Powerlines - Issue #20 - September 2010 - Parsons Brinckerhoff

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Powerlines - Issue #20 - September 2010 - Parsons Brinckerhoff

Issue 20 : September 2010

Powerlines

News and industry comment from Parsons Brinckerhoff around the globe

Riding a

solar wave

UK plans gas

storage caverns

Plus

That sinking feeling

Qatar diversifies

Let the music play

Friends united

Water on the rise

Closing the UK capacity gap

UK biomass appointment


Powerlines

Issue 20 : September 2010

That sinking feeling

Contact: Paul Shiers (shiers@pbworld.com)

When a sinkhole almost 2m deep mysteriously appeared next to a hydroelectric dam in

Tennessee, USA, PB engineers were brought in to get to the bottom of it.

The Chilhowee Dam near Knoxville

is 26m high and 458m long, with two

rockfill embankment sections, an integral

powerhouse, a concrete gated spillway, and

two concrete non-overflow sections. The

dam had performed well for over 50 years,

but in February 2000 a substantial sinkhole

appeared on its south embankment.

On behalf of the owner/operator – Alcoa

Power Generating Inc – PB implemented

an intensive monitoring program lasting

over eight years, during the course of

which a further 1.2m of settlement was

observed. Given the progressive nature of

the settlement, it was vital to determine the

exact cause of the sinkhole so that it could

be corrected. Left alone, the problem was

likely to reoccur and threaten the stability of

the dam.

PB carried out many different types of

subsurface investigations, from borings and

test pits to instrumentation, dye tests and

geophysics. The site was a challenging

one, with complex geometry at the

abutment and multiple inclined layers of

materials in the embankment. Although PB

found deficiencies in the embankment, it

could not conclusively identify the cause of

the sinkhole using subsurface exploration

methods.

The next step was to conduct a forensic

excavation. By following the sinkhole and

excavating in thin layers, PB determined

the cause to be poor construction of the

original dam. The solution? Excavating the

sinkhole area to rock, extensively treating

the rock foundation and abutment, and

replacing the zoned embankment materials

to match pre-construction surface contours.

Safety was the top

priority on this repair

effort. PB had to

ensure that staff, the

public and the dam

were kept safe at

all times, and that

no safety incidents

occurred during

construction

PB increased the number of upstream

filters from two to three, with a coarse filter

added between the medium filter and

rockfill to allow for compatibility. Another

downstream filter was also added, providing

a sand filter next to the clay for improved

protection of the new clay. By adopting a

flexible approach, PB was able to adapt to

unexpected conditions encountered during

construction, such as filters not being at

design width or position.

The magnitude and duration of the reservoir

drawdown during construction had to be

minimised to prevent the clay core from

drying out and cracking, to diminish the

potential environment impacts created by

the lowered water level, and to reduce lost

generation revenue. PB achieved this by

creating an efficient construction sequence

via significant planning, and by doing only

a partial depth replacement of the existing

structure based on field observations.

Safety was the top priority on this repair

effort. PB had to ensure that staff, the

public and the dam were kept safe at all

times, and that no safety incidents occurred

during construction. All excavation and

dam repairs had to undergo qualified

engineering inspection, and materials were

tested on site with quick results to support

the construction schedule.

Communications played a key role in the

success of this project: daily discussions

allowed the owner, engineer, construction

team and the Federal Energy Regulatory

Commission (which licenses the dam) to

work closely together to achieve shared

goals.


Powerlines

Issue 20 : September 2010

Riding a solar wave

Contact: Eric Lassurguere (lassurgueree@pbworld.com)

With its world-famous sandy beaches and holiday resorts, you would expect Thailand

to be an ideal candidate for embracing solar energy. Indeed, NASA measurements

of average solar radiation over the last 20 years indicate a potential installed power

capacity of more than 50,000 MW.

However, like many other countries in

Southeast Asia, this has not been the case

and Thailand has not yet developed solar

power generation to any great extent.

Solar energy collection is something of a

challenge in a wet tropical climate where it

rains more than 100 days per year and the

average humidity is 80 per cent. In these

conditions, the most suitable systems for

energy collection are photovoltaic (PV)

panels rather than a system that depends

on direct radiation collection.

The limitations inherent to the technology

(high cost, limited output and efficiency)

have kept the unit cost of solar electricity

high in comparison with other energy

sources. Firm government incentive

policies have been required to stimulate

sizeable PV energy production.

The break-even point was reached in 2009.

Amid increasing worries about global

warming and strategic concerns raised

by Thailand’s dependence on fossil fuels

(70% of energy production from gas, 21%

from coal and lignite), the Government had

already introduced incentives for private

investors producing energy from renewable

sources through the country’s Small Power

Producer (SPP) and Very Small Power

Producer (VSPP) programmes.

The SPP programme allows private

developers to build, own and operate

10-90 MW power projects and enter into

power purchase agreements (PPAs) with

EGAT, the national electrical generation

and transmission utility. Under the VSPP

program, producers of up to 10 MW may

sell power directly to MEA and PEA, the

electricity distribution utilities.

The incentive comes as an ‘adder tariff’

provided for purchases of solar energy

from private suppliers, similar to Germany’s

feed-in tariff model. It is part of a framework

aiming to reduce energy sector greenhouse

gas emissions by as much as 30 per cent

by 2020.

In 2009, the price of imported PV panels

fell about 50 per cent as a result of an

oversupply on the world market, caused in

part by the global recession.

It was these two factors that led the Ministry

of Energy to receive applications for more

than 250 projects that would supply the

national network with 425 MW within two to

three years, making Thailand a clear leader

in promoting the use of solar energy in

Southeast Asia.

Small-scale solar power has been around

for many years in the country. There are

32 solar rooftop installations connected to

the grid, multiple off-grid VSPPs, and even

a few solar farms sponsored by EGAT. But

the combined capacity of these projects

remains very low (34 MW) and the arrival

of the projects currently being developed

presents two major challenges:

• Impact on communities: solar plants

have very specific characteristics

that present both challenges and

opportunities (no emissions but covering

large areas; limited infrastructure

development; limited requirements for

operation and maintenance).

• Grid integration: in addition to having

cyclic and ‘uncontrollable’ power output,

solar farms tend to generate lots of

harmonics. With large solar farms now

in construction, little is known about the

effect of integrating these embedded

generators into the national grid.

PB has been involved in the Thai ‘solar

wave’ since its origin, leveraging the

experience gained by colleagues in Asia,

Europe (notably Spain) and Australasia.

The team has played an active role in

demonstrating the technical and economic

potential of many landmark projects, and

was involved recently in assessing a PV

production facility in China, providing

technology know-how and important market

input at a local and global level.

The current focus in Asia is on a small

number of carefully selected projects that

address the community impact and grid

integration issues referred to above. PB

also has a critical construction management

role on one of the region’s largest PV plants,

with an installed capacity of 42.5 MW.


Powerlines

Issue 20 : September 2010

UK plans gas storage caverns

Contact: Roger Blair (blair@pbworld.com)

Oman

strategy

assessment

Contact: Mo Deif (deifm@pbworld.com)

A natural gas storage cavern planned under the East Irish Sea will increase the UK’s

natural gas storage capacity by 30 percent, while providing five full days of gas supply

based on average UK gas demand.

20 individual caverns will be developed in

a natural salt structure some 750m below

the seabed, enabling gas to be delivered,

stored and then returned to the UK’s

national transmission system. Each cavern

will measure approximately 200m high and

85m wide, with a total capacity of 1.5bn

cubic metres.

PB is providing front-end engineering

design (FEED) services for this US$924m

project, located 25 km offshore southwest

of Barrow-in-Furness, Cumbria. Its

proximity to existing onshore gas terminals

near Barrow and the particular nature of

its salt strata makes it one of the most

appropriate locations in the UK.

Storing gas in salt caverns and depleted

gas fields helps the UK’s gas market to

meet seasonal and short-term peaks in

demand, and to respond to price volatility.

In recent years, Centrica’s Rough field has

been the UK’s only offshore gas storage

facility and its largest single facility, but a

number of new storage projects are now

coming forward, both onshore and offshore.

Thanks to the expertise of its energy storage

services team in North America, PB is a

world leader in the design of storage cavern

systems in salt and hard rock. The team is

currently involved with a number of other

significant cavern storage projects in North

America, Asia and the UK.

Roger Blair, president of PB’s Power and

Energy group in the Americas, commented:

“As the North Sea natural gas fields

continue their decline, the UK will need a lot

more storage to take care of peak demand.

When completed, the Gateway caverns

will help assure gas availability for the UK’s

power generation market.”

“The biggest challenges of this project – its

size and location offshore – are also its

advantages,” added Roger. “Because it’s

located offshore, it doesn’t risk the local

opposition of an onshore project, but it has

significant logistics and weather challenges,

not to mention the complex offshore drilling

environment.”

Nick Flew, managing director of PB’s

European business, said: “This is a crucially

important project for the UK’s security of

energy supply, particularly for the domestic

market. The engineering challenge to

deliver the scheme is considerable and it is

absolutely the type of work where Parsons

Brinckerhoff’s expertise comes to the fore.

It also demonstrates our ability to bring to

bear specialist knowledge from around the

world wherever it is needed.”

PB’s client, Gateway Storage, has

appointed two other companies to the

FEED: AMEC for the onshore and offshore

elements, and Senergy for the offshore

infrastructure and logistics. Gateway

Storage was formed and is managed by

Stag Energy to develop storage caverns in

offshore rock formations.

The front-end engineering process is

scheduled for completion by the end of

2010, followed by a year of detailed design

and engineering and then construction.

Gateway is targeted to start commercial

operations in 2014/2015.

This is a crucially

important project

for the UK’s security

of energy supply,

particularly for the

domestic market. The

engineering challenge

to deliver the scheme

is considerable and it

is absolutely the type

of work where Parsons

Brinckerhoff’s expertise

comes to the fore

In July this year, Parsons Brinckerhoff was

awarded a contract to assess the optimum

development strategy for power generation

and transmission systems in support of an

oil and gas production network covering

a large part of the interior of Oman and

operated by Petroleum Development of

Oman (PDO).

PDO is an operating company which holds

an inland concession for the exploration,

drilling and production of oil across multiple

locations in the interior from Lekhwair and

Nahada in Northern Oman to just north of

Salalah in the south. This growing network

requires increasingly sophisticated power

generation and distribution systems. PDO

is jointly owned by the Government of the

Sultanate of Oman (60%), Shell (34%), Total

(4%) and Partex (2%).

Our study will provide PDO with optimum

development proposals for the power

system over the next 25 years. It will

provide a new master plan based on

current PDO policies, provide the heat

requirement for cogeneration, and review

alternatives within the context of possible

excess capacity and export opportunities.

PDO currently meets electrical demand

through the use of 25 gas turbine

generators operating in open cycle or

cogeneration mode. PDO plans to install

further turbines over the next few years

to meet forecast increases in demand.

The future gas turbine generators will be

operating as cogeneration of CCGT to

increase the overall thermal efficiency.

The plan is to locate the new turbine units

as close as possible to demand centres

across the PDO network in order to balance

the load.

Substations on the network are

interconnected by 132 kV single-circuit

overhead transmission lines. While PDO

is essentially self sufficient for power, there

is a 132 kV single-circuit connection to

the main interconnected system operated

by Oman Electricity and Transmission

Company (OETC) which runs from Nahada

to Nizwa, south west of Muscat. A new

connection to Dhofar Power Company

(DPC) at Salalah in the south is under

construction.

For more information visit

www.gatewaystorage.co.uk

Our final report will be presented to PDO at

the end of September 2010.


Powerlines

Issue 20 : September 2010

Let the music play

Contact: Ray Stankowski (stankowski@pbworld.com)

You only need to stroll through Austin, Texas, to understand why it is known as the live

music capital of the world. From musical festivals to open-air classical concerts, the streets

are most definitely alive with the sound of music! But there is so much more on offer in

this vibrant city, from popular tourist attractions to the renowned University of Texas and a

flourishing high-tech industry. And behind it all is an ever-increasing demand for energy.

some of the MBE/WBE staff were not

experienced in the design of large power

plants, but we were able to provide them

with the necessary guidance and expertise

to add value. The project also allowed

significant economic gains to be realised

locally with the use of highly efficient

gas turbines achieving lower electrical

production costs and providing the area

with cost-effective power.

Readers may be interested to know that this

was the first project designed by PB to use

screw-type gas compressors. Wet-screw

natural gas compressors require far less

maintenance than the more commonly

used reciprocating compressors, a primary

consideration in their selection. These are

large 5 kV, 2,800 HP compressors providing

high-pressure gas for the two new CTGs

and the four CTGs already on site.

sequencing of the gas compressors and

the black-start synchronisation of the diesel

generators. But with a coordinated effort

from all involved, this EPC peaking project

was kept on track and successfully entered

commercial operation. The designed

power efficiency was achieved and the

much-loved music could continue to play

“Live... from Austin City Limits”.

During the work there were a number of

interface issues to be overcome, arising

from the assimilation of new systems

into various existing site equipment

connections. In addition there were a

number of design challenges relating to the

Austin Energy is the utility company serving

residential and commercial businesses

throughout the Austin area. Aware that

without additional power the city could face

outages or failures, Austin Energy devised a

solution: the 100 MW expansion of the San

Hill Energy Center.

The Energy Center is located in a rural

industrial area around 13 km outside

the city centre. To provide additional

capacity, Austin Energy acquired two

GE LM6000 ‘classic design’ combustion

turbine generators (CTGs) and associated

equipment to ensure a fully integrated and

highly efficient system.

In a competitive procurement process,

PB’s extensive experience with this type of

gas turbine and a strong relationship with

joint venture partner TIC proved a winning

combination, and Austin Energy selected

us as EPC (engineer, procure, construct)

partner.

We were awarded a two-phase designbuild

contract. During phase one we

reviewed and finalised the owner’s design

criteria, proposed schedule, budget and

arrangement drawings to clarify design

details such as preliminary site survey

and geotechnical investigations. Phase

two covered an EPC cost proposal for the

detailed design, construction, start-up and

commissioning of the completed expansion

project.

With the project being performed on a fasttrack

basis, we quickly pulled together our

best team for the work. Our San Francisco

office provided detailed design engineering

and our Austin office identified local Minority

Business Enterprise (MBE) and Women’s

Business Enterprise (WBE) engineering

firms. By inviting engineering and design

support from local minority firms we were

able to deliver real social benefits by

helping to maintain and develop the local

skills base. Whilst well-qualified technically,

Readers may be

interested to know

that this was the first

project designed by

PB to use screw-type

gas compressors


Powerlines

Issue 20 : September 2010

Friends united

Contact: Colin Mackenzie (mackenzieco@pbworld.com)

Europe is in the process

of building an ‘electric

economy’ which could

see most of its transport

powered by electricity

by 2050. As part of this

transition, electricity grids

will no longer be seen

as a national resource:

they will instead become

international corridors of

trade, bringing renewable

energy generation from

northern marine and

southern solar generation

to European centres of

population.

To reduce carbon emissions, the increased

demand for electricity will have to be met

by renewable energy. To fully exploit these

renewable resources, and deliver power

on a continental scale, the energy sector

will need to significantly reduce investment

costs through a series of innovations, from

plant design to voltage source technology.

In offshore wind, scale will come from

combining large clusters of simplified

turbines into wind-fired power stations – and

it is these stations that will form modules on

which the Supergrid will be built.

The Supergrid is an exciting development

proposal that will create a network of

subsea electricity cables interlinking all the

countries of Europe, allowing the exchange

of electricity. It will enable an extensive

development of offshore wind farms to

counter the intermittency of the wind – the

thinking being that if the wind is not blowing

in the North Sea, it could well be blowing

in the Mediterranean. The Supergrid will

also facilitate the electricity transmission

from other generation sources to counter

intermittency, including hydro power in

Northern Europe and potentially solar

power in Southern Europe. Offshore wind

farms will be able to plug directly into the

Supergrid. It is envisaged that the offshore

grid network will run from the northern

North Sea, off the coast of Scotland,

through the English Channel, past the west

coasts of France and Portugal and into the

Mediterranean, with multiple connections to

the land-based grid networks.

This multi-billion pound development will

require cooperation at European level. It

has already gained the support of the

European Energy Minister, and now ten

global companies – PB included – have

come together to form ‘Friends of the

Supergrid’ (FOSG). The group not only has

the requisite insight into the policies needed

to create the Supergrid, it also has the

capability to deliver it in practice.

Launched in London and Brussels in

March this year, the FOSG is the only

representative body to combine companies

in sectors that will deliver the high voltage

direct current (HVDC) infrastructure

and related technology, together with

organisations that will develop, install, own

and operate that infrastructure.

Speaking on behalf of FOSG at the London

launch, Mainstream Renewable Power’s

Chief Executive Dr Eddie O’Connor said,

“The UK Government has recently shown its

commitment to large-scale offshore wind by

announcing the development of up to

50 GW by 2020. We now need to

integrate this huge resource into Europe

to enable the open trade of electricity

between member states. The Friends of

the Supergrid group is uniquely placed to

influence policy makers towards creating

the Supergrid and ultimately changing

how we generate, transmit and consume

electricity for generations to come.”

In late 2009, Norway joined nine member

states of the EU, including the UK and

Germany, to develop policy to advance

offshore interconnection in Europe. The

FOSG is solely able to present ‘cradle to

grave’ interconnection solutions to the

policymakers and others looking to develop

energy policy across Europe through to

2050.

The concept of Supergrid was first

launched a decade ago and it is defined

as an electricity transmission system,

mainly based on direct current, designed

to facilitate large-scale sustainable power

generation in remote areas for transmission

to centres of consumption, one of

whose fundamental attributes will be the

enhancement of the market in electricity.

The Supergrid will open markets,

strengthen security of supply, assist in

meeting Europe’s emissions targets

to 2050, and create another global

opportunity for European companies to

export sustainable energy technology. The

technology underpinning the Supergrid

will give competitive advantage to the

companies involved with its specification

and design. This type of integrated AC/

DC grid will be a template for what will be

needed in other global markets, including

the United States and China.

The founding members of FOSG are 3E,

Areva T&D, DEME Blue Energy, Elia,

Hochtief Construction AG, Mainstream

Renewable Power, Parsons Brinckerhoff,

Prysmian Cables & Systems, Siemens, and

Visser & Smit Marine Contracting.

For further information visit

www.friendsofthesupergrid.eu

The Supergrid will open markets,

strengthen security of supply, assist in

meeting Europe’s emissions targets

to 2050, and create another global

opportunity for European companies to

export sustainable energy technology


Powerlines

Issue 20 : September 2010

Qatar diversifies

Contact: Fred Fawcett (fawcettf@pbworld.com)

Water on the rise

Contact: Eric Wolters (wolterse@pbworld.com)

Despite being one of the

world’s richest hydrocarbon

economies, the Middle

East State of Qatar is now

starting to deliver on its

declared policy to diversify

into non-hydrocarbon

related industries and

services and reduce

greenhouse gas emissions.

This enlightened approach will also be

evidenced in power generation this year

when the US$2.3bn Mesaieed power

plant comes on line. For the first time in

Qatar, this state-of-the-art facility will use

sophisticated catalytic reduction technology

to ensure greenhouse gas emissions are

greatly reduced in keeping with demanding

international standards.

The Mesaieed combined cycle gas turbine

power plant which, at 2,007 MW, will be one

of the largest of its type within the State of

Qatar, was inaugurated on 18 May by His

Highness Emir Sheikh Hamad bin Khalifa

al-Thani accompanied by His Excellency

the Deputy Prime Minister and Minister of

Energy and Industry, Abdullah bin Hamad

Al-Attiyah.

It was back in 2007 when Kahramaa

(The Qatar General Electricity and

Water Corporation), mindful of the need

to increase the country’s electricity

provision, looked to private investors to

help build an independent power project

(IPP). An agreement was signed with the

Mesaieed Power Company (MPower)

which subsequently awarded the owner’s

engineer contract to Parsons Brinckerhoff.

The EPC contractor for the project was

Iberdrola Ingeniería y Construcción SAU of

Spain. The electricity produced by the plant

will be sold to Kahramaa under the terms of

a 25-year power purchase agreement.

As owner’s engineer, PB worked

closely with MPower to assist

with project management, design

review, works inspections, and

supervision of construction and

commissioning. To ensure the

successful delivery of the project,

PB drew on the expertise of its

staff around the world,

making full use of

electronic documentsharing

systems to

provide quick access to

contract documents.

Mesaieed A IPP will bring Qatar’s total

power capacity to 9,000 MW by the end of

2010. The power will benefit the 1.2 million

residents in Qatar, and the infrastructure

exists for the surplus to be exported

to neighbouring countries via the Gulf

Cooperation Council’s interconnection.

The plant comprises three power blocks

each consisting of two GE frame 9FA gas

turbine generators, two NEM heat recovery

steam generators (HRSGs), and one GE

steam turbine generator. Two GE frame

6B gas turbines operating in open cycle

with black-start capability are also provided.

Three substations (400 kV, 220 kV

and 132 kV) feed the power to

Qatar’s main power grid while a

400 kV cable supplies electricity

to industrial neighbour Qatar

Aluminium. It is the first power plant

in Qatar to use selective catalytic

reduction technology in the HRSGs,

reducing nitrogen oxide emissions

from around 24 parts per million to

9ppm.

The new century has seen a global upsurge in interest in hydroelectricity, particularly in

developing countries. For many communities, it is the most economical way to provide

electricity to growing populations. For those concerned about carbon emissions, it is a

relatively reliable, low-pollution power source. But for anybody wanting to construct a

hydroelectric facility, it is both an opportunity and a risk: an opportunity to meet a major

need, and a risk that something might go wrong.

This is where the lenders’ technical advisor

(LTA) comes in, says Eric Wolters, executive

of renewable power generation for PB in the

Australia-Pacific region.

“Both public- and private-sector lenders

are interested in hydro generation

projects because demand for electricity

is reasonably assured and the return

reasonably certain,” said Eric. “But every

project has risks, and potential lenders

want to examine all aspects to make sure a

project will produce the necessary revenues

to meet operating expenses and service

debt. The LTA’s role is to help lenders

identify risks that might influence a project’s

viability, and advise how to avoid or mitigate

those risks.”

These risks need to be thoroughly explored

by professionals familiar with the industry,

and that’s where PB comes in. We look

at risks across all areas, including those

relating to infrastructure (eg roads and

transmission facilities), construction,

completion, operation, and how reliable the

supply of ‘fuel’ (ie water) will be.

On the Nam Theun 2 Hydro Project in Laos,

the lenders were most interested in the

impact a turbine rough-running issue was

going to have on revenue streams, because

repair efforts had the potential to cause

significant downtime. PB researched this

issue thoroughly on the lenders’ behalf.

On another project, PB was able to advise

lenders regarding repairs to a flooded

power station that had been out of action for

a year. As well as assessing the impact on

the borrower’s cash flow and ability to repay

the loan, PB assessed the competence of

the repair efforts.

Social and environmental issues are more

carefully thought through on modern hydro

projects than in the past. On the Nam

Theun 2 project, for instance, large tracts

of inhabited land had to be flooded, with

subsistence farmers relocated to purposebuilt

villages, and their means of livelihood

restored. The project also had to deal

with the decline of water quality caused by

rotting vegetation, and its impact on fishing

and grazing.

PB is now working as LTA on hydro

projects in Africa, Sri Lanka, Laos and the

Philippines, and Eric Wolters believes the

market will continue to grow.

“It’s been estimated that only 32 per cent

of the world’s viable hydro generation

resources have been utilised to date,”

he said. “With a worldwide move away

from carbon-based to renewable power

generation, the future of hydro is strong.”

This article first appeared in the July

2010 issue of PB Notes (Australia-Pacific

edition).

It’s been estimated that only 32 per cent of the

world’s viable hydro generation resources have

been utilised to date


Powerlines

Issue 20 : September 2010

Closing the UK capacity gap

Contact: Ian Burdon (burdoni@pbworld.com)

The enormous changes in many of the

world’s electricity supply industries in

the 1980s and 1990s were envisaged

to bring choice and competition in the

supply of electricity to end-consumers.

The move away from all-embracing

parastatals to unbundled public limited

liability companies (PLCs) saw the

separation of generation from supply and

the introduction of regulated monopolies

for ownership and operation of the

transmission and distribution networks.

A market mechanism was established to allow wholesale competitive

trading. In the UK, the sellers into this market are the generating

companies (mainly multinational entities) with many power stations,

and the buyers are the supply companies who retail the energy

as megawatt-hours (MWh) to domestic, commercial and industrial

consumers.

Given that electricity cannot be stored in quantity, the capacity (ie

MW) of the power stations has to be matched on a second-bysecond

basis to consumer demand to avoid widespread collapse

of the system and subsequent enormous economic cost and social

disruption.

The phrase ‘keeping the lights on’ has become a political mantra

in most developed countries where social considerations often

undermine the ability of market mechanisms to choose the

economically efficient level of system reliability. The problem for

many governments is how to ensure that electricity consumers’

requirements are satisfied by global PLCs, in a private sector context,

at an acceptable cost. Meeting consumer demands at all times

means that there must always be sufficient generation capacity to

balance supply capacity against demand on a continuous basis,

whether that is economically sensible or otherwise. Prudence and

technical requirements dictate that a margin of excess capacity,

which may be 10-20 per cent of expected maximum demand, be

installed on top of the forecasted day-to-day requirements.

Given the age profile of generation assets in the UK (shown in

the following figure), to maintain supply security significant new

generating capacity is needed to replace the older, life-expired

capacity. There is also growing concern that the price signals in the

market place are inadequate to ensure enduring capacity with an

appropriate reserve margin into the longer term.

Age profile of UK generating stations

MW installed capacity

25,000

20,000

15,000

10,000

5,000

pre 1950 1950-

1959

1960-

1969

1970-

1979

1980-

1989

1990-

1999

2000-

May 2008

Other Offshore wind Wind Gas CHP Pumped storage

CCGT Oil Nuclear Gas/oil Coal Diesel Hydro

Source: Digest of UK Energy Statistics, table 5.11

In other parts of the world, the market signals or inducements to

ensure adequate capacity reserve margins are more specific and

obvious. In the United States, for example, the Eastern transmission

system operators require the so-called ‘load-serving entities’ (ie

competitive retailers of MWh) to contract for capacity (as well as

energy) to meet projected peak demand, plus a reserve margin.

The fundamental difficulty in inducing generators to provide or

maintain capacity to meet the reserve margin requirement is that,

on a typical interconnected power system, about 50 per cent of the

installed capacity will supply over 90 per cent of the energy. Hence,

generating units which operate for a few hours each year are very

sensitive to the electricity price in high demand periods when they

are called upon to generate. External attempts to cap the price in an

attempt to keep down consumer costs are only likely to drive such

players out of the game.

Ofgem – the UK energy regulator – has identified five key issues that

represent an unprecedented challenge to securing UK electricity

supply:

• High levels of investment are needed over many years in difficult

financial conditions and against a background of increased risk

and uncertainty.

• Uncertainty in future carbon prices is likely to delay or deter

investment in low-carbon technology and lead to greater

decarbonisation costs in the future.

• Misaligned pricing signals, with short-term price

signals at times of system stress not fully reflecting

the value that customers place on supply security.

Because of this, the incentives to make additional

peak energy supplies available and to invest in

peaking capacity are not strong enough.

• Inter-dependence with international markets exposes

the UK to a range of additional risks that may undermine

security of supply.

• Higher gas and electricity costs may mean that

increasing numbers of consumers are unable to afford

adequate levels of energy to meet their requirements

(so-called ‘fuel poverty’) and that the competitiveness of

industry and business is affected.

In a comprehensive analysis of the challenges which face

UK electricity supply, Ofgem emphasised the importance

of developing a coherent package rather than implementing

reform in a piecemeal fashion. Whilst some of the measures could

be taken forward individually by Ofgem and industry, many would

require Government action. The packages favoured by the UK

Government are broadly differentiated by the level of reform involved

and are outlined in the options below:

• Enhanced obligations. This reform would oblige suppliers to

demonstrate that they have sufficient plans in place to better cope

with threats to security of supply and by placing obligations on the

transmission system operator (National Grid) to take additional

measures to help further improve security of supply.

• Enhanced obligations and renewables tenders. This option

would include the reforms mentioned above, and would replace

the current Renewables Obligation with tenders for renewable

generation. The tenders would offer investors a guaranteed return

over, say, a 20-year period, encouraging investment in renewable

energy by providing investors with increased certainty over the

revenue they would earn.

• Capacity tenders for all forms of generation, including renewables,

would provide greater confidence for delivering security of supply

by providing clearer long-term investment signals.

For the UK, and for many other developed countries where

liberalisation of electricity supply has occurred, there is no silver

bullet to ensure, in a free market, that the private sector will ‘keep the

lights on’. The outcome of Ofgem’s ‘Project Discovery’ remains to

be seen. The majority of assets in the UK electricity supply industry

are owned by major overseas utility companies, which have many

items on their supervisory board agendas. Their business models

are designed to increase their customer base rather than sell more

MWh or maintain spare capacity to make a contribution to the

reserve margin. The privatised model of electricity supply has many

more miles to run over a long and rocky road before true choice,

competition and supply security is available to all consumers.

This is a condensed version of an article which appeared in the

PB journal ‘Economic Forecasting Review, June 2009. Available

at http://www.pbworld.com/news_events/publications/efr/


Powerlines

Issue 20 : September 2010

UK biomass

appointment

Contact: Alan Lawless (lawlessa@pbworld.com)

Parsons Brinckerhoff recently secured

a key delivery role on a new 65 MW

biomass power plant for RWE npower

renewables at Stallingborough, UK, near

the Humberside port of Immingham.

As ‘third party engineer’ for RWE, PB will review the current concept

plant design developed for the client under an earlier contract,

and undertake detailed design for seven major contractor work

packages, producing the associated specifications and tender

documents.

In collaboration with RWE, PB will also assess the capital and

operational expenditure profile for the facility along with its potential

risk profile, reliability and thermal performance. This information

will be essential for RWE’s senior management when sanctioning

detailed design and construction to proceed.

A key factor in PB’s appointment was the ability to take the entire

project from conceptual design through to the necessary levels of

detail to let the key packaged contracts.

This important award highlights our

ability to deliver integrated singlesource

solutions on complex and

challenging projects

Nick Flew, Managing Director of

PB’s European business, said: “This

important award highlights our ability

to deliver integrated single-source

solutions on complex and challenging

projects. It also reinforces our leading

position in the renewable energy sector

which will play an important role in

reducing our carbon emissions and

in providing a crucial balance to the

energy generation mix of the future.”

Nick Flew

When operational in 2013, the new

CHP-ready facility will be the UK’s

second-largest wood-burning biomass power plant, providing

electricity to the national grid. It will burn locally grown energy

crops in addition to a mixture of recycled and virgin woodchip from

elsewhere in the UK.

PB’s contract is scheduled for completion in October 2010 following

the assessment of work package tenders for RWE. The seven

work packages consist of site preparation, boiler island, steam

turbine/generator, electrical and controls, fuel handling and storage,

balance of plant, and civil and building works.

For additional copies of this newsletter

please contact the editor:

Maria Laffey

laffeym@pbworld.com

tel: 44-191-226-2000

Amber Court, William Armstrong Drive

Newcastle upon Tyne, NE4 7YQ, UK

www.pbworld.com/power

For further information about PB’s power

capabilities, please contact your nearest

regional director.

Africa

Gavin Young

youngg@pbworld.com

tel: 27-11-787-4141

Americas

Roger Blair

blair@pbworld.com

tel: 1-281-589-5826

Asia

Tom Campbell

thomas.campbell@pbworld.com

tel: 65-6395-4311

Australia/NZ

John Bergantino

bergantinoj@pbworld.com

tel: 61-3-9861-1254

Europe

David Rutherford

rutherfordd@pbworld.com

tel: 44-191-226-1899

Middle East

Rob Higgo

higgor@pbworld.com

tel: 9714-449-7222

Parsons Brinckerhoff is an international

engineering and programme

management firm offering a multidisciplinary

consultancy service in

power, transportation, buildings and

telecommunications. Established in

1885, with its headquarters in New York,

PB employs approximately 14,000 staff in

150 offices worldwide.

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