets to new airport in Tibet
Su-Kam and Kohler launch
diesel and gas gensets
Cosworth and Rolls-Royce
work on 2 kW generator
60 www.peimagazine.com
GensetRoundup
PEi - March 2012
GensetRoundup
www.peimagazine.com 61 PEi - March 2012
GEs exible, efcient, trailer-
mounted TM2500+ aeroderivative
gas turbine recently received
ecomagination qualication for
its ability to help power cities and
industries during environmental,
economic and emergency power
challenges.
GEs TM2500+ joins the FlexAero
LM6000-PH, LM6000-PCe, LM6000-
PF and LMS100 among GEs growing
list of ecomagination-qualied
products.
When compared with the previous
version, the TM2500, it provides
customers with faster, more exible
distributed power generation by
combining high efciency, better fuel
gas consumption and fuel exibility,
coupled with lower emissions in both
the 50 and 60 Hz segments.
The TM2500+ is a workhorse in
the global aeroderivative mobile eet.
With a GE Aviation CF6-6 engine at
its core, the TM2500+ resides on two
trailers and can provide up to 31 MW
of power generation in days due to its
unique roll-on, roll-off capabilities for
air, ship or road transportation. It is
the portable version of the LM2500+
aeroderivative gas turbine, which has
been the backbone of the global eet
since it was unveiled in 1969.
GEs legacy of innovation and
American ingenuity is showcased in
the TM2500+, said Darryl Wilson,
president and chief executive of
aeroderivative gas turbines for GE
Power & Water.
Our engineers took the successful
TM2500 and drove lean, innovative
processes to make it even better to
meet the needs for fast, emergency
or mobile power.
GEs two-trailer design was
enhanced to include the LM2500+
engine, allowing for higher megawatt
output and efciency performance.
The TM2500+ offers multi-fuel
exibility operating on either natural
gas or liquid distillate fuels and is
easily converted from 50 Hz to 60 Hz.
It can reach full power in less than 10
minutes and is capable of achieving
nitrous oxide (NOx) emissions down
to 25 ppm with water injection.
GEs TM2500+ aeroderivative
gas turbine operating on natural gas
at ISO baseload conditions has an
efciency of 37 per cent at 60 Hz
and 35 per cent at 50 Hz with water
injection for NOx control.
To earn ecomagination
qualication, a product is evaluated
for its ability to signicantly and
measurably improve the customers
environmental and operating
performance.
Green Order, a consulting rm,
helps verify the rigorous, multi-
tiered qualication process to
ensure accuracy and thorough
documentation of technological
performance.
At 60 Hz and when compared
to GEs TM2500 aeroderivative gas
turbine operating at ISO baseload
conditions, the TM2500+ emits
approximately 5700 fewer metric
tonnes of carbon dioxide (CO2) per
year at 30 MW of output, equivalent
to the annual CO2 emissions of
approximately 1120 cars on US
roads.
After two years of constant
development, the new version of the
TCG 2032 (the largest MWM genset)
was launched in January 2012.
Optimized spark plugs and turbo-
charger technology have resulted in
electrical efciency of up to 44.2 per
cent with an output of 3333 to
4300 kWe (in the V12 and V16 cyl-
inder versions). Thanks to excellent
operational experience, the period of
operation up to the major overhaul
has been increased from 64 000
hours to 80 000 hours.
After the successful launch of
the TCG 2020K in April 2010, MWM
extended its product range in the
autumn of the same year to include
the TCG 2020K1 system, which
delivers up to 1,000 kWe. This new
genset with electrical efciency of
up to 40% can be operated with
natural gas under many different
environmental conditions. It combines
low operating and maintenance costs
with the dynamic load response
capabilities and robustness of the
tried and tested TCG 2020K series.
Customers are thus guaranteed an
excellent price-performance ratio
and a shorter amortization period.
Furthermore, nano-coated intercoolers
also improve operational safety when
the intake air is of poor quality.
MWM recently launched an
improved TCG 2016 C which can also
be used with biogas. It is available
for both 50 and 60 Hz. The TCG
2016 C series is available in the V8,
V12 and V16 versions. Systematic
optimization of the ignition and the
TEM (Total Electronic Management)
control system guarantee improved
load balancing over all the cylinders.
The anti-knocking controller has also
undergone further improvement. The
combination of optimized throttle
valves, a new actuator for the gas
mixer and a nano-coated intercooler
ensures that the genset lasts even
longer and is even less sensitive to
external inuences.
Thanks to these improvement
measures, the new genset achieves
a maximum efciency of 42.8% with
biogas.
GEs TM2500+ joins ecomagination product portfolio
MWM introduces a new version of its TCG 2032
EquipmentRoundup
62 www.peimagazine.com
March 2012 - PEi
Metso has strengthened its offering for
customers in oil and gas and power
by acquiring South Korean globe valve
technology and service company
Valstone Control.
The acquisition enables Metso to
expand its offering for the oil and gas
and power industries with globe valve
technology that plays a key role in
most critical processes with extreme
pressures and temperatures.
Valstone is a privately owned globe
valve and service specialist company.
It has an established customer base in
Korean engineering, procurement and
construction (EPC) companies and in
domestic South Korean petrochemical
and power generation industries, said
Metso.
Valstones globe valves add to
Metsos current wide portfolio of
control valves, making Metso one of
the strongest control valve suppliers,
said the company.
Metso has ambitious targets
to develop its valve business and
services. This acquisition has been
preceded by a series of investments in
its global offering and presence, also
testifying to Metsos commitment to
growth, said the rm.
Last year, Metso opened a new
valve technology center in Finland.
In 2010 Metso, opened a new valve
facility in Shanghai, China, and the
rm is currently expanding its valve
production premises in the US as well
as building a new supply and service
center in Vadodara, India. Additionally,
Metso has high-class industrial valve
facilities in Brazil and Germany.
This is a strong message for our
customers globally. We are in the
business with a long-term strategy to
continuously improve our technology
offering and services to benet our
customers who are facing increasing
operating pressures and demand for
more advanced applications, said
Markku Simula, president of Metso
Automations Flow Control
business line.
The acquisition of Valstone is
intended to strengthen Metsos position
in the Asia-Pacic market area, which
the company sees as one of the main
growth areas for its valve technologies
and services. In particular, the
agreement provides Metso with a key
position to further improve its presence
in the domestic South Korean market.
With a combined technology offering,
Metso can now offer South Korean
customers a more comprehensive
product offering and services.
Moreover, Metso further plans to
develop partnerships with leading
South Korean engineering, procurement
and construction companies. The
regions EPC companies have gained
a strong market share in recent years,
especially in the growing Middle East
market, by winning contracts from
major global customers.
It is a clear benet for us that
we are now close to South Korean
and other EPCs in the region. They
are important partners, and we can
offer them technology that is known
and proven for them. This improves
our position signicantly when these
companies choose key suppliers for
new projects, added Simula.
Meggitt Sensing Systems, a Meggitt
group division, has introduced the
Endevco model EM46BE, a combined
1/4 free-eld pressure microphone
and iTEDS-enabled preamplier
set (per IEEE 1451.4), designed
for general purpose and larger
channel count precision acoustic
measurements within a variety of
applications.
The Endevco model EM46BE
comes in a preassembled, pre-
calibrated kit, consisting of the model
EM40BE prepolarized free-eld
microphone and the model EM26CB
ISOTRON preamplier with
Microdot coaxial connector, both
constructed of stainless steel for high
durability.
Units are assembled in a
clean room environment to avoid
contamination of the contacts and are
calibrated together to form a reliable
acoustic measurement system. These
combined units are fully repairable.
With a frequency response from
10 Hz to 40 kHz (1 dB) and a wide
dynamic range of 40 dBA to 160 dB (re.
20 Pa), the Endevco model EM46BE
is designed according to guidelines
set forth by IEC 61094 Class 1, the
highest industry standards for precision
acoustic product reliability.
Incorporation of iTEDS technology
allows for the microphone and
preamplier to be recognised by any
smart-transducer compatible input
module. When connected, the analyser
will derive data such as microphone
type, serial number and sensitivity,
which can be read by the application
software for simplied test setups.
Silicon Designs has announced the
global market introduction of its new
model 2445 series, a family of single-
ended low-noise analogue MEMS
capacitive accelerometer modules,
designed to support a variety of low-
to-medium frequency
triaxial measurement
requirements.
The rugged
design of the model
2445 features three
orthogonally mounted
low-noise MEMS
capacitive sensing
elements, packaged in a nitrogen-
damped, epoxy sealed lightweight
aluminum housing, nished with a
5V single ended output.
The outputs are referenced to
external ground. Units are available
with individual standard measurement
ranges from 2 g to 400 g, with all
designed for reliable operation over
a temperature range of -55 C to
+125 C.
Non-standard units with enhanced
measure-
ment and
temperature
ranges,
as well as
alternative
housings
and outputs,
are available
upon request.
The model 2445 features
a six-wire connection with an
instrumentation amplier on each
axis, for higher drive capability and
low-impedance output.
Meggitt launches iTEDS enabled
microphone and preamplier
Silicon Designs launches triaxial
MEMS capacitive accelerometers
Metso enters globe valve business by acquiring South Korean
technology and service company Valstone Control
Conference & Exhibition
6 - 8 November 2012
Sandton Convention Centre
Johannesburg, Republic of South Africa
www.powergenafrica.com
GLOBAL
TECHNOLOGY FOR
LOCAL SOLUTIONS
Owned and Produced by: Co-Located with:
Presented by:
About POWER-GEN Africa
The inaugural POWER-GEN Africa event will provide
comprehensive coverage of the power needs, resources, and
issues facing the electricity industries across Sub-Saharan
Africa.
Global attention is being paid to Africas power requirements
as the continent continues to experience rapid growth and
development, driving the need for more widespread and
reliable electricity.
With POWER-GEN Africas conference and exhibition
focusing on all aspects of the power industry and bringing
together the worlds leading power equipment suppliers
with those developing power infrastructure in this dynamic
region of the world, this is a new event you cannot afford to
miss.
Invitation to Exhibit
If your company supplies products or services to the
power generation and transmission and distribution
industries in Africa, then POWER-GEN Africa is
essential to reaching the key industry professionals and
decision makers.
A three day event, POWER-GEN Africa serves the industrys
information and networking needs with a dedicated trade
show oor featuring the prime movers in the power industry.
For further information on exhibiting and
sponsorship, please contact:
Leon Stone
T: +44 (0) 1992 656 671
E: leons@pennwell.com
FOR FURTHER INFORMATION PLEASE VISIT WWW.POWERGENAFRICA.COM
For more information, enter 34 at pei.hotims.com
EquipmentRoundup
64 www.peimagazine.com
March 2012 - PEi
Setra Systems has announced the
global market introduction of the Model
730, a compact, low-cost variable
capacitance (capacitive) vacuum
manometer.
Available in full-scale pressure
ranges from 10 Torr to 1000 Torr,
the Model 730 offers 0 to 5 VDC or 0
to 10 VDC output that is both linear
with pressure and independent of
gas composition. Its standard 0.5%
percent of reading accuracy, with
option for optimization to 0.25%,
ensures a wide dynamic range,
along with negligible temperature
coefcients across its 0 to +50C
compensated range, making units
relatively insensitive to thermal
transients and environmental changes.
Temperature coefcients of 0.25% of
reading/+50C on zero; and 1.35% of
reading/+50C on span are standard.
Units operate from a standard 12
to 30 VDC power source and can be
congured with a 9- or 15-pin D-sub
or 5-pin terminal strip electrical
connection, all with plug-and-play
industry standard pin-outs. A variety
of vacuum ttings and interconnecting
cables are also available.
Design of the Setra Systems Model
730 employs a welded, all Inconel
wetted parts sensor for compatibility
with virtually all process chemistries.
Suzlon Group has announced a new
turbine in the 1.5 MW range focused
on harnessing Class III, low-wind
sites. The new turbine is specically
designed to deliver high efciency
and cost effective power generation
even at low wind speeds, therefore
increasing the size of the market and
making wind power projects even
more nancially competitive than
they are today, said the company.
The S8X is designed for the Indian
market, where most potential lies
in medium-to-low wind sites. This
turbine is designed with advanced
rotors, with diameters of 86.5 and
89 metres, and a tower height
of 90 metres, which will bring
improvements in energy yields of
between 15 to 20 per cent over the
current S82 1.5 MW offering in low
wind conditions. Additionally, the S8X
is designed specically to operate in
high temperatures, and to meet the
current and future grid requirements
in India.
This turbine is an evolution of
the proven S82 1.5 MW platform,
with about 2400 MW in installations
consistently delivering 97 per cent
plus availability (uptime). The new
design also incorporates several
key features from the S9X suite of
turbines, helping to achieve higher
reliability, improved power output,
higher safety and improved lightening
protection. Like the S9X, the new
turbine offers an improved pitch and
yaw system, hub assembly, main
frame and other key components,
ensuring easier maintenance, greater
reliability and higher uptime.
Emerson Process Management is
automating two new 1000 MW,
ultra-supercritical, power-generating
units at the Jiangsu Xinhai power
plant with its OvationTM expert
control system. The new units are
the rst 1000 MW units to be built
by Jiangsu Guoxin Investment Group,
which owns and operates the plant
in Lianyungang city, near the East
China Sea in the Jiangsu province.
By using ultra-supercritical
technologies which offer both
higher efciency and lower
emissions than traditional coal-
based electricity generation
Jiangsu Guoxin Investment Group
is supporting economic growth in
Eastern China in an environmentally
responsible way.
Emersons Ovation technology has
been selected for 40 of 64
1000 MW ultra-supercritical units in
China. The systems ability to more
tightly control operations is essential
for achieving and maintaining ultra-
supercritical unit efciency.
Because it was the companys
rst experience constructing and
operating 1000 MW units, Jiangsu
Guoxin Investment Groups leaders
and experts wanted to be sure
they selected a supplier with a
successful track record automating
these types of plants. Emerson
offered a proven, state-of-the-art
control solution backed by superior
technical expertise that was just
what the company was looking for,
which is prompting Jiangsu Guoxin
Investment Groups interest in
collaborating with Emerson on future
energy projects.
Dating back to 1941, Jiangsu
Xinhai is one of the oldest operating
power plants in China. The facility
currently has a generating capacity
of 660 MW (2 X 330 MW). The new
units, Units 5 and 6, will replace two
old, less-efcient 220 MW units that
have been decommissioned. Unit
5 is slated to go into commercial
operation during fall 2012; Unit 6
is scheduled to come online the
following year.
Emerson will supply a total of
66 Ovation controllers and 16
workstations. Ovation technology
will monitor and control boilers
and turbines supplied by Shanghai
Electric Group. The Ovation system
will also perform data acquisition,
as well as manage each units ue
gas desulphurisation (FGD) system,
modulating control system, sequence
control system, electrical control
system, furnace safety supervisory
system, feed-water turbine control
system and balance-of-plant
processes. In all, Ovation will manage
28 000 I/O points. In addition to
Ovation, Emerson will also supply
nearly 1000 Rosemount differential
pressure, level and ow transmitters.
Industry leaders like Jiangsu
Guoxin Investment Group understand
the importance of choosing the right
automation for ultra-supercritical
and supercritical power plants, said
Bob Yeager, president of Emerson
Process Managements Power &
Water Solutions.
Setra Systems Variable Capacitance
Vacuum Manometer
Suzlon launches S8X 1.5 MW
low-wind turbine for India
Emerson automates two 1000 MW USC units in eastern China
19-21 APRI L 2012, PRAGATI MAI DAN, NEW DELHI , I NDI A
SWITCHING ON INDIAS POWER FUTURE
Flagship Media Sponsors Supporting
Organisation
Event Organisers
5,876* Attendees
37 Exhibitors
QUICK FACTS:
3,451 Attendees
311 Exhibitors
QUICK FACTS:
+6,000** Attendees
190** Exhibitors
QUICK FACTS:
650 Attendees
85 Exhibitors
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EquipmentRoundup
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March 2012 - PEi
PEi Webcard
ADVERTISEMENT INDEX
AGGREKO INTERNATIONAL POWER PROJECTS 33
AMERICAN WIND ENERGY ASSOCIATION 31
ANSALDO ENERGIA C4
AUMA RIESTER GMBH 22
AVEVA SOLUTIONS LTD 43
BABCOCK & WILCOX CO 6-7
BECHTEL 19
BFI AUTOMATION 57
CARPENTER TECHNOLOGY CORP 51
CATERPILLAR INC. 39
CRESTCHIC LIMITED 72
DOOSAN HEAVY INDUSTRIES & 49
CONSTRUCTION CO LTD
DOOSAN SKODA 69
DR THIEDIG 35
ERC EMISSIONS-REDUZIERUNGS-CONCEPTE GMBH 59
GE ENERGY 45
GGB BEARING TECHNOLOGY 54
HAMON THERMAL 23
HILLIARD GMBH 3
HYDRATIGHT 56
HYDROGROUP EVENTS 71
HYTORC 9
HYTORC 11
INDIA POWER EVENTS 65
LUVATA 5
MAGALDI POWER S P A 25
MAN DIESEL SE 37
MEMBRANA 20
MTU MAINTANANCE-BERLIN BRANDENBURG GMBH 29
PERKINS ENGINES COMPANY LTD 15
PETRO CANADA 27
POWER-GEN AFRICA 63
POWER-GEN ASIA C3
POWER-GEN INTENATIONAL 67
RENEWABLE ENERGY WORLD CONFERENCE- 53
NORTH AMERICA
SIEMENS AG 17
TOGNUM ASIA PTE LTD C2
TOPOMASTER 21
TURBOTECT LTD 55
VESTAS WIND SYSTEMS 13
WELLAND & TUXHORN AG 47
WOODWARD GMBH 41
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CONFERENCE & EXHIBITION
IMPACT EXHIBITION & CONVENTION CENTRE,
BANGKOK, THAILAND
3 5 OCTOBER 2012
WWW.POWERGENASIA.COM
TOWARDS A SECURE ENERGY FUTURE
INVITATION TO EXHIBIT
Celebrating its 20th Anniversary in 2012, POWER-GEN Asia has established itself as the premier conference and exhibition
dedicated to the power generation and transmission and distribution industries.
Attracting 7,000 delegates and attendees from over 60 countries from across South East Asia and around the world, it is the leading
industry event to meet and network with senior executive and industry leaders.
Thailands GDP is predicted to see a 5.6% growth, leading to a 6% growth in peak power demand between 2012-2016 to 35,600
MW and 44,200 MW by 2021. With current capacity of around 28,500 MW, and despite current energy imports from neighbouring
countries, Thailand will see a shortfall in capacity in the next few years.
To gain access to the opportunities within the power industry of Thailand and wider region, you should ensure your presence at
POWER-GEN Asia 2012.
We invite you to celebrate 20 years of POWER-GEN Asia with us in Bangkok, Thailand from 3-5 October 2012.
OWNED AND PRODUCED BY: PRESENTED BY:
CO-LOCATED WITH:
Anniversary
For exhibition and sponsorship
opportunities contact:
Kelvin Marlow
Exhibit Sales Manager
T: +44 (0) 1992 656 610
C: +44 (0) 7808 587 764
F: +44 (0) 1992 656 700
E: exhibitpga@pennwell.com
For information about participating at
the conference contact:
Mathilde Sueur
Conference Manager
T: +44 (0) 1992 656 634
F: +44 (0) 1992 656 700
E: paperspga@pennwell.com
SUPPORTING ORGANIZATION:
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Shaping the future
of energy
ansaldoenergia.it
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