Beruflich Dokumente
Kultur Dokumente
ISBN 0-9756076-6-9 May 2005 Australian Business Council for Sustainable Energy 3rd Floor, 60 Leicester Street, Carlton Victoria 3053 Tel. +61 3 9349 3077 Fax. +61 3 9349 3049 Email: bcse@bcse.org.au Website: www.bcse.org.au
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FOREWORD
Local Authorities often have access to or are responsible for waste streams that can be used to produce renewable energy. Australian and State Government policy and program support for renewable energy as part of its greenhouse reduction commitment, together with energy market reform, have created opportunities for Local Authorities to convert an environmental problem and financial burden into a resource base for the production of renewable energy. This Guide has been developed to provide senior management in Local Authorities with an overview of the opportunities and risks associated with waste-to-energy conversion. The Australian energy market and the relevant policies and regulations are complex. The Guide outlines the issues that should be understood before the organisation makes progress in developing waste-to-energy solutions. A number of international case studies are also provided. The Guide has been developed by the Australian Business Council for Sustainable Energy (BCSE). Australian Government funding through the Australian Greenhouse Office in the Department of Environment and Heritage supports this project. The BCSE acknowledges the assistance of a number of its members and other stakeholders in providing input for this Guide. It also acknowledges the assistance and support of staff at the Australian Greenhouse Office and consultants Energy Futures Australia and Stephen Schuck & Associates.
The Australian Business Council for Sustainable Energy (BCSE) is the leading advocate for sustainable energy in Australia. It has more than 270 organisations as members, ranging from installers and designers of renewable energy systems to large project developers and equipment manufacturers. Members also include both energy retailers and generator companies. The BCSE undertakes activities and programs which support the development of the industrys capability, addressing impediments and promoting the benefits to potential customers. With regard to distributed power generation, the BCSE provides the following services to its members: publishes a large number of generation project profiles and case studies dealing with a range of sustainable fuels and technologies distributes regular energy bulletins and updates on energy market issues affecting the development and implementation of sustainable energy projects provides information to members on commercial and regulatory issues that impact on the development of sustainable energy projects project-manages the cogeneration support program under the Australian Greenhouse Office-administered Greenhouse Gas Abatement Program, with $10 million of funding available for small gas-fired cogeneration projects.
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Disclaimer
The Australian Business Council for Sustainable Energy (the Providers) provides this Waste-to-Energy: A Guide for Local Authorities on the following basis: The Guide is not intended to be final or definitive but rather a fairly vigorous preliminary assessment of a structured way in which to assess and evaluate waste-to-energy opportunities and to facilitate the implementation of cost effective projects either now or planning for the future. The Guide is not intended to be used as the tool for basing final investment decisions upon, and in all cases the user must conduct sufficient additional analyses and obtain appropriate professional advice before proceeding with any investment decisions. The Providers do not and cannot in any way supervise, edit or control the content of any information or data accessed through the contact details provided in the Guide and shall not be held responsible in any way for any content or information accessed. The Providers, along with their servants and agents, are released from and indemnified against all actions, claims and demands which may be instituted against the Providers arising out of use of this Guide or of any other person for whose acts or omissions the user of the Guide is vicariously liable. The views expressed in this publication are those of the authors at the time of writing and are not attributable to the Australian Government.
Accuracy
Whilst considerable care has been taken to ensure the accuracy of the Guide, the Australian Business Council for Sustainable Energy would be pleased to hear of any errors or omissions, together with the source of the information.
TABLE OF CONTENTS
Foreword 1 1.1 2 2.1 2.2 2.3 3 3.1 3.2 4 5 6 6.1 6.2 6.3 7 7.1 7.2 7.3 8 8.1 8.2 8.3 8.4 Appendix 1 Appendix 2 Attachment 1 Attachment 2 Attachment 3 Introduction The Guide Setting the scene The waste resource The social environment Waste-to-energy applications New and emerging opportunities and support for waste-to-energy Greenhouse initiatives providing indirect support Policy measures providing financial support Waste-to-energy technologies Economics of waste-to-energy Business risk considerations Waste treatment the environmental sustainability issue Issues surrounding waste-to-energy projects Financing routes Making it happen Project fundamentals Stakeholder considerations Risk management The regulatory environment National Electricity Market Registration and power sale options under the NEM Connection to the distribution network Environmental and planning approvals Glossary, abbreviations and acronyms List of useful organisations, support programs and references Waste-to-energy primary conversion technologies Contractual arrangements for stand-alone waste-to-energy development Existing waste-to-energy projects in Australia
iii 1 1 2 2 3 7 8 9 12 18 22 25 25 26 27 31 33 34 36 37 37 37 39 39 41 44 46 51 54
1.
INTENDED AUDIENCE This Guide is principally aimed at the senior management of Local Authorities, including waste management companies acting as agents for the Local Authorities and waste water authorities. Local Authorities are constantly under pressure to increase efficiency and reduce the environmental impacts of their activities. Waste-to-energy represents an opportunity for Local Authorities to potentially manage risks and/or costs whilst improving environmental outcomes at the same time. AIMS AND SCOPE The main aim of this Guide is to facilitate the development of waste-to-energy projects in the short term if economically and technically feasible, and to allow Local Authorities to plan for future development of potential which may require medium- to longer-term strategic focus. The Guide is intended to give a variety of readers (for example, executive, strategic and operational management) an understanding of the opportunities, issues and risks involved in implementing cost-effective waste-to-energy projects. The Guide assists in providing some of the necessary tools to allow readers to assess and evaluate opportunities, facilitate the implementation of cost effective projects or to develop strategic plans that will enable the resources to be developed later as existing facilities (water treatment, waste disposal or landfills) are expanded or replaced. The Guide is not intended to be a full technical document. To ensure the appropriateness of content, format and style, this Guide was developed through a process of extensive consultation and review with stakeholders including BCSE members, relevant local government representative bodies, and a number of local governments, government agencies and non-BCSE industry members. This process involved questionnaires, interviews and stakeholder review of all drafts of the Guide. The process also included presentation and feedback at a number of conferences including: Waste to Energy Conference 2003, Enviro 2004 and Bioenergy Australia 2004.
2.
In Australia, and also worldwide, Local Authorities are under increasing pressure from the community and from governments to incorporate ecological, social and economic considerations into their day-to-day operations. Sustainability is rapidly becoming a guiding principle underpinning all decision-making. Local Authorities with responsibility for waste streams are seeing costs escalate, traditional options diminish and social and budgetary pressures mount. Decision-makers and planners can no longer assume that past practices will reliably guide them into the future. Senior Management now face complex strategic issues regarding the implementation of new or proven waste management technologies, whilst minimising economic and environmental risks to the organisation and coping with increasing social accountability. Local Authorities can view the waste-to-energy opportunity in a number of ways ranging from indifference to proactive enthusiasm. Three possible approaches have been identified. 1 Is energy production simply a by-product of a solution to a critical waste problem? In this case the organisation may give energy matters a lower weighting in its decisionmaking, focussing instead on the waste handling and disposal features of proposed applications. 2 Does energy from waste provide the organisation with opportunities to satisfy social and environmental expectations and obligations regarding sustainability, with waste stream considerations being only one part of the overall issue? In this case the organisation would benefit from a comprehensive local energy strategy so that all stakeholders can clearly understand the significance of the project. 3 Is the organisation seeking to expand operational options, which may include adding a major new business venture to its operations? In this case the organisation will need to invest additional resources into acquiring a greater understanding of the energy and renewables market and the technology options and risks. Subsequent sections of this document provide background to the options raised above, outlining the issues that should be understood by the organisation and providing guidance for further progression.
2.1
Waste resources can offer a number of benefits when used to produce energy, other than mitigation of greenhouse gas emissions. The cost of the fuel to a power generation facility is usually low due to the preexisting need to collect and manage waste. Costs may even be negative. The current cost of disposing of waste is increasing (for example, full cost landfill pricing is now being considered more widely by governments as a policy measure) and can be associated with environmental problems. Local energy production results in reduced electricity network losses, and can improve energy security and reliability for the local area. Such projects create regional employment opportunities. However, it must be emphasised that in the Australian context, appreciation of many of these benefits has yet to become mainstream. FIGURE 2.1 FIGURE 2.2
2.2
SUSTAINABILITY CONTEXT
A seminar held by the Australian Cooperative Research Centre for Renewable Energy (ACRE) Energy Policy Group and Bioenergy Australia (2001) identified many of the features of sustainability that are pertinent to waste-toenergy developments: Sustainability involves multiple human dimensions which are not fully independent and may involve concepts of community at household, local community, state, national or global levels. Economic sustainability involves the concepts of productive, allocative and dynamic efficiency. Environmental sustainability includes specific issues ranging from local to regional to global and also encompasses the maintenance of entire ecosystems. Social sustainability involves the ideas of human knowledge and ingenuity, quality of life, equity and the social skills which serve to create or maintain a society. Technical sustainability involves using best practice products, services, work practices and institutional arrangements, as well as fostering appropriate innovation in hardware, software and the institutional framework. Achieving perfect sustainability is unlikely as is consensus between all stakeholders and therefore trade-offs must be made that allow communities to improve all aspects of sustainability over time.
For waste management, the waste management hierarchy (see Figure 2.3) is widely accepted. This promotes avoiding the generation of waste in the first place, followed by maximising the use of existing materials by their reuse, reprocessing and recycling into alternative products, including recovery of their inherent energy content, in preference to committing the material to disposal. FIGURE 2.3
There is a range of waste-to-energy options that fit within the waste management hierarchy. At least in theory, practical energy from waste options should be employed when the waste stream contains no further practical value for reuse, recycling or reprocessing as a resource. Section 6.2 addresses the difficulties of practical application of this theory.
However, tighter environmental laws and regulations are continuing to be applied for air and water emissions. Burning and landfill of wastes for disposal are being discouraged by such regulations. Even the best-designed landfills still have significant fugitive emissions of methane, a potent greenhouse gas, to the atmosphere. Figure 2.4 shows the fugitive emissions from waste streams in the year 2002. Leachate from landfill and inappropriate disposal of organic waste streams, such as animal litter to agricultural land, can also cause significant environmental pollution in the ground water, and give rise to odours. Nonetheless, significant quantities of urban wastes continue to be disposed of in landfill, largely due to its current low cost and ready availability. From an energy perspective there are also other issues of interest in addition to considerations of sustainable development and climate change mitigation. There is increasing interest in the concept of having smaller, more modular generating plant geographically distributed around the power system rather than large, centralised facilities. With such distributed or embedded generation, the system is by its nature more secure, that is, more robust against blackouts as demand on the system is rapidly increasing and less vulnerable in terms of national security. To varying extents distributed generation is supported by opening power systems up to competition from companies offering smaller, distributed power solutions, including energy from waste power plants. This provides a good synergy between the distributed nature of waste generation and the geographic location of electrical loads. FIGURE 2.4
The broader benefits of waste-to-energy projects may not be apparent in policy and can provide some leverage in the political process. Both national and regional economic benefits can be demonstrated to policy makers and the community for investments in waste-to-energy plants. Such benefits include: capital investment and employment in Australia expenditure on fuel sourcing and operations and maintenance creation of Australian jobs by local manufacture of equipment and its installation investment in regional and rural Australia, and potential for deferral or elimination of the need for major infrastructure and power distribution networks sustaining and developing of regional communities creation of Australian jobs by local manufacture of equipment and its installation provision of opportunities for other recycling innovations.
CASE STUDY
WASTEWATER BIOGAS Sewage wastewater can either be processed aerobically (in the presence of oxygen) or anaerobically (oxygen excluded). The anaerobic process produces methane, which in this project is collected and used to generate renewable power. If not collected and used for power production the methane would either be flared or vented to atmosphere with adverse environmental impacts. WERRIBEE SEWAGE PLANT The Werribee Sewage Plant has been transformed from an open lagoon treatment plant to an anaerobic plant. Portions of the lagoon receiving raw sewage wastewater are covered, oxygen is excluded, an anaerobic reaction is produced and methane is generated. In 1995 two 0.63 MW engines were installed. AGL has now installed two additional 1.25 MW reciprocating engine generating sets. Sections of the lagoons remain uncovered and pumps agitate these sections to introduce oxygen, further processing the wastewater, which is eventually discharged into Port Phillip Bay. The plant treats about 500mL of sewage per day. POWER GENERATION AND SALES There are two power supplies to the site, and each generator is connected to an incoming supply.
Host: Melbourne Water Owner: AGL Capacity: 3.8 MW Location: Werribee Sewage Treatment Plant about 30 kms southwest of Melbourne Operational: June 2001 Operator: AGL Energy Services Power purchase arrangements: 100% to Melbourne Water Manufacturer: Duetz Packager: SE Power Equipment Construction contractors: AGL Energy Services Primary fuel: Biogas from anaerobic digestion of sewage sludge Supplementary fuel: None For more information: AGL Bill McLaughlin, Group Manager Corporate Affairs Tel: 02 9922 8349
MELBOURNE WATER
Power is generated at 415 volt and stepped up to 22,000 volts for connection to the Powercor distribution network. The power plant operates in base load mode and all power is sold to Melbourne Water. GAS RETICULATION The site is large, and extensive reticulation was required to deliver gas to the generating plant. Blowers are used to deliver the biogas at a low positive pressure. AGL has been responsible for the total site development and control of gas delivery to the plant.
SITE The power generators are containerised and the gas processing plant including scrubbers and gas conditioning are contained in a central compound. ENVIRONMENTAL IMPACT At full capacity, Werribee produces around 25,000 MWh of green electricity per annum, which reduces greenhouse gas emissions by 20,000 tonnes per annum. In addition the capture of methane significantly reduces odours from the site familiar to Melbourne-toGeelong travellers.
Christine/ Gibbs, Manger Corporate & Community Relations Melbourne Water Corporation Tel: 03 9235 7172
2.3
Waste-to-energy applications
Wastes have a diversity of physical and chemical properties and therefore a waste bioenergy resource needs to be matched with the appropriate energy conversion technology. For example, landfill gas projects will utilise reciprocating gas engines that are capable of being installed in a modular form and can accommodate some fluctuation in fuel quality. The waste materials covered in this Guide range from dry agricultural residues through to wet wastes, and the various urban wastes. The settings, scale of plants, energy conversion technologies and key participants will differ for each of these and consequently so will the viability parameters of different projects and the economic considerations and implications. When talking about waste-to-energy applications, it is common to refer to a primary energy conversion process, an energy carrier and secondary energy conversion.
The Australian Business Council for Sustainable Energy has identified one hundred and two waste-toenergy projects that were operating in Australia at the end of 2004, with a total capacity of 917 MW. Of these, 115 MW can be classified as renewable waste-to-energy, 473 MW as renewable waste-toenergy cogeneration, 172 MW as fossil fuel waste-toenergy and 156 MW as fossil fuel waste-to-energy cogeneration. Details of renewable waste-to-energy projects are presented in Appendix 2.
Primary energy conversion of wastes of high calorific value generally occurs via one of combustion, gasification or pyrolysis. These are all thermal conversion processes, with the essential difference being the amount of atmospheric oxygen used in the process. The biochemical processes of fermentation and anaerobic digestion are generally chosen for primary energy conversion of wetter waste or mixed waste streams. These two processes utilise naturally occurring microbes and biochemical pathways to convert waste into energy carriers such as methane-rich biogas and ethanol. Refer to Section 4: Waste-toenergy technologies for more detailed information. The energy carrier (steam, gasified waste, biogas, pyrolysis bio-oil) produced during the primary waste conversion process of combustion, gasification, pyrolysis, anaerobic digestion or fermentation is required to be converted into a usable form of energy, such as electricity and/or process heat, in a secondary energy conversion step. There are several mature and emerging secondary energy technologies. Wastes such as vegetable oil and tallow may be converted via esterification to biodiesel, which in turn may be used as a transport or stationary energy fuel. Similarly ethanol may be used as a fuel or as a fuel additive.
3.
Climate change is now recognised as being real and immediate and requiring urgent action. Analysis undertaken by the Australian Government concludes that Australia is vulnerable to changes in temperature and precipitation. Australias vulnerability to climate change is intensified by already being a generally dry continent and experiencing high natural climate variability from year to year. [Saddler, H., Diesendorf, M. & Dennis R. (2004) A Clean Energy Future for Australia, WWF Australia.] Scientists now agree that climate change is due to the enormous amounts of fossil fuels that we burn: the coal we burn to generate electricity and the oil that we use in our cars. Reducing the greenhouse emissions from the fossil fuels that we use to meet our energy needs is thus an important priority for governments at both the state and national level. FIGURE 3.1
Source: Australian Greenhouse Office (2004), National Greenhouse Gas Inventory 2002
Australia is one of the worlds worst greenhouse polluters on a per capita basis. Figure 3.1 summarises Australias greenhouse gas emissions by sector. Electricity generation is both the largest contributor to growing greenhouse emissions, accounting for nearly 35 per cent of total emissions, and the fastest growing sector. Coal, the fuel with the highest greenhouse emissions, currently accounts for 80 per cent of our power generation. Importantly for Local Authorities, greenhouse emissions from waste, an area over which they have control and influence, accounts for nearly 20 million tonnes or 3 per cent of total emissions. A critical way to address climate change is to firstly reduce our consumption of energy and then to ensure that the energy that we do consume is produced from lower greenhouse intensive sources. In this regard expanding the use of renewable energy that produces no greenhouse gas emissions is critical.
Importantly, producing power from waste sources not only displaces the production of electricity from fossil fuels but also reduces emissions of the more greenhouse-intensive methane gas, increasing the environmental gain. The other important issue for Local Authorities is that the employment leverage from renewable energy is greater than from conventional energy. As a result, expanding renewable energy production from waste will lead to increased employment, particularly in regional and rural communities. In Australia, major new commercial opportunities for waste-to-energy projects are emerging out of greenhouse gas emission reduction measures. These measures may provide general support or financial benefits to waste-to-energy projects.
3.1
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The Department of the Environment and Heritage, Australian Greenhouse Office administers Greenhouse Challenge Plus. The support provided by the AGO to programme participants can be useful to organisations implementing a waste-to-energy project as part of a broader greenhouse gas emissions abatement programme. For further information on the Greenhouse Challenge Plus, visit www.greenhouse.gov.au/challenge, call: 02 6274 1229 or e-mail: greenhouse.challenge@greenhouse.gov.au CASE STUDY
ReOrganic Energy
Ipswich, Queensland
THE SITE The project is located at the Swanbank Landfill, Queensland, approximately 40 kilometres south-west of Brisbane. Thiess Services operates the landfill which is a former coal mine. FUEL SOURCE AND SUPPLY Fuel is supplied from a landfill gas extraction system installed within the landfill, and also from specifically engineered bio-cells installed on site. Waste is placed within the bio-cells and undertakes a rapid decomposition process to enhance the timeframe within which the gas is generated. This gas is extracted and combined with gas from the landfill. A dedicated pipeline has been installed over 1.5 kilometres to supply the gas to the adjacent CS Energy Swanbank B Coal Fired Power Station, where it is utilised to displace fossil fuel. PLANT EQUIPMENT AND OPERATION The plant consists of a stateof-the-art Gas Conditioning Plant which dries, conditions and delivers the gas.
The plant operates 24 hours per day, and is computer controlled from a remote location using a specifically designed software application. ENERGY PURCHASE AND SUPPLY Gas is supplied at low pressure to the coal-fired power station. The project is a renewable energy generator under the Renewable Energy (Electricity) Act and is eligible to produce Renewable Energy Certificates (RECs). The RECs are shared between the Joint Venture and CS Energy. ENVIRONMENTAL IMPACT The total energy and environmental benefits of this project in its first year of
operation include the generation of approximately 15,000 MWh of renewable energy, enough to power 3000 homes, and the reduction of 77,500 tonnes of carbon dioxide equivalent greenhouse gas emissions. This is equivalent, per annum, to the removal of 18,300 cars from the road or the planting of 7900 hectares of trees. OUTSIDE SUPPORT The ReOrganic Energy project at Swanbank is the result of a successful application by the partners to the Australian Greenhouse Offi ce under the Renewable Energy Commercialisation Program (Round 3), which has seen funding assistance of $1 million.
Owner: Joint Venture (Thiess Services, LMS, New Hope Energy) Nominal capacity: 710 MW Location: Ipswich, Queensland Commissioned: 18 February 2002 Capital cost: $4.5 million Construction contractors: LMS Operator: LMS Fuel source: Bio gas and landfi ll gas Gas purchase arrangements: CS Energy purchases gas from the site Equipment manufacturer: LMS Type: Gas conditioning/ extraction plant For more information: Mr John Falzon Managing Director Tel: 08 8363 0100 Fax: 08 8363 7700 Email: info@lms.com.au
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CITIES FOR CLIMATE PROTECTION PROGRAM Cities for Climate Protection (CCP) is an innovative program that helps local government and their communities to reduce greenhouse gas emissions and their impact on the environment. It is an International Council for Local Government Initiatives (ICLEI) campaign, delivered in Australia in collaboration with the Australian government through the Australian Greenhouse Office. CCP Australia is the largest local government greenhouse program in the world, with over 200 local councils now participating. CCP empowers local governments to reduce greenhouse gas emissions. It provides local governments with a strategic milestone framework that helps them to identify the emissions from their councils and communities, set reduction goals and develop and implement an action plan to reach the targets . A range of support is available for member organisations of CCP, including: CCP software and other appropriate tools for calculating emissions direct support in assessing emissions and understanding what they mean training workshops workbooks, relevant case study material and fact sheets access to expertise and networks of local council peers to exchange ideas and solutions advice on funding opportunities and some funding support from the Australian Greenhouse Office. The support offered by CCP could also be useful to an organisation which is implementing a waste-to-energy project as part of a broader greenhouse gas emission abatement initiative. CASE STUDY
The Essent Energy plant gasifies demolition wood and injects the combustible gas into the adjacent 900 MW coal-fired boiler of the Amer Centraal power station in the Netherlands, where this renewable fuel offsets coal use. Steam energy from the gasifier plant also provides renewable energy into the host power station energy system. The advantage of this system is that a separate waste wood gasification plant keeps contaminants out of the main power plant, thereby allowing better control of emissions.
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3.2
13
CASE STUDY
Built in 1996, the Kristianstad biogas plant in Sweden processes household, industrial and agricultural waste and produces biogas for the local district heating plant, with plans to fuel the fleet of waste transport vehicles. Of the 73,000 tonnes of organic waste delivered to the plant each year, household waste and miscellaneous waste make up about 5 per cent each with the remainder comprising both animal manures and agricultural processing wastes. The equivalent of 20,000 MWh of biogas is recovered annually, 17,900 MWh is sent to the district heating plant and the remainder is used on-site.
STATE GOVERNMENT SUSTAINABLE ENERGY FUNDING PROGRAMS Several State Governments in Australia offer funding to support sustainable energy projects. Such funding is often offered through dedicated State Government agencies such as the Department of Energy, Utilities and Sustainability (DEUS) in NSW, the Sustainable Energy Authority of Victoria (SEAV) and the Sustainable Energy Development Office in Western Australia. Each of these funding programs has its own eligibility criteria. Waste-to-energy projects may be eligible for funding under most of these programs. VIC RENEWABLE ENERGY SUPPORT FUND (RESF)
For a comprehensive description of the bioenergy resources (including wastes) and markets in NSW, the reader is directed to the DEUS NSW Bioenergy Handbook.
RESF is a key initiative of the Victorian Greenhouse Strategy and is administered by SEAV. The initiative will provide $8 million to support and encourage innovative applications of medium-scale proven renewable energy technologies in Victoria including waste-to-energy. The fund will provide up to 20 per cent of the capital cost of accepted projects.
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AUSTRALIAN GOVERNMENT MANDATORY RENEWABLE ENERGY TARGET (MRET) With effect from 1 April 2001, the Australian Government introduced a trading scheme for electricity generated from renewable energy sources, the Mandatory Renewable Energy Target (MRET). MRET places a legal liability on wholesale purchasers of electricity to proportionately contribute towards the generation of an additional 9500 GWh per year of electricity generated from renewable sources by 2010. The target applies nationally until 2020, with all electricity retailers and other wholesale electricity purchasers on liable grids in all states and territories contributing proportionately to the achievement of the target. To ensure that there will be consistent progress toward achieving the 9,500 GWh target by 2010, the measure will be phased-in by specifying a number of interim targets over the period 20012020. Wholesale electricity purchasers are proportionately liable for meeting their share of the target. For example, if a liable party purchases 10 per cent of the liable electricity in Australia, they will need to meet 10 per cent of the interim target level for that year. Wholesale electricity purchasers meet their share of the target each year by surrendering renewable energy certificates (RECs). RECs are created by accredited renewable energy generators which deliver renewable electricity to a grid, end-user or directly to a retailer or wholesale buyer. Waste-to-energy projects may be classified as renewable energy generators for the purpose of MRET if they use one or more of the following fuels: bagasse black liquor wood waste crop waste food and agricultural wet waste landfill gas municipal solid waste sewage gas. Provided a waste-to-energy project using an eligible fuel commenced commercial operation on or after 1 January 1997, it may be able to earn RECs for all electricity provided to the appropriate measurement point. A waste-to-energy project which was in commercial operation prior to 1 January 1997 is only eligible to earn RECs from existing generation assets where there is an increase in output from the assets as compared with a 1997 baseline. Once registered, each REC is equal to one megawatt-hour of renewable generation available at an agreed measurement point. Wholesale electricity purchasers are required to surrender RECs equivalent to their total liability in that year. The penalty for noncompliance has been set at $40 per megawatthour. RECs remain valid until surrendered (that is, certificates can be banked for use in future periods). Liable parties may either construct their own renewable energy generation facilities or purchase RECs directly from generators or third parties that trade in RECs. RECs may be traded in financial markets that are separate from the physical National Electricity Market (NEM), so that there is no interference with the operations of the NEM. Owners of renewable energy generation assets hold RECs in the first instance, until traded among liable or third parties. In the first years of the MRET scheme, RECs have generally been traded at a moderate discount to the $40 penalty.
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The MRET scheme enables waste-to-energy projects to generate a revenue stream from the trading of RECs which is additional to the revenue from the sale of electricity. This provides a strong incentive for the implementation of waste-to-energy projects. FIGURE 3.2
Source: Australian Business Council for Sustainable Energy, Sustainable Energy Report 2004
NSW GREENHOUSE GAS ABATEMENT SCHEME The New South Wales Government has set a state-wide benchmark of reducing greenhouse gas emissions to 7.27 tonnes of carbon dioxide equivalent per capita by 2007. This is 5 per cent below the per capita emissions in the Kyoto Protocol baseline year of 1989/90. To ensure continual progress towards this end target, progressively tighter targets have been set year-on-year, commencing with a target of 8.65 tonnes per capita in 2003 and leading to the final benchmark level of 7.27 tonnes per capita in 2007. The level of 7.27 tonnes per capita will then be maintained until at least 2012. Under the New South Wales Greenhouse Gas Abatement Scheme, parties who are required to meet targets for greenhouse gas emissions are called benchmark participants. Each year, the Scheme sets individual benchmark reductions of greenhouse gas emissions for each benchmark participant based on their contribution to the supply of electricity in New South Wales. Each benchmark participant then has to reduce the average emissions of greenhouse gases from the electricity they supply or consume to the pre-set individual benchmark level. Benchmark participants comprise: electricity retailers electricity customers taking supply directly from the National Electricity Market electricity generators with contracts to supply electricity directly to customers certain other parties who consume large volumes of electricity in NSW and who elect to participate directly in the Scheme, rather than have their electricity retailer manage the emission reduction obligation in relation to the electricity they consume. If a benchmark participant does not reduce the average emissions of greenhouse gases from electricity they supply or consume to their pre-set individual benchmark level, they pay a penalty of $10.50 per tonne of carbon dioxide equivalent for all emissions above their benchmark.
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FIGURE 3.3
To achieve the required reduction in greenhouse gas emissions, benchmark participants purchase and surrender certificates called NSW Greenhouse Abatement Certificates (NGACs). One NGAC represents one tonne of carbon dioxide equivalent that would otherwise have been released into the atmosphere in generating electricity. NGACs are transferable certificates that may be freely traded between any parties. It is expected that NGACs will generally be traded at a moderate discount to the $10.50 penalty. NGACs may be created by eligible electricity generators that reduce the average greenhouse intensity of electricity generation. To be eligible, generators must be connected to the main transmission networks of the National Electricity Market, or to distribution systems currently connected to those networks in NSW, the ACT, Queensland, Victoria and South Australia. It is expected that when the Basslink connection between Tasmania and the mainland is operational, generators in Tasmania will also become eligible to create NGACs. Most waste-to-energy projects connected to the specified electricity networks will reduce the average greenhouse intensity of electricity generation and will therefore be eligible to create NGACs. Provided a waste-to-energy project commenced commercial operation on or after 1 January 2002, the project proponent will be able to create NGACs for the greenhouse gas abatement achieved by the project from 1 January 2003. Abatement is defined as the reduction in greenhouse gas emissions resulting from electricity generation by the project as compared with the average level of emissions for electricity generation in NSW. Similarly to the MRET scheme, the NSW Greenhouse Gas Abatement Scheme enables waste-to-energy projects connected to the specified electricity networks to generate a revenue stream from the trading of NGACs which is additional to the revenue from the sale of electricity. However, NGACs cannot be created for renewable electricity for which MRET RECs have been created. Because RECs are traded at a significantly higher price than NGACs, and the emissions reduction and renewable energy generation of one REC is roughly equivalent to one NGAC,1 the proponent of a waste-to-energy project which generates renewable electricity is likely to prefer to create RECs rather than NGACs. However, for waste-to-energy projects which use fuels containing methane (for example, landfill gas or sewage gas), the project proponent may create NGACs in addition to any RECs which have been created for the project. The number of NGACs which may be created in addition to RECs is calculated based on the global warming potential of methane relative to that of carbon dioxide. Methane has a global warming potential twenty-one times that of carbon dioxide.
1. On average, generating one megawatt-hour of electricity from black coal releases slightly less than one tonne of carbon dioxide.
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NATIONAL GREEN POWER INITIATIVE The purpose of a Green Power program is to increase the quantity of electricity generated from renewable energy sources and therefore to drive investment in new renewable energy generators. Under a Green Power program, electricity retailers provide a green tariff option to customers that is at a premium to regular tariffs. The retailer commits to ensuring that an equivalent amount of electricity to the amount of Green Power energy purchased by a customer is produced from renewable energy sources by approved electricity generators. The additional cost to the retailer of purchases from these generators is covered by the higher tariff charged to customers who purchase Green Power. In Australia, electricity retailers offer Green Power products throughout the country. Depending on the details of the individual retailers program, customers are offered an opportunity to purchase a proportion or the whole of the electricity they use as Green Power at prices which are usually between 20 per cent and 40 per cent above the normal price. Around 125,000 customers across Australia have chosen Green Power products, including close to 6000 businesses. Retailers purchase sufficient electricity to meet their Green Power commitments from approved Green Power generators. Broadly defined, these are generators whose generation of electricity is based primarily on renewable energy sources and results in greenhouse gas emission reductions and net environmental benefits. Generators are given the final Green Power tick of approval if they comply with specific eligibility guidelines. All generation projects are assessed individually against strict criteria and require support from consumer and environmental stakeholders. Renewable energy generation cannot be counted toward both Green Power and MRET liabilities. This avoids double dipping. Waste-to-energy projects may qualify as Green Power generators if they use landfill gas, municipal solid waste, agricultural wastes, or wood wastes from existing sustainably managed forestry plantations and clearing of specified noxious weeds. Approval as a Green Power generator will enable the electricity generated by the waste-to-energy project to be sold at a premium price to an energy retailer.
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4.
WASTE-TO-ENERGY TECHNOLOGIES
As noted in Section 2.3, wastes have a diversity of physical and chemical properties requiring matching energy conversion technologies. Moisture content and contamination levels are particularly important. Drier forms of waste are usually converted through the thermal energy conversion paths, while wet wastes may be processed through biochemical pathways. Other wastes may be converted through esterification. The diagram below illustrates the variety of pathways through which waste sources can be converted to energy and energy related products. Also illustrated is the range of secondary energy technologies to produce the end-use energy. The technologies are then outlined briefly. For further detail refer to Attachment 1.
Members of the Australian Business Council for Sustainable Energy can provide guidance about appropriate technologies for different waste-toenergy applications. See www.bcse.org.au.
Waste materials
Thermal processing
Biochemical
Chemical
Combustion
Gasification
Pyrolisis
Anaerobic digestion
Fermentation
Esterification
Chemical feedstocks
Ethanol
Biodiesel
4. WASTE-TO-ENERGY TECHNOLOGIES
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CASE STUDY
The MAV anaerobic treatment plant in Ghent, Belgium, is equipped to handle and treat sewage sludge, organic wastes, presorted food waste, fat sludge and abattoir residues to produce biogas and high quality fertiliser. The plant has a capacity of 200,000 tonnes per year, which is supplied under contract by industry and farms in the surrounding area. Total fermentation capacity is 12,000 litres, divided between four digesters.
Carbon Partners are establishing a similar facility, with State Government support in the Melbourne metropolitan area. The plant will have the capacity to process 100,000 tonnes of organic waste per annum, generating 40,000MWh of electricity and 15,000 tonnes of high quality fertiliser.
PHOTOS: CARBON PARTNERS
Fertiliser product
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4. WASTE-TO-ENERGY TECHNOLOGIES
21
INTERNAL COMBUSTION ENGINES Internal combustion engines are widely used for powering small to medium scale electricity generators. Spark ignition engines use combustible fuels such as methane-rich biogas, or producer gas, while compression ignition engines use fuels such as biodiesel. Large, modern compression ignition engines can have efficiencies up to 30 per cent. Dual fuel operation of diesel engines with biogas or producer gas involves supplying the wastederived gas into the engines combustion air intake. GAS TURBINES Gas turbines are well proven commercially for operation with natural gas. The operation with hot gases from the combustion of wastes, or biogas and producer gas derived from waste- and biomass-derived fuels, using modified gas turbines, has been demonstrated in several countries for outputs up to 8 MW electrical output. Gas turbines may be either indirectly fired or directly fired. With indirectly fired gas turbines, the combustion chamber is replaced by a heat exchanger heated by an external heat source from the combustion of the waste fuel. With directly fired gas turbines, cleaned, hot combustible gases from a pressurised gasifier are fed directly into the gas turbine. Methane-rich biogas, such as landfill gas, is a commercially mature technology.
Emerging technologies
MICRO-TURBINES Micro-turbines are derivatives of gas turbines, except most designs include a recuperator to recover part of the exhaust heat for preheating the incoming combustion air, to provide higher energy conversion efficiencies in the range 2030 per cent. Micro-turbines are commercially available for use with biogas in the range 25 to 250 kWe. STIRLING ENGINES Stirling engines are external combustion engines, which operate on the principle of heat expanding a gas, usually helium, within a sealed unit, which drives a piston, linked to an electrical generator. There is no contact between the moving parts of the Stirling engine and the waste generated heat or gas. Stirling engines are commercially available in small sizes of 300 W to 150 kWe. FUEL CELLS Fuel cells are electro-chemical devices similar to batteries. They comprise two porous electrodes separated by an electrolyte. A fuel is supplied continuously over the anode and oxygen over the cathode and a chemical reaction directly produces electricity. They directly convert the chemical energy in the fuel into electricity, overcoming the thermodynamic limitation of heat engines, and efficiencies of 5060 per cent in simple cycle and over 80 per cent in combined cycle/cogeneration are achievable.
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5.
ECONOMICS OF WASTE-TO-ENERGY
In considering the economics of waste-to-energy projects, thought must be given to the revenue streams that are available to the project and the costs that will be incurred in securing the waste and in building, operating and maintaining the plant. The settings, scale of plants, energy conversion technologies and other factors will influence the project economics as will the consistency and volume of wastes available. Supply as well as the physical and calorific nature of the waste can add operational costs that are unable to be sustained, or are unacceptable to operating licence conditions.
Revenue streams
Revenue in a waste-to-energy project will generally come from the sale of electricity generated or through the gate fees for processing waste. Possible revenue streams can include: avoided waste disposal and/or processing costs, such as avoided tip fees sales of electricity. This is typically through a power purchase agreement with an electricity retailer. The electricity generated may also offset the power that would otherwise be consumed in the case where cogeneration is adopted avoided network costs where local generation reduces or delays the need for network expenditure sale of NGACs, Green Power or Renewable Energy Certificates (RECs) under the MRET scheme sales of other products from the energy conversion process such as steam in the case of cogeneration or organic residues that can be used as fertiliser heat sales (or displaced purchases of heating fuel) ash or fertiliser sales.
Costs
In broad terms the financial costs of establishing and operating a waste-to-energy project would include the project development costs, capital cost of the plant, operating, training and maintenance costs, and costs of transporting or obtaining long-term feedstock arrangements. PROJECT DEVELOPMENT COSTS These could include: resource assessment studies pre-feasibility and detailed feasibility studies technical, legal and planning consultants fees time and costs of obtaining regulatory approval (for example, environmental agencies) consultancy costs of any audits required and Environmental Impact Statements costs of contracts for both input streams and power and other product off-take arrangements costs of licences (for incoming waste, water, disposal of any residues) electrical connection (if required).
5. ECONOMICS OF WASTE-TOENERGY
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CAPITAL COST OF THE PLANT Plant items could include: waste/feedstock acquisition, processing, storage plant the energy conversion plant, digester or reactor gas clean-up systems generator system effluent or ash disposal works cooling systems (if required) electrical plant and equipment storage (for biodiesel/biogas) emissions treatment (for example, scrubbing systems). OPERATING AND MAINTENANCE COSTS Ongoing costs could include: transport costs for the feedstock, if not delivered to or on-site already insurance annual fees for licences and emission compliance labour and contractor costs operating material and plant maintenance costs audits. FEEDSTOCK COSTS Those disposing of a waste may pay for its processing. Alternatively the waste feedstock may be purchased for processing to a value added product (as is typically the case for a biodiesel plant).
Cogeneration, where use can be made of the waste heat produced by the generation of electricity, can provide a financially attractive development option. Available from the BCSE, the Cogeneration Ready Reckoner is a software package that conducts a simple analysis of a cogeneration opportunity. A benchmark case is established for the heat and
electricity requirements of the organisation without cogeneration, and includes load growth, O&M costs, capital costs, payments for fuel and electricity. A cogeneration case is then developed which selects appropriate plant and looks at the relevant costs. NPV and IRR are then calculated for the difference between the cash flows of the two approaches.
24
CASE STUDY
THE SITE Woongoolba continues to be a thriving sugar-growing area, with 6500 hectares of land under sugar cane and growers looking to expand into adjoining Shires, in particular Beaudesert. The mill is the largest grower, producing 55,000 tonnes per annum. The Rocky Point Sugar Mill is the only mill in Australia to produce organic certifi ed sugar and has its own distillery (alcohol factory) on site to convert molasses into alcohol, in particular fuel alcohol. This provides another use for molasses, which was once only used as a stockfeed for cattle. TECHNOLOGY Cogeneration occurs primarily during sugar mill crush where a major part of boiler output is supplied as steam to the sugar mill for heat to evaporate water from sugar juice. The plant was designed to be part of a regional, tertiary-treated, effl uent reuse scheme. All water used in the plant (some 3-4 ML/day) is sourced from the Beenleigh Water reclamation facility (sewage treatment plant). ENERGY PURCHASE AND SUPPLY The generator is registered as unscheduled and is an accredited generator under the Green Power scheme. The plant is expected to produce 140 GWh of electricity per annum and is connected to the Energex
View from top of boiler house looking down on dearator (right) and stack, with spray-water cooling pond and biomass stockpile in background
CREDIT:DOUG STELEY STANWELL CORPORATION
local electricity network. Power generated from the project is sold to Energex under long-term agreement. The generator operates 24 hours a day for approximately 300 days a year. FUEL SOURCE Fuel for the plant is supplied from the sugar mill and from contracts between Stanwell and various councils, including Gold Coast City Council. Biomass consisting of bagasse from adjoining sugar mill in the mill crush with the non-crush fuel being predominately greenwaste from Council and woodwaste from nearby Wood Mulching Industries in Cannon Hill. Green waste from across south-east Queensland is collected and sorted at the newly established green waste
handling facilities at Rocky Point. Major transportation firms also benefit from contracts to transport the biomass to the site. The problem of a glut of biomass at Council refuse dumps and landfi lls throughout the region will be solved for many years by the commissioning of the Rocky Point Project. ENVIRONMENTAL IMPACT The project is expected to save 130,000 tonnes per annum of greenhouse gas emissions. The new plant has replaced previously high emission boilers with more effi cient high pressure boilers resulting in improved particulate emissions (<250 mg/Nm3 down from over 800). In addition, the plant reuses tertiary treated water from the local council.
Owner: Stanwell Capacity: 30 MW Location: Woongoolba, 55 km southeast of Brisbane Commissioned: August 2002 Capital cost: $50 million Developer: Stanwell and The Heck Group Construction contractor: Alstom Power Operator: Stanwell Fuel source: Biomass consisting of bagasse, municipal greenwaste and woodwaste Boiler: ABB VU40 Grate Boiler Boiler Capacity: 130 t/hour Steam Conditions: 70 Bar (absolute) and 510 C Turbine: ABB ATP Industrial Steam Turbine, Axial Flow, single casing construction, with reaction blading. Generator: 11 kV threephase A.C. synchronous alternator For more information: Stanwell Corporation Tel: 07 3335 7444
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6.
Like any organisation, Local Authorities face a number of business and operating risks that they need to manage in providing services to their constituents. Progressing wasteto-energy projects will entail some risk to the organisation, particularly where this is a new activity. It is, however, important to note that the do nothing approach also often involves considerable risk, as the authority will be exposed to future greenhouse emission constraints, as well as tightening environmental controls on waste disposal, odour and visual amenity. Many waste-to-energy technologies and applications are well established and well proven, and in many countries (with similar conditions to Australia) have been providing effective service to local constituents. This fact is not well known, and there remains a perception that the technologies and applications are not technically proven. As at 31 December 2004, there were ninety-seven waste-to-energy projects either operating or under construction with a combined electricity generation capacity of 772.51 MW (refer to Attachment 3). There are also emerging waste-to-energy technologies being developed that have the potential to expand the range of opportunities available to productively utilise waste streams.
6.1
26
FRAMEWORK TOOL
The Waste Management Association of Australia has developed a framework tool to help guide energyfrom-waste decision-making by providing an agreed basis for evaluation of options for dealing with urban waste streams, a starting point for community involvement and a template for project design, development and implementation. For further information, the reader is directed to the two resource documents, A Sustainability Guide for Energy from Waste Projects and An Energy from Waste Industry Code of Practice. See www.wmaa.asn.au
A common misconception with waste-to-energy technology is that within the accepted hierarchy of waste handling options (refer to Section 2.2), energy recovery is actually no higher than disposal as currently practised. This perception arises as a consequence of the following potential concerns in the Australian community: The community tends to equate combustion, even in modern facilities, with burning. This may mean that the community is more receptive to biological processes for waste treatment than combustion because of poor past experience with municipal solid waste incinerators and their emissions. Energy supply has historically been relatively inexpensive and not been constrained as Australia has abundant supplies of coal. Some view investment in a plant as providing a hungry mouth for the waste stream, encouraging unsustainable waste producing practices rather than promoting innovation. It can compete for resources and contribute to unsustainable practices rather than promote innovation. Waste-to-energy technology may reduce participation in and hence cost-effectiveness of kerbside recycling, which has an accepted social value and is already significantly subsidised. What is also not well understood by the community is that the consumption and generation of electricity leads to significant production of harmful greenhouse gas emissions. Waste-to-energy conversion not only reduces greenhouse gas emissions from power generation, but also reduces the more potent waste methane emissions. The global warming potential of methane is twenty-one times that of carbon dioxide. Waste-toenergy projects can also lead to other local environmental benefits such as reduced odour and more effective land use. Again, these benefits are not well understood or recognised.
6.2
27
It should not be automatically assumed that policy support will be forthcoming for projects that may seem sensible and viable. For example, the environmentally sustainable or green credentials of municipal waste mass burn technologies, co-firing with fossil fuels, and the use of manure from battery chickens can be politically sensitive and may be questioned irrespective of any net environmental benefits. The planning and approval process for these types of projects may also be difficult and the benefits may not be well understood by the local community. For these types of projects, the importance of effective consultation and community engagement cannot be overestimated. Even at the design and early discussion phase, considerable effort should be made to demonstrate that the highest value uses will be achieved from the waste stream. A seemingly simple proposal may evolve into a proposal for a total system perspective that considers multiple outputs and co-location of business activities in eco-industrial parks in order to obtain support for the project. It is important to: clearly understand the waste resources available now and in the future nurture relationships with both stakeholders and future service providers from an early stage develop strategies that minimise the organisations exposure to risks make corporate decisions about the scale of involvement that might be appropriate for the organisation prepare the community for energy-from-waste concepts ensure EPA requirements are clear and the process and criteria for acceptance of the proposal is objective.
6.3
Financing routes
The type of ownership or financing structure that a Local Authority is prepared or able to accept may dictate the whole approach to developing a waste-to-energy project, and establish the options that are realistically available. Considerable time and effort can be wasted if these parameters are not assessed early in the development process. For example, an organisation may be constrained by legislation or corporate strategy regarding borrowings, and have a fixed amount of capital available for investment. If this results in a small plant being developed, it may be too expensive for the waste reduction benefits it provides, or alternatively it may provide a low-risk demonstration that attracts larger players in the future. Typically the criteria used when considering the finance structure include: appropriate use of an organisations capital resources (focus on core business requirements) best use of the organisations management resources maintenance of appropriate debt/equity ratios potential to generate profit risks associated with any income stream regulatory or other constraints. Several possible ownership and financing options exist, each with its own merits and risk allocations. Each model provides for balancing the relative risks and rewards, depending on the developers requirements and acceptable levels of risk.
28
CASE STUDY
A Victorian example of anaerobic digestion technology is the 160 kW cogeneration plant at the 1500 sow (15,000 animal) Berrybank piggery near Ballarat, Victoria. This facility uses a two-stage digestion process to ensure complete digestion of the solids. A daily average of 210,000 litres of slurry is produced, having an organic content of 1.7 per cent. The plant has an output of 3500 kWh electricity and 27,000 MJ of thermal energy.
The electricity is produced using spark ignition engines. The farm uses 65 per cent of the electricity produced, the plant 25 per cent and about 10 per cent is sold into the grid. A benefit of the plant is that it now produces an odourless organic fertiliser as an end product. The initial investment of this plant was $2 million. An overall benefit of $300,000 p.a. is claimed.
Source: IEA CADDET
OWNER FINANCING EPC OR TURNKEY In an Engineer, Procure and Construct (EPC) or turnkey project, a contractor carries out the design and construction of the facilities on behalf of the client (or financier). Operation and maintenance is by the client or contracted to the contractor or a third party, and the client retains all the revenues. PARTNERSHIP OR JOINT VENTURING In this arrangement a developer and the client enter into a joint venture agreement for the design, construction, operation and maintenance of the plant with revenues shared by the owner and the developer. BOO/BOOT For buildownoperate (BOO) or buildownoperatetransfer (BOOT) arrangements, the project is assigned to a developer. The developer finances the project in full, and designs and constructs the plant. With BOO the operation and maintenance of the plant is by the developer or contracted to a third party. Usually the developer would pay a lease and/or royalty to the Local Authority. The BOOT arrangement is similar to the BOO option, except that ownership of the development passes to the Local Authority after a prespecified period of time. PROJECT COMPANIES For projects of significant size, special purpose companies are often set up and funded through a mixture of debt and equity. This allows large amounts of funding to be raised and the risk to be shared amongst several partners. Set-up costs tend to be high and the financiers have first call on all cash returns.
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Project finance refers to lending funds to a project strictly on the merits of the projects own commercial performance, without recourse to the projects owners for a guarantee of debt repayment. To underpin such a non-recourse loan, the projects services must be able to be dedicated on contract to a few credit worthy customers. The credit is built upon the basis of a series of commercial contracts which envelop the project and strictly define its life. These would generally include; a long-term revenue contract for the services of the project (waste processing) a long-term Operations and Maintenance contract with an entity who will operate the facility for a predictable fee a turnkey Engineering, Procurement and Construction (EPC) contract with a major engineering company that will build and guarantee the performance of the plant an Offtake agreement for the sales of electricity and other products (such as fertiliser). The duration of the various contracts should match and align with the financing. EQUITY FINANCE. This expands the capital base of the developer through a share issue or selling an equity stake in the project itself to a financier who may wish to take an active part in running the business. DEBT OR LOAN FINANCE. There are two types of loans: those secured against the developers existing assets (on-balance sheet financing) and limited recourse financing (secured against future cash flows from the project). It is unlikely that a lending institution will finance 100 per cent of the projects requirement. A lender will wish to see some contribution from the developer, usually between 20 and 40 per cent, to establish commitment from the developer. Traditional investors may not recognise the environmental benefits and sustainability of various waste-to-energy routes, as there is generally no market and hence cash flow attributable to these benefits. Therefore investors may view the project using the same criteria applied to any other commercial projects, demanding high security and high returns on invested capital. Socially Responsible Investment (SRI) or ethical funds are now beginning to appear. These tend to take a more sympathetic view of sustainable energy projects in general, and may be willing to invest with less onerous terms. In addition, electricity retailers seeking Renewable Energy Certificates or equipment suppliers seeking orders may also be willing to invest in worthy projects. Soft finance and grants may also be available from government agencies in support of National and State greenhouse gas and industry development policies and programs.
30
CASE STUDY
connected to the local (Energex)11 kV grid via a 2 MVA transformer. ENERGY PURCHASE AND SUPPLY The plant is registered as a non-scheduled generator in the National Electricity Market (NEM).The plant works in season from April to end November - five to six days a week to production requirements.The steam turbine generates about 9.5 GWh per annum of electricity, of which 1.4 GWh is consumed onsite. The remaining 80 per cent is exported to the grid.Under the third party power arrangement,the host gains steam and electricity without charge in return for supplying the fuel source and plant site. The power plant is eligible to create Renewable Energy Certifi cates under the Mandated Renewable Energy Target,which Ergon Energy has rights to under long-term agreement. FUTURE By 2005 it is expected that the facility will double its power output.More than 150 growers throughout Queensland and northern New South Wales could supply up to 10,000 tonnes of macadamia nut shells.Investigations are also under-way into utilising the reject nut-in-shells that were previously burnt as waste.
Owner: Ergon Energy Capacity: 1.5 MW Location: Gympie, 160 km north of Brisbane Commissioned: September 2003 Capital Cost: $3 million Developer: Ergon Energy Construction contractor: SE Power Equipment, Queensland Boilers Operator: Ergon Energy Fuel Source: Food process waste, macadamia nut shells Boiler: Water tube steam boiler. Boiler capacity: 6 MW, 9 t/hour Steam conditions: 41 bar, 350 Celsius Turbine: Tuthill Nadrowski multistage steam turbine Generator: Stamford 2 bearing brushless alternator For more information: Shane Harkin Project Manager Ergon Energy Tel: 07 3228 8240
THE SITE Regionally based Suncoast Gold Macadamias (SGM)processing site produces about 5000 tonnes of waste macadamia nut shells each year.The shells previously were sent to landfill, garden mulch or burned to produce heat.The plant will now utilise the shells as fuel for cogeneration,thereby increasing the energy effi ciency of the site.
TECHNOLOGY The 6 MW,high pressure steam boiler produces nine tonnes of steam per hour, which is used in the nut process and to generate electricity.The process steam is passed through a plate heat exchanger to create hot water.This is used to dry the nuts in their shells in storage silos. The remaining steam is passed through a 1.5 MW steam turbine. During any hour of operation the plant can convert 1680 kg of waste shell into 1.5 MW of electricity. The plant is
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7.
MAKING IT HAPPEN
The Local Authority would be prudent to understand and develop information on a number of factors, irrespective of whether the organisational strategy is to be an active or passive participant in a waste-to-energy development: the waste resource calorific and physical properties of the fuel; seasonality, quantity and long-term availability of the fuel; fuel handling options; implications of alternative strategies energy supply matters interconnection requirements of the local electricity distributor; security of supply benefits; arrangements for electricity generated (own use or export to the grid); energy options other than electricity (for example, biogas) and their markets. technical feasibility (study usually by a specialist consultant) economic analyses to produce a simple payback period or IRR a screening analysis to test sensitivities detailed engineering evaluation project specification and investigation of models for owning and financing projects. There are a number of business models that have been successfully adopted in Australia over the last five or so years. A review of waste-to-energy projects completed over this time provides us with the spectrum of options and opportunities to develop and implement projects: The BCSE has profiled several waste-to-energy projects and these are summarised in Figure 7.1. For further project details refer to the BCSEs web site at www.bcse.org.au and follow these links: About->Renewable Energy Page->Renewable Energy Project Profiles
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FIGURE 7.1
Visy Pulp & Paper Mill, NSW Black liquor Belconnen Project, ACT Brooklyn Project, VIC Eastern Creek, NSW Ipswich Renewable Energy Facility, Qld Jacks Gully, NSW Kelvin Road Facility, WA Millar Road Power Generation Facility, WA LFG LFG LFG LFG LFG LFG LFG
Lucas Heights II Plant, NSW LFG Mugga Lane, ACT ReOrganic Energy, Swanbank, Qld Shoalhaven Project, NSW Suntown Plant, Qld Stapylton Green Waste to Energy Plant, Qld Cronulla Sewage Treatment Biogas Plant, NSW Malabar Cogeneration Facility, NSW Melbourne Water Biogas Facility, VIC Townsville Citiwater Biogas Project, Qld LFG LFG LFG LFG Wood waste Sewage gas Sewage gas Sewage gas Sewage gas
Long-term power Green Pacific purchase agreement Energy N/A 100 per cent consumed on site Sydney Water Sydney Water
Sold to Melbourne AGL Energy Water Services 100 per cent used on site Long-term agreement Stanwell Corporation Ergon
7. MAKING IT HAPPEN
33
7.1
Project fundamentals
There are effectively two key models and then some derivatives of each of these. The first is for the Local Authority to undertake the project on its own books. It will develop the project and fund the investment through internally derived funding sources or through specified financing but the key thing is that the Local Authority owns the energy conversion project. The other option (or extreme) is for the Local Authority to merely supply the fuel, or host the facility on its land. In this case the development and investment capital is provided by a project developer. Biogas projects in sewage treatment plants undertaken to date in Australia tend to have been undertaken directly by the local water authority. This model has tended to be followed where the project is reasonably integrated with other activities at the site. Interestingly, however, recent projects such as at Werribee and in Townsville have tended to be undertaken by third party developers who own and operate the facility. In the case of landfill gas projects, the model has been for the complete outsourcing of the project by the waste authority, with third party developers effectively providing the site (and fuel). The project proponent in this case would typically pay the authority a monthly lease or rental for use of the landfill. The role that the Local Authority in these cases typically plays is that of fuel provider. In the case of the Werribee and Townsville projects, the Local Authority provided a waste water or methane stream. In the case of a landfill project, the project proponent is typically provided with the exclusive use of the site for a defined period of time for a specified monthly rental. Sewage gas and landfill projects are typically several MW of capacity or less. The average size of all landfill gas projects amounts to just less than 3 MW with an average capital cost of $35 million. Sewage gas projects average capacity of 2.1 MW with an average capital cost of around $23 million. These projects typically utilise reciprocating engines, which are a readily available technology and can be built in modular form. As an example, Energy Developments has implemented twenty-one landfill gas projects, with an installed capacity of 51.8 MW and has installed 1 MW reciprocating engines in modular form. This approach reduces risk and complexity. MSW projects, agricultural waste projects, wood waste or bagasse projects tend to be implanted through the utilisation of steam turbines and are typically much larger, with higher capital costs.
Hobart City Council sought out a third party developer for cogeneration at one of its waste water treatment plants. Despite the rate of return being relatively attractive, the scale of the project was considered too small (0.14 MW) to be worth the effort, following an assessment by the third party at the councils expense. The council has proceeded with and financed the project itself.
The Gold Coast City Council has an Agreement with Energex at its Stapylton, Suntown, Molendinar and Reedy Creek sites. Green electricity is produced at the first three sites whilst the gas at Reedy Creek is flared.
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7.2
Stakeholder considerations
The success of any waste-to-energy strategy or project will depend on identifying key stakeholders early in the process, and addressing their concerns and interests. While the principle is similar to many other developments, waste-to-energy does create strong views in the community misguided and otherwise. Although many jurisdictions do require public consultation as part of the permitting process,2 engaging with the community and meeting their expectations through an approach described as social impact assessment should be encouraged for potentially controversial developments. Social impact assessment has been defined as the process of analysing and managing the intended and unintended consequences of planned interventions on people so as to bring about a more sustainable biophysical and human environment (Dr Frank Vanclay, Charles Sturt University). Ideally the process should be employed at all key stages of a waste-to-energy development planning, design and evaluation of options; construction and implementation; and operation and would encompass the following actions. Stakeholder groups need to be identified, and could include neighbours, nearby landholders, local groups (including indigenous interests), environmental groups (local and umbrella organisations), other non-government organisations, suppliers and consumers, shareholders, unions and media. A public involvement program for all key stakeholders would be developed, as would a social/economic profile of the area. The range of issues and concerns of each stakeholder group would be identified, and important social impact categories would be developed (such as employment, property values, conservation and so on). The probability, magnitude and extent of effects of the project positive and negative would be determined, together with strategies for mitigating potential adverse social effects arising from lack of understanding. Lastly, monitoring of progress and reporting to the stakeholders are very important. It should be noted that even with the best of intentions, mutual trust and rigorous procedures in place, consensus decision-making may not produce an outcome, and there could be a role for other options such as third party certification. The Australian Cooperative Research Centre for Renewable Energy (ACRE) carried out Roundtables in Western Australia during June 2001 with the broad aim of soliciting the views of environmentalists and key community members regarding local energy developments such as waste-to-energy. It is interesting to highlight some of the questions and views that were raised in local communities, as these could be expected in all parts of Australia: Energy: why generate more electricity when energy efficiency measures have yet to be strongly promoted? Poor grid supply in rural areas, resulting in power fluctuations and blackouts, is a real concern. The lack of grid supply in some areas also needs to be better addressed. More understandable information is needed on the economic, social and environmental implications of transport of fuels to a proposed plant. What are the implications of combustion compared to decomposition in landfills? What is the nature of the economic benefits to the region (local training, employment and revenue generation)?
2. It is expected that the reader will have considerable knowledge of the planning approval process.
7. MAKING IT HAPPEN
35
CASE STUDY
USE/HOST Heat is recovered from a hot water heat exchanger. The waste heat is used for heating raw sewage sludge feed to digesters. Digested sludge is de-watered and used for agricultural biosolids. ENERGY PURCHASE AND SUPPLY Digester gas is combusted in the engines and heat recovered from the cogeneration facility is used to heat raw sewage sludge before going to the digester. The electricity produced is treated as green power under a scheme accredited by the Sustainable Energy Development Authority of New South Wales and is consumed onsite for the sewage treatment plant. The plant operates in base-load mode subject to the availability of digester gas. ENVIRONMENTAL IMPACT Electricity produced by the plant is designated as renewable energy and the plant effectively produces no net greenhouse emissions.
Owner: Sydney Water Capacity: 3 MW Location: The plant is located at Malabar Sewage Treatment Plant at Malabar, New South Wales. Commissioned: April 1999 Capital cost: $AUS 5 million Developer: AGL Construction: SE Power Operator: Sydney Water
Efficiency of the processes: waste heat should be utilised as a direct source of heat for other processes, as is done in other countries. How much fuel is needed to make electricity production viable? Production of liquid biofuels is interesting, but is it more efficient than other approaches to energy production? There can be strong opposition to the use of native timber residues, whether forest or plantation in origin conservation rather than resource management. Pilot or demonstration projects are encouraged, as is the development of a comprehensive sustainable energy policy at the local level.
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7.3
Risk management
Any new venture brings with it elements of risk. Waste-to-energy projects are not yet regarded as a standard part of the Australian waste management environment and the project risks are commensurate with this. However, the waste management environment everywhere is changing fast and the do-nothing approach carries its own risks. The organisations plan may aim to reduce the magnitude of the project risks outlined below and elsewhere, through small-scale demonstration, experience and capacitybuilding, with further developments promoted as the benefit-to-risk ratio continues to increase. The common elements of project risk that are discussed in relation to a plant such as a waste-to-energy development are outlined below. Other risks, such as technology risk and market risk, have been outlined in other sections of the document. Each can be allocated and managed in different ways. OPERATIONS RISK Planned and unplanned outages of the plant will require contingency plans particularly important if the plant is being relied upon for waste disposal. Contracted supply of power from the plant will need to be covered in the event of outages. Waste fuel supply to the plant will need to be carefully managed. Some technologies must be run continuously and cannot easily be shut down. ENERGY PRICE RISK If the plant is relatively large, the price paid to the organisation for power exported to the wholesale electricity market is important. However, electricity pool prices are low, and it is likely to remain a buyers market for some time (this applies to buyers such as electricity retailers or individual customers). The availability of RECs, NGACs or similar could make or break a project under current conditions. Even if the plant is not usually an exporter of electricity, charges for connection to the network could be significant. There may be some potential, depending on location, to negotiate favourable terms with an electricity network business if export from the plant can be guaranteed at times of network stress. REGULATORY RISK A plethora of diverse regulatory bodies throughout Australia may have an interest in a waste-to-energy development. These include planning and environmental agencies, statebased electricity regulators, National Electricity Market bodies and the Australian Competition and Consumer Commission. A risk-averse corporate strategy approach in the near-term would be to develop a wasteto-energy plan for the organisation, preferably as part of both a more comprehensive local energy strategy and a regional development strategy. The Local Authority will play an important role in promoting these approaches to the community, and government support could be expected to assist these ventures.
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8.
In becoming a renewable generator, the power generation facility must: register as a generator in the National Electricity Market if it has a capacity above 5 MW and exports more than 20 MW per year, or wants to sell power through the wholesale market; connect to the local distribution network; and meet particular state-specific planning and environment regulations The BCSE has published two documents that comprehensively set out the issues and processes that generation project proponents need to be aware of in connecting to the local distribution networks and to the National Electricity Market (NEM). These are the Guide for the Connection of Embedded Generation in the National Electricity Market and the Technical Guide for Connection of Renewable Generators to the Local Electricity Network. These Guides are aimed to provide the reader with a general understanding of the NEM and the issues that affect the design, cost of connections and network access for renewable embedded generators. This section will give a brief overview and readers are directed to these reports for further information. Both of these Guides are available under Publications on the BCSEs website at www.bcse.org.au .
8.1
8.2
38
Alternatively, embedded generators may choose not to participate in the NEM and instead: sell all their power to the local retailer under a power purchase agreement. sell all their power to a customer sharing the same connection point under a power purchase agreement. In practice, proponents of embedded generation projects generally choose to enter into longer term power purchase agreements which have a defined price with retailers. Contracting in this way is easier for the generator, who is also able to achieve a more certain revenue stream that will in turn assist the effective financing of the project. As part of the registration process (assuming the proponent is required, or chooses, to register) the proponent must classify its generator as: either a scheduled generating unit or a non-scheduled generating unit either a market generating unit or a non-market generating unit. Generators that produce above 30 MW are generally required to register as a scheduled generator. Others may apply to be classified under this status. Scheduled generators must participate in NEMMCOs centralised dispatch process. These generators will be dispatched in accordance with their submitted price bids. Non-scheduled generators are not required to participate in the dispatch process. These generators will produce electricity as they see fit or as their resources warrant, and receive the prevailing wholesale market price. A generator will be deemed a market generator unless the entire generators output is purchased by the local retailer or by a customer located at that same connection point through a power purchase agreement. A market generator must also sell all sent-out electricity through the spot market and accept payments from NEMMCO for sent-out electricity at the spot prices applicable to its connection point. A non-market generator is a generator who elects not to participate in the NEM. Instead, it sells its power to the local retailer or customer at the same connection point through a power purchase agreement. Non-market generators are not entitled to receive payment from NEMMCO for any electricity sent out. In addition to the existence of the NEM, each state and territory has legislation in place that covers the electricity industry as it operates in its state or territory. Generator licence requirements also exist and an embedded generator may be required to register. For example, a generator that wishes to operate in Victoria is required to register with the Essential Service Commission. For embedded generators, these requirements generally tend to be administrative and do not tend to impose onerous conditions or obligations on the generator. For further information on the registration requirements for each state and territory in the NEM, refer to the following websites: Essential Services Commission www.esc.vic.gov.au Queensland Competition Council www.qca.qld.gov.au IPART www.ipart.nsw.gov.au Essential Services Commission www.ecosa.sa.gov.au Independent Competition & Regulatory Commission www.icrc.act.gov.au Office of the Tasmanian Energy Regulator www.energyregulator.tas.gov.au
39
8.3
8.4
40
Much of the information relating to approvals, such as legislation, guidance notes, procedures and forms, is available on the Internet sites of the relevant Australian and State Government departments. Approval requirements will depend on factors such as size (which determines environmental impact) and location (which determines development approval requirements). Location issues that will impact on approval requirements include current zoning of the area (which determines the permitted purposes) and any special areas that will be impacted (crown land, areas of environmental significance). For more information on development and environmental approvals on a state-by-state basis, refer to the Guide for the Connection of Embedded Generation in the NEM. Australian Government approvals may also need to be sought under the Environment Protection and Biodiversity Conservation Act 1999 if the project has, will have or is likely to have a significant impact on a matter protected that may include: the values of a World Heritage property the values of a National Heritage place the ecological character of internationally important (Ramsar) Wetlands nationally listed threatened species and ecological communities listed migratory species. An action that may be located on, or otherwise may have a significant impact on, the environment of Commonwealth land may also need to be referred. For further information see www.deh.gov.au/epbc or call the Referrals Section in the Department of Environment and Heritage on (02) 6274 1111.
41
APPENDIX 1
ACCC Aerobic process ACRE
Australian Competition and Consumer Commission. A process requiring the presence of oxygen. Australian Cooperative Research Centre for Renewable Energy. Some of the activities previously carried out by ACRE are now undertaken by the Research Institute for Sustainable Energy (RISE) based at Murdoch University. Anaerobic digestion Digestion of organic matter by bacteria in the absence of air. Australian Business Council for Sustainable Energy BCSE BOO/BOOT Buildownoperate/Buildownoperatetransfer arrangements. Biodegradable component Component that has the ability to breakdown safely by biological means into its raw materials of nature and disappear. Biofuels Fuels made from biomass resources. These include wood, waste and alcohol. Biogas A combustible gas derived from the anaerobic decomposition of organic matter. Composed primarily of methane, carbon dioxide and hydrogen sulfide. Biomass Can refer to the total mass of living organisms in a given area, but when talking about energy it refers to plant materials and animal wastes used as fuel. CADDET An information centre sponsored by twelve member countries committed to the sharing of information regarding renewable energy and energy efficiency activities and developments worldwide. The program concluded in March 2005. Calorific Value The heat liberated by the combustion of a unit quantity of a fuel under specific conditions; measured in calories. Cities for Climate Protection. CCPTM CO2-e Carbon dioxide equivalent. This is the concentration of carbon dioxide that would cause the same amount of radiative forcing as a given mixture of carbon dioxide and other greenhouse gases. Cogeneration (Also known as combined heat and power or CHP .) The simultaneous production of electrical energy and another form of useful thermal energy (such as heat or steam) from the same fuel source, often used for industrial, commercial, heating or cooling purposes. Combustion Burning. The transformation of biomass fuel into heat, chemicals and gases through chemical combination of hydrogen and carbon in the fuel with oxygen in the air. DNSP Distribution Network Service Provider Distributed generation (Also known as embedded generation.) Electricity generation that occurs at or near the site of ultimate consumption as opposed to most electricity which is generated at a remote site and transported by long-distance transmission lines to the consumer. Emissions trading (Also known as carbon trading.) A market-based mechanism aimed at reducing greenhouse gas emissions. An emissions trading system allows countries that have committed to emissions reduction targets to buy or sell emissions permits among themselves. It provides participating parties with the opportunity to reduce emissions where it is most cost-effective to do so EPC contract Engineering, Procurement and Construction contract ESD Ecologically sustainable development (also known as sustainable development). Defined in the National Strategy for ESD as Using, conserving and enhancing the communitys resources so that ecological processes, on which life depends, are maintained and the total quality of life now and in the future can be increased. Feedstocks The raw organic material/biomass fed into the energy conversion process. Fuel Any material that can be burned to produce energy. Fuel cell An electrochemical device that continuously changes the chemical energy of a fuel (hydrogen) and oxidant (oxygen) directly to electrical energy and heat, without combustion. Gasification Process in which waste is heated to produce a combustible gas that can be burned in excess air to generate heat. GJ Gigajoule. 1GJ = 1,000,000,000 J. 1 MWh = 3.6GJ
42
Essentially the warming potential of a gas. The instantaneous radiative forcing that results from the addition of 1 kg of a gas to the atmosphere, relative to that of 1 kg of carbon dioxide. The measure allows for equal comparison of the various greenhouse gases contributions to global warming. Green Power Electricity generated from approved generators under accredited Green Power products. Green waste Urban wood waste such as tree loppings and garden waste. IEA International Energy Agency. IRR Internal Rate of Return. Integrated waste The use of a variety of techniques to handle municipal solid waste safely and effectively, management including source reduction, recycling, composting, combustion and land filling. Kyoto Protocol An international agreement reached in 1997 at the Third Conference of the Parties to the UN Framework Convention on Climate Change. The Protocol established specific targets and timetables for reductions in greenhouse gas emissions to be achieved by the frameworks signatories. The protocol became legally binding for those countries who have ratified on 16 February, 2005. The Australian Government has chosen not to ratify the protocol. kW or MW Kilowatt or Megawatt. kWh or MWh or GWh Kilowatt hour; megawatt hour; gigawatt hour. Landfill gas Gas generated by the natural degrading and decomposition of municipal solid waste by anaerobic micro-organisms in sanitary landfills. Comprised of 50 to 60 per cent methane, 40 to 50 per cent carbon dioxide, and less than 1 per cent hydrogen, oxygen, nitrogen and other trace gases. Leachate A liquid generated in landfills. It is the result of water seeping into and through the wastes. As the water contacts the waste materials, it dissolves part of the organic and inorganic matter contained in the landfill. If this leachate is allowed to exit the bottom of the landfill, it will carry contaminants to the groundwater and/or adjoining surface water. Limited recourse financing Security for the project debt is underpinned by the cash flows of the project itself, with limited recourse to the capital of the proponent Liquidated damages The damages a party suffers as a result of the breach of a contract by the other party. MJ/Nm3 and MJ/kg Mega joules per normal cubic metre; mega joules per kilogram ML Mega litre. MRET Mandatory Renewable Energy Target. MSW Municipal solid waste. Mt/a Mega tonnes per annum 3 m /d Metres cubed per day m3/kg Metres cubed per kilogram NEM National Electricity Market. NEMMCO) National Electricity Marketing Management Company. NGACs New South Wales Greenhouse Abatement Certificates. NGO Non-governmental organisation. Nm3 Normal cubic metre. Volume of gas at 0C and one atmosphere pressure. NPV Net present value. Offtake Agreement entered into with the organisation to whom you sell outputs of the project such as electricity or steam. O&M Operations and Maintenance. Organic waste technically, waste containing carbon, including paper, plastics, wood, food wastes and green waste. The term is often used in a more restricted sense to mean material that is directly derived from plant or animal sources, and which can generally be decomposed by micro-organisms Power Purchase Agreement Agreement entered into with the electricity purchaser for supply of electricity generated from project. Pyrolysis The thermal decomposition of organic material through the application of heat in the absence of oxygen. RECs Renewable Energy Certificates.
43
Products or materials that can be collected, separated and processed to be used as raw materials (inputs) in the manufacture of new products. Energy from sources that cannot be exhausted. Practices which find alternate uses or alternate avenues for use of an item rather than expending energy to dispose of it or alter its form by recycling. The process of analysing and managing the intended and unintended consequences of planned interventions on people so as to bring about a more sustainable biophysical and human environment (Dr Frank Vanclay, Charles Sturt University). Sustainable Energy Authority Victoria. Sustainable Energy Development Authority (NSW). Sustainable Energy Development Office (WA). Socially Responsible Investment. Transmission Network Service Provider Waste Management Association of Australia.
44
APPENDIX 2
Support Programs
Cities for Climate Protection Program www.iclei.org/ccp-au Australian Government Greenhouse Challenge Program www.greenhouse.gov.au/challenge/ Australian Government Mandatory Renewable Energy Target www.orer.gov.au National Green Power Initiative www.greenpower.com.au NSW Greenhouse Gas Abatement Scheme www.greenhousegas.nsw.gov.au State Government Sustainable Energy Funding Programs www.deus.nsw.gov.au www.seav.vic.gov.au/renewable_energy/support_fund.html www.env.qld.gov.au/environmental_management/sustainability/energy/ energy_innovation_fund_qseif www.senrac.sa.gov.au www1.sedo.energy.wa.gov.au/pages/grants.asp
45
References
Australian Greenhouse Office (2004), National Greenhouse Gas Inventory 2002, Commonwealth of Australia, Canberra. Golder Associates (1999), Waste Profile of Victorian Landfills, Environment Protection Authority Victoria, Melbourne. Passey, R., MacGill, I., Nolles, K. & Outhred, H. (2005), The NSW Greenhouse Gas Abatement Scheme: An analysis of the NGAC Registry for the 2003 Compliance Period, Draft Discussion Paper, Centre for Energy and Environmental Markets, University of New South Wales, Sydney.
46
ATTACHMENT 1
COMBUSTION Direct combustion is a mature and well-established technology with numerous operating plants around the world. In combustion, the waste fuel is burnt in excess air in a controlled manner to produce heat. Flue gases from efficient combustion are mainly carbon dioxide and water vapour, with small amounts of other air emissions, depending on the nature of the waste fuel. The flue gases are cleaned using flue gas scrubbers, bag filters and electrostatic precipitators, and if required further chemical processing to reduce emission of oxides of nitrogen (NOx) and other pollutants. Up to 60 per cent of the cost of a municipal solid waste-to-energy plant can be in the air emission control plant. The combustion heat is used to raise steam in a boiler. The steam is expanded through a turbine connected to a generator, thereby producing electricity. FIGURE A.1
Gas cleaning
EXCESS AIR Combustion Fuel preparation FUEL HOT GASES Boiler STEAM Engine or turbine
ASH
If there is a requirement for heat adjacent to the power plant, the energy plant can be configured as a cogeneration plant to simultaneously generate electricity and provide heat to nearby industries or other applications such as district heating. This is done extensively in the Australian sugar industry, where bagasse (crushed sugar cane residue) is used as fuel for providing the energy needs of the sugar mill. Waste fuels may also be co-combusted with fossil fuels in existing power stations and cement kilns. This usually entails feeding relatively small quantities of waste fuels (generally under 5 per cent of the total fuel) into the plant with the conventional fuel, without disturbing the operation of the plant.
47
GASIFICATION Gasification is the conversion of a carbon-rich waste feedstock into a combustible gas, at elevated temperatures, up to 1300C, in a restricted atmosphere of air or oxygen. For organic-based feedstocks, such as most wastes, the resultant gas is typically a mixture of carbon monoxide, carbon dioxide, hydrogen, methane, water and small amounts of higher hydrocarbons. If air is used, the gas is sometimes called producer gas and is diluted by atmospheric nitrogen. Producer gas has a relatively low calorific value of 46 MJ/Nm3, compared with the calorific value of natural gas which is about 39 MJ/Nm3. Producer gas can be used as a fuel in boilers, internal combustion engines or gas turbines. Its low calorific value requires using greater volumes of gas to achieve the same energy output compared with using natural gas. In some sophisticated applications oxygen-enriched air or oxygen or even steam may be used as the gasification medium. The resulting gas, usually called syngas, will have a higher calorific value in the range 1015 MJ/Nm3 due to the absence of diluting nitrogen. The combustible gas produced from most waste sources will contain varying amounts of tars and particulate matter, which may need to be removed prior to its use in a boiler, engine or turbine. The degree of the contamination and purification required will depend on the gasification technology and application of the fuel gas. Gasification of coal is a proven technology, having been used to produce town gas since the early 1800s. In more recent times gasification has been adopted and applied to various waste streams. A variety of gasification technologies have been developed, or are currently under development. These range from smaller scale fixed bed reactors, up to 1 MW electrical output, to larger scale fluidised bed gasifiers. The produced fuel gas may also be used in cogeneration or combined cycle plant configurations, to allow high overall energy conversion efficiencies. FIGURE A.2
48
PYROLYSIS Pyrolysis is thermal transformation of a material in the complete absence of air or oxygen, typically at temperatures in the range 400800C, to form a mix of gases, vapours, liquids, oils, solid char and ash. The composition and proportions of these products depends on input composition, pre-treatment, temperatures and reaction rates. At temperatures around 500C and short reaction times (under two seconds), pyrolysis oils are produced, with up to 80 per cent of the feedstock being transformed into pyrolysis bio-oil. At higher temperatures of 700-800C, pyrolysis reactions produce a much higher proportion of gas, with correspondingly fewer liquid and solid products. The gas has a calorific value of 1520 MJ/Nm3, about half that of natural gas, and may be used to fuel engines and gas turbines without modification. Pyrolysis bio-oil has a heating value of about 17 MJ/kg, or about 60 per cent that of diesel on a volume basis. A significant feature of producing pyrolysis bio-oil is that it can be produced at a separate location to where it is eventually used, using transportation and storage infrastructure similar to conventional liquid fuels. Pyrolysis bio-oil has been successfully trialled as a boiler fuel, and several pilot and nearcommercial projects have been conducted in Europe and North America. Bio-oil has been successfully fired in several diesel test engines, where it behaves similarly to diesel in terms of engine parameters, performance and emissions. A number of pyrolysis plants are in operation, mainly concentrating on processing uniform waste streams such as plastics and biosolids. FIGURE A.3
Fuel preparation
FUEL
Reactor
BIO-OIL
Bio-oil processing
CLEANED BIO-OIL
Storage/ transport
49
ANAEROBIC DIGESTION Anaerobic digestion is a biochemical process in which a consortium of bacteria participates in the decomposition of organic matter in the absence of oxygen to produce a biogas consisting of approximately 5575 per cent methane and 4525 per cent carbon dioxide plus some trace gases, depending on the waste stream and system design. Anaerobic digestion is a versatile process and can be applied to a wide variety of waste biomass feedstocks including municipal solid waste, industrial waste, livestock and food processing wastes, and human sewage. The liquid fraction of the remaining digested feedstock from several wastes, such as farm and food processing wastes, can be returned to the land as a fertiliser and the solid fibre can be used as a soil conditioner. The familiar form of anaerobic digestion occurs in landfills, where anaerobic digestion occurs over decades. A variant on landfills are bioreactor cells, where the biological process of breaking down the waste, and thus producing biogas, is sped up by optimising the process. There is a whole spectrum of anaerobic digesters customised to the various wet waste streams. These include covered lagoons, contact digesters, plug flow reactors, completely mixed digesters, fixed-film/packed-bed sludge blanket, hybrid fixed-film/sludge blanket, landfills. The flow chart for a generic anaerobic digester is shown below. FIGURE A.4
Feedstock pre-treatment
FEED
Anaerobic digester
BIOGAS
Biogas cleaning
CLEANED BIOGAS
Storage
Separator
POWER/HEAT/ TRANSPORT
LIQUOR
FIBRE (COMPOST)
50
FERMENTATION Organic wastes can be converted to ethanol through fermentation. This is where bacteria convert carbohydrates in the feedstock to ethanol, the alcohol found in beverages. Where the feedstock is in the form of starch, it must be converted to sugars prior to fermentation. Feedstocks to date have included agricultural wastes such as molasses or waste starch, with recent developments focusing on municipal organics including food and sewage sludge. The production of ethanol from cellulose components such as corn cobs and rice straw is under development. ESTERIFICATION Biodiesel can be produced from waste vegetable oils and tallow through a transesterification process. This process involves combining the oil with an alcohol (usually methanol) in the presence of a catalyst (usually caustic soda). A by-product is glycerine, which is itself a chemical feedstock. Biodiesel is a less toxic and more biodegradable fuel than petroleum diesel and is often blended with petroleum diesel to provide a renewable energy component in the fuel.
New South Wales now has two operating 40 ML per year biodiesel plants based on waste vegetable oil and tallow.
51
ATTACHMENT 2
CONTRACTUAL ARRANGEMENTS FOR STAND-ALONE WASTETO-ENERGY DEVELOPMENT Stand alone project financing
A typical project structure for a stand-alone waste-to-energy development using a residual waste stream illustrates the nature of the contractual arrangements that will need to be considered. The terms are discussed in the text following the diagram, and financing matters are considered in more detail in Section 6.3.
Waste provider
Offtake
Equity
Project
O&M
Debt
EPC
A fundamental of developing the financial side of a project is the identification and quantification of the various major categories of risk in the project, and assigning these risks, through contracts, to project partners who are best able and qualified to accept them. In this way the lender of the finance is not asked to bear, for instance, technology risk, which he is not qualified or compensated to take. The project is structured to rely on parties who: contractually agree to accept such risks are qualified to accept these risks are financially capable of bearing allocated risks.
52
Offtake Contract
Revenues from the sale of electricity, heat, Renewable Energy Certificates (for the renewable energy component of the project), Green Power (for compliant feedstocks) and co-products such as fertiliser or nutrient-rich effluent would add to the revenue base of the project. These revenues may be considered the revenue foundation of the project.
Members of the Australian Business Council for Sustainable Energy can provide guidance about waste-to-energy project development for all wasteto-energy applications.
53
54
ATTACHMENT 3
WASTE-TO-ENERGY PROJECTS POWER PLANTS OPERATING AND UNDER CONSTRUCTION AS AT 31 DEC 04 Listed by primary fuel Equipment Types: RCP: Reciprocating engine ST: Steam turbine Owner Location Status Equip. Configuration type No. x MW BAGASSE COGENERATION NSW NSW Sugar Milling Co-op NSW Sugar Milling Co-op NSW Sugar Milling Co-op QLD Bundaberg Sugar Bundaberg Sugar Bundaberg Sugar Bundaberg Sugar Bundaberg Sugar Bundaberg Sugar Bundaberg Sugar Bundaberg Sugar CSR Sugar CSR Sugar CSR Sugar CSR Sugar CSR Sugar CSR Sugar CSR Sugar CSR Sugar Ergon Ergon Independent (Sugar North)
Size MW
Year
Industry
ST ST ST
8.00 3.00 4.50 NSW Subtotal 15.50 2.75 5.00 9.42 6.25 7.00 6.00 19.30 5.00 9.00 7.20 23.00 11.80 12.00 50.00 8.00 63.00 25.00 25.00 10.50
1996 NSW Sugar Milling Co-op 1981 NSW Sugar Milling Co-op 19641982 NSW Sugar Milling Co-op 3 Projects/sites 1970 1969 1970 1970 1998 1971 19701997 1970 1976 19581976 19701997 19651976 19631976 19761996 1965 2005 2006 2006 1970 Moreton Sugar Mill Bingera Sugar Mill Fairymead Sugar Mill Mourilyan Sugar Mill Tableland Mill Babinda Sugar Mill South Johnstone Mill Millaquin Sugar Mill & Refinery CSR Kalamia Sugar Mill CSR Pioneer Mill CSR Plane Creek Mill CSR Victoria Mill CSR Inkerman Mill CSR Invicta Sugar Mill CSR Macknade Mill Nth Qld Mill Isis Central Sugar Mill Tully Sugar Mill Mulgrave Sugar Mill
Nambour (Moreton Mill) Bingera Fairymead Mourilyan Arriga (Tableland Mill) Babinda South Johnstone Millaquin Kalamia Pioneer Plane Creek Victoria Inkerman Invicta Macknade Pioneer II Isis II Tully II Mulgrave
Operating Operating Operating Operating Operating Operating Operating Operating Operating Operating Operating Operating Operating Operating Operating Construction Construction Construction Operating
ST ST ST ST ST ST ST ST ST ST ST ST ST ST ST ST ST ST ST
1 1 1 1 1 1 1 1 1 1 2 1 1 1 1 2
x x x x x x x x x x x x x x x x
2.0, 1 x 0.75 1.5, 1 x 3.5 5.5, 1 x 2.67, 1 x 1.25 1.75, 2 x 1.5, 1 x 1, 1 x 0.5 7.0 6.0 2.0, 1 x 9.5, 1 x 7.8 2, 1 x 1.75, 1 x 1.25 9.0 2.5, 1 x 1.2, 1 x 3.5 2, 1 x 4, 1 x 10 3.2, 1 x 3.6, 1 x 5.0 2.0, 1 x 10.0 9, 1 x 2.5, 1 x 38.5 3.0, 1 x 5 30
Sugar Sugar Sugar Sugar Sugar Sugar Sugar Sugar Sugar Sugar Sugar Sugar Sugar Sugar Sugar Sugar Sugar Sugar Sugar
55
WASTE-TO-ENERGY PROJECTS POWER PLANTS OPERATING AND UNDER CONSTRUCTION AS AT 31 DEC 04 Listed by primary fuel Equipment Types: RCP: Reciprocating engine ST: Steam turbine Owner Location Status Equip. Configuration type No. x MW BAGASSE COGENERATION (continued) QLD (continued) Independent Maryborough Isis Central Sugar Mill Mackay Sugar Cooperative Association Mackay Sugar Cooperative Association Mackay Sugar Cooperative Association Mackay Sugar Cooperative Association Mossman Sugar Mill Proserpine Sugar Mill Stanwell Corporation Tully Sugar
Size MW
Year
Industry
Maryborough Isis Farleigh Marian Pleystowe Racecourse Mossman Proserpine Rocky Point Tully
Operating Operating Operating Operating Operating Operating Operating Operating Operating Operating
ST ST ST ST ST ST ST ST ST ST
1 x 0.75, 2 x 2.0 4.75 1 x 1.5, 1 x 2.7, 1 x 6.5, 1 x 0.8 RCP 11.50 1 x 1.5, 1 x 3.0, 1 x 3.5, 1 x 5.0 13.00 1 x 3, 1 x 10, 1 x 5 1 x 3.1, 1 x 7.0 1 x 3.5, 1 x 7.0 18.00 10.10 13.80
1970 Maryborough Sugar Factory 19651975 Isis Central Sugar Mill 19561983 Mackay Sugar Farleigh Mill 19671978 Mackay Sugar Marian Mill 19661975 Mackay Sugar Pleystowe Mill 19681982 Mackay Sugar Racecourse Mill 19541995 19741999 2001 19651997 Mossman Sugar Mill Proserpine Sugar Mill Rocky Point Tully Sugar Mill 29 Projects/sites 1995 Ord Sugar Mill 1 Project/site 33 Projects/sites
Sugar Sugar Sugar Sugar Sugar Sugar Sugar Sugar Sugar Sugar
2 x 1, 1 x 3, 1 x 0.85, 1 x 6 11.85 1 x 10, 1 x 6, 2 x 2 20.00 1 x 30 30.00 2 x 2.25, 1 x 5.3, 1 x 10.0, 1 x 1.6 21.40 RCP QLD Subtotal 459.62 6.00 WA Subtotal 6.00 BAGASSE COGENERATION Subtotal 481.12 1 x 6.0
Kununurra
Operating
ST
Sugar
Tumut
Operating
ST
1 x 20
2001
Paper
ST
1997
Paper
56
WASTE-TO-ENERGY PROJECTS POWER PLANTS OPERATING AND UNDER CONSTRUCTION AS AT 31 DEC 04 Listed by primary fuel Equipment Types: RCP: Reciprocating engine ST: Steam turbine GT: Gas turbine Owner Location Status Equip. Configuration type No. x MW BLACK LIQUOR (continued) VIC Paperlinx
Size MW
Year
Industry
Maryvale
Operating
ST
3 x 12, 1 x 18.5
Gympie
Operating
ST
2003
Food processing
Camellia, Parramatta
Operating
RCP
NSW Subtotal FOOD AND AGRICULTURAL WET WASTE Subtotal LANDFILL GAS ACT Energy Developments Energy Developments
Operating Operating
RCP RCP
57
WASTE-TO-ENERGY PROJECTS FOR LOCAL AUTHORITIES GUIDE POWER PLANTS OPERATING AND UNDER CONSTRUCTION AS AT 31 DEC 04 Listed by primary fuel Equipment Types: ST: Steam turbine RCP: Reciprocating engine GT: Gas turbine Owner Location Status Equip. Configuration type No. x MW LANDFILL GAS (continued) NSW AGL AGL Collex Energy Energy Energy Energy Energy Energy
Size MW
Year
Industry
West Nowra Shoalhaven Woodlawn Eastern Creek Lucas Heights II Eastern Creek II Lucas Heights I Jacks Gully Belrose
1.00 1.00 25.00 3.80 12.70 2.00 5.20 1.00 2.10 NSW Subtotal 53.80 20.00 1.00 1.00 1.00 0.70 0.55 3.30 1.00 QLD Subtotal 28.55 1.00 2.90 1.00 4.00 2.10 SA Subtotal 11.00
2002 2002 2005 2002 1998 2004 1994 2001 1995 9 Projects/sites 2005 1997 2002 2002 2002 2003 2005 2004 8 Projects/sites 1995 1996 1995 1994 1994 5 Projects/sites
QLD Collex Energy Developments Energy Impact Energy Impact Energy Impact Energy Impact Landfill Management Services Landfill Management Services SA Energy Energy Energy Energy Energy
Ti Tree Browns Plains Stapylton Suntown Molendinar Reedy Creek Rochedale Ipswich
1 1 1 1 1 3 1
x x x x x x x
1 3 1 4 2
x x x x x
58
WASTE-TO-ENERGY PROJECTS FOR LOCAL AUTHORITIES GUIDE POWER PLANTS OPERATING AND UNDER CONSTRUCTION AS AT 31 DEC 04 Listed by primary fuel Equipment Types: ST: Steam turbine RCP: Reciprocating engine GT: Gas turbine Owner Location Status Equip. Configuration type No. x MW LANDFILL GAS (continued) VIC Energy Developments Energy Developments Energy Developments Energy Developments Energy Developments Energy Developments Energy Impact Energy Impact Mill Park Leisure Centre WA AGL AGL Landfill Gas and Power Landfill Gas and Power Landfill Gas and Power Landfill Gas and Power Landfill Gas and Power Landfill Management Services Landfill Management Services
Size MW
Year
Industry
7.20 7.90 1.00 11.00 6.90 1.15 1.00 0.70 0.10 VIC Subtotal 36.95 1.60 2.10 1.65 2.65 4.00 1.90 1.00 1.00 2.20 WA Subtotal 18.10 LANDFILL GAS Subtotal 151.50
Horticulture
Food
Recreation
Millar Road, Kevin Road, Gosnells Tamala Park Red Hill Canning Vale Kalamunda Brockway Malaga South Cardup
9 Projects/sites 42 Projects/sites
59
WASTE-TO-ENERGY PROJECTS FOR LOCAL AUTHORITIES GUIDE POWER PLANTS OPERATING AND UNDER CONSTRUCTION AS AT 31 DEC 04 Listed by primary fuel Equipment Types: ST: Steam turbine RCP: Reciprocating engine GT: Gas turbine Owner Location Status Equip. Configuration type No. x MW MUNICIPAL SOLID WASTE COMBUSTION NSW Global Renewables
Size MW
Year
Industry
Operating
RCP
NSW Subtotal MUNICIPAL SOLID WASTE COMBUSTION Subtotal SEWAGE GAS NSW Sydney Water Sydney Water QLD Brisbane City Council Stanwell Corporation
Malabar Cronulla
Operating Operating
RCP RCP
1999 2001
Operating Operating
RCP RCP
1979 2000
SA South Australian Water Corporation South Australian Water Corporation TAS Hobart City Council
Bolivar Glenelg
Operating Operating
GT RCP
5.45 0.14
United Water Bolivar Wastewater Treatment Plant United Water, Glenelg Treatment Plant 2 Projects/sites Macquarie PT Wastewater Treatment Plant 1 Project/site
Hobart
Operating
RCP
Waste water
0.14
60
WASTE-TO-ENERGY PROJECTS FOR LOCAL AUTHORITIES GUIDE POWER PLANTS OPERATING AND UNDER CONSTRUCTION AS AT 31 DEC 04 Listed by primary fuel Equipment Types: ST: Steam turbine RCP: Reciprocating engine GT: Gas turbine Owner Location Status Equip. Configuration type No. x MW SEWAGE GAS (continued) VIC AGL AGL Charles IFE Melbourne Water WA WA Water Corp
Size MW
Year
Industry
2 2 1 5
x x x x
Melbourne Water Waste water Charles IFE Pty Ltd Melbourne Water 4 Projects/sites WA Water Corp 1 Project/site 12 Projects/sites
Woodman Point
Operating
RCP
3 x 0.6
1998
Waste water
WOOD WASTE QLD Green Pacific Energy Green Pacific Energy SA Carter Holt Harvey
Stapylton Stapylton II
Operating ST Construction ST
1x5
5.00 20.00 QLD Subtotal 25.00 3.50 SA Subtotal 3.50 WOOD WASTE Subtotal 28.50 GRAND TOTAL 772.51
2004 2005 2 Projects/sites 1968 Bell Bay 1 Projects/sites 3 Projects/sites 97 PROJECTS/SITES Timber
Mount Gambier
Operating
ST