Biofuels in large power plants opportunities and limitations

1
Biofuels in large power plants - opportunities
and limitations

• Andrzej Rubczynski - Vattenfall Heat Poland

Polish - Swedish Bioenergy conference Ministry of
Economy Warsaw, 30-31 May 2007
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Contents of the presentation

• Support mechanisms
• Results and forecasts
• Vattenfall Heat Polands approach

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It takes two to tango and a good band
Energy sector
Agriculture
Government

• Success depends on the harmony of the band

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Support mechanisms in Poland

• Electricity market
• Quota system Green Certificates (GC) obligatory
  purchase
• Separation of the electricity and GC
• Priority access to the grid system
• Obligatory purchase of the energy by Last Resort
  Suppliers (DSO)
• Substitution fees or penalties in case of
  non-fulfilment of the obligation

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Support mechanisms in Poland

• Electricity market cont.
• 50 reduction of the connection fee for small
  renewable sources (5MW) and wind farms
• Preferential balancing rules for the energy
  produced at wind farms (under
  preparation)
• Preferential loans from The National Environment
  Protection Fund
• Tax preferences exemption from excise tax

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Support mechanisms in Poland

• Biomass sector
• Direct subsidies for farmers 45 EUR/ha
• Support for energy crops plantation set up
• Subsidy from ECOFUND 250 EUR/ha
• Preferential loans from The National Environment
  Protection Fund
• European Fund for Regional Development
  (Ministry of Agriculture and Rural Development)

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Support mechanisms in Poland
Will they work ? probably
not. Great risk of missing RES targets for
Poland in 2010
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Ongoing challenges

• Manual control of the G.C. value
• Lack of full support for bio-CHPs (G.C. R.C.)
• Lack of long-term vision
• Shallow and immature biomass market
• Power plants have made the easiest changes
• Only co-combustion technology
• Lack of biomass boilers

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Investment needs long-term stability
Short term targets discourage investors
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How would it work in practice?
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What drives us ?

• what made energy producers enter into this
  business ?
• CO2 deficit
• Green Certificates prices
• Social responsibility

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Plans of Vattenfall Heat Poland

• Co-combustion of biomass at CHP Zeran
• Pilot feeding installation capacity up to 40 000
  t/a
• Final installation capacity up to 120 000 t/a
• Two kinds of biomass wood chips and briquettes

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Plans of Vattenfall Heat Poland

• Modernisation of the oldest plant CHP Pruszków
• Decommissioning existing inefficient facilities
• Construction of new state-of the-art small
  biomass
  and coal CHP units 50 MWe
• Biomass market survey and contracts conclusion
  with biomass suppliers up to 250000
  t/a

14
VHP experience

• Time consuming permit procedure
• No green heat support
• No fuel flexible permit
• Biomass is not standardised (type quality by
  random)

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Summary

• Vattenfall Heat Poland intends to increase the
  biomass volume up to 500 kt/a
• EU Energy Package forces us to anticipate the
  expected Polish law amendments
• Government needs to support more the agriculture
  side and small heat producers
• Small biomass CHP plants may strongly support
  meeting by Poland RES and CO2 targets

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• Thank you
• ANDRZEJ RUBCZYNSKI
• Director
• Strategy and Analysis Department
• Tel.   [phone]
• Mob. [phone]
• andrzej.rubczynski_at_vattenfall.pl
•  
• Vattenfall Heat Poland S.A.
• 03-216 Warszawa, ul. Modlinska 15