Title PageRentia van Tonder SBU Head: Green Industries
Raoul Goosen Specialist: Green Industries
Hennie de Jager Production Manager: SA Calcium Carbide
Presentation to Parliamentary Portfolio Committee : Energy
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Content
SA Calcium Carbide 4
Cogeneration
High-Level Sector Development Strategies to achieve objectives
In du
st ry
G oa
ls
To be carbon neutral by 2050: Emissions in SA should be reduced to 1 tonne per person per annum
ID C
G oa
ls
To play a leading role in the development of the green economy through investments in Green Industries
F oc
Energy Efficiency Renewable Energy Fuel based green power Bio fuels
K ey
S tr
at eg
ie s/
In iti
at iv
objectives
identified
turbine manufacturing
stimulate local PV component
in rest of Africa
Biogas as feedstock for clean
transport
create conducive regulatory
CFLs
• Costly Bid process
confirmed asap
• COFIT / wheeling
Municipal solid waste or
cycle
Electricity
Piped gas
Secondary Process
• Fuel to co-generation plant (waste-heat or off-gas) is a by-product from an industrial process which
manufactures carbide, cement, ferrochrome, steel, glass, platinum, etc.
• Industrial process itself is heart of the core business of the fuel supplier / host
• Co-generation at end of industrial process is an “add-on”, not under control of the co-generation plant
Fuel Based Green Energy: “Waste” to energy and Co-generation
Feedstock
Offtakes
Revenue
• Challenge: Long term supply agreement to cover
debt tenure + 2 years
• Quality, quantity, price & period
• MFMA requirements for municipalities
and off take options
Offtakes:
cost power
existing industry more efficient &
ferro-chrome, ferro-manganese, silicon,
carbon black (ca 2000 MW potential)
Sugar Industry (1000 MW from bagasse);
Pulp & Paper (500 MW from waste)
Over lifetime generates electricity at
lower cost than Eskom supply, due to
“free/low cost” fuel
ca 8 years and cash cost (O&M) of 10-
25 c/kWh
Increasing power prices,
Carbon Tax proposed,
Eskom IDM for own use – cancelled by NERSA
DTI MCEP & CIP grants - uncertain
Negative factors:
large players to participate in feasibility
studies/project development.
IDC approach:
• Sub debt with equity kicker,
• Equity/development funding (minority stake)
approval.
SA Calcium Carbide
SA Calcium Carbide Operations
• SACC produce some 72,000 tons of calcium carbide per annum with a capacity to produce up to 90,000 tons pa
• From local materials – limestone (largest customer in SA); anthracite and electricity
• uses 50 % of Newcastle’s electricity
• SACC are the only producer of calcium carbide on the African continent
• Annual turnover of some R 500 million per annum (approx. US$53 million)
• Supply all local users – steel industry (to desulphur steel) ; to make acetylene welding gas and acetylene carbon black (as pigment and to make zinc carbon batteries)
• More than 50 % of production exported – so R 500mil forex +ve
• 300 direct employees, and many more in value chain (raw materials mining, logistics)
SA Calcium Carbide Furnace
Previous SACC Operation
SACC Cogen Project Highlights
• 8MW electricity co-generation project
• displace Eskom fossil fuel derived electricity
• saving 20 % of SACC use (10 % for Newcastle)
• as a Clean Development Mechanism (CDM) initiative;
• commissioned Dec 2013 – after 1st soil turned in Jan 2012
• R105 million capital cost requirement for this project over
a financing period of 10 years
SACC Carbon Credits
Eskom IDM Support
• Eskom on a massive drive to reduce consumption from National Power Grid, so supported this initiative by SACC by partially fund this DSM project by compensation for electricity saved over the next three years (during weekdays from 06:00-22:00)
• All this electrical energy generated is consumed on site, thus reducing SACC’s consumption from national grid. Resulting in reduced emissions of greenhouse gasses and CO2 emissions from Eskom - due to reduced electricity demand from SACC from grid
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30000
35000
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Actual Furnace Grid Consumption Pre- Implementation [kWh]
Expected Grid Consumption Post- Implementation [kWh]
SACC Cogen Project Benefits
• Energy efficiency supporting growth needs of Newcastle Municipality (10 % more power)
• Support of the local community with a rural school green (solar) energy solution
• Contribute favourably to the Sustainable Development of the Newcastle municipal region by introducing job opportunities to plant operators, plant technicians, contractors, maintenance personnel and plant equipment suppliers
• Maintaining SACC operations by mitigating power price increases (30 % of costs) and hence protecting 300 jobs and 1000 indirect jobs as well as SA value add of R 500 mil pa
• Combatting climate change - registered CDM project with United Nations Framework Convention on Climate Change (UNFCCC) - carbon credits for international sale
Typical Co-generation opportunity
• Host generates “waste” fuel or heat
• “Waste” fuel or heat cannot be stored or limited storage is possible
• Could be augmented with additional fuel such as coal or gas
• Host can produce 5-20% of own needs, some cases much more
• Requires integration with existing process
• Host company has extensive engineering and operating competence but maybe limited project power implementation experience
• Electricity generation is not core business
Fuel Based Green Energy: Attractiveness of Cogen
• High Load Factor (24x7) – directly reduces demand when industry uses (load following)
• Utilises “waste” and produces “green” power at low cost (“free” fuel)
Fuel Based Energy
• White Paper on Renewable Energy (2003) - 10 000GWh by 2013
– Highlighted technologies to be deployed in the 1st phase (2005 to 2007) included sugar- cane bagasse (fibre that comes from crushing the sugar cane) for cogeneration
• (Eskom) MTPP in 2008 – prices from 2013/14 reducing to 35 c/kWh in 2018
• PNCP and COFIT floundered
• IRP 2010 – 2030 (May 2011): MTRMP for power before 2016, but slow progress.
• 800 MW determination Dec 2012
so now a RFI/P is due, but requirements and PPA uncertain
PPA options and issues:
charge (c/kWh) - includes penalties for
non-delivery; for LT (15 yrs) – NOT AN
OPTION, as Fuel not guaranteed
2. PPA akin to a feed-in tariff (COFIT
concept) - an energy-payment (c/kWh), but
difficult to guarantee fuel supply (like wind),
but different – needs significant DSCR or
guarantee
component) plus a variable charge. ie.
buyer takes on some/all of fuel-supply risk
4. Simple capital subsidy as per the IDM
subsidy arrangement from Eskom
Conclusions
• Cogen - using “waste” heat or fuels, and increased efficiency of CHP (2x efficiency of power only, ie. Eskom generation) - saves fossil fuel usage & makes SA more energy efficient
• Due to “free” fuel, after capital investment repaid, produces at low cost
• It reduces demand directly, so reduces peak demand and has excellent load factor, unlike other renewables (without storage) – so reduces national investment required in power generation capacity directly (unlike wind, PV)
• In national interest to facilitate investment soonest, especially given tight power supply - it is lower cost than Medupi and Kusile and cleaner & saves coal use
• IDC positioned to support industry/developers who have the opportunities (“waste” fuel)
Also supporting development and use of fuel cells (improved efficiency) that can substantially increase platinum demand (if power of Eskom supplied by FC would double PGM demand - increase SA revenue 4x)
Offtake/Incentive to invest (PPA or capex grant) is needed, as otherwise industry may not
invest, as not core business, and best return given when power prices peak in real terms (4
years away)
South Africa
CHP (Cogen) Technologies