Request for Proposal

Joint Venture Investment Opportunity:

Retro-fit of a 1000 MW

Coal-combustion power plant in Shanghai

 

 

Table of contents:

Introduction

Background Information

Criteria

General Proposal Details

Finance Details

Conclusion

References

Appendix

Contact Information

 

1) Introduction

This Request for Proposal is for a retrofit of a 1000 (one thousand) MW fossil power complex burning high sulfur coal with NOx, SOx and particulate removal systems. The Greater Shanghai Powers Authority (GSPA) actively encourages international proposals for this project. The Greater Shanghai Power Authority (GSPA) was founded in 1990 after a decision of the Chinese government to supply Shanghai with electricity. The power utility was privatized last year (December 1997). The new organization is composed of:

Proposals are to be compliant with the specifications described in the following sections and the technical addendum.

 

2) Background information

  1. China

The Peopleís Republic of China is the most populous country in the world today. Current population distribution and concentration are the main reasons that environmental conditions have become a high priority in China. In 1996 alone over one million deaths caused by air pollution were reported.

The environmental issues of greatest concern in China are the following:

Note: see Appendix A for Chinaís current ambient air quality standards.

China is the worldís largest consumer of coal. While the Three Gorges Dam provides an alternative energy source, coal powered plants will continue to be built and used for at least the next 20 years. Every year over 1.4 billion tons of coal are burned in China, and much of this coal is burned inefficiently and with little pollution control. Currently seventy percent of smoke and dust discharged and 90 percent of sulfur dioxide emitted are a result of burning coal (see appendix). While the national goal is to increase the power grid by 5 GW per year for the next 20 years, the government is also seeking to increase efficiency and cleanliness of power production. The government has adopted measures for developing clean coal and clean-combustion technologies.

In 1998, the State Council ratified a plan submitted by the National Environmental Protection Agency. This plan defined different control regions in which to treat sulfur dioxide pollution, and set targets and measures for controlling this environmental problem. The first target is to regulate sources of industrial pollution and enforce state discharge standards by the year 2000. The second target for the year 2010 is to have lower emission levels than year 2000 levels. The State Council has also forbidden the building of new coal-burning power plants in large or medium-sized cities or in their suburbs.

The Chinese market is a market of over one billion people. Although investments have dropped in China due in part to the return of Hong Kong from Britain to China, several experts agree that at the end of the crisis, China will again become the market of the future. Many international companies understood this at the beginning of the nineties and shifted their production units to China. This has caused power consumption to increase, especially in the Shanghai area. In fact, the Shanghai region is the first in which the foreign companies have invested. Most investors are therefore historically acquainted with the area, and there are several existing international firms. With this trend electricity consumption shows no sign of decreasing.

Also the Asia crisis may have caused a decrease in market growth but the market is still dynamic. However, market growth was increased by approximately 9% last year (five times European market growth). Although China is a communist country, a capitalist economy is developing and the government encourages foreign investment.

 

b) Shanghai

Shanghai is the largest industrial and commercial center in China. It plays a vital role in the countryís economic development. The GSPA was founded in 1990 after a decision by the Chinese government to control the supply of electricity to Shanghai. The power utility was privatized in 1997. Since 1990 the city has adopted a three-step development strategy, setting the goal to becoming an international center of economy, finance and trade by the year 2010 and to activate the economic take-off of the Yangtze River Delta. Currently Shanghai has a number of large enterprises as its backbone. Close ties have been established with international market. Large quantities of raw materials are imported and around one third of its processed industrial goods are exported to markets around the world.

 

3) Criteria:

Proposals should address the following criteria and will be evaluated on this basis by the GSPA.

 

4) Proposal Details

Preferences will be given to proposals that augment the existing pollution control systems, thereby allowing the current technicians to share their expertise in current plant operation. The size of any additions must follow Chinese government guideline for the localized impact of industrialization.

The plant will be fully owned by the Shanghai government, however, the partner will be given the option to subscribe for 40% of the bonds that will be issued towards capitalization.

Proposals must include a temporary plan to train current and potential employees in the understanding, control, and management of new emission reduction technology. 80% of operations should be independently possible within 5 years. Full managerial responsibilities should taken by GSPA within 10 years. In order to gain the support of the Chinese government, it is important to promote the use of Chinese materials, labor and suppliers.

Compliance with European or American environmental standards (see Appendix A) is also suggested. The use of these standards would not only allow for funding from organizations such as World Bank, but also attract foreign investors. The World Bank has implemented a new project, "blue sky, clear water," which encourages cooperation between foreign investors and Chinese industries in similar environmental endeavors.

 

5) Finance Details

One alternative is available to foreign investors. Investors have a choice to invest by acquiring shares or to form a joint venture with the GSPA. The Chinese government prefers a joint venture. A joint venture would be formed with the GSPA providing production equipment and plants and foreign investors providing money and technical assistance.

The following is a table showing how investments are split. Each hundred dollars invested in the new project will be divided as illustrated below. This division results in the ownership of 70% of the new company by the GSPA.



* Foreign investors can supply either money or facilities. As the investments for the current project are expected to be large, 50 % (fifty per cent) of the investments will be borrowed and the remaining 50 % (fifty per cent) will be provided by foreign investors- 60 % (sixty per cent); trustees- 40 % (forty per cent).

 

6) Conclusion

The deadline for submission of proposals is the 18th of November 1998.

These proposals must comply with all the specifications addressed in the request for proposal. Assessment of the different proposals will consider points such as maintenance, process performance and price.

 

7) References

  1. http://www.eia.doe.gov/emeu/cabs/china/part2.html
  2. http://www.eia.doe.gov/emeu/cabs/china/part2.html
  3. China Energy Databook, Ernest Orlando Lawrence Berkeley National Laboratory, Univ. of California, Berkeley, Editor: Jonathan E. Sitton.
  4. http://www.pnl.gov/china/
  5. Energy Efficiency Opportunities in China, 1995, Pacific Northwest Laboratory, Richland, Washington

* In order to obtain these figures, we used a computer simulation package. All monetary figures are in U.S. dollars.

 

8) Contact Information

(Please feel free to contact Marie Agnes Divine of Albi or Michelle Ng of Carnegie Mellon for further questions or information.)


Albi School of Mines, France
Group Advisor: Tim Gilroy
Group Members:
Marie Agnes Divine (divine@enstimac.fr)
Nelly Marcillac (marcilla@enstimac.fr)
Olivier Pairault (pairault@enstimac.fr)
Fabrice Pourcel (pourcel@enstimac.fr)
Anne-Florence Gohee (gohee@enstimac.fr)

Carnegie Mellon University, Pittsburgh, Pennsylvania, USA

Group Advisors:
Indira Nair (in0a@andrew.cmu.edu)
Benoit Morel ( bm1v@andrew.cmu.edu)
Group Members:
Mira De (mmd@andrew.cmu.edu)
Kevin Fredrick (kevinf@andrew.cmu.edu)
Anne Leete (aleete@andrew.cmu.edu)
Michelle Ng (moshuen@andrew.cmu.edu)
Mark Sin (msin@andrew.cmu.edu)
Zachary Slaton (zas@andrew.cmu.edu)
Howzan Tai (tai@andrew.cmu.edu)
Choon-Hon Tay (ctay@andrew.cmu.edu)
Kush Tyagi (tyagi@andrew.cmu.edu)
Shalini Vajjhala (vajjhala@andrew.cmu.edu)

 

Appendix

  1. Suggested possible techniques and technologies to monitor and reduce coal plant emissions.
  2. Use of flue gas desulfurization (or scrubbers) to reduce particulate emissions.
  3. Coal benefaction (or washing), which is ash/sulfur extraction to reduce SO2 and particulate emissions.
  4. Use of high stacks (around 200 m) to disperse SO2 such that after consideration of wind speed, topography, diffusion will lead to ambient concentration that meets local health standards.

 

Ambient Air Quality Standards in China (1997) (m g/m3, ppm)

Compound Produced

Stack Height (m)

2nd Grade Plant

3rd Grade Plant

Sulfur Oxides

15
40
70
100
2.6
25
77
170
3.5
38
120
270

Nitrogen Oxides

15
40
70
100
0.77
7.5
23
52
1.2
11
35
78

 

European Air Pollutant Emission norms as of 1st March 1993

Polluting particles

Reject norm

(mg/m3)

Minimum flow for the norm

(kg/h)

Sulfur oxide

300

25

Nitrogen oxide

500

25

Ammonia

50

0.1

Chlorine

50

1

Fluor

5

0.5

Organic particles

150

2

Dusts

50

100

1

<1

 

Recent Air Quality Statistics (1995) (µg/m3)

City

Ash (TSP)

SO2

NO2

Shanghai

246

53

73

Tokyo

49

18

68

 

Environmental and Health Effects of Air Pollutants

EMISSION

ENVIRONMENTAL EFFECTS

HEALTH EFFECTS

Sulfur oxide

Acidification

Corrosion of metallic structures

Damage of stones

Photo-oxidizing pollution

Pulmonary irritation

Nitrogen oxide

Acidification

Corrosion of metallic structures

Damage of stones

Photo-oxidizing pollution

Mucous, eyes and breath irritation

Damage the respiratory tract

(NO2 is more toxic than NO)

Carbon oxide

-

Problem with blood

 

Existing Plant Specifications (CPU Simulation)*

Gross Electrical Output (MW)

1000

NOx out (ton/hr)

1.673

Net Electrical Output (MW)

941.5

SOx out (ton/hr)

13.84

Gross Cycle Heat Rate (Btu/kWh)

8833

Ash out (ton/hr)

19.41

Net Cycle Heat Rate (Btu/kWh)

9382

Bottom Ash (ton/hr)

7.99

Fuel Energy Input (MBtu/hr)

8833

Base Cost

$776.8M

Annual Power Generation (BkWh)

6.19

Coal Flowing In (ton/hr)

333.1

 

Upgraded Specifications (CPU Simulation)

NOx Control

$41.11M

NOx out (ton/hr)

0.44

SOx Control

$64.39M

SOx out (ton/hr)

2.77

TSP Control

$48.11M

Ash out (ton/hr)

0.15

Limestone In (ton/hr)

12.64

Bottom Ash (ton/hr)

7.993

Ammonia In (ton/hr)

0.69

Fly Ash (ton/hr)

47.03

 

 

Existing Plant Technology Specifications:

BOILER SPECIFIC DATA:

Boiler size: 500 MW

Boiler firing method: wall

Capacity factor: 65 %

Retrofit status

Air heater exit temperature: 310 degrees Fahrenheit

Dry boiler bottom

 

COAL CHARACTERISTICS:

Characteristics

run of mine coal

clean coal

heating value

13100

13810

sulfur content (%)

2.6

1.66

ash content (%)

9.1

5.7

coal cost ($/ton)

0.00

5.00

Na2O content in Ash (%)

0.9

0.6

alkalinity content in ash (%)

5.1

4.8

chlorine content (%)

0

0

Fe2O3 content in ash (%)

20.2

20.2

moisture content (%)

6

6

volatile matter content

36.2

37.6

fixed carbon content (%)

48.7

50.7