• Combustion Industry News

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      Patrick Lavery

      Combustion Industry News Editor

Business Trends

Reuters has carried an opinion piece on how political uncertainty in Australia is discouraging investment in power generation. A carbon tax comes into effect in July this year, and was meant to encourage investment, but with an election looming in 2013, the current government deeply unpopular, and the opposition promising to repeal the carbon tax legislation, investors in power generation are facing high uncertainty.  Recent state election wins by conservative parties have added to the shifting ground. The fixed-price carbon tax is due to be in effect for three years, after which a cap-and-trade system is scheduled to take over. The set price of $US 23.85/€ 17.99 per tonne of CO2 is not expected to make gas-fired plants, which the opinion piece says are needed, more cost effective than coal-fired plants.

The European Commission is to review the rules surrounding carbon allowance auctions by the end of the year, with the aim of giving life back to the market. The review was to be conducted next year, but the current glut of supply of allowances has brought the date forward. Any changes to the system will have to be approved by all EU member states, the likelihood of which is uncertain, due to Poland’s opposition to any increase in the price of carbon.

Legislation and Regulation

Peru has enacted a climate change initiative, with a long-term plan to increase renewable energy, develop a lower-carbon economy and curb illegal logging in its share of the Amazon. Peruvian officials believe that the country is already experiencing negative impacts as a result of climate change. The Peruvian plan follows the lead of South Africa, which Chile, Argentina, Colombia and Brazil have also followed, Reuters reports.

The Mexican senate has passed the country’s climate change bill, meaning it now only requires the signature of President Felipe Calderon before it becomes law. Under the bill, a voluntary carbon trading system would be instituted, along with other policies and incentives to promote low-carbon technologies. Participants in the carbon trading system would be allowed to trade with international carbon markets. A National Institute of Ecology and Climate Change would also be established. The expectation is that the President’s signature will be given without any complications.

The Power Ministry of the Indian state of Maharashtra has asked industry in the state to conserve the oil used for back-up power generation. Thirteen power plants are amongst the 478 industrial entities who will participate in a scheme in which they are given credit for each tonne of oil they conserve, while paying a fee for each tonne of oil used over a certain cap. The power plants sometimes use the oil in lieu of coal when the coal is of a particularly poor quality. Other industry uses oil for stand-by generators when there are power failures.

Company News

IFRF stalwarts may be interested in news from IJmuiden, Netherlands, former base of the IFRF, where it was nestled within the Hoogovens steel plant. The new owner of the plant, Tata Steel, has released a string of news in April. First came the appointment of a new Chief Technical Officer in Europe, Mr Hans Fischer, who started his career at Hoogovens.  He will return to IJmuiden to take up his new position in July 2012, having worked also for Salzgitter and ThyssenKrupp.  Next came the news of the decision to invest in a new zinc pot at the IJmuiden plant, one devoted solely to the production of the company’s MagiZinc Auto coated steels, lightweight steels that offer enhanced corrosion protection. Third was the news that it had won a contract worth tens of millions of US dollars to supply 169 kilometres of 450 mm diameter pipe for Enterprise Products Partner’s new crude oil export pipeline in the Gulf of Mexico. This pipe will be manufactured in Tata Steel’s factory in Hartlepool, England.

Alstom’s €1.3 billion/$US 1.7 billion power plant upgrade project in Slovenia is a step closer to being undertaken after the Slovenian parliament voted to allow the government to supply a guarantee for a loan of €550 million for the project. The upgrade is to involve replacement of four existing units by one 600 MW unit in Sostanj, northern Slovenia, so that the plant as a whole can supply one third of Slovenia’s energy demand, reducing its reliance on energy imports. The law is dependent on two further votes in the parliament, but Alstom already started work on the upgrade in February this year. It is threatening to drop the upgrade if the loan guarantee is not forthcoming by 20 May.

Tokyo Gas will make a decision this northern hemisphere autumn about adding a new 400 MW gas-fired unit to its Ohgishima plant in Yokohama, Japan, the company president has announced. The new unit would add to two existing 400 MW units at the plant, and would come earlier than originally planned at the request of Tokyo Electric Power Co in response to the 2011 tsunami and the Fukushima nuclear disaster. Nikkei business daily put the cost at 30–40 billion yen ($US 371-495 million/€280–373 million). Tokyo Gas also announced that as part of their energy diversification strategy, they would begin to buy LNG from Africa on a term basis.

Last month the Callide Oxyfuel Project, in Callide, central Queensland, Australia, announced that it had started the commissioning process of its oxyfiring technology. Two air separation units produce oxygen, which is then mixed with exhaust gas from the boiler and fed into the coal fired boiler, in one of the few coal-fired oxyfuel constructions in the world. The aim is to produce a flue gas that is effectively a mix of CO2 and water vapour (and minor impurities), from which the water can be readily removed, meaning a final gas stream with a very high CO2 concentration, suitable for storage/compression/drying. The plant is expected to be fully operational towards the end of the year. The project is a joint venture between CS Energy, the Australian Coal Association, Xstrata Coal, Schlumberger, and Japanese participants, J-POWER, Mitsui & Co. and IHI Corporation.

A range of companies have been bidding for the contract to build a 2000 MW combined cycle power plant in Riyadh, Saudi Arabia. The lowest bid, of around $US 1.26 billion/€957 million, was submitted by Saudi Arabian Bemco Contracting, with five other bids ranging from $US 1.29 billion/€977 million to $US 1.69 billion/€ 1.28 billion. Hyundai Engineering and Construction, Daelim Industrial, Hyundai Heavy Industries, Tecnicas Reunidas, and a consortium of National Contracting Co (a Saudi company) and Siemens were the other bidders. Saudi Electricity, the client and the state electricity, plans to expand power generation by 30,000 MW by 2018.

China’s Power Construction Company (PCC) has agreed a $US 2.4 billion/€1.81 billion engineering, procurement and construction contract to build four 660 MW coal-fired power plants in southern India. The client is Infrastructure Leasing and Financial Services Ltd, and is the second and final phase of a project to build 3,600 MW of power generation capacity. Not to be outdone by Saudi Arabia, India expects to add 76,000 MW of power generation capacity, 85% of it coal-fired, over the next five years. The coal fired at the new plants is expected to come from Indonesia, Australia and South Africa.

Canadian company TransAlta and its partners Enbridge and Capital Power have cancelled plans to build a demonstration carbon-capture and storage plant in Alberta, Canada. The $US 1.42 billion /€1.08 billion plant, named Project Pioneer, was abandoned after no buyers for the carbon dioxide could be found, nor any way of selling the emissions-reduction credits (a cap-and-trade system is not yet in place in Canada). The project, which would have captured and stored carbon from the 450 MW Keephills coal-fired power plant west of Edmonton, had been backed by $US 768 million/€579 million of funding from the state and federal governments.

Brazilian company MPX, which had planned to build a 2100 MW coal-fired power plant in Chile, in a joint venture with E.ON, has announced it is reconsidering the project. In what must be seen as a tactical move, as the plans are currently being reviewed by Chile’s supreme court, and the additional power is seen as vital to Chile’s economic growth, the joint venture has publically aired its thoughts about building a plant of half the capacity, or no plant at all. The 2100 MW plant carried a price tag of $US 5 billion/€3.77 billion. The supreme court is considering the proposals because of concerns raised by fishermen and artisans local to the proposed site, in the north of Chile, that the project carried the wrong environmental categorisation. Chile plans to add 8000 MW of additional power generation capacity by 2020.

Australian firm HRL has announced it is freezing the development of a 600 MW hybrid gas/brown-coal-fired power plant it planned to build in the state of Victoria, Australia. The plant was to gasify the brown coal before mixing it with natural gas and combusting the mixture, resulting in 40% lower CO2 emissions compared to typical brown-coal only plants. The decision to freeze came after a tribunal ruling that HRL felt was against its interests in building the plant, which had been in development for five years.