CHP Feasibility Study by Lorik Haxhiu

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Terms of reference

TERMS OF REFERENCE

File: Objekt:

Terms of reference-par0-rev0.DOC - IBE KOSOVO COMBINED HEAT AND POWER

Revizija: 0 Datum: 21.3.2005

APPENDIX E—TERMS OF REFERENCE

Introduction These Terms of Reference (ToR) outlines the requirements for preparation of a Feasibility Study for Supplying Heat from the lignite fired power plant Kosovo B (PPKB) primarily with the objective of supplying heat to the District Heating (DH) System in Prishtina.

Background GENERAL BACKGROUND The provision of heating services for the population of Kosovo is essential to their survival and improvement in quality of life. At present, District Heating covers only 5% of heat demands in Kosovo, therefore electricity is the predominant source of energy for space heating and tap water heating in households is not connected to district heating. Even in buildings connected to district heating, tap water heating is usually done with electricity. The high demand for electricity in winter creates severe shortages, requiring Kosovo to import electricity and to regulate the supply. This not only leads to a fiscal burden but also disrupts economic activities. Increased use of affordable District Heating would reduce the pressure on the power system. The Kosovo Trust Agency (KTA) is, as part of the UN Mission in Kosovo (UNMIK), acting as custodian of assets of Publicly Owned Enterprises (POE), including the DH Companies and the Power Company. For the DH companies KTA is in charge of following functions: Oversight management of the DH Companies and chairing the Supervisory Boards, Co-ordination of Donors funds, and Strategic policies and developments of DH-sector Recently, EU (EAR) has launched a Tender for support to undertake corporate restructuring, of selected POE’s, including the DH-Companies and the Power Company. The key project deliverable will be incorporation of the organization. This means that the DHC’s will be reorganized into legal corporate entities with: Asset registers and opening balance sheet(s), Statutes, charter/bylaws defining the responsibilities of management and the Board, Registration of each corporate entity. After incorporation, an ancillary deliverable will be the production of an information memorandum for lenders. THE PRISHTINA DISTRICT HEATING SYSTEM Termokos, the district heating company in Prishtina, is a local public utility company that operates the district heating system in Prishtina. The company has currently around 150 employees. The heating system serves about 12,000 apartments (614,000 m2), the hospital

(79,000 m2), official buildings (207,000 m2) and commercial premises (42,000 m2). The production is provided by two 58 MWth heavy fuel oil fired boilers and two new (1999-2000) 7 MWth light fuel oil fired boilers in the hospital area. The distribution system consists of 55 km of pipes and about 220 substations in the primary network. Last heating season, peak demand was some 70-80 MW. Clients are generally connected via substations equipped with heat exchangers. Domestic Hot Water (DHW) is not supplied from District Heating. The system is operated during the heating season (approximately 15 October –15 April), during the warmer part of the year it is shut down. Furthermore, the system is generally shut off during nighttime, in order to save fuel and water. During the recent heating seasons the intention has been to start continuous (24 h) operation, which has been possible for shorter periods of time, but has proved difficult to continuously achieve, due to scarce fuel supply, and heavy water leakages. The refurbishments so far carried out, including; i) relatively large scale pipe replacement program; ii) refurbishment of substations, and; iii) installation of a large substation hydraulically dividing the Sunny Hill (an area at a higher altitude than the rest of the city) network from the main system, have improved the leakage situation. During the heating season 2003/2004 leakage rate was reduced to around 400 m3/day compared with 800 m3/day in 2000/2001. Further refurbishment of the network will gradually be carried out, with an objective of reaching a leakage rate of 40-60 m3/day within the next three years. Client heating demands have during recent years not been fully met, partly due to the poor technical condition of the system, partly due to scarce fuel supply. Supply situation has however, drastically improved the last two heating seasons, due to the technical system refurbishment and improved fuel supply. The system has so far been operated in production-oriented way, and clients have been billed according to the heated area, not according to actual heat consumption. However, after installation of variable speed drives on the distribution pumps and control valves at the substations as well as appropriate controls for these, the system will be transferred into a demand driven operation. This will be accompanied by a gradual transfer towards a billing system based on actual consumption at the substation level. Low collection rates have been the major obstacle to financial reconstruction of the company. However, last heating season showed a drastic improvement, from ca 29% of billed amount in 2002/2003 to around 45% in 2003/2004. POWER PLANT “KOSOVO B” The Kosovo B power plant consists of two lignite-fired units, B1 and B2. The tables below shows some base design data for the units of Kosovo B and actual achieved technical parameters during years 2000 and 2001. Technical data for Kosovo B Unit

B1 B2

Year of commissioning

1983 1984

Designed gross capacity MW 339 339

Available net capacity MW 309 309

Minimum load – net MW 172 172

Design net heat rate kJ/kWh 11724 11724

The thermal cycle includes re-superheating and a maximum steam temperature of 542 °C is foreseen. Maximum pressure is about 170 bar. URBAN DEVELOPMENT IN PRISHTINA The City of Prishtina has grown considerably during and after the conflict and has now a population of some 400,000 to 450,000 people, the municipality planners foresees a further increase in population to around 640,000 to 800,000 the year 2020. Currently about 80,000 of the inhabitants live in apartment buildings, constituting some 20% of the building stock. The main portion of the apartment buildings (ca 65,000 inhabitants) is currently connected to the Termokos DH system. The municipality has elaborated an ambitious development plan for the period to 2020. The plane includes a large housing program that eventually would switch the portion of apartment buildings from the current situation to a status where about 50% of the population would live in such accommodation. The municipality has declared an intention to promote DH as the preferred means of space heating and provision of DHW. Details of infrastructure planning are foreseen to be available at the Department of Urban Development and Construction of the Prishtina Municipality during the autumn 2004.

THE PROJECT Project Outline Current DH production system is not technically or financially sustainable. Even after the recent refurbishment the two base load boilers will probably continue to have a low efficiency and possibly unsatisfactory reliability. Furthermore, remaining lifetime, considering poor maintenance and operation, and the frequent starts and stops undertaken, is limited. Furthermore, base load production utilizing heavy fuel oil is hardly financially sustainable and a less optimal solution from environmental viewpoint. Therefore, new base load production is a necessity within a perspective of a few years. The nearby power stations have always been a natural option for supplying base load to Prishtina. A project was initiated in the 80’s to supply heat from an industrial CHP plant close to the older power plant “Kosovo A”. However the project was never brought to completion, parts of the pipeline were installed and construction of a heat exchanger building at the District Heating production plant was commenced. The building structure and parts of the pipeline still exist. The current project aims at extracting heat from PPKB and transfer through a transmission pipeline to the Prishtina District Heating system. Preliminary assessment indicates a suitable extraction and transmission capacity of some 90 MWth.

Investments and Financing Preliminary assessments (ESTAP module H) indicate an investment for the complete heat transmission system of around US$ 18 million, under the assumption that part of the piping and the building from the abandoned project can be reused. The Kosovo Consolidated Budget (KCB) has allocated funding for the project, currently € 2.5 million. These funds will be utilised for project preparation, and for part funding of project implementations. It is highly unlikely that the KCB could fund the entire investment, which is why external finance will be sought. The law on Concessions, expected to be passed by the Assembly and promulgated by the Special Representative of the Secretary General (SRSG), may increase the likelihood of attracting foreign and private capital. Objective of the Consultancy The overall objective of the Consultancy is to: • Prepare a Feasibility Study for the project with a sufficient quality to justify the contribution from KCB and acquire financing from International Finance Institutions or Private sector • Assist the client to take initial contacts with potential financiers and prepare a realistic proposal for project financing. Consultancy Scope of Work TASK 1; VERIFICATION OF CONDITIONS AND ASSUMPTIONS The consultant shall taking into account i.a. Termokos and KEK production statistics and urban development plans in Prishtina, verify i) current total heat load in the Prishtina District Heating system, including losses; ii) current load duration curve (annual and daily variations); iii) prepare realistic forecasts for the development of the heat load and load duration, in three scenarios low, medium and high growth, taking into account the municipal development plans as well the development plans of the DHC, including the impact of increased end user efficiency; iv) verify current and future key design features of the Prishtina District Heating system with an impact on the heat supply systems performance, particularly the temperature regime the DH system is and will be operating at; and v) verify price levels and other financial data to be utilised in the study. Above shall be presented in the inception report, and agreed with the Client before proceeding with the following study tasks.

TASK 2; LEAST COST ANALYSIS Taking into account the results of task 1 the conclusion that a transmission line from Kosovo B is the Least Cost Solution for the supply of District Heating to Prishtina, from the ESTAP Module H study shall be verified, and reported in the Analysis Report. TASK 3; ASSESSMENT OF CURRENT STATUS OF INSTALLATIONS The consultant shall make a thorough status analysis of the equipment already installed in connection with the abandoned transmission pipeline project in order to assess the feasibility of and associated costs in connection with reusing the equipment. The assessment shall be separately documented in an inventory report with the objective of defining the possibilities of reusing equipment already available, including but not necessarily limited to pipes, pipe supports and civil structures for heat exchanger building at Termokos main production plant. TASK 4; TECHNO-ECONOMIC ANALYSIS The Consultant shall analyze and optimize the system. The analysis shall include, but not necessarily be limited to: • Pricing of heat at the delivery limits of the system. That is, from the turbines to the transmission system, and from the transmission line to the DH system. • Sizing/optimization of the system. The size, in terms of heat extraction and transmission capacity shall be optimized to achieve a least cost solution (taking into account the possible re-use of equipment already in place). Alternative methodologies for sizing/optimization shall be presented and discussed in the inception report and a decision made together with the Client on what methodology to use. The planning horizon should be a realistic load development considering the development plans over the nearest future (ca 5-7 years) with a perspective of how to, if necessary, increase capacity to accommodate growth over a longer period (15 years) • The inclusion of a thermal storage to level out load variations and improve the possibilities of optimizing heat and electricity production by shifting production in time shall be separately analyzed. On the basis of the analysis a preferred solution in terms of general principles and sizes shall be worked out. The analysis and preferred solution shall be reported to and agreed with the Client in the Analysis Report. For the agreed preferred solution a preliminary design to a degree sufficient to verify technical feasibility and to assess investment cost with an accuracy of +/- 15% shall be prepared, including • Heat extraction system. • Transmission pipeline and requisite heat exchanger and pumping arrangements. The design and costs assessment shall take into account to the maximum degree possible, with consideration to technology and economy, reuse of equipment and installations already in place from the abandoned project.

TASK 5; INSTITUTIONAL ANALYSIS The consultant shall analyze alternative institutional set-up for owning, operating and maintaining the system and present the findings for agreement with the Client in the Analysis Report. A set of principal agreements (heat purchase, transmission etc) matching the agreed institutional set-up shall be drafted. TASK 6; FINANCIAL AND ECONOMIC ANALYSIS A detailed financial analysis of the project to verify its financial feasibility under the agreed assumptions shall be performed. This shall be supplemented by a thorough sensitivity analysis taking into account i.e. the high and low growth scenarios, variations in the investment and in prices of fuel etc. An outline economic analysis shall be performed to highlight the impact of the project on the Society in Kosovo, the analysis including but not necessarily limited to: • Employment • Social impact by access to more affordable heating • Macroeconomic impact by substitution of electric heating by DH TASK 7: ENVIRONMENTAL IMPACT ASSESSMENT The Consultant shall prepare an outline Environmental Impact Assessment in line with the requirements of the IFI’s to a level of detail ness sufficient to start initial financing discussions. TASK 8; IDENTIFICATION OF SOURCES OF FINANCE The Consultant shall survey and identify potential financiers (donors, IFI’s and private capital/operators) of the project including the conditions of such finance. On the basis of the survey a preferred finance package shall be elaborated, including recommendations to the stakeholders (primarily UNMIK, KTA and KCB) on required actions to facilitate the finance. BACKGROUND MATERIAL AVAILABLE In preparing their offer the Consultant shall take into account information provided in the following reports and background documents: • Energy Sector Technical Assistance Project (ESTAP) Kosovo, World Bank Grant No TF-027791, Particularly Modules B “Least Cost Power Generation Investment Program”, and H “District Heating” Final Report, June 2002.

â&#x20AC;˘

Energy Strategy and Policy of Kosovo, The White Paper, Final version submitted for approval, September 2003 QUALIFICATIONS OF THE CONSULTANTS

The consultant is envisaged to be a company or consortium offering extensive experience in medium to large scale CHP and District Heating technology. A small team of consultants is preferred (2-3 persons) with experience in CHP technology, particularly turbine technology, district heating distribution, financial and economic analysis and acquisition of project finance. In addition to the core team a pool of expertise from the home office is anticipated. The inclusion of Kosovar experts into the team is encouraged, these may however not be employed by KTA, KEK or the District Heating Companies, or any of their affiliations. All foreign team members shall be fluent in English. Knowledge of local languages (Albanian and/or Serbian) is an advantage.

TIMING AND REPORTING The assignment is expected to commence early October 2004. The consultant shall produce the following Reports to KTA: 1. An Inception Report, ref task 1 latest four weeks after commencement date, the Client is left two weeks for comments that the consultant shall incorporate into a final agreed version of the report latest seven weeks after commencement. 2. An inventory report, ref task 3 latest six weeks after commencement date. 3. An Analysis Report, ref task 2, 4 and 5, latest eight weeks after commencement date, the Client is left two weeks for comments that the consultant shall incorporate into a final agreed version of the report latest ten weeks after commencement. 4. Draft Final Feasibility Report latest thirteen weeks after commencement date, the Client is left three weeks for comments that the consultant shall incorporate into a final agreed version of the report latest eighteen weeks after commencement

Implementation Arrangements PRACTICAL ARRANGEMENTS KTA will facilitate the issuance of all necessary visas and permits required for the Consultant to carry out his work. KTA will provide the following free of charge to the Consultants: • Office facilities, 2 furnished rooms centrally in Prishtina (tentatively at the KEKbuilding) • Access to international telephone and facsimile at their offices • Access to reliable internet connection at their offices COUNTERPART ORGANIZATION KTA will nominate a counterpart organization with representatives from KTA, KEK and Termokos, and with liaison persons from the Ministry of Economy and Finance, department of Budget (KCB) and the Department of Urban Planning and Construction of the Municipality of Prishtina. The counterpart organization will be responsible to: • Assist the consultant in data collection (without reliving the consultants from their responsibilities in terms of quality of their final product) • Provide the Consultants with comments/approvals of reports etc.

Executive summary

EXECUTIVE SUMMARY

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EXECUTIVE SUMMARY

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CONTENTS

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EXECUTIVE SUMMARY

heating station in the TPP Kosovo B main pipeline heating station in Prishtina

The following issues were considered in the study: Task Task 1 Task 2 Task 3 Task 4

Task 5 Task 6 Task 7 Task 8 File: Objekt:

• • • • • • • • • • • • • •

Issue heat consumption in accordance to the predicted growth of the city temperature regime of the district heating system in Prishtina preliminary least cost analysis assessment of current status of installations optimization of the heat supply from the TPP Kosovo B consideration of the heat storage tank selection of the other main parameters for the base heat load supply from the TPP Kosovo B investment cost and operating data time schedule institutional analysis financial analysis sensitivity analysis environmental impact assessment identification of sources of finance

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Executive summary

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Heat consumption and heat load have been considered due to the predicted high expansion of the city. In accordance with the EU regulation already in force and the one anticipated a significant reduction of the heat consumption in new buildings in comparison with the existing ones is foreseen. Moreover, a part of the existing buildings is supposed to be reconstructed. Domestic water heating in the new buildings will be connected to the district heating system. The economic performance of the district heating system depends on the number of factors. They range from heat generation and distribution to house substations and customer installations and they are interrelated. Over-dimensioning of the existing utilities and selection of a more reasonable design ambient temperature were taken into account by determining the temperature regime. The selected heat loads for low, medium and high scenario are as follows:

HEAT LOAD 450 400

Heat load (MW)

350 300 250 200

low

150

medium

100

high

50 0 2005

2010

2015

2020

2025

2030

2035

Year

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Executive summary

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There were many activities performed in the past concerning base load heat supply from the Thermal Power Plant Kosovo A and B. Technical documentation for the district heating of the city of Prishtina from the Kosovo A Thermal Power Plant was made in 1993. The installation started after the documentation was completed and stopped due to the crisis in the Kosovo region. The current status of the installed equipment is as follows: unit

current status of the installation

heating station at the TPP Kosovo A pipeline from the TPP Kosovo A to the heating station in Prishtina heating Prishtina

station

current status of the equipment

installation has not started

most of foundations for some foundations are supports are finished, damaged most of the pipeline is pipes and elbows are highly temporary welded corroded in main civil structures are the building is in a quite good erected condition

If we would like to assure a reliable operation and an increased heat consumption the use of the existing pipeline is not recommended. The existing heating station in Prishtina is in a good condition and appropriate for the designed purpose. It is foreseen that the existing civil structure will be completed in accordance with the revised technical documentation.

Several options were considered in the optimization of the base heat load supply from the TPP Kosovo B. The options were divided into two main groups: â&#x20AC;˘ â&#x20AC;˘

installation of the main pipeline in one phase installation of the main pipeline in two phases

In both options, the supply and the return pipelines shall be installed at the beginning of the project. In case of the one-phase installation, the capacity of the pipeline is sufficient for maximal load. In case of the two-phase installation, an installation of the third pipeline is foreseen after the consumption rises up to the appropriate level. Several nominal diameters of the main pipeline (from DN350 up to DN700) were taken into consideration.

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The results of the medium growth scenario are presented in the following figure. Key: DNyyy 2xDNyyy

nominal diameter of the supply and return pipeline installed in one phase nominal diameter of the supply and return pipeline installed in the first phase, third pipeline is installed in the second phase with a cross area 2 x DNyyy

Net present value

50.0 40.0

fuel oil TPP Kosovo B maintenance investment

30.0 20.0

2xDN600

2xDN500

2xDN450

2xDN400

2xDN350

DN700

DN600

DN500

0.0

2xDN450-existing

10.0

DN450

net present value (mio EUR)

60.0

option

The option of the two phase installation has been selected. The main 2 x DN450 pipeline is foreseen in the first phase and the DN700 pipeline is foreseen in the second phase. The main operating data for the selected option and the medium growth scenario are presented in the following figures. Key: t1DHK supply temperature from the TPP Kosovo B district heating station t2DHK return temperature to the TPP Kosovo B district heating station t1HS_DHP outlet temperature from the heating station in Prishtina t1DHP supply temperature from the boiler house in Prishtina t2DHP return temperature from the district heating system in Prishtina DHK heating station in the TPP Kosovo B TPP Kosovo B heating station in the TPP Kosovo B DHP heating station in Prishtina Peak load boiler peak load boiler and boiler house in Prishtina

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1-5

Temperature regime in first year 140

120 temperature regime °C

temperature regime °C

120

100

40 40

Temp. regime after second investment

ambient temperature °C t1DHK t2DHK t1HS_DHP t1DHP t2DHP

ambient temperature °C t1DHK t2DHK t1HS_DHP t1DHP t2DHP Temperature regime in last year

140

temperature regime °C

120

100

ambient temperature °C t1DHK t2DHK t1HS_DHP t1DHP t2DHP

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Flow diagram in first year

400

Flow diagram after second investment

800

350

700

300

600

flow kg/sec

1-6

250

200

150

400

ambient temperature 째C DHK DHP

1200

500

300

ambient temperature 째C DHK DHP

Flow diagram in last year

flow kg/sec

1000

800

600

400

ambient temperature 째C DHK DHP

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Structure of the heat supply TPP Kosovo B fuel oil

8.33 heat rate %

heat supply (MWh)

800000

Heat supply from peak load boiler

600000

6.67 5 3.33 1.67

400000

year 200000 0

year

Operating costs of the heat supply without maintenance costs TPP Kosovo B fuel oil

cost (mio EUR)

1 0

year

Heat load in first year

280 Heat load MW

Heat load MW

75 60 45 30

ambient temperature 째C TPP Kosovo B Peak load boiler

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210 140 70

15 0

Heat load in last year

350

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ambient temperature 째C TPP Kosovo B Peak load boiler

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Executive summary

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The foreseen heat supply from the TPP Kosovo B covers the range from 90% to 100 % of the total heat consumption regarding the required heat load. The reduction of the electricity production in the TPP Kosovo B is approximately 0,2 MWhe/MWht. The installation of a heat storage tank was also considered. The main advantage of the heat storage tank is higher electricity production. The heat is supplied to the tank during the night load reduction of the power plant and withdrawn at rush hours of the electric consumption. In spite of all that we do not recommend the installation of the heat storage tank due to the low absolute level of the net present value, inaccurate production costs and electricity sales prices. The heating station in the TPP Kosovo B will be installed in the new building. The selected location for the heating station is near the north-west side of the main turbine building. The main parts of the heating station are as follows: • connection to the steam turbines (unit B1 and B2) • heat exchangers • main circulating pumps • system for maintaining of the static pressure • other equipment The main pipeline will connect the heating station in the TPP Kosovo B with the heating station in Prishtina. The route of the pipeline runs along the Prishtina-Mitrovica main motorway. Two pre-insulated pipes, 2 x DN450 and DN700 are foreseen. The length of the pipeline is 10,500 m. The heating station in Prishtina will be installed in the existing building which was built several years ago near the boiler house. The building is located on the west side of the boiler house. The main parts of the heating station are as follows: • heat exchangers • main circulating pumps • auxiliary circulating pumps • connection to the existing boiler house The Kyoto Protocol objectives and, more recently, the constraints on energy sources enhanced the priority given to energy efficiency policies. The Combined Heat and Power (CHP Project) is a fuel efficient energy technology that, unlike conventional forms of power generation, puts to use the by-product heat that is normally wasted to the environment. From the environmental point of view the advantages of the Pristina CHP project are evident. Due to an increase of the overall fuel efficiency the specific emissions of carbon dioxide will be reduced. The reductions of the emissions calculated at the existing heat demand are as follows: • 23.6% reduction of CO2 emissions • 91.1% reduction of SO2 emissions

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Depending on different future heat demand projections the CO2 emissions will increase substantially according to the heat demand growth. On the other hand, the SO2 emission quantities will be lower than the reference value even in case of the high heat demand scenario. The estimated investment and financial sources are as follows (Prices as of January 2005): Price component

Cost Phase I 000 EUR

Heating station Kosovo B

the

Grand total 000 EUR

Phase II 000 EUR

TPP 3,484

868

4,352

13,119

13,032

26,151

Heating station in Prishtina

2,719

1,419

4,138

Financing costs

1,858

993

2,851

21,180

16,312

37,492

Main pipeline

Grand total

DINAM ICS OF CONST RUCT ION 16,000 14,000 12,000

000 EUR

10,000 8,000 6,000 4,000 2,000

2013

2012

2011

2010

2009

2008

2006

2005

Ye ar

Civil W orks

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Equipment

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Other

Financing Costs

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There are many types of finances potentially available to energy projects and it is usually a mixture of different sources of finance which results in a financial package. The main financial sources available to the project are: − The World Bank Group, − European Bank for Reconstruction and Development (EBRD), − The European Investment Bank (EIB), − Global Environment Facility (GEF) funds, − Government export financing agencies, − Domestic government, − International commercial banks, − Venture capital companies, companies that are interested in taking an equity stake in the project and − contractors and suppliers debt financing.

As a general rule, the maximum debt equity split required by the international financial institutions is 70% debt and 30% of equity financing. If TERMOKOS and the local community can not assure at least 30% of their own financial sources, concession or BOT model of financing would be appropriate. Concession or BOT model was not selected due to the existing low collection rates. It is expected that the major part of the project will be financed by one of the international banks. Their share will be slightly over 60%. Furthermore, it is expected that Kosovo Government will, according to current legislation, grant a loan to finance a part of the first phase of the project. The governmental loan will represent 17% in total financing of the project. The rest of the financial sources will be provided by Termokos. Termokos funds will be primarily used to cover financing cost i.e. interest during construction and financial fees. The majority of Termokos funds are expected in the second phase of the project, when Termokos will already realize the financial benefits of the first phase of the project. The financial sources are presented in the following table.

Financial sources Investors Funds Kosovo Budget funds Grant Domestic loan Foreign loan Total VAT TOTAL

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Structure 22.3% 0.0% 0.0% 16.9% 60.9% 100.0% 13.9% 100.0%

Summary-par1-rev1.DOC - IBE KOSOVO COMBINED HEAT AND POWER

Total 000 EUR 8,354 0 0 6,318 22,820 37,492 5,196 42,688

Phase I. 000 EUR 2,138 0 0 6,318 12,728 21,184 2,898 24,082

Phase II: 000 EUR 6,215 0 0 0 10,092 16,308 2,298 18,606

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Executive summary

1-11

The main financial results for the scenarios considered are as follows: No growth Scenario Average energy production GWh Investment costs (VAT excluded) million EUR

Low Scenario

Medium Scenario

High Scenario

185

456

564

758

21.2

37.5

19.0 90%

29.1 78%

Average District Heating cost price (Without connection to TPP Kosovo B) EUR/MWh

50.0

46.0

45.3

44.5

Average District Heating cost price (With connection to TPP Kosovo B) EUR/MWh

25.6

19.6

19.2

20.4

6.4 16.3%

25.9 22.2%

34.8 24.3%

47.7 27.0%

Financed by loans million EUR Debt financing % COST PRICE

ECONOMICS OF THE PROJECT Simple Pay-back (years) NPV at 12% discount rate (million EUR) IRR

For the medium growth scenario, the district heating price is presented in the following figure. DISTRICT HEATING COST PRICE Medium Scenario 70 60

Cost price EUR/MWh

50 40 30 20

2031

2029

2027

2025

2023

2021

2019

2017

2015

2013

2011

2009

2007

2005

Le to

W ith connection to TPP Kosovo B

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W ithout connection to TPP Kosovo B

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The figure above presents the cost price of the district heat without connection to the TPP Kosovo B and for the scenario with connection to the TPP Kosovo B. In case there is no connection to the Kosovo B, the cost price in 2005 will be 44.38 EUR/MWh. In the future years, the cost price will increase mainly because of the raise of financing costs. Due to a long receivables collection period the amount of the short term debt increases, which results in higher financing costs.

For the medium growth scenario, the cash flow is presented in the following figure.

CASH FLOW 60 50

million EUR

40 30 20 10 0 -10

20 05 20 06 20 07 20 08 20 09 20 10 20 11 20 12 20 13 20 14 20 15 20 16 20 17 20 18 20 19 20 20 20 21 20 22 20 23 20 24 20 25 20 26 20 27

-20

Year Cash receipts from operations

Receipts from financing & investment

Disbursements for operations & investment

Financing disbursments

NET CASH FLOW

The period till 2014 can be defined as a construction period. In this period, Termokos will raise long term loans to finance the investment and short term loans to cover loss from operations. Therefore, the net cash flow in this period ranges around zero. From the year 2014 onward, the net cash flow begins to rise. The main reason of the net cash flow rise lies in the expected growth of the district heat consumption which at present district heating prices yields big profits.

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The sensitivity analysis is presented in the following figure.

SENSITIVITY ANALYSIS

80.0 70.0

NPV mill EUR

60.0 50.0 40.0 30.0 20.0 10.0 0.0 -60%

-50%

-40%

-30%

-20%

-10%

10%

20%

30%

40%

50%

60%

Change of input data

Investment costs

Scope of production

HFO prices

DH sales prices

DH purchase costs

When interpreting the sensitivity analysis results one must bear in mind that the economics of the project were calculated as a difference between two scenarios, the one without connection to the TPP Kosovo B and the other with connection to the TPP Kosovo B. A major cost item in case of no connection to the TPP Kosovo B is fuel oil costs. Therefore the profitability of the project is very sensitive to fuel oil costs. The second most influential issue is change in the production scope, and in the scope of district heat sales, respectively. The third issue is the project sensitivity to investment costs. The project is least sensitive to change in the district heating purchase price and district heating sales price. The existing low collection rates lead the project in a vicious circle. Because of low collection rates there are no funds to carry out the project. The increase of the collection rate is the key condition for implementation of the project.

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Most European district heating projects have two types of institutional models. The first model is a single company responsible for heat generation, transmission and distribution. The second model includes two or more companies responsible for heat generation, transmission and distribution. The actual situation in Pristina is that there is an existing heating company TERMOKOS, which operates the district heating network. Another fact is that the Power Plant Kosovo B is also an independent business entity. Therefore we assume that in case of Pristina the most feasible solution is to adopt the model of two independent companies. The business relationship between TERMOKOS and the Power Plant Kosovo B would be regulated by a Thermal Energy Service Agreement.

The study approved that from the economical and the environmental point of view the connection of the district heating system in Prishtina to the TPP Kosovo B is an appropriate solution.

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TASK 1

TASK 1 VERIFICATION OF CONDITIONS AND ASSUMPTIONS

1.0

INTRODUCTION

2.0

HEAT CONSUMPTION

3.0

TEMPERATURE REGIME

4.0

OTHER DATA

5.0

REFERENCES

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CONTENTS

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INTRODUCTION................................................................................................................. 1-1

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INTRODUCTION

The City of Prishtina has grown considerably in the last years and has now a population of approximately 400,000 residents. The municipality predicts an increase of up to 800,000 inhabitants in the year 2020. The main portion of the existing apartment buildings without domestic water heating is connected to the district heating system. The existing district heating system in Prishtina is supplied by two heavy fuel oil boilers installed in the boiler station. For economical and ecological reasons heavy fuel oil boilers are not appropriate for base load heat production. The base load heat supply from the TPP Kosovo B is a better option. The existing district heating system in Prishtina is in a bad condition and lacks a contemporary control system. The supply temperature is limited and the operation stopped during the night due to bad condition of the network. These restrictions cause an insufficient heat supply to the apartments at low ambient temperatures. Heat consumption and heat load have been considered due to the predicted high expansion of the city. Studies concerning the existing heat consumption have not been made. Instead of measured data of the heat consumption in Prishtina relevant data from other cities were used. The allowed heat consumption in accordance with former regulation, the one still in force and the anticipated one was considered. In accordance with the EU regulation already in force and the one anticipated a significant reduction of heat consumption in new buildings in comparison with the existing ones is foreseen. One part of the existing buildings is foreseen for reconstruction as well. Domestic water heating in the new buildings will be connected to the district heating system. The economic performance of the district heating system depends on the number of factors. They range from heat generation and distribution to house substations and customer installations and they are interrelated. Low temperature regime gives an opportunity for a competitive cogeneration. Possibilities to lower the temperature regime in the district heating system Prishtina were considered. Over-dimensioning of the existing utilities and selection of a more reasonable design ambient temperature were taken into account by determining the lower temperature regime. Energy prices and other economical data were selected for a techno-economic analysis.

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CONTENTS

HEAT CONSUMPTION ...................................................................................................... 2-1

2.1

REGULATION OVERVIEW................................................................................................. 2-1

2.2

INPUT DATA ......................................................................................................................... 2-4

2.2.1

Introduction............................................................................................................................. 2-4

2.2.2

Climate conditions .................................................................................................................. 2-4

2.2.3

Building configuration factor.................................................................................................. 2-8

2.2.4

Construction year.................................................................................................................... 2-9

2.2.5

Apartments data for Prishtina............................................................................................... 2-10

2.2.6

Non-residential heat consumption ........................................................................................ 2-10

2.3

HEAT CONSUMPTION ANALYSIS.................................................................................. 2-11

2.3.1

Specific heat consumption for space heating:....................................................................... 2-11

2.3.2

Heat consumption for domestic water heating...................................................................... 2-16

2.3.3

Heat losses in the network..................................................................................................... 2-17

2.4

ENERGY CONSERVATION POTENTIALS ..................................................................... 2-18

2.5

PREDICTED HEAT CONSUMPTION IN PRISHTINA .................................................... 2-20

2.5.1

Predicted specific heat consumptions ................................................................................... 2-20

2.5.2

Heat consumption scenarios ................................................................................................. 2-20

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HEAT CONSUMPTION

2.1

REGULATION OVERVIEW

The first measures concerning heat conservation in the buildings in ex-Yugoslavia were issued in 1968. The »Proposal for maximal thermal transmittance« predicted three climate zones for the state. In accordance with the selected climate zone the maximal allowable thermal transmittance k (W/m2K) was limited. It was defined for the outside and indoor walls and outside ceiling. The city of Prishtina was classified in the third zone (III). The maximal allowable thermal transmittance was k = 1,37 W/m2K (Official Gazzette SFRJ 45/67). In the year 1970, the maximal allowable thermal transmittance coefficient was reduced down to k = 1,28 W/m2K (Official Gazzette SFRJ 35/70). A greater improvement concerning the heat conservation in buildings was achieved by the JUS.U.J5.600 code which was published in 1980. It was not only limited to the maximum allowable thermal transmittance but it took into consideration also other influences as minimal thermal stability of civil structures and vapor diffusion through the building outside walls. The maximal allowed thermal transmittance was significantly decreased. For the Prishtina (third climate zone (III)) it was limited to k = 0,83 W/m2K which represented a reduction of about one third with respect to the regulation of 1970. Calculation methods for thermal heat transfer coefficient, vapor diffusion and thermal stability of the civil structures were defined in the JUS.U.J5.510, 520 and 530 codes, also published in 1980. In 1984, a new regulation »Rules for rational use of energy (Official Gazzette SRS 31/84« was released in Slovenia due the reduction of the maximal allowable heat losses in Europe. The regulation was included in the JUS.U.J5.600 code which was released in Yugoslavia in 1987. In the same year, the JUS.U.J5.510 code was amended.

Table 1: Review of regulations in Yugoslavia (YU) [1] Year of publishing or amending of Regulation 1967 1970 - 1980 1980 – 1984 (1987) 1984 (1987) – 2002 2002 - 2006 2006

Reduction of the heat losses (%) / -7 -30 -25 -30 -30 -20

Range of validity YU YU YU SLO (YU) SLO (EU) SLO (EU)

As a consequence of the process of accession to the EU and adoption of the acquis communautaire in the field of efficient use of energy, new »Rules on thermal protection and

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efficient use of energy in buildings (Official Gazzette RS 42/02)« passed in 2002 adopting the EU legislation. The existing EU legislation concerning heat losses in buildings is as follows: [2] • Directive on construction products (89/106/EEC) • Directive SAVE (93/76/EEC) • code EN 832 Table 2: Heat insulation thickness in accordance with regulation and good engineering practice for the third climate zone [2] [11]

Massive compact buildings

Regulation (Year)

Thermal transmittance (W/m2K)

1984 (1987) 2002 2006

U(k)= 0,70 W/m2K) U(k)= 0,40 W/m2K) U(k)= 0,20 W/m2K)

Heat insulation thickness for outside boundary 5 cm 9 – 10 cm 20 cm

The Directive on construction products (89/106/EEC) deals with requirements relating to construction elements in all life (vital) period (e. g. economical treatment of energy). The Directive SAVE (93/76/EEC) restricts heat losses, requires energy reviews and introduces energy identity cards for buildings. The calculation method in EN832 gives the opportunity to compare the energy consumption indexes of the buildings. The energy consumption index is also restricted. The energy consumption index is the output of the calculation method given in EN 832. It indicates the energy consumption of the building in one year (kWh/m2a or kWh/m3a). The EU legislation in force reduces the energy consumption for at least 30% regarding previous regulations in Yugoslavia. The new legislation concerning energy performance of the buildings (Directive on Energy Performance of Buildings (2002/91/EC)) [3] is in ratification in EU. It is expected that the new legislation will be accepted in all EU members up to 2006. The new directive introduces additional measurements for reduction of the energy consumption concerning space and water heating, air conditioning and lighting. A 20% reduction of the energy consumption is expected. The directive defines: • • •

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calculation methodology for the overall energy consumption of the buildings minimal requirements for the heat losses of the new buildings minimal requirements for the heat losses of the existing reconstructed buildings

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• •

2-3

energy identity card regular inspection review of the boilers, air conditioning equipment and space heating systems with boilers older than 15 years.

Table 3: Review of regulation in Germany (D) [1] Year of publishing or amending of Regulation 1977 1977 - 1983 1983 – 1994 1994 – 2001 2001

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Reduction of the heat losses (%) / -30 -30 -30 -30

Range of validity D D D D D (EU)

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2.2

2-4

INPUT DATA

2.2.1 Introduction Heat consumption in buildings depends on the quality of civil construction, resident habits and measurement method. Quality of thermal insulation, room temperature and tariff system are the most important influences. The comparison of heat consumption in different buildings is made on the basis of the following: • climate conditions • building configuration • purpose of the building • construction year Specific heat load and heat consumption (W/m2, kWh/m2 etc.) are used as a main value for indication of the heat consumption in buildings.

2.2.2 Climate conditions Prishtina and Ljubljana are comparable in the view of climate zones and design temperatures. The climate zone and the design temperature represent the main input data for heat consumption and required heat load determination. Table 3: Yugoslavian Code JUS.U.J5.600 (80/87) Climate zone LJUBLJANA PRIŠTINA

III. III.

Outside design temperature - 18°C - 18°C

Minimum outside temperature - 25,2°C - 25,2°C

Table 4: Duration of the heating season [4] Heating season Average outside SD* Z (day) temperature LJUBLJANA 198 3,9°C 2985 PRIŠTINA 195 4,1°C 2915 * Local climate conditions are defined with degree-days. They are calculated in form of a difference between room and outside temperature multiplied by the number of days. The value “degree-days” is calculated for the heating season. The foreseen room temperature is 20°C and the maximal outside temperature 12°C.

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The above table shows that Prishtina and Ljubljana are comparable as regards climate conditions. Outside design temperature for Ljubljana was increased in the new SLO legislation in 2002 (adopted EU legislation) from -18°C to -13°C. In accordance with the design temperature in Ljubljana (-13°C) we anticipate that the design temperature of -13°C for Prishtina is an acceptable value.

Picture 1: Annual load duration curve

outside temp. (°C)

Distribution curve of the outsiede air temperature Prishtina -14 -12 -10 -8 -6 -4 -2 0 2 4 6 8 10 12 14

distribution curve

100

120

140

160

180

200

220

days Heating season for Prishtina is 195 days.

The Prishtina District Heating Company has not recorded heat load and heat consumption, yet. Only supply/return temperatures have been recorded manually. The operation of the district heating system is being interrupted during the night, supplying no heat for domestic water heating.

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Picture 2: Heat load daily variation curve - Prishtina - Working day

Prishtina - working day Heat load - daily variation

100% 80%

load

60% 40%

relative load 20% 0% 0

daily hours

Picture 3: Heat load daily variation curve - Prishtina - Weekend

Prishtina - weekend Heat load - daily variation

100% 80%

load

60% 40%

relative load

20% 0% 0

daily hours

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Picture 4: Heat load daily variation curve - Ljubljana - winter

Ljubljana - winter (working day) Heat load - daily variation 100% 80%

load

60% 40%

relative load

20% 0% 0

daily hours

Picture 5: Heat load daily variation curve - Ljubljana - summer

Ljubljana - summer (working day) Heat load - daily variation 100% 80%

load

60%

relative load

40%

20% 0% 0

daily hours

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The comparison of the daily variation heat load curve between Prishtina and Ljubljana shows that the range of variation is higher in Prishtina than in Ljubljana. A characteristic day with the highest variation is presented for Ljubljana. A higher variation in Prishtina may be caused by the interrupted operation and manual recording. A higher variation increases higher optimal capacity of the heat storage tank. In order to avoid any selection of a too big heat storage tank we presume that the daily variation heat load curve of Ljubljana is more accurate for optimization.

2.2.3 Building configuration factor There are no average values known as regards heat consumption in the buildings. The specific heat consumption depends on the category of the building and its configuration factor (e. g. block of flats, terraced houses, single house). Buildings with the same floor area and the same heat insulation quality of outside walls have different heat losses with regard to the building configuration factor. The building configuration factor (f0) is defined as a division between building volume and building outside boundary. The buildings with higher configuration factor have higher heat consumption due to the more inappropriate building configuration concerning heat losses. The buildings can be classified in the main categories with an average configuration factor as follows [2]: • Apartments building: block of flats (g+3 floors) Average configuration factor f0 = 0,33

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•

Row of houses: terraced houses Average configuration factor f0 = 0,65

•

Detached house: single house Average configuration factor f0 = 0,92

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Picture 4: Maximal allowed heat consumption for heating in relation to configuration factor f0

2.2.4 Construction year The construction year represents an important data due to the regulation concerning maximum allowable heat losses in the past. It should be pointed out that every new regulation has reduced the allowable heat losses for approximately 30% with relation to the previous regulation. In accordance with the regulation development it is helpful to divide buildings into three categories as follows: • • •

buildings constructed up to 1984 (1987) buildings constructed between1984 (1987) and 2002 new buildings

The annual energy consumption in the new buildings in the EU members is limited in accordance with the EU legislation. The energy consumption of the building is indicated as specific energy consumption (kWh/m2a or kWh/m3a). [5] There are different indicators related to the type of energy consumption (space heating, domestic water heating, electricity, lighting etc.).

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2.2.5 Apartments data for Prishtina Floor areas of the existing apartments in Prishtina already connected to the district heating system (TERMOKOS) are as follows:

Apartments, Flats Stores, Offices Schoolhouses Public buildings

Floor area (m2) 634086 43056 128561 182610

Total

988313

Type of building

Comment: construction year is not available.

Heat consumption of the additional existing apartments foreseen for connection to the district heating system is 9,000 MWh/a [26].

Floor areas of the new apartments foreseen for connection to the district heating system are as follows: Projection

low medium high

Total floor area (m2)

Share of connected apartments to district heating system

3750000 5250000 8000000

70% 70% 70%

Total floor area heated by district heating system (m2) 2625000 3675000 5600000

2.2.6 Non-residential heat consumption Detailed data concerning non-residential heat consumption are not available. The estimated heat consumption in public sector and industry is approximately 40% of the total heat consumption which includes residential and non-residential heat consumption.

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2-11

HEAT CONSUMPTION ANALYSIS

2.3.1 Specific heat consumption for space heating: 1. YU (SLO) regulation: a. Apartments building: block of flats (g+3 floors)

Regulation (Year)

Configuration factor (f0)

1984 1984 - 2002 2002 * * -valid only in SLO

0.30 – 0.35

Annual heat consumption (kWh/m2a) 150 - 130 85 55

b. Row of houses: terraced houses

Regulation (Year) 1984 1984 - 2002 2002 * * -valid only in SLO

Configuration factor (f0) 0.65

Annual heat consumption (kWh/m2a) 180 - 150 100 70

2. German (D) regulation: a. Apartments building: block of flats (g+3 floors)

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Regulation (Year)

Configuration factor (f0)

1984 1984 - 1994 1994 - 2001 2001

0.30 – 0.35

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Specific heat loss (W/m2) 180 - 130 90 60 40 - 35

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3. Values for Ljubljana in accordance with good engineering practice: [6] Annual heat consumption (kWh/m2a) 180 - 130 100 - 70 < 55

Year 1966 - 1984 1984 - 2002 2002

Specific heat loss (W/m2) 180 - 130 60 - 45 < 35

4. Project »Apartments 2000« in Germany (Competitive examination for the best solution of heat conservation): [7]

Year 1984 1984 - 2000 2000

Configuration factor (f0) 0.30 – 0.35 block of flats 160 (kWh/m2a) 90 (kWh/m2a) < 60 (kWh/m2a)

Configuration factor (f0)) 0.65 terraced houses 190 (kWh/m2a) 110 (kWh/m2a) < 60 (kWh/m2a)

5. Heat consumption analysis of residential buildings connected to the district heating system in Ljubljana: [8] Annual heat Specific heat consumption loss 2 (kWh/m a) (W/m2) 1950 - 1968 168 150 0.30 – 0.35 151 135 1972 – 1997 * 136 121 * share of residential buildings constructed before 1984 is high, so the values are a little bit higher than those given as the average values in the regulation Year

Configuration factor (f0)) block of flats

The surveys in Ljubljana indicate that the annual heat consumption in the apartment buildings (block of flats) move in the range from -10% to +10% related to the regulation in force for the buildings construction year. Maximal inaccuracy was found for the period after 1984 (1987). A possible reason for such deviation lies in the fact that buildings in early 80’s were not designed in accordance with the new regulation.

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6. Heat consumption analysis in public buildings: [5] [10]

Public buildings high value average value low value

Annual heat consumption (kWh/m2a) 240 (kWh/m2a) 205 (kWh/m2a) 80 (kWh/m2a)

Annual heat Schoolhouses * consumption (kWh/m2a) high value 200 (kWh/m2a) average value 170 (kWh/m2a) low value 80 (kWh/m2a) * Some schoolhouses have already been renovated; average values for old schoolhouses amount to 200 (kWh/m2a)

7. Analysis of heat consumption regarding the actual heavy fuel oil consumption in the Prishtina District Heating Company - TERMOKOS a Heat production: Annual values for 2003/2004 Heavy fuel oil consumption Boiler efficiency Lower heat value (Hi)

12301000 (kg) 90% 41 (MJ/kg)

Heat production Heat losses in the network*

126085 (MWh) 15%

Supplied Heat 107172 (MWh/a) * Increased due to the bad condition of the network.

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b Heat consumption in buildings:

Type of building Apartments, Flats Stores, Offices Schoolhouses Public buildings

Annual consumption of heat for heating (kWh/m2a) 150 150 170 200

Floor area (m2)

Annual heat consumption (MWh/a)

634086 43056 128561 182610

95113 6458 21855 36522

988313

159949

0,85

135956

Total Reduction due to the interrupted supply (published value) Reduction due to the insufficient supply (calculated as per data recorded from supply/return temperature)

10% 122361

The difference between the calculated and the measured heat consumption is 14%. The difference is acceptable regarding the quality of the input data.

8. District heating system in Ljubljana: [24] Central heating supply system in Ljubljana consists of a district heating system and a gas network. In 1999, both systems together covered 57% of the heat consumption in the residential buildings.

Year

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Total number of apartments

Connected to main system

Local heating

number

1999

120000

69000 DH system natural gas

57 39 18

51000

2010

125000

90000 DH system natural gas

72 41 31

35000

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Non-residential buildings are covered from the same central heating supply system. The heat consumption share in the non-residential buildings was around 47% of total heat consumption.

Residential and non-residential heat consumption in Ljubljana Non-residential buildings 47%

Residential buildings 53%

9. District heating system in the Velenje municipality: [25] The Velenje municipality district heating system is the second largest district heating system in Slovenia. The base load heat is supplied from the Ĺ oĹĄtanj Thermal Power Plant.

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Residential and non-residential heat consumption in Velenje Non-residential buildings 43%

Residential buildings 57%

2.3.2 Heat consumption for domestic water heating Daily domestic hot water consumption in housekeeping depends on the number of members of a family and theirs personal habits. The annual heat consumption for domestic water heating ranges between 2,500 and 3,200 kWh for an average four members’ family. [9]

Consumption

Heating season (200 days) kWh/per.

Summer season (145 days) kWh/per.

medium

400

250

Heat consumption for domestic water heating per day KWh/per. 1,2 do 2,4

Consumption of hot water (l/per.) per day By 45°C 30 - 60

Consumption of hot water (l/per.) per day By 60°C 20 - 40

Consumption medium

A heat consumption survey of residential buildings connected to the district heating system in Ljubljana indicated that the share of annual heat consumption for water heating is between 25% and 30% of the overall annual heat consumption. The annual heat consumption share for water heating in the apartment buildings (block of flats) is around 30%. The share in the detached houses (single house) is around 15%.

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2-17

In more than 1,000 apartments the heat load for domestic water heating amounts to 1,4kW/apartment. [15]

2.3.3 Heat losses in the network The level of the heat losses depends on the type of insulation and its thermal conductivity, thickness and application method of insulation. Distribution temperatures and extensive surface area of any heat distribution may justify efficient insulation. Quality and cost of materials are of importance which dictates their application. The existing network is in bad condition. Not only heat losses but also leakages are high. . Consequently, the present heat losses can not be used for a long term prediction. To exemplify: reasonably acceptable yardsticks tests under West European and British conditions indicate that for mean supply/return water at 80째C and 5째C soil temperature, an average heat loss figure of 40 W/m length of pipe, could be realistic as a guide. This figure refers to an average for a range of pipe sizes constituting a typical system and use of factory pre-fabricated insulated pipe work. For a competently installed system an overall winter heat loss of network may be estimated at 5-7% of total heat distributed. [12] Very relevant to overall thermal loss from mains is the network heat density of particular area. High concentration of heating loads with correspondingly short runs of underground piping would ensure a much lower loss of heat than a scattered, possibly badly planned estate. This is the European experience indicating 9% loss for distribution density of 250 W/m2 and 3% for a heat density of 1000 W/m2. [12] An overview of the annual reports of district heating companies in different European countries indicates that the overall heat loss is in the range from 6% to 14% with the average value of 10%. [13] The overall heat loss of 10% is selected as a conservative value for the Prishtina district heating network.

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2.4

2-18

ENERGY CONSERVATION POTENTIALS

Energy saving in the building sector is focused on improvements in the building envelope, heating systems, electrical appliances, and advice on efficient energy utilisation. A survey concerning energy conservation potential for the town of Prishtina has not been made. Due to the lack of data we present data valid for Slovenia [14]. They can be used as a case study. Total energy saving potential resulting from the building envelope and heating measures ranges from 30% to 65% in single family houses depending on the age of the building, and between 14% and 73% in the apartment blocks and commercial, public and industrial buildings, again depending upon their age. The potential is higher in buildings constructed before 1980 and more particularly before 1966. Assuming that only measures provoking a payback period of less than 10 years are attractive, the cost effective potential is reduced. The cost effective potential in single family houses is so reduced to 36%, in residential apartments to 27% and in commercial, public and industrial buildings to 34%. The most effective benefits are gained from the following areas: • • •

measures related to building insulation (loft and roof insulation and wall insulation) measures related to the heating system (control systems and thermostatic radiator valves) reduction of air infiltration level (draught proofing) and improved double glazing

Institutional measures can also have a market effect on the energy conservation. For example the introduction of a formalised energy management system, according to Western European experience, gives cost effective savings of the order of 5-10%. In addition, institutional measures may be used to focus attention on: • • •

inefficient heating systems inappropriate thermal performance of the building envelope rational energy behaviour

The reduction level of the heat losses in the existing buildings with some measurements is presented in the following table: [6] Measure – – – –

File: Objekt:

20 cm roof insulation replacement of windows 12 cm insulation of outside boundary 6 cm insulation of basement ceiling

Task1-par2-rev3.DOC - IBE KOSOVO COMBINED HEAT AND POWER

Heat loss reduction 11% 20% 25% 6%

Revizija: 3 Datum: 21.3.2005

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In accordance with the survey [14] the cost effective potential ratio of 10% has been selected as a conservative value for the existing buildings in Prishtina for the next 10 years.

File: Objekt:

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Revizija: 3 Datum: 21.3.2005

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2.5

2-20

PREDICTED HEAT CONSUMPTION IN PRISHTINA

2.5.1 Predicted specific heat consumptions 1. Apartment building: block of flats (g+3 floors):

Year of construction

Configuration factor (f0)

Annual heat consumption for space heating (kWh/m2a)

Annual heat consumption for domestic water heating (kWh/m2a)

1984 (1987) 150 -135** 1984 (1987) 90 - 81** 0.30 â&#x20AC;&#x201C; 0.35 45 New buildings 2002 - 2006 55 New buildings 2006 50 - 45 * * Directive on Energy Performance of Buildings (2002/91/EC) anticipated decreased / cut for 15 to 20%. ** It is predicted that the average heat consumption will be reduced for 10% in the next 10 years. The heat consumption in the first year is 150 (90) kWh, it decreases to 135 (81) in the tenth year and stays unchanged up to the last analysed year.

Year of construction 1984 (1987) 1984 (1987) New buildings 2002 - 2006 New buildings 2006

Configuration factor (f0)

Heat load for space heating (W/m2)

Additional Heat load for domestic water heating (W/m2)

0.30 â&#x20AC;&#x201C; 0.35

135 75 45 40 - 35 *

2. Non-residential area: The floor area of the new public buildings and heat consumption in the industry area are not defined. Due to the lack of data the heat consumption of the non-residential area is defined in accordance with the heat consumption in the residential area. The selected share of the heat consumption in non-residential area is 40% of the total heat consumption.

2.5.2 Heat consumption scenarios The predicted heat consumption is presented in the following tables and diagrams. File: Objekt:

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2-21

Heat consumption without network heat losses: Annual heat Annual heat consumption consumption for space for space heating in 2005 heating in 2020

Type Existing buildings

Apartments, Flats Stores, Offices Schoolhouses Public buildings New connections Total

(kWh/m a)

150 150 170 200

135 135 153 180

residential non-residential

Projection I

(kWh/m a)

Annual heat consumption for hot water 2

(kWh/m a)

Annual heat consumption Predicted for space share for heating in Floor area DH system 2008 2

(m )

634086 43056 128561 182610

(%) 100% 100% 100% 100% 100%

988313

(MWh/a)

95113 6458 21855 36522 9000 168949

residential non-residential

Task1-par2-rev3.DOC - IBE KOSOVO COMBINED HEAT AND POWER

(MWh/a)

168949

85602 5813 19670 32870 8100 152054

152054

3750000

70%

131250 87500 370804

118125 78750 196875

249375 166250 567679

5250000

70%

183750 122500 458304

165375 110250 275625

349125 232750 733929

8000000

70%

280000 186667 618720

252000 168000 420000

532000 354667 1038720

Existing buildings+Projection III

File: Objekt:

(MWh/a)

Annual heat Total heat consumption for hot water consumption in 2020 in 2020

Existing buildings+Projection II Projection III

Total heat consumption in 2008

Annual heat consumption for space heating in 2020

Existing buildings+Projection I Projection II

Annual heat consumption for hot water in 2008

Revizija: 3 Datum: 21.3.2005

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2-22

Heat consumption and heat load with network heat losses:

Existing buildings

Heat consumption 2008 2020 2033 (MWh/a) (MWh/a) (MWh/a) 185.844

2008 (MW) 83

Heat load 2020 (MW)

2033 (MW)

235 299 416

624.447 624.447 807.322 807.322 1.142.593 1.142.593

Existing buildings+Projection I Existing buildings+Projection II Existing buildings+Projection III

Heat consumption and heat load growth:

Heat consumption growth (2020 - 2033)

Heat load growth (up to 2020)

(%)

11% 13% 16%

0% 0% 0%

9% 11% 14%

0% 0% 0%

Heat consumption growth (up to 2020)

Existing buildings+Projection I Existing buildings+Projection II Existing buildings+Projection III

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Heat load growth (2020 - 2033)

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2-23

PREDICT ED HEAT CONSUM T ION

Heat consumption (MWh/a)

1,200,000 1,000,000 800,000 600,000 Projection I

400,000

Projection II Projection III

200,000 0 2005

2010

2015

2020

2025

2030

2035

Year

PREDICTED HEAT LOAD 450 400

Heat load (MW)

350 300 250 200 Projection I

150

Projection II

100

Projection III

50 0 2005

2010

2015

2020

2025

2030

2035

Year

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3-0

CONTENTS

TEMPERATURE REGIME ................................................................................................ 3-1

3.1

EXISTING SYSTEM IN PRISHTINA................................................................................... 3-1

3.2

UTILISING EXISTING RESERVES..................................................................................... 3-3

3.3

SELECTED TEMPERATURE REGIME............................................................................... 3-6

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3-1

TEMPERATURE REGIME

3.1

EXISTING SYSTEM IN PRISHTINA

The existing district heating system in Prishtina covers the main portion of the existing apartment buildings in the city. It is supplied from the boiler house with two heavy fuel oil fired boilers. The domestic water heating is not connected to the district heating system. The design data for the apartment space heating and district heating system are as follows: • • • •

ambient design temperature room temperature space heating (SH) district heating system in Prishtina (DHP)

-18°C 20°C 90/70°C 140/80°C

The heat load at the output from the boiler house has not been measured and recorded. Only the supply/return temperatures are manually recorded. Due to the bad condition of the network the supply temperature is limited to 100°C. The capacity of the district heating system is due to the limitation of the supply temperature insufficient at the low ambient temperatures. The calculated and measured temperatures are presented in the following diagram:

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3-2

Temperature regime

140

−5

flow/return teperature (°C)

120

100

20 20

5 0 ambient temperature (°C)

SH_supply SH_return DHP_supply DHP_return DHP_supply_measured DHP_return_measured

The comparison of the calculated values and the measured ones shows that in case of ambient temperature ranging down to 0°C the supply temperatures of the district heating system in Prishtina (DHP) are higher than required.. At lower outside temperatures they are lower than the calculated values. In case of ambient temperatures ranging down to -5°C the return temperatures of the district heating system are higher than the calculated values.. There is also a high deviation of the measured values due to manual recording. The limited supply temperature causes lower supply temperatures than calculated at the ambient temperatures below 0°C. The return temperatures of the district system are lower than calculated at the ambient temperatures below -5°C. The capacity of the district heating system is insufficient due to the limited supply temperature. The supply temperatures are lower and return temperatures are higher than calculated in the range of ambient temperatures from 0°C to -5°C. We can conclude that the existing utilities are over dimensioned.

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3.2

3-3

UTILISING EXISTING RESERVES

The economic operation of the district heating system depends on the number of factors. They range from heat generation and distribution to house substations and customer installations and they are interrelated. A low temperature regime gives an opportunity for a competitive cogeneration. The existing maximum supply temperatures in the district heating systems in Europe are in the range from 150°C to 90°C. The range between 120°C and 130°C is the most frequent one with tendency to even lower values through to low temperature systems. When converting the existing heating facilities, usually dimensioned for the 90/70°C temperature regime, to district heating service, it is important to consider which heating-unit reserves are available. There have not been made any analyses concerning dimensioning of the existing heating units in Prishtina. The studies from the other cities were used for estimation of the existing utilizing reserves. Several analyses of heating units dimensioning in the existing buildings have revealed mean over dimensioning factor of 1.3 to 1.6 in comparison to calculating the connected heat load [16]. It has been established that as a rule over 85% of the heating units have been over dimensioned. There are considerable reserves available in radiators. However, a survey of individual buildings has also demonstrated that heating units are in use on individual basis that have been under dimensioned up to 50%. In such cases, careful consideration and detailed reflection of needed measures (replacement of radiators and of parameters for house installations) is indispensable. Analysis of radiator dimensioning for 40 buildings with 1,883 heating units in Germany:

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3-4

Another example of successful lowering the network temperature regime is Esag District Heating system in Dresden [17]. The system was originally designed for the temperature regime of 145/80°C and supplies the heat to 503 customers. They established a test program with lowering the supply temperature for 20°C. They only received complaints from customers which use heat for generating low pressure steam. Underheating due to too small dimensioned heating surfaces was not established. We have recalculated the temperature regime in Prishtina with a selected 10% over dimensioning of the existing utilities. The results are presented in the following diagram:

Temperature regime with overdimensioning

140

− 13

flow/return teperature (°C)

120

100

20 20

10 5 0 5 outside ambient temperature (°C)

SH_supply SH_return DHP_supply DHP_return DHP_supply_measured DHP_return_measured

It can be estimated from the above diagram that at ambient temperature below -10°C the existing system with limited supply temperature has insufficient capacity.

File: Objekt:

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3-5

There is a statement in the conceptual design for the district heating system of Prishtina being supplied from the Kosovo A Thermal Power Plant [18] that the return temperature has never reached the temperature of 65°C. In accordance with the data recorded the temperature regime of 110°C/65°C was selected. Ljubljana and Prishtina are comparable in view of climate data. The design temperature in Ljubljana has been increased from -18°C to -13°C. If we assume the design temperature of 13°C for Prishtina and predict a 10% over-dimensioning of the existing heating units in buildings, the maximal return temperature in the district heating system is 65°C. The actual design temperature regime is then 117/65°C and it is comparable with the values selected in [18].

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3.3

3-6

SELECTED TEMPERATURE REGIME

The highest temperature regime in the Prishtina district heating system is defined in accordance with the lowest calculated ambient temperature and the required room temperature. The lowest temperature regime is defined by the requirements for domestic water heating. The domestic water heating is normally adjusted to 45°C. The domestic hot water in the storage tank should be heated to 60°C once per day to decrease legionella growth [19]. The temperature regime in the Prishtina district heating system is selected on the basis of the following conclusions: • • •

The existing design temperature -18°C is replaced with -13°C (comparison between Ljubljana and Prishtina) The existing utilities are over dimensioned for at least 10% (several investigations of the similar systems) Heating of domestic water is foreseen

The selected temperature regime is as follows: • • •

design temperature temperature regime in the Prishtina district heating system minimal supply temperature

-13°C 117/65°C 70°C

The selected temperature difference between the supply and the return temperatures in the Prishtina district heating system is 52°C and a sliding operation is predicted. The supply line from the TPP Kosovo B to the heating station in Prishtina is specified as the district heating system of Kosovo (DHK). The foreseen optimal temperature difference in the Kosovo district heating system can be estimated in accordance with [20]. A sliding operation is foreseen. The approximate distance between the TPP Kosovo B and the heating station in Prishtina is 10 km and a maximal heat load in the range from 100 MW to 500 MW is estimated. The estimated optimal temperature difference in the Kosovo district heating system is 50°C. The selected temperature difference in the Prishtina district heating system is approximately the same as the estimated temperature difference in the Kosovo district heating system. The selected temperature difference in the Prishtina district heating system is appropriate for the optimal selection of the temperature difference in the Kosovo district heating system.

File: Objekt:

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3-7

The selected temperature regime in the Prishtina district heating system is presented in the following diagram:

Selected temperature regime

140 − 13 120

teperature (°C)

100

ambient temperature (°C)

SH_supply SH_return DHP_supply DHP_return

File: Objekt:

Task1-par3-rev2.doc - IBE KOSOVO COMBINED HEAT AND POWER

Revizija: 1 Datum: 21.3.2005

TASK 1

4-0

CONTENTS

OTHER DATA ...................................................................................................................... 4-1

4.1

ENERGY PRICES .................................................................................................................. 4-1

4.1.1

Average prices in EU .............................................................................................................. 4-1

4.1.2

Selected prices......................................................................................................................... 4-4

4.2

EQUIPMENT COST............................................................................................................... 4-5

4.3

ECONOMICAL DATA .......................................................................................................... 4-6

File: Objekt:

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Revizija: 3 Datum: 21.3.2005

TASK 1

4-1

OTHER DATA

4.1

ENERGY PRICES

4.1.1 Average prices in EU 4.1.1.1

Coal prices

The price of hard coal used in power plants within the Community has been monitored and published since 1977. The data concerns hard coal (hard coal used for electrical production and for combined heat and power generation) imported by the EU from the third countries. [21] Average Price Average Price (EUR/tec*) (EUR/MWh) st 1 semester 2004 51,497 6,33 nd 2 semester 2003 40,751 5,01 st 1 semester 2003 38,783 4,77 * 1 tonne of coal equivalent = 29,3 GJ (net calorific value) Period

4.1.1.2

Electricity prices

4.1.1.2.1

Internal cost

Electricity generated by coal fired plants will tend to be setting the market prices and determine the average prices. Coal prices have increased sharply in the last year, driven mainly by a sharp increase in demand from China. [21] Coal price (EUR/MWh) 7,5

Time June 2004

These increases affect the electricity prices by increasing the cost of coal fired plant which often sets prices in wholesale markets. [21]

Time June 2004 File: Objekt:

Marginal generation cost (EUR/MWh) 22

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Total generation cost (EUR/MWh) 45 Revizija: 3 Datum: 21.3.2005

TASK 1

4-2

The CO2 tax is not included in the marginal cost. The average price for the CO2 tax (in accordance with the European Energy Exchange [22]) amounts to 8,67 EUR/EU (EU = 1tonCO2). The CO2 tax for Kosovo lignite is approximately 1.06 EUR/MWh (1ton CO2/1ton coal).

4.1.1.2.2

Market price

The electricity market price is defined in accordance with the European Energy Exchange Market [22]. The equilibrium price determined on this (European Energy Exchange) market is a market price which is defined by way of bilateral auction by suppliers as well as by consumers. Electricity prices on the European Energy Exchange are presented in a graph as an average price for a daily hour in the whole-year and in the winter period.

Average electricity price

electricity price (Eur/MWh)

50,00 40,00 30,00 20,00

average electricity price average winter electricity price

10,00 0,00

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 daily hours

The base load price in November 2004 was 31,33 EUR/MWh. The electricity price in November in rush hours was 43,37 EUR/MWh. The selected rush hours are from 17.00h to 20.00h.

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4-3

The predicted short term future prices are presented in the following table:

4.1.1.3

Fuel oil prices

The average light fuel oil price on the EU market (25 Member States) was 529,07 EUR/1000l in November 2004, VAT included. The average VAT is around 20% for 25 Member States. [21] The light fuel oil price without VAT is as follows: –

1000l of light fuel oil = 423,26 Euro (without VAT) = 43.21 Euro/MWh

The average heavy fuel price is as follows: –

File: Objekt:

1ton of heavy fuel oil (sulphur<1) = 200,13 Euro (without VAT) = 17,56 Euro/MWh

Task1-par4-rev3.DOC - IBE KOSOVO COMBINED HEAT AND POWER

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4-4

4.1.2 Selected prices The selected prices are as follows: •

coal

• • •

marginal electrical generation cost total electrical generation cost light fuel oil

•

heavy fuel oil (sulphur >1%)

1.05 EUR/GJ 3.78 EUR/MWh 18 EUR/MWh 30 EUR/MWh 343.2 EUR/1000 l without VAT and customs duty 434.15 EUR/1000 l 44.33 EUR/MWh 220.47 EUR/tonne without VAT and customs duty 278.89 EUR/tonne 24.49 EUR/MWh

For ecological reasons (too high sulphur content) the use of heavy fuel oil is not acceptable in future. Heavy fuel oil with sulphur content less than 1% can be used in the existing large combustion units in accordance with the EU legislation. In the long term optimisation of the district heating system light fuel oil was selected as a peak load fuel. For the option “doing nothing” the existing heavy fuel oil was selected.

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4.2

4-5

EQUIPMENT COST

The prices are defined in accordance with the offers of potential suppliers participating in the project. The main equipment foreseen is as follows: • • • •

shell tube heat exchanger in the TPP Kosovo B heating station plate heat exchanger in the Prishtina heating station pre-insulated pipes for connection of the TPP Kosovo B and Prishtina heating stations (max. temperature 140°C) large hot water reservoir for heat storage tank

Civil work costs are divided into: Civil works (EUR/m3) – excavation - transport of excavated material (~10km) – filling up with sand – backfilling with excavated material

File: Objekt:

Task1-par4-rev3.DOC - IBE KOSOVO COMBINED HEAT AND POWER

3,9 12,5 29,2 6,25

Revizija: 3 Datum: 21.3.2005

TASK 1

4.3

4-6

ECONOMICAL DATA

Cost of heat supply from the TPP Kosovo B The cost of the heat supply from the TPP Kosovo B will be calculated as the total cost of the equivalent electrical production. Cost of electrical consumption for circulating pumps The total electrical production price will be used for the cost estimation of circulating pumps electrical consumption. Cost of heat produced by peak load boilers Light fuel oil price serves as a basis for cost estimation of the heat generated by peak load boilers. The reserve boilers are foreseen also as peak load units. Benefits from the heat storage tank A part of the daily heat production is moved from the daily hours to the nighttime. Most of the day the existing units operate at full load which is reached in accordance with the current condition of the unit. Operation with constant full load is required due to the lack of electricity in the country. The load is reduced for 7 hours only during the night. It is reduced for approximately 36 MWe. The benefit of the heat storage is increasing the electricity production during the day. The maximal heat load for heat supply to the heat storage tank is defined in accordance with the reduced load during the night. Reduction of the electricity production due to heating should not be greater than 100 MWe during the heat supply to the heat storage tank. Due to the lack of electricity it is not possible to define the electricity market price. Economic estimation of the heat storage tank is as follows: •

•

additional costs o investment of the heat storage tank o marginal generation cost for additional electricity production additional income o selling of the additionally produced electricity at the total generation cost

Interest rate • interest rate

12% [23]

Considered life time • period of depreciation

25 years

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TASK 1

5-0

CONTENTS

File: Objekt:

REFERENCES:..................................................................................................................... 5-1

Task1-par5-rev3.DOC - IBE KOSOVO COMBINED HEAT AND POWER

Revizija: 3 Datum: 21.3.2005

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5-1

REFERENCES:

[1]

Poraba toplotne energije v stanovanjskih objektih priklju enih na plinovodni sistem v Ljubljani; Heat consumption in residential building connected to gas pipelines in Ljubljana; Strokovno posvetovanje – energetika v našem okolju; (4; 2001; Portorož)

[2]

Pravilnik o toplotni zaš iti in u inkoviti rabi energije v stavbah; Energy conservation and efficient use of energy in buildings; Strokovna delavnica; (2002; Ljubljana)

[3]

Energija v stavbah - jutri; Energy in buildings - tomorrow; Seminar; (2004; Maribor)

[4]

Projektovanje postrojenja za centralno grejanje; Space heating design; Mašinski fakultet; (1982; Beograd)

[5]

Kazalci rabe energije za ogrevanje in rabe elektrike; Indicators for the heat consumption and electricity consumption; ZRMK; (2001; Ljubljana)

[6]

Prihranki energije pri posodobitvi ogrevanja in energetski obnovi ovoja stavbe; Energy saving in improvements of heating systems and the building envelope; (2003; Ljubljana)

[7]

Pregled inozemnih i doma ih pilot programa energetske efikasnosti u zgradama; Overview of the domestic and international energy programs; Energetski institute; (2001; Zagreb)

[8]

Analiza porabe toplote in stroškov za potrebe ogrevanja v stanovanjskih objektih priklju enih na sistem daljinskega ogrevanja v Ljubljani; Analysis of heat consumption and heating costs of residential buildings connected to the district heating system in Ljubljana; Strokovno posvetovanje – energetika v našem okolju; (4; 2001; Portorož)

[9]

Priprava tople sanitarne vode; Hot domestic water preparation; U inkovita raba energije; AURE; (1999; Ljubljana)

[10] Primerjava kazalcev rabe energije v ob inah; Comparison of the energy consumption indicators in municipalities; ZRMK; (2001; Ljubljana) [11] Var ne hiše; Economical (energy saving) buildings ; U inkovita raba energije; EGES; (2004; Ljubljana) [12] District heating (1979, MacKenzie-Kennedy) [13] Annual reports from district heating companies

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TASK 1

5-2

[14] Final Report to Ministry of Economic Affairs – Study on Energy Conservation Strategy in Slovenia, Task 1: Development of a National Energy Survey; (1996, ETSU) [15] Grejanje i klimatizacija; Heating and air conditioning; Interklima; (1995) [16] Utilization of Reserves to Achieve Lower Outflow and Return-Flow Temperatures in District Heating Networks; F. Schmitt; (Jarbuch Fernwearme international 1992) [17] Possibilities and Marginal conditions for Lowering the Network Temperature shown by the Esag District Heating System in Dresden; g. Berger; (Jarbuch Fernwearme international 1992) [18] Sistem daljinskog grejanja Prištine; Idejni projekti; Sveska A.2.5. Idejni projekat izmenjiva ke stanice uz TO Priština; 5M 2112.5 Mašinski deo; Energoprojekt-ENTEL; (1993) [19] Trinkwassererwaermungs und Leitungsanlagen; DVGW Technische Regel W 551 [20] Economic Outgoing Temperatures in DH Supply; H. Winkens, (Jarbuch Fernwearme international 1988) [21] Energy sources and demand management; EUROPA - European Commission Energy; (November 2004) [22] European Energy Exchange – EEX Futures Market; (November 2004) [23] Feasibility studia za obnovu hidrocentrale Kozhner; (2002) [24] Strategija razvoja daljinske oskrbe s toploto in plinom v Ljubljani do leta 2010 z na rtom zmanjšanja onesnaževanja zraka za izpolnitev mednarodnih obveznosti; Strokovno posvetovanje – energetika v našem okolju; (4; 2001; Portorož) [25] Novelacija energetske zasnove ob ine Velenje; (2004; Portorož) [26] ESTAP KOSOVO; Module H »District Heating« Final Report; (2002; Pristhina)

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TASK 2

TASK 2 LEAST COST ANALYSIS

1.0

INTRODUCTION

2.0

LEAST COST ANALYSIS

3.0

CONCLUSION

4.0

REFERENCES

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TASK 2

1-0

CONTENTS

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INTRODUCTION................................................................................................................. 1-1

Task2-par1-rev2.DOC - IBE KOSOVO COMBINED HEAT AND POWER

Revizija: 2 Datum: 21.3.2005

TASK 2

1-1

INTRODUCTION

The existing district heating system in Prishtina is supplied by two heavy fuel oil boilers. The alternative option is base load heat supply from the Kosovo B Thermal Power Plant. In this case the existing heavy fuel oil boilers would be used as peak and reserve boilers. The main purpose of this task is to confirm that the heat supply from the Kosovo B Thermal Power Plant could be a better option. Both options (without and with connection to the TPP Kosovo B) were evaluated. The existing floor area which is heated by the existing district heating system and the existing buildings which are foreseen for connection were taken as a conservative approach. The total heat consumption was defined in accordance with the specific heat consumption selected in TASK 1. The temperature regime selected in TASK 1 was used for district heating system in Prishtina. The temperature difference in the pipeline from the TPP Kosovo B to the Prishtina heating station was defined in accordance with the data published [1]. The selected temperature difference is 50째C. A new pipeline is foreseen for the district heating system from the TPP Kosovo B to the heating station in Prishtina. The pre-insulated pipes are foreseen due to the required underground installation by the Prishtina municipality. A new heating station is foreseen at the TPP Kosovo B. The heating station will consist of a shell tube heat exchanger, circulating pumps and a static pressure control system. The steam will be extracted from the exhaust of the intermediate pressure stem turbine. The estimated length of the pipeline from the TPP Kosovo B to the heating station in Prishtina is approximately 2 x 10500 m. The heating station in Prishtina shall be erected in the existing building which was intended for the same purpose in the previous project [2]. A plate heat exchanger and circulating pumps shall be installed.

File: Objekt:

Task2-par1-rev2.DOC - IBE KOSOVO COMBINED HEAT AND POWER

Revizija: 2 Datum: 21.3.2005

TASK 2

2-0

CONTENTS

LEAST COST ANALYSIS................................................................................................... 2-1

2.1

EXISTING DISTRIC HEATING SYSTEM IN PRISHTINA ............................................... 2-1

2.2

BASE HEAT SUPPLY FROM TPP KOSOVO B.................................................................. 2-3

2.3

EVALUATION....................................................................................................................... 2-6

File: Objekt:

Task2-par2-rev2.DOC - IBE KOSOVO COMBINED HEAT AND POWER

Revizija: 2 Datum: : 21.3.2005

TASK 2

2-1

LEAST COST ANALYSIS

2.1

EXISTING DISTRIC HEATING SYSTEM IN PRISHTINA

There is an existing district heating system already erected in Prishtina.. The main boiler plant in the southern end of the city is the main heat source in the network and includes all facilities for operation of the district heating system. Heat is produced by two heavy fuel oil boilers in the main boiler house. The heavy fuel oil is stored in four ground tanks with 1800 m3 of overall capacity. Total capacitiy of the boilers is 2 x 58 MW. An uninterrupted night time operation with sufficient heat supply is foreseen. a Heat consumption in the buildings of Prishtina:

Type of building Apartments, Flats Stores, Offices Schoolhouses Public buildings

Annual heat consumption for heating (kWh/m2a) 150 150 170 200

Floor area (m2) 634086 43056 128561 182610

Annual heat consumption (MWh/a) 95113 6458 21855 36522

New connections Total

9000 988313

168949

Total heat consumption was defined in accordance with specific heat consumption selected in TASK 1 for the existing floor area in the city of Prishtina and the existing buildings foreseen for connection. The present maximal head load in the heating season is around 83MW.

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Revizija: 2 Datum: : 21.3.2005

TASK 2

2-2

Existing heat load and heat consumption Ambient air temperature

Days

Heat load

(째C) -13 -12 -11 -10 -9 -8 -7 -6 -5 -4 -3 -2 -1 0 1 2 3 4 5 6 7 8 9 10 11 12 Total

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2 1 1 1 1 1 2 3 2 3 4 4 6 6 10 9 19 18 16 16 13 14 10 10 12 11 195

Task2-par2-rev2.DOC - IBE KOSOVO COMBINED HEAT AND POWER

Heat consumption Fuel consumption

MWh

83.34 80.82 78.29 75.77 73.24 70.72 68.19 65.67 63.14 60.61 58.09 55.56 53.04 50.51 47.99 45.46 42.94 40.41 37.88 35.36 32.83 30.31 27.78 25.26 22.73 20.20

4001 1940 1879 1818 1758 1697 3273 4728 3031 4364 5577 5334 7637 7274 11517 9820 19578 17457 14547 13578 10244 10183 6668 6061 6546 5334 185844

4445 2155 2088 2020 1953 1886 3637 5253 3367 4849 6196 5927 8486 8082 12796 10911 21754 19397 16164 15086 11382 11315 7408 6735 7274 5927 206493

Revizija: 2 Datum: : 21.3.2005

TASK 2

2-3

2.2

BASE HEAT SUPPLY FROM TPP KOSOVO B

The base load heating from the TPP Kosovo B is an alternative option. The estimated base heat load for district heating system in the city of Prishtina supplied from the Kosovo B Thermal Power Plant is 58 MW. This is approximately 70% of the maximal heat load in the heating season. In this case, the heavy fuel oil boilers shall be used as peak load and reserve boilers. The base heat load supply from the Kosovo B Thermal Power Plant will cover the entire heat consumption down to the ambient temperature of – 3°C. The main data of the alternative heat supply system are as follows: Max. heat load for alternateve heat supply system Temperature regime Ambient air temperature

Days

(°C)

Heat load

Heat consumption

Heat production

MWh

Peak load boiler

DH system in Prishtina

Base load from Peak load TPP Kosovo B boiler

25,26 22,73 20,20 17,68 15,15 12,63 10,10 7,58 5,05 2,53 0,00 0,00 0,00 0,00 0,00 0,00 0,00 0,00 0,00 0,00 0,00 0,00 0,00 0,00 0,00 0,00

4001 1940 1879 1818 1758 1697 3273 4728 3031 4364 5577 5334 7637 7274 11517 9820 19578 17457 14547 13578 10244 10183 6668 6061 6546 5334 185844

DH system Base load from in Prishtina TPP Kosovo B -13 -12 -11 -10 -9 -8 -7 -6 -5 -4 -3 -2 -1 0 1 2 3 4 5 6 7 8 9 10 11 12 Total

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2 1 1 1 1 1 2 3 2 3 4 4 6 6 10 9 19 18 16 16 13 14 10 10 12 11 195

83,34 80,82 78,29 75,77 73,24 70,72 68,19 65,67 63,14 60,61 58,09 55,56 53,04 50,51 47,99 45,46 42,94 40,41 37,88 35,36 32,83 30,31 27,78 25,26 22,73 20,20

58,09 MW 120/70 °C (at ambient temperature -3° C)

58,09 58,09 58,09 58,09 58,09 58,09 58,09 58,09 58,09 58,09 58,09 55,56 53,04 50,51 47,99 45,46 42,94 40,41 37,88 35,36 32,83 30,31 27,78 25,26 22,73 20,20

Task2-par2-rev2.DOC - IBE KOSOVO COMBINED HEAT AND POWER

2788 1394 1394 1394 1394 1394 2788 4182 2788 4182 5577 5334 7637 7274 11517 9820 19578 17457 14547 13578 10244 10183 6668 6061 6546 5334 181055

Revizija: 2 Datum: : 21.3.2005

1212 546 485 424 364 303 485 546 242 182 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 4789

TASK 2

2-4

The alternative heat supply system from the Kosovo B Thermal Power Plant will assure 97% off the complete heat consumption during the heating season.

The equivalent electricity production (base heat load cost) in the TPP Kosovo B and fuel oil consumption in peak load boilers is presented in the Table below: Ambient air temperature

Days

(째C)

Heat consumption

Heat production

MWh

DH system in Prishtina -13 -12 -11 -10 -9 -8 -7 -6 -5 -4 -3 -2 -1 0 1 2 3 4 5 6 7 8 9 10 11 12 Total

2 1 1 1 1 1 2 3 2 3 4 4 6 6 10 9 19 18 16 16 13 14 10 10 12 11 195

Equivalent electricity production MWh

Base load from Peak load Base load from TPP Kosovo B TPP Kosovo B boiler

4001 1940 1879 1818 1758 1697 3273 4728 3031 4364 5577 5334 7637 7274 11517 9820 19578 17457 14547 13578 10244 10183 6668 6061 6546 5334 185844

2788 1394 1394 1394 1394 1394 2788 4182 2788 4182 5577 5334 7637 7274 11517 9820 19578 17457 14547 13578 10244 10183 6668 6061 6546 5334 181055

1212 546 485 424 364 303 485 546 242 182 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 4789

Fuel consumption

Days

MWh Peak load boiler

Peak load boiler

1347 606 539 471 404 337 539 606 269 202 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 5321

2 1 1 1 1 1 2 3 2 3 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 17

474 237 237 237 237 237 474 711 474 711 948 907 1298 1237 1958 1669 3328 2968 2473 2308 1741 1731 1133 1030 1113 907 30779

The estimated distance from the TPP Kosovo B to the main heating station in Prishtina is approximately 2 x 10500 m. The pre-insulated pipes are foreseen for the underground installation.

The main data of the new equipment for alternative heat supply are as follows:

File: Objekt:

Task2-par2-rev2.DOC - IBE KOSOVO COMBINED HEAT AND POWER

Revizija: 2 Datum: : 21.3.2005

TASK 2

•

2-5

Pipeline The temperature regime is defined in accordance with [1].

Temperature Flow speed °C (m/s) supply return

•

120 70

Wall thickness (mm)

Estimated length of the pipeline (m)

6,30 6,30

10500 10500

Heat exchangers

Location Main heating station in Pristhina Heating station in TPP Kosovo B

•

1,8 1,8

Pipeline outside diameter (mm) 457 457

Type

Estimated heat load (MW)

plate

shell tube

Pumps

Temperature °C (-3°C)

Max. flow (kg/s)

Estimated length of the pipeline (m)

Total pressure drop (bar)

120/70

277,94

21000

Location of the pumps: – Heating station in the TPP Kosovo B – Mean heating station in Prishtina

File: Objekt:

Task2-par2-rev2.DOC - IBE KOSOVO COMBINED HEAT AND POWER

Revizija: 2 Datum: : 21.3.2005

TASK 2

2.3

2-6

EVALUATION

For evaluation the net present value method was used.. Two main options were analyzed: • •

Option A: Option B:

option with the existing heating option with base load heating from the TPP Kosovo B

The Option A represents the existing heating system with two heavy fuel oil boilers in Prishtina. For ecological reasons light fuel oil is also considered as an alternative fuel in the option A. The Option B represents base heat load supply from the TPP Kosovo B. In this option the existing heavy fuel oil boilers will be used as peak load and reserve boilers. Heavy fuel oil and light fuel oil are considered as fuels for peak load boilers. The main data for the analysis: • • • • • •

total electrical generation cost heavy fuel oil price light fuel oil price interest rate duration of the heating season period of depreciation

30 24,49 44,33 12 195 25

EUR/MWh EUR/MWh EUR/MWh % days years

The costs are presented in the following diagram and table:

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Revizija: 2 Datum: : 21.3.2005

TASK 2

2-7

Cost structure 80,00 70,00 maintenance

Cost (mio EURO)

60,00

energy investment

50,00 40,00 30,00 20,00 10,00 0,00

A1 - base option A2 - base option B1- alternative (heavy fuel oil) (light fuel oil) option (peak heavy fuel oil)

B2 - alternative option (peak light fuel oil)

Option In the depreciation. period considered, the option with base load heat supply from the TPP Kosovo B demonstrates lower costs. The type of the fuel for peak load boilers has minor influence on the total costs.

File: Objekt:

Task2-par2-rev2.DOC - IBE KOSOVO COMBINED HEAT AND POWER

Revizija: 2 Datum: : 21.3.2005

TASK 2

2-8

Cost

Description Existing system - heavy fuel oil Existing system - light fuel oil Base heat load supply from TPP Kosovo B heavy fuel oil for peak load Base heat load supply from TPP Kosovo B light fuel oil for peak load

File: Objekt:

Option

NPV Operation and maintenance cost mio EURO mio EURO

Investment cost

Fuel oil cost

Base heat load cost

mio EURO

0,00

5,06

0,00

0,15

40,85

0,00

9,15

0,00

0,15

72,98

16,42

0,13

0,92

0,31

27,10

16,42

0,24

0,92

0,31

27,96

A1 A2 B1

Task2-par2-rev2.DOC - IBE KOSOVO COMBINED HEAT AND POWER

Revizija: 2 Datum: : 21.3.2005

TASK 2

3-0

CONTENTS

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CONCLUSION...................................................................................................................... 3-1

Task2-par3-rev1.DOC - IBE KOSOVO COMBINED HEAT AND POWER

Revizija: 1 Datum: : 21.3.2005

TASK 2

3-1

CONCLUSION

The option with the existing heat supply by two heavy fuel oil boilers and the option with base load heating from the TPP Kosovo B were evaluated. The existing heating system (base option) requires low investment even in case with replacement or extension of the existing boilers. The existing boilers are fired with heavy fuel oil. The option with fuel oil was also considered out of ecological reasons. The connection of the existing district heating system to the TPP Kosovo B (alternative option) requires high investment. In spite of high installation costs the operating costs are quite low in comparison with the base option. The net present value of the alternative option is significantly lower than in the base option. The option with base load heating from the TPP Kosovo B is more economical than the existing heating system. The result confirms that the connection to the TPP Kosovo B is an optimal solution. It is made in accordance with the European practice. There are a lot of installations with similar distances between consumers and heat production units. The predicted growth of the heat consumption will increase the benefits of the selected option.

File: Objekt:

Task2-par3-rev1.DOC - IBE KOSOVO COMBINED HEAT AND POWER

Revizija: 1 Datum: : 21.3.2005

TASK 2

4-0

CONTENTS

File: Objekt:

REFERENCES:..................................................................................................................... 4-1

Task2-par4-rev1.DOC - IBE KOSOVO COMBINED HEAT AND POWER

Revizija: 1 Datum: 21.3.2005

TASK 2

4-1

REFERENCES:

[1]

Warmeauskopplung aus Heizkraftwerken; Fernwarme international - FWI; (1992)

[2]

Sistem daljinskog grejanja Prištine; Idejni projekti; Sveska A.2.5. Idejni projekat izmenjiva ke stanice uz TO Priština; 5M 2112.5 Mašinski deo; Energoprojekt - ENTEL; (1993)

File: Objekt:

Task2-par4-rev1.DOC - IBE KOSOVO COMBINED HEAT AND POWER

Revizija: 1 Datum: 21.3.2005

TASK 3

TASK 3 ASSESSMENT OF CURRENT STATUS OF INSTALLATIONS

1.0

INTRODUCTION

2.0

CURRENT STATUS OF THE EQUIPMENT

3.0

CONCLUSION

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Task3-par0-rev0.DOC - IBE KOSOVO COMBINED HEAT AND POWER

Revizija: 0 Datum: 21.3.2005

TASK 3

1-0

CONTENTS

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INTRODUCTION................................................................................................................. 1-1

Task3-par1-rev1.DOC - IBE KOSOVO COMBINED HEAT AND POWER

Revizija: 1 Datum: 21.3.2005

TASK 3

1-1

INTRODUCTION

Technical documentation for the district heating of the city of Prishtina from the Kosovo A Thermal Power Plant was made in 1993. The design data for the district heating system running from the Kosovo A Thermal Power Plant to the heating station in Prishtina were as follows: • •

nominal heat load temperature regime

85 MW 160°C/70°C

The anticipated main units for the district heating system were as follows: • • •

heating station at the TPP Kosovo A pipeline from the TPP Kosovo A to the heating station in Prishtina heating station in Prishtina

The installation started after the documentation was completed and stopped due to the crisis in the Kosovo region. The current status of the installed equipment is as follows: unit

current status of the equipment

heating station at the TPP Kosovo A installation has not started pipeline from the TPP Kosovo A to the most of foundations for supports are heating station in Prishtina finished, most of the pipeline is temporary welded heating station in Prishtina main civil structures are erected The installed equipment hasn’t been protected against weather conditions after the project was stopped.

File: Objekt:

Task3-par1-rev1.DOC - IBE KOSOVO COMBINED HEAT AND POWER

Revizija: 1 Datum: 21.3.2005

TASK 3

2-0

CONTENTS

CURRENT STATUS OF THE EQUIPMENT ................................................................... 2-1

2.1

PIPELINE FROM THE TPP KOSOVO A TO PRISHTINA ................................................. 2-1

2.2

HEATING STATION IN PRISHTINA .................................................................................. 2-5

File: Objekt:

Task3-par2-rev1.DOC - IBE KOSOVO COMBINED HEAT AND POWER

Revizija: 1 Datum: 21.3.2005

TASK 3

2-1

CURRENT STATUS OF THE EQUIPMENT

2.1

PIPELINE FROM THE TPP KOSOVO A TO PRISHTINA

The main data of the pipeline are as follows: • • •

outside diameter wall thickness material

457.2 mm 6.3 mm St 37.0 ( .0361)

Total length of the pipeline is 2 x 7800 m. The majority of the required pipes and elbows are found on the site. Most of the pipes and elbows are temporary welded and layed on concrete foundations. Front pipes are not closed with caps for storage. Only straight pipes were corrosion protected. The inner surface of the pipes is corroded in spite of the elbows where the inner and the outer surfaces are corroded. The supports are not located on the site. Most of the concrete foundations and ducts without covers and drying systems are installed. The quality assurance documentation is not available. The current status of the pipeline is presented on the pictures as follows:

File: Objekt:

Task3-par2-rev1.DOC - IBE KOSOVO COMBINED HEAT AND POWER

Revizija: 1 Datum: 21.3.2005

TASK 3

2-2

Prior to the continuation of the installation the following works shall be carried out: The above ground installation • demolition of the existing pipes and elbows • manual internal cleaning of the pipes and elbows • cleaning of the pipes and elbows with shot blasting and corrosion protection • metallurgical examination of the pipes and elbows as a substitution for the missing quality assurance documentation • repair of the damaged concrete foundations • leveling of the foundations which are not on the appropriate level • repair of the damaged concrete ducts • installation of the drying system in the ducts The underground installation (pre-insulated pipes) • demolition of the existing pipes and elbows • manual internal cleaning of the pipes and elbows • cleaning of the pipes and elbows with shot blasting and corrosion protection • metallurgical examination of the pipes and elbows as a substitution for the missing quality assurance documentation • pre-insulated pipes covering with insulation in the factory

File: Objekt:

Task3-par2-rev1.DOC - IBE KOSOVO COMBINED HEAT AND POWER

Revizija: 1 Datum: 21.3.2005

TASK 3

2-3

In the design phase a stress calculation was made in accordance with the JUS.M.E2.038 code. The main data for the calculation were as follows: • design temperature 160°C • design pressure 22 bar g • material St 37.0 ( .0361) • type welded • safety factor 1.5 • welding factor 0.8 (without inspection certificate in accordance with JUS.C.B5.026) • thickness tolerance -0.35 mm • additional thickness due to corrosion 1 mm • wall thickness 6.3 mm The maximal allowable pressure should be reduced down to 18 bar due to high corrosion. Regarding the original calculation an additional reduction of the wall thickness for 1 mm is foreseen It should be pointed out that the JUS.M.E2.038 code does not consider the influence of the inspection certificate on the safety factor. This influence affects only the welding factor. In accordance with the JUS.M.B5.026 code delivery with or without the inspection certificate depends on the agreement between the purchaser and the supplier. The DIN 2413 code increases the safety factor from 1.5 to 1.7 in case of a delivery without the inspection certificate. The welding factor is 0.85. If we assume the increased value of the safety factor, the maximal allowable pressure is reduced to 16 bar. The foreseen pressure drop in the pipeline from the TPP Kosovo B to the heating station in Prishtina is approximately 11 bar. The maximal pressure in the pipeline is as follows: pressure drop 11 bar elevation difference 74 m 7.4 bar vapor pressure for 130°C 1.7 bar g safety range for pressure control 0.5 bar required maximal pressure 20.6 bar The required maximal pressure is similar as the original design pressure. The pressure drop in the pipeline is increased due to the extension of the line and the increased roughness. On the other side, the maximal temperature is reduced in order to achieve a lower maximal pressure required. In spite of the temperature reduction the required pressure is still higher than the allowable pressure of the current pipeline. The operation with the existing pipes is possible only with a high risk. Due to the temperature reduction the line capacity is sufficient only for the existing heat consumption of the district heating system in Prishtina.

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Revizija: 1 Datum: 21.3.2005

TASK 3

2-4

In case with the existing pipes the operating costs increase as well due to a higher roughness. The increased pressure drop is calculated as follows: • case with new pipes • length 21 km • roughness 0.2 mm • case with the existing pipes existing pipes • length 15.6 km • roughness 1.5 mm new pipes • length 5.4 km • roughness 0.2 mm The increased pressure drop in the case with the existing pipes is approximately 6 bar. The increased operating costs are calculated as follows: • marginal electricity price 22 EUR/MWh • interest rate 12% • duration of the heating season 195 days • considered years 25 The increased operating costs are approximately 200,000 EUR. The estimated price of the new pipes and elbows for the same quantity as it is installed is approximately 2.5 mio EUR. The municipality of Prishtina has additional requirements concerning installation of the pipeline: • •

The pipeline should be installed underground. The route foreseen is predicted for the reconstruction of the motor way running from Prishtina to Mitrovica

In order to meet the requirement regarding the underground installation the pre-insulated pipes are foreseen. Generally, it is possible to send the existing pipes and elbows in the factory to be covered by insulation. We can make a conservative conclusion that due to the differences in dimensions between the supplied elbows and pre-insulated elbows.only pipes can be used The estimated price of the new pipes in the same quantity as supplied amounts to approximately 2.2 mio EUR. The estimated steel pipes share in the total price of the preinsulated pipes is approximately 60%. On the other hand, the existing pipes use could cause a highly risky operation and the capacity of the existing pipeline would be sufficient only for the existing heat consumption. It is not a good engineering practice to design a district heating system with high risk operation. Consequently, the existing pipes are not foreseen for the district heating system treated in the feasibility study.

File: Objekt:

Task3-par2-rev1.DOC - IBE KOSOVO COMBINED HEAT AND POWER

Revizija: 1 Datum: 21.3.2005

TASK 3

2.2

2-5

HEATING STATION IN PRISHTINA

The heating station is made from pre-fabricated concrete elements. There are only foundations, external walls and roofing installed. The building is not protected against weather conditions. The openings for windows and doors are not covered and a temporary roof is not installed, either. The current status of the heating station is presented on the pictures as follows:

File: Objekt:

Task3-par2-rev1.DOC - IBE KOSOVO COMBINED HEAT AND POWER

Revizija: 1 Datum: 21.3.2005

TASK 3

2-6

The design documentation covering the existing structure has foreseen a monolith reinforced concrete skeleton type of structure with a steel roof. Actually, the structure is of a prefabricated RC type composed of main columns, main roof supports, longitudinal faรงade connections and T-type roof beams. The foundations are of reinforced concrete, block type, interconnected by strip supports along the rim of the structure, supporting the faรงade prefabricated panels. Relevant technical documentation shall be obtained for the existing structure confirming that the structure serves for the anticipated purpose. This shall represent a starting point of the reconstruction. The construction should be completed in accordance with the revised technical documentation. In order to avoid any additional damage on the building temporary protection (at least roof) is suggested prior to final construction. Using of the existing building for a heating station is a preferred option.

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TASK 3

3-0

CONTENTS

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CONCLUSION...................................................................................................................... 3-1

Task3-par3-rev1.DOC - IBE KOSOVO COMBINED HEAT AND POWER

Revizija: 1 Datum: 21.3.2005

TASK 3

3-1

CONCLUSION

The supplied equipment consists of a pipeline with total length of approximately 15.6 km and the main civil structure for the heating station in Prishtina. The supplied pipeline was foreseen for an aboveground installation. There are no inspection certificates for the pipeline and it is corroded due to an inappropriate preservation. Prior to any continuation of the installation the existing pipeline should be dismantled, cleaned and sent to factory for covering with insulation. It should be installed underground. On the other hand, the existing pipeline use could cause operation with high risk and the dimension of the pipeline is sufficient only for the existing heat consumption. In order to assure a reliable operation and an increased heat consumption the use of the existing pipeline is not recommended in the feasibility study. The existing heating station in Prishtina is in a good condition and appropriate for the designed purpose. It is foreseen that the existing civil structure will be completed in accordance with the revised technical documentation. It is suggested to protect the existing civil structure against any future damage prior to final construction.

File: Objekt:

Task3-par3-rev1.DOC - IBE KOSOVO COMBINED HEAT AND POWER

Revizija: 1 Datum: 21.3.2005

TASK 4

TASK 4 TECHNO-ECONOMIC ANALYSIS

1.0

INTRODUCTION

2.0

OPTIMIZATION

3.0

TECHNICAL DESCRIPTION

4.0

INVESTMENT COSTS AND OPERATING DATA

5.0

TIME SCHEDULE

6.0

ENCLOSURES

7.0

DRAWINGS

File: Objekt:

Task4-par0-rev0.DOC - IBE KOSOVO COMBINED HEAT AND POWER

Revizija: 0 Datum: 21.3.2005

TASK 4

1-0

CONTENTS

File: Objekt:

INTRODUCTION................................................................................................................. 1-1

Task4-par1-rev1.DOC - IBE KOSOVO COMBINED HEAT AND POWER

Revizija: 1 Datum: 21.3.2005

TASK 4

1-1

INTRODUCTION

The main purpose of this task is selection of an optimal heat load from the TPP Kosovo B for the district heating system, and of a temperature regime in the supply line from the heating station in the TPP Kosovo B to the heating station in Prishtina. Heat consumption and temperature regime in the district heating system of the city of Prishtina are defined in the Task 1. The following scenarios are considered: • • •

low scenario medium scenario high scenario

Projection I Projection II Projection III

HEAT CONSUM PT ION

Heat consumption (MWh/a)

1,200,000 1,000,000 800,000 600,000 low

400,000

medium high

200,000 0 2005

2010

2015

2020

2025

2030

2035

Year

HEAT LOAD 450 400

Heat load (MW)

350 300 250 200

low

150

medium

100

high

50 0 2005

2010

2015

2020

2025

2030

2035

Year

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TASK 4

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Selected temperature regime

140 − 13

teperature (°C)

120

100

ambient temperature (°C) SH_supply SH_return DHP_supply DHP_return

Technical description, investment price and operating costs are included in the second part of this task.

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TASK 4

2-0

CONTENTS

OPTIMIZATION .................................................................................................................. 2-1

2.1

INTRODUCTION................................................................................................................... 2-1

2.2

OPTIMAL HEAT SUPPLY FROM THE TPP KOSOVO B ................................................. 2-3

2.2.1

Optimal velocity in the main pipeline ..................................................................................... 2-3

2.2.2

Connection to the steam turbine.............................................................................................. 2-4

2.2.3

Optimal heat supply from the TPP Kosovo B.......................................................................... 2-7

2.3

HEAT STORAGE TANK..................................................................................................... 2-29

2.4

STATIC PRESSURE SYSTEM ........................................................................................... 2-35

2.5

THERMAL COMPENSATION ........................................................................................... 2-38

2.6

INSULATION THICKNESS................................................................................................ 2-42

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TASK 4

2-1

OPTIMIZATION

2.1

INTRODUCTION

The optimization of the heat supply from the TPP Kosovo B was divided into three phases. An optimal heat supply was selected in the first phase and a thermal heat storage tank was considered in the second phase. In the third phase the rest of optimizations were done. The optimal heat supply from the TPP Kosovo B was defined in five main steps: • • • • •

selection of optimal velocity in the pipeline selection of connection to the steam turbine calculation of heat supply for different scenarios and options calculation of net present values for different scenarios and options selection of optimal design

Additional electrical production in the TPP Kosovo B was considered by heat storage installation. The following optimizations were performed in the third phase: • static pressure system • compensation of the main pipeline • thermal insulation thickness

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TASK 4

2-2

The optimization process is presented in the following flow diagram.

Selection of optimal velocity in the main pipeline

Optimal connection to the steam turbine

low scenario

medium scenario

high scenario

Calculation of heat supply from the TPP Kosovo B and from the peak load boiler for different options

Calculation of net present values for different options

Selection of optimal heat supply from the TPP Kosovo B and of temperature regime for all scenarios.

Considering of the heat storage tank

Selection of optimal location maintaining static pressure

for

Selection of thermal compensation

Selection of thermal insulation thickness

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TASK 4

2-3

2.2

OPTIMAL HEAT SUPPLY FROM THE TPP KOSOVO B

2.2.1 Optimal velocity in the main pipeline The investment costs and the operating costs were included in the main pipeline optimal velocity calculation. The option with minimal net present value was selected as an optimal option. The input data are as follows: • length of the pipeline 10.5 km • estimated investment cost of the pipeline with standard wall thickness and without civil works o DN300 3.6 mio EUR o DN500 7.2 mio EUR o DN700 10.9 mio EUR o DN1000 20.0 mio EUR o installation cost 30% • estimated investment cost of the pumping station 810 EUR/kW • custom duty 10% • electricity price 30 EUR/MWh • interest rate 12% • period of depreciation 25 years The results are presented in the following diagrams: Net present value

Pressure drop

pressure drop (bar)

cost (mio EUR)

1.5 2 2.5 velocity (m/s)

1.5

2 2.5 velocity (m/s)

investment operating NPV

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In accordance with the above diagrams the optimal velocity is around 2 m/s. The maximal pressure in the pipeline depends on the pressure drop. Higher pressure drop requires higher maximal pressure in the pipeline. A standard wall thickness was included in the calculation. The wall thickness of the pipeline and the nominal pressure of the equipment should be increased in case of the high pressure drop. The optimal velocity of 1.8 m/s is selected in accordance with the above diagrams in order to reduce the maximal pressure in the pipeline.

2.2.2 Connection to the steam turbine There are two coal fired units with 2 x 339 MW nominal power. The existing steam turbines are not designed for the connection to the district heating system. There exist two appropriate locations for extraction of the steam required for the heating station: • •

inlet of the superheated steam into IP steam turbine exhaust from the IP steam turbine

Regarding the appropriate locations for extraction of the steam there are two main possible designs of the heating station: • •

design with one stage heater design with two stage heaters

The design with one stage heater requires installation of a throttle valve on the existing steam pipeline between the IP and the LP steam turbine. The steam for the heating station is extracted upstream of the throttle valve. The required steam pressure in the heater is achieved by throttling of the valve. In the design with two stage heaters the installation of the throttle valve on the steam pipeline between the IP and the LP steam turbine is not required. The first stage heater is connected to the non-regulating exhaust from the IP turbine and the second stage heater is supplied by the superheated steam via a temperature control valve. Both designs are presented in the following flow diagrams:

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TASK 4

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The difference between both designs is presented with a value which indicates the reduction of the electricity production with relation to the heat load and outlet temperature from the heating station. The reduction of the electricity production is calculated for different heat loads and outlet temperatures from the heating station. The nominal load of the coal fired unit is 90% of the design load. The reduced electricity production for both options is shown in the following diagram:

reduction of the electrical production (Mwe/MWt)

0.40

50 MW with 1 steage heater

0.35

100 MW with 1 steage heater 200 MW with 1 steage heater

0.30

400 MW with 1 steage heater

0.25

50 MW with 2 stage heater 100 MW with 2 stage heater

0.20

200 MW with 2 stage heater

0.15

400 MW with 2 stage heater

0.10 100

110

120

130

140

outlet temperaturefrom heating station (째C)

In accordance with the above diagram we can conclude that there is no significant difference between both options except by the highest heating load. The option with a two stage heater is not appropriate for the highest load. The option with a one stage heater is selected owing to its simplified design.

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2.2.3 Optimal heat supply from the TPP Kosovo B 2.2.3.1

Overview

Several options for each scenario were considered by selection of the optimal heat supply from the TPP Kosovo B. The options could be divided into three main groups: • •

•

Options with installation of the main pipeline only at the beginning of the operation Options with installation of the main pipeline in two phases: Installation of the supply and return line at the beginning of the operation Installation of the third line after the heat consumption increases up to the appropriate level. The cross area of the third line is equivalent to the cross area of both existing lines and the existing supply line becomes a return line. Option with the existing pipes. The existing pipes shall be demolished, cleaned and pre-insulated before installation. After the heat consumption increases up to the appropriate level, the third line will be installed.

The options which were considered are as follows: option DN450 DN500 DN600 DN700 2 x DN350

2 x DN400 2 x DN450 2 x DN450-exisitng

2 x DN500 2 x DN600

description Supply and return pipeline with nominal diameter DN 450 are installed at the beginning of the operation Similar as by option DN450 Similar as by option DN450 Similar as by option DN450 Supply and return pipeline with nominal diameter DN350 are installed at the beginning of the operation. The third line will be installed in the second phase Similar as by option 2 x DN350 Similar as by option 2 x DN350 The existing pipes DN450 are demolished, cleaned, pre-insulated and installed at the beginning of the operation. The third pipeline will be installed in the second phase. Similar as by option 2 x DN350 Similar as by option 2 x DN350

In options where the installation of the main pipeline is foreseen in two phases, the installation of the heating stations is foreseen in two phases as well.

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The main difference between using the new pipes and the existing ones is in the maximal allowable temperature. Static pressure is defined in accordance with the maximal temperature. Maximal pressure in the pipeline depends on the static pressure and the pressure drop in the pipeline. The maximal allowable pressure in the existing pipes is reduced due to a high corrosion. The maximal allowable temperature in the new pipes is limited up to 140°C and in the existing pipes up to 120°C due to the reduction of the maximal allowable pressure. The main input data for the optimization are as follows: Variable investment costs • main pipeline DN300 DN500 DN700 DN1000 saving by using the existing pipes installation cost • heating station at the TPP Kosovo B • heaters in the heating station in Prishtina • pumping station • customs duty Operating costs • reduction of the electricity production in the TPP Kosovo B • electricity consumption for circulating pumps • light fuel oil consumption for peak load boiler • maintenance costs pipeline equipment • electricity price Other data • interest rate • period of depreciation

3.6 mio EUR 7.2 mio EUR 10.9 mio EUR 10.0 mio EUR 1 mio EUR 30% 7.1 EUR/kW 120 EUR/kW °C 810 EUR/kW 10% electricity price electricity price 44.33 EUR/MWh 1% 2% 30 EUR/MWh 12% 25 years

The optimization is presented in the following flowchart:

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Pipe flow calculation for all considered pipe diameters

Nominal temperature regime selection in the first year of operation at ambient temperature of -3째C for all considered pipe diameters

Temperature regimes calculation for all outside temperatures and years if all heat is supplied from the TPP Kosovo B

Correction of the temperature regime and heat supply from the TPP Kosovo B for all cases where maximal temperature in the supply line is higher than allowable

Operating costs calculation

Investment costs calculation

Net present value calculation

Optimal option selection

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The results are presented in the following diagrams.

2.2.3.2

Scenario: Low

The results of the optimization are shown in the following diagram.

50.0 45.0 40.0 35.0 30.0 25.0 20.0 15.0 10.0 5.0 0.0

2xDN600

2xDN500

2xDN450-existing

2xDN450

2xDN400

2xDN350

DN700

DN600

DN500

fuel oil TPP Kosovo B maintenance investment

DN450

net present value (mio EUR)

Net present value

option

The optimal option is the DN400 one. The net present value of the DN450option is quite close to the net present value of the DN400option. The main operating data for DN400 and DN450 options are shown below. Key: t1DHK t2DHK t1HS_DHP t1DHP t2DHP DHK TPP Kosovo B DHP Peak load boiler

File: Objekt:

supply temperature from the TPP Kosovo B district heating station return temperature to the TPP Kosovo B district heating station outlet temperature from the heating station in Prishtina supply temperature from the boiler house in Prishtina return temperature from the district heating system in Prishtina heating station in the TPP Kosovo B heating station in the TPP Kosovo B heating station in Prishtina peak load boiler and boiler house in Prishtina

Task4-par2-rev1.DOC - IBE KOSOVO COMBINED HEAT AND POWER

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Operating data for the DN400option

Structure of the heat supply TPP Kosovo B fuel oil

8.33 heat rate %

600000

heat supply (MWh)

Heat supply from peak load boiler

500000

400000

6.67 5 3.33 1.67

300000

year

200000 0

year

Operating costs of the heat supply without maintenance costs TPP Kosovo B fuel oil

cost (mio EUR)

1 0

year

Heat load in first year

280 Heat load MW

Heat load MW

75 60 45 30

ambient temperature 째C TPP Kosovo B Peak load boiler

File: Objekt:

210 140 70

15 0

Heat load in last year

350

Task4-par2-rev1.DOC - IBE KOSOVO COMBINED HEAT AND POWER

ambient temperature 째C TPP Kosovo B Peak load boiler

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2-12

140

Temperature regime in first year 140

120 temperature regime °C

temperature regime °C

120

100

40 40

Temp. regime after second investment

ambient temperature °C t1DHK t2DHK t1HS_DHP t1DHP t2DHP

ambient temperature °C t1DHK t2DHK t1HS_DHP t1DHP t2DHP Temperature regime in last year

140

temperature regime °C

120

100

ambient temperature °C t1DHK t2DHK t1HS_DHP t1DHP t2DHP

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2-13

Flow diagram in first year

Flow diagram after second investment

800

350

700

300

600

flow kg/sec

400

250

200

150

400

ambient temperature 째C DHK DHP

1200

500

300

ambient temperature 째C DHK DHP

Flow diagram in last year

flow kg/sec

1000

800

600

400

ambient temperature 째C DHK DHP

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Operating data for the DN450option

Structure of the heat supply TPP Kosovo B fuel oil

8.33 heat rate %

600000

heat supply (MWh)

Heat supply from peak load boiler

500000

400000

6.67 5 3.33 1.67 0

300000

year

200000 0

year

Operating costs of the heat supply without maintenance costs TPP Kosovo B fuel oil

cost (mio EUR)

1 0

year

Heat load in first year

280 Heat load MW

Heat load MW

75 60 45 30

ambient temperature 째C TPP Kosovo B Peak load boiler

File: Objekt:

210 140 70

15 0

Heat load in last year

350

Task4-par2-rev1.DOC - IBE KOSOVO COMBINED HEAT AND POWER

ambient temperature 째C TPP Kosovo B Peak load boiler

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140

Temperature regime in first year 140

120 temperature regime °C

temperature regime °C

120

100

40 40

Temp. regime after second investment

ambient temperature °C t1DHK t2DHK t1HS_DHP t1DHP t2DHP

ambient temperature °C t1DHK t2DHK t1HS_DHP t1DHP t2DHP Temperature regime in last year

140

temperature regime °C

120

100

ambient temperature °C t1DHK t2DHK t1HS_DHP t1DHP t2DHP

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Flow diagram in first year

Flow diagram after second investment

800

350

700

300

600

flow kg/sec

400

250

200

150

400

ambient temperature 째C DHK DHP

1100

500

300

ambient temperature 째C DHK DHP

Flow diagram in last year

1000

flow kg/sec

900

800

700

600

500

ambient temperature 째C DHK DHP

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2.2.3.3

Scenario: Medium

The results of the optimization are shown in the following diagram.

Net present value

50.0 40.0

fuel oil TPP Kosovo B

30.0

maintenance investment

20.0

2xDN600

2xDN500

2xDN450

2xDN400

2xDN350

DN700

DN600

DN500

0.0

2xDN450-existing

10.0

DN450

net present value (mio EUR)

60.0

option

The optimal option is the DN450 one. The main operating data for the DN450 option are shown below.

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Operating data for the DN450option

Structure of the heat supply 8.33 heat rate %

heat supply (MWh)

800000

Heat supply from peak load boiler

TPP Kosovo B fuel oil

600000

6.67 5 3.33 1.67

400000

year 200000 0

year

Operating costs of the heat supply without maintenance costs TPP Kosovo B fuel oil

cost (mio EUR)

1 0

year

Heat load in first year

280 Heat load MW

Heat load MW

75 60 45 30

ambient temperature 째C TPP Kosovo B Peak load boiler

File: Objekt:

210 140 70

15 0

Heat load in last year

350

Task4-par2-rev1.DOC - IBE KOSOVO COMBINED HEAT AND POWER

ambient temperature 째C TPP Kosovo B Peak load boiler

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140

Temperature regime in first year 140

120 temperature regime °C

temperature regime °C

120

100

Temp. regime after second investment

40 20

ambient temperature °C t1DHK t2DHK t1HS_DHP t1DHP t2DHP

Temperature regime in last year

140

temperature regime °C

120

100

ambient temperature °C t1DHK t2DHK t1HS_DHP t1DHP t2DHP

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Flow diagram in first year

Flow diagram after second investment

900

350

800

300

700

flow kg/sec

400

250

200

150

600

500

ambient temperature grd.C DHK DHP

1400

400

ambient temperature 째C DHK DHP

Flow diagram in last year

flow kg/sec

1200

1000

800

600

400

ambient temperature grd.C DHK DHP

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2.2.3.4

Scenario: High

The results of the optimization are shown in the following diagram.

100.0 90.0 80.0 70.0 60.0 50.0 40.0 30.0 20.0 10.0 0.0

fuel oil TPP Kosovo B

2xDN600

2xDN500

2xDN450-existing

2xDN450

2xDN400

2xDN350

DN700

DN600

DN500

maintenance investment

DN450

net present value (mio EUR)

Net present value

option

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Operating data for the DN500option

Structure of the heat supply TPP Kosovo B peak load boiler

8.33 heat rate %

1200000

1000000

heat supply MWh

Heat supply from peak load boiler

800000

6.67 5 3.33 1.67

600000

0 400000

year

200000 0

year

Operating costs of the heat supply without maintenance costs TPP Kosovo B fuel oil

cost mio EUR

0 0

year

Heat load in first year

Heat load MW

360

60 45 30

270 180 90

15 15

ambient temperature 째C TPP Kosovo B Peak load boiler

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Heat load in last year

450

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ambient temperature 째C TPP Kosovo B Peak load boiler

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Temperature regime in first year

140

temperature regime grd.C

temperature regime °C

120

100

120

100

ambient temperature °C t1DHK t2DHK t1HS_DHP t1DHP t2DHP

Temp. regime after second investment

ambient temperature °C t1DHK t2DHK t1HS_DHP t1DHP t2DHP

Temperature regime in last year

140

temperature regime °C

120

100

ambient temperature °C t1DHK t2DHK t1HS_DHP t1DHP t2DHP

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Flow diagram in first year

Flow diagram after second investment

900

350

800

300

700

flow kg/sec

400

250

200

150

500

ambient temperature grd.C DHK DHP

2000

600

400

ambient temperature 째C DHK DHP

Flow diagram in last year

1800

flow kg/sec

1600 1400 1200 1000 800 600

ambient temperature grd.C DHK DHP

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Operating data for the DN450option

Structure of the heat supply TPP Kosovo B peak load boiler

8.33 heat rate %

heat supply MWh

1200000

Heat supply from peak load boiler

1000000

800000

6.67 5 3.33 1.67

600000

0 400000

year

200000 0

year

Operating costs of the heat supply without maintenance costs TPP Kosovo B fuel oil

cost mio EUR

0 0

year

Heat load in first year

Heat load MW

360

60 45 30

270 180 90

15 15

ambient temperature 째C TPP Kosovo B Peak load boiler

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Heat load in last year

450

Task4-par2-rev1.DOC - IBE KOSOVO COMBINED HEAT AND POWER

ambient temperature 째C TPP Kosovo B Peak load boiler

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Temperature regime in first year

140

temperature regime grd.C

temperature regime °C

120

100

120

100

ambient temperature °C t1DHK t2DHK t1HS_DHP t1DHP t2DHP

Temp. regime after second investment

ambient temperature °C t1DHK t2DHK t1HS_DHP t1DHP t2DHP

Temperature regime in last year

140

temperature regime °C

120

100

ambient temperature °C t1DHK t2DHK t1HS_DHP t1DHP t2DHP

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Flow diagram in first year

Flow diagram after second investment

900

350

800

300

700

flow kg/sec

400

250

200

150

500

ambient temperature grd.C DHK DHP

2000

600

400

ambient temperature 째C DHK DHP

Flow diagram in last year

flow kg/sec

1500

1000

500

ambient temperature grd.C DHK DHP

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2.2.3.5

Conclusion

The optimal diameters of the main line from the TPP Kosovo B to the heating station in Prishtina are as follows: scenario

optimal option

low medium high

2 x DN400 2xDN450 2xDN500

The 2xDN450option is selected as a solution which is the most suitable for all scenarios. The investment is foreseen in two phases. Two main pipelines (supply and return) are foreseen in the first phase. The third line will be installed in the second phase. The third line will have the function of the supply line and the pipelines installed in the first phase will have the function of the return lines. The selected nominal diameters are as follows:

installation phase

function

nominal diameter

supply line return line supply line return line

DN450 DN450 DN700 2 x DN450 installed in the 1st phase

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HEAT STORAGE TANK

The average load of both coal fired units B1 and B2 during heating season is approximately 90%. The reduction of the load is only about 7 hours during the night. The base load heat supply from the TPP Kosovo B will reduce the electricity production due to the high average load of the power plant during heating season. The heat storage tank installation gives the opportunity to move a part of the daily heat production in the night and to increase the electricity production. Possible locations for the heat storage tank are in the TPP Kosovo B heating station or in the heating station in Prishtina. The location of the heat storage tank in the heating station in Prishtina would require a higher capacity of the transmission line and of both heating stations. A higher capacity of the transmission line can be achieved to some extent by a higher temperature difference. The location of the heat storage in the TPP Kosovo B requires only a higher capacity of the heating station in the TPP Kosovo B. The location in the TPP Kosovo B is not appropriate for direct connection of the tank to the main pipeline due to a high static pressure. An additional heater is foreseen to supply heat to the thermal storage tank. In the district heating system of the city of Prishtina the static pressure is lower and the tank could be directly connected to the grid. The existing main circulating pumps in the boiler house should be moved from the cold side to the hot side and an additional peak load heater is required due to the maximal temperature limitation to 98째C. in the heat storage tank. The capacity of the heat storage tank also depends on the inlet temperature. The temperature difference between the return temperature in the district heating system of Prishtina and in the return line from the heating station of Prishtina to the TPP Kosovo B is quite low. We can conclude that the return temperature does not have a bigger influence on the optimal location of the tank. Two companies are foreseen from the organization point of view. These are the TPP Kosovo B as a base heat load supplier and the Distribution Company as a heat supplier to the customers. The heat storage tank will serve the needs of the TPP Kosovo B. There is no steam source for sealing on the top of the storage tank in Prishtina. The location in the TPP Kosovo B is selected because it is closer to the heat source and the storage tank will serve the needs of the TPP Kosovo B.

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The maximal allowable temperature in the heat storage tank is 98°C and the maximal supplied heat load to the heat storage tank is the same as the maximal heat load of the heating station (210 MW). At the highest load one coal fired power plant can supply heat to the district heating system and another one to the heat storage tank. The main data for the optimization of the heat storage tank are as follows: • • • • • • • • •

main pipeline maximum temperature in the heat storage tank total electricity price marginal electricity price specific investment price of the heat storage tank specific investment for additional heating station customs duty interest rate period of depreciation

2xDN450 + DN700 98°C 30 EUR/MWh 18 EUR/MWh 163 EUR/MWh 7.1 EUR/kW 10% 12% 25 years

The results of the optimization are presented in the tables and diagrams below.

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Scenario: Low Net present value income from volume of the maximal filling investment selling additional tank capacity cost maintenance electricity total m3 MW mio EUR mio EUR mio EUR mio EUR 5000 41 1.22 0.10 1.54 0.22 10000 82 2.43 0.19 3.01 0.39 15000 123 3.65 0.29 4.19 0.25 20000 164 4.86 0.38 4.91 -0.33 25000 205 6.08 0.48 5.36 -1.20

800

Storage capacity in first year storage capacity MWh

storage capacity MWh

Option with heat storage tank 10000 m3

600 400 200 0

9 3 3 9 ambient temperature 째C

Storage capacity in last year

650 500 350 200

9 3 3 9 ambient temperature 째C

Storage capacity

150

capacity GWh

800

125 100 75 50

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12 16 year

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Scenario: Medium Net present value income from volume of the maximal filling investment selling additional tank capacity cost maintenance electricity total m3 MW mio EUR mio EUR mio EUR mio EUR 5000 41 1.22 0.10 1.55 0.23 10000 83 2.44 0.19 3.04 0.41 15000 124 3.66 0.29 4.26 0.32 20000 165 4.88 0.38 5.06 -0.19 25000 206 6.09 0.48 5.61 -0.97

800

Storage capacity in first year storage capacity MWh

storage capacity MWh

Option with heat storage tank 10000 m3

600 400 200 0

9 3 3 9 ambient temperature 째C

Storage capacity in last year

650 500 350 200

9 3 3 9 ambient temperature 째C

Storage capacity

200

capacity GWh

800

150 100 50

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12 16 year

Task4-par2-rev1.DOC - IBE KOSOVO COMBINED HEAT AND POWER

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Scenario: High Net present value income from selling additional volume of the maximal filling investment total tank capacity cost maintenance electricity m3 MW mio EUR mio EUR mio EUR mio EUR 5000 41 1.22 0.10 1.55 0.23 10000 83 2.44 0.19 3.05 0.42 15000 124 3.66 0.29 4.33 0.38 20000 165 4.88 0.38 5.22 -0.04 25000 206 6.09 0.48 5.88 -0.69

800

Storage capacity in first year storage capacity MWh

storage capacity MWh

Option with heat storage tank 10000 m3

600 400 200 0

9 3 3 9 ambient temperature 째C

Storage capacity in last year

650 500 350 200

9 3 3 9 ambient temperature 째C

Storage capacity

200

capacity GWh

800

150 100 50

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12 16 year

Task4-par2-rev1.DOC - IBE KOSOVO COMBINED HEAT AND POWER

Revizija: 1 Datum: 21.3.2005

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The optimal volume of the heat storage tank is 10,000m3. The net present value is positive in all scenarios but the absolute value is quite low. The net present value is approximately 14% of the income from additional electricity sales. It should be noticed that there are also some additional fixed investment costs which were not included in the calculation and they reduce the net present value. The existing electricity supply in the Kosovo region is insufficient at the moment. On the other hand, the foreseen load of the coal fired power plant is 90% due to some technological problems. With increasing of the power plant quality and including of the heat thermal storage tank in the process the electricity production could be increased to a higher level. The electricity market in the Kosovo region is not an open one. The real production costs and selling price are inaccurate due to the present economic situation in Kosovo. We do not recommend the installation of the heat storage tank due to the low absolute level of the net present value, inaccurate production costs and electricity sales prices. The connection of the heat storage tank to the heating station is presented in the drawing DHSP-2X0021. The installation of the heat storage tank can be made any time after the heating station is put in operation.

File: Objekt:

Task4-par2-rev1.DOC - IBE KOSOVO COMBINED HEAT AND POWER

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2.4

STATIC PRESSURE SYSTEM

The heating station in the TPP Kosovo B is selected for installation of the system maintaining static pressure in the main pipeline. This location is selected due to a sufficient existing capacity of the water treatment plant and large demineralised water tanks. Minimum pressure in the system is defined as follows: • •

maximum temperature additional margin for pressure control system

150°C 0.4 bar

The selected minimum pressure in the system is 5.2 bar abs. The heating station in the TPP Kosovo B lies on the lowest elevation. Between the TPP Kosovo B and Prishtina there is a hill with the highest elevation. Possible locations for static pressure maintenance are as follows: location

suction side of circulating pumps

maximal pressure in the system bar abs the

outlet from the heaters

18.7

Between the circulating pumps

18.7

comments

the highest maximal pressure but lower operating costs of the static pressure system lower maximal pressure but higher operating costs of the static pressure system lower maximal pressure and operating costs of the static pressure system but main pumps and booster pumps are required

The location between the circulating pumps is rejected due to a high number of the circulating pumps. Low increase of the maximal pressure by maintaining of the static pressure on the suction side may not increase investment costs. This location is selected for maintaining static pressure. The pressure distribution for all options is presented in the following diagrams.

File: Objekt:

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Maintaining of the static pressure on the supply line

!! # $ % !"

!& !"

Maintaining of the static pressure on the return line (selected option)

!& !" !! # $ % !"

Maintaining of the static pressure between the booster and the main circulating pump

!! # $ % !"

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Task4-par2-rev1.DOC - IBE KOSOVO COMBINED HEAT AND POWER

!& !"

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A detailed pressure distribution for the selected option is presented in the following diagram.

Supply line from the TPP Kosovo B to Prishtina PROFIL KOSOVO B - PRISTHINA

610

22.00

600

elevation (+m)

580

14.00

570

10.00

elevation

560

pressure

550

6.00

540

pressure (bar)

18.00

590

2.00

530 520

-2.00 0

1000

2000

3000

4000

5000

6000

length (m)

7000

8000

9000

10000

Return line from Prishtina to the TPP Kosovo B PROFIL PRISTHINA - KOSOVO B

610

18.00

600

elevation (+m)

580 10.00

570 560

6.00

elevation

550

pressure

540

2.00

530 520

-2.00 0

File: Objekt:

1000

2000

3000

4000

Task4-par2-rev1.DOC - IBE KOSOVO COMBINED HEAT AND POWER

5000

length (m)

6000

7000

8000

9000

10000

Revizija: 1 Datum: 21.3.2005

pressure (bar)

14.00

590

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2.5

THERMAL COMPENSATION

The bonded pipe system can be installed according to different installation methods as follows: • heat pre-stressing • expansion bends • E-muffs • high axial stress installation The heat pre-stressing technique ensures that the pipe section is stress-free at a mean temperature, and that the temperature variations in the system are converted to stresses instead to movement. Pre-stressing can be performed by water or electricity. The installation method with expansion bends is a traditional method. The E-system is a simplified installation technique where temperature variations are absorbed as stresses in the steal pipe instead of being converted into expansion movements. The only expansion absorbing device is the E-muff which replaces expansion bends and anchors. The E-muff is a compensator which operates only once, after which it is fixed to absorb a movement corresponding to the pipe being stressless at mean temperature. The result is that the pipes are fixed in the ground without expansion movements. High axial stress installation is a very simple installation method by which very long pipe sections are installed without pre-stressing and without U, Z and L bends for expansion absorption. The main characteristics of the different installation techniques are as follows: technique

advantages

disadvantages

pre- • • • expansion bends • • heat stressing

E-muffs

File: Objekt:

fewer components • the trench is open until heat no movements in the pipes pre-stressing has been made even stress level low stress • additional U, Z and L bends the pipes can be backfilled with foam pads are required before heating • fewer components • additional E-muffs are required • no movements in the pipes even stress level the pipes can be backfilled before heating

Task4-par2-rev1.DOC - IBE KOSOVO COMBINED HEAT AND POWER

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technique

advantages

disadvantages

high axial stress

• fewer components • the pipes can be backfilled before heating • no movements except at the end

• high stress levels • reinforcement at all branches • more stringent requirements for pipes excavation • very large movements at the bends • it is not possible to use anchors • it is not possible to use beveling or bends between 0 – 80°

The maximal allowable stress depends on the material. The following allowable stress is in the range from 150 N/mm2 up to 300 N/mm2. Higher allowable stresses cause additional restrictions by design and installation of the pipes. The maximal allowable stress up to 250 N/mm2 is selected.

The covering of the pipe must be sufficient to obtain the necessary stability so that the pipes are not pushed up. Furthermore, the necessary covering ensures that no damages occur to the pipes due to the traffic loads. The traffic load of 16.7 kN/m2 and the wheel load of 50 kN are defined for town streets and roads with normal traffic (bridge class SLW 30). On the locations with higher traffic loads additional measurements are foreseen. The selected covering is as follows: • •

DN450 DN700

600 mm 750 mm

The maximal calculated temperature is 140°C and the minimum soil temperature is 0°C. The geometry of the pipeline is simplified with the straight run pipeline. The main data concerning thermal compensation are as follows:

File: Objekt:

Task4-par2-rev1.DOC - IBE KOSOVO COMBINED HEAT AND POWER

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DN450 pipe type of installation

cold installation

type of compensation

distance between compensation units m

U elbow with foam pads

120

start up compensator

128

axial stress

comments

N/mm2

without compensation heat pre- without stressed compensation

77 The maximal distance between U elbows is limited by allowable deformation of the foam pads. The maximal deformation of the foam pads is 90 mm. 250 The maximal distance between start up compensators is limited by allowable stress 360 not applicable ± 180 Heat pre-stressing in sections with electric preheating is foreseen

DN700 pipe type of type of distance installation compensation between compensa tion units

cold installation

start up 120 compensator

± 250 N/mm2

Task4-par2-rev1.DOC - IBE KOSOVO COMBINED HEAT AND POWER

comments

N/mm2

U bend with 120 m foam pads

without compensation heat pre- without stressed compensation

File: Objekt:

axial stress

360 N/mm2

The maximal distance between U elbows is limited by allowable deformation of the foam pads. The maximal deformation of the foam pads is 90 mm. The maximal distance between start up compensators is limited by allowable stress not applicable

± 180 N/mm2 Heat pre-stressing in sections with electric preheating is foreseen

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The heat pre-stressed installation is selected with regard to acceptable maximal stresses and competitive investment solution. Heat pre-stressing in sections and electric preheating method is foreseen.

File: Objekt:

Task4-par2-rev1.DOC - IBE KOSOVO COMBINED HEAT AND POWER

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2.6

INSULATION THICKNESS

The pre-insulated pipes can be supplied with three different insulation thicknesses as follows: nominal diameter

category of the thickness insulation

jacket pipe diameter mm

DN 450

series 1 series 2 series 3

630 710 800

DN 700

series 1 series 2 series 3

900 1000 1100

The optimal insulation thickness was calculated in accordance with the following input data: • • • • • •

average temperature in the supply line average temperature in the return line average soil temperature heat price (equivalent electricity price) interest rate period of depreciation

108°C 51°C 5°C 6 EUR/MWh 12% 25 years

The cost of heat losses and investment price are included in the calculation of the optimal insulation thickness. The results are presented in the following table: insulation thickness nominal average diameter temperature category °C DN450 108 series 1 series 2 series 3 51 series 1 series 2 series 3 DN700 108 series 1 series 2 series 3

heat loss W/m 48 36 29 22 16 13 65 46 38

heat losses additional net present value cost investment of all costs EUR/m EUR/m EUR/m 1.35 0 11 1.01 52 60 0.81 122 128 0.62 0 5 0.45 52 56 0.37 122 125 1.83 0 14 1.29 98 108 1.07 197 205

The insulation thickness category “series 1” is selected due to minimal expenses.

File: Objekt:

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TASK 4

3-0

CONTENTS

TECHNICAL DESCRIPTION ............................................................................................. 3-1

3.1

INTRODUCTION................................................................................................................... 3-1

3.2

HEATING STATION IN THE TPP KOSOVO B .................................................................. 3-2

3.2.1

Mechanical part ...................................................................................................................... 3-2

3.2.2

Electrical part ......................................................................................................................... 3-6

3.2.3

Civil part ................................................................................................................................. 3-7

3.3

MAIN PIPELINE.................................................................................................................... 3-8

3.3.1

Mechanical part ...................................................................................................................... 3-8

3.3.2

Electrical part ......................................................................................................................... 3-9

3.3.3

Civil part ................................................................................................................................. 3-9

3.4

HEATING STATION IN PRISHTINA ................................................................................ 3-10

3.4.1

Mechanical part .................................................................................................................... 3-10

3.4.2

Electrical part ....................................................................................................................... 3-13

3.4.3

Civil part ............................................................................................................................... 3-14

3.5

EXTENSION OF THE BOILER HOUSE............................................................................ 3-15

3.6

SCOPE OF SUPPLY ............................................................................................................ 3-16

3.6.1

Phase I................................................................................................................................... 3-16

3.6.2

Phase II ................................................................................................................................. 3-25

File: Objekt:

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3-1

TECHNICAL DESCRIPTION

3.1

INTRODUCTION

Two heat sources are anticipated for heat supply to the district heating system in Prishtina. TPP Kosovo B is foreseen as a base load unit and fuel oil boilers in Prishtina are foreseen as peak load boilers. Three new units are foreseen: • heating station in the TPP Kosovo B • main pipeline • heating station in Prishtina The extension of the existing boiler house and network in Pristina is also anticipated but it is not included in the feasibility study. The project will be completed in two phases. Installation of the main 2 x DN450 pipeline and one heat exchanger in each heating station is foreseen in the first phase. The third DN700 pipe and the second heat exchanger in each heating station will be installed in the second phase. The capacity of the equipment does not depend on the scenario. The difference in heat loads between scenarios is covered by higher heat load and heat supply from the peak load boilers.

File: Objekt:

Task4-par3-rev1.DOC - IBE KOSOVO COMBINED HEAT AND POWER

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3.2

3-2

HEATING STATION IN THE TPP KOSOVO B

3.2.1 Mechanical part The heating station will be installed in the new building. The selected location for the heating station is near the north-west side of the main turbine building. The main parts of the heating station are as follows: • connection to the steam turbines (unit B1 and B2) • hybrid heat exchangers • main circulating pumps • system for maintaining of the static pressure • other equipment There are two identical units in the TPP Kosovo B with nominal load of 2 x 339 MW. The extraction of the steam for the heating station is anticipated from the IP steam turbine exhaust. For that purpose the installation of a throttle butterfly valve is foreseen on the connecting steam pipeline between the IP and LP steam turbines. There are two connecting pipelines (2 x DN1200) on each unit. The following equipment is foreseen at the connection for protection of the steam turbine: • safety valve • check butterfly valve • check butterfly valve with pneumatic actuator One DN 1000 steam pipeline from each unit is foreseen for supplying the steam to the heating station. The condensate is returned back into the feed water heating system. Two hybrid heat exchangers will be installed in the heating station. They will operate with only one unit or with both units (B1 and B2). In case when the steam is supplied from both units, each heat exchanger will be separately supplied from one unit. Three main circulating pumps are foreseen. Two of them will be equipped with a speed control. The required flow depends on the ambient temperature and return temperature. The return temperature from the heating station in Prishtina and the main circulating pumps located in Prishtina are also included in the control system. The static pressure maintenance system consists of: • two expansion tanks • three pumps • two pressure control valves The selected level of the static pressure is 12.6 bar abs. The selected volume of the expansion tanks is sufficient for normal operation. The existing demineralized tanks and a

File: Objekt:

Task4-par3-rev1.DOC - IBE KOSOVO COMBINED HEAT AND POWER

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3-3

water treatment plant will be used during start up or shut down of the heating system. One pump (the smallest one) is connected to the electric emergency supply system. The heating station will be equipped also with other necessary equipment as follows: • • • • • •

pipes and headers supporting structures valves instrumentation drain and venting system heating and air conditioning system

The heating station will be completed in two phases. In phase I the following equipment will be installed: • • • • • •

complete connection to the units B1 and B2 one heat exchanger two main circulating pumps with speed control one expansion tank complete pumps for static pressure maintenance both pressure control valves for static pressure maintenance

The following equipment will be installed in phase II: • • •

another heat exchanger third main circulating pump without speed control second expansion tank

Design data for the equipment are as follows: Heat exchangers: • number of heat exchangers • heat load • steam o pressure o temperature o flow o return condensate temperature • cold water o temperature regime o flow

File: Objekt:

Task4-par3-rev1.DOC - IBE KOSOVO COMBINED HEAT AND POWER

2 107.1 MW 4 bar abs 260°C 41.4 kg/s 90°C 139/49.7 °C 287.17 kg/s

Revizija: 1 Datum: 21.3.2005

TASK 4

3-4

Condensate system: • condensate tank o number o volume • condensate pump o number o flow o head Main circulating pumps: • number of circulating pumps o with speed control o without speed control • flow • head • suction pressure • temperature Static pressure maintenance: • design supply temperature o maximal o minimal • design return temperature o maximal o minimal • volume of the whole system o supply pipeline o return pipeline • maximal increase/reduction of the ambient temperature • expansion tank o number of the tanks o volume • pumps o main pumps • number • flow • head o emergency pump • number • flow • head

File: Objekt:

Task4-par3-rev1.DOC - IBE KOSOVO COMBINED HEAT AND POWER

2 50 m3 4 41.4 kg/s 13 bar

2 1 287.17 kg/s 9 bar 12.6 bar abs 140 °C

140°C 73°C 73°C 50°C DN700, 11 km 2 x DN450, 11 km 10 °C/h 2 150 m3

2 40 kg/s 13 bar 1 0.5 kg/s 13 bar

Revizija: 1 Datum: 21.3.2005

TASK 4

â&#x20AC;˘

File: Objekt:

3-5

pressure control valve o number o flow

Task4-par3-rev1.DOC - IBE KOSOVO COMBINED HEAT AND POWER

2 80 kg/s

Revizija: 1 Datum: 21.3.2005

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3-6

3.2.2 Electrical part The existing 6,3kV general auxiliary switchgear will be used for electrical supply of the 6,3kV main circulating pumps. It shall be supplied from the 0BT - 48/28/28MVA power transformer. The switchgear consists of two equal sections (0BL and 0BM) and enables 100% redundancy of power supply for auxiliary consumers of the power plant. It is placed in R12 switch room on the platform +-0,00m. The main consumers will be three 500kW heating pumps. The same mode of supply will be used for the new consumers of the heating station. The existing two free-reserve cubicles located in sections 0BL (Nr.: 08) and 0BM (Nr.: 08) will be used for connection to the new switchgear. The connection between both switchgears will be realized with middle voltage cables (XHP48 3x (1x150mm2)). New 6kV switchgear will be composed of 5 cubicles: • • • • •

cubicle for metering, cubicle for power supply of the first pump with frequency converter, cubicle for power supply of the second pump with frequency converter (reserve), cubicle for power supply of the third pump without frequency converter and cubicle for connection with 0BL and 0BM switchgears.

The new switchgear will be placed in the existing room R8 on the platform +6,00m. The type of connection between both switchgears will be the same as by the existing power supply for the existing pumps. This means that the switchgear will be connected with a single cable from two cubicles, 0BL (number: 08) and 0BM (number: 08). For that reason an additional cable connection between 0BL and OBM sections (between both cubicles 0BL-08 and 0BM-08) will be performed. One or two circulating pumps will be in operation. The third pump is a reserve pump. The number of the pumps in operation depends on the required heat load. In the scope of new consumers there will be also two pumps for static pressure (2x90kW), condensate pumps (4x90kW), other small consumers and an emergency 2,8kW static pump. The static pressure pumps and the condensate pumps will be supplied from the new low voltage switchgear. This switchgear will be supplied from the existing 0EU low voltage switchgear. The 2,8kW emergency pump will be supplied from the existing low voltage 0EU switchgear. This switchgear has two sources of supply. One is from the existing 1000kVA transformers

File: Objekt:

Task4-par3-rev1.DOC - IBE KOSOVO COMBINED HEAT AND POWER

Revizija: 1 Datum: 21.3.2005

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3-7

0CT09 and 0CT10 and the other is from the existing 0EY emergency diesel generator. This 0EY is automatically switched on when it is necessary. In such manner a safe shutdown of the heating system will be assured.

3.2.3 Civil part The heating station will be installed in a new building. The ground dimensions are 24,0 x 42,0 m, and the maximal height is 9,0 m. The main structure involves reinforced concrete foundations and columns with a steel roof construction. The faรงade walls and the roof covering are made of double corrugated trapezoidal sheet with intermediate isolation. The ground floor, where the most technological equipment is installed, is made of a reinforced concrete slab. The main pumps are based on their own block foundations.

File: Objekt:

Task4-par3-rev1.DOC - IBE KOSOVO COMBINED HEAT AND POWER

Revizija: 1 Datum: 21.3.2005

TASK 4

3.3

3-8

MAIN PIPELINE

3.3.1 Mechanical part The main pipeline will connect the heating station in the TPP Kosovo B with the heating station in Prishtina. The route of the pipeline runs along the Prishtina-Mitrovica main motorway. Two pre-insulated pipes, 2 x DN450 and DN700 are foreseen. The length of the pipeline is 10,500 m. The pipeline will be completed in two phases. The 2 x DN450 pipeline will be installed in the phase I. The installation of the third DN700pipeline is foreseen in the phase II. The third pipe will be a supply line and the 2 x DN450 pipelines will be the return lines after the completion of the phase II during the heating season. During summer, when the heat is needed only for domestic water heating, the DN700 pipeline will not be in operation. Only 2 x DN450 pipelines will be in operation in the summer period. Butterfly valves with an actuator are foreseen for switching the lines in operation with relation to the season. A surveillance system for identifying locations of any moisture in the pipe insulation is foreseen. The pipeline will be equipped also with a drain and a venting system. The design data for the pipeline are as follows: • • • •

•

File: Objekt:

maximal temperature maximal pressure allowable traffic load without additional measurements nominal diameter o material o outside diameter o wall thickness o diameter of the jacket pipe o covering o length

140°C 22 bar

nominal diameter o material o outside diameter o wall thickness o diameter of the jacket pipe o covering o length

DN700 P235GH 711.2 mm 8 mm 900 mm 750 mm 10500 m

Task4-par3-rev1.DOC - IBE KOSOVO COMBINED HEAT AND POWER

16.7 kN/m2 DN450 P235GH 457.2 mm 6.3 610 mm 600 mm 2 x 10500 m

Revizija: 1 Datum: 21.3.2005

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3-9

A heat pre-stressed installation is foreseen. The section of the pipeline installed shall be electrically preheated to the mean temperature (70째C). After the mean temperature is reached, the pipeline will be backfilled. This technique allows installation on different sections at the same time. The intermediate sections can be installed later according to an appropriate method. The foam pads will be installed at the elbows to allow an appropriate movement.

3.3.2 Electrical part A cathode protection is foreseen on the sections of the pipeline which are close to the railway or a high voltage grid. All the necessary I/O modules for binary and analog signals are included in the project. They will be connected to the existing serial bus link based on an ETHERNET (IEEE 802.3). A new fiber cable for connection of both heating stations is foreseen.

3.3.3 Civil part The main 2 x DN450 pipeline of 10,500 m total length shall be buried into soil and shall be constructed in two phases. Civil construction works shall encompass excavation, transport of excess material and backfilling with sand and the excavated material. All the other civil construction works including crossings with traffic and municipal infrastructure are considered as well.

File: Objekt:

Task4-par3-rev1.DOC - IBE KOSOVO COMBINED HEAT AND POWER

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3.4

3-10

HEATING STATION IN PRISHTINA

3.4.1 Mechanical part The heating station will be installed in the existing building which was built several years ago near the boiler house. The building is located on the west side of the boiler house. The main parts of the heating station are as follows: • • • •

heat exchangers main circulating pumps auxiliary circulating pumps connection to the existing boiler house

Two hybrid heat exchangers will be installed in the heating station. The heat will be supplied from the TPP Kosovo B heating station via main pipeline. The heating station will be connected to the district heating system on the intermediate header. It is located on the discharge side of the main circulating pumps in the boiler house. The auxiliary pumps are foreseen to cover the pressure drop through the heating station on the secondary side. The main circulating pumps will operate in cooperation with the main circulating pumps located in the TPP Kosovo B heating station.. The heating station will be equipped also with other necessary equipment as follows: • • • • • •

pipes and headers supporting structures valves instrumentation drain and venting system heating and air conditioning system

The heating station will be completed in two phases. In the phase I, the following equipment will be installed: • • • •

File: Objekt:

one heat exchanger two main circulating pumps with speed control complete auxiliary pumps connection to the existing boiler house

Task4-par3-rev1.DOC - IBE KOSOVO COMBINED HEAT AND POWER

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The following equipment will be installed in the phase II: • • •

another heat exchanger third main circulating pump without speed control connection to the extension of the boiler house

Design data for the equipment are as follows: Heat exchanger • •

number of heat exchangers mode of operation

•

capacity hot side temperature regime flow o cold side temperature regime flow mode of operation o o

o o

capacity hot side temperature regime flow cold side temperature regime flow

2 maximal load in first year at ambient temperature -13°C 79.8 MW 140/73.5 °C 287.17 kg/s 114.6/64.7 °C 382.7 kg/s maximal heat load in last year at ambient temperature +3°C 107.1 MW 139/49.7 °C 287.17 kg/s 73.3/46.5 °C 954.5 kg/s

Main circulating pumps •

• • • •

File: Objekt:

number of circulating pumps o with speed control o without speed control flow head suction pressure temperature

Task4-par3-rev1.DOC - IBE KOSOVO COMBINED HEAT AND POWER

2 1 287.17 kg/s 9 bar 7 bar 140 °C

Revizija: 1 Datum: 21.3.2005

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3-12

Auxiliary circulating pumps •

• • • •

File: Objekt:

number of circulating pumps o with speed control o without speed control flow head suction pressure temperature

Task4-par3-rev1.DOC - IBE KOSOVO COMBINED HEAT AND POWER

3 1 232 kg/s 1.5 bar 14 bar abs 80 °C

Revizija: 1 Datum: 21.3.2005

TASK 4

3-13

3.4.2 Electrical part The existing 10kV switchgear, which is supplied from the remote PRIII-35/10kV switchyard, will be used for electrical supply of 10kV main circulating pumps in the heating station. The 10kV switchgear consists of only one section and it is placed in the main switch room of Termokos on the platform +-0,00m. Frequency converters for the existing pumps, complete main low voltage 0,4kV switchgear and cubicles with compensation batteries are located there as well.. There is not enough place for the new switchgear in the room with the existing middle voltage. It will be used for power supply of the three 500kW new main circulating pumps. Therefore it is more practical and from the operational aspect more reliable and safe to place the new part of the middle voltage switchgear in the separate auxiliary room near the main switch room. There are now 10kV and 0,4kV switchgears which are out of operation. This room is foreseen for installation of the new electrical equipment for the heating station and extension of the boiler house (not included in the scope of the feasibility study). The middle voltage cables (XHP-48 3x (1x150mm2)) will be used for connection of both switchgears. The new 10kV switchgear will consist of 5 cubicles: • • • • •

One or two circulating pumps, or neither of them, will be in operation. The third pump is a reserve pump. The number of the pumps in operation depends on the heat consumption. There are also four low voltage 55kW auxiliary pumps in the scope of the new heating station. The pumps will be supplied from the new low voltage switchgear. This switchgear will be supplied from the existing low voltage switchgear and the existing 1600kVA reserve transformer T3. This switchgear will be placed in the same room as the existing one. Three auxiliary pumps will be equipped with frequency converters and only one will be connected directly to the switchgear and will operate with constant power.

File: Objekt:

Task4-par3-rev1.DOC - IBE KOSOVO COMBINED HEAT AND POWER

Revizija: 1 Datum: 21.3.2005

TASK 4

3-14

The auxiliary pumps will operate simultaneously with the existing main circulating pumps in the boiler house. Three pumps will be in operation at the maximum heat consumption and one pump will be a reserve pump.

3.4.3 Civil part The heating station shall be located in the already existing but uncompleted structure. The top view dimensions of the structure are approximately 17.0 x 22.0 m, the height is 8.0 m above the terrain. The design documentation covering the existing structure has foreseen a monolith reinforced concrete skeleton type of structure with a steel roof. Actually the structure is of RC prefabricated type composed of main columns, main roof supports, longitudinal faรงade connections and T-type roof beams. The roof covering was not accomplished. The foundations are of reinforced concrete, block type, interconnected by strip supports along the rim of the structure, supporting the faรงade pre-fabricated panels. Relevant technical documentation shall be obtained for the existing structure confirming that the structure serves for the anticipated purpose. This shall represent a starting point of the reconstruction. Civil construction works shall encompass refurbishment of the structure and faรงade. The roof covering is made of double corrugated trapezoidal sheet with intermediate isolation. The ground floor, where the most technological equipment is installed, is made of a reinforced concrete slab. The main pumps are based on their own block foundations. Additional steel structures are foreseen for supporting of the main equipment and pipelines. New windows, doors and other finishing works are foreseen as well.

File: Objekt:

Task4-par3-rev1.DOC - IBE KOSOVO COMBINED HEAT AND POWER

Revizija: 1 Datum: 21.3.2005

TASK 4

3-15

3.5

EXTENSION OF THE BOILER HOUSE

The extension of the boiler house is not included in the feasibility study and it is not necessary at the beginning of the project. The extension range will be adjusted in accordance with the actual increase of the heat consumption. The capacities of the existing boiler house are as follows: â&#x20AC;˘

â&#x20AC;˘

main circulating pumps o number of the pumps in operation o total capacity

3 695 kg/s

peak load boiler o number of the boiler in operation o total capacity

2 116 MW

The required maximal capacities are as follows: scenario

capacity of the main circulating pumps kg/s

capacity of the peak load boiler MW

low medium high

1078 1372 1909

71 133 250

The additional capacities which should be installed in the extension of the boiler house are as follows: scenario

additional capacity of the main circulating pumps kg/s

additional capacity of the peak load boiler MW

low medium high

383 677 1214

0 17 134

File: Objekt:

Task4-par3-rev1.DOC - IBE KOSOVO COMBINED HEAT AND POWER

Revizija: 1 Datum: 21.3.2005

TASK 4

3-16

3.6

SCOPE OF SUPPLY

3.6.1 Phase I 3.6.1.1

Heating station in the TPP Kosovo B

3.6.1.1.1

Mechanical part

3.6.1.1.1.1 • • •

•

number of heat exchangers heat load steam o pressure o temperature o flow o return condensate temperature cold water o temperature regime o flow

3.6.1.1.1.2 •

•

File: Objekt:

1 107.1 MW 4 bar abs 260°C 41.4 kg/s 90°C 139/49.7 °C 287.17 kg/s

Condensate system

condensate tank o number o volume condensate pump o number o flow o head

3.6.1.1.1.3 • • • • • •

Heat exchanger

1 50 m3 2 41.4 kg/s 13 bar

Main circulating pumps

number of circulating pumps speed control flow head suction pressure temperature

Task4-par3-rev1.DOC - IBE KOSOVO COMBINED HEAT AND POWER

2 yes 287.17 kg/s 9 bar 12.6 bar abs 140 °C

Revizija: 1 Datum: 21.3.2005

TASK 4

3-17

3.6.1.1.1.4 •

•

expansion tank o number of the tanks o volume pumps o main pumps • number • flow • head o emergency pump • number • flow • head pressure control valve o number o flow

3.6.1.1.1.5 • • • • • •

File: Objekt:

Maintaining of the static pressure

2 150 m3

2 40 kg/s 13 bar 1 0.5 kg/s 13 bar 2 80 kg/s

Other equipment

pipes and headers supporting structures valves instrumentation drain and venting system heating and air conditioning system

Task4-par3-rev1.DOC - IBE KOSOVO COMBINED HEAT AND POWER

Revizija: 1 Datum: 21.3.2005

TASK 4

3-18

3.6.1.1.2 3.6.1.1.2.1 • • • • •

Electrical part New 6kV switchgear with 5 cubicles:

3.6.1.1.2.2

Frequency converter for 650kVA power 2 pcs.

3.6.1.1.2.3

Low voltage switchgear for static pressure pumps ( 90kW )

3.6.1.1.2.4 switchgear

New part of a low voltage switchgear for connection with a new LV

3.6.1.1.2.5

Middle voltage 1x150mm2-Cu cables: 3 x 3 x 20 m = 180 m

3.6.1.1.2.6

Low voltage cables approx. 150 m

3.6.1.1.2.7

I/O modules for binary and analog signals

3.6.1.1.2.8

Other electrical equipment and parts

File: Objekt:

Task4-par3-rev1.DOC - IBE KOSOVO COMBINED HEAT AND POWER

Revizija: 1 Datum: 21.3.2005

TASK 4

3-19

3.6.1.1.3

Civil part

3.6.1.1.3.1

New building o

o o o o o

File: Objekt:

main dimensions floor area 24 m x 42 m maximal height 9m structure reinforced concrete foundations columns with steel roof construction faรงade walls double corrugated trapezoidal sheet with intermediate isolation roof covering double corrugated trapezoidal sheet with intermediate isolation ground floor reinforced concrete slab equipment foundations block foundations finishing works

Task4-par3-rev1.DOC - IBE KOSOVO COMBINED HEAT AND POWER

Revizija: 1 Datum: 21.3.2005

TASK 4

3-20

3.6.1.2

Main pipeline

3.6.1.2.1

Mechanical part

3.6.1.2.1.1 • • • • •

nominal diameter DN450 maximal operating temperature 140°C maximal short term temperature 150 °C maximal pressure 22 bar allowable traffic load without additional measurements 16.7 kN/m2 o material P235GH o outside diameter 457.2 mm o wall thickness 6.3 o diameter of the jacket pipe 610 mm o covering 600 mm o length 2 x 10500 m o including in the scope of supply • elbows and other fittings • insulation shells • shrink film • shrink sleeve • surveillance system for identifying locations of any moisture in the pipe insulation

3.6.1.2.1.2 •

File: Objekt:

Pre-insulated pipe

Other equipment

drain and venting system

Task4-par3-rev1.DOC - IBE KOSOVO COMBINED HEAT AND POWER

Revizija: 1 Datum: 21.3.2005

TASK 4

3-21

3.6.1.2.2

Electrical part

3.6.1.2.2.1

Cathode protection

3.6.1.2.2.2

Fiber cable length 10.500m

3.6.1.2.3 3.6.1.2.3.1 • • • • • • •

File: Objekt:

Civil part Civil works for installation of the pre-insulated pipeline

length excavation off-loading of excavated material backfilling with sand delivered to location backfilling with excavated material other works finishing works

Task4-par3-rev1.DOC - IBE KOSOVO COMBINED HEAT AND POWER

10500 m 4.7 m3/m 2.5 m3/m 1.6 m3/m 2.2 m3/m

Revizija: 1 Datum: 21.3.2005

TASK 4

3-22

3.6.1.3

Heating station in Prishtina

3.6.1.3.1

Mechanical part

3.6.1.3.1.1

Heat exchanger

• •

number of heat exchangers mode of operation

•

capacity hot side temperature regime flow o cold side temperature regime flow mode of operation o o

o o

3.6.1.3.1.2 • • • • • •

• • • •

File: Objekt:

140/73.5 °C 287.17 kg/s 114.6/64.7 °C 382.7 kg/s maximal heat load in the last year at ambient temperature +3°C 107.1 MW 139/49.7 °C 287.17 kg/s 73.3/46.5 °C 954.5 kg/s

Main circulating pumps

number of circulating pumps speed control flow head suction pressure temperature

3.6.1.3.1.3 •

capacity hot side temperature regime flow cold side temperature regime flow

1 maximal load in the first year at ambient temperature -13°C 79.8 MW

2 yes 287.17 kg/s 9 bar 7 bar 140 °C

Auxiliary circulating pumps

number of circulating pumps o with speed control o without speed control flow head suction pressure temperature

Task4-par3-rev1.DOC - IBE KOSOVO COMBINED HEAT AND POWER

3 1 232 kg/s 1.5 bar 14 bar abs 80 °C

Revizija: 1 Datum: 21.3.2005

TASK 4

3-23

3.6.1.3.1.4 • • • • • •

pipes and headers supporting structures valves instrumentation drain and venting system heating and air conditioning system

3.6.1.3.2 3.6.1.3.2.1 • • • • •

Other equipment

Electrical part New 10kV switchgear with 5 cubicles:

3.6.1.3.2.2

Frequency converter for 650kVA power 2 pcs.

3.6.1.3.2.3

Low voltage switchgear for auxiliary pumps ( 55kW )

3.6.1.3.2.4

Frequency converter for 70kVA power 3 pcs.

3.6.1.3.2.5

Middle voltage 1x150mm2-Cu cables: 3 x 3 x 80m + 30m = 750m

3.6.1.3.2.6

Low voltage cables approx. 90m

3.6.1.3.2.7

File: Objekt:

Other electrical equipment and parts

Task4-par3-rev1.DOC - IBE KOSOVO COMBINED HEAT AND POWER

Revizija: 1 Datum: 21.3.2005

TASK 4

3-24

3.6.1.3.3

Civil part

3.6.1.3.3.1

Completion of the existing building o

o o

o o o o

o o

File: Objekt:

main dimensions floor area 17 m x 22 m maximal height 8m structure refurbishment faรงade walls refurbishment installation of the windows and doors roof covering double corrugated trapezoidal sheet with intermediate isolation ground floor reinforced concrete slab equipment foundations block foundations steel structures supports for the main equipment secondary steel structures for piping connection to the existing boiler house finishing works

Task4-par3-rev1.DOC - IBE KOSOVO COMBINED HEAT AND POWER

Revizija: 1 Datum: 21.3.2005

TASK 4

3-25

3.6.2 Phase II 3.6.2.1

Heating station in the TPP Kosovo B

3.6.2.1.1

Mechanical part

3.6.2.1.1.1 • • •

•

number of heat exchangers heat load steam o pressure o temperature o flow o return condensate temperature cold water o temperature regime o flow

3.6.2.1.1.2 •

•

File: Objekt:

1 107.1 MW 4 bar abs 260°C 82.8 kg/s 90°C 139/49.7 °C 287.17 kg/s

Condensate system

condensate tank o number o volume condensate pump o number o flow o head

3.6.2.1.1.3 • • • • • •

Heat exchanger

1 50 m3 2 41.4 kg/s 13 bar

Main circulating pumps

number of circulating pumps speed control flow head suction pressure temperature

Task4-par3-rev1.DOC - IBE KOSOVO COMBINED HEAT AND POWER

1 no 287.17 kg/s 9 bar 12.6 bar abs 140 °C

Revizija: 1 Datum: 21.3.2005

TASK 4

3-26

3.6.2.1.1.4 • • • • •

pipes supporting structures valves instrumentation drain and venting system

3.6.2.1.2 3.6.2.1.2.1

3.6.2.1.3 3.6.2.1.3.1 •

File: Objekt:

Other equipment

Electrical part I/O modules for binary and analog signals

Civil part New building

minor civil works caused by installation of the new equipment

Task4-par3-rev1.DOC - IBE KOSOVO COMBINED HEAT AND POWER

Revizija: 1 Datum: 21.3.2005

TASK 4

3-27

3.6.2.2

Main pipeline

3.6.2.2.1

Mechanical part

3.6.2.2.1.1 • • • • • • • • • • • •

nominal diameter DN 700 maximal operating temperature 140°C maximal short term temperature 150 °C maximal pressure 22 bar allowable traffic load without additional measurements 16.7 kN/m2 material P235GH outside diameter 711.2 mm wall thickness 8 mm diameter of the jacket pipe 900 mm covering 750 mm length 10500 m including in the scope of supply o elbows and other fittings o insulation shells o shrink film o shrink sleeve o surveillance system for identifying locations of any moisture in the pipe insulation

3.6.2.2.1.2 •

File: Objekt:

Pre-insulated pipe

Other equipment

drain and venting system

Task4-par3-rev1.DOC - IBE KOSOVO COMBINED HEAT AND POWER

Revizija: 1 Datum: 21.3.2005

TASK 4

3-28

3.6.2.2.2 3.6.2.2.2.1

3.6.2.2.3 3.6.2.2.3.1 • • • • • • •

File: Objekt:

Electrical part I/O modules for binary and analog signals

Civil part Civil works for installation of the pre-insulated pipeline

length excavation off-loading of excavated material backfilling with sand delivered to location backfilling with excavated material other works finishing works

Task4-par3-rev1.DOC - IBE KOSOVO COMBINED HEAT AND POWER

10500 m 4.5 m3/m 2.6 m3/m 1.8 m3/m 1.9 m3/m

Revizija: 1 Datum: 21.3.2005

TASK 4

3-29

3.6.2.3

Heating station in Prishtina

3.6.2.3.1

Mechanical part

3.6.2.3.1.1

Heat exchanger

• •

number of heat exchangers mode of operation

•

capacity hot side temperature regime flow o cold side temperature regime flow mode of operation o o

o o

3.6.2.3.1.2 • • • • • •

File: Objekt:

140/73.5 °C 287.17 kg/s 114.6/64.7 °C 382.7 kg/s maximal heat load in the last year at ambient temperature +3°C 107.1 MW 139/49.7 °C 287.17 kg/s 73.3/46.5 °C 954.5 kg/s

Main circulating pumps

number of circulating pumps speed control flow head suction pressure temperature

3.6.2.3.1.3 • • • • •

capacity hot side temperature regime flow cold side temperature regime flow

1 maximal load in the first year at ambient temperature -13°C 79.8 MW

1 no 287.17 kg/s 9 bar 7 bar 140 °C

Other equipment

pipes supporting structures valves instrumentation drain and venting system

Task4-par3-rev1.DOC - IBE KOSOVO COMBINED HEAT AND POWER

Revizija: 1 Datum: 21.3.2005

TASK 4

3-30

3.6.2.3.2 3.6.2.3.2.1

3.6.2.3.3 3.6.2.3.3.1 • •

File: Objekt:

Electrical part I/O modules for binary and analog signals

Civil part Existing building

minor civil works caused by installation of the new equipment connection to the extension of the boiler house

Task4-par3-rev1.DOC - IBE KOSOVO COMBINED HEAT AND POWER

Revizija: 1 Datum: 21.3.2005

TASK 4

4-0

CONTENTS

INVESTMENT COSTS AND OPERATING DATA.......................................................... 4-1

4.1

INVESTMENT COSTS.......................................................................................................... 4-1

4.1.1

Phase I..................................................................................................................................... 4-1

4.1.2

Phase II ................................................................................................................................... 4-3

4.1.3

Overview of all investment costs ............................................................................................. 4-4

4.2

OPERATING DATA .............................................................................................................. 4-5

4.2.1

Low scenario ........................................................................................................................... 4-5

4.2.2

Medium scenario ..................................................................................................................... 4-6

4.2.3

High scenario .......................................................................................................................... 4-7

File: Objekt:

Task4-par4-rev2.DOC - IBE KOSOVO COMBINED HEAT AND POWER

Revizija: 2 Datum: 21.3.2005

TASK 4

4-1

INVESTMENT COSTS AND OPERATING DATA

4.1

INVESTMENT COSTS

4.1.1 Phase I 4.1.1.1

Heating station in the TPP Kosovo B

price component

equipment

cost EUR

mechanical part

heat exchanger

141,700

main circulating pumps

174,000

pressure static system

42,000

condensate system

27,000

valves

613,000

supply steam pipeline

300,000

other equipment subtotal

249,820 1,547,520

electrical part

110,000

civil part

641,000

installation

331,504

subtotal investor's costs transport and insurance customs duty subtotal contingencies grand total

File: Objekt:

Task4-par4-rev2.DOC - IBE KOSOVO COMBINED HEAT AND POWER

2,630,024 184,102 49,726 165,752 3,029,603 454,440 3,484,044

Revizija: 2 Datum: 21.3.2005

TASK 4

4-2

4.1.1.2

Main pipeline

price component

cost EUR

mechanical part

7,243,700

electrical part

15,000

civil part

1,386,000

installation

1,814,675

subtotal

10,459,375

investor's costs

522,969

transport and insurance

217,761

customs duty

725,870

subtotal

11,925,975

contingencies

1,192,597

grand total

4.1.1.3

13,118,572

Heating station in Prishtina

price component

equipment

mechanical part

heat exchanger

278,000

main circulating pumps

174,000

auxiliary circulating pumps

cost EUR

69,360

valves

361,000

connection to the boiler house

211,600

other equipment subtotal

244,988 1,338,948

electrical part

150,000

civil part

242,000

installation

297,790

subtotal investor's costs transport and insurance customs duty subtotal contingencies grand total

File: Objekt:

Task4-par4-rev2.DOC - IBE KOSOVO COMBINED HEAT AND POWER

2,028,738 142,012 44,668 148,895 2,364,312 354,647 2,718,959

Revizija: 2 Datum: 21.3.2005

TASK 4

4-3

4.1.2 Phase II 4.1.2.1

Heating station in the TPP Kosovo B

price component mechanical part

equipment

cost EUR

heat exchanger

141,700

main circulating pumps

87,000

pressure static system

21,000

condensate system

27,000

valves

81,000

supply steam pipeline

other equipment

107,780

subtotal

465,480

electrical part

20,000

civil part

64,000

installation

97,096

subtotal

646,576

investor's costs

45,260

transport and insurance

14,564

customs duty

48,548

subtotal

754,949

contingencies

113,242

grand total

868,191

4.1.2.2

Main pipeline

price component mechanical part electrical part

cost EUR 7,158,500 0

civil part

1,449,000

installation

1,789,625

subtotal

10,397,125

investor's costs

519,856

transport and insurance

214,755

customs duty

715,850

subtotal contingencies grand total

File: Objekt:

11,847,586 1,184,759 13,032,345

Task4-par4-rev2.DOC - IBE KOSOVO COMBINED HEAT AND POWER

Revizija: 2 Datum: 21.3.2005

TASK 4

4-4

4.1.2.3

Heating station in Prishtina

price component

equipment

mechanical part

heat exchanger

cost EUR 278,000

main circulating pumps

87,000

auxiliary circulating pumps

valves

114,000

connection to the boiler house

211,600

other equipment

107,852

subtotal

798,452

electrical part

20,000

civil part

72,000

installation

163,690

subtotal

1,054,142

investor's costs transport insurance

73,790 and 24,554

customs duty

81,845

subtotal

1,234,331

contingencies

185,150

grand total

1,419,481

4.1.3 Overview of all investment costs

Price component Phase I EUR Heating station in the TPP Kosovo B Main pipeline Heating station in Prishtina Grand total

File: Objekt:

3,484,044

Cost Phase II EUR 868,191

Grand total EUR 4,352,235

13,118,572 13,032,345 26,150,917 2,718,959

1,419,481

4,138,440

19,321,575 15,320,017 34,641,592

Task4-par4-rev2.DOC - IBE KOSOVO COMBINED HEAT AND POWER

Revizija: 2 Datum: 21.3.2005

TASK 4

4.2

4-5

OPERATING DATA

4.2.1 Low scenario

Year 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24

File: Objekt:

Total heat consumption MWh 185844 205594 227444 251615 278355 307936 340661 376864 416915 461222 510237 564462 624449 624449 624449 624449 624449 624449 624449 624449 624449 624449 624449 624449 624449

Supplied heat from the TPP Kosovo B MWh 185673 204915 225958 248934 273994 300873 329972 376864 416594 459896 507326 559188 615849 615849 615849 615849 615849 615849 615849 615849 615849 615849 615849 615849 615849

Supplied heat from the peak load boiler MWh 171 679 1485 2681 4361 7063 10689 0 321 1326 2911 5273 8600 8600 8600 8600 8600 8600 8600 8600 8600 8600 8600 8600 8600

Task4-par4-rev2.DOC - IBE KOSOVO COMBINED HEAT AND POWER

Equivalent electricity production in the TPP Kosovo B MWh 37966 41349 45065 49261 54094 59441 65738 79817 87052 94809 103347 112573 122924 122924 122924 122924 122924 122924 122924 122924 122924 122924 122924 122924 122924

Electric consumption for circulating Peak pumps heat load MWh MW 3428 83 3507 91 3583 99 3639 108 3678 118 3701 128 3767 140 6683 153 6851 166 6992 181 7155 198 7271 215 7349 235 7349 235 7349 235 7349 235 7349 235 7349 235 7349 235 7349 235 7349 235 7349 235 7349 235 7349 235 7349 235

Required boiler peak load MW 4 10 18 26 36 46 57 0 7 20 35 52 70 70 70 70 70 70 70 70 70 70 70 70 70

Revizija: 2 Datum: 21.3.2005

TASK 4

4-6

4.2.2 Medium scenario

Year 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24

File: Objekt:

Total heat consumption MWh 185844 210043 237392 268302 303237 342721 387346 437782 494784 559209 632023 714317 807327 807327 807327 807327 807327 807327 807327 807327 807327 807327 807327 807327 807327

Supplied heat from the TPP Kosovo B MWh 185673 209208 235395 264486 296398 331311 369012 436905 492126 553666 621818 696653 778445 778445 778445 778445 778445 778445 778445 778445 778445 778445 778445 778445 778445

Supplied heat from the peak load boiler MWh 171 835 1997 3817 6839 11410 18335 877 2659 5543 10205 17664 28882 28882 28882 28882 28882 28882 28882 28882 28882 28882 28882 28882 28882

Task4-par4-rev2.DOC - IBE KOSOVO COMBINED HEAT AND POWER

Equivalent electricity production in the TPP Kosovo B MWh 37966 42054 46714 52135 58464 66075 75157 90227 100002 110906 123286 137387 153984 153984 153984 153984 153984 153984 153984 153984 153984 153984 153984 153984 153984

Electric consumption for circulating Peak pumps heat load MWh MW 3428 83 3530 93 3598 103 3660 115 3700 128 3774 142 3791 158 6960 176 7118 195 7280 217 7396 241 7463 269 7541 299 7541 299 7541 299 7541 299 7541 299 7541 299 7541 299 7541 299 7541 299 7541 299 7541 299 7541 299 7541 299

Required boiler peak load MW 4 12 22 33 45 59 75 15 33 54 77 103 133 133 133 133 133 133 133 133 133 133 133 133 133

Revizija: 2 Datum: 21.3.2005

TASK 4

4-7

4.2.3 High scenario

Year 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24

File: Objekt:

Total heat consumption MWh 185844 216211 251540 292642 340459 396090 460812 536108 623708 725622 844189 982129 1142609 1142609 1142609 1142609 1142609 1142609 1142609 1142609 1142609 1142609 1142609 1142609 1142609

Supplied heat from the TPP Kosovo B MWh 185673 215131 248712 286640 328821 375128 459068 531232 613023 704764 806339 916971 1033503 1033503 1033503 1033503 1033503 1033503 1033503 1033503 1033503 1033503 1033503 1033503 1033503

Supplied heat from the peak load boiler MWh 171 1080 2828 6002 11638 20962 1743 4877 10685 20858 37850 65159 109106 109106 109106 109106 109106 109106 109106 109106 109106 109106 109106 109106 109106

Task4-par4-rev2.DOC - IBE KOSOVO COMBINED HEAT AND POWER

Equivalent electricity production in the TPP Kosovo B MWh 37966 43030 49052 56407 65527 77047 93539 106171 120888 138482 160281 187364 219146 219146 219146 219146 219146 219146 219146 219146 219146 219146 219146 219146 219146

Electric consumption for circulating Peak pumps heat load MWh MW 3428 83 3527 95 3644 109 3690 125 3775 142 3799 163 7060 186 7240 213 7406 243 7491 278 7582 318 7618 364 7663 416 7663 416 7663 416 7663 416 7663 416 7663 416 7663 416 7663 416 7663 416 7663 416 7663 416 7663 416 7663 416

Required boiler peak load MW 4 14 27 42 60 80 25 49 79 113 152 197 250 250 250 250 250 250 250 250 250 250 250 250 250

Revizija: 2 Datum: 21.3.2005

TASK 4

5-0

CONTENTS

File: Objekt:

TIME SCHEDULE ............................................................................................................... 5-1

Task4-par5-rev2.DOC - IBE KOSOVO COMBINED HEAT AND POWER

Revizija: 2 Datum: 21.3.2005

TASK 4

5-1

TIME SCHEDULE

General time schedule task

1 2 3

4 5 6

year 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25

decision for investment phase I phase II operation

Phase I task

month 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37

decision for investment preparing tender documentation invitation for tenders tenders evaluation signing of the contract preparing documentation for building permit building permit preparing design documentation construction start of operation

File: Objekt:

Task4-par5-rev2.DOC - IBE KOSOVO COMBINED HEAT AND POWER

Revizija: 2 Datum: 21.3.2005

TASK 4

5-2

Phase II task

month 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30

File: Objekt:

Task4-par5-rev2.DOC - IBE KOSOVO COMBINED HEAT AND POWER

Revizija: 2 Datum: 21.3.2005

TASK 4

6-0

CONTENTS

File: Objekt:

ENCLOSURES...................................................................................................................... 6-1

Task4-par6-rev1.DOC - IBE KOSOVO COMBINED HEAT AND POWER

Revizija: 1 Datum: 21.3.2005

TASK 4

6-1

ENCLOSURES

enclosure 6-1 6-2 6-3

6-4

6-5

File: Objekt:

description TPP Kosovo B 90% nominal load TPP Kosovo B Existing operation – without HP feedwater heaters TPP Kosovo B with heating station 90% nominal load of the power plant Maximal load of the heating station in the first year of operation – 79.8 MW TPP Kosovo B with heating station 90% nominal load of the power plant Maximal load of the heating station in the last year of operation – 214 MW TPP Kosovo B with heating station Existing operation – without HP feedwater heaters Maximal load of the heating station in the last year of operation – 214 MW

Task4-par6-rev1.DOC - IBE KOSOVO COMBINED HEAT AND POWER

Revizija: 1 Datum: 21.3.2005

Enclosure 6-1

TPP Kosovo B 90% nominal load 17°

11 26 39.7 320 900

39.7 320 65.76 14

8 18°

15 39.7 3207 834

12 27 21.6 463 834

21.6 463 35.05 19° 16 17 21.6 463 799

10.2 364 29.14 20° 18

28 10.2 364 799

19 10.2 364 770

14 29 6.22 305 770

6.22 305 40.53 21° 20 21 6.22 305 730

15 30 3.00 231 730

3.00 231 42.82 22

31°

22°

23 42 3.00 3.00 231 231 687 687

16 31 0.87 125 687

0.87 125 62.91 23° 24 25 0.87 125 624

32 1.01 0.061 34.0 36.3 3.1E+4 624 27° 40

30 33 24° 1.01 174 1186

RH2

26°

RH1 7

36 36.1 540 834

9 12 1.01 15.0 1080

35 199 365 0

34 177 540 900

7 11 1.01 25.0 131

5 3°

3 246 247 900

4 39.7 224 65.7

4 1°

4° 5 250 214 900

37 254 189 900

32 1 11.4 181 900

10° 5°

25° 6 21.6 197 101

43 11.4 158 770

7 11.4 158 770

Gross power Net power Net electric efficiency(LHV) Net heat rate(LHV) Net fuel input(LHV) THERMOFLEX Version 12.0 Iztok JENKO IBE 173 File = C:\Projekti\Kosovo\optimizacija parametrov\sheme\TPPosnova.tfx 02-11-2005 14:25:03

8 6.22 160 40.5

310720 278499 35.98 10007 774134

3.00 231 42.8 13

6° 9 11.6 128 770

10 3.00 97.6 83.4

[kW] [kW] [%] [kJ/kWh] [kW]

2° 2 11.8 91.8 770

39 0.061 12.0 34.3 34.6 624 38624

41 1.01 23.0 3.1E+4

Enclosure 6-2

TPP Kosovo B

Exisitng operation - without HP feedwater heaters 17°

11 26 36.5 327 774

36.5 327 06 14

8 18°

15 36.5 3277 774

12 27 20.6 442 774

20.6 442 05 19° 16 17 20.6 442 774

9.83 346 21.14 20° 18

28 9.83 346 774

19 9.83 346 753

14 29 6.00 289 753

6.00 289 39.63 21° 20 21 6.00 289 713

15 30 2.91 221 713

2.91 221 42.02 22

31°

22°

23 42 2.91 2.91 221 221 671 671

16 31 0.85 123 671

0.85 123 61.71 23° 24 25 0.85 123 610

32 1.01 0.060 33.8 36.2 3.1E+4 610 27° 40

30 33 24° 1.01 166 1104

RH2

26°

RH1 7

36 33.4 513 774

9 12 1.01 15.0 1005

35 177 356 0

34 158 532 774

7 11 1.01 25.0 122

5 3°

3 219 182 774

4 10.7 298 0

4 1°

4° 5 224 182 774

25° 6 10.7 298 0

37 228 182 774

5° 32

1 9.50 172 774

10°

43 9.50 156 753

Gross power Net power Net electric efficiency(LHV) Net heat rate(LHV) Net fuel input(LHV)

7 9.50 156 753

8 6.00 159 39.6

274670 244502 33.94 10606 720309

THERMOFLEX Version 12.0 Iztok JENKO IBE 173 File = C:\Projekti\Kosovo\optimizacija parametrov\sheme\TPPobstojece.tfx 02-11-2005 14:26:37

2.91 221 42.0 13

6° 9 9.68 127 753

10 2.91 96.6 81.5

[kW] [kW] [%] [kJ/kWh] [kW]

2° 2 9.87 91.0 753

39 0.060 10.1 33.2 33.5 610 38610

41 1.01 23.0 3.1E+4

TPP Kosovo B with heating station

Enclosure 6-3

90% nominal load of the power plant Maximal load of the heating station in the first year of operation - 79.8 MW

17°

11 26 39.7 321 900

39.7 321 65.66 14

8 18°

15 49 39.7 39.7 3217321 834 0

21.7 463 36.75 19° 16

27 21.7 463 834

17 21.7 463 798

10.5 367 25.34 20° 18

28 10.5 367 798

19 10.5 367 772

6.61 312 43.23 21° 20

29 6.61 312 772

21 6.61 312 729

30 3.70 252 729

20.1 73.5 1027 46

8 33 24° 1.01 290 1255

12 1.01 15.0 1143

3 246 247 900

4 39.7 224 65.6

31 0.75 141 573

0.75 141 49.21 23° 24 25 0.75 141 523

32 1.01 0.055 32.4 34.5 3.1E+4 523 27° 40

34 177 540 900

39 0.055 11.8 32.5 32.9 523 38523

26°

7 11 1.01 25.0 139

37 254 188 900

Gross power

1 11.2 180 900

1° 25°

6 21.7 197 102

D 48 10.5 367 25.3

10° 5°

7 11.2 159 772

8 6.50 162 43.2

289290

THERMOFLEX Version 12.0 Iztok JENKO IBE 173 File = C:\Projekti\Kosovo\optimizacija parametrov\sheme\Ogrevanje_max_prvo_leto.tfx 03-21-2005 13:40:03

3.70 252 45.6 13

6° 9 11.4 128 772

[kW]

10 3.01 95.3 88.8

2° 2 11.6 88.3 772

45 3.70 90.5 111 11.8 90.7 50111

4° 5 250 214 900

5 3°

22°

23 42 3.70 2.56 252 250 573 573

36 36.1 540 834

35 199 365 0

31°

33°

RH1

47 3.70 252 111

44 20.0 140 1027

RH2

3.70 252 45.62 22

32 43 11.8 43.0 634

41 1.01 23.0 3.1E+4

TPP Kosovo B with heating station

Enclosure 6-4

90% nominal load of the power plant Maximal load of the heating station in the last year of operation - 214 MW

17°

11 26 39.8 321 900

39.8 321 65.56 14

8 18°

15 49 39.8 39.8 3217321 835 0

21.7 463 36.95 19° 16

27 21.7 463 835

17 21.7 463 798

10.6 368 25.34 20° 18

28 10.6 368 798

19 10.6 368 772

14 29 6.79 315 772

6.79 315 44.23 21° 20

21 6.79 315 728

30 4.00 260 728

20.4 49.7 2068 46

8 33 24° 1.01 290 1255

12 1.01 15.0 1143

3 246 247 900

4 39.8 224 65.5

31 0.51 149 376

0.51 149 23.41 23° 24 25 0.51 149 353

32 1.01 0.045 29.4 31.1 3.1E+4 353 27° 40

34 177 540 900

39 0.045 11.8 29.1 29.7 353 38353

26°

7 11 1.01 25.0 139

37 254 188 900

Gross power

1 11.2 180 900

1° 25°

6 21.7 197 102

D 48 10.6 368 25.3

10° 5°

7 11.2 159 772

8 6.50 162 44.2

4.00 260 53.6 13

6° 9 11.4 127 772

258814

THERMOFLEX Version 12.0 Iztok JENKO IBE 173 File = C:\Projekti\Kosovo\optimizacija parametrov\sheme\Ogrevanje_max_zadnje_leto.tfx 03-21-2005 13:41:23

[kW]

10 3.01 89.8 97.8

2° 2 11.6 80.0 772

45 3.82 90.0 298 11.8 90.2 50298

4° 5 250 214 900

5 3°

22°

23 42 4.00 1.70 260 257 376 376

36 36.2 540 835

35 199 365 0

31°

RH1

47 4.00 260 298

44 20.0 139 2068

RH2

4.00 260 53.62 22

32 43 11.8 57.5 651

41 1.01 23.0 3.1E+4

TPP Kosovo B with heating station

Enclosure 6-5

Existing operation -without HP feedwater heaters Maximum load of the heating station in the last year of operation - 214 MW

17°

11 26 36.9 327 774

36.9 327 06 14

8 18°

15 49 36.9 36.9 3277327 774 0

20.9 443 05 19° 16

27 20.9 443 774

17 20.9 443 774

10.3 351 17.24 20° 18

28 10.3 351 774

19 10.3 351 757

14 29 6.64 300 757

6.64 300 43.93 21° 20

21 6.64 300 713

30 4.00 252 713

20.4 49.7 2068 46

8 33 24° 1.01 282 1169

12 1.01 15.0 1064

3 219 183 774

4 11.2 298 0

31 0.49 147 359

0.49 147 21.11 23° 24 25 0.49 147 338

32 1.01 0.045 29.2 30.8 3.1E+4 338 27° 40

34 158 532 774

39 0.045 10.1 28.8 29.5 338 38338

26°

7 11 1.01 25.0 129

37 228 182 774

Gross power

1 9.51 172 774

1° 25°

6 11.2 298 0

D 48 10.3 351 17.2

10° 5°

7 9.51 159 757

8 6.50 162 43.9

224436

4.00 252 53.9 13

6° 9 9.69 127 757

10 3.01 89.2 97.9

[kW]

THERMOFLEX Version 12.0 Iztok JENKO IBE 173 File = C:\Projekti\Kosovo\optimizacija parametrov\sheme\Ogrevanje_brez HP_grelnikov_max_zadnje_leto.tfx 03-21-2005 13:42:18

2° 2 9.89 79.0 757

45 3.82 90.0 300 10.1 90.1 50300

4° 5 224 182 774

5 3°

22°

23 42 4.00 1.61 252 248 359 359

36 33.6 513 774

35 177 356 0

RH1

47 4.00 252 300

44 20.0 139 2068

RH2

4.00 252 53.92 22

32 43 10.1 58.1 638

41 1.01 23.0 3.1E+4

TASK 4

7-0

CONTENTS

File: Objekt:

DRAWINGS .......................................................................................................................... 7-1

Task4-par7-rev1.DOC - IBE KOSOVO COMBINED HEAT AND POWER

Revizija: 0 Datum: 21.3.2005

TASK 4

7-1

DRAWINGS

Identification No. DHSP -2X0001 DHSP -2X0002 DHSP -2X0003 DHSP -2X0004 DHSP -2X0005 DHSP -2X0006 DHSP -2X0010 DHSP -2X0011 DHSP -2X0020 DHSP -2X0021 DHSP -2X0022 DHSP -2X0023 DHSP -2X0024

File: Objekt:

Title General flow diagram Flow diagram of connection to the TPP Kosovo B Flow diagram of the heating station in the TPP Kosovo B Flow diagram of the heating station in Prishtina Flow diagram of connection to the boiler house Flow diagram of the heat storage tank Electrical single line diagram of the TPP Kosovo B Electrical single line diagram of the h.s. in Prishtina Layout of the main pipeline Layout of the TPP Kosovo B Layout of the units in Prishtina Layout of the heating station in the TPP Kosovo B Layout of the heating station in Prishtina

Task4-par7-rev1.DOC - IBE KOSOVO COMBINED HEAT AND POWER

Revizija: 0 Datum: 21.3.2005

TASK 5

TASK 5 INSTITUTIONAL ANALYSIS

1.0

INSTITUTIONAL ANALYSIS

2.0

FINDINGS AND SUGGESTIONS

3.0

DRAFT AGREEMENTS

File: Objekt:

Task5-par0-rev0.DOC - IBE KOSOVO COMBINED HEAT AND POWER

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1-0

TASK 5

CONTENTS 1.

INSTITUTIONAL ANALYSIS ........................................................................................... 1-1

1.1

DISTRICT HEATING IN EU AND CEE .............................................................................. 1-1

1.1.1 1.1.2 1.1.3 1.1.4 1.2

LEGAL AND REGULATORY FRAMEWORK ........................................................................ 1-1 OWNERSHIP .......................................................................................................................... 1-2 COMPETITIVE ASPECTS...................................................................................................... 1-3 PRICES AND TAXES .............................................................................................................. 1-3 DISTRICT HEATING IN PRISHTINA ................................................................................. 1-5

1.2.1 1.2.2 1.2.3

LEGAL AND REGULATORY FRAMEWORK ........................................................................ 1-5 OWNERSHIP .......................................................................................................................... 1-5 PRICES AND TAXES .............................................................................................................. 1-7

File: Objekt:

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1-1

TASK 5

INSTITUTIONAL ANALYSIS

Under UNMIKâ&#x20AC;&#x2122;s administration Kosovo has started the process of approaching to the EU standards. Therefore, in the beginning of this section, we are presenting an overview of the district heating systems in the EU and in the CEE countries.

1.1 DISTRICT HEATING IN EU AND CEE 1.1.1 LEGAL AND REGULATORY FRAMEWORK In most of the EU countries, there is no specific law for DH. District heating is considered as a business function, driven mainly by market forces. However, CHP/DHC fulfils tasks of general economic interest, mainly in relation to environmental policies. Countries like the Netherlands and Sweden rely on fiscal/taxation incentives in order to promote CHP/DHC, while Germany, Austria and Denmark provide support to efficient CHP schemes through legislation (bonus systems). Renewables are also promoted through both, policy and regulatory/legislative measures. As a part of the accession process to the EU, all selected CEE countries have passed energy laws/acts to create a general framework for the energy sector and to support market liberalization and the introduction of competition in line with the EU Directives. Some of the CEE countries have developed specific DH/heat legislation. For example, Hungary issued a district heat law and Estonia is preparing one. In Croatia and Lithuania, DH aspects are addressed in heat laws. In the Czech Republic and Romania, DHC/CHP is seen as a part of the energy conservation policy and a cost-effective tool for implementing energy efficiency measures. In Bulgaria, Hungary, Romania, Latvia and Slovakia, the DH sector is considered a public service and is regulated as such. Most CEE countries are strongly encouraging the development of electricity produced in CHP units and from renewable energy sources. CHP support measures include, among others: a guaranteed price level for CHP electricity (Estonia and Latvia for certain capacities), and a purchasing obligation for the electricity supplied by CHP plants (Bulgaria, Czech Republic, Hungary, Slovakia). The development of renewables is supported by targets, purchasing obligations, feed-in tariffs, and incentive mechanisms. Estonia uses a combination of three measures while Lithuania has an ambitious target for renewable energy production (12% by 2010). Hungary and Czech Republic have also established targets and Latvia, Bulgaria and Slovakia foresee purchasing obligations.

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TASK 5

1.1.2 OWNERSHIP In most EU Member States, the DH companies are either municipal or privately owned (Sweden, Finland, UK). As DH is a local business, municipalities play an important role. Conversely, the DH companies in these countries are acting in a market-driven environment, and with the energy market liberalization new trends such as mergers and take-overs create new structures. Recent developments in the ownership structure of the DH companies in the CEE countries are mostly related to the restructuring process. Leasing, privatization and public-private partnerships are used in several Accession countries as a method of attracting financial sources for reforming and refurbishing the DH schemes. In most CEE countries, the DH companies are owned by municipalities. In Bulgaria, Croatia, Slovakia and Latvia the DH systems are partially owned by the state. The Czech Republic, Estonia, Hungary, Latvia, Slovakia and Romania are in the process of privatizing the DH companies. Lithuania uses leasing extensively in order to attract investment funds.

A rough indication of the ownership structure in the CEE countries is provided in Figure 5.

Figure 5. Ownership structure of DH systems in CEE countries

File: Objekt:

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TASK 5

1.1.3 COMPETITIVE ASPECTS The main competitor for the DH schemes in both EU Member States and the surveyed CEE countries is individual gas heating. The competitive advantage of CHP/DHC mainly emerges from energy savings and the reduction of carbon dioxide emissions. District heating, and especially CHP generation, also reduces sulphur dioxide (SO2), dust and oxides of nitrogen (NOx) emissions, and therefore plays a major role in reducing the environmental impact of energy supply as well as in meeting the greenhouse gas emission reduction targets. The country examples below illustrate this. •

In Austria in 1998, a reduction of 1.1 million tons of carbon dioxide was achieved by means of district heating and CHP.

•

In Hungary, energy savings related to CHP (90% coupled to the DH schemes) represented 20 PJ/year in 1998, which was 2% of the total primary energy consumption. This resulted in the reduction of approximately 1 million tons of carbon dioxide emissions.

•

In Italy in 2000, the DH schemes saved approximately 27% of energy which would have been used by conventional systems. Carbon dioxide emissions were reduced by 1.1 million tons, SO2 emissions by 13,000 tons and NOx by nearly 5000 tons.

•

In the Netherlands, fuel savings achieved by using different CHP technologies ranged between 15% and 24% in 1999.

1.1.4 PRICES AND TAXES The DH prices in the EU Member States surveyed vary in the range of €27-69/MWh (US$31-79/MWh). Some countries apply a favorable value-added tax (VAT) for the DH sector (UK and Iceland). However, in France the VAT level is higher for DH (19.6%) than for electricity and gas (5.5%). In Sweden and Finland the trend is to substitute income taxes by indirect taxes, including energy taxes. In the CEE countries, DH prices are situated in the range of €13-41/MWh ($1547/MWh). In some cases there is a single residential heat price (independent of whether the heat is supplied from DH or individual gas boilers). Those Accession countries where the VAT rate is lower for households connected to the DH schemes (Czech Republic, Estonia, Lithuania) will have to develop measures to enhance the DH sector and counterbalance the negative effects induced by a possible future equalization of VAT taxes in the energy sector.

File: Objekt:

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TASK 5

Various mechanisms are used for financing DH rehabilitation and modernization in the CEE countries. They range from direct governmental support to the use of third-party financing and leasing of capacity. However, private sector investments (mainly foreign) have an increasing importance - often being associated with the privatization process. In some cases, international financial institutions have played a catalytic role as well.

File: Objekt:

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TASK 5

1.2 DISTRICT HEATING IN PRISHTINA 1.2.1 LEGAL AND REGULATORY FRAMEWORK Legal and regulatory framework concerning district heating made a substantial progress in 2004. Functioning of the energy sector in Kosovo and establishment of an energy market was regulated by Law on Energy (Law NO. 2004/08). One of the purposes of the Law is to promote the efficient and economical use of energy resources. Article 9 of the Law states: − The purpose of the energy efficiency policy shall be to encourage the efficient use of energy and energy resources and to promote renewable energy sources and cogeneration. − The economic regulation of activities in the energy sector shall be implemented in compliance with the Law on the Energy Regulator. Based on the Law on Energy the Law on the Energy Regulator was passed and the Energy Regulatory Office was established. The Energy Regulatory Office has already issued two temporary instructions concerning district heating: − Temporary Instruction No. 01/2004 On the Principles of Calculation of Prices and Tariffs in the District Heating Sector in Kosovo for the Heating Season 2004/2005 − Temporary Instruction No. 01/2004 On the Terms and Procedure for New Connections to the District Heating Distribution Network

1.2.2 OWNERSHIP The United Nations Interim Administration Mission in Kosovo entrusted the Kosovo Trust Agency (KTA) to administer the publicly owned enterprises (POEs). One of them is the District Heating Enterprise in Pristina. In regulation no. 2002/12 on the establishment of the Kosovo Trust Agency the Administrative Powers of the Agency over Enterprises was set.

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TASK 5

The Agency has power of: − Appointing and replacing the chairman, directors and managers of an Enterprise; − Creating, confirming or recomposing the supervisory board, managing board, workers’ council or other managing or supervisory body of an Enterprise; − Modifying the authority of any of the aforementioned bodies; − Issuing instructions regarding an Enterprise operations, in particular policies for sound financial management; − Assuming direct control over an Enterprise, including its accounts and assets, and administering such accounts and assets, separately from the Agency’s accounts; − Carrying out external audits of an Enterprise either directly or through designated agents; − Requiring any employee or contractor or other business contact of an Enterprise to provide information in his possession regarding such Enterprise; − Requiring any person with control over documents regarding an Enterprise to provide access to such documents for their review, reproduction and safekeeping; − Entering and inspecting the premises of Enterprises; − Approving business plans and investment plans of Enterprises; − Issuing or modifying charters, by-laws and other relevant documents of Enterprises; − Effecting the registration in Kosovo of Enterprises not properly registered; − Entering into arrangements for the management, reconstruction or reorganization of Enterprises; − Granting concessions or leases with respect to Enterprises; − Establishing one or more corporate subsidiaries of Enterprises, owned by those Enterprises but administered by the Agency, and transferring part or all of the assets of such Enterprises to such subsidiaries; − Transforming Enterprises into Corporations; − Restructuring an Enterprise into several Enterprises and/or Corporations; − Contracting out part of the activities of Enterprises; and − Initiating bankruptcy proceedings with respect to Enterprises and/or representing such Enterprises in bankruptcy proceedings.

At present the European Agency for Reconstruction (EAR) is funding the project of incorporation for District Heating. When the incorporation process is finished, it will enable District Heating company business contacts with lenders such as the World Bank, the EBRD and other international financial institutions. The incorporation is also a necessary pre-requisite for any privatization or Joint Venture.

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TASK 5

1.2.3 PRICES AND TAXES According to the Law on Energy Regulator the Energy Regulatory Office (ERO) is responsible for setting methodology and approving the district heating tariffs in Kosovo. The district heating tariff rates for heating season 2004/2005 set by ERO are:

Consumer Class Residential Commercial

DH Company "Termokos" Prishtina 0.85 EUR/m2 per month 1.10 EUR/m2 per month

DH Company "Gjakova" 0.82 EUR/m2 per month 1.25 EUR/m2 per month

Taking into consideration the average size of flats and of the commercial area as well as the average heat consumption, the district heating prices in Prishtina amount to 37,5 EUR/MWh. Compared to the EU member states, the district heating prices in Prishtina are below the EU average. In comparison with the CEE countries, the district heating prices in Prishtina are on the upper side of the district heating price span. The district heating prices in Kosovo are subject to VAT.

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TASK 5

CONTENTS 2.

File: Objekt:

FINDINGS AND SUGGESTIONS ...................................................................................... 2-1

Task5-par2-rev1.doc -JK KOSOVO COMBINED HEAT AND POWER

Revizija: 1 Datum: 21.3.2005

2-1

TASK 5

FINDINGS AND SUGGESTIONS

Most European district heating projects have two types of models. The first model is a single company responsible for heat generation, transmission and distribution. Model 1:

Single company

Production Transmission Distribution

The second model includes two or more companies responsible for heat generation, transmission and distribution. Model 2:

Company A

Production (Transmission) Company B

Distribution (Transmission)

The actual situation in Pristina is that there is an existing heating company TERMOKOS, which operates the district heating network. Another fact is that the Power Plant Kosovo B is also an independent business entity. The organizational model with two companies, one taking care of heat distribution and peak heat production and the other producing electricity and heat is quite common in the EU. Therefore we suggest that in case of Pristina the most feasible solution is to adopt the model of two independent companies. The business relationship between TERMOKOS and the Power Plant Kosovo B would be regulated by a Thermal Energy Service Agreement. The draft of the Thermal Energy Service Agreement is presented in the next chapter.

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TASK 5

Another major issue is the company ownership.. After the incorporation process of TERMOKOS is finished, the company will be legally capable to raise loans. But beside legal capability the company should have enough financial strength to raise such loans. For financial reasons or any other reasons the municipality can grant a concession for heat supply and running the existing district heating system. The concession is an operating contract between the owner (the municipality) and the operator. The owner gives the right to the company to build and to operate the assets for a certain period of time against a concession fee. The advantages for the municipality are: â&#x2C6;&#x2019; The municipality keeps control over operations (property, rules, prices..); â&#x2C6;&#x2019; The company operates and guarantees efficiency and service; â&#x2C6;&#x2019; The local community can allocate funds to other priorities. In case the concession proves to be, for financial or other reasons, a right solution, the municipality usually announces a public tendering for the concession. A draft of such concession tender is presented in chapter 3 of this task.

File: Objekt:

Task5-par2-rev1.doc -JK KOSOVO COMBINED HEAT AND POWER

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TASK 5

CONTENTS 3.

DRAFT AGREEMENTS...................................................................................................... 3-1

3.1

THERMAL ENERGY SERVICE AGREEMENT ................................................................. 3-1

3.2

CONCESSION TENDER ..................................................................................................... 3-17

File: Objekt:

Task5-par3-rev1.doc -JK KOSOVO COMBINED HEAT AND POWER

Revizija: 1 Datum: 21.3.2005

3-1

TASK 5

DRAFT AGREEMENTS

3.1

THERMAL ENERGY SERVICE AGREEMENT

THERMAL ENERGY SERVICE AGREEMENT THIS THERMAL ENERGY SERVICE AGREEMENT ("Agreement") is entered into as of (date), by and between ("Seller"), and ("Buyer"). WITNESSETH: WHEREAS, Seller is engaged in the business of producing and selling heating energy; and WHEREAS, Buyer operates district heating system in Prishtina (Buyer's Facilities) ;and NOW, THEREFORE, in consideration of the premises and mutual covenants, conditions hereinabove and hereinafter set forth and such other good and valuable considerations, the receipt and sufficiency of which are hereby acknowledged, Buyer and Seller, each intending to be legally bound, do hereby agree as follows: 1. DEFINITIONS Except as otherwise expressly provided herein, all capitalized terms used in this Agreement shall have the respective meanings as set forth below: (a) "Billing Month" shall mean any calendar month, or any portion thereof, during which Buyer receives and Seller delivers Thermal Energy to Buyer's Facilities in accordance with the terms and conditions of this Agreement. (b) "Contractual Obligation" shall mean, as to either party to this Agreement, any contract, agreement, indenture, instrument or undertaking to which such party is a party or by which any of its properties is bound or affected. (c) "Governmental Authority" shall mean the government and other political subdivision thereof, and any entity exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government and any other governmental entity with authority over any aspect of this Agreement or the performance of any of the obligations hereunder. (d) "Metering Equipment" shall have the meaning set forth in Section 8.1 of this Agreement. (e) "Point of Delivery" shall mean the physical point where Thermal Energy is delivered to Buyer, as more specifically described on Schedule 1(e) attached hereto and made a part hereof.

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(f) "Point of Return" shall mean the physical point where Seller is anticipated to receive the cold water return, as more specifically described on Schedule 1 (f) attached hereto and made a part hereof. (g) "New Service Commencement Date" shall have the meaning set forth in Section 2.2 of this Agreement. (h) "Thermal Energy" shall mean, as the context requires, quantities of heating energy as measured in MWh, respectively, extracted from the circulating flow of the hot water provided to Buyer at Buyer's Facilities in accordance with the delivery specifications set forth on Schedule 1 (h) of this Agreement. (i) "Thermal Energy Capacity Charges" shall mean the capacity charges for Thermal Energy for each Billing Month determined in accordance with the capacity charges set forth on Schedule 6.1 of this Agreement. (j) "Thermal Energy Production Facilities" shall mean the coal fired power plant, heating station, and all appurtenant equipment thereto, together with any and all parts, supplies and equipment installed or added thereto, and all improvements, additions or replacements made thereto (on the primary side) which constitute the hot water production facilities located at Seller's Facilities, and shall include Seller Owned Thermal Energy Production Facilities, all as more specifically identified on Schedule 1(j) attached hereto and made a part hereof. (k) "Thermal Energy Consumption Facilities" shall mean the supply and return pipeline from Point of delivery to Point of return, heating station, and all appurtenant equipment thereto, together with any and all parts, supplies and equipment installed or added thereto, and all improvements, additions or replacements made thereto (on the primary side) which constitute the hot water consumption facilities located at Buyer's Facilities, and shall include Buyer Owned Thermal Energy Consumption Facilities, all as more specifically identified on Schedule 1(k) attached hereto and made a part hereof. (l) "Thermal Energy Usage Charges" shall mean the usage charges for Thermal Energy for each Billing Month determined in accordance with the usage charges set forth on Schedule 6.1 of this Agreement.

2. TERM 2.1 Term. This Agreement shall be in full force and effect and be legally binding upon the parties and their permitted successors and assigns as of the date hereof and shall remain in effect for a term of twenty (20) years following the New Service Commencement Date, unless otherwise terminated as provided herein (the "Term"). 2.2 New Service Commencement Date. Buyer and Seller shall mutually agree upon a New Service Commencement Date upon which Seller shall first make available and deliver to Buyer's Facilities Thermal Energy but in no event shall the New Service Commencement Date occur any later than (date), unless otherwise agreed to in writing by the parties.

3. EASEMENTS 3.1 Easements and Rights-Of-Way; Access. Buyer shall grant, or cause to be granted, to Seller all rights-of-way, access rights, easements, licenses and other rights with respect to Buyer's Facilities as may File: Objekt:

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be reasonably necessary for Seller to perform its obligations and exercise its rights hereunder and Seller shall grant, or cause to be granted, to Buyer all rights-of-way, access rights, easements, licenses and other rights with respect to Seller's Facilities as may be reasonably necessary for Buyer to perform its obligations and exercise its rights hereunder.

THERMAL ENERGY PRODUCTION AND CONSUMPTION FACILITIES AND RELATED REQUIREMENTS

4.1 Thermal Energy Production Facilities. Seller will engineer, permit, construct, finance, operate and maintain the Thermal Energy Production Facilities so as to produce and deliver Thermal Energy to Buyer at the agreed upon Point of Delivery. 4.2 Thermal Energy Consumption Facilities. Buyer will engineer, permit, construct, finance, operate and maintain the Thermal Energy Consumption Facilities so as to take Thermal Energy from Seller at the agreed upon Point of Delivery. 4.3 Facility Operation. Seller will use, operate and maintain the Thermal Energy Production Facilities in a manner which meets or exceeds good industry practice, and Seller shall secure and maintain, at its sole cost and expense, all permits necessary for the use, operation and maintenance of Thermal Energy Production Facilities. Buyer will use, operate and maintain the Thermal Energy Consumption Facilities in a manner which meets or exceeds good industry practice, and Buyer shall secure and maintain, at its sole cost and expense, all permits necessary for the use, operation and maintenance of Thermal Energy Consumption Facilities. As soon as practicable, but in no event later than (date), Buyer and Seller shall enter into a definitive operating agreement on terms mutually acceptable to each of them setting forth their respective responsibilities for the use, operation and maintenance of the Thermal Energy Production Facilities and Thermal Energy Consumption Facilities. 5.0

PURCHASE AND SALE OF THERMAL ENERGY

5.1 Purchase and Sale of Thermal Energy. Commencing on the New Service Commencement Date and continuing thereafter throughout the Term of this Agreement, Seller will produce and deliver for sale to Buyer, and Buyer will purchase and receive from Seller, agreed Buyer's Thermal Energy requirements for Buyer's Facilities. Such Thermal Energy requirements will be produced by Seller from the Thermal Energy Production Facilities; provided, however, that Seller, at its sole reasonable discretion, may provide such Thermal Energy requirements from a centralized thermal energy plant to be owned and operated by Seller or an affiliate thereof, in which event Seller will maintain the Thermal Energy Production Facilities in a mothball condition which meets or exceeds good industry practice and in which event appropriate changes will be made to the Point of Delivery and Point of Return. Provided Buyer's Thermal Energy requirements do not exceed the levels of contract capacity specified in Schedule 6.1 attached hereto on more than two (2) occasions within any two (2) consecutive billing periods or in any two (2) Billing Months within consecutive calendar years, the costs thereof shall be as set forth in Schedule 6.1. File: Objekt:

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If Buyer's Thermal Energy requirements exceed the levels of contract capacity specified in Schedule 6.1 on more than two (2) occasions within any two (2) consecutive billing periods, the contract capacity specified in Schedule 6.1 shall be increased to the maximum quantity of capacity delivered to Buyer and the cost thereof shall be as set forth in Schedule 6.1. 5.2 Point of Delivery and Return. Buyer will obtain its Thermal Energy

by extracting heat from the circulating flow of hot water that Seller will make available to Buyer at the agreed upon Point of Delivery. Buyer agrees to take and accept the flow of hot water at such Point of Delivery and return the cooled water to Seller at the agreed upon Point of Return. 5.3 Point of Transfer, Risk of Loss. The sale of Thermal Energy shall be deemed to occur at the Point of Delivery and the risk of loss of the circulating medium shall transfer to Buyer at such point and shall transfer back to Seller at the Point of Return. 5.4 Delivery Specifications. The Thermal Energy delivered by Seller at the Point of Delivery shall satisfy the conditions of temperature and pressure specified in Schedule 1 (h) attached hereto and made a part hereof. 5.5 Treatment of Water. Buyer shall not interfere with, or restrict (other than to extract its Thermal Energy requirements), or contaminate in any way the flow of water supplied to or collected from Buyer hereunder. Buyer agrees to compensate Seller for the reasonable costs of treating or replacing any water that is either contaminated or not returned, after making allowance for reasonable losses occurring within normal operating conditions by Buyer, as reasonably demonstrated by Seller to Buyer. Further, it is agreed that Seller may suspend service if Buyer fails to cure any contamination of water caused by Buyer, as reasonably demonstrated by Seller to Buyer, within thirty (30) days after being advised in writing by Seller of such contaminating, provided, however, that if the nature of such contamination is such that the same cannot reasonably be cured within such thirty (30) day period, Buyer shall not be deemed to be in default if it shall have commenced such cure within such thirty (30) day period and thereafter diligently and continuously prosecutes such cure to completion, and Seller may not suspend service to Buyer during such period of cure. 5.6 Scheduled Outages. Whenever it shall become necessary for Seller to schedule an outage so that Seller may make repairs, replacements or changes in the Thermal Energy Production Facilities, both parties shall exercise reasonable efforts to coordinate the timing of the scheduled outage, and, in any event, Seller shall give Buyer not less than ten (10) days prior written notice of such outage. Seller shall use reasonable means to limit the duration of the outage and shall attempt to schedule outages during summer months. Both parties agree to act reasonably and in good faith, recognizing that such outages will, from time to time, be required. Notwithstanding anything herein contained to the contrary, Seller agrees that outages shall not and may not result in the reduction of Thermal Energy services required to continue to maintain and meet Buyer's Thermal Energy requirements within reasonable levels hereunder.

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5.7 Buyer's Rights During Interruption in Service. If at any time during this Agreement, Seller shall fail to deliver Buyer's Thermal Energy requirements and such failure is, in Buyer's reasonable judgment, attributable to Seller's failure to diligently pursue and implement appropriate corrective actions consistent with the facts and circumstances of the interruption, Buyer may at its option elect to cure Seller's non performance, without being in default of Buyer's obligations under this Agreement, by producing its own Thermal Energy or purchasing and accepting deliveries of Thermal Energy from any other source. In such event, Seller shall reimburse Buyer for the excess of any costs if incurred by Buyer to cover over and above Seller's rates and charges hereunder. 6. CHARGES AND PAYMENTS 6.1 Charges for Heating Service. For each Billing Month in which Buyer receives Thermal Energy from Seller, Buyer shall pay Seller (i) the applicable Thermal Energy Capacity Charges for Thermal Energy set forth in Schedule 6.1 attached hereto and made a part hereof; (ii) the applicable Thermal Energy Usage Charges for Thermal Energy set forth in Schedule 6.1 attached hereto and made a part hereof. 6.2 Adjustment in Thermal Energy Capacity Charges. In the event the Thermal Energy required by Buyer increases at any time within ten (10) years of the New Service Commencement Date as the result of any expansion to Buyer's Facilities, Seller shall, at Buyer's option exercisable within twelve (12) months of Buyer's commencement of any expansion, provide such additional Thermal Energy requirements to Buyer under the same rates, terms and conditions then applicable under this Agreement. 6.3 Capacity Charge Payments; No Set-Off. Unless excused by reason of Force Majeure, payment of the Thermal Energy Capacity Charges and Thermal Energy Usage Charges are conditioned on Seller's ability to deliver to Buyer at the Points of Delivery the full Thermal Energy requirements of Buyer under this Agreement, and subject to the provisions of this Agreement, shall not otherwise be subject to any setoff, counterclaim, abatement, or diminution. If Seller is unable to deliver to Buyer when required any quantity of Thermal Energy up to the levels of Contract Capacity specified in Schedule 6.1 the applicable Thermal Energy Capacity Charges shall be adjusted to on a pro rated basis to account for such deficiency. 6.4 Invoice and Payments. Within fifteen (15) days following the close of each Billing Month, Seller shall send Buyer a detailed invoice setting forth all charges for Thermal Energy delivered to Buyer by Seller during such calendar month. Payment, less any credits or rebates due to Buyer pursuant to this Agreement, will be due and payable within thirty (30) days of receipt by Buyer of the invoice from Seller, or the first business day following such day if such day is not a business day. Buyer shall have the right at reasonable hours to examine the testing records and meter reading charts of Seller to the extent reasonably necessary to verify the accuracy of any invoice. If any such examination reveals any error or inaccuracy in Seller's invoice, than proper adjustment and correction thereof shall be made as promptly as practicable thereafter.

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6.5 Delinquent Payments. Any invoice tendered for service rendered hereunder shall be deemed delinquent if not paid within thirty (30) days after becoming due and payable. The outstanding balance of any delinquent invoice shall accrue interest from the date due until paid, at the prime rate then in effect at (source) or comparable publication, plus one percent (1%) per annum. 7. METERING 7.1 Metering Equipment. Seller will furnish, install, and maintain for the Term of this Agreement without charge to Buyer all required meters, instruments, recording devices, and other related data logging equipment required to measure and record all charges payable by Buyer under this Agreement (collectively, the "Metering Equipment"). 7.2 Testing. All Metering Equipment will be tested and calibrated by Seller periodically in accordance with the manufacturer's instructions and good industry practice. Test and calibration records will be issued to the Buyer upon request. Further, Buyer may request additional meter tests at any time; provided, however, if a meter is subsequently found to have a variance for accuracy of less than three (3%) percent, Buyer will bear the reasonable cost of such testing. 7.3 Adjustment to Prior Invoices. If any test establishes that a meter is not accurately performing (i.e., in accordance with the manufacturer's variance specifications), Seller shall make an adjustment in Buyer's invoices, measured from the date it is determined by Seller or Buyer, in good faith, that the inaccuracy began. 8. SALE OF THERMAL ENERGY TO THIRD PARTIES 8.1 Resale of Thermal Energy by Buyer. Thermal Energy may be resold by Buyer to its tenants, provided such tenants occupy Buyer's Facilities and provided that such resale does not subject Seller to any new or additional governmental rules, regulations or laws, including but not limited to, tax laws or regulations by any regulatory authority. In case of any such resale, Buyer shall remain primarily liable to Seller for all costs and charges of Thermal Energy delivered to Buyer pursuant to this Agreement. 9. REPRESENTATIONS AND WARRANTIES 9.1 Seller Representations. Seller hereby represents and warrants that: (a) It is a corporation duly organized, validly existing and in good standing under the laws of the state of its incorporation and has all requisite corporate power and authority to enter into this Agreement, to perform its obligations hereunder and to consummate the transactions contemplated hereby; (b) Seller has or will obtain all necessary corporate approvals for the execution and delivery of this Agreement and the performance of its obligations hereunder; (c) This Agreement is a legal, valid and binding obligation of Seller enforceable against Seller in accordance with its terms, subject to the qualification, however, that the enforcement of the rights and remedies herein is subject to (i) bankruptcy and other similar laws of general application affecting rights and remedies of creditors and

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(ii)

the application of general principals of equity (regardless of whether considered in a proceeding in equity or at law);

(d) To the best knowledge of Seller, as of the date of execution hereof, no Governmental Approval (other than any Governmental Approvals which have been previously obtained or disclosed, in writing, to Buyer), is required to authorize, or is required in connection with the execution, delivery and performance of this Agreement or the performance of Seller's obligations hereunder which Seller has reason to believe that it will be unable to obtain in due course; and (e) Neither the execution nor delivery of this Agreement by Seller nor compliance by Seller with any of the terms and provisions hereof (i)

conflicts with, breaches or contravenes the provisions of the corporate charter or bylaws of Seller or any Contractual Obligation of Seller or

(ii) results in a condition or event that constitutes (or that, upon notice or lapse of time or both, would constitute) an event or default under any Contractual Obligation of the Seller. 9.2 Buyer Representations. Buyer hereby represents and warrants that: (a) It is a general partnership duly formed, validly and existing and in good standing under the laws of the state of its formation and has all requisite power and authority to enter into this Agreement, to perform its obligations hereunder and to consummate the transactions contemplated hereby. (b) The execution and delivery of this Agreement and the performance of its obligations hereunder have been duly authorized by all necessary partnership action; (c) This Agreement is a legal, valid and binding obligation of Buyer enforceable against Buyer in accordance with its terms, subject to the qualification, however, that the enforcement of the rights and remedies herein is subject to (i)bankruptcy and other similar laws of general application affecting rights and remedies of creditors and (ii)

application of general principals of equity (regardless of whether considered in a proceeding in equity or at law);

(d) To the best knowledge of Buyer, as of the date of execution hereof, no Governmental Approval (other than any Governmental Approvals which have been previously obtained or disclosed, in writing, to Seller) is required to authorize, or is required in connection with the execution, delivery and performance of this Agreement or the performance of Buyer's obligations hereunder which Buyer has reason to believe that it will be unable to obtain in due course. (e) Neither the execution and delivery of this Agreement by Buyer nor compliance by Buyer with any of the terms and provisions hereof

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(i)

conflicts with, breaches or contravenes the provisions of the Partnership Agreement of Buyer or any Contractual Obligation of Buyer or

(ii)

results in a condition or event that constitutes (or that, upon notice or lapse of time or both, would constitute) an event of default under any Contractual Obligation of the Buyer.

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10. INDEMNIFICATION/INSURANCE 10.1 Seller's Indemnity. Seller hereby agrees to defend, indemnify and hold harmless Buyer, its employees, officers, owners, directors and agents from and against any and all claims, demands, suits, actions, recoveries, judgments, and costs and expenses in connection therewith (including, without limitation, reasonable attorneys' fees and expenses), made, brought or obtained on account of the loss of life, property, or injury or damage to the person or property of any person or persons whomsoever, which loss of life or property, or injury or damage to persons or property, shall arise out of or in connection with Seller's or its employees' use, operation and maintenance of the Thermal Energy Production Facilities, or any act required of or omission by Seller, or any agent or employee of Seller under this Agreement or in connection therewith. 10.2 Buyer's Indemnity. Buyer hereby agrees to defend, indemnify and hold harmless Seller, its employees, officers, owners, directors and agents from and against any and all claims, demands, suits, actions, recoveries, judgments, and costs and expenses in connection therewith (including, without limitation, reasonable attorneys' fees and expenses), made, brought or obtained on account of the loss of life, property, or injury or damage to the person or property of any person or persons whomsoever, which loss of life or property, or injury or damage to persons or property, shall arise out of or in connection with Sellers or its employees' operation of Thermal Energy Consumption Facilities, or any act required of or omission by Buyer, or any agent or employee of Buyer, under this Agreement or in connection therewith. 10.3 Seller's Insurance. Commencing on the date of this Agreement and at all times thereafter throughout the Term of this Agreement, Seller shall maintain, at is sole cost and expense, comprehensive general public liability (including contractual) insurance, in an amount not less than (value Euro), with respect to any liability, losses, damages, expenses, claims, actions, judgments and settlement for any personal injury, death or property or economic loss occurring in Seller's Facilities or surrounding premises and arising out of or incident to the operation, maintenance, repair, construction, replacement or modification of Seller's Facilities. 10.4 Buyer's Insurance. Commencing on the date of this Agreement and at all times thereafter throughout the Term of this Agreement, Buyer shall maintain, at is sole cost and expense, comprehensive general public liability (including contractual) insurance, in an amount not less than (value Euro), with respect to any liability, losses, damages, expenses, claims, actions, judgments and settlement for any personal injury, death or property or economic loss occurring in Buyer's Facilities or surrounding premises and arising out of or incident to the operation, maintenance, repair, construction, replacement or modification of Buyer's Facilities. 10.5 Evidence of Insurance. Prior to commencing any construction or delivering any Thermal Energy under this Agreement, Seller and Buyer shall each furnish to the other one or more certificates of insurance evidencing the existence of the coverages set forth in Sections 10.3 and 10.4, respectively. Each certificate shall state that the insurance carrier will give Seller and Buyer at least thirty (30) days written notice of any cancellation or material change in the terms and conditions of such policy during the periods of coverage. 11. DEFAULT 11.1 Seller Default. Anyone of the following events shall constitute an "Event of Default" hereunder with respect to Seller: (a) In connection with itself or its assets, Seller shall File: Objekt:

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(i) (ii) (iii) (iv)

apply for or consent to the appointment of or taking of possession by a receiver or liquidator, make a general assignment for the benefit of creditors, file a petition for relief under the Federal Bankruptcy Code or similar statelaw, or take similar action to commence a proceeding for relief under any other law relating to the bankruptcy, insolvency, reorganization, or winding up of itself or the composition or adjustment of its debts;

(b) An action or proceeding shall be commenced, without the application or consent of Seller, in any court of competent jurisdiction for (i) the liquidation, reorganization, dissolution, or winding up of Seller of the composition or adjustment of its debts, (ii) the appointment of a trustee, receiver, liquidator or custodian of Seller or substantially of all its assets, or (iii)any similar relief under any law relating to Seller's bankruptcy or insolvency, provided such proceeding shall continue undismissed, or an order, judgment or decree approving or ordering anyof the foregoing shall be entered and continues unstayed for ninety (90) days; (c) Any representation or warranty made by Seller and contained in this Agreement shall prove to have been incorrect in any material respect when made; or (d) Seller shall fail to (i) timely make any payment required hereunder, or (ii) comply with any non-payment obligation under this Agreement and shall fail to cure or remedy such default within thirty (30) days following notice and written demand by Buyer to cure the same; provided, however, that Seller's failure to provide and deliver to Buyer the Thermal Energy required pursuant to this Agreement for any period of three (3) consecutive days, unless excused due to Force Majeure or actions or inactions of Buyer its agents representatives or employees, shall constitute an immediate Event of Default. 11.2 Buyer Default. Any one of the following events shall constitute an "Event of Default" hereunder with respect to Buyer. (a) In connection with itself or its assets, Buyer shall (i) apply for or consent to the appointment of or taking of possession by a receiver or liquidator, (ii) make a general assignment for the benefit of creditors, (iii) file a petition of relief under the Federal Bankruptcy Code or similar state law, or (iv) take similar action to commence a proceeding for relief under any other law relating to the bankruptcy, insolvency, reorganization, or winding up of itself or the composition or adjustment of its debts; (b) An action or proceeding shall be commenced, without the application or consent of Buyer, in any court of competent jurisdiction for (i) (ii) (iii)

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the liquidation, reorganization, dissolution, or winding up of the buyer or the composition or adjustment of its debts, the appointment of a trustee, receiver, liquidator or custodian of Buyer or substantially all of its assets, or any similar relief under any law relating to Buyer's bankruptcy or insolvency, provided such proceeding shall continue undismissed or order, judgment or decree approving or ordering any of the foregoing shall be entered and continue unstayed for ninety (90) days;

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(c) Any representation or warranty made by Buyer and contained in this Agreement shall prove to have been incorrect in any material respect when made by Buyer; or (d) Buyer shall fail to comply with any provision of this Agreement and shall fail to cure or remedy such default within thirty (30) days following notice and written demand by Seller to cure the same. 12. REMEDIES 12.1 Seller's Remedies. Upon an Event of Default by Buyer, Seller may declare the Buyer to be in material breach of this Agreement and (i) (ii) (iii)

suspend service until Buyer either cures the default or, in the case of nonpayment, provides Seller with such assurances and security as Seller may reasonably request, terminate this Agreement by written notice to Buyer, or seek such other relief to which Seller may be entitled at law or equity.

12.2 Buyer's Remedies. Upon an Event of Default by Seller, Buyer may (i)

to the extent commercially practicable, cure the default by Seller and obtain reimbursement (through direct cash payment, credit, offset or otherwise as Buyer may elect) from Seller for all costs and expenses incurred by Buyer in connection with such cure, (ii) terminate this Agreement by written notice to Seller, or (iii) seek whatever relief to which Buyer may be entitled at law or equity. 13. FORCE MAJEURE 13.1 Suspension of Performance. Neither Buyer nor Seller shall be in default in respect of any obligation under this Agreement if the party is unable to perform its obligation by reason of an event of Force Majeure, provided (i) (ii)

that the suspension of performance shall be commensurate with the nature and duration of the event of Force Majeure and the non-performing party is using its best efforts to restore its ability to perform, that for so long as an event of Force Majeure relieves Seller of its obligation to deliver Thermal Energy to Buyer as required under this Agreement, Buyer may elect, without being in default of its obligations hereunder, to produce its own Thermal Energy or to purchase and accept deliveries of Thermal Energy from any other source.

13.2 Termination by Reason of Force Majeure. Notwithstanding anything in this Agreement contained to the contrary, if a party's performance is suspended for more than one (1) year, the other party may terminate this Agreement upon thirty (30) days written notice to the other, provided (with respect to an event of Force Majeure by Seller) that upon such termination Buyer is able to generate its own Thermal Energy or to obtain Thermal Energy from a third party. 13.3 Force Majeure Defined. Force Majeure shall mean any event that prevents or delays a party from performing in whole or in part any obligation arising under this Agreement and neither was within the reasonable control of the non-performing party nor could have been prevented by reasonable actions taken by the non-performing party, including, without limitation, an act of God, explosion, fire, lightening, earthquake, storm, civil disturbance, strike, lock-out, unavailability of fuel or power, changes in law, orders of governmental authorities, and equipment failures that are not due to the negligence of the nonperforming party.

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14. TERMINATION This Agreement shall terminate at the end of the Term and may otherwise be sooner terminated only: (i) by Buyer upon the occurrence of an Event of Default by Seller, (ii) by Seller upon the occurrence of an Event of Default by Buyer, (iii) by either party in accordance with the provisions of Section 13.2 of this Agreement, or (iv)by Buyer in the event of any increase in the cost of Thermal Energy hereunder by more than ten (10%) percent and actually paid or to be paid by Buyer resulting solely from the assertion of rate jurisdiction and imposition of any law or regulation respecting rates, whether now existing or hereafter enacted, or directly resulting form the administration or interpretation of any such law or regulation respecting rate regulation by any Governmental Authority. 15. MISCELLANEOUS 15.1 Assignment. Neither Party shall assign this Agreement without first having obtained the written consent of the other party, provided, however, that either party may assign its rights and delegate its duties hereunder without first obtaining the other party's consent to any subsidiary or affiliated entity controlled by the assigning party, on the condition that the assignee agrees in writing to assume all of the obligations of the assigning party hereunder, further provided, however, that either party may assign, pledge or mortgage this Agreement as security for the obligations or indebtedness of such party, including Seller's or Buyerâ&#x20AC;&#x2122;s financing of the District Thermal Energy Facilities, without the approval of the other party. 15.2 Notice. All notices hereunder shall be sufficient if sent by registered or certified mail postage prepaid, addressed, if to Seller: (address) Attention: President; and if to Buyer: (address), Attention: President and Chief Operating Officer, provided that either Seller or Buyer may by like notice designate any further or different address or addresses or person to which notices shall be sent. 15.3 Limitation of Liability. Except in the case of willful misconduct or gross negligence, neither Seller nor Buyer, nor their respective officers, officials, partners, agents, employees, subsidiaries, parents or affiliates shall be liable to the other party, or their respective officers, officials, directors, partners, agents, employees, subsidiaries, parents or affiliates for claims for incidental, special, direct or consequential damages of any nature, including lost profits and opportunity costs in connection with or resulting from performance or non-performance of their respective obligations under or in connection with this Agreement. Nothing in this Section 15.3, however, shall limit either party's rights or remedies to recover any direct damages for a breach of this Agreement. 15.4 Confidentiality. Each of the parties agrees to hold in confidence any information supplied to it by the other and designated in writing as confidential unless the recipient is required to disclose the information as a matter of law, in which case, the recipient shall give the other party prior written notice. 15.5 Counterparts. This Agreement may be executed in separate and several counterparts, each of which shall be deemed an original and all of which shall constitute one and the same instrument. 15.6 Severability. Any provision hereof that is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction and to the fullest extent permitted by applicable law, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof and without affecting the validity or enforceability of any provision in any other jurisdiction.

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15.7 Governing Law. This Agreement shall be construed in accordance with and shall be enforceable under the laws of the (destination). 15.8 Entire Agreement. The Agreement constitutes the entire agreement between the Parties with respect to the matters contained herein and all prior agreements with respect thereto are superseded hereby. No amendment or modification hereof shall be binding unless duly executed by both Parties.

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IN WITNESS WHEREOF, the undersigned have caused this Agreement to be duly executed and delivered as of the date and day first above written. (Seller) By: /s/ ---------------------------------Name: Title: (Buyer) By: /s/ ---------------------------------Name: Title:

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SCHEDULE 1(e) POINT OF DELIVERY Point of delivery is defined as the point of exit from the heating station located in Seller's Facilities. Metering of thermal energy usage will occur within the heating station in Seller's Facilities.

SCHEDULE 1(f) POINT OF RETURN Point of return is defined as the point of entry into the heating station located in Seller's Facilities.

SCHEDULE 1(h) CONTRACT CAPACITIES AND THERMAL ENERGY SPECIFICATIONS (To Be Completed)

SCHEDULE 1(j) THERMAL ENERGY PRODUCTION FACILITIES The "Thermal Energy Production Facilities" are defined on the following Piping Schematic. Thermal Energy Production Facilities are located within Seller's Facilities. All associated electrical and controls equipment required for the operation of the above-mentioned equipment is also included. (To Be Completed)

SCHEDULE 1(k) THERMAL ENERGY CONSUMPTION FACILITIES The "Thermal Energy Consumption Facilities" are defined on the following Piping Schematic. Thermal Energy Consumption Facilities are located within Buyerâ&#x20AC;&#x2122;s Facilities except the part of the connecting pipelines. All associated electrical and controls equipment required for the operation of the above-mentioned equipment is also included. (To Be Completed)

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SCHEDULE 6.1 Thermal Energy Capacity Charges, Thermal Energy Usage Charges I. CHARGES FOR HEATING SERVICE The charges for heating service in any billing month shall equal the sum of the Monthly Capacity Charges and Monthly Usage Charges. A. MONTHLY CAPACITY CHARGES The Monthly Heat Capacity Charge shall equal the product of the Heat Contract Capacity times the sum of the Heat Capital Capacity Rate and the Heat O&M Capacity Rate, i.e., MSCC = SCC x (SCCR + SOMCR) where, MSCC = Monthly Heat Capacity Charge (Euro) SCC = Heat Contract Capacity (MW), and SCCR = Heat Capital Capacity Rate (Euro per MW) SOMCR = Heat O&M Capacity Rate (Euro per MW) The initial Heat Capital Capacity Rate shall equal (value Euro) per MW and the initial Steam O&M Capacity Rate shall equal (value Euro) per MW. These rates shall be adjusted annually commencing on (date). The new rates shall be determined by multiplying the old rates times the fraction whose numerator shall equal the latest available "Consumer Price Index" as published by (source) and whose denominator shall equal the same index as of twelve months immediately preceding, provided that with respect to the Heat Capital Capacity Rate, such fraction shall be no less than (value for example 1.03) nor more than (value for example 1.04). ---------Refer to Schedule 1(h) for the Heat Contract Capacities.

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B. MONTHLY USAGE CHARGE The Monthly Heat Usage Charge shall equal the product of the Monthly Heat Energy Deliveries times the quantity determined by adding the Monthly Heat Base Usage Rate and the Monthly Heat Energy Usage Rate, i.e., MSUC = MSED x ( MSBUR + MSEUR ) where, MSUC = Monthly Heat Usage Charge (Euro) MSED = Monthly Heat Energy Deliveries (MWh) MSBUR = Monthly Heat Base Usage Rate (Euro/MWh), and MSEUR = Monthly Heat Energy Usage Rate (Euro/MWh) The initial Monthly Base Usage Charge shall equal (value) per MWh. This rate shall be adjusted annually commencing on (value). The new rates shall be determined by multiplying the old rate times the fraction whose numerator shall equal the latest available "Consumer Price Index," as published by (source) and whose denominator shall equal the same index as of twelve months immediately preceding. The initial Monthly Energy Usage Charge shall equal (value) per MWh. This charge shall be adjusted quarterly commencing on (date). The new rate shall be determined by multiplying the old rate times the fraction whose numerator shall equal the latest available Coal Price Index, as published by (source), and whose denominator shall equal the same index as of the immediately preceding quarter.

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3.2

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CONCESSION TENDER

Task5-par3-rev1.doc -JK KOSOVO COMBINED HEAT AND POWER

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PRISTINA town LOCAL GOVERNMENT

announces:

OPEN TENDER ON SUPPLY OF THERMAL ENERGY IN PRISTINA AND THE ONE FOR RUNNING OF THE PRESENT HEATING SYSTEM

Pristina, (Date)

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In accordance with Status of Pristina town, and on the base of (other relevant legislation) by mutual consent and on behalf of the individual owners of energetic systems, which are situated on territory of Pristina town (if aplicable), of the local government of Pristina, hereby announces the following

OPEN TENDER CONCERNING TO THE CONCESSION AWARDING FOR SUPPLYING OF HEATING POWER (PRODUCING AND SUPPLYING OF STEAM AND HOT WATER) ON TERRITORY OF PRISTINA AND CONCERNING TO THE CONCESSION AWARDING FOR THE PRESENT HEATING SYSTEM

PRESENT CONDITIONS IN HEATING SYSTEM IN PRISTINA Introduction. Within territory of Pristina there are a few local separated and partial heating mini-systems, energetic systems in municipal, business and other objects. These separated local systems are not connected together organically. These systems are the following heating and energetic ones: ➭ Existing district heating system, ➭ Individual boiler houses, ➭ Future expansion of district heating system The above-mentioned current heating (energetic) systems present existing distric heating system with boiler house and theand some inividual boiler houses. Detailed qualification and description of these systems there are found in the General and Particular Conditions of the present Competition Documentation, and we shall call them by common name “Heating System” (hereafter referred to as Heating System). All parts of heating system are separately listed in the tender documentation in the event that there is need for it, or there is necessary to emphasise, when we mention them as a “Separate Thermal System” or when – as a “Separate Energetic System”. So Pristina town (hereafter referred to as Town, or as announces a Pristina town, or as Grantor of Concession) – by means of the present invitation to tender – hereby calls for open tender (hereafter referred to as Tender) for concession on supply of heating energy in territory of Pristina town. At the same time and by means of the present tender, Pristina town chooses for itself a qualitative and capable Operator, who – by means of a concession agreement (hereafter referred to as Concession Agreement) – could take the responsibility for supply with heating energy (hereafter referred to as Concessionaire), and File: Objekt:

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namely, with responsibility for Heating System of Pristina town as a whole, which is a subject of the Concession awarding. Concessionaire undertakes to run and correspondingly to develop heating system in a good way and for a long time, to provide qualitative and economically acceptable heating services

Classification and description of the present heating system. Subject of the concession awarding By means of the present tender the Grantor of Concession initiates the process of awarding of the Heating Supply Concession (hot water producing and supplying), as well as initiates the process of awarding of the Concession for running of the current Heating System. Pristina town is awarding the town concession along the whole territory of the town on the condition that Pristina asks from all participants of the tender to grant concrete detailed offer on acceptance of Heating System, which should contain the followings: (a)

in the urban residential sector of the town: The subject of the Concession are ( Description)

(b)

Municipal and county public and other objects in heating sector: The subject of the Concession are the trunk pipelines as well as the heating substations.

In accordance with the acquired concession, concessionaire has exclusive right and possibility to extend the Operator’s activity to other heating systems in Pristina in the future, which are not mentioned in the present tender documentation and which are independent from Heating System described and defined here.

Part 2. DESCRIPTION OF THE HEATING SYSTEM. DEFINITION OF THE SUBJECT OF THE CONCESSION. FIELD OF RESPONSIBILITY OF THE CONCESSIONAIRE. In process of competition procedure, every Tenderer on his own responsibility makes on the spot his decision in accordance with qualification of the whole Heating System and data at his disposal as well as in accordance with examination of the all parts of the separate heating- or energetic systems. On the basis of this, every Tenderer may forecast his own investments, which have the purpose to improve the energetic efficiency, accessibility and reliability of the given heating system, which are defined by the Concessionaire within the present field of responsibility so, how it is exactly described in what follows in the present Particular Conditions for every part of the System. However every Tenderer is obliged to carry out the investments in heat transmission pipeline TPP Kosovo B – Pristina, which will enable the use of heat produced in Power Plant Kosovo B. Tenderer is also obliged to use heat produced in Power Plant Kosovo B as primary source of heat used in district heating system in Pristina. It is follows from the conditions of the tender, that the Concessionaire’s responsibilities concerned of his field of responsibilities and defined by the present Particular Conditions will be passed by Concession Agreement concluded between the Granter of the Concession and the selected Concessionaire

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PART 3. CONTENT OF APPLICATION AND METHOD OF OFFER In the course of the tender procedure, each Tenderer – on the basis of the available data and documents and in accordance with on-the-spot investigation of the present condition of this part of Heating system and on his own responsibility – should perform his own judgement of state of the heating system and its quality, characteristics, features, energetic efficiency, reliability and other indicators, and on account of all the above, tenderer should take a stand on connection with the present state of the system. Tenderer is obliged to offer his unit price for a services for all parts of the Heating System, broken down into figures for the heating bought at PP Kosovo B, his own heat production and for heating energy sales, for domestic hot-water and so on, in dependence of specific kind of services demanded by the tender. For the purpose of we would have opportunity for evaluating and comparing of the offers of all tenderers, it is necessary to indicate the above prices for services in the “binomial” form of price for each separate part of thermal system, it means that the above price should be consist of two parts: the first part – the part of the variable costs that descends from the system control procedure but are variable depending on quantity of power, and the second part – the part of the permanent costs of the Concessionaire that as well descends from the system control procedure, but this part of the costs is permanent for every year and are independent on quantity of expended energy Fundamentally it means that the price for the energetic service should be shown as follows:

R1 – Variable part of the service’s price (Power S1): This service has a variable price depending on the used quantity of the power basic material during the billing period of time, and which consists of, first of all, the costs of fuel, electric power, basic material used for chemical pre-treatment of water, municipal water or other material used for heating production, which were used for an accounting period. In the case if the Concessionaire uses the heating power descending from other producer of heating power, as it is valid in case of the providing of heating power from the company TPP Kosovo B, then the costs of provided heating power of such kind must be accounted just as in the case of purchase of other power basic materials. Within duration of the agreement the Concessionaire is obliged to provide the best power conditions. The Operator is obliged to modernise the present system with the purpose of providing of the more economic production, reorganisation and energy consumption, which should be mutually advantageous both for end- customers and for Concessionaire. Within the framework of the offer each Concessionaire should describe and plan in detail, how he is going to organise this service. The Operator as a future Concessionaire is expected to describe unequivocally and exactly, how, in what way, and in accordance with which guiding principle he wants to measure the quantity of expended fuel, electric power or other energy sources or applications, municipal water, as well as produced heating energy, quantity of domestic hot-water, and therewith, in what manner he used to bill the end-customers Tenderer is obliged in his offer to give a very detailed explanation of how and in what way he intends to organise the billing for the produced quantities of heating power during the initial stage of action of the agreement in conditions of absence of the measuring equipment. For the mentioned period of time, when the tenderer intends billing for provided quantities of heating power in accordance with reading of the measuring instrument, the tenderer is obliged to give a very detailed explanation on his measuring plan according to each part of the heating system and according to every single energy source.

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R2 – Permanent part of the service’s price Simultaneously with the variable part R1, it is necessary to present this permanent part R2 of the service, which will be billed towards the end-customers monthly (EUR/month), in ratio 1/12 of debt of current year, or to simplify the above, for unit of measurement (EUR/unit/month), however there is not any connection with quantity of the provided energy sources towards the end-customer Those services belongs here that are independent on quantity of the delivered power during an agreed period, and namely: - service – «S2 Heating system maintenance and control» - service – «S3 Total warranty for functioning of system of thermal production” - service – «S4 Investments in the heating system» Within the framework of the service, the Operator is obliged to: −

provide – in a workmanlike manner – control, operation and supplying with materials necessary for jobbing and current maintenance of the whole heating system trusted to him, and to pay work of the operating staff

−

provide economical and effective managing in the heating system, at the same time to accomplish all necessary prevent and operating maintenance with providing of the necessary materials and the spare parts in interests of the best satisfaction of needs of the end-customer.

−

make investments in the heating system

The above kinds of work are billed towards the end-customers in the settled period monthly, and the ones consist of followings in detail: SERVICE S2 – HEATING SYSTEM MAINTENANCE AND CONTROL: This service includes all control service of the heating system, as well as all jobbing and current maintenance of the heating system, which a subjects of the present tender. Tenderer is obliged to present an exact description of this service, and namely, a separate description of made work and another separate description with listing the materials needed for jobbing and current maintenance. Payment due for these services is organised and controlled only by the Concessionaire. These kinds of servicing work are billed monthly in the settled period towards the end-customers, in form of flat-rate debt during the billing period. These services concerns the whole heating system, and namely: the primary equipment for producing and distributing, the secondary equipment for liquid distributing, the secondary heating equipment, the ventilation, the conditioning, the secondary electric equipment, lighting equipment, electric cable configuration and equipment for domestic hot-water, which were determined in the present tender documentation. Tenderer offers all this, as well the Granter of concession and the endcustomers altogether approve, and hereby it is becomes constituent parts of the concession agreement Tenderer is obliged to offer the best possible calculation for this part of permanent costs, his principles for accounting and for billing, which should be shown in adequate units of measure, in understandable, acceptable and clearly arranged way.

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SERVICE S3 – TOTAL WARRANTY FOR FUNCTIONING OF SYSTEM OF THERMAL PRODUCTION This service includes the total maintenance and the total warranty of proper operating and maintenance for functioning of system of thermal production system in accordance with modernisation program for the energetic system. These services concerns the production system described in above parts, and the Tenderer is obliged to describe them precisely in his own offer. The tender is obliged to separate precisely the production network under force of the total warranty from other parts of the distributing system that are not covered by this total warranty. In like manner, in his offer, within the total warranty’s frameworks, the Tenderer is obliged to present a preliminary description of his modernisation investments planned for producing system in accordance with content of the concession agreement. The concessionaire will be responsible for organisation and control of the investments and for financing. These kinds of work are billed towards the end-customers in the settled period monthly, in form of flat-rate debt during the billing period. Tenderer is obliged to offer the best mode for calculation, accounting and billing these costs. The total warranty does not concern to the liquid distributing equipment, to the secondary equipment for heating and conditioning, lighting equipment, electric cable configuration and secondary equipment for domestic hot-water, in accordance with the present Particular conditions. The total warranty does not concern to extension kinds of work, or to the new equipment that falls out of the objective frameworks. These kinds of work serve for provision of possible new needs (extension of the Heating System) or for provision of new business areas (new services). These applications remains in frameworks of responsibility of the Grantor of the concession and/or end-users, however they are entitled to ask help or consult with the concessionaire as well with a outside executor about their offers in connection with these executions. In the case if the Grantor of concession will enter into the agreement with the Concessionaire in connection with these executions, then those ones will become subjects of a new agreement that will be concluded according to conditions offered by the Tenderer and accepted by the Grantor of the concession SERVICE S4 – INVESTMENTS IN THE HEATING SYSTEM General investments This service covers the financing and the paying by instalments for acquisition of new equipment for the purpose of optimisation and development of the networks and the equipment with the object of development of energetic efficiency, reliability and accessibility of the present heating system, in concerning to the kinds of work that are not covered by the total warranty. These services concern the Heating system as a whole, so the producing system too as a distributing part of the system. This service means development of the whole system or only modernisation of a part of the system, for the purpose of the most effective satisfaction of the true needs of the end-customers, from the point of view of optimisation of energetic costs and optimisation of development of obsolete parts of the system. These kinds of work will be accomplished on the account of the Concessionaire.

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Tenderer is obliged to offer an investment program in the field of responsibility within providing area with the object of modernisation of the system or/and of development of the energetic- and application efficiency. This program should contain a description of the investments. The Concessionaire finances and accomplishes these basic kinds of work connected to these investment, and so this service must be paid back completely till expiration of the concession agreement. The Concessionaire enjoys absolute freedom in his choice of technical solutions and in election of kinds of investments during duration of the concession agreement. The Concessionaire may plan and project new investments in the energetic system with the object of steady raising of the budgeting and energetic efficiency as well as accessibility of the Heating System. The Concessionaire organises, finances and accomplishes all these investments , and so this service must be paid back completely at the latest till expiration of the concession agreement. All investment accomplished within duration of the concession agreement in the frameworks of the part S4 will transfer to the Grantor of the concession (or if so was stipulated in the agreement â&#x20AC;&#x201C; then in the property of the end-customers) after expiration of the concession agreement (in the end of the duration of the concession agreement); the payment for any possible unpaid book keeping values may be in prospect for those investments, which were accomplished in the last year of the concession agreement, and so their amortisation does not finished totally yet and if this fact may be proved by relevant book-keeping. All those kinds of work that must be made in the future after signing of the present concession agreement, as a result of possible modifying of the legal rules within duration of the agreement, in connection with flue-gas emanation, safety, energetic fluids, selection or insertion of materials, replacement of fuel, change of parameters (pressure, tension, heating value, air-, soil-, or waterpollution and so on) will remain in field of responsibility and charge of the end-customers or the Grantor of concession. The concessionaire is obliged to comply all prescription, will inform the Grantor of concession or the end-customers on possible modifications in the prescriptions and will offer necessary solutions for doing. With the purpose of adaptation to such modifications in the prescriptions, in necessary cases the Grantor of concession and the end-customers may ask additional offers from any third persons, and then will compare these conditions to the offer of the concessionaire Investment in heat transmission pipeline TPP Kosovo B- Pristina Tenderer is obliged to offer an investment program in the investment in heat transmission pipeline TPP Kosovo B â&#x20AC;&#x201C; Pristina and connecting via new heating station to the district heating system.. This program should contain a description of the investments and financing of the project.

Method of offer Summing up a required method of offer described in this chapter, it is clear, that the concessionaire gets right in offering of the prices for all the power services provided by him, with a habitual method of accounting for such services, on the basis of his own knowledge and experience as Operator, according to accepted international professional standards and rules, and namely the prices for following services:

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➭ hot water for heating ➭ customer (domestic) hot water ➭ other (possible) Tenderer offers the prices, where the offering principle is well arranged and comprehensible, so, that the represented prices should show all structural elements contained the permanent and variable part of the price, the billing and the succession too. Each Tenderer is obliged to describe in details his own offering principle, to recast it for every energetic service, and to make it well arranged, comprehensible and acceptable both for the Grantor of concession and for end-customer. Each tenderer is obliged in his offer to prepare and to enclose the submission in table form for the prices R1 and R2 for each medium (and for each service), and the submissions for every element of the system separately that is a part of the subject of the concession, as well as to offer his comprehensible equation (formula) for modification in prices during the contracted period. Content and description of the power producing (transforming) system and equipment as well as of the power distributing system, which are subjects of the tender and the concession awarding, are in the above chapter of the Particular Conditions. Tenderer is obliged, on the basis of his experience in work of such kind, on the one part, to group the producing equipment and the primary distributing equipment in the best way, as well as, on the other part, to group the secondary distributing and applying equipment, and to offer the corresponding services’ prices for these both groups of networks, for Grantor of concession and for end-customer, in well arranged and comprehensible way. As well the offerer is obliged to make certain about completeness and state of the individual parts of the Heating System with the help of examination in the spot and by revision of technical documentation, he should suggest in his offer the appropriate communal-technical decisions inside frameworks of the above determined Heating System.

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PART 4. PLAN OF MEASUREMENT AND PRINCIPAL OF BILLING All transferred fuel and transformed energy that is a subject of the agreement in correspondent part of the Heating system will be measured with appropriate means, certified, sealed and accepted from the part of the a establishment concerned and acknowledged by Grantor of Concession or by the end-customers, but at the expense of Concessionaire The monthly reading values from all measuring tools should be handing over the end-customers once a month, except for the cases of flat-rate billing, that is defined in the plan of variable measurement and that is fixed in the offers of all tenderers and in the Concession agreement. On the basis of his own experience and Operator’s knowledge, Concessionaire should submit his own plan of measurements which makes possible measurements, readings and billings for all power fluids within the framework of services provided by the concessionaire (Plan of delivery and measurement). As well Concessionaire should suggest separately a such plan of measurement that makes possible to share the consumption between the concessionaire and an other eventual consumer, if the one exists in the area of responsibility of the concessionaire. (Plan of share measurement). The Plan of delivery and measurement should show in unequivocal and express way the division into application levels and application groups of the energetic networks (pipelines). The mentioned plans of measurement are obligatory parts of the offer, and necessarily must contain the schemes of all appropriate energetic systems, with indication of exact location of all supply measuring tools and with indication of exact place of share of energetic source materials’ applications (Scheme of points of measurement). These plans of measurements may be variable (develop) within the duration of the concession agreement depending on the offered investment project, the eventual modifications should be accepted by Grantor of the concession and then after the acceptance they should be enclosed to the agreement. The concessionaire have at his disposal four (4) months after the signing of the concession agreement for completion of installation of all measuring equipment in accordance with his own plan of delivery and measurement and in accordance with his plan of share measurement. Each Tenderer in his offer is obliged to develop in details and the to suggest to Grantor of concession his plan of billing concerning to the above 4 months’ period from the signing of the concession agreement till the completion of installation of all measuring tools. In his offer the offerer should describe in details the desired principles and modes of billing within this period. Each Tenderer is obliged to describe with full particulars in his offer the unit prices for all energy sources that are subjects of supply for the end-customers, and namely for each category of all end-customers separately, in accordance with principles of measured and used quantities and that are billed in flat-rate prices for the first 4 months of content of the concession agreement. It goes without saying that the unit prices, offered to various groups of the end-customers, will differ from each other, and the ones should not be identical, as the technical performance and the input parameters of used power systems for the different groups of end-customers are not identical, this implies an opportunity of various accounting of unit prices for the various end-customers also. In this situation it should elaborate and offer the price of the service that is a subject of the offer, in well arranged and comprehensible way, and first of all before application in the real world in the present situation.

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Depending on what part of thermal system is the case in point, and what energetic services were offered for this part of the Heating System , the Tenderer presents unit prices expressed in the appropriate units of measurement. It is responsibility of the Tenderer, on the basis of regulations of the present Particular conditions and on account of his own experience in providing services of this kind in accordance with his own capacity, to make his decision on subject of selection of the most useful and effective mode for exposition of the billed quantities and unit prices.

PART 5. SERVICE PRICE-CURRENT Immediately after the concession agreement concluding, the Concessionaire takes over the whole Heating System, in the present state, in accordance with the currant accounting principles in the current services. It means that in the parts of the Heating system, where already any billing for energetic services was in existence, there the Concessionaire will proceed the energetic services towards the end-customers according to the former billing principles, but with the prices in the “binomial” form offered by him and accepted by Grantor of concession. Tenderer offers particular prices relating to the billing services connected to particular conditions in the case of absence of measuring tools, as well as quotes a price for billing services connected to particular conditions in the case of presence of measuring tools, but under the stipulation that these measuring tools were stipulated in accordance with the installed measuring and billing plan presented in the Part 4.

Object heating During billing in accordance with the services’ price it is necessary explicitly to separate two following cases: 1. The case, if it takes place the acceptance of that part of the Heating system, which was in possession of billing of any definite kind towards the end-customers in the moment of the acceptance. The following belongs to this particular case: - existing district heating system 2. The case, if it takes place the acceptance of that part of the Heating system, which possessed with “rental” connection towards the end-customers in the moment of the acceptance, so there do not exist any billing before the acceptance by Concession agreement. The following belongs to this particular case: - individual boiler houses

We would like particularly to note, that the Concessionaire should arrange mutual relations with the company Power Plant Kosovo B. The prices, the shifts of prices and all elements of terms of supply of thermal energy from the company Power Plant Kosovo B to the Tenderer are indicated in Appendix --- to the Common Conditions, and the tenderer is obliged take these conditions into his consideration in his price offer calculated for end-customers.

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The concessionaire may freely find any other solution for providing of these consumers with heating energy, however it should be a profitable, economic and safe solution, or in the case if the concessionaire does not come to an arrangement with the present providers.

Consumer domestic hot water (SHW) (Optional) The concessionaire makes his suggestion for the selling unit price of the domestic hot-water to the end-customers consuming the domestic hot-water (SHW), to each end-customer separately, in accordance with the Plan of delivery and measurement, on the basis of real consumption provided to the end-customers and measured separately with one or more measuring tools installed under control of the concessionaire, and the price should be expressed in units of EUR per cubic meter. In the course of year all these prices may be corrected many times, depending on the arisen costs and according to the correcting equation, which as well should be offered in the offer of the tenderer. The equation should be indicated, and each basic principle or the one for alterations should be explained. The provided domestic hot-water should be billed once a month.

Concessionaires’ services in excess of their obligations Any other interference in the work, which makes necessary of attraction of an additional staff, and which falls out of frameworks of the concessionaire responsibility (i.e. does not correspond to the above described services) is a subject of additional billing. The Tenderer in his offer should process all cases of such kind that could happen in this sector in the future, and he should develop an appropriate mode of billing for the case as well as a mode of the price changing. However, for the purpose of the Grantor of concession must be ready to provide the opportunity to cover the costs, which do not concern to sphere of the responsibility of the concessionaire, with the object to ensure reimbursement for the following accounting period, at the end of the current period the concessionaire as the service provider should present his report and estimations about that work quality that should be executed in the following accounting period.

Services billing and paying-off Concessionaire’s services billing and paying-off The billing of the concessionaire’s services towards the end-customers should take place once a month, in an exactly determined and contracted day, the billed costs are concerned the previous month. The bill should be issued in accordance with the Concession agreement, settlement of the bill occurs within 30 days. An eventual price correction will be accounted and billed separately, for each month separately. End- customers’ lateness in fulfilment of their responsibilities If an end-customer does not settle his obligation in the time to contracted payment date, then the Concessionaire is entitled to count up the interest for delay foreseen by law for a day of delinquency. If the end-customer does not settle his obligation in the future too, then the Concessionaire is entitled to attempt to enforce this claim in other legal way.

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Otherwise, if the concessionaire regards it necessary and if such kind of delay in payment lasts so long, that threatens to the financial state of the concessionaire because of impossibility of fulfilment of his own obligations in relation to his own suppliers, and in particular in relation to the state, then the concessionaire has the right to suspend performance of contractual services in relation to that end-customer that does not execute his payment obligations, without acceptance of the responsibility for possible consequences of the step. This decision is accepted by the concessionaire on his own.

PART 6.

FORMULATED COMFORT CONDITIONS

The concessionaire in accordance with his offer is obliged to reach and keep prescribed conditions (temperature and micro-climate in the premises, where it is necessary in, quality of the domestic hotwater and so on), according to preliminarily provided and contracted values, as follows in below, or according to Kosovo regulations. In the following there are the quality standards (i.e. comfort conditions) for energy provided by the concessionaire. The concessionaire is obliged to run and to control the system entrusted to him, that the system should meet the requirements of standards, or indicated technological values, in relation to quality of the heating of the premises or prescriptions for the providing domestic hot water..

POWER − Maximum initial temperature 76°C − Minimum temperature depend on ambient temperature − Operating sy stem of heating 75/55°C Availability with 24 h of 24 h and 7 days of 7 days from September 01 till April 31, or in the case, when on three (3) consecutive days at 6.00 a.m. was registered the temperature less than +13°C − − − −

Production minimum temperature Contracted minimum temperature Production maximu m temperature Once per day in the tank to decrease legionella growth

45°C 50°C 55°C 60 °C

Availability with 24 h of 24 h and 7 days of 7 days all the year round, except for standby attended time for technical maintenance provided for whole year

Guaranteed values connected to operation of the heating and conditioning systems are set depending on the specified values of internal climatic conditions given on the part of the end user. These conditions are the followings: WINTER-TIME design ambient temperature:

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Room-temperatures: Flats: On the stipulation that the capacity is sufficient the secondary equipment, that are out of the field of responsibility of the concessionaire, meets the prescribed requirements, and if other regulations do not prescribe anything else, the concessionaire should guarantee the following parameters in the flats: Day’s normal mode of operation ➭ Living room ➭ Bedrooms – children ➭ Bathroom

+20°C with tolerance ±2°C +20°C with tolerance ±2°C +22°C with tolerance ±2°C

Night’s reduced mode of operation: ➭ Living room: ➭ Bedrooms – children ➭ Bathroom

+16°C with tolerance ±2°C +16°C with tolerance ±2°C +16°C with tolerance ±2°C

Hospital premises: ( To be defined) Business premises and others: ( To be defined)

PART 7.

THE ORDER OF USE OF THE PREMISES

Dwelling sector −

flats

24/24 h

7/7 days

Availability from September 01 till April 31, or in the case, when on three (3) consecutive days at 6.00 a.m. was registered the external temperature less than + 3°C. In this season you should to differ the normal day's mode of operation and night's mode of operation, which were described in the above.

Other premises (schools, hospitals etc.) Availability from September 01 till April 31, or in the case, when on three (3) consecutive days at 6.00 a.m. was registered the external temperature less than + 13°C.

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PART 8. THE ORDERS

PARTICIPANTS

OBLIGATIONS

AND

GENERAL

Allowances and modes of payment Concession refunding towards the Grantor of concession As refunding for use of the Heating System as well as for the exclusive right of management of Heating System places on the territory of town Pristina, the concessionaire pays allowance for the benefit of the Grantor of concession. The concessionaire pays the concession allowance in accordance with the Concession agreement, the amount of the allowance is indicated in the offer of the Tenderer and is a constituent part of the concession agreement. This concession allowance should be paid by the concessionaire once in quarter year for 3 months, in the beginning of the quarter. The amount of allowance is determined by reckoning, and namely - in accordance with the equation suggested in the offer of the concessionaire. The size of the concession allowance may be corrected once a year, in accordance with general temporary requirements, with growth of the cost-of-living index and other basic changes, according to the correction equation suggested in the offer of the concessionaire. The equation should be indicated and all basic or variable governing principles should be explained. Concession allowance towards the Concessionaire as a result of a new connection Concessionaire is authorised on flat-rate allowance after each new heating supply connection created within the area of his responsibility in town. The amount of this allowance is suggested by the tenderer in his offer and comes into effect after signing of the concession agreement, and the payment of the concession allowance becomes obligatory after each new connection. Concessionaire may spend the paid-in amount on modernisation of the energetic capacities for the purpose of perspective development of the town. The amount of allowance within duration of the agreement is determined by reckoning, in accordance with the equation suggested in the offer of the concessionaire. The size of the connection allowance may be corrected once a year, in accordance with general temporary requirements and other changes, according to the correction equation suggested in the offer of the concessionaire. The equation should be indicated and all basic or variable governing principles should be explained In accordance with the signed concession agreement, every new end-customer pays the connection allowance at the rate determined in the agreement, in the moment, when he makes his application for connection of his facilities to the Heating system of the concessionaire, in accordance with the procedure that should be described in the offer of each offerer and that is a constituent part of the concession agreement

Additional obligations of concessionaires Concessionaire as a provider of the service provides the services according to the obligation stated in the present tender documentation contained the General and Particular Conditions adjusted with regulations of the Concession agreement. It is natural, that concessionaire should be acquainted exceedingly with all networks that subjects of the Concession agreement. In accordance with the above, Concessionaire should set straight all eventual problems, especially in pursuance of the proper quality of materials or services. Concessionaire as a provider of the service faces and makes arrangements against the problems and the situations in case of potential dangers in connection of the good operation of the system trusted to him, as File: Objekt:

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well as he provides managing and maintenance, repair and control, i.e. he should respect his responsibilities relating the public service. In any case and irrespective of what there is the question, Grantor of the Concession and end-customer should be informed quickly and in good time on the forthcoming or compelled measures and work in the system. Concessionaire as a provider of the service should be connected to external communication network that provides possibility of external communication in connection with services provided by him.

Reports on the present situation in the heating system Concessionaire is obliged to make a report on the present state of the Heating system trusted to him once a year at stated report time. The report should contain the following: - enumeration of the problems which have eventually arisen in the trusted part of the heating system or in other parts of the system for the past period - enumeration of the problems that were solved or not solved in the past period, with commentary - energetic consumption of the Heating system during the reported period

Staff Concessionaire as a provider of the service arranges work and pays the staff for proper providing the taken responsibilities. Concessionaire on his own exclusive responsibility applies the staff and provides the staffâ&#x20AC;&#x2122;s appropriate working discipline and satisfaction, just as he guaranteed the above in his own offer concerning both to organisational level and to formation of the staff. At time of duration of the Concession agreement, the whole staff of the Concessionaire should be subordinated to the Kosovo legislation and Kosovo professional rules, as well as the labour prescriptions, and especially those regulations that concerning to behaviour, bearing own responsibility and professional ethic of the staff as a whole. The staff of the Concessionaire in the site of work carries a well conspicuous identification sign (for example: the corporate name) that assigns and identifies the person and appropriate place of work. In case of serious infringement of the working morale or the professional approach, the Grantor of the concession reserve the right to draw the Concessionaire attention to the fact, in the case if the breach of discipline goes on, then the Grantor of the concession will ask the Concessionaire to expel or to transfer the person committed the contravention, depending on degree of the contravention. From point of view of public health, Concessionaire is obliged put each his employee through all necessary health controls and vaccinations stipulated in the general health prescriptions. Concessionaire assumes the obligation to train the staff according to the special professional program. The training program of the professional training is concerning to the handling of the contracted system, the maintenance and the repair, but includes the farther continuous training too, which is necessary in case of modification or change of the equipment, covers the development of the planned maintenance and so on. This process goes in conference with the Concession agreement, which is in harmony with the further development of the Heating system during the period of validity of the Concession agreement.

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In the moment of acceptance of the Heating system, Concessionaire is obliged to buy all stored accessory material (chemical agents for the water treating and preparing, oils, lubricants and so on) from Grantor of Concession or from the end-customers, in accordance with the commercial prices valid for the date of acceptance of the system, after verification and on the assumption of the normal quality. As well, Concessionaire is obliged to buy all stored fuel (if any) from Grantor of Concession (or from the endcustomers) in accordance with the commercial prices valid for the date of acceptance of the system, after verification and on the assumption of the normal quality. After the signing of the Concession agreement, Concessionaire and the end-customers are obliged to perform census of all stored spare parts there, where they are and where they are used in the frameworks of the system trusted to him. These spare parts are in the book-keeping of the end-customers by way of their own reserve till the date of entry in the book-keeping of the Concessionaire. Concessionaire realises the receipt at the latest in three months after the acceptance of the Heating system and after the approval of the Grantor of Concession, the receipt will be enclosed to the Concession agreement as an appendix.

Warranty on equipment Concessionaire takes the responsibility to keep all accessories built in the structure of the Concession agreement in the proper working state, under the protection of the appropriate warranties in writing covered all parts and performance of the accessories. Concessionaire should inform the Grantor of the concession and the end-customers about the improper work, the componentsâ&#x20AC;&#x2122; failure and same cases, and will make all necessary action for realisation of the warranties. Concessionaire responds for all damage risks or for costs because of componentsâ&#x20AC;&#x2122; or performanceâ&#x20AC;&#x2122; failure concerned of the property of the Grantor of the concession or the end-customers, which have arisen as a result of the mistake of the Concessionaire in realisation of the warranty rights

Use and maintenance of the premises obtained for exploitation Grantor of the concession and/or the end-customers are obliged to provide the corresponding areas to Concessionaire in the buildings possessing land parcels with the object of the installation and the operating of the equipment, and for this reason it should take reasonable measure for prevention of the such equipment against impairment, stealing or abuses. All premises place under control of the Concessionaire should be kept in good state and in the course of validity of the Concession agreement the state of these premises should not be worse, than the state in the moment of the acceptance of the premises by the Concessionaire. Grantor of the concession and/or the end-customers are obliged to provide at disposal of the Concessionaire all those premises that are in direct connection with the trusted energetic system, as for instance: the workshops, the production shops, the personnel rooms attached to the workshops acquired by the Concessionaire, the cloakrooms, the shower rooms, WC-s, the premises of the heating substations and so on, and they are obliged to do so for free of charge during validity the Concession agreement. Grantor of the concession and/or the end-customers should keep in good and proper (closed and covered) condition the objects and premises (buildings and land parcels) aimed for handing to the Concessionaire Concessionaire does not response for the architectural maintenance of the buildings, where are placed the above premises.

Providing of access to equipment for concessionaire Grantor of the concession is obliged to provide to Concessionaire the access to the buildings having the land parcels for the purpose of execution of the functions of all kind concerning to the Concession

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Agreement at normal working time, or at any other time if the Concessionaire makes his adequate request with indication of the weighty reason for it. Grantor of the concession and/or the end-customers may not without presentation of the weighty reasons for refusal to interfere to the Concessionaire with execution by him of repair or restoration of system if the Concessionaire considers it necessary.

Access to documentation and data Grantor of the concession and/or the end-customers provide at disposal of the Concessionaire all necessary technical documentation on hand connected to the energetic system trusted to him, such as the drawings of the equipment of the trusted system, the operative documentation, various reports and all other documents connected to the energetic system and the services that are presenting subjects of the acceptance. Grantor of the concession and/or the end-customers provide at disposal of the Concessionaire all available documentation connected to the notes and the data on utilisation and power charge of the system for last 3 years at least and primarily based on the invoices issued for energy sources

Control of system on the part of the grantor of the concession At any time the authorised representative Grantor of the concession and/or the end-customers from the public sector possess their free access to the equipment and the energetic system for the purpose of control of order on the premises and to check of the state of the energetic system are under the responsibility of the Concessionaire Grantor of the concession and/or the end-customers are authorised, on the assumption of the present of the preliminary notification at least 48 hours before, with help of application of experts elected in accordance with their will, in the presence of the Concessionaire, to execute an detailed professional technical inspection of the equipment that may be made by method of disassembly of the equipment too. The party at fault will pay the costs of the technical inspection with application of the external experts of such kind as well as the costs, connected to the extraordinary shut-down of the energetic system and eventual additional expenses as subsequent result of such shut-down. In case of the either part is right only partially, both the Concessionaire and the Grantor of the concession and/or the end-customers altogether will pay all arisen costs.

Operation of the system and planned service interruptions Concessionaire as a provider of the service should be capable on determinate way to provide the contracted energetic services in accordance with the above regulations at all duration of the Concession agreement. Taking into consideration the state of the system and obligations on providing of the end-customers with energetic services, it is necessary strictly to limit in time till minimum the periods of the shut-downs of technical units of the system made irrespective of the reasons, and especially because of control inspections or because of repair. In case of an irrespective of the reasons termination of the agreement, on the demand of the Grantor of the concession, the Concessionaire is obliged to continue his managing and handling services as well as the services connected to the maintenance of the system out of duration of the agreement with the view to provide the continuance of the system operating so long as a new partner will not take away the control. This period can not exceed six (6) months

Force Majeure File: Objekt:

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Heating system, as a subject of the concession awarding, should run in the contracted period without any interruptions, it means, that the running of the Heating system should not be stopped at any circumstances, with the exception of the preliminary planned shut-downs or the Force majeure circumstances. Force majeure circumstances are such kind of events and circumstances, which are not predictable and that can call the interruption of the normal mode or stopping of operations of the Heating system, and that should consider in accordance with Kosovo and other regulations as Force majeure circumstances In case of Force majeure as follows: such step or legal regulation that confines the free supply of fuel as well the failures in the system or unpredictable incidents, Concessionaire as a provider of the service, with help of the Grantor of the concession and/or the eventual end-customer should do all of his best and should use all possible available modes for the purpose to remove the present difficulties and to restore the system operating In case of the above Force majeure circumstances, as well in the case of absence of readiness to help from part of Grantor of the concession and/or the end-customers and when it is necessary from them, the Concessionaire as a provider of the service will not responsible for providing of the irregular and incomplete service.

Insurance obligations In accordance with the obligatory liability insurance (third-party insurance), the Concessionaire is obliged to take out the third-party insurance with a solvent insurance company on those cases, when the Concessionaire bears responsibility or it possible to make him answerable against a third-party. This insurance in case of a person should be made without limit on amount, and the system and the materials should be insured on the amount of their purchasing price. Concessionaire as a provider of the service is oblige to pay the insurance systematically, and on each request of the Grantor of the concession he should show the evidence, that proves the proper payment, with presentation of the insurance policy and appropriate bills of payments. In each case, the Concessionaire as a provider of the service should apply all necessary legal prescriptions and regulations, both in the field of the social insurance and in the field of labour and legal regulations. Concessionaire should prevent an unauthorised access to system or to any part of the system trusted to him, except for the authorised personal possessing with permission or admission for access to the energetic system.

Duration of the concession agreement Duration of the Concession agreement is twenty-five (25) years. The beginning of the application of the Concession agreement is the moment of the acceptance of the system from part of Concessionaire, and this fact will be attested by the bilateral protocol of the acceptance of the Heating system. After the contracted period expiring, the Concession Agreement will be automatically concluded again, with condition, that each contracting part will be entitled to enter new conditions in accordance with prolongation of the term of the Concession agreement on a new period.

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After expiring of the Concession agreement, Concessionaire gives the energetic system in the proper technologic state back to Grantor of the concession and to the end-customer, and this technologic state should be better than the state of the system in the moment of the previous acceptance by the Concessionaire For the purpose of establishing of the technical state of the system, Grantor of the concession and/or the end-customers have right to assign an independent professional company specialised on the problems of such kind, even so if the assignment will vain, the Grantor of the concession and the end-customers will pay the eventual costs .

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TASK 6

TASK 6 FINANCIAL AND ECONOMIC ANALYSIS

1.0

INPUT DATA

2.0

FINANCIAL ANALYSIS

3.0

SENSITIVITY ANALYSIS

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TASK 6

1-0

CONTENTS

INPUT DATA ........................................................................................................................ 1-1

1.1

INVESTMENT COSTS.......................................................................................................... 1-1

1.2

FINANCIAL SOURCES ........................................................................................................ 1-4

1.3

ENERGY PRICES .................................................................................................................. 1-5

1.4

OPERATING COSTS............................................................................................................. 1-5

1.5

CASH COLLECTION ............................................................................................................ 1-6

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1-1

INPUT DATA

Key data on which the financial and economic data are based are: − Investment costs, − financial sources, − energy prices, − operating costs.

1.1

INVESTMENT COSTS

The investment cost for phase I and phase II of the district heating project is 34,641,590 EUR. The financing costs (interests during construction, fees) of the project are 2,850,150 EUR. The value added tax on the investment is 5,196,240 EUR so that the total investment sum amounts to 42,687,980 EUR. In total project costs, investments in the pipeline, heating station in the TPP Kosovo and heating station in Prishtina are included. The pipeline between Prishtina and the TPP Kosovo B will be carried out in two phases. The first phase will take roughly 3 years to be accomplished. If it is assumed that the project starts in 2005, it will be finished in 2007. The second phase will take 2.5 years to be accomplished and this is expected by the end of 2012. The investment costs and the construction dynamics are shown in Table 1.1. and in Figure 1.1

Table 1.1

STRUCTURE AND DYNAMICS OF INVESTMENT COSTS Prices as of January 2005 in 000 EUR Type of works FIXED ASSETS Civil works Civil works H.S. Prishtina Civil works TPP Civil works pipeline Equipment Equipment H.S. Prishtina Equipment TPP Equipment pipeline Other investments Other H.S. Prishtina Other TPP Other pipeline

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Structure

Total

2005

2006

2007

10.3% 0.8% 1.9% 7.6% 68.9% 8.2% 7.6% 53.1% 13.3% 2.0% 2.1%

3,854 314 705 2,835 25,815 3,069 2,850 19,896 4,973 756 797

0 0 0 0 0 0 0 0 111 25 0

592 48 128 416 3,842 396 441 3,005 1,425 248 319

1,677 194 513 970 10,360 1,584 1,764 7,012 1,315 223 319

9.1%

3,420

858

772

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TASK 6

1-2

STRUCTURE AND DYNAMICS OF INVESTMENT COSTS Prices as of January 2005 in 000 EUR Type of works

Structure

Total

2005

2006

2007

92.4%

34,642

111

5,860

13,351

7.6% 1.6% 6.0%

2,850 610 2,240

0 0 0

373 116 257

1,486 495 991

100.0%

37,492

111

6,232

14,837

0.0%

TOTAL

100.0%

37,492

111

6,232

14,837

VAT GRAND TOTAL

13.9% 113.9%

5,196 42,688

17 127

879 7,111

2,003 16,839

Total Financing costs - domestic loan - foreign loan TOTAL FIXED ASSETS WORKING CAPITAL

Table 1.1 - continuation

Total Financing costs - domestic loan - foreign loan

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2011

2012

2013

0 0 0 0 0 0 0 0 98 13 0

462 14 13 435 3,310 218 129 2,964 1,061 129 79

1,123 58 51 1,014 8,302 871 517 6,915 963 117 79

852

767

4,833

10,388

0 0 0

191 0 191

801 0 801

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TASK 6

1-3

STRUCTURE AND DYNAMICS OF INVESTMENT COSTS Prices as of January 2005 in 000 EUR Type of works TOTAL FIXED ASSETS WORKING CAPITAL TOTAL VAT GRAND TOTAL

2011

2012

2013

5,024

11,189

5,024

11,189

15 113

725 5,749

1,558 12,748

Figure 1.1

DINAM ICS OF CONST RUCT ION 16,000 14,000 12,000

000 EUR

10,000 8,000 6,000 4,000 2,000

2013

2012

2011

2010

2009

2008

2006

2005

Ye ar

Civil W orks

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Other

Financing Costs

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1-4

1.2

FINANCIAL SOURCES

It is assumed that Termokos will carry out the project which means that VAT on the investment can be compensated by VAT Termokos collects at heat sales. So the total funds needed to carry out the project amount to 37,492 thousand EUR. It is expected that the major part of the project will be financed by one of the international banks. Their share will be slightly over 60%. Furthermore, it is expected that Kosovo Government will, according to current legislation, grant a loan to finance a part of the first phase of the project. The governmental loan will represent 17% in total financing of the project. The rest of the financial sources will be provided by Termokos. Termokos funds will be primarily used to cover financing cost i.e. interest during construction and financial fees. The majority of Termokos funds are expected in the second phase of the project, when Termokos will already realize the financial benefits of the first phase of the project. The financial sources are presented in Table 1.2. Table 1.2 FINANCIAL SOURCES Prices as of January 2005 in 000 EUR Financial sources

Structure

Total

Phase I.

Phase II:

Investors Funds Kosovo Budget funds Grant Domestic loan Foreign loan Total

22.3% 0.0% 0.0% 16.9% 60.9% 100.0%

8,354 0 0 6,318 22,820 37,492

2,138 0 0 6,318 12,728 21,184

6,215 0 0 0 10,092 16,308

VAT TOTAL

13.9% 100.0%

5,196 42,688

2,898 24,082

2,298 18,606

LOAN CONDITIONS

Financial sources

Domestic loan â&#x20AC;&#x201C;gover. Foreign loan

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Interest

Repayment

rate 10.0% 10.0%

period

Grace PeriodYears

Year of First

10.0 10.0

0.0 2.0

Installment 2008 2008- 2013

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TASK 6

1.3

1-5

ENERGY PRICES

Energy prices represent one of the key data for a financial analysis. The main data for the analysis are: • • • •

1.4

electricity price regulated price of heat heavy fuel oil price light fuel oil price

32 37,44 24,49 44,3

EUR/MWh EUR/MWh EUR/MWh EUR/MWh

OPERATING COSTS

In order to calculate profitability of district heat supply from the TPP Kosovo B it would be enough to calculate the operating costs of the new pipeline and both heating stations. But to get more insight into the financial operation of the district heating system in Prishtina it is quite important to include also the existing operating costs. Total costs of the district heat in Prishtina represent an important information for the presentation of the project. Costs estimation of the existing operation in Termokos Prishtina is based on the Methodology for Temporary Tariffs for the DH Companies in Kosovo – Heating Season 2004/05 and on the Annual Report of Termokos.

The operating costs of the district heating system in Prishtina have been calculated in the following way: Fuel costs were calculated on the basis of heavy fuel and light fuel oil spent as well as on the quantities of district heat supplied from the TPP Kosovo B. The value of district heat supplied from the TPP Kosovo B was set by evaluating the loss in the electrical energy production. The electrical energy, which was not produced due to heat supply, was valued by electricity sales price, i.e. 32 EUR/MWh. Costs of maintenance and other material costs are estimated at 0.2% of the value for civil works and 1,5% of equipment investment costs. For the existing system the maintenance and other material costs in the year 2005 amount to 273 thousand EUR. In the next years we assume that material costs of the existing system will increase proportionally with the heat load of the system. Depreciation is calculated by considering 3,3% of the value for civil works and pipeline and 5% of the value for equipment of substations and other costs. For the existing system the yearly depreciation is 810 thousand EUR. In future, the existing depreciation cost will also increase proportionally with the heat load of the system.

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1-6

Costs of services are estimated at 0.5% of the investment costs. The existing system costs of services are 321 thousand EUR yearly. The anticipated heat losses from the source to the customers are approximately 10%. It is assumed that because of the new investment no new workers will be employed. The existing yearly labor costs are 554 thousand EUR. They are expected as well to increase proportionally with the heat load of the system. Labor costs are expected to rise due to the new employments and partly due to the increase of monthly wage and other related personal costs. A part of the total costs are also financing costs, which include interests on long term loans required to finance the project and interests on short term loans which are needed for current operation. Profit tax included in the calculations is in accordance with UNMIK Regulation No. 2002/3 â&#x20AC;&#x201C; on Profit Taxes in Kosovo. According to the mentioned regulation the taxable profit shall be charged at the 20% rate.

1.5

CASH COLLECTION

In the actual companyâ&#x20AC;&#x2122;s life, cash collection represents a serious problem. In the household sector the payment rate in 2002 achieved 18%. In 2003, cash collection improved and it was 29%. In commercial sector (business and budgetary customers) the payment rate in 2002 achieved 24%, and in 2003 it decreased to 20%. At such low payment rates Termokos needs subsidies to cover the operating costs. If in the financial model that we used for calculation of the project profitability such low payment rates were considered, it would be impossible to prove the project profitability. Therefore, the unpaid bills were assumed as a recoverable debt in the model. In the year 2005, a longer receivables collection period (800 days) was assumed. In the next years, the collection period decreases and after a 10 year period, it reaches a 90 day collection period.

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TASK 6

2-0

CONTENTS

FINANCIAL ANALYSIS ..................................................................................................... 2-1

2.1

PROFIT AND LOSS ACCOUNT .......................................................................................... 2-3

2.1.2

Profit and loss account â&#x20AC;&#x201C; existing system without connection to the TPP Kosovo B.......... 2-3

2.1.3

Profit and Loss Account - Low Growth scenario .................................................................... 2-5

2.1.4

Profit and Loss Account - Medium Growth scenario.............................................................. 2-7

2.1.5

Profit and Loss Account - High Growth scenario................................................................... 2-9

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2-1

FINANCIAL ANALYSIS

The financial analysis was carried out by comparison of financial results obtained with the district heating connection to the TPP Kosovo B, with the financial results obtained without the connection to the TPP Kosovo B. The difference in the financial results of these two scenarios shows the financial successfulness of the project. The financial analysis was carried out for the following growth scenarios of the heat consumption in Prishtina: − no growth scenario (sensitivity analysis), − low growth scenario, − medium growth scenario and − high growth scenario. The main financial results of these scenarios are: FINANCIAL INDICATORS Low Scenario

Average energy production GWh Investment costs (VAT excluded) million EUR

Medium Scenario

High Scenario

456

564

758

37.5

29.1 78%

Average District Heating cost price (Without connection to the TPP Kosovo B) EUR/MWh

46.0

45.3

44.5

Average District Heating cost price (With connection to the TPP Kosovo B) EUR/MWh

19.6

19.2

20.4

25.9 22.2%

34.8 24.3%

47.7 27.0%

Financed by loans million EUR Debt financing % COST PRICE

ECONOMICS OF THE PROJECT Pay-back period (years) NPV at a 12% discount rate (million EUR) IRR

For each heat consumption scenario the cost price of heat was calculated. In figure 2.1 we are presenting the cost price in the time period from 2005 to 2032 for the medium growth scenario.

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2-2

Figure 2.1

DISTRICT HEATING COST PRICE Medium Scenario 70 60

Cost price EUR/MWh

50 40 30 20

2031

2029

2027

2025

2023

2021

2019

2017

2015

2013

2011

2009

2007

2005

Le to

W ith connection to TPP Kosovo B

W ithout connection to TPP Kosovo B

Figure 1.2 presents the cost price of the district heat for the medium growth scenario without connection to the TPP Kosovo B and for the scenario with connection to the TPP Kosovo B. In case there is no connection to the Kosovo B the cost price in 2005 will be 44.38 EUR/MWh. In the future years, the cost price will increase mainly because of the raise of financing costs. Due to a long receivables collection period the amount of short term debt increases, which results in higher financing costs. In the year 2010 the cost price increase amounts to 46.63 EUR/MWh and in the year 2020, to 69.39 EUR/MWh. In case of connection of the Prishtina district heating system to the TPP Kosovo B, the cost price in the year 2010, which is after the completion of the first phase, would decrease to 22.72 EUR/MWh. In the year 2020, the price would be 19.70 EUR/MWh which is less than a half of price of the case without the project. Merely the comparison of cost prices itself shows the economical justification of the project.

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2-3

2.1

PROFIT AND LOSS ACCOUNT

Two sets of profit and loss account have been made for each scenario of future heat consumption.

2.1.2 Profit and loss account â&#x20AC;&#x201C; Kosovo B

existing system without connection to the TPP

PROFIT AND LOSS ACCOUNT Prices as of January 2005 in 000 EUR Items

2005

2006

2007

2008

SALES

5,829

5,990

6,155

6,325

OPERATING EXPENSES Costs of materials - energy purchase costs - maintenance and other material Costs of services Depreciation Labour costs Other production costs Profit (Loss) from operations

7,601 5,834 5,561

7,754 5,988 5,715

7,912 6,146 5,872

8,074 6,308 6,035

273 321 810 554 82

-1,772

-1,765

-1,757

-1,749

REVENUES FROM INVESTMENTS AND INTERESTS FINANCIAL COSTS - existing liabilities - due to new investment OTHER REVENUES OTHER EXPENSES

0 0 0 0 0 0

0 156 156 0 0 0

0 237 237 0 0 0

0 322 322 0 0 0

-1,772

-1,921

-1,994

-2,071

-1,772

-1,921

-1,994

-2,071

PROFIT (LOSS) TAXES NET PROFIT

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2-4

Without connection to the TPP Kosovo B, Termokos will use heavy fuel oil as primary fuel. At district heating prices set by ERO the revenues will amount to 5.8 to 6.3 million EUR in the period 2005 â&#x20AC;&#x201C; 2008. In the same period, the fuel costs will range from 5.8 to 6.3. This means that, at a 100% collection rate the revenues will suffice only to cover fuel costs. All the other uncovered costs will add up to 1.7 million EUR loss from operations. The structure of the operating costs for the year 2005 is shown in Figure 2.2. Figure 2.2

OPERATING COSTS Labour costs 7% Depreciation 11%

Other operating costs 1%

Costs of services 4%

Maintenance and other material 4%

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Fuel & other variab. costs 73%

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2.1.3 Profit and Loss Account - Low Growth scenario PROFIT AND LOSS ACCOUNT Prices as of January 2005 in 000 EUR Items

2005

2006

2007

2008

2009

2010

2011

2012

SALES

5,829

5,990

6,155

6,325

6,997

7,741

8,563

9,473

7,601 5,834 5,561 273 321 810 554 82 -1,772

7,754 5,988 5,715 273 321 810 554 82 -1,765

7,912 6,146 5,872 273 321 810 554 82 -1,757

4,400 1,775 1,334 441 417 1,571 554 82 1,925

4,723 1,939 1,473 466 446 1,644 604 89 2,274

5,089 2,132 1,640 493 477 1,724 659 97 2,651

5,511 2,365 1,842 522 512 1,811 718 106 3,053

5,999 2,646 2,092 554 549 1,905 783 115 3,475

0 0 0 0 0 0

0 611 239 373 0 0

0 1,759 274 1,486 0 0

0 2,126 368 1,758 0 0

0 1,920 212 1,708 0 0

0 1,733 115 1,618 0 0

0 1,488 79 1,409 0 0

0 1,409 17 1,391 0 0

-1,772

-2,376

-3,516

-201

354

918

1,565

2,066

184

313

413

-1,772

-2,376

-3,516

-201

283

734

1,252

1,653

OPERATING EXPENSES Costs of materials - energy purchase costs - maintenance and other material Costs of services Depreciation Labour costs Other production costs Profit (Loss) from operations REVENUES FROM INVESTMENTS AND INTERESTS FINANCIAL COSTS - existing liabilities - due to new investment OTHER REVENUES OTHER EXPENSES PROFIT (LOSS) TAXES NET PROFIT File: Objekt:

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2-6

PROFIT AND LOSS ACCOUNT Prices as of January 2005 in 000 EUR Items

2013

2014

2015

2016

2017

2018

2019

2020

10,480

11,594

12,826

14,189

15,697

17,365

19,211

21,252

OPERATING EXPENSES Costs of materials - energy purchase costs - maintenance and other material Costs of services Depreciation Labour costs Other production costs Profit (Loss) from operations

6,581 3,004 2,415 589 590 2,008 853 125 3,899

8,058 3,584 2,821 763 711 2,696 930 137 3,536

8,314 3,573 2,768 805 760 2,818 1,014 149 4,512

8,906 3,873 3,023 850 813 2,952 1,106 163 5,284

9,581 4,231 3,332 899 870 3,098 1,205 177 6,116

10,348 4,651 3,699 953 933 3,256 1,314 193 7,017

11,215 5,140 4,129 1,011 1,001 3,430 1,432 211 7,996

12,209 5,724 4,649 1,075 1,076 3,618 1,562 230 9,043

REVENUES FROM INVESTMENTS AND INTERESTS FINANCIAL COSTS - existing liabilities - due to new investment OTHER REVENUES OTHER EXPENSES

51 2,784 0 2,784 0 0

41 1,672 0 1,672 0 0

136 1,362 0 1,362 0 0

161 1,051 0 1,051 0 0

182 741 0 741 0 0

214 483 0 483 0 0

356 381 0 381 0 0

509 280 0 280 0 0

PROFIT (LOSS)

1,166

1,904

3,285

4,393

5,557

6,749

7,971

9,272

TAXES

233

381

657

879

1,111

1,350

1,594

1,854

NET PROFIT

933

1,524

2,628

3,514

4,446

5,399

6,377

7,418

SALES

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2.1.4 Profit and Loss Account - Medium Growth scenario PROFIT AND LOSS ACCOUNT Prices as of January 2005 in 000 EUR Items

2005

2006

2007

2008

2009

2010

2011

2012

SALES

5,829

5,990

6,155

6,325

7,149

8,079

9,131

10,320

7,601 5,834 5,561 273 321 810 554 82 -1,772

7,754 5,988 5,715 273 321 810 554 82 -1,765

7,912 6,146 5,872 273 321 810 554 82 -1,757

4,400 1,775 1,334 441 417 1,571 554 82 1,925

4,800 1,977 1,505 472 453 1,662 617 91 2,349

5,271 2,228 1,721 506 493 1,763 686 101 2,809

5,831 2,543 1,998 544 538 1,876 763 112 3,301

6,518 2,957 2,371 586 587 2,001 848 125 3,802

0 0 0 0 0 0

0 611 239 373 0 0

0 1,759 274 1,486 0 0

0 2,126 368 1,758 0 0

0 1,920 212 1,708 0 0

0 1,741 123 1,618 0 0

0 1,500 91 1,409 0 0

0 1,421 30 1,391 0 0

-1,772

-2,376

-3,516

-201

429

1,068

1,801

2,381

214

360

476

-1,772

-2,376

-3,516

-201

343

855

1,441

1,905

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PROFIT AND LOSS ACCOUNT Prices as of January 2005 in 000 EUR Items

2013

2014

2015

2016

2017

2018

2019

2020

11,664

13,183

14,899

16,839

19,032

21,510

24,311

27,476

OPERATING EXPENSES Costs of materials - energy purchase costs - maintenance and other material Costs of services Depreciation Labour costs Other production costs Profit (Loss) from operations

7,370 3,505 2,872 633 642 2,140 944 139 4,294

9,225 4,372 3,550 822 780 2,870 1,049 154 3,958

9,268 4,039 3,159 880 848 3,042 1,167 172 5,631

10,167 4,521 3,576 945 924 3,233 1,298 191 6,672

11,219 5,108 4,091 1,017 1,008 3,446 1,444 212 7,813

12,475 5,848 4,751 1,097 1,102 3,683 1,606 236 9,035

14,008 6,807 5,621 1,186 1,206 3,947 1,786 263 10,303

15,906 8,065 6,781 1,285 1,322 4,240 1,987 292 11,571

REVENUES FROM INVESTMENTS AND INTERESTS FINANCIAL COSTS - existing liabilities - due to new investment OTHER REVENUES OTHER EXPENSES

44 2,784 0 2,784 0 0

44 1,672 0 1,672 0 0

154 1,362 0 1,362 0 0

214 1,051 0 1,051 0 0

256 741 0 741 0 0

311 483 0 483 0 0

479 381 0 381 0 0

659 280 0 280 0 0

PROFIT (LOSS)

1,555

2,330

4,423

5,835

7,328

8,863

10,401

11,950

311

466

885

1,167

1,466

1,773

2,080

2,390

1,244

1,864

3,539

4,668

5,862

7,091

8,320

9,560

SALES

TAXES NET PROFIT

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2.1.5 Profit and Loss Account - High Growth scenario PROFIT AND LOSS ACCOUNT Prices as of January 2005 in 000 EUR Items

2005

2006

2007

2008

2009

2010

2011

2012

SALES

5,829

5,990

6,155

6,325

7,358

8,561

9,960

11,587

7,601 5,834 5,561 273 321 810 554 82 -1,772

7,754 5,988 5,715 273 321 810 554 82 -1,765

7,912 6,146 5,872 273 321 810 554 82 -1,757

4,400 1,775 1,334 441 417 1,571 554 82 1,925

4,908 2,031 1,550 480 463 1,687 634 93 2,451

5,536 2,369 1,844 525 516 1,820 725 107 3,025

6,332 2,835 2,258 576 576 1,972 828 122 3,627

7,379 3,502 2,867 635 644 2,145 947 139 4,209

0 0 0 0 0 0

0 611 239 373 0 0

0 1,759 274 1,486 0 0

0 2,126 368 1,758 0 0

0 1,920 212 1,708 0 0

0 1,751 133 1,618 0 0

0 1,517 108 1,409 0 0

0 1,441 49 1,391 0 0

-1,772

-2,376

-3,516

-201

530

1,274

2,110

2,768

106

255

422

554

-1,772

-2,376

-3,516

-201

424

1,019

1,688

2,214

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PROFIT AND LOSS ACCOUNT Prices as of January 2005 in 000 EUR Items

2013

2014

2015

2016

2017

2018

2019

2020

13,480

15,683

18,246

21,227

24,696

28,731

33,425

38,887

OPERATING EXPENSES Costs of materials - energy purchase costs - maintenance and other material Costs of services Depreciation Labour costs Other production costs Profit (Loss) from operations

8,768 4,459 3,757 702 723 2,344 1,083 159 4,712

9,687 4,232 3,316 915 889 3,146 1,238 182 5,996

10,925 4,904 3,901 1,003 992 3,405 1,416 208 7,321

12,472 5,805 4,702 1,103 1,109 3,702 1,619 238 8,755

14,459 7,053 5,835 1,217 1,243 4,041 1,851 272 10,236

17,084 8,832 7,484 1,348 1,397 4,428 2,116 311 11,647

20,592 11,374 9,876 1,498 1,572 4,871 2,419 356 12,833

25,340 15,016 13,348 1,669 1,773 5,378 2,766 407 13,547

REVENUES FROM INVESTMENTS AND INTERESTS FINANCIAL COSTS - existing liabilities - due to new investment OTHER REVENUES OTHER EXPENSES

31 2,784 0 2,784 0 0

39 1,672 0 1,672 0 0

243 1,362 0 1,362 0 0

299 1,051 0 1,051 0 0

367 741 0 741 0 0

450 483 0 483 0 0

642 381 0 381 0 0

835 280 0 280 0 0

PROFIT (LOSS)

1,960

4,363

6,203

8,003

9,862

11,614

13,093

14,103

392

873

1,241

1,601

1,972

2,323

2,619

2,821

1,568

3,491

4,962

6,402

7,890

9,291

10,475

11,282

SALES

TAXES NET PROFIT

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2-11

In all growth scenarios (low, medium, maximal) the first year of the first phase operation is 2008; in the year 2014, the second phase becomes operational. When the connection to the TPP Kosovo B becomes operational, in all growth scenarios there is a significant 4.7 million decrease of fuel costs. Taking into consideration other operational costs which increase, the result is a 3.7 million increase in profit from operations. Since 78% of the investment is financed by loans, the interests in the year 2008 amount to 1.8 million EUR. But the net profit is still for 1.8 million EUR higher than in the case without connection.

The differences between scenarios become evident in the year 2014 that is after the second phase becomes operational. In the low growth scenario in 2014, there is an 8.2 million EUR decrease in fuel costs. Due to the increase of other operation costs the result is a 6.4 million EUR increase of profit from operations. The increase of net after tax profit is 5.8 million EUR. In the medium growth scenario, the decrease of fuel costs is 9.0 million EUR. The increase of profit from operations is 7.2 million EUR and the increase of net profit after tax is 6.7 million EUR.

In the high growth scenario, the savings on fuel costs are 11.6 million EUR. The increase of profit from operations is 9.8 million EUR and the net profit increase is 9.2 million EUR.

In the years after 2014, in all 3 scenarios, the net profit increases, partly due to the increase of heat consumption and partly due to the decrease of interests. The interests diminish each year due to the loan repayment.

For the medium growth scenario the profit and loss account is presented in Figure 2.3.

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Figure 2.3

PROFIT AND LOSS ACCOUNT

35,000 30,000 25,000

000 EUR

20,000 15,000 10,000 5,000 0

Year

2031

2029

2027

2025

2023

2021

2019

2017

2015

2013

2011

2009

2007

2005

-5,000

Costs of materials

Depreciation

Costs of services

Labour costs

Other production costs

FINANCIAL COSTS

OTHER EXPENSES

REVENUES

As we can see from the Figure 2.3, after the year 2008, revenues exceed costs, which results in increasing of the net profit. If the district heating sales prices remain unchanged, the return on equity will exceed 20%. This means that the district heating sales prices can be lowered and still 10% - 16% yield on equity can be achieved.

For the medium growth scenario, the cash flow is presented in Figure 2.4

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Figure 2.4

CASH FLOW 60 50

million EUR

40 30 20 10 0 -10

20 05 20 06 20 07 20 08 20 09 20 10 20 11 20 12 20 13 20 14 20 15 20 16 20 17 20 18 20 19 20 20 20 21 20 22 20 23 20 24 20 25 20 26 20 27

-20

Year Cash receipts from operations

Receipts from financing & investment

Disbursements for operations & investment

Financing disbursments

NET CASH FLOW

The period till 2014 can be defined as a construction period. In this period, Termokos raise long term loans to finance the investment and short term loans to cover loss from operations. Therefore, the net cash flow in this period ranges around zero. From the year 2014 onward, the net cash flow begins to rise. As we mentioned before, the main reason of the net cash flow rise lies in the expected growth of the district heat consumption which at present district heating prices yields big profits.

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3-0

CONTENTS

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SENSITIVITY ANALYSIS.................................................................................................. 3-1

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3-1

SENSITIVITY ANALYSIS

The sensitivity analysis serves to show how the project profitability alters with the change of input data or suppositions.

A part of the sensitivity analysis shows what the project profitability would be with the supposition that only the first phase of the project is accomplished and that there is no growth of the district heat consumption. The results of such scenario are shown in Table 3.1 Table 3.1 FINANCIAL INDICATORS No growth Scenario

Average energy production GWh Investment costs (VAT excluded) million EUR Financed by loans million EUR Debt financing % COST PRICE

185 21.2 19.0 90%

Average District Heating cost price (Without connection to the TPP Kosovo B) EUR/MWh

50.0

Average District Heating cost price (With connection to the TPP Kosovo B) EUR/MWh

25.6

ECONOMICS OF THE PROJECT Pay-back period (years) NPV at 12% discount rate (million EUR) IRR

9 6.4 16.3%

As we can see from the Table 3.1 the internal rate of return is 16.3% and the NPV at a 12% discount rate is positive. The pay-back period in this scenario is 9 years. All this indicators show that even at the present scope of district heat sales, the realization of the first phase of the project is economically justified.

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3-2

The sensitivity analysis was carried out for the medium growth scenario and following input data: −

investment costs,

−

scope of DH production,

−

Dh purchase costs,

−

HFO price and

−

DH sales prices.

The results of the sensitivity analysis are presented in Tables 3.2, 3.3, 3.4, 3.5, 3.6 and in Figure 3.2

Table 3.2 SENSITIVITY ANALYSIS Investment costs Prices as per January 2005 Change in %

IRR % -60.00% -50.00% -40.00% -30.00% -20.00% -10.00% 0.00% 10.00% 20.00% 30.00% 40.00% 50.00% 60.00%

File: Objekt:

47.7% 40.5% 35.4% 31.6% 28.7% 26.3% 24.3% 22.6% 21.2% 19.9% 18.8% 17.8% 16.8%

Task6-par3-rev1.DOC - IBE KOSOVO COMBINED HEAT AND POWER

NPV mill EUR 50 47 45 42 40 37 35 32 30 27 25 22 19

Pay-back 5 5 6 6 8 9 10 10 11 11 12 12 12

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Table 3.3 SENSITIVITY ANALYSIS Scope of production Prices as per January 2005 v 000 EUR Change in %

IRR % -60.00% -50.00% -40.00% -30.00% -20.00% -10.00% 0.00% 10.00% 20.00% 30.00% 40.00% 50.00% 60.00%

#N/V #N/V 47.1% 37.1% 31.4% 27.4% 24.3% 21.8% 19.6% 17.8% 16.2% 14.8% 13.5%

NPV mill EUR 53.6 51.2 48.5 45.5 42.2 38.6 34.8 30.6 26.2 21.6 16.8 11.9 6.6

Pay-back 3.00 3.00 4.00 5.00 7.00 8.00 10.00 10.00 11.00 11.00 12.00 12.00 13.00

Table 3.4 SENSITIVITY ANALYSIS DH purchase costs Prices as per January 2005 v 000 EUR Change in %

IRR % -60.00% -50.00% -40.00% -30.00% -20.00% -10.00% 0.00% 10.00% 20.00% 30.00% 40.00% 50.00% 60.00%

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26.6% 26.3% 25.9% 25.5% 25.1% 24.7% 24.3% 23.9% 23.5% 23.1% 22.7% 22.3% 21.9%

NPV mill EUR 41.70 40.55 39.40 38.24 37.09 35.93 34.77 33.60 32.43 31.27 30.08 28.90 27.72

Pay-back 9.00 9.00 9.00 9.00 10.00 10.00 10.00 10.00 10.00 10.00 10.00 10.00 11.00

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Table 3.5 SENSITIVITY ANALYSIS HFO prices Prices as per January 2005 v 000 EUR Change in %

IRR %

NPV mill EUR

12.1% 14.0% 16.0% 18.1% 20.2% 22.3% 24.3% 26.3% 28.3% 30.3% 32.2% 34.1% 36.0%

-60.00% -50.00% -40.00% -30.00% -20.00% -10.00% 0.00% 10.00% 20.00% 30.00% 40.00% 50.00% 60.00%

Pay-back

0.16 5.18 10.58 16.60 22.65 28.71 34.77 40.82 46.88 52.94 58.99 65.05 71.11

15.00 14.00 13.00 12.00 11.00 10.00 10.00 9.00 8.00 6.00 6.00 6.00 6.00

Table 3.6 SENSITIVITY ANALYSIS DH sales prices Prices as per January 2005 v 000 EUR Change in %

IRR % -50.00% -40.00% -30.00% -20.00% -10.00% 0.00% 10.00% 20.00% 30.00% 40.00%

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25.5% 25.4% 25.3% 25.1% 24.7% 24.3% 23.9% 23.4% 22.9% 22.6%

NPV mill EUR 39.63 39.19 38.35 37.37 36.15 34.77 33.31 31.83 30.34 29.31

Pay-back 10.00 10.00 10.00 10.00 10.00 10.00 10.00 10.00 10.00 10.00

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3-5

Figure 3.1

SENSITIVITY ANALYSIS

80.0 70.0

NPV mill EUR

60.0 50.0 40.0 30.0 20.0 10.0 0.0 -60%

-50%

-40%

-30%

-20%

-10%

10%

20%

30%

40%

50%

60%

Change of input data

Investment costs

Scope of production

HFO prices

DH sales prices

DH purchase costs

When interpreting the sensitivity analysis results one must bear in mind that the economics of the project were calculated as a difference between two scenarios, the one without connection to the TPP Kosovo B and the other with connection to the TPP Kosovo B. A major cost item in case of no connection to the TPP Kosovo B is fuel oil costs. Therefore the profitability of the project is very sensitive to fuel oil costs. A ten percent change in fuel oil prices results in a 17% change of the project NPV. The second most influential issue is change in the production scope, and in the scope of district heat sales, respectively. The 10% change in the production scope results in an 11% change of the project NPV. The next issue is the project sensitivity to investment costs since a 10% change in the investment costs results in a 7% change of the project NPV. The project is least sensitive to change in the district heating purchase price and district heating sales price. Sensitivity to district heating sales price is small since the change in district heating sales prices affects so the

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TASK 6

3-6

scenario with as the scenario without connection to the TPP Kosovo. Actually, the influence of the district heating prices on the project profitability is high. At the existing district heating sales prices the return on equity in the year 2014 is 18.7%. If we decrease the sales prices for 10%, the return on equity in the year 2014 drops to 13.9%. If we decrease the sales prices for 18%, the return on equity in the 2014 is brought down to zero.

File: Objekt:

Task6-par3-rev1.DOC - IBE KOSOVO COMBINED HEAT AND POWER

Revizija: 1 Datum: 21.3.2005

TASK 7

TASK 7 ENVIRONMENTAL IMPACT ASSESSMENT

1.0

EXISTING SITUATION

2.0

COMBINED HEAT AND POWER (CHP) PROJECT

3.0

COMPARISON OF AIR EMISSIONS

4.0

ENERGY EFFICIENCY AND ENVIRONMENTAL PROTECTION

File: Objekt:

Task7-par0-rev0.DOC - IBE KOSOVO COMBINED HEAT AND POWER

Revizija: 0 Datum: 21.3.2005

TASK 7

1-0

CONTENTS

EXISTING SITUATION...................................................................................................... 1-1

1.1

EXISTING HEAVY FUEL BOILERS................................................................................... 1-1

1.2

THERMAL POWER PLANT KOSOVO B ........................................................................... 1-2

File: Objekt:

Task7-par1-rev1.DOC - IBE KOSOVO COMBINED HEAT AND POWER

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TASK 7

1-1

EXISTING SITUATION

1.1

EXISTING HEAVY FUEL BOILERS

Heat (hot water) for district heating system of Prishtina has been supplied by two existing heavy fuel oil boilers installed in 1998. During the heating season normally both boilers are in operation. The number of operating hours with one or both boilers in operation depends on the outside temperature (required heat capacity in the distribution net). The existing TERMOKOS heavy fuel boilers have a 2 x 58 MWt capacity (each boiler is ranked as a large combustion unit). The heat supply is insufficient due to bad condition of the existing district heating system. Maximal operating temperature is limited to 100 °C and the operation is interrupted during the night due to substantial leakage of the system. The TERMOKOS heavy fuel oil boilers operation data are as follows: ♦ Heavy fuel oil consumption: - at the maximal (rated) load: - at the average (normal) load: boilers - heavy fuel oil consumption per year:

2 x 6 tons/hour (2 x 1.67 kg/s) 4,31 tons/hour (1.197 kg/s); both 12.301 tons/year

♦ Number of operating hours: 2.851 hours/year ♦ Boiler efficiency: estimated boiler efficiency is approx. 85 %

Heavy fuel oil with 2 % (mass) sulphur (S) content has been used to run the TERMOKOS boilers. At the maximal load the generated flue gas quantity (one boiler) is estimated to 66,700 mn3/h (dry basis) with appropriate SO2 concentration of 3,600 mg/mn3 (dry basis). The emission limit value for boilers with rated thermal input basis, O2=3%); according to Directive 2001/80/EC.

50 MWt is 1,700 mg/mn3 (dry

The SO2 concentration in flue gases at the existing two boilers outlet is much higher than permitted. In order to operate the boilers in accordance with the emission standards from the Directive 2001/80/EC, fuel oil with sulphur content less than 1 % (mass) is required. Taking into account heavy fuel oil consumption of 12,301 tons per year the SO2 emission from both TERMOKOS boilers amounts to 492 tons per year. Corresponding carbon dioxide (CO2) emission from the existing two boilers amounts to 38,130 tons per year.

File: Objekt:

Task7-par1-rev1.DOC - IBE KOSOVO COMBINED HEAT AND POWER

Revizija: 1 Datum: 21.3.2005

TASK 7

1.2

1-2

THERMAL POWER PLANT KOSOVO B

The Thermal Power Plant Kosovo B consists of two units with 339 MW electric power each. Rated thermal input of the unit is 845 MWth. Both units are producing electric energy for the grid and at the time being the units are not connected to the district heating system. The TPP Kosovo B operation data are as follows: ♦ Coal consumption: - at the maximal load 339 MWe: 2 x 416 tons/hour (2 x 115.5 kg/s) ♦ Low calorific value of the coal: 7,327 KJ/kg ♦ Number of operating hours: B1: 5823 h/year; B2: 4657 h/year ♦ Average coal data (chemical analysis) in mass %: - C: 23.7 % - H: 1.8 % - O: 11.15 % - N: 0.4 % - S: 0.1 % - Moisture (W): 48.20 % - Ash 14.64 % ♦

Concentration of particles in flue gas (dry basis) – measured in 1994: - average (B1): 80 mg/m3n - average (B2): 171 mg/m3n

♦ NOx concentration in flue gas (dry basis) – measured in 1994: - average (B1): 573 mg/m3n - average (B2): 939 mg/m3n ♦ SO2 concentration in flue gas (dry basis) – measured in 1994: - average (B1): 660 mg/m3n - average (B2): 726 mg/m3n ♦ Ash and wet ash quantity: - average: 50 – 70 t/h (per unit) ♦ Flue gas quantity at maximal load (per unit): - dry: 1.282,000 m3n/h (calculated) - wet: 1.615,000 m3n/h (calculated)

File: Objekt:

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1-3

♦ SO2 concentration in flue gas (dry basis, O2=6 %) – calculated - average: 650 mg/m3n ♦ Carbon dioxide (CO2) quantity: 362,000 kg/h (per unit at full load)

In case of full load operation of the Kosovo B units B1 and B2 with the number of operating hours listed above, the SO2 emission amounts to 8,733 tons per year. In the same conditions the carbon dioxide (CO2) emission from the Kosovo B amounts to approx. 3.79 million tons per year. The emission limit values for the existing boilers with rated thermal input (according to Directive 2001/80/EC) are as follows (dry basis, O2=6%): ♦ Particles: 50 mg/m3n 400 mg/m3n ♦ SO2: ♦ NOx: 200 mg/m3n ; Outermost Regions: 650 mg/m3n ♦ CO: 250 mg/m3n

50 MWt

It is evident that most of pollutant concentrations (particles, SO2 and NOx) in flue gases at the Kosovo B TPP outlet are higher than permitted. The pollutant concentrations at the TPP Kosovo B outlet are not extremely high but, some technical improvements (measures) need to be peformed to reduce the particles and the SOx concentrations particularly. The Prishtina district heating system project (combined heat and power – CHP) foresees an operation of the TPP Kosovo B (units B1, B2) in accordance with the emission standards from the Directive 2001/80/EC.

File: Objekt:

Task7-par1-rev1.DOC - IBE KOSOVO COMBINED HEAT AND POWER

Revizija: 1 Datum: 21.3.2005

TASK 7

2-0

CONTENTS

COMBINED HEAT AND POWER (CHP) PROJECT..................................................... 2-1

2.1

OPERATION OF TERMOKOS BOILERS............................................................................ 2-1

2.2

TPP KOSOVO B OPERATION ............................................................................................. 2-2

File: Objekt:

Task7-par2-rev1.DOC - IBE KOSOVO COMBINED HEAT AND POWER

Revizija: 1 Datum: 21.3.2005

TASK 7

2. 2.1

2-1

COMBINED HEAT AND POWER (CHP) PROJECT OPERATION OF TERMOKOS BOILERS

After the Combined Heat and Power (CHP Project) system realization, the existing TERMOKOS fuel boilers will operate to cover peak heat demand only. In order to meet air emission standards light fuel oil shall be used as an energy source (it is also possible to use some heavier fuel oil fractions but, with less than 1 % sulphur (S) content). The SO2 concentration in flue gas at the TERMOKOS boilers outlet shall not exceed 1,700 mg/mn3 (dry basis, O2=3%). At the maximal boiler load the generated flue gas quantity (one boiler) is estimated to 66,700 mn3/h (dry basis). The corresponding SO2 quantity will amount to approx. 113.3 kg/h (one boiler in operation). In order to assure full load operation of one TERMOKOS boiler, light fuel oil consumption of 1.6 kg/s is required. The carbon dioxide emission is 4.83 kg/s (17.4 t/h of CO2). Three different scenarios (projections) of heat demand growth which influence the TERMOKOS peak load boilers operating regime as well as air emissions are foreseen. The following peak load heat production using light fuel oil is foreseen: Low scenario: Low heat demand growth (existing heat demand in Pristina + heat demand growth of 12 % by the year 2020); taking into consideration that the existing district heating system is renovated and it operates with acceptable (standard) heat losses. It is foreseen that the average light fuel oil consumption in the years from 2008 to 2032 (25 years) will amount to 7,000.6 MWh/year (592 t/year of fuel). Medium scenario: Middle heat demand growth; it is foreseen that the average light fuel oil consumption in the years from 2008 to 2032 (25 years) will amount to 21,450 MWh/year (1,814 t/year of fuel). High scenario: High heat demand growth; it is foreseen that the average light fuel oil consumption in the years from 2008 to 2032 (25 years) will amount to 75,400 MWh/year (6,376 t/year of fuel).

File: Objekt:

Task7-par2-rev1.DOC - IBE KOSOVO COMBINED HEAT AND POWER

Revizija: 1 Datum: 21.3.2005

TASK 7

2.2

2-2

TPP KOSOVO B OPERATION

Once the investment is realized both Kosovo B units (B1 and B2) will be able to operate as a Combined Heat and Power Plant producing electricity for the grid and heat to supply the Pristina district heating system. Compared to the existing TPP operating regime the electric energy production in the power plant will be reduced in order to achieve the required heat production. Reduction of electric energy production in the TPP due to combined electricity and heat production is calculated for different scenarios listed below. Within several scenarios, different heat demand of the town of Pristina was taken into account. Thermal efficiency of 36 % is used to calculate the consumption of coal needed in the process of heat production (portion of coal that belongs to heat production). The emissions calculation is based on the presumption that both units of the TPP Kosovo B will operate in accordance with the emission standards from the Directive 2001/80/EC. The following specific values were used for the air emission calculations (kg/kgf): ♦ ♦ ♦ ♦

Particles: 154 mg / kgf SO2: 1233 mg / kgf NOx: 616 mg / kgf (2000 mg / kgf) CO2: 0.87 kg / kgf

Low scenario: Low heat demand growth (existing heat demand in Pristina + heat demand growth of 12 % by the year 2020); taking into consideration that the existing district heating system is renovated and it operates with acceptable (standard) heat losses. An average coal consumption of 192.528 MWh/year (94.595 t/year of coal) in the years from 2008 to 2032 (25 years), which corresponds to heat production, is foreseen. Medium scenario: Middle heat demand growth; an average coal consumption of 326.908 MWh/year (160.620 t/year of coal) in the years from 2008 to 2032 (25 years), which corresponds to heat production, is foreseen. High scenario: High heat demand growth; an average coal consumption of 442.739 MWh/year (217.531 t/year of coal) in the years from 2008 to 2032 (25 years), which corresponds to heat production, is foreseen.

File: Objekt:

Task7-par2-rev1.DOC - IBE KOSOVO COMBINED HEAT AND POWER

Revizija: 1 Datum: 21.3.2005

TASK 7

3-0

CONTENTS

COMPARISON OF AIR EMISSIONS ............................................................................... 3-1

3.1

CO2 AND SO2 EMISSIONS BEFORE THE INVESTMENT ............................................... 3-1

3.2

CO2 AND SO2 EMISSIONS AFTER THE INVESTMENT .................................................. 3-1

File: Objekt:

Task7-par3-rev1.DOC - IBE KOSOVO COMBINED HEAT AND POWER

Revizija: 1 Datum: 21.3.2005

TASK 7

3-1

COMPARISON OF AIR EMISSIONS

3.1

CO2 AND SO2 EMISSIONS BEFORE THE INVESTMENT

The TERMOKOS boilers are using heavy fuel oil; the estimated heat demand amounts to 185,844 MWh/year taking into consideration that the existing district heating system is renovated. Calculated future heavy fuel oil consumption (218.640 MWh/y) is much higher than nowadays (fuel consumption: 12,301 t/y = 140,095 MWh/y) because heat supply has not been sufficient by now and some existing buildings are anticipated for connection. HEAVY FUEL OIL BOILERS (TERMOKOS BOILERS) OPERATION

Year

2008

3.2

Total heat demand (MWh/y) 185.844

Heavy fuel oil Coal Light fuel CO2 SO2 consumption consumption consumption emissions emissions (MWh/y) (MWh/y) (MWh/y) (t/y) (t/y) 218.640

59.033

725,89

CO2 AND SO2 EMISSIONS AFTER THE INVESTMENT

The TPP Kosovo B + TERMOKOS peak load boilers operation; the peak load boilers are using light fuel oil; both TPP Kosovo B and the peak load boilers meet the emission standards.

File: Objekt:

Task7-par3-rev1.DOC - IBE KOSOVO COMBINED HEAT AND POWER

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3-2

LOW SCENARIO: LOW HEAT DEMAND (PROJECTION I) HEAT SUPPLIED FROM THE TPP KOSOVO B + PEAK LOAD BOILER OPERATION LOW HEAT DEMAND SCENARIO Heavy FO Coal Light fuel CO2 SO2 consumpt consumpt consump emissions emissions (MWh/y) (MWh/y) (MWh/y) (t/y) (t/y)

Total heat demand (MWh/y)

Year

2008 Average 2008 2032

185,844

105,461

200.9

45,085

64.24

489,799

192,528

7,000.6

117,085

175.13

COMPARISON: EXISTING / FUTURE SITUATION LOW HEAT DEMAND SCENARIO Reduction of CO2 emissions (heat demand 185,844 MWh/y): Reduction of SO2 emissions (heat demand 185,844 MWh/y): Increase of CO2 emissions (average heat demand 489,799 MWh/y): Reduction of SO2 emissions (average heat demand 489,799 MWh/y):

23.6 % 91.1 % 98.3 % 75.9 %

Average NOx emissions: 256.6 t/y; Average emissions of particles: 20.5 t/y

MEDIUM SCENARIO: MIDDLE HEAT DEMAND (PROJECTION II) HEAT SUPPLIED FROM THE TPP KOSOVO B + PEAK LOAD BOILER OPERATION MIDDLE HEAT DEMAND SCENARIO Total Heavy heat FO Coal Light fuel CO2 SO2 demand consumpt consumpt consump emissions emissions (MWh/y) (MWh/y) (MWh/y) (MWh/y) (t/y) (t/y)

Year

2008 Average 2008 2032

185,844

105,461

200.9

45,085

64.24

610,730

326,908

21,450.0

145,304

233,67

COMPARISON: EXISTING / FUTURE SITUATION MIDDLE HEAT DEMAND SCENARIO Reduction of CO2 emissions (heat demand 185,844 MWh/y): Reduction of SO2 emissions (heat demand 185,844 MWh/y): Increase of CO2 emissions (aver. heat demand 610,730 MWh/y): Reduction of SO2 emissions (aver. heat demand 610,730 MWh/y):

File: Objekt:

Task7-par3-rev1.DOC - IBE KOSOVO COMBINED HEAT AND POWER

23,6 % 91,1 % 146,1 % 67,8 %

Revizija: 1 Datum: 21.3.2005

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3-3

Average NOx emissions: 322.5 t/y; Average emissions of particles: 24.8 t/y HIGH SCENARIO: HIGH HEAT DEMAND (PROJECTION III) HEAT SUPPLIED FROM THE TPP KOSOVO B + PEAK LOAD BOILER OPERATION HIGH HEAT DEMAND SCENARIO Heavy Total FO Coal Light fuel heat CO2 SO2 demand consumpt consumpt consump emissions emissions (MWh/y) (MWh/y) (MWh/y) (MWh/y) (t/y) (t/y)

Year

2008 Average 2008 2032

185,844

105,461

200.9

45,085

64.24

828,371

442,739

75,399.3

209,136

393.31

COMPARISON: EXISTING / FUTURE SITUATION HIGH HEAT DEMAND SCENARIO Reduction of CO2 emissions (heat demand 185,844 MWh/y): Reduction of SO2 emissions (heat demand 185,844 MWh/y): Increase of CO2 emissions (aver.heat demand 828,371 MWh/y): Reduction of SO2 emissions (aver.heat demand 828,371 MWh/y):

23.6 % 91.1 % 254.3 % 45.8 %

Average NOx emissions: 437.3 t/y; Average emissions of particles: 33.7 t/y

Within “doing nothing” scenario it is presumed that the TERMOKOS heavy fuel oil boilers will operate also in future, using heavy fuel oil and covering the existing heat demand of 185,844 MWh/y. It is considered that the existing district heating system shall be renovated and it will be able to operate with acceptable (standard) heat losses. This represents a basis for the CO2 and SO2 emission reference values definition (CO2 emissions: 59,033 t/y; SO2 emissions: 725.89 t/y). The combined heat and electricity (power) production in the TPP Kosovo B will result in a reduction of the CO2 emissions by 23.6 % and of the SO2 emissions by 91.1 % (taking into account the same heat demand of 185.844 MWh/y). The expected CO2 reduction is 13,948 t/y, while the expected SO2 reduction is 661.6 t/y. Depending on different future heat demand projections the CO2 emissions will increase substantially according to the heat demand growth (see tables above). On the other hand, the SO2 emission quantities will be lower than the reference value even in case of the high heat demand scenario (projection III).

File: Objekt:

Task7-par3-rev1.DOC - IBE KOSOVO COMBINED HEAT AND POWER

Revizija: 1 Datum: 21.3.2005

TASK 7

4-0

CONTENTS

File: Objekt:

ENERGY EFFICIENCY AND ENVIRONMENTAL PROTECTION ........................... 4-1

Task7-par4-rev1.DOC - IBE KOSOVO COMBINED HEAT AND POWER

Revizija: 1 Datum: 21.3.2005

TASK 7

4-1

ENERGY EFFICIENCY AND ENVIRONMENTAL PROTECTION

The Kyoto Protocol objectives and, more recently, the constraints on energy sources enhanced the priority given to energy efficiency policies. Transport and energy production remain the sectors where the achievements (results) concerning efficient energy use are still insufficient (particularly in Kosovo region). Carbon dioxide (CO2) emissions that must be reduced following the Kyoto Protocol objectives are strongly connected to energy efficiency. Besides natural gas introduction instead of coal (replacement of energy source), the energy efficiency is one of the most effective measure to reduce the CO2 emissions from the thermal energy production units. The specific CO2 emissions (kg CO2 per calorific value of fuel) of different fuels are as follows: ♦ ♦ ♦ ♦

Coal: Heavy fuel oil: Light fuel oil: Natural gas:

0.119 kg CO2 / MJ 0.078 kg CO2 / MJ 0.074 kg CO2 / MJ 0.056 kg CO2 / MJ

It is evident that the specific CO2 emission using natural gas is approximately twice as low as in case of using coal. But in Kosovo they have large domestic coal mines and very limited possibilities of natural gas supplies. Therefore, the efficient use of coal in the existing thermal power plants is the most realistic and feasible technical option. The Combined Heat and Power (CHP Project) is a fuel efficient energy technology that, unlike conventional forms of power generation, puts to use the by-product heat that is normally wasted to the environment. Simultaneous generation of useful heat and power can increase the overall efficiency of fuel use to even more than 75 % (approximately), compared with around 36 % from conventional (Kosovo B) electricity generation. The supply of heat provides an economic benefit for supplier and user alike as well as providing environmental benefits. From the environmental point of view the advantages of the Pristina CHP project are evident. Due to an increase of the overall fuel efficiency the specific emissions of carbon dioxide will be reduced. Residents of Pristina who are now using electricity for heating purposes should switch over from electricity to district heating system. It is estimated that approximately 9,000 MWh / year of electricity generated in the TPP that is used for heating purposes will be replaced with heat supplied from the district heating system. Namely, electricity is the most expensive and the most valuable energy source which should not be used for heating. It is not acceptable to

File: Objekt:

Task7-par4-rev1.DOC - IBE KOSOVO COMBINED HEAT AND POWER

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4-2

use electricity generated in a power plant for heating while in the same time the by-product heat is wasted through the cooling system. Each MWh of heat produced in a thermal power plant CHP process results in a reduction of the electricity generation for approximately 0.2 MWhe only. As mentioned before, the most of pollutant concentrations (particles, SO2 and NOx) in flue gases at the TPP Kosovo B outlet are higher than permitted but, they are not extremely high. Emissions from the unit B2 are a little bit higher than from the unit B1 (unit B1 is obviously in better condition). Comparison of emission concentrations from the unit Kosovo B2 with emission standards shows the following results (index of exceeding): ♦ Particles: 171 mg/mn3 726 mg/mn3 ♦ SO2: ♦ NOx: 939 mg/mn3

50 mg/mn3 (index: 3.42) 400 mg/mn3 (index: 1.81) 650 mg/mn3 (index: 1.44)

With some technical improvements (measures) in view of particles, SOx and NOx concentrations reduction from the Kosovo B TPP the Combined Heat and Power project will bring significant benefits to the Prishtina region as regards environmental protection.

File: Objekt:

Task7-par4-rev1.DOC - IBE KOSOVO COMBINED HEAT AND POWER

Revizija: 1 Datum: 21.3.2005

TASK 8

TASK 8 IDENTIFICATION OF SOURCES OF FINANCE

1.0

SURVEY AND IDENTIFICATION OF POTENTIAL FINANCIERS

2.0

PROJECT FINANCING

File: Objekt:

Task8-par0-rev0.DOC - IBE KOSOVO COMBINED HEAT AND POWER

Revizija: 0 Datum: 21.3.2005

TASK 8

1-0

CONTENTS

SURVEY AND IDENTIFICATION OF POTENTIAL FINANCIERS........................... 1-1

1.1

FINANCIAL SOURCES ........................................................................................................ 1-1

1.2

BUILD, OPERATE AND TRANSFER (BOT) MODEL....................................................... 1-2

1.2.1

DEFINITION........................................................................................................................... 1-2

1.2.2

PARTIES TO BOT PROJECTS ............................................................................................... 1-2

1.2.3

ADVANTAGES AND DISADVANTAGES OF BOT PROJECTS ............................................ 1-3

File: Objekt:

Task8-par1-rev1.DOC - IBE KOSOVO COMBINED HEAT AND POWER

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TASK 8

1. 1.1

1-1

SURVEY AND IDENTIFICATION OF POTENTIAL FINANCIERS FINANCIAL SOURCES

There are many types of finances potentially available to energy projects and it is usually a mixture of different sources of finance which results in a financial package. The key issue which influences the selection of financial sources is the capital structure (or debt equity split). The next major role determining the financial sources have the participants in the project such as investor, suppliers of equipment, contractors, and financiers (banks and other financial institutions). The main financial sources available to energy projects are: − The World Bank Group, − European Bank for Reconstruction and Development (EBRD), − The European Investment Bank (EIB), − Government export financing agencies, − Domestic government, − International commercial banks, − Venture capital companies, companies that are interested in taking an equity stake in the project and − contractors and suppliers debt financing. Connecting of the district heating system in Pristhina to the TPP Kosovo B can be identified also as an environmental project. Owing to the project the overall SO2 emissions will be reduced. Moreover, due to the economical use of fuel (cogeneration) CO2 emissions will be reduced as well. Consequently, by pointing out the environmental benefits and efficient use of energy, the project can compete for Global Environment Facility (GEF) funds. The international development banks can play an important role in financing of the district heating project in Pristhina. World Bank is currently or has recently financed district heating projects in Latvia, Lithuania, Bulgaria and other countries. Also EBRD has recently financed district heating projects in Bulgaria, Poland, Czech Republic and other countries. In the process of potential financers identification the financing capabilities of the company TERMOKOS should be checked as well. The funds availability of the Pristhina municipality should be also considered. When the TERMOKOS and municipality financial sources are established, the general outlines of a financial package can be set. As a general rule, the maximum debt equity split required by the international financial institutions is 70% debt and 30% of equity financing. If TERMOKOS and the local community can not assure at least 30% of their own financial sources, concession or BOT model of financing would be appropriate.

File: Objekt:

Task8-par1-rev1.DOC - IBE KOSOVO COMBINED HEAT AND POWER

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1.2

1-2

BUILD, OPERATE AND TRANSFER (BOT) MODEL

1.2.1 DEFINITION BOT is an approach to infrastructure development, which enables direct private sector investment in the infrastructure projects. The theory of BOT is as follows: Build – A private company (or consortium) agrees with a government to invest in a public infrastructure project. The company then secures their own financing to construct the project. Operate – the private developer owns, maintains, and manages the facility for an agreed concession period and recoups their investment through charges or tolls. Transfer – after the concessionary period the company transfers ownership and operation of the facility to the government or relevant state authority.

1.2.2 PARTIES TO BOT PROJECTS There are a number of major parties to any BOT project and all of them have particular reasons to be involved in the project. The contractual arrangements between those parties, and the allocation of risks, can be complex. The major parties to a BOT project will usually include:

1. Government Agency A government department or a statutory authority is a pivotal party. It will: • grant the sponsor the “concession”, that is the right to build, own and operate the facility, • grant a long term lease of or sell the existing facility to the sponsor, and • often acquire most or all of the service provided by the facility. The government co-operation is critical in large projects. It may be required to assist in obtaining the necessary approvals, authorizations and permits for the construction and operation of the project. It may also be required to provide comfort that the agency acquiring services from the facility will be in a position to honor its financial obligations. The government agency is normally the primary party. It will initiate the project, conduct the tendering process and evaluation of tenders, and will grant the sponsor the concession, and where necessary, the off-take agreement.

2. Sponsor The sponsor is a party, usually a consortium of interested groups (typically including a construction group, an operator, a financing institution, and other various groups) which, in

File: Objekt:

Task8-par1-rev1.DOC - IBE KOSOVO COMBINED HEAT AND POWER

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1-3

response to the invitation by the Government Department, prepares the proposal to construct, operate, and finance the particular project. The sponsor may take the form of a company, a partnership, a limited partnership, a unit trust or an unincorporated joint venture.

3. Construction Contractor The construction company may also be one of the sponsors. It will take construction and completion risks, that is, the risk of completing the project on time, within budget and in accordance to specifications.

4. Operation and Maintenance Contractor The operator will be expected to sign a long-term contract with the sponsor for the operation and maintenance of the facility. Again the operator may also inject equity into the project.

5. Financiers In a large project there is likely to be a syndicate of banks providing the debt funds to the sponsor. The banks will require a first security over the infrastructure created. The same or different banks will often provide a stand-by loan facility for any cost overruns not covered by the construction contract.

6. Other Parties Other parties such as insurers, equipment suppliers and engineering and design consultants will also be involved. Most of the parties too will involve their lawyers and financial and tax advisers.

1.2.3 ADVANTAGES AND DISADVANTAGES OF BOT PROJECTS Potential benefits of BOT financing for infrastructure include: BOT provides a modality through which commercial financing can be attracted for infrastructure projects. As global private capital flows increase and play an increasingly important role in financing, especially for developing economies, BOT will help to make infrastructure projects accessible to the growing sources of private sector capital, and thus accelerate infrastructure development. Competitively awarded BOTs lower the cost of providing infrastructure and the tariffs for consumers. If suitable pre-qualification criteria are adopted, private sector involvement will ensure good quality services provided to the customers. A competitive BOT bidding process will involve a larger pool of investors to ensure the best qualified bidders to win the contract at best available prices. In comparison with joint ventures, competitively bid BOTs encourage more competition, which reduces costs.

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In comparison with the modality of equity plus traditional debt financing often secured on a credit or asset basis, BOT allows limited recourse financing secured partly by projectgenerated cash flows. It can decompose the underlying investment risks and allocate the risks to the parties that are most suitable to mediating them. This leads to reduction of costs of financing. On the operation and management side, BOT provides a mechanism and incentives for enterprises to improve efficiency through performance-based contracts and output-oriented targets. It reduces the role of the public sector mainly to developing a framework conducive to fair competition, formulating strategic policies and setting up strategic objectives and targets. It leaves the decisions on how to achieve the targets to private sector. Potential disadvantages of BOT include: It involves multiple entities and requires a relatively complicated legal and institutional framework. As a result, it may take a long time and considerable up front expenses to prepare and close a BOT financing deal. This is especially true in countries where the legal and policy framework are not well developed. The up front expenses tend to be fixed regardless the size of the project. Therefore the BOT modality may not be suitable for small projects. Even with a good framework, it may take time to develop the necessary institutional capacity to ensure that the full benefits of BOT are realized, such as development and enforcement of transparent and fair bidding and evaluation procedures and the resolution of potential disputes during implementation.

File: Objekt:

Task8-par1-rev1.DOC - IBE KOSOVO COMBINED HEAT AND POWER

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TASK 8

2-0

CONTENTS

PROJECT FINANCING ...................................................................................................... 2-1

2.1

DEBT EQUITY RATIO AND AMOUNT OF DEBT............................................................ 2-1

2.2

LOAN AMORTIZATION ...................................................................................................... 2-2

File: Objekt:

Task8-par2-rev1.DOC - IBE KOSOVO COMBINED HEAT AND POWER

Revizija: 1 Datum: 21.3.2005

TASK 8

2-1

PROJECT FINANCING

2.1

DEBT EQUITY RATIO AND AMOUNT OF DEBT

Total investment costs without financing costs and VAT amount to 34,642,000 EUR. Total investment costs can be divided among those investments that belong to Termokos Prishtina and those that belong to KEK â&#x20AC;&#x201C; TPP Kosovo B. Division of investment costs between two companies is presented in Table 2.1 Table 2.1 INVESTMENT COSTS Prices as per January 2005 in 000 EUR Civil works Equipment Other Total Investment share

Termokos 3,149 22,965 4,176 30,289

TPP Kosovo B 705 2,850 797 4,352

Total 3,854 25,815 4,973 34,642

87.4%

12.6%

100.0%

As a general rule, the debt equity ratio acceptable to international financial institutions is 30% to 40% of equity financing and 70% to 30% of debt financing. In 2003, total assets of Termokos amounted to 27.0 million EUR. If grants are treated as some kind of equity, then 61% of assets were financed by equity and 39% by loans. In the same year, total assets of Korporata Energjetike Kosoves (KEK) amounted to 421.7 million EUR; 86% of them were financed by equity and 14% by loans. In future, the amount of assets and the debt equity ratio for both companies will change. The investment cost of both phases of the district heating project that belong to KEK is 4.3 million EUR. Compared to KEK assets in 2003, this represents a 1% increase in the assets. If KEK raises a 4.0 million EUR loan to finance his part of the project, the debt equity ratio will be practically the same as in 2003. In case of realization of this project, KEK will not be heavily encumbered with debts. At present, KEK has great needs or opportunities to finance various projects. Therefore, other projects could represent quite a threat for the realization of the district heating project.. Also KEK low collection rates (60% in 2003) can represent a problem with reference to the district heating project financing.

File: Objekt:

Task8-par2-rev1.DOC - IBE KOSOVO COMBINED HEAT AND POWER

Revizija: 1 Datum: 21.3.2005

TASK 8

2-2

In 2003, total assets of Termokos amounted to 27 million EUR. The investment cost of both phases of the district heating connection to the TPP Kosovo B that belong to Termokos is 30.3 million EUR. Compared to Termokos assets in 2003, this represents a 112% increase in the assets. Actually, the investment will be carried out in two phases and that second phase will be finished in 2013. If we neglect this fact and compare the influences of the project on the Termokos balance sheet of the year 2003, the assets, as mentioned before, more than redouble. If 25.1 million EUR loans are raised to finance the project, the total loans of Termokos will amount to 35.6 million EUR. Taking into consideration the existing debt and the expected loan to finance the district heating project, the total debt financing will represent 62% of total assets. This means that raising a 25.1 million loan brings us close to a debt equity ratio that is still acceptable to the financial institutions. Discussing the amount of debt that Termokos can raise for the district heating project financing, we can not by pass the low bill collection rate. The 20% collection rate represents a serious problem. At such collection rates the money collected does not suffice to cover fuel costs. With such low collection rates, even with governmental or local community guarantees, raising of loans in financial institutions becomes practically impossible. Low collection rates lead the project in a vicious circle. Due to low collection rates there are no funds to carry out the connection to the TPP Kosovo B, which will enable substantial savings on the fuel costs. Lower fuel cost can result in lower district heating prices.

2.2

LOAN AMORTIZATION

The sum of all loans to finance both phases of connection to the TPP kosovo B is 29,138,000 EUR. The distribution of loans between Termokos and KEK and between the first and the second phase is presented in Table 2.2

Table 2.2 Loan from Bank Bank Kosovo loan I. loan II. Government phase phase Total thousand thousand thousand thousand EUR EUR EUR EUR Termokos KEK Total

File: Objekt:

6,318 0 6,318

9,214 3,441 12,655

Task8-par2-rev1.DOC - IBE KOSOVO COMBINED HEAT AND POWER

9,593 572 10,165

25,125 4,013 29,138

Revizija: 1 Datum: 21.3.2005

TASK 8

2-3

Amortization schedule for Termokos loans

Kosovo government

Loan name Loan amount Interest rate Repayment period Grace period Installments yearly First year of loan repayment in 000 EUR No. 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20

File: Objekt:

6,318 8.00% 10.0 0.0 2

thousand EUR p.a. years years

2008 Interests

Loan Total repayment 253 240 227 215 202 190 177 164 152 139 126 114 101 88 76 63 51 38 25 13

316 316 316 316 316 316 316 316 316 316 316 316 316 316 316 316 316 316 316 316

Task8-par2-rev1.DOC - IBE KOSOVO COMBINED HEAT AND POWER

569 556 543 531 518 505 493 480 468 455 442 430 417 404 392 379 366 354 341 329

Outstanding debt 6,318 6,002 5,686 5,370 5,054 4,738 4,422 4,106 3,791 3,475 3,159 2,843 2,527 2,211 1,895 1,579 1,264 948 632 316 0

Revizija: 1 Datum: 21.3.2005

TASK 8

2-4

Bank - first phase

Loan name Loan amount Interest rate Repayment period Grace period Installments yearly First year of loan repayment in 000 EUR No.

9,214 10.00% 10.0 2.0 2 2008 Interests 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20

File: Objekt:

thousand EUR p.a. years years

Task8-par2-rev1.DOC - IBE KOSOVO COMBINED HEAT AND POWER

Loan Total repayment 461 461 461 461 461 432 403 374 346 317 288 259 230 202 173 144 115 86 58 29

0 0 0 0 576 576 576 576 576 576 576 576 576 576 576 576 576 576 576 576

461 461 461 461 1,037 1,008 979 950 921 893 864 835 806 777 749 720 691 662 633 605

Outstanding debt 9,214 9,214 9,214 9,214 9,214 8,639 8,063 7,487 6,911 6,335 5,759 5,183 4,607 4,031 3,455 2,880 2,304 1,728 1,152 576 0

Revizija: 1 Datum: 21.3.2005

TASK 8

2-5

Bank - second phase

Loan name Loan amount Interest rate Repayment period Grace period Installments yearly First year of loan repayment in 000 EUR No.

9,593 10.00% 10.0 0.0 2 2013 Interests 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20

File: Objekt:

thousand EUR p.a. years years

Loan Total repayment 480 456 432 408 384 360 336 312 288 264 240 216 192 168 144 120 96 72 48 24

Task8-par2-rev1.DOC - IBE KOSOVO COMBINED HEAT AND POWER

480 480 480 480 480 480 480 480 480 480 480 480 480 480 480 480 480 480 480 480

959 935 911 887 863 839 815 791 767 743 719 695 672 648 624 600 576 552 528 504

Outstanding debt 9,593 9,113 8,634 8,154 7,674 7,195 6,715 6,236 5,756 5,276 4,797 4,317 3,837 3,358 2,878 2,398 1,919 1,439 959 480 0

Revizija: 1 Datum: 21.3.2005

TASK 8

2-6

Amortization schedule for KEK loans

Bank - first phase

Loan name Loan amount Interest rate Repayment period Grace period Installments yearly First year of loan repayment in 000 EUR No.

3,441 10.00% 10.0 2.0 2 2008 Interests 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20

File: Objekt:

thousand EUR p.a. years years

Task8-par2-rev1.DOC - IBE KOSOVO COMBINED HEAT AND POWER

Loan Total repayment 172 172 172 172 172 161 151 140 129 118 108 97 86 75 65 54 43 32 22 11

0 0 0 0 215 215 215 215 215 215 215 215 215 215 215 215 215 215 215 215

172 172 172 172 387 376 366 355 344 333 323 312 301 290 280 269 258 247 237 226

Outstanding debt 3,441 3,441 3,441 3,441 3,441 3,226 3,011 2,796 2,581 2,366 2,151 1,936 1,720 1,505 1,290 1,075 860 645 430 215 0

Revizija: 1 Datum: 21.3.2005

TASK 8

2-7

Bank - second phase

Loan name Loan amount Interest rate Repayment period Grace period Installments yearly First year of loan repayment in 000 EUR No.

572 10.00% 10.0 0.0 2 2013 Interests 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20

File: Objekt:

thousand EUR p.a. years years

Loan Total repayment 29 27 26 24 23 21 20 19 17 16 14 13 11 10 9 7 6 4 3 1

Task8-par2-rev1.DOC - IBE KOSOVO COMBINED HEAT AND POWER

29 29 29 29 29 29 29 29 29 29 29 29 29 29 29 29 29 29 29 29

57 56 54 53 51 50 49 47 46 44 43 41 40 39 37 36 34 33 31 30

Outstanding debt 572 543 515 486 458 429 400 372 343 315 286 257 229 200 172 143 114 86 57 29 0

Revizija: 1 Datum: 21.3.2005