URU, Alm.del - 2018-19 (1. samling) - Endeligt svar på spørgsmål 103: MFU spm., om ministeren vil oversende rapporterne med beregninger af klimaeffekten for de to kraftværker i Mali og Benin, som IFU gik ind i i 2016, til ministeren for udviklingssamarbejde

Udenrigsudvalget 2018-19 (1. samling)
URU Alm.del
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Benpower SA: Dual Fuel HFO/NG

power plant, Maria Gleta, Benin

SUMMARY

The project will increase the overall capacity installed in the country of Benin and thus satisfy currently

unmet demand for electricity. Electrification provides a viable alternative to highly polluting private

generators, running on diesel. Thus, despite the application of rather carbon-intensive fuels, the

project can still feasibly provide GHG savings based on detailed analysis. It shall also be noted that the

installed electric capacity of Benin has been growing over the past 2 years and has gradually expanded

into less carbon intensive generation sources, including hydroelectricity. Two scenarios were analysed

–

with the power plant operating on heavy fuel oil (HFO) and operating on HFO for 2 years, before

transitioning to natural gas.

In the first scenario, mate

iality of a o sa i gs is o side ed

low’

with an associated net benefit of

24 tCO

e/DKK million invested.

With social cost of carbon incorporated, this is equivalent to 0.019

DKK/DKK invested.

In the second scenario, should the plant switch to natural gas in the third year of operation, materiality

of carbon savings is still

o side ed

low

ith a highe

associated net benefit of

257 tCO

e/DKK

million invested.

With social cost of carbon incorporated this is equivalent to 0.2089 DKK/DKK

invested.

URU, Alm.del - 2018-19 (1. samling) - Endeligt svar på spørgsmål 103: MFU spm., om ministeren vil oversende rapporterne med beregninger af klimaeffekten for de to kraftværker i Mali og Benin, som IFU gik ind i i 2016, til ministeren for udviklingssamarbejde

DATA AVAILABLE



The installed capacity will be 144 MW, consisting of 127 MW dual fuel power

plants and 17 MW steam turbines. (BWSC Dual Fuel HFO/NG power plant,

October 2018).

The actual working capacity is 91.3% of maximum capacity (BWSC Dual Fuel

HFO/NG power plant, October 2018).

The project life considered for the analysis is 15 years, as per the power purchase

agreement (PPA) signed with the primary offtaker for the energy

–

the national

utility

So iete Be i oise d E e gie Ele t i ue SBEE .



ASSUMPTIONS

The following is assumed:



Marie Gleta, Benin, is a brownfield site. Since the plan entails dismantling some

existing capacity and building new one, construction emissions are accounted for.

The estimation of construction emissions is conservative and leans towards the

more carbon-intensive infrastructure for heavy fuel oil.

The electricity produced by the dual fuel plant will increase the total capacity of

the country and will supposedly reduce the use of diesel private generators.

The plant will utilize heavy fuel oil, with the option of switching over to a less

carbon intensive option of natural gas.

Impacts are determined based on EcoInvent LCA data for construction impacts of

conventional oil and natural gas power generation and.

It is assumed that currently part of unmet demand in the country of Benin is

supplied by private generators running on diesel, in accordance with existing

practices in other countries in the region of West Africa.

The baseline scenario considered reflects the marginal emission factor, rather

than the grid capacity mix. This considers the likely fuel sources required to

generate currently unmet demand, rather than replacing current generation.

It is assumed that the working hours of a HFO power plant would be 8760 hours

per annum.



RATIONALE OF FUNDING THE PROJECT

In Benin, West Africa, there is an increasing demand for electricity, which is currently unsatisfied.

Access to power in Benin remains at a low 29% and the unreliability of supply is one of the key

constraints faced by economic actors and investors (BWSC Dual Fuel HFO/NG power plant, October

2018).

IFU is considering an investment developing a HFO to help meet this need and increase access to

electricity.

The optimal opportunity for carbon reductions relates to renewable energy rather than continued

development of fossil fuel based power generation. However, given that the energy demand is

increasing at a high rate and it is easier and reliable to expand the energy generation from thermal

power plant, HFO electricity generation is investigated as an alternative to current private generator

and carbon intensive grid generation.

INTRODUCTION

In 2006, because of structural deficiencies to electricity supply, the Beninese Government decided to

build a new power plant by installing eight gas turbines with a combined capacity of 80 MW on the

site of Maria Gléta on the outskirts of Cotonou. The power plant was commissioned in 2013.

However, because of a chronic shortage of natural gas, the high cost of the alternative fuel Jet A1 as

well as design and maintenance problems, the plant could not fulfill its intended role as a steady

supplier of electricity to the grid. As a result, the Government of Benin launched an open Request for

Proposal (RFP) to invite specialized companies to submit their technical and financial proposals for

the rehabilitation, expansion and operation of the plant.

The consortium of IFU-AIIM-BWSC-Enpower has emerged as the final concessionaire for the IPP,

afte a halle gi g p o ess. The o so tiu s Spe ial Pu pose Vehi le SPV ill sig a Co essio

Agreement (CA) and Power Purchase Agreement (PPA) with the Government of Benin (GoB) to

construct a 144 MW combined cycle dual fuel HFO/Natural Gas plant (127 MW thermal duel-fuel

power plant and 17 MW steam turbine). The project will provide baseload power during a

concession period of 15 years following which the plant will be transferred to GoB. (BWSC Dual Fuel

HFO/NG power plant, October 2018).

The CA allows for a 16+4 month construction period followed by a 15 year operation period on a

build-own-operate-transfer (BOOT) basis. The power plant (Benpower SA, the project) is to be built

on a 20 hectar site in Maria Gleta, 20 km north-west of Cotonou the main commercial city and port

of Benin. (BWSC Dual Fuel HFO/NG power plant, October 2018).

Benpower SA will be operational in April 2020. Initially the plant will run on Heavy Fuel Oil (HFO)

which will be delivered by truck from storage facilities in the Port of Cotonou close by. SBEE has the

responsibility to deliver the HFO. The plant which will the be first Independent Power Producer (IPP)

in Benin will be the most fuel efficient and environmentally friendly power plant in the country.

Benpower SA, anticipated to add approximately up to 40-50%

of Be i s u e t ele t i ity apa ity,

will play a critical role in a market with a 7-8% annual increase in demand, which cannot be met due

to lack of production capacity. (BWSC Dual Fuel HFO/NG power plant, October 2018).

TABLE 1: DETAILS OF INVESTMENT

–

BENPOWER SA, DUAL HFO/NG POWER PLANT BENIN

UNIT

Project

City

Location

Power Type

Total Investment

IFU investment

Maximum Capacity

Actual working capacity

Guaranteed output

Working Hours/day

Working Hours/annum

Total MWH

DKK

MWh/annum

hours

MWh/annum

INVESTMENT

Benpower SA

Marie Gleta

near Cotonou, Benin

HFO/NG thermal power plant

1,392,000,000

122,500,000

144

91.3%

1,151,695

8,760

1,151,695

METHODOLOGY

The focus of the proposed HFO power plant is to increase the current capacity rather than replace it.

In the absence of a HFO power plant, it is assumed an equal amount of electricity would have been

provided by thermal power plants (50%) and private generators (50%), based on the current energy

mix and assumed near-future generation possibility. It shall be noted that the current energy mix of

Benin supposedly has hydroelectricity and some solar capacity installed. However, due to

unreliability of the grid, in a more conservative fashion it is assumed that diesel run private

generators contribute a higher share than prescribed. IFU should also consider future increase in

renewable energy generation could potentially reduce the benefit achieved by a fossil fuel based

plant which brings immediate gain. No further consideration of future energy scenarios has been

considered in this analysis.

To capture impacts arising from both supply chain and operations of alternative and baseline

scenarios, carbon impacts were derived from LCA values from EcoInvent to account for entire

upstream activities associated with different electricity producing technologies.

Project life is considered 15 years, in accordance with the signed PPA.

Two main scenarios were analysed: with the plant running on HFO for the entire life of the project and

for the plant running on HFO for 2 years, before being transitioned to natural gas.

Benpower SA Project GHG emissions profile

The proposed plant in Benin has a nameplate capacity of 144 MW and an assumed working capacity

ratio of 91.3% was applied. While the plant will be constructed to use both HFO and natural gas, the

infrastructure required for storing and delivering HFO is more carbon intensive. Thus the construction

emissions in both scenarios, consider the initial stage of putting up infrastructure for HFO.

Benin Baseline GHG emissions profile

Be i s g id ele t i ity ai ly o es f o fuel oil

(IEA, 2016), a part of remaining unmet demand is

catered through private diesel generators, assumed to be 29% and a small share of capacity of hydro

energy is installed (3%). Considering this energy mix ( IEA,2016) and using emission factors (Ecoinvent,

2016) a current emission factor of national energy is calculated to be 0.900 kgCO

e/kWh (Ecoinvent,

2016).

There is currently significant unmet demand in Benin, and this is increasing annually. Therefore, the

country energy composition has been adjusted to reflect a higher share of private generators and thus

increasing the average emission factor to 0.934 kgCO

e/kWh. Table 4 below presents the total

contribution by each power generation type.

TABLE 2: NATIONAL MARGINAL ENERGY SCENARIO, BENIN (IEA,2016, ADJUSTED BY TRUCOST)

POWER

TYPE

Thermal

Private

generators

FUEL

TYPE

HFO

Diesel

ESTIMATED

CONTRIBUTION

50%

GRID EMISSION FACTOR

(Kg CO2e/KWh)

0.460

0.474

0.934

COUNTRY

GHG/KWh

0.920

0.948

Total

Benin

Here the baseline is electricity generation through thermal power plants and private generators to

produce power equivalent to 1,151,695 MWh

–

total generation of the project.

RESULTS

The total emissions were calculated per typical year and total project life for the project in two fuel

scenarios, compared to a baseline case. Using the client provided investment details (in Table 1), the

GHG savings or emissions avoided per Million Danish Krone (DKK) invested in the HFO plant were

calculated.

SCENARIO 1: The plant operates on HFO for the entire project life

TABLE 3: GHG SAVINGS FROM INVESTMENT MADE IN BENIN HFO POWER PLANT

–

SCENARIO 1

TYPICAL YEAR

Project emissions (tCO

Baseline emissions (tCO

1,050,342

1,075,356

TOTAL PROJECT LIFE

15,755,134

16,130,338

GHG savings (tCO

25,014

375,204

GHG savings (tCO

e per Total DKK mn

Investment)

GHG savings (tCO

e per IFU DKK mn

investment)

N/A

270

N/A

IFU saving (DKK/DKK invested)

N/A

0.019

For every million DKK IFU is investing in the Benin HFO power plant, 24 tonnes of GHG is being

saved. When considering the social cost of carbon, this is equivalent to 0.019 DKK/DKK invested,

considered low materiality for carbon saving.

SCENARIO 2: The plant operates on HFO for 2 years and on natural gas for the remaining 13 years

TABLE 4: GHG SAVINGS FROM INVESTMENT MADE IN BENIN HFO POWER PLANT

–

SCENARIO 2

TYPICAL YEAR

Project emissions (tCO

Baseline emissions (tCO

804,300

1,075,356

TOTAL PROJECT LIFE

12,064,500

16,130,338

GHG savings (tCO

271,056

4,065,839

GHG savings (tCO

e per Total DKK mn

Investment)

GHG savings (tCO

e per IFU DKK mn

investment)

N/A

2,921

N/A

257

IFU saving (DKK/DKK invested)

N/A

0.209

For every million DKK IFU is investing in the Benin HFO power plant, 257 tonnes of GHG is being

saved. When considering the social cost of carbon, this is equivalent to 0.209 DKK/DKK invested,

considered low materiality for carbon saving.

The carbon savings in a natural gas scenario are higher, yet it shall be emphasized that in order to

achieve absolute carbon savings, the overall direction shall be towards lowering the dependence on

fossil fuels and expanding renewables capacity.

REFERENCES

Ecoinvent, 2016. [Online]

Available at:

https://v33.ecoquery.ecoinvent.org/

IEA, 2016.

Benin Electrciity Statistics.

[Online]

Available at:

https://www.iea.org/statistics/?country=BENIN&year=2016

US AID, Benin Installed Energy Capacity

https://www.usaid.gov/sites/default/files/documents/1860/BeninPACFSDEC2017.pdf

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