·       Chinese Coal-to-Liquids and Gas Program Could Completely Change the World Energy Markets

·       Renewable Energy Briefs

·       Headlines for the June 27, 2014 – Utility E-Alert

·       “Hot Topic Hour Webinar” on July 10 is “Direct Sorbent Injection”

·       McIlvaine Hot Topic Hour Registration

Chinese Coal-to-Liquids and Gas Program Could Completely Change the

World Energy Markets

China will increase LNG imports.  Some predict imports of 110 billion cubic meters per year (BCM) by 2020.  However, the cost of LNG is presently $16/MMBtu. This is an expensive fuel source when China has domestic options including coal-to-gas, underground coal gasification, and coal bed methane.   China is therefore changing focus and is pursuing these alternatives. The biggest program includes building plants in the western and northern coal fields which will convert coal to gas. This gas will be piped across country and provide clean burning fuel for major eastern cities.  It is the avowed solution to the smog problem.

The reason for a huge coal-to-gas program is the low cost of the product from a reliable domestic source.  Here are the cost components:

                                                            Cost of Gas Derived From Coal

The costs for coal bed methane are likely to be in the same range. Underground gasification could be even less expensive depending on the depth of the seam.

If China produces 200 BCM from coal and coal bed methane and buys only 40 BCM of LNG, then the implications on the world LNG market will be very substantial. There would be a negative effect on gas prices.  The program would benefit a gas turbine operator or gas-to-chemicals manufacturer in any country which would be a potential exporter of LNG.  Here are the Chinese gas sources under a plan to make maximum use of coal gas.

The Chinese have 15 coal-to-gas projects underway which will produce 80 BCM of gas per year.  Another 25 projects are under discussion which, if all were constructed, would raise gas from coal production to 200 BCM. This compares to the U.S. present shale gas production of 260 BCM.

China has the world’s third largest ready reserves of coal bed methane (CBM), estimated at 36.8 trillion cubic meters (TCM), of which 10 TCM can be exploited.  China plans to complete construction of two major coal bed methane production bases in the central and western regions by 2015 and increase the number to three to five in another ten years.

China is also the leader in underground gasification. It has thirty projects under discussion and one in construction.  Carbon Energy's first commercial UCG project is located at Haoqin Coal Field in Xiwuqi in Inner Mongolia, China. 

Underground coal gasification is estimated to increase reserves by 300 to 400 percent.  When coupled with coal bed methane, total recoverable reserves are sufficient to supply the world for hundreds of years.

Here is the Chinese coal production for last year compared to a very approximate estimate of coal production in 2025:

The Chinese vision entails cleaning up the air in the big cities by piping in coal gas from the west and north of the country. The elimination of 300 million tons of coal burned by industry and residences will go a long way toward reducing the smog in Beijing and elsewhere.  The Chinese leaders have been quoted as saying that the health of these citizens in the short term is a higher priority than global warming.

In China, 16 olefin and polypropylene from coal projects are due for start up by the end of next year with a combined capacity of 10 million tons per year. This new capacity will exceed the additional petrochemical capacity planned for the U.S.  So the Chinese are saying that shale gas is only one route to an inexpensive raw material for chemical manufacture.  With another 650 million tons of coal slated for coal-to-chemicals, China will be a major petrochemical manufacturer.

The conventional coal-to-fuels route uses indirect gasification.  For decades there has been research on direct liquefaction. This is potentially a much less expensive way to make high quality liquid fuels. China now has a successful commercial direct liquefaction plant in operation and two more under construction.

China has coal reserves in excess of 110 billion tons. Another 300 billion tons could be recoverable with underground coal gasification.  Coal bed methane is a reserve of equivalent size. China imported 276 million tons of coal in 2013. The environmental efforts to reduce coal burning in many countries have unintended consequences.  Reduced world demand for coal lowers prices.  China will be the beneficiary. 

World coal production is now 8 billion tons per year. China is the major consumer, but it is also the major supplier of cement and other energy intensive products, so its coal consumption is proportional.

China is leading the coal-to-gas and chemicals initiative, but India and other countries are likely to follow.  The lower the per capita GDP, the lower the relative concern about global warming and the greater the concern about the necessities of life.  To the Chinese apartment owner faced with $16/MMBtu LNG or $4.50/MMBtu coal gas, the global warming arguments are not likely to be persuasive.

China can also make a case for the total environmental benefits of the program.  If the result is smogless cities, the benefits will be very substantial.  The tradeoff between CO₂ and pollutants such as NO_x and particulate has been reduced to a common metric by McIlvaine in the Sustainability Universal Rating System.     

McIlvaine continually analyzes these developments in two publications N049 Oil, Gas, Shale and Refining Markets and Projects and N043 Fossil and Nuclear Power Generation: World Analysis and Forecast.  The costs and potential for alternatives are analyzed in N042 Renewable Energy World Markets.  The company was founded to further environmental knowledge in 1974.  In response to the oil crisis, McIlvaine initiated the Coal Gasification and Liquefaction Knowledge System in 1979. The first issue covered DOE activities to develop direct coal liquefaction.  This technology was eventually acquired by a U.S. company Headwaters.  It is this technology 35 years later which is finally being commercially deployed in China.

How different would the situation in the Middle East be today if the U.S. had continued to support the synfuels programs?  One can only speculate. The future of Middle East supply is equally uncertain. The perspective of China faced with assured coal gas or uncertain quantities from an unreliable Russia and a region in revolution has to be weighted toward reliable supply. In other words, China will make the decision the U.S. could have made decades earlier.

Renewable Energy Briefs

Canadian Solar Closes Canada’s Largest EPC Agreement for the Construction of a 140 MW DC Solar Energy Farm in Ontario

Canadian Solar Inc. announced that its wholly-owned subsidiary, Canadian Solar Solutions Inc., has entered into an Engineering, Procurement, and Construction (EPC) agreement with Kingston Solar LP, a solar energy project developed by Samsung Renewable Energy Inc. for the construction of a 140 MW DC (100 MW AC) utility-scale solar energy farm. The EPC agreement is expected to generate revenue of over C$300 million for Canadian Solar. The construction of the utility-scale solar energy farm will begin in the third quarter of 2014, and is expected to be fully operational in the third quarter of 2015. This is Canadian Solar's second EPC agreement in connection with a solar project developed by Samsung and represents Phase II of Samsung's Green Energy Investment Agreement (GEIA) solar project development in Ontario, which totals 300 MW AC. This follows the Phase I agreement announced on June 10, 2013, for Canadian Solar to build the 130 MW DC Grand Renewable Energy Park in Haldimand County.

Clinton Global Initiative Funds Solar Powered Carports with Electric Vehicle Charging Stations through World’s First “Feed-Out” Funding Program

The Clinton Global Initiative America (CGI America) and Demeter Power Group are launching the world's first market-based, fixed-price funding program for solar and renewable technologies.  The CGI Commitment to Action will help modernize the nation's power grid with more distributed energy through the Feed-Out® Program.

"The Feed-Out® Program will bring together independent power producers and financiers to enable the lowest-cost, fixed-price offering for renewable energy, "said Michael Wallander, Demeter Power Group Founder and President.  "But unlike other similar 'feed-in-tariff' programs, the energy will be used on the customer-side of the meter."

"What retail tenant or business owner would not want to save money on their energy bills while offering customers and employees the ability to shade their cars and power up with solar energy?" said Yann Brandt, Demeter Co-Founder and EVP of Development.  "We enable funding for solar-powered carports with electric vehicle charging stations at a net-negative cost to the customer."

The program will initially make financing available to commercial properties located in Northern California communities participating in the California FIRST property assessed clean energy (PACE) Program offered through the California Statewide Community Development Authority.

OPIC Board Approves Financing for Solar Plant in Chile

The Board of Directors of the Overseas Private Investment Corporation, the U.S. Government’s development finance institution, has approved an investment guaranty of up to $230 million to First Solar, Inc. to support construction and operation of the Luz del Norte power project, a solar photovoltaic park in Chile’s Atacama desert. This will be the largest photovoltaic project in Latin America once complete, producing 141 megawatts of renewable energy.

Chile’s National Energy Strategy outlines an ongoing effort to expand that country’s renewable energy capacity to 20 percent of total generated power by 2025. The grid-connected Luz del Norte project will contribute significantly to this goal.

Chile’s Atacama Desert receives some of the planet’s steadiest concentrations of direct sunlight, presenting ideal conditions for solar power generation. Widespread utilization of this tremendous resource is relatively new, and First Solar’s OPIC-supported Luz del Norte project represents an important advancement for development of solar energy in the region.

Voith Ships Stators and Distributors to the Smithland Hydroelectric Project in Kentucky

Voith Hydro has continued its manufacturing role in American Municipal Power's Ohio River projects through its recent shipment of three stators and three distributors from its Hannibal, OH plant to the Smithland Hydroelectric Project in Kentucky. Voith has previously shipped stators and distributors – which are major components of the generators that will be used to provide power – to the Cannelton and Meldahl projects in Kentucky and Willow Island in West Virginia. Smithland is the last of the four Ohio River plants to receive this shipment. Taken together, AMP's Ohio River projects represent the largest new U.S. hydro development undertaken in recent years.

The stators and distributors were manufactured by Voith Hydro at the facility it opened in Hannibal, OH (the distributors were manufactured at Voith Hydro's facility in York, PA with final assembly in Hannibal). The stator is a key component of the generator and typically one of the larger components of the power unit of a hydroelectric project. The stators for Smithland are 9.18 meters in diameter and weigh 165 metric tons.

AMP's hydroelectric projects – which are taking place on existing locks and dams on the Ohio River - will add more than 300 MW of new, renewable generation. The Smithland project will provide 72 MW of power to AMP's participating members once operational.

Bluesphere Pursues Acquisition Strategy & Puts Company on Accelerated Path to Growth in $6 Billion Waste to Energy Market

Bluesphere Corp., a clean energy company that develops, manages and owns waste-to-energy projects, announced it is pursuing a strategy to acquire fully operational, revenue generating waste-to-energy facilities in select global markets. The company is augmenting its current build-own-operate model with an acquirer-own-operate strategy in order to create immediate revenue and cash flow generation, putting the company on a short term path to profitability in the $6 billion global waste-to-energy market.

Bluesphere is currently conducting due diligence on an acquisition opportunity in Italy for 16 anaerobic digestion waste-to-energy 1 MW facilities that have each been fully operational for at least a year. These facilities have long term agreements with local utilities that are purchasing electricity from the plants. Based on due diligence conducted to date, collectively the plants are producing very high EBITDA, are expected to have an internal rate of return (IRR) of greater than 25 percent, and if acquired, would generate strong immediate cash for Bluesphere.

Bluesphere is currently developing two facilities in the U.S. under its build-own-operate model. The first is a 5.2 MW facility in Charlotte, NC slated to become fully operational in 2015. Approximately $23 million in project financing has been secured from a Fortune 50 company and a leading environmental finance fund. One of the largest power holding companies in the U.S. has signed a long-term contract with Bluesphere to purchase electricity generated at the Charlotte plant.

For more information on Renewable Energy Projects and Update please visit

http://www.mcilvainecompany.com/brochures/Renewable_Energy_Projects_Brochure/renewable_energy_projects_brochure.htm

Headlines for June 27, 2014 – Utility E-Alert

UTILITY E-ALERT

#1181 – June 27, 2014

Because of the Fourth of July Holiday the Next E-Alert will be July 11

Table of Contents

COAL – US

• Supreme Court endorses regulation of Greenhouse Gas Emissions

COAL - WORLD

·       Consortium agrees to develop First Phase of 1200 MW Coal-fired Power Plant in Vietnam

·       POSCO Energy wins License for CHP-5 in Mongolia

GAS/OIL – US

·       Transco files at FERC for Rock Springs Expansion Project to New Gas-fired Power Plant in Maryland

·       Natural Gas-fired Power Plant planned for Salem Township, Pennsylvania

GAS/OIL – WORLD

·       Institute for Democracy and Economic Affairs (Ideas) urges New Tenders for Project 4A in Johor State, Malaysia

·       Siemens Consortium receives Turnkey Construction Order from PETRONAS for Cogeneration Power Plant in Johor, Malaysia

·       Huaneng Power International, Inc. Shanxi Dongshan Gas Turbine Project obtains Approval

·       BHI Co. awarded Contract by Samsung C&T for design and supply of HRSGs for Rabigh II Combined Cycle Power Plant in Saudi Arabia

NUCLEAR

·       China’s ICBC to finance Romanian Nuclear Project

·       Westinghouse developing Seismic Option for AP1000 Nuclear Reactor

·       Korean Consortium to upgrade Research Reactor in the Netherlands

BUSINESS

·       $9 Billion Fabric Filter System Market will expand from 4 Percent to 8 Percent a Year

·       Wisconsin Energy buying Integrys for $5.8 Billion

·       General Electric wins $17 Billion Bid to buy Alstom's Gas Turbine Business

·       Dominican Republic, AES Corp. strike US $260 Million Energy Deal

·       AES sells Minority Stake in Masinloc Power Plant and Development Projects in the Philippines to EGCO Group for $453 Million

·       FirstRand Limited Investment Banking Unit will finance $120 Million of Ghana’s $820 Million Kpone Power Plant

HOT TOPIC HOUR

·       The Hot Topic for June 26 was “CCR $ Billions Needed”

·       Gas Turbine Emission Control Webinar on July 17 will focux on NOx, CO and Toxics

·       Webinar on July 10 on Direct Sorbent Injection

·       Wet Calcium FGD “Hot Topic Hour” on July 24

·       Upcoming Hot Topic Hours

For more information on the Utility Tracking System, click on: 

http://home.mcilvainecompany.com/index.php/databases/2-uncategorised/89-42ei

“Hot Topic Hour” Webinar on July 10 is “Direct Sorbent Injection”

This panel discussion will build on the webinar on “Dry Scrubbers” held in March of this year.

To view the Continuing Analysis of Dry Scrubbers go to: http://www.mcilvainecompany.com/DryScrubAnalysis/Subscriber/Default.htm.

However, the focus of the DSI Update panel will be more on the cost and efficiency of various sorbents and delivery systems relative to reducing emissions of SO₂, Hg and HCl. We would like to discuss the affect of sorbent type and material preparation, handling and delivery on the efficiency, and proven methods for increasing the performance while reducing the cost. There is also a tradeoff between capital cost of the sorbent preparation and delivery equipment and the continuing cost of sorbent required to achieve emission limits.

Panelists will include:

James Dickerman, Director of Flue Gas Treatment Applications, Lhoist North America/Chemical Lime Company

Tony Licata, Principal, Licata Energy & Environmental Consultants, Inc.

Marc Sylvester, Vice-president, Sales, Midwest Energy Emissions Corp (ME2C)

Robert Brogli, Senior Manager for Business Development, NAES Engineering & Construction Group

Paul Farber, Principal, P. Farber & Associates, LLC

Michael (Mike) Atwell, Market Development Manager, Solvay Chemicals Inc

During the webinar we will arrange for personal discussions at MEGA in August.  Paul will be a speaker and McIlvaine will have a stand with several people on hand. 

To register for the “Hot Topic Hour”, click on: http://home.mcilvainecompany.com/index.php/component/content/article?id=675.

McIlvaine Hot Topic Hour Registration

On Thursday at 10 a.m. Central time, McIlvaine hosts a 90 minute web meeting on important energy and pollution control subjects. Power webinars are free for subscribers to either Power Plant Air Quality Decisions or Utility Tracking System. The cost is $300.00 for non-subscribers.

See below for information on upcoming Hot Topic Hours. We welcome your input relative to suggested additions.

Click here for the Subscriber and Power Plant Owner/Operator Registration Form

Click here for the Non-Subscribers Registration Form   

Click here for the Free Hot Topic Hour Registration Form   

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You can register for our free McIlvaine Newsletters at: http://home.mcilvainecompany.com/index.php?option=com_rsform&formId=5

Bob McIlvaine
President
847 784 0012 ext 112

rmcilvaine@mcilvainecompany.com

www.mcilvainecompany.com

191 Waukegan Road Suite 208 | Northfield | IL 60093

Ph: 847-784-0012 | Fax; 847-784-0061