Appropriate business conditions to utilize gas from landfills for power generation

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Appropriate business conditions to utilize gas from landfills for power generation Gerhard Pirker, Marketing Program Manager GE Energy Jenbacher gas engines Methane to Markets Partnership Exposition Landfill Sector Session 3: Transitioning LFG to Beneficial Use, 9:20 AM October 30-31, 2007 China World Center, Beijing

The Landfill Gas (LFG) business for GE- Jenbacher

GE Energy is a worldwide leading supplier of reliable and efficient products/services for the energy industry Turbines, gas engines, control equipment, generators, software and other for Coal Wind/ Solar energy Oil Nuclear energy Natural Gas Renewables >> GE Energy Jenbacher gas engines John Krenicki, Jr. President and Chief Executive Officer, Energy Financial Results 2006: Revenues 19.1 billion US$, Net Earnings: 3.0 billion US$ 3 Appropriate business conditions to utilize gas from landfills for power generation Beijing, October 2007

Overview GE-Jenbacher gas engines World wide 1,500 employees (1,200 in HQ Jenbach, Austria) 0.25-3MW Gas Engines, Generator Sets, Co-/Trigeneration, Container Solutions Total installed base : 7,350 engines, 8,260 MWel Total LFG base installed: 1,190 units, output 1,140 MWel all over the world 4 Appropriate business conditions to utilize gas from landfills for power generation Beijing, October 2007

GE-Jenbacher worldwide presence China Germany 1,5% 2,5% France 2,7% Spain 6,4% Total = 1,140 MWel USA 15,3% Other 16,4% Italy 17,9% United Kingdom 37,3% Arpley/UK 18 x JGC 320 GS-L.L 18,612 kwel Cavenago/Italy 3 x JMC 312 GS-L.L 1,803 kwel 5 Appropriate business conditions to utilize gas from landfills for power generation Beijing, October 2007

GE-Jenbacher worldwide presence Pohang/Korea 2 x JGC 320 GS-L.L 2,116 kwel Pinto/Spain 11 x JMS 420 GS-L.L 15,543 kwel/ 8,327 kwth 6 Appropriate business conditions to utilize gas from landfills for power generation Beijing, October 2007

Evaluation of business conditions and profitability

Parameters to influence LFG PG output Landfill size and existence in years Future additional waste to be deposited Tightness of landfill (surface/ sides/ bottom) Share of organic/ inorganic waste Composition of LFG: % CH 4 -CO 2 -O 2 -N 2 Gas contaminations: halides, sulphur... Amount of leachate inside the liner Clime: temperature, wind, air pressure LHV- fluctuation, gas pressure fluctuation Humidity of landfill gas Electrical efficiency 8 Appropriate business conditions to utilize gas from landfills for power generation Beijing, October 2007

>> Output per ton of waste may vary a lot Depending on all these parameters the electrical output from 1 million tons of waste may vary between 5,000-8,700 MWhel for 15-25 years Intensive planning is mandatory to establish a sustainable project The electrical efficiency of the gas engine is a core success factor for a profitable LFG project 9 Appropriate business conditions to utilize gas from landfills for power generation Beijing, October 2007

Project margin LFG PG - Case 1: Gas collection & flaring/utilization mandatory Feed-in tariff CDM/ JI revenue 1 MW PROFIT Feed-in tariff CDM/ JI revenue 5 MW PROFIT 0 2 4 6 CAPEX genset CAPEX BoP O&M genset O&M Plant *all figures stated in US$ cent per kwhel and calculated for 60,000 OH/ good gas quality, J320 10 Appropriate business conditions to utilize gas from landfills for power generation Beijing, October 2007

Project margin LFG PG - Case 2: Gas collection & flaring/utilization NOT mandatory Feed-in tariff CDM/ JI revenue 1 MW PROFIT LOSS 5 MW Feed-in tariff CDM/ JI revenue PROFIT 0 2 4 6 8 CAPEX genset CAPEX BoP O&M genset O&M Plant *all figures stated in US$ cent per kwhel and calculated for 60,000 OH/ good gas quality, J320 11 Appropriate business conditions to utilize gas from landfills for power generation Beijing, October 2007

The UK LFG PG utilization model In the UK GE-Jenbacher since 1990 installed 452 engines at landfill sites all over the country Totally around 700MWel installed Mainly responsible for this boom was the introduction of NFFO (Non- Fossil Fuel Obligation) & ROCs (Renewables Obligation Certificates): 12 Appropriate business conditions to utilize gas from landfills for power generation Beijing, October 2007

Outlook Asia/China

Success factors for profitable LFG projects Extensive and long-term project planning Information about general landfill condition (e.g.: leachate!) Project size >> 1MWel High-tech gas capturing system Flexible and mobile fleet of modular container units Gas engine electrical efficiency is crucial Try to obtain further revenues with heating Long-term energy purchase agreement Take advantage of CDM/JI 14 Appropriate business conditions to utilize gas from landfills for power generation Beijing, October 2007

Recommendations to improve business conditions in Asia Legal framework for LFG PG utilization to establish a mechanism like NFFO, ROCs/UK or EEG/Germany >> build up confidence among the project owners: - Supported feed-in tariffs, fixed/ guaranteed over a certain period of time - Utilities must give LFG PG project owners a sustainable access to the public grid Especially small projects need competent support to lower their administrative CDM/JI costs Given these subsidies a mandatory gas capture/ recovery can then be imposed In order to increase LFG PG utilization in Asia/China the legal framework should be adapted to EU models 15 Appropriate business conditions to utilize gas from landfills for power generation Beijing, October 2007

Some Chinese GE-Jenbacher LFG plants Nent LF/HongKong 2 x JGS 320 GS-S.L 2,130 kwel Xing Feng LF/China 2 x JGS 320 GS-S.L 2,130 kwel Bei Shen Shu LF/China 1 x JGS 212 GS-S.L 526 kwel Went LF/China 2 x JGS 320 GS-S.L 2,130 kwel 16 Appropriate business conditions to utilize gas from landfills for power generation Beijing, October 2007

Backup

General factors influencing LFG projects FAVORABLY In times of energy shortage Landfill gas presents an alternative to conventional fuels CDM/JI projects are important drivers for LFG utilization Asian mega cities need new concepts to manage their waste NEGATIVELY Landfill consistently became more contaminated Gas pretreatment overhead costs also for small projects Considerable administrative costs and emphasis of CDM also for small projects Asian governments did not yet establish business conditions like given in EU/WH Due to these facts after a boom in the 90ties the worldwide LFG-utilization business stagnated in recent years 18 Appropriate business conditions to utilize gas from landfills for power generation Beijing, October 2007

Jenbacher landfill gas engines are ecomagination certified Due to their cost-effectiveness, high output and measurable benefits to the environment, Jenbacher landfill gas engines have been certified as GE ecomagination product by an independent agency. Ecomagination is a GE commitment to use and develop new technologies to help customers around the world meet escalating environmental challenges. 19 Appropriate business conditions to utilize gas from landfills for power generation Beijing, October 2007

Utilizable LFG varies in amount and sustainability Depending on these parameters: - 1 ton of municipal waste is converted to average 10 m³ N landfill gas per year - A landfill generates gas over a period of 15-25 years with different intensity - LHV = approx. 4.5-5 kwh/m³ N - 40-50% of gas collectable from a covered landfill >> 1 million tons waste => 18,000-25,000 MWh/year input over a period of 15-25 years 20 Appropriate business conditions to utilize gas from landfills for power generation Beijing, October 2007

Adjust and maximize annual energy output To adapt to fluctuation of emitted gas modular container genset solutions are superior e.g.: 21.300 MWh = 8,200 J320 operating hours >> 8,700 MWhel output (41% electrical efficiency) Electrical efficiency, LHVfluctuation, gas pressure fluctuation and humidity of gas determine output >> 1 million tons waste => annual 8,700 MWhel output for 15-25 years 21 Appropriate business conditions to utilize gas from landfills for power generation Beijing, October 2007

Power Generation with Landfill Gas in the UK M2M Conference, Beijing, 31 October 2007

In the UK landfill gas is seen as a valuable fuel source The UK has more landfill gas power generation projects than any other country 1.1% of the UK s electricity is generated from landfill gas 2

Given that landfill gas is environmentally damaging and needs to be extracted and destroyed, it makes good sense to generate electricity from it. 3

Landfill sites need to be engineered for gas collection to be successful. This is starting to happen in China. 4

Rule of thumb estimate of landfill gas generation It takes 1 million tons of domestic waste to generate 1MW Yields vary greatly 5

Government assistance (1) The Non Fossil Fuel Obligation (NFFO), 1989-1999 Electricity suppliers had to purchase a certain amount of electricity generated from non-fossil fuels There were five NFFO orders between 1990 and 1998 Prices were determined by competitive tendering The price per kwh started at 0.065 (first order) and fell to 0.029 (fifth order) Prices were guaranteed for 7 years in the first two orders, 15 years in the later orders 6

Government assistance (2) The Renewables Obligation (2002 present) Requires electricity suppliers to source a percentage of electricity from renewable sources The percentage increases each year from 3% in 2002 to 15.4% in 2015 Has resulted in increased prices compared with NFFO But prices are not guaranteed A Renewable Obligation Certificate (ROC) is obtained for each MWh ROCs are traded The combined value of electricity and ROC is presently 0.08-0.09 per kwh 7

Costs in the UK (approximate); To establish 1MW including electrical connection, gas wells, gas blowers, 1m For each additional MW, 0.5m 8

Power is generated by the landfill operator or by a contractor who pays the landfill operator a royalty. The royalty is generally 5% - 20% of revenue 9

Usually 1MW units in containers are used. They are easy to install and can be moved between sites. 10

Sometimes a building is used. This is a 12MW site. 11

Engines need to; Handle changing methane levels Generate full power at low methane levels down to around 30% methane GE Energy Jenbacher engines are ideal Turbines are not suitable Clarke Energy has 15 years landfill gas experience and 80%+ market share in the UK 12

The GE Energy Jenbacher J320 1MW engine The most popular engine in the UK for landfill gas applications 41% electrical efficiency 13

Thank you!