Energy Island. Opportunities and Social Feasibility. 2 December Frits Verheij, Wouter de Boer, Arie Mol, Albert Quist

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Transcription:

Energy Island. Opportunities and Social Feasibility Frits Verheij, Wouter de Boer, Arie Mol, Albert Quist We@Sea, 2 December 2009 Experience you can trust.

Agenda. 1. The Energy Island, from an old visionary plan in the 1980s to a innovative concept in the 21 st century 2. Opportunities (first results): a. Energy Island is technically feasible b. one can make a business case of it 3. Social feasibility: patience and perseverance required to realize this project

1. From old idea to new concept. History of the Energy Island, back to the 1980s Combine electricity storage and wind energy Experience you can trust.

The old design: Plan Lievense.

The old design at Brouwersdam.

Artist impression of the old design near the Brouwersdam.

Transfer to an innovative concept. Energy Island an artificial island in the North Sea A 40 meters deep dredged open pit enclosed by a ring of dikes containing ~ 1.500 MW / 20 GWh for Energy Storage Island can be made with the sand of the pit Room for 300-500 MW of wind turbines on the island and other renewable energy sources, e.g. aquatic biomass Location for industrial activities, e.g. harbor facilities

Our first thoughts on the island. Governments aim at large volumes of renewables Climate change Security of supply Reduction of fossil reserves A new idea was born: the Energy Island Offshore wind energy is key element in RES policy Offshore wind energy has largest potential in The Netherlands (as in other North-western European countries) Our country is well-known for its offshore industry which requires smart measures for integration Flexibility of power generation mix, demand side management, improved cross-border cooperation, or Electricity storage

Combination of electricity storage and wind energy seems logical Electricity storage is well-established practice In 1999 the EU had 32 GW capacity of pumped storage out of a total of 188 GW of hydropower and representing 5.5% of total electrical capacity in the EU (90 GW worldwide) Wide variety of (mainly small-scale) storage applications Okinawa, Japan, 30 MW (sea water)

besides storage adds value to the energy sector. Decouples supply from demand Increases technical reliability of power supply Reduces loads on conventional power plants due to less frequent adjustments less maintenance Absorbs unpredicted variations in wind power Balances wind during windless or stormy periods Provides more flexibility in utilization of conventional power plants Stabilizes costs of electricity (peak shaving) and decreases imbalance costs

2. Opportunities first results. Optimal size of storage system determined Technical feasibility of Energy Island investigated Economics large-scale electricity storage analyzed Final result: Energy Island is feasible Experience you can trust.

First study: check technical feasibility and business case of our idea. KEMA and Lievense performed study sponsored by Utilities: Delta, Eneco, E.On Benelux, EPZ, Essent, Nuon TSO: TenneT Additional funding: We@Sea Goals of this study Determine optimal size of storage system (MW / GWh) Calculate costs of large-scale electricity storage Value system with respect to costs and emission reductions 2020: 9 GW installed wind power

Optimal size of large-scale electricity storage based on main applications. Present Future Download capacity base load units during off-peak hours + deliver additional power during peak loads Download capacity wind power plants during hours of strong winds Energy management Spinning reserve (hours) Other ancillary services like frequency control and voltage support (minutes) Balancing unexpected variations in wind energy (actual versus forecast) Result for NL 1.500 MW, 20 GWh

Inverse pump accumulation. Size of the island is 4 x 6 km Pump generators 12 x 125 MW ( = 1,500 MW) Water level varies between - 32-40 m bentonite walls clay layer, thickness 40 m

Technical data. Capacity Power (12 units x 125 MW) Number of cycles Efficiency Availability Response time Size of the Energy Island Distance to shore Water levels Building time 20,000 MWh 1,500 MW (about 12 hours) Max. 1 per day about 80% (full cycle) 98% (2% O&M time) Sec (normal) to min (cycle change) about 8 x 4 km 25 to 30 km -32 to -40 m 6 years

Building an artificial island at the North Sea, a piece of a cake. Dredge an open pit an enclose it by a ring of dikes Make the island using the sand of the pit Prevent water coming into the inner subsurface lake Use the surrounding sea as pumped hydro facility Install pump generators Proven technology!

Planned location fulfils requirements. ~ 20-30 km from coast line, enough room for the island, acceptable impact on ecology and morphology A location with heavy clay at -50 to -90m beneath NAP, able to resist water pressure from aside and underneath Fits in governmental policy, and is not too far from HV station to connect to the grid

Energy Island is technical feasible. Thick clay layer available near the coast of NL Offshore industry experienced in creating such islands Bentonite walls has been applied in other projects Suitable pump generators are available First drawings have been made

Investments costs based on budget offers and meetings with industry... Dredging: Dutch offshore construction companies Pump turbines: Alstom Housing of pump turbines: construction companies Grid connection: Prysmian and Delta

provides overview of total investment costs. Energy Island, PAC (1.5 GW, 20 GWh) Dredging EUR 0,65 billion Building pit EUR 0,15 billion Housing of pumps etc. EUR 0,90 billion Pump generators etc. EUR 0,50 billion HV cable + grid connection EUR 0,25 billion Total costs EUR 2,45 billion CCGT EUR 500 per kw EUR 0,80 billion

Input data economic analysis agreed upon after consultation with clients. Input data, scenario 2020 9 GW of wind power 20 GW of conventional power, mainly coal Coal price EUR 2.1 per GJ Gas price EUR 5.0 (low) to 7,9 (high) per GJ CO 2 emission price EUR 20 per ton Base case: no storage capacity and no wind Second series with 1,500 MW of storage, no wind In other scenarios wind is included Storage systems replaces peak-load CCGT plants

Large-scale energy storage reduces operational costs + CO 2 emissions. Annual costs and CO 2 emissions calculated with ProSym Low price scenario 1,500 MW / 20 GWh 2,500 MW / 30 GWh High price scenario 1,500 MW / 20 GWh 2,500 MW / 30 GWh Cost savings (million EUR/yr) 94 96 Cost savings (million EUR/yr) 167 190 Reduction of CO2 emission (kton/yr) 840 (2.5%) 640 (1.9%) Reduction of CO2 emission (kton/yr) 500 (1.5%) 350 (1.0%)

Summary of our business case. Energy Island: costs saving and CO 2 reducing Input data (2020) 9 GW wind power 20 GW centralized power plants 2% annual growth electricity demand Coal: EUR 3.0 / GJ Gas: EUR 5.6-8.5 / GJ (both including EUR 20 per ton CO 2 ) Exclusive import capabilities Economic life time: 40 years WACC: 6.4% Results 1,500 MW / 20,000 MWh storage 1.5-2.5% less CO 2 emissions 1) Investment costs Energy Island: EUR 2,45 billion incl. dredging costs EUR 1,80 billion excl. dredging costs (EUR 1,65 or EUR 1,00 billion more compared to investment 1,500MW CCGT) EUR 80 130 mio annual costs saving 2) NPV: EUR 0.8 billion (excl. dredging costs, high gas price) 1) Download of coal increases emission as it replaces gas, download of wind reduces emission. In our business case the net result is reduction of CO2 emission 2) Compared to operating energy system with additional 1,500 MW CCGT power plant

Secondary functions of Energy Island. The Energy Island offers opportunity for various additional functionalities Energy Wind energy on the island Aquatic biomass in the subsurface lake Biomass power plant + harbour for biomass Industry Harbours and port facilities, e.g. maintenance and assembly offshore wind turbines LNG terminal Societal values Aquaculture + nature These functions should be able to lower required investment costs thanks to additional yearly earnings

3. Social feasibility. Positive response from various stakeholders Value and necessity of LSES, a knotty problem Energy storage is becoming a board room topic and still patience and perseverance is required Experience you can trust.

Social feasibility Positive feedback. KEMA and Lievense have visited departments, provinces, interest groups and many others to inform and to discuss results of first study Many invitations received for key note speeches, interviews and panel discussions in NL and abroad In general we received very positive feedback and discussions created enthusiasm in the audience Some interest groups added some critical remarks which will be taken into account in the next phase

Pros and cons of the Energy Island. Advantages of Energy Island Disadvantages of Energy Island Regulating and spinning reserve power Trading opportunities Growing volume of wind power increases value of storage system More interesting than investment in CCGT + adds flexibility in usage of portfolio of power plants Wide range of secondary functions possible reduces investment costs storage system (next slide) Showpiece of The Netherlands (brand) High investment costs Political and societal issue long-lasting until realization Energy losses: around 76% round trip efficiency More CO 2 emissions if only used for download coal during off-peak hours Industrial activities create higher economic value, however nature creates higher societal value Several risks (next slide)

Risks of the project. Technical risks Clay layer may not be large or not stable enough Pump turbine generators might be hard to build in clay layer Financial risks Investment costs could be underestimated Annual cost savings might be lower than expected No investors for secondary functions investment too high Other solutions could be available to incorporate fluctuating wind power in the European electricity system Other risks Politicians will not cooperate in the permitting process Societal resistance will cause very long permitting process

Current status Political attention. Prime Minister Balkenende during top conference Winnen met Water (February, 2008): We have to think big, simply because the social issues that we have to deal with are big Multifunctional energy island on agenda of Innovation Platform and mentioned in EZ s Energy Report 2008 Besides, a location study (quick scan) has been performed by Deltares for Ministry of Transport and Communications

Current status - Market parties ready to define business case. KEMA and Lievense initiated Energy Island project and defined extensive feasibility study (Phase 2) Meetings with CEO s of Dutch utilities and TSO: willing to invest if government shows commitment and if usefulness and necessity of large-scale energy storage (LSES) has been proved Ministry of Economical Affairs shows commitment LSES not completed yet, seems to be a knotty problem with many variables and uncertainties Doing nothing will result in giant curtailment, and increased interconnection will hardly contribute

Next step proposal phase 2. A. Business case: detailed calculations of economic value of electricity storage under various conditions B. Detailed location study, including clay layer stability C. Alternative for the construction of pump-generators in this clay layer, and other technical issues D. Modelling the shape and size of the Energy Island, including morphology and environmental impact E. Examination of possible market and ownership structures for large-scale storage facility F. Assessment of secondary functions on the island G. Social, administrative and political feasibility

Spin off ideas and projects created. Impact of Large-scale Energy Storage (TP DEV) Tulip at the North Sea (Innovatieplatform) Harbor at Sea (We@Sea) Value and necessity of Large-scale E-Storage (Utilities + Energy Council)

Others have similar ideas. Green Power Island (Gottlieb Paludan, DK)

Combine strengths of offshore industry with wind energy business and electro-technical expertise. Chemical industry Energy Island LNG terminal Beach Electricity storage Agriculture Housing Aquatic biomass Wind farms Tourism Pump turbine generators Fish farming Marina Recreational facilities

Thank you for your attention. Your contact persons: Frits Verheij / Wouter de Boer Arie Mol / Albert Quist KEMA Bureau Lievense Arnhem The Netherlands Breda The Netherlands T/M +31 (0) 26 356 2445 T +31 (0)76 522 5022 frits.verheij@kema.com amol@lievense.com www.kema.com www.lievense.com Experience you can trust.