Group
Burmeister & Wain Energy A/S · Lundtoftegaardsvej 93A · DK-2800 Kgs. Lyngby · Denmark · Tel/fax +45 39 45 20 00/+45 39 45 20 05 · [email protected]
BWE – A CASE STORY
Challenges for export of
Danish biomass technology
Nicholas Kristensen
Manager, Proposals Department
Burmeister & Wain Energy – Denmark
Board member – DI Bioenergy
October 13, 2011
Bioenergy – a Driving Force for Change
Group
BWE In brief
• Part of Lentjes Group in 1980
• Part of Deutsche Babcock in 1991
• Part of FLS Miljø in 1997
• Part of the Italian STF S.p.A. Group in 2002
• BWE India founded in 2009
Ownership History
• Company established in 1843
• First steam boiler delivered in 1848
• First Benson boiler delivered in 1955
• World Records:
Exceeding 47% efficiency on a coal-fired boiler,
Largest USC multifuel biomasse/fossil boiler,
First 100% straw and wood pellet fired boiler
Group
• Advanced Ultra Super Critical
steam boilers for power generation
• Biomass boilers
Grate fired
Pulverized Fuel (PF) fired
• Low-NOx firing systems and multi-fuel burners
coal, gas, oil and biomass
• Upgrading of existing boilers for improved performance
• Boiler service and maintenance
BWE – Products and services
Group
Ultra-high efficiency multi-fuel USC boilers for power plants:
World’s highest efficiency Less CO2 per unit of electricity.
Less CO2 means lower CCS cost.
Flexibility - the same boiler can use coal, oil, gas and biomass
Biomass combustion CO2 neutral
Worlds largest pellet-fired biomass power plant (AVV2)
Grate-fired biomass power plants
Optimizing of plant’s from other boiler supplier’s for higher
efficiency:
Lower operating costs.
Less CO2 per unit of electricity produced.
Increased fuel flexibility by implementing of multi-fuel techology.
BWE’s Products – “Uniqueness”
Group
Grate-fired boilers: up to 40MWe
Untreated biomass acceptable
Plant sizes
New PF biomass boilers: Starting at 40MWe
Up to 400 MWe in operation (AVV2)
Larger plants are possible.
Treated biomass is required (pellets)
Convertion coal-fired Full or partial conversion is possible.
boilers to PF biomass: Boilers typically starting around 150 MWe,
but any size can be considered.
Treated biomass is required (pellets)
Emissions of CO2 will go down, and so will SO2, heavy
metals, and particles.
Group
PF biomass boilers
Conversion from
fossil fuel to biomass
Generating
companies
Clients: Products
Clients & Products
Group
Grate fired
biomass boilers
PF biomass boilers
Conversion from
fossil fuel to biomass
Industrial clients
(captive boilers)
Clients: Products
Clients & Products
Group
Grate fired
biomass boilers
PF biomass boilers
Project Developers
Clients: Products
Clients & Products
Group
Grate fired
biomass boilers
PF biomass boilers
Conversion from
fossil fuel to biomass
Project Developers
Industrial clients
(captive boilers)
Generating
companies
Clients: Products
Clients & Products
Group
EPC:
BWE as part of
consortium or JV
EPC:
BWE as nominated
subcontractor
Package supply: BWE as supplier of boiler
package
Project Developers
Industrial clients
(captive boilers)
Generating
companies
Clients: Project set-up
Project modalities
All combinations are possible....
Group
EPC:
BWE as part of
consortium or JV
EPC:
BWE as nominated
sucontractor
Package supply: BWE as supplier of boiler
package
Project Developers
Industrial clients
(captive boilers)
Generating
companies
Clients: Project set-up
Project modalities
...but the main challenges are here!
Group
From 2007 until today BWE has received more than 200 requests for
biomass projects, mainly from within Europe but also a few from
North America, South America, China, and Australia.
THE CHALLENGE
BWE has the technology and the experience.
So what is the challenge?
Of the more than 200 requests for biomass projects roughly:
• 25-30 has become orders
• BWE has quoted on approximately 20
• 10 of these are still undecided
• BWE has won 4
Group
The challenge is to present a strong business case!
Without this there will be no financing for the project!
There are 4 main questions to answer:
1. Is the technology safe and reliable (”proven technology”)?
2. Can the profit margin satisfy the ROI required for the investment?
3. Is the project financially ”safe”?
4. Are there better investments available?
THE CHALLENGE
Group
The challenge is to present a strong business case.
Without this there will be no financing for the project.
There are 4 main questions to answer:
1. Is the technology safe and reliable (”proven technology”)?
2. Can the profit margin satisfy the ROI required for the investment?
3. Is the project financially safe?
4. Are there better investments available?
THE CHALLENGE
Group
1. Is the technology safe and reliable (”proven technology”)?
YES FOR BWE – but we only supply the boiler, so the checks are:
• EPC supply – do we have the right (local) partner in terms of
Technical capability?
Financial strength?
Experience and references?
Local contacts?
Reputation in the market?
• For a ”package supply” this coordination is out of BWE’s hands
Technology
Group
But the main challenge is on the financial side, or to quote an
investment banker:
Show me the ”P = R – C” !
THE CHALLENGE
Group
Before continuing one thing should be made clear:
Bioenergy (or Renewable Energy except hydropower) is today not a
viable alternative to fossil energy without politically chosen
incentives.
Incentives can include:
• Premium on feed-in tariffs (EEG, ROC, .....)
• Grid preference for RE (EEG, .....)
• Minimum targets (RES-E / RES-H)
• CO2 allowances or CO2 quotas (EU ETS)
• Fossil taxes (e.g. UK Carbon Floor Pricing)
• Political drivers for CHP (Varmeforsýnigsloven)
THE CHALLENGE
Group
2. Can the profit margin satisfy the ROI required for the investment?
3. Is the project financially safe?
Profit Margin
These questions can be evaluated by looking at Costs, Revenues, and
the related uncertainties.
Group
COSTS
• Construction costs
• Well-defined and handled through the supply contract.
• Maintenance costs
• Well-defined, and can be fixed with an LTSA or O&M contract.
• Fuel costs
• Fuel accounts for most of the operating costs.
• The long term supply/demand balance is unpredictable, so fuel
costs are uncertain.
• LTFS contracts required.
• Uncertainty on sustainability criteria and the coming directive
increases the uncertainty.
Profit Margin
Group
Direct revenues
REVENUES
• Feed-in tariffs / Power Purchase Agreements
• This is the main source of revenues
• Well-defined, but often not fixed for plant payback time.
• National schemes, so each country is different
• Subject to political priorities and decisions.
• District heating (DH) supply
• Increases overall fuel efficiency.
• There may not be a DH need (loss of income longer payback)
• The demand may be unpredictable.
• Process steam supply
• Mostly suitable for captive plants
Profit Margin
Group
Direct revenues
• Financial strength of the project companies
• Special Purpose Company?
• Debt/equity ratio for financing?
• Contract issues
• Recognisable format (Yellow Book, MF/1,...)?
• Level of Liquidated Damages?
• Cash flow / Lender exposure
• Bond coverage
• Financial strength of suppliers
• Equity level / solidity
• Backlog
• Banking cost and risk-level acceptance
• Difficulty in finding banks willing to take risks
Financial Security and Challenges
Group
4. Are there better investments available?
• Bioenergy will typically compete for investment capital with other
Renewable Energy (RE) projects.
• Investments will seek out the projects with the best combination of
RoI and risk levels.
• If RE incentive schemes does not consider this then investments
will favour one technology (wind in Germany, solar in Spain, .....).
• Politically driven incentive schemes do not always consider this
balance.
Alternative investments
Group
Summary
Primary issues to help these projects along:
• The power sales price must be fixed for a relatively long period.
• Grandfathering (of projects, if not technologies) is a possible solution.
• The RE incentive schemes must be balanced to match the desired
outcome, and this may require international coordination.
• Back-up guarantee of financing must be considered.
Secondary issues to help these projects along:
• Incentive schemes must be clarified (national issues).
• A good overview of incentive scheme is needed (e.g. AEBIOM’S
CROSSBORDER BIOENERGY)
• Sustainability criteria for fuel should be clarified (upcoming EU directive).
Top Related