20.5.2009

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Biomass co-combustion in Central and East Europe

May 20

th

, 2009

Pozna , Poland

Ilkka Pihlainen

Future of Bioenergy

A Pöyry perspective

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Biomass co-combustion in Central and East Europe, Ilkka Pihlainen

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Content

1.

Current and future energy
demand

2.

Economics of energy

3.

Bioenergy environment and
technologies

4.

Key messages

5.

Pöyry presentation

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Biomass co-combustion in Central and East Europe, Ilkka Pihlainen

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Several factors affect the energy market investments

INVESTMENT

CLIMATE

Global economy

Energy demand

Energy market

structure

Banking crisis

Global economic
crisis

Climate
change

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Biomass co-combustion in Central and East Europe, Ilkka Pihlainen

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Global Energy Demand 2006 and 2030 (Mtoe)

North America

+ 15 %

2 768 3 180

Latin America

+ 63 %

530

862

Europe

+ 6 %

1 884 2 005

Africa

+ 40 %

614

857

Middle East

+ 112 %

522

1 106

Asia

+ 96 %

3 227

6 325

E. Europe/ Eurasia

30 %

1 118 1 454

Pacific

+ 13%

884

995

= 2006

= 2030

Source: IEA 2008

World Energy Demand Growth

+ 45 %

North America: USA, Canada and Mexico

Eurasia: include Russia

Pacific: Australia, New Zealand, Japan and Korea

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Global Electricity Consumption 2006 and 2030 (TWh)

North America

+ 31 %

4 413 5 774

Pacific

+ 30%

1 601

2 089

Europe

+ 32 %

3 022 3 980

Asia

+ 189 %

3 669 10 589

Latin America

+ 93 %

777

1 498

Africa

+ 108 %

479

997

Middle East

+ 151 %

539

1 353

Source: IEA 2008

= 2006

= 2030

World Electricity Demand Growth

+ 80 %

60 %

1 165

1 860

E. Europe/ Eurasia

North America: USA, Canada and Mexico

Eurasia: include Russia

Pacific: Australia, New Zealand, Japan and Korea

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6.3

13.813.9

6.5 8.3

178.1

12.515.3

35.2

12.6

5.6

207.8

57

19

201

Natural gas

Oil

Coal

64.8

100.1

0.3

Proved reserves of fossil fuels are
generally taken to be those
quantities that geological and
engineering information indicates
with reasonable certainty can be
recovered in the future from known
reservoirs under existing economic
and operating conditions

Total Proved Fossil Fuel Reserves in the World

Thousand million tonnes 2004

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Economics of Power Generation From Different Fuels

•

Based on the current estimates, nuclear
power has clearly lower generation costs
than coal-fired power generation with
carbon capture or carbon tax

•

However, there are reasons why nuclear
may not in all cases be a practical
solution:

–

Public opposition for long-term
storage of nuclear waste – but public
may oppose carbon storage as well

–

Nuclear safety fears, seismic issues
and siting difficulties

–

Limitations on equipment supply
market due to limited number of
manufacturers

–

Lack of nuclear engineers and know-
how

–

More limited uranium reserves
compared to coal

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Investment by region 2016-2030

303

352

1 428

478

450

1 886

498

3 206

0

500

1000

1500

2000

2500

3000

No

rt

h A

m

e

ri

c

a

E

ur

ope

Pa

c

ific

E.

Eu

ro

p

e

/

E

u

rasia

A

s

ia

M

idd

le E

as

t

Af

ri

ca

L

atin

A

me

ric

a

b

ill

io

n

U

S

D

(2

0

0

7)

Generation (54%)

Transmission (14%)

Distribution (32%)

Investment Needs in Power Infrastructure

Source: IEA 2008

*One EU is the annual energy demand in Europe today

•

The global energy supply
projections call for
cumulative infrastructure
investment of $26 trillion
by 2030

•

World overall energy
demand is expected to
grow by 5 EU* within the
next 25 years

•

Power sector requires
more than half of total
energy investment ($14
trillion)

•

…or roughly three times
the total amount spent by
governments on financial
crisis packages

The largest investment requirements during the next 25 years
will be concentrated in Asia, North America and Europe

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Business Environment for the Bioenergy Sector

The EU, the US, Canada and several Asian countries have set mandatory
targets for electricity production from renewables and for biofuels. Biomass will
play an important role in reaching these targets.

Scale of individual biomass investments is constantly increasing (>300 MWe),
requiring very large volumes of biomass (>2.5 million tonnes per year).

High prices for fossil fuels drive process of replacing fossil fuels with biomass.

Innovative technologies for the conversion of cellulose to biofuels are close to
commercial breakthrough, further increasing the global fibre demand.

The biomass market is becoming more and more international, but it is still far
away from being a unified global market comparable to markets for fossil fuels.

Currently there are not many relevant market players who could provide
international biomass sourcing on a very large scale.

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Biomass Consumption

•

Biomass currently accounts for about
14% of world’s final energy
consumption; about 25% of this is in
industrialised countries, while 75% is in
developing countries

•

About 860 TWh of biomass is currently
used for heat and power generation,
mostly in Europe and North America

•

Biomass usage for heat and power is
expected to double worldwide by 2015;
in Asia, the forecasted increase is
about 300% (source: IEA reference
scenario World Energy outlook 2006)

•

Only 1.3% of world’s electricity is
generated from biomass at present; the
share of biomass power generation
varies by country from 0 to 10.9%
(Finland).

•

The share of biomass power
generation is forecasted to increase to
2.4% of the total by 2030.

0

100

200

300

400

500

600

No

rth A

m

eric

a

E

urope

Eas

te

rn

Eur

op

e/R

us

si

a

A

si

a (

ex

cl

ud

in

g C

hin

a&Ind

ia)

China

Ind

ia

Lat

in Ameri

ca

M

id

dl

e Ea

st

Africa

P

as

ific

T

Wh

Increase 2015

2004

Biomass Consumption for Heat & Power

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Biomass expected to deliver most of the REN increase in Europe

•

Pöyry estimates that the emerging
European economies need 300 TWh
of additional renewable energy to
meet the 2020 target

•

Around 300 TWh of additional primary
biomass fuel will be required

•

A minimum of 15 GW of wind will be
deployed.

•

Pöyry estimates that € 1,000 bn of
investments will be needed in the
EU27 between 2010 and 2020

•

Mix of additional energy required to meet

the 2020 target for the 12 new members

The European Commission estimates a significant additional potential for biomass to
energy in all of Europe

0

20

40

60

80

100

120

Wind

Hydro

biomass

electricity

biogas/biowaste

other renewable

electricity

biomass heat

other renewable

heat

biofuels for

transport

Energy requirement between 2010 and 2020 (TWh)

Source: Pöyry

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Global View on Future Harvesting Potential and Wood Market

On a global level the available potential of biomass resources is high. However
the biomass demand from the bioenergy sector is increasing significantly and
competition with traditional wood consuming industries is becoming stronger. A
secure and sustainable long-term biomass procurement strategy is the key
success factor for bioenergy investments.

Only marginal potential to
increase harvest level in Europe.
Increasing pressure from bio-
energy on wood resources

Asia-Pacific will continue
to be the world's largest
wood deficit area.

Increasing removals
based on existing and
new plantations,

Potential to expand
plantation area is
very limited.

Increasing wood supply
based on maturing softwood
plantations in UK and US
South. Stable wood supply
in US East

Temporarily
increasing harvest
potential due to pine
beetle infestations in
B.C.. Decreasing
harvest potential for
softwood in the long
term. Note. Sawmill
production now
temporarily low

Stable or slightly
decreasing
long term wood
supply potential.

Stable or slightly decreasing wood supply as
harvesting quotas in Eastern-Canada are reduced
to prevent unsustainable harvesting.

Latin America holds the world's
largest hardwood stock, however
mostly inaccessible in natural
tropical forests. Substantially
increasing removals based on fast-
growing plantations.

Controversial harvesting
of high-value sawlogs
from natural forests is
increasing.

Controversial
substitution of natural
forest with plantations.

Russia holds significant unutilised
harvest potential. However a
significant part of unutilized
harvest potential is currently
inaccessible. Export duties are
hampering the trade in logs.

Existing and future hotspots for bioenergy investments

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Maturity of Selected Biomass Power Generation Technologies

Commercially

available

Demonstration

phase

Pilot phase

In Future

Pressurized fluid bed combustion

Integrated Gasification Combined Cycle

Cofiring

Grate

BFB/CFB

Supercritical CFB

Organic Rankine Cycle

Stirling

Anaerobic digestion + engine

Suspension firing

BFB = Bubbling Fluidised Bed
CFB = Circulating Fluidised Bed

Current focus

Gasification

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0

100

200

300

400

500

600

700

800

900

1000

GRATE

BFB

CFB

Capacity Range for Different Boiler Technologies

Boiler capacity MW

th

MW

Current Scale

The next scale-up potential

Generation potential MW

e

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Climate change mitigation creates a substantial market for renewable energy

Biomass usage in heat and electricity plants is expected to double by 2015; in
Asia, the increase is forecasted to be about 300%

Rapidly growing bioenergy market is changing the traditional operating
environment of forest industry

Energy efficient concepts and capability to use multifuels is increasing

Economic downturn decreases power prices and short term project viability

Business Environment - Key Messages

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Biomass Procurement – Key Messages

The biomass resources on a global level are sufficient to support significant
growth in the bioenergy sector.

The biomass trade will most likely further internationalise and expand.

Due to increasing competition for biomass resources, highest priority should
be given to a secure and sustainable biomass supply to make a bioenergy
investment successful.

The main wood assortments for the bioenergy industry are small dimension
logs and wood chips. Wood pellets are increasing their market presence,
especially in Europe and North America. Harvesting residues are so far a
mostly unused resource but will be a very important biomass source in the
future

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Technology – Key Messages

Biomass usage in heat and electricity plants is expected to increase
significantly in the next decade causing that availability, logistics and price of
biomass limits the growth

The specific properties of the available biomass must be considered when
selecting the technology and flexibility to fuel quality variations, possibility to
use variety of fuels, emission removal, steam parameters and lifetime costs
are key technological aspects to be considered

Subsidy schemes and surrounded infrastructure have impact on technology
(full condensing, combined heat and power – CHP, fuel sources etc.)

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Technology – Key Messages (2)

Multiple type of biomass and possibility to use fossil fuels to secure fuel
supply

•

more complex fuel handling

•

challenges in combustion process

•

higher maintenance costs

•

higher specific investment costs

Scale-up of today’s commercial technology has limitations and duplication to
compensate scale-up is more capital intensive. In the short term, no major
changes are expected in large scale biomass power generation technologies

=> Tendency is towards higher efficiency and fuel flexibility

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Group overview

Company presentation 2009

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Five business groups

Core operations based on five know-how clusters

(c) grafikdienst.com

Energy

Water &

Environment

Forest Industry

Construction

Services

Transportation

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Pöyry’s services and expertise

Areas of expertise

•

Forest industry/by-products

•

Forest/Agrofuels -harvesting

•

Logistics

•

Combustion technologies

•

Flue gas treatment
processes

•

Power generation

•

CHP and district heating

•

Wood pellets

•

Liquid biofuels for
transportation

•

Landfill Gas and biogas

Services

•

Assessment of bioenergy
resources and potentials

•

Master plans

•

Market studies

•

Business strategies

•

Feasibility studies

•

Business plans

•

JI/CDM projects

•

Environmental impact
assessment and
environmental permitting

•

Engineering

•

Project management

•

O & M

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Renewable Energy

•

Comprehensive consulting, project
management and engineering services.

•

Know-how covers all aspects of feedstock
management and energy conversion schemes.

•

Strong development in solar applications with
capabilities assessing irradiation, designing
large solar power schemes combined with sea
water desalination.

•

Core areas

–

Bioenergy

–

Waste-to-Energy and waste treatment

–

Solar power

–

Wind power

–

Geothermal energy

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Hongsa 1,800 MW Lignite-fired Power Project, Laos

Client:

Banpu Public Co., Ltd.

Project:

1,800 MW Lignite-Fired Mine

Mouth Power Plant

Services: Owner’s Engineer services:

Project Management; including

•

overall project review and risk assessment

•

review and adjustment of project master

schedule

•

support in project and schedule management

•

review of the concept and tender documents for

the dams

•

assistance in finalisation and negotiation of all

project contracts

•

project planning for the construction phase

•

support in lenders due diligence process and

other project development work

Duration: 2005–2008

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Elcho 300 MW CHP Plant, Poland

Client: Foster Wheeler Energia Oy
Performance of Power Plant:
Electric power output, max.

2 x 150 MW

District heat output, max.

2 x 180 MW

Fuel:

Polish black coal

Boilers: Circulating fluidized bed boilers

with natural circulation and reheating

Steam Turbines:

Three-casing extraction condensing
turbines with district heating supply

Services:

•

Engineering management for BOP

•

Technical advisory services for turbine island,
water treatment and district heating

•

Process engineering

•

Plant layout and piping design and procurement

•

Equipment dimensioning and procurement

•

Equipment test witnessing

Duration: 2001-2003

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Client: Oy Alholmens Kraft Ab, Pietarsaari

Performance of the plant:
Electric power output, max. 240 MW
Process steam, max.

100 MWth

District heat, max. 60 MWth

Fuels:

Coal, bark, sawdust, wood waste,
commercial biofuel, peat (and REF)

Boiler: Circulating fluidized bed boiler with

natural circulation and reheat cycle

Steam Turbine:

Three-casing extraction condensing
turbine with district heating and
process steam supply

Services provided
Economic studies, conceptual design,
pre-engineering of BOP and procurement
services for steam turbine and auxiliary
equipment and systems, plant layout design
(3D model), HVAC engineering, general and
process engineering, piping design and
procurement services, services for
automation system procurement

Services for automation system procurement
expediting audit of the steam turbine plant delivery
and supervision of steam turbine plant design

Duration: 1999-2001

Alholmens Kraft 240 MW Condensing Power Plant, Finland

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Conclusion – Wise use of Bioenergy

“The use of biomass raw material must
be on a sustainable level in terms of
adequacy and biodiversity”

“Combined heat and power (CHP) is the
most effective way to utilize bioenergy in
large scale”

“Biomass trade possibilities can be
expanded by further upgrading e.g. to
wood pellets or BTL (Biomass To
Liquids)”

“Heat only boiler (HOB) provides
efficient solution in smaller installations”

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Company Presentation 2009

27

Thank you for your attention.

More information from

www.poyry.com

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Contact details

Mr. Wojciech Dygas

Director

Pöyry, Chemical Process Industry

Pöyry Forest Industry Sp. z o.o.

90-626 Lódz, ul. Zeromskiego 52

Office in Gliwice

44-100 Gliwice, ul. Szobiszowicka 1

tel.

[phone]

Fax

[phone]

Mobile

[phone]

[e-mail]