Monday, October 25, 2010

BANDIRMA EnerjiSA 930 MWe GCPP Thermal Power Plant

Dear Colleagues

We have received good news from BANDIRMA that a new 930 MWE GTCC type gas fired thermal power plant is now in operation at a present cost of 550 million Euros. The opening ceremony was held in the plant on 23rd October 2010 under the auspices of Prime Minister Recep Tayyip Erdogan.

Prime Minister opened Enerjisa Bandırma Natural Gas Combined Cycle Power Plant, the foundations of which had been laid two years ago by Enerjisa, which aims to become the leader of Turkey’s energy market. Turkey’s largest and most efficient natural gas power plant with an installed power of 930 MW and an annual generation capacity of more than 7,000 GWh, Enerjisa Bandırma Natural Gas Combined Cycle Power Plant will meet approximately 3.5 percent of Turkey’s demand for electric power. Enerjisa Bandırma Natural Gas Combined Cycle Power Plant, the foundations of which had been laid two years ago by Enerjisa, a joint-venture of Sabanci Holding and the Austrian energy giant Verbund, for the purpose of contributing to meeting Turkey’s demand for electric energy in the most efficient and most environmentally friendly manner was opened by the Prime Minister.

Noting that they wished to continue investing in Bandırma, Guler Sabancı announced that they were going to start building a second power plant as soon as they received permission for grid connection and a license. Sabancı added that the company also had plans to build a wind farm in the area. Completed in 26 months at an investment of 550 million  Euros, the Enerjisa Bandırma Natural Gas Combined Cycle Power Plant aims to meet in the shortest time span Turkey’s demand for power that has been rising rapidly after the crisis.

The Enerjisa Bandırma Natural Gas Combined Cycle Power Plant has become Turkey’s most efficient natural gas power plant at an efficiency rating of 59%.  With this high efficiency ratio, the Bandırma Power Plant will contribute to diminishing the threat of global warming by reducing carbon emissions by 50,000 tons per year. The power plant will meet approximately 3.5 percent of Turkey’s demand for electricity by generating more than 7 billion kilowatt-hours of electric power annually.

Mitsubishi Heavy Industries, Ltd. (MHI) has received order for M701F gas turbines for natural gas-fired power generation plant in year 2008. The 930 MW (megawatt) gas turbine combined-cycle (GTCC) power plant for a Turkish electricity provider for the domestic market, is slated to go on-stream in late 2010.  It is now in commercial operation.

The Turkish GTCC power plant - the order for which MHI received on a full-turnkey basis jointly with A-TEC Power Plant Systems AG (A-TEC PPS), an Austrian engineering company specialized in GTCC power plants - built in Bandirma, ŞirinÇavuş village on the Marmara Sea coast.

The Bandirma power plant  consists primarily of two gas turbines, a steam turbine and three generators. MHI  supplied design and manufacture of the gas and steam turbines.

A-TEC PPS furnished peripheral equipment and performed civil work and installation. Mitsubishi Electric Corporation manufactured the generators.

A-TEC PPS is a subsidiary of A-TEC Industries AG, a Vienna-based industrial group with operations in drive systems, plant engineering, machine tools and metallurgy. MHI began collaboration with A-TEC PPS in the marketing of GTCC plants in 2006 in a quest to expand GTCC sales mainly in Central and Eastern Europe and Turkey.

The latest Turkish GTCC order is the outcome of the MHI/A-TEC PPS team's marketing activities. MHI established Mitsubishi Power Systems Europe, Ltd. (MPSE) in October 2007 as a base dedicated to power systems business in Europe. Collaboration with A-TEC PPS is one of MHI's proactive initiatives to enhance its locally tailored power systems marketing activities in the region.

We understand that the local company and Österreichische Elektrizitätswirtschafts-Aktiengesellschaft (Verbund) signed a 865 million Euro financing package for the first phase of the company’s investment program. This landmark transaction, which is expected to be increased to up to  1 bn Euro in the course of 2008, secures the generation of 12,000 gigawatt-hours of electricity per year, potentially supplying 3.6 million consumers. This financing package was successfully arranged by IFC, a member of the World Bank Group, local bank and WestLB AG, together the Global Coordinators.

The project will construct a portfolio of ten hydroelectric power plants and one natural gas-fired thermal plant in Bandirma with total capacity of 1,900 megawatts.  There is no treasury guarantee for electricity sales. All generated electricity will be sold in the market.  This is the largest international financing package for a private Turkish company which will sell into Turkey's deregulated power market.  Given the current market conditions, this financing sends a strong signal of confidence in joint venture, to become a leading private power generator in Turkey’s liberalized electricity market.

We sincerely feel that our local private investors deserve all our support to complete those new power plant investments. We would like to congratulate them for completion of the first phase and we hope them all success in the second phase. They deserve since they risk their own portfolio in order to get proper "Corporate Financing" at reasonable interest rates, and payment terms.  
We will be too pleased to receive your comments. With deepest regards

Haluk Direskeneli

Thursday, October 14, 2010

Basic thermal power plant design for AfsinElbistan

Dear Colleagues
There are power plant design software companies serving the energy markets for basic design of thermal power plants. Almost all engineering companies use similar thermal power plant design software. Germans prefer German language software. However all other software applications are in English. These are all similar in nature; you can evaluate them and find them via goggle search.  Once they also initiated Turkish version of software, but they have received market reluctance and objections since nobody needs thermal power plant software in Turkish. They advise that the feasibility and the basic design have to be in a global language (English) so that they make their international communications for EPC sourcing, negotiations and financing easier.  Anyhow they also had difficulty in finding Turkish equivalent of many new thermal expressions. Most of our colleagues preferred to use the English wording even in Turkish articles.  We have been invited by two very big engineering contracting local companies for in-house software training for one complete week for not less than 12 engineers.  In these in-house trainings, they made clarifications for the software, making best use for various applications.  Combined cycle power plants are the easiest. You can get multiple outputs of the same design, with a few touch of the keyboard. Software and technology is available for those who can use it. There are many local engineering companies who use the latest available technology.  There are also reputable local universities who are using academic version of thermal power plants software within an increment of the commercial application with one important precondition that they should mention the name of the software in their academic articles. We have many new MSc and PhD dissertations which used the academic thermal power plant design software. In that in-house software training, trainers are asked to evaluate the new thermal power plants in AfsinElbistan for best coal firing application.  New Plants should fire local very low Kcal/kg LHV  local lignite with approximately 1150 kcal/kg LHV, or 2000 BTU/lb HHV. Elbistan coal elementary analysis releases an approximate figure of 55% moisture and 25 % ash.   Software evaluations advise that this lignite can not be fired properly in pulverized coal firing thermal power plants unless its LHV is enriched to 2000 kcal/kg. So the AfsinElbistan lignite has to be enriched by moisture capture. That could be via drying or ESP applications, or any other means. CFB is also possible but we also need enrichment up to 2000 kcal/kg LHV, or 3000 BTU/lb HHV. Available references are not compatible with Elbistan coal. IGCC needs further academic investigations prior to any commercial applications.  Oxy-fuel is theoretically possible but we do not have any reliable practical research. AfsinElbistan is our future for our energy security, therefore we need to allocate more academic funds in order to have more research on local fuel supply that will enable to fire the available coal best in our own design thermal power plants. From our past experience, those off-the-shelf foreign designs are obsolete, they do not work. Locals are to concentrate themselves into their own design of their own local lignite. Do not rely on foreign financing which will advise their obsolete lignite firing technologies. They did not work in the past; hence they will not work in future. Your comments are always welcome.  With deepest regards
Haluk Direskeneli,
Ankara based Energy Analyst

Saturday, October 09, 2010

Acid Test for Turkish Energy Markets

Dear Colleagues,
We have an extraordinary evaluation opportunity to have acid test of Turkish Energy Markets, and to check local market forces in energy business of our local investment environment.  New 800 Mwe electricity generation output capacity  naturalgas firing Bandirma combined cycle power plant is expected to feed the national grid commercially soon. The Investment Group has already announced that the plant opening ceremony will take place on 23rd October 2010 with presence of our Prime Minister. With maximum local overall national demand of 35K MWe, we shall have a great opportunity to test the average floating unit price of national electricity  markets with new influx of additional clean 800 MWe capacity, a real yardstick to evaluate the market impact. This plant has a substantial capacity. It is very important for market and will influence price fluctuations. So it will provide extraordinary information not only in national scale but also in international magnitude to provide precious information for global investment appetite.  We need to evaluate the floating price figures at least for 1-month   or more, upon new extra clean electricity contribution.  Similarly the price evaluations will need information on new investments in operation, which are recent power plant investments namely OMV Samsun 800 MWe, RWE Denizli 800 MWe, 1150 MWe full capacity in Aksa Antalya, Unit CCPP 800 MWe Gebze, Catalagzi 1360 MWe Eren.  All of these new power plants in construction will have the same course of experience in entering energy markets and they will give us important clues.  These findings will advise us to update our feasibility calculations, payback period estimations for our colleagues in investment banking, financing disciplines, whether the public expectation of 5-years payback period is feasible, reliable, and reasonable.  Accordingly foreign as well as local investors will have a better roadmap in their investment decisions, whether or not to continue in base electricity generation power plants in thermal/ nuclear/ and local/imported coal, or completely more to renewable.  It is our speculation that the average overall electricity unit price will be lowered immediately after addition of new 800 MWe capacity due to stagnant demand at maximum 35K Mwe level, however this new capacity will give some relaxation and release some load from public power plants to enable them to have rehabilitation / maintenance in marginal scale. In any case the privatization of electricity generating power plants will have priority in our near future before general elections in July 2011.  These above estimations are pure speculation and need to be proven in due time with market figures and evaluations. You all know that markets are guided by expectation in global means as always.  Get ready, be prepared.  We are able to predict this much, and will be too pleased to receive your comments/ contributions.  With deepest regards
Haluk Direskeneli, Ankara based Energy Analyst
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