Magdalena

COMPANY PROFILE

2015

Magdalena

www.imsa.com.gt | T: +502 23 64 5900

Sugar Cane = Power Editorial: Rosie DeWinter

Magdalena has had a successful three decades and now, as one of the largest employers in Guatemala and the largest sugar mill in the region, it is leading the field in energy as an important independent energy supplier to the Guatemalan grid. Total World Energy speaks to Jaime Alberto Morales, Head of the Energy Division of the Group, to find out what’s next for this interesting company.

Today, the sugar mill industry is a large business, not only for the never-ending need of raw sugar but also as an independent power producing industry. If you consider that sugar cane bagasse, a natural fuel source, is produced out of the sugar cane milling process as a by-product, producing sugar and power is just a natural process.

Generating electricity via this

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method is done using energy conversion. Thermal energy produced from the combustion of bagasse (cellulose fibre from crushed sugar cane stalks) is converted into mechanical energy in a turbine, then into electricity in the generator to be finally fed into the electrical grid for people and industry use.

Bagasse from this sugar cane

process is used as raw material, which is then transported to the boilers to be used as fuel to heat water and produce steam. High temperature and high pressure steam is produced inside the boilers to move a turbo generator and produce electricity. The steam is produced in a group of aquatubulartype boilers and delivered to a series of turbo-generators that make the

Magdalena conversion of thermal to mechanical energy and then electricity.

A renewable fuel, sugar cane baggase can then be used for power generation, either for internal consumption or transmitted for consumption in the national electrical grid.

Total World Energy speaks to Jaime Alberto Morales, Head of Energy Division at Magdalena, which, when first purchased in 1983, was known as one of Guatemala’s smallest independent sugar mills.

THREE SUCCESSFUL DECADES Now, 30 years on and Magdalena, through a succession of investments and projects, has become the largest sugar mill in the region, conforming to the highest global industry standards. What’s more, the company is now one of the key suppliers of electricity to the ntional grid in Guatemala and in the

“Sugar cane bagasse is a renewable fuel which is used for power generation.

In the sugar industry, bagasse has been used for more than 50 years to produce steam and power.

Bagasse is the natural fuel that we have here”

regional electricity market.

Morales explains: “Sugar cane bagasse is a renewable fuel which is used for power generation. In the sugar industry, bagasse has been used for more than 50 years to produce steam and power.

Bagasse is the natural fuel that we have here.”

“Having said that, Magdalena has been leading the sugar mill and power generation Industry in the region. Magdalena has been recently appointed as one of the biggest sugar mills in the world, processing more than 42,000 tons per day of sugar cane.

“Early in the 90´s, Guatemala was needing power generation to support its growing demand, considering that most of its power generation was coming from hydroelectric stations, it was limited mainly to the rainy season.

Magdalena as other sugar mill companies were awarded with energy supply contracts to meet the

Jaime Morales Choto

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uncovered demand. During the last decade, sugar mill power generation has been a key component of the electrical power portfolio in Guatemala where Magdalena has been playing an important leading role,” Morales explains.

“Since the 90’s, Magdalena has been continuously investing and growing in the energy sector, expanding its generation capacity from 20 Mw at the beginning, to 200 Mw at the current times. The expansion of the sugar mill business allowed Magdalena to have more sugar bagasse and install more generation stations,” says Morales.

In order to diversify its generation portfolio, Magdalena Group invested in other generation technologies like coal and hydroelectric power.

All this, to support the growing demand of Guatemala and other regional countries in the vicinity were

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Magdalena is currently supplying power. Additionally, considering the current capacity, Magdalena invested in high voltage transmission lines and got interconnected in the main transmission system of the country.

THE SUMMER MONTHS Guatemala is now one of the most important sugar cane producers in the world and consequently a significant portion of the national power demand is being covered by the renewable fuel, sugar cane bagasse.

Magdalena designed its latest power units to run on a mix of biomass and coal to increase its generation capacity by 180 MW with the installation of three 60 MW turbo-generators capable of generating power year-round. The last 60 MW unit will be on line by the

end of 2015.

The Guatemalan summer drives the start of the sugar mill season which is when fuel for power generation is produced: “The sugar cane season starts in November and ends before May, so we produce the fuel for power generation between those months,” explains Morales.

The upgraded units are designed to run on bagasse during the November to May summer harvest season and then switch to coal between the rainy season that goes from May to October. The first unit came online in November 2012, the second in June 2014 and third is scheduled for the end of 2015.

GROWTH OPPORTUNITIES During 2013, Magdalena began the installation of a new boiler with a turbo-generator for increasing the installed capacity in the power plant.

Magdalena Morales explains: “Magdalena saw the opportunity to continue growing in the power generation sector. Magdalena realised that they had enough sugar cane bagasse and therefore enough fuel to install the Unit B6, which has the capability of burning bagasse during the sugar mill season. When we don’t have bagasse, we can switch to coal and keep producing energy the rest of the year. Our technology allows us to maintain our emissions levels within the International Standard and local regulations.”

“So with the new units, we are now capable of supplying energy continuously to the National Grid while previously we only had seasonal units. Right now, we have just finished commissioning and entered into commercial operation with the second new block, B7.

Additionally we are now building the

“If you ask me, what was the support from government to have Magdalena investing in this country, I would say: Issuing good laws and providing enough confidence to invest for the long term”

third block, B8, and hope to have it finished by the middle of 2015.”

Morales explains that support from both the government and community has remained very positive throughout the process: “What’s happening in Guatemala is very interesting in terms of the electricity law. When Guatemala entered into a modern energy market scheme, the generation, transmission and distribution of energy went from being a government owned monopoly into a competitive open market. The power generation assets were then sold to the private sector.

“The international companies came to purchase those assets as Independent Power Producers. A similar approach was taken with the distribution companies. The new electricity issued early in the 90´s opened the door for new

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Blanketing: Operations to Maximum Safety with Flammable Liquids Blanketing is the application o f gas technology which consists in replacing the air by inert gas in the gas head of stored combustible liquids, in order to prevent their flammability and thereby protect the stored product and the storage facilities, against a fire or explosion. Air, and specifically the 21% oxygen content in it, represents the main risk of flammability. Additionally, it prevents oxidation and internal corrosion of storage tanks to minimize time and cost of maintenance.

It works elimination one of the essential factors to declare a fire: the presence of oxygen as oxidizer.

3 factors are required for a flammable product to reach combustion: the fuel (which can not be removed from the system as it represents the product to be stored), the oxidizer that is the oxygen present in the air, and the activation energy that even can be an electrostatic charge accumulated in the metal of the tank.

One of the actions to remove a combustion factor has been the connection of the tanks to physical ground to prevent accumulation of electrostatic charge. However, this protective mechanism is not viable in regions of high humidity which causes oxidation or corrosion of electrical ground wires and thus permissiveness to accumulate an electrostatic charge sufficient to ignite the fire inside the tank where presence of flammable gases.

For that reason, blanketing becomes the most effective and safe mechanism to protect the product and its storage tank, because in the absence of oxygen, combustion, fire or explosion can not be produced.

With the storage tank completely closed, the movement of gases mixed with nitrogen is self-regulated with pressure relief valves and vacuum break valves which allow the internal forces do not affect the integrity of the tank.

Sergio Molina Mejía. Chemist MA – MBA – MSc. Productos del Aire de Guatemala, S. A. 41 Calle 6-27 zona 8, 01008 Guatemala.

Phone 2421 0400 ext 314. Fax 2440 9696.

E-mail smolina@fabrigas.com

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Magdalena international and local investment and added new dynamics to the electricity business.

“Initially there were only a few international players in the electricity sector but right now we have various power investors.

The promotion that Guatemala did to attract investors and the new regulation brought international companies like ENEL, Duke Energy, Globelec, IC Power as well as other world class companies.

“I think that, if you as a government develop good regulations, support local and international investors for the long term and keep your promises consistently, you will attract more and more companies interested in investing and in the growth of your country. If you ask me, what was the support from government to have Magdalena investing in our country, I would say: Issuing good laws and providing enough confidence to invest for the long term,” Morales adds.

Having worked in the oil and energy market for more than 15 years, Morales explains that Magdalena has turned into a real energy company: “We have a commercial team that trades our power, we have a regulatory and market team focused on the behaviour of the local and regional market and in any change of the regulatory frame. Additionally we have a project development group focused on new business opportunities in hydroelectric, solar, thermal and other technologies.

With our current energy division team, Magdalena is looking to grow

in the region with new operations and with more electricity exports.

We want to be the preferred choice for any distribution company or large industrial consumer for the supply of its energy needs. ” Continuing to stand as the largest sugar mill in the region, one of the largest employers in Guatemala and representing one of the most important enterprises in the country today, Morales simply concludes: “The Energy Market in Guatemala is now at a mature stage, and therefore we need to explore other opportunities in the region to continue with our growth.”

A SIGNIFICANT MILESTONE With such a successful and innovative history behind Magdalena, Morales explains that a significant milestone for the company was to jump in the power sector; being in the sugar industry and getting in the power industry was a natural step.

“The sugar mill and power generation businesses do not conflict each other,” he explains.

“The sugar mill production means taking sugar cane and passing it through different mill stages to get the cane juices. As part of this production processes you get the bagasse, the bagasse is then used to produce high pressure steam and steam moves turbines and generates power. Once steam has passed through the turbines, low pressure steam is reused in the sugar mill processes, which is called cogeneration.”

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