Mexel

virtual power station

Overview:

The term VPS has become very popular in the Demand Side Management (DSM) industry and is featured extensively on the Eskom website.

VPS refers to the additional power or energy that can be made available by careful management and reduction of the use of electrical power without additional capital expenditure, which would normally be required to provide a physical production plant.

It is normally applied to the Demand Side Management (DSM) and involves the reduction in amount of electricity consumed by the end user by either some form of load management or the replacement of electrical equipment with more efficient energy consumption alternatives i.e. CFLs, Solar Geysers etc.

Mexel Energy has adopted an innovative and unique approach by focusing on improving the energy efficiency of the power generating facility viz. Power Generating Plants.

A comprehensive study and summary of the largest utility’s Power Stations was produced and applying a minimum improvement in efficiency of only 0.8% (detailed in an independent report on the Kingston Power Station, Tennessee, USA), it was calculated that the reduction in carbon emissions, if applied to the current Utility’sinstallations is estimated to be 1.8 million tons per annum

A further reduction of 0.6 million tons can be expected from the two new proposed installations at  two other power stations

The greatest financial benefit of the project is that the reduction in virtual carbon emissions can be calculated and will qualify for Certified Emission Records (CER’s) under the Clean Development Mechanism (CDM) initiated by the Kyoto Protocol.

The income that can be derived from the CER trade (at a current value of around 12.0€ per ton), would be somewhere between R200 to R300 mill annum

VPS Financial Models

In order to become eligible for the financial benefits derived from the carbon sales and other benefits, the current financial model assumes the Mexel Energy will become the Project Developers and provide a Design Build Operate (DBO) project at no cost to them i.e. to execute the project on a Risk / Reward basis and hence looking at a model where the benefits are shared on a 50/50 basis.

This approach necessitates an initial capital expenditure of the order of R40 to R50 million.
The potential savings and additional income from this approach will be as follows for the initial phase i.e. the current running Power Stations.

• Additional base load Electricity Sales R750 million per annum
• Saving on Coal Costs R237 million per annum
• Sale of Carbon Credits at approximately 12 Euro per CER R263 million per annum
• Total Annual Benefit R1,265 million per annum which will go up to about R1,6 million per annum once the full three year multiple yearly tariff increase of approximately 25% pa has been implemented.
• The concept would be to share this with Eskom as the project has been executed on a risk reward basis

It is important to get a pilot trial under way on a coal fired Power Station where the introduction of Mexel 432 into the water treatment schedule of one condenser circuit could be directly compared to another circuit using the current water treatment process.

It is anticipated that the benefits of the Mexel 432 could be measured reasonably quickly (i.e. within 3 to 6 months) but the long-term financial benefits from the reduction in corrosion could take significantly longer.

The results of these comparable tests could be accelerated under controlled laboratory conditions for example at the CSIR.

This project concept can be applied to any high energy, heat intensive industrial process that uses water as a cooling medium and any water transportation system where bio-fouling and corrosion create efficiency reduction and related financial burden.

It can be replicated throughout SA, in the bordering countries and internationally with a consequential enormous impact on the GHG emissions.

Mexel Energy is already considering registering a PIN for the myriad of Power Stations in China and India where the electricity generation capacity is 10 & 4 times greater respectively, than in South Africa