feasibility study project for the jcm (2014fy) (jcm f/s to ... · 3 al-jouf cement 2014/12/11...

Feasibility Study Project for the JCM (2014FY)

(JCM F/S to introduce photovoltaic power generation

and gas-fired combined power generation facilities in

Saudi Arabia)

March 2015

Mizuho Bank, Ltd.

Table of Contents

1. JCM-related policies and measures ............................................................. 1

1.1 Discussion with the KSA Government ................................................... 1

(1) 1st visit of KSA [from 7 Sep to 11 Sep, 2014] ...................................... 1

(2) 2nd visit of KSA [from 11 Dec to 16 Dec, 2014] .................................. 6

(3) The other visits ..................................................................................... 9

1.2 JTVT (Japan Technology Visit Tour) ................................................... 11

1.3 Government Tender / Procurement Law .............................................. 17

2. Identification of the project candidates suitable for the JCM scheme ..... 20

2.1 Priority types ......................................................................................... 20

(1) Project information provided by the DNA ......................................... 20

(2) Project information provided from companies .................................. 22

3.2 Identification of high priority types ...................................................... 23

(1) High priority types ............................................................................. 23

(2) GHG reduction potential .................................................................... 24

3. Investigation of the project plans by applying the JCM framework ........ 25

3.1 Project candidates ................................................................................. 25

(1) Energy efficiency project of the seawater desalination plant ........... 25

(2) Energy efficiency project of the gas-fired power plant ...................... 35

(3) Waste heat recovery in the cement plant .......................................... 39

3.2 Superiority of Japanese technology ...................................................... 44

4. Draft of JCM methodology and estimate of GHG emission reductions .... 45

4.1 Target types ........................................................................................... 45

4.2 Reference scenario ................................................................................. 45

4.3 Eligibility criteria .................................................................................. 46

4.4 Calculation method of emission reductions ......................................... 47

4.5 Calculation of emission reductions ....................................................... 50

5. Business opportunity and project candidate ............................................. 51

1

1. JCM-related policies and measures

1.1 Discussion with the KSA Government

In order to implement the JCM projects in the Kingdom of Saudi Arabia (KSA), the investigation

team made hearing and discussions with the governmental bodies, state-own companies, provate

companies in KSA, Japanese private companies and governmental bodies, those are potential parties

concerned.

(1) 1st visit of KSA [from 7 Sep to 11 Sep, 2014]

At the beginning of the investigation, our team visit KSA to join the Workshop for JCM supported

by Ministory of Economic, Trade and Industry of Japan (METI). At the Workshop, our team had

meetings with Designated National Authority Saudi Arabia (DNA) and other entities to get

acquaintanceship. Then the folloing days our team made some discussions with some governmental

entities.

Table1 Visiting companies and governmental entities

Visit to Date Participants

1 Workshop for JCM 2014/ 9/7 Japan side) METI,

Embasy of Japan in Riyadh, Mizuho Bank, Ltd.,

Mizuho Saudi Arabia Company

KSA side)

DNA, Ministry of Water and Electricity, Ministry of

Commerce and Industry, SWCC, SEC, Saudi

Aramco, KACSTand so on.(About 20 persons)

2 JETRO/ Japan Cooporation

Center for Middel East

2014/9/8 (2 persons)

3 Sasakura Engeneering 2014/9/8 Sasakura Engeneering Co., Ltd. / Arabian Company

and Sasakura for Water and Power

Itochu Plantec inc.

(3 persons)

4 Designated National Authority

Saudi Arabia (DNA)

2014/9/9 Mr. Abdullah N. Al-Sarhan (Secretary General),

Dr. Taha M. Zatari (Senior Consultant),

2


Dr. SK Noim Uddin (Senior Advisor),

Eng. Mahammed A. Al-Saeed (Tech Consultant)

5 ESDM 2014/9/9 Mr. Tom Marren (Managing Director)

Eng. Donal O’Donnell (Operations Manager)

Eng. Dareen Ayyad (Project Engineer)

6 Embasy of Japan in Riyadh 2014/9/9 (1 person)

7 King Abdullah City for Atomic

and Renewable Energy

(KACARE)

2014/9/10 Research & Development & Innovation:

Eng. Wail Khalid Bamhair (Researcher)

Eng. Mohammed A. Altamimi (Researcher)

Eng. Omar S. Al-Shesha (Consultant)

8 Ministry of Water & Electricity 2014/9/10 Eng. Wail Khalid Bamhair (Researcher)

Eng. ohammed A. Altamimi (Researcher)

Eng. Omar S. Al-Shesha (Consultant)

(Research & Development & Innovation)

9 Saudi Aramco 2014/9/11 Mr. Jasim Yousuf Kooheji (Domestic Joint Ventures

Department)

10 JGC Gulf International Co. Ltd. 2014/9/11 JGC Gulf International CO. Ltd.

JGC Corporation

Table 2 Meeting contents

Visit to Contents

1 Workshop for JCM Presentation on the structure of JCM by METI and our team.

DNA requested KSA attendee to submit the list of potential

projects for JCM.

2 JETRO/ Japan

Cooporation Center for

Middel East

KSA come to be conscious of energy efficiency in accordance

with the gradual increase of petro consumption recently.

Japanese government had been proposing to supply the

Japanese energy efficiency technology, but proposals of

action plans by the western countries are mainly introduced

currently.

In order to introduce Japanese technology, it could be a better

way to present a package of technology such as EPC and

maintenance as a spec-in.

The preferencial for local companies is given by Aramco in

10% of price. SEC place emphasis not only on price but also

3

Visit to Contents

on quality in the tenders.

3 Sasakura Engeneering Having a meeting with Sasakura Engeneering they were

vising KSA as business trip at that time.

Sasakura had concluded a MoU with KACARE in 2012 and

continued to implement a substantiative experiment regarding

desalination technology using the solar heat for 2 years.

Sasakura have business experience in KSA more than 30

years. As a supplier of desalination plants, they had been

traded with SWCC through thir group company in KSA,

Arabian Company and Sasakura for Water & Power (APS),

which is also invested by both Itochu Corporation and

ACWA. Their business target is both new plants and

lihabilitation.

Sasakura uses RO membrane made by Japanese companies.

Japanese RO manufacturer’s global share is approximately

60%.

4 Designated National

Authority Saudi Arabia

(DNA)

DNA is willing to introduce some companies those have

seeds of JCM project as listed in the information sheet

provided by DNA if requested.

The candidates for JCM project DNA can introduce are the

waste heat recovery projects planned by the following cement

companies.

Najran Cement Company

Al Jouf Cement Company

Saudi Aramco, SEC and Solar Fronteer are planning to

enhance the PV solar project developed in the Farasan Island

from current 5MW to 10MW.

SEC is planning to enhance the solar desalination plant in

North Kafuji science city.

Ministry of Water and Electricity is developing a wind project

in the suburbs of Riyadh. KACARE is researching the wind

condition in the area.

5 ESDM ESDM is established by PCMC (Petroleum, Chemicals &

Mining Company Ltd) and CES Energy (Irish energy

consultant) as their joint venture company for environmental

4

Visit to Contents

consuting and investment company, based in Jeddah.

ESDM had an experience to develop a CDM project.

Now ESDM understands that the possibility to realize the

CDM project in KSA is almost diminished and considering to

utilize the JCM scheme.

ESDM is investing a JV for manufacring ORC (Organic

Rankine Cycle) steam turbine with Mitsubishi Heavy Industry

in Italy. The projects using products could be a JCM.

6 Embasy of Japan in

Riyadh

Open bid for KSA public sector is tied by the quite strong

request by Ministry of Finance, so it is difficult to make

optional contract with those public sector.

PV Solar projects are developed by Saudi Aramco.

Waste power generation is supervised by SABIC.

DNA is considering that to implement the the first project is

important even small one.

7 King Abdullah City for

Atomic and Renewable

Energy

(KACARE)

KSA’s renewable policy (draft) can be accessible through the

White Paper at the KACARE’s website.

This paper could be changed through the discussion with the

concerned parties in the government and private sector.

Saudization is one of the important elements for developing a

project in KSA.

8 Ministry of Water &

Electricity

In KSA, there is big demand for electricity and SEC is

concerned about the shortage of supply. It will be more

important to install the more renewable energy for supply side

and energy efficiency for demand side. The plan of renewable

installment drafted by KACARE is under process of

government approval. MOWE think that PV, CSP and wind

power generation could have bigger potential amoung the

renewable energies.

The priority between PV and CSP is now investigated by

MOWE.

The target for wind installment is 7-9GW currently;

KACARE is making the resource assessment and north west

area is expected as the best wind condition area.

FIT system is reviewed by KACARE.

5

Visit to Contents

The modification of the national grid had been implemented

by MOWE in these years, but it still has some problems.

MOWE is also planning to connect the national grid with

GCCs and Egypt.

9 Saudi Aramco The JCM related departments in Saudi Aramco are as

follows;

Power System Admin.: Development of renewable

projets (PV, IGCC etc.)

New Business Development: Planning of JV

establishment ⇒ through Board meeting’s approval

Domestic Joint Ventures: Operation of JV

Corporate Planning : Business planning of whole

company and energy efficiency

10 JGC Gulf International Co.

Ltd.

In case JGC group participate in JCM project in KSA, JGC

Gulf will be the participant as the representative and take a

roll of EPC.

JGC (Japan) have experienced supplier of the PV solar. And

JGC Gulf’s business is mainly petrochemical area.

JGC had an experience to participate in the PV demonstrative

project in the suburban area of Riyadh with Tokyo University

and KACARE. It was lightly affected by sandstorm.

6

(2) 2nd visit of KSA [from 11 Dec to 16 Dec, 2014]

Based on the information obtained in the 1st visit, our team visited KSA to identify the project

candidates.

Table 3 Visiting companies and governments


1 Saudi Designated National

Authority (DNA)

2014/12/14 Mr. Abdullah N. Al-Sarhan (Secretary General)

Dr. SK Noim Uddin (Senior Advisor)

Eng. Mahammed A. Al-Saeed (Tech Consultant)


Electricity

2014/12/14 Mr. Saleh H. Alawaji (Deputy Minister for

Electricity / Chairman of SEC)

Eng. Wael A. Al-Ghamdi (Director General of

Energy Efficiency Department)

3 Al-Jouf Cement 2014/12/11 Al-Jouf Cement

Mr. Khalid H. Al-Motairy (Finance Manager)

Mr. Haani Yousuf Al-Kutami (Manager,

Materials Department)

DNA

Eng. Mohammed A. Al-Saeed (Technical

Consultant)

Mr. Abdulmalik M. Al-Obra (Projects Engineer)

4 Taqnia

(Advanced Water

Technology)

2014/12/15 Mr. Todd Leyland (Consultant)

Eng. Khalid M. AlHabib (Business

Development)

Eng. Ibrahim N. AlSubeh (Engineering

Manager)

5 ACWA Power 2014/12/14 Ms. Yara Anabtawi (Director, Business

Development, Renewables)

6 Saline Water Conversion

Corporation (SWCC)

2014/12/14 Eng. Othman Y.I. Al-Najdi (Deputy governor for

operation)

Dr. Absulmajeed S. Al-Twaim (Technical

Affairs & Production Manager)

Mr. Mohammed Moghram Alghamdi (Power

Specialist Engineer)（join from Jeddahthrough

telesystem）

7


7 Saudi Electric Company

(SEC)

2014/12/15 Mr. Manish Manchandya (Head, Corporate

Finance Treasury)

8 Solar Frontier K.K.TSO 2014/12/16 1 person (General Manager)

9 JGC Gulf International Co.

Ltd.

2014/12/16 1 person (Senior Manager, Finance &

Accounting Department)


Companies Contents

1 Saudi Designated

National Authority

(DNA)

Regarding MOU of JCM can be concluded in April 2015 at the

earliest.

DNA would like to set a discussion meeing with investigation team

and Al-Jouf Cement to introduce thir planning waste heat revovery

project.

DNA would like to introduce the two waste landfill methane

recovery projects as JCM potential projects.

Jeddah: municipal organization would be main project owner.

CDM experienced. PV solar combined is also planned.

Medina: 8MW by private company.

MOWE is planning a 10MW wind project in the suburban area of

Riyadh.

It will be good idea to hold the side event in the next COP (Paris)

on JCM, in which presentations should be made by governments,

F/S team and KSA counterparts.


Electricity

It would be good strategy to find specific projects owned by SEC

or SWCC.

There are many projects with large potential in both energy supply

sides and demand sides.

SEC’s key person on the JCM is in the procurement department.

3 Al-Jouf Cement Waste heat recovery project in the cement plant has been

investigated.

That project is proposed by the Chinese company which

constructed the existing plant.

Plant capacity is 5,000 -10,000 ton/d; construction cost is estimated

as 70 million SAR (25 million USD); and construction period is

estimated as 9 months.

8

Companies Contents

Interest in introducing Japanese technology.

4 Taqnia

(Advanced Water

Technology)

Regarding water supply in KSA, by applying energy efficient

technology, they would like to reduce OPEX.

JCM candidate projects:

Surplus electricity in the desalination plant which is to be

purchased by the grid.

No experience but interest on renewable energy.

Geothermal energy.

5 ACWA Power The following project types are suitable for JCM:

Power generation that has the capacity less than 5MW

(speedy)

Off-grid power generation by the hybrid of solar power and

diesel genset. (The Government intends to reduce the

consumption of diesel oil.)

ACWA Power can participate in the JCM project of renewable

energy as IPP/IWPP or EPC.


Corporation (SWCC)

SWCC has the plans to construct desalination plants including

Al-Jubail phase 3 and 5 small plants in Jeddah.

There are also the plans to construct small desalination plant

combined with solar power in Al-Khafji, 2015, and desalination

plant combined with cogeneration in Al-Jubail.

SWCC has good and long relationship with Sasakura.

SWCC has interest on JCM, except for the concern to limit the

project possibility only on the bilateral framework with Japan.

There is possibility to avoid the tender process for smaller projects.


(SEC)

SEC held gas turbine suppliers’ meeting in Tokyo, June 2014.

SEC highly rates the technologies of GE, MHI and Siemens.

Investment is decided by the Investment Committee.

JCM financing scheme is preferable to SEC.

8 Solar Frontier K.K.TSO Experience of the solar power project in the Farasan islands.

Interest on the new type technologies including power stabilization

using battery, connection and operation of mini-grid.

9 JGC Gulf International

Co. Ltd.

Interest on the waste recovery project in the cement plant and

energy efficiency project in the seawater desalination plant.

9

(3) The other visits

Table 5 The other visits



Corporation (SWCC)

December 2, 2014 SWCC:

Eng.Othman Y.I. Al-Najdi (Deputy Governor)

ACWA Power Sasakura:

Al-Ajmah (President & COO)

Sasakura:

Mr. Miyamura


(SEC)

December 18, 2014 Abdullah Alsohibany (Executive Director,

Contracting)

3 Saudi Basic Industries

Corporation (SABIC)

December 23, 2014 SABIC:

Dr. Ahmed Al-Hazmi (General Manager,

Environmental Affairs), Mr. Zaour Israfilof

(Climate Change & CDM Specialist)

Daikin Saudi Arabia:

Mr. Shimada (GM)

Daikin McQuay Middle East:

Mr. Michel (Manager)


Companies Contents


Corporation (SWCC)

Sasakura has the interest to participate in the SWCC’s expanding

plans of seawater desalination.

5 members of SWCC have taken part in the Workshop held on

September 7, 2014.

Sasakura made proposal to apply both the Tri-hybrid technology

and modification technology onto the existing plants.

Mizuho proposed to utilize the JCM framework for those

developments.

Deputy Governor of SWCC is the member of DNA committee, and

set a high value on environmental and energy-related issues, and he

regards it good approach to apply JCM scheme.


(SEC)

Spec-in by the Japanese companies is welcomed. Japanese

technology and maintenance service are highly rated.

10

Companies Contents

Open bid is mandatory process for all projects.

JCM scheme is in accordance with SEC’s policy:

Spec-in of Japanese companies is welcomed.

Improving energy efficiency is required by the Saudi

Government.

In the process of open bid, the priority of technical performance is

higher than the price. And, Japanese companies are always highly

rated regarding technology along with some EU and US companies

(Siemens or GE).

Financial backup provided by the Japanese Government will

definitely contribute to increase the opportunity for Japanese

companies to win the bid.

3 Saudi Basic Industries

Corporation (SABIC)

With Daikin Industries, we made proposal to improve energy

efficiency by optimizing air-conditioning as the JCM project.

There are some project candidates in SABIC to apply JCM scheme,

which will be investigated later.

As for Spec-in of the Japanese companies, if better than the other

companies, they will make a recommendation to the related

division.

11

1.2 JTVT (Japan Technology Visit Tour)

As mentioned later, the project type to improve energy efficiency of the seawater desalination

plant (introduction of the Tri-hybrid technology to new facilities, modification of existing plants) by

utilizing advanced technology owned by Sasakura is considered to be candidate for the JCM

demonstration project. So we have invited SWCC to Japan on 3-6 March 2015 and have arranged

the meetings with the following companies and the government.

Mr. Othman (vice governer of SWCC), who is responsible on SWCC’s policy to introduce good

technology, has nominated the visiting members.

As a result of the tour, SWCC’s members have deepened further understanding and interest on

Japanese technology, which will contribute to the future plans of SWCC through the feedback to the

vice gocerner. This activity is also one of the fruits of the DNA’s support.

Table 7 Visiting Entities in Japan

Date Visit to Purpose

2015/3/3 (tue)

MHPS

Takasago works (Hyogo)

Visit gas turbine manufacturing

factory

Sasakura Engineering

Headoffice / factory / “Techno-plaza”(Osaka)

Visit seawater desalination plant

manufacturing factory

2015/3/4 (wed) TOYOBO

Iwakuni factory (Yamaguchi)

Visit RO Membrane

manufacturing factory

2015/3/5 (thu) TEPCO

Kawasaki thermal power station (Kanagawa)

Visit operating thermal power

generation plant

2015/3/6 (fri) METI

(Tokyo) Understand about JCM

Table 8 List of Saudi counterpart

No Name Title/ Institution

1 Dr. Mohamed Osman Saeed Research Scientist and Head Environment & Biology Dept, SWCC

2 Eng. Ahmed M. Al-Zahrani Jubail Plant Manager, SWCC

3 Mohamed A. Al Mutair Plant Chemist, SWCC

4 Eng. Naif Issa Askari Senior Efficiency Engineer, SWCC

12

Table 9 Results of the visits

Companies Contents

1 MHPS

(MITSUBISHI HITACHI

POWER SYSTEMS)

Company’s activities

For the business of the thermal power generation,

Mitsubishi Heavy Industries (65%) and Hitachi (35%)

have invested and established the company in February

2014.

In the Takasago works, mainly gas turbine and steam

turbine are manufactured.

Many expierences in Saudi Arabia (gas turbines 35,

steam turbine 35 and boilers 45)

Gas turbine technology

Various lineups to meet customers’ needs

1,600 degrees class gas turbine “J Series” has large

capacity (simple cycle 327MW, combined-cycle

470MW) and high efficiency (thermal efficiency 62%:

LHV）

Figure 1 Capacity of GTCC1

1 MHPS

13

Companies Contents

Figure 2 GTCC Thermal efficiency2

Plant tour

Gas Turbine

R&D Center

T-point (demonstration facility for gas turbine

combined-cycle power generation plant)

Remote Monitoring Center

Technical Q&As

Figure 3 In front of the works

2 MHPS

14

Companies Contents

2 Sasakura Engineering Presentation on the technology

Modification of exsting plant

Tri-hybrid

Tour of “Techno-plaza”

Technical Q&As: SWCC stated that Sasakura has many

experiences to introduce facilities to SWCC and high

technical reliability than the other companies.

Figure 4 Meeting

3 TOYOBO Presentation on the technology

RO (Reverse Osmosis) Membrane

Surface area of the membrane is larger than

conventional products, therefore superior in

recovery ratio.

Periodical exchange (e.g. 15% per year) is necessary

to guarantee the performance.

Instead of higher initial cost, it has high efficiency

and high durability.

FO (Forward Osmosis) Membrane

Power generation utilising membrane movement

TOYOBO’s activities in KSA

Arabian Japanese Membrane Company (AJMC) was

established as joint venture of ACWA Holding, Itochu

and Toyobo. The headoffice is located in Riyadh.

TOYOBO’s RO Membranes are applied for large

15

Companies Contents

desalination plants in KSA including Al-Jubail Phase II

and Ras Al Khair.

Factory tour

Technical Q&As

Figure 5 Meeting

4 TEPCO

(Tokyo Electric Power

Company)

Overview of the power station

Group 1:

500,000 kW * 3 units

1,500 degrees grade combined cicle (MACC);

thermal efficiency 59%

Manufactured by Mitsubishi Heavy Industries

Group 2:

500,000kW * 1 unit (2nd and 3rd units are under

construction)

The first unit is 1,500 degrees grade combined cycle

(MACC); thermal efficiency 59%. The second and

third units are 1,600 degrees grade combined cycle

(MACC II); thermal efficiency 62%.

Manufactured by Mitsubishi Heavy Industries

Plant tour

Exibition center and central control room

Turbine

HRSG (Waste heat steam generator)

Q&As on the details of facilities and O&M.

16

Companies Contents

Figure 6 Meeting

5 METI

(Ministry of Economy Trade

and Industry)

Outline of JCM

Questions from SWCC:

Difference between JCM and CDM

Advantages of the JCM demonstration project

Construction of Joint Committee in KSA

Diffirence between BaU and reference scenario

Comment on JCM

JCM is very simple and useful scheme.

Please speedup the agreement with KSA government.

Figure 7 Meeting

17

1.3 Government Tender / Procurement Law

Government tender and procurement procedures in KSA are established as the “Government

Tender and Procurement Law” issued on 2006, and its rules of implementation issued by Minister of

Finance in 2007. All Saudi governmental entities have obligations to implement tenders (open-bid)

for companies that are appropriately licensed by the Government. In addition, Saudi governmental

entities should give priorities on products and services supplied by domestic companies.

In the stage of application of the law and rules, there should be some flexibility.

Government Tender and Procurement Law (2006)

Rules of Implementation (2007)

Table 10 Government Tender and Procurement Law3

Summary

- Government can purchase directly as urgent treatment if the amount less

than 1 million SRA (approximately 30 million yen).

- Preference shall be given to national industries, products and services and

those of equal classification.

- All government tenders shall be advertised in two local newspapers and

electronic advertisement media.

- The works of a special nature for which no local contractors are available

shall be advertised outside the Kingdom in addition to local advertisement

means.

- Purchases shall be made and works executed at equitable prices that do not

exceed the prevailing prices.

Bidding Process

- Bids shall be submitted inside sealed envelopes and may be submitted and

opened through electronic means.

- The bid shall be accompanied by a preliminary deposit ranging from 1% to

2% of its value.

- Validity period of bids for public tenders is 90 days from the date of

envelopes opening.

- Two committees are in charge: The envelope opening committee and The

bid evaluation committee

- Bid evaluation committee may negotiate with the lowest price bidder, if

fails to reach the specified price, the committee shall negotiate with the

3 Government Tender and Procurement Law（2006）

18

next bidder, and so on.

- No bid may be excluded on the pretext of low prices unless it is 35% less

than the estimates of the prevailing prices.

Contract

Execution and

Duration

- Contracts and related documents shall be executed in Arabic; another

language may be used beside Arabic but Arabic text shall govern.

- Service contracts of a continuous nature; like maintenance, operation and

catering shall not exceed 5 years.

- The work site shall be handed over to the contracting party within 60 days

from the date of award.

- Prior signing, all government agencies shall present contracts to Ministry of

Finance for review if the execution period is more than one year and the

contract value is 5 million Saudi Riyals.

Bank Guarantees

- The successful bidder shall submit a final guarantee equal to 5% of the

contract amount within ten days from the award date. No final guarantee in

case of direct purchase.

- The final guarantee for continuous contracts shall be reduced annually by

the percentage of work completion, but should not be less than 5% of the

value of remaining works.

- The final guarantees shall be accepted in a form of a bank guarantee letter

issued by a local bank or by a foreign bank through a local bank.

Payment of

Financial

Compensation

- The value of contracts shall be paid in Saudi Riyals, though it may be paid

in another.

- The government agency may make an advance payment equal to 5% of the

total contract value to the contractor, if the payment amount does not

exceed 50 million Saudi Riyals, against a bank guarantee equal to the same

amount.

- The dues of the contractor shall be paid as per the percentage of completed

works against invoices.

- The final payment, which should not be less than 10% of contract value,

shall be paid after the provisional acceptance of works of the delivery of

purchases.

- The total value of the contract shall include and cover all related costs

including fees and taxes.

- The requirements of the government agency may be procured through direct

purchase in urgent cases provided that it does not exceed one million Saudi

Riyals, at least three bids shall be solicited.

Penalties and

Extension of

Contracts

- If the contractor delays contract completion, a delay penalty shall apply

with not more than 6% of the value of the contracts.

- The penalty shall be waived if the delay results from an emergency.

- The government agency may withdraw the work from the contractor if it is

19

found that the contractor has offered a bribe to any official or if the

contractor delays work commencement, slows down execution of the

contract or fails to fulfill any contract conditions.

- Contracts shall be concluded directly with the authorized contractor. No

mediation may be accepted.

It would be very difficult for any foreign companies to avoid tender / bidding for the public

institution including national enterprise business. To match those laws and rules with JCM project

development, the following ways should be considered:

The agreement between Japanese and KSA companies to apply Japanese technology

should be incorporated into a kind of technical requirements (e.g. RFP).

Those technical requirements and JCM methodology (Eligibility criteria) should have

the consistency.

Figure 8 Spec-in inclusion into tender / bidding process4

4 Mizuho Bank

Discuss the Japanese technical application

Consistency with JCM methodology (Eligibility

criteria)

Implement JCM demonstration project

Bidding Process JCM Process

JCM F/S, Business preparations

Spec-in (to be investigated in the detailed F/S)

Successful bid

Bidding

Present technical requirements (KSA)

Technical review

20

2. Identification of the project candidates suitable for

the JCM scheme

2.1 Priority types

Based on the project information provided by the DNA and several companies, we have identified

the project candidates as priority types which are probable to proceed to the JCM demonstration

project stage.

(1) Project information provided by the DNA

We have taken project information list from DNA, which includes projects on the way of CDM

development (not registered yet).

Table 11 Project list provided by the DNA

Project type Site Capacity etc. Counterpart

1 Simple to combined cycle

conversions

Faras power

plant

NA SEC


conversions

Hail NA SEC


conversions

Riyadh NA SEC


conversions

Riyadh NA SEC


conversions

Qaseem NA SEC

6 Crude oil pipeline Qaseem NA SEC


conversions

Qurayat NA SEC


conversions

Rabigh NA SEC


conversions

Rafha NA SEC

21



conversions

Tuhama NA SEC

11 Sub critical boiler to supercritical

boiler

Al-Khufgi NA SEC

12 Sub critical boiler to supercritical

boiler

Shqaiq NA SEC

13 Flare gas recovery Safaniyah oil

field- Riyadh

GHG reduction

116,577tCO2/y

Saudi Aramco

14 PV panel on the rooftop 10.5MW Dhahran City GHG reduction

10,834tCO2/y

Saudi Aramco

15 Landfill gas Jeddah GHG reduction

362,688tCO2/y

NA

16 Tri-Generation System Jeddah GHG reduction

6,865tCO2/y

NA

17 Landfill gas Madinah GHG reduction

141,266tCO2/y

NA

18 High efficiency power generation Jeddah 2,650MW SEC

19 Flare gas recovery Jubail 11MMSCFD Saudi Aramco

20 Flare gas recovery Hofuf city 6MMSCFD Saudi Aramco

21 Flare gas recovery Hofuf city 6MMSCFD Saudi Aramco

22 Flare gas recovery Jubail 5MMSCFD Saudi Aramco

23 Flare gas recovery Dhahran 6MMSCFD Saudi Aramco

24 Energy optimization of the

fertilizer plant

Jubail Industrial

city

1,271Mt/d Al Jubail Fertilizer

Company, Al-Bayroni

(SABIC)

25 Energy optimization of the

fertilizer plant

Jubail Industrial

city

129.25Mt/h *3 Al Jubail Fertilizer

Company, Al-Bayroni

(SABIC)

26 Water cooled chillers using 134a

refrigerants

Mekkah 55,000TR Central District Cooling

Company

27 District cooling plant Hadeed, 30,000TR Energy Central

22


Al-Jubail Company

28 Centralized district cooling plant Jubail Industrial

city

GHGreduction

850,000tCO2/y

SAFCO

29 Waste water recycling plant using

the RO membrane

Jubail NA United Complex

30 Windrow composting Al Kharj NA Al Safi Dairy

31 Waste water recycling plant using

the UF / RO membrane

Jubail 12KTA Ibnzahr

32 Waste heat recovery from boilers Jubail GHG reduction

57,000tCO2/y

SABIC

33 Optimization of steam utilization

in the petrochemical plant

Jubail GHG reduction

48,000tCO2/y

Kayan

34 Flare gas recovery from the

petrochemical plant

Jubail GHG reduction

25,000tCO2/y

SABIC

(2) Project information provided from companies

In addition to the project information provided from DNA, we have gathered project information

from various companies, including Saudi Aramco, Saudi Electric Company (SEC), SWCC, etc.

Table 12 Project information provided from companies

Project type Site Capacity etc. Counterpart Japanese

participants (assumption)

1 Tri-hybrid system for

seawater desalination plant

Al-Jubail Saline water

production

20,000 t/d

SWCC Sasakura

2 Modification of seawater

desalination plant

NA NA SWCC Sasakura

3 Waste heat recovery in the

cement plant

Al-Najran Cement

5,000 -10,000 t/d

Al-Jouf

Cement

JGC, Taiheyo

Engineering

4 Simple to combined cycle gas

turbine

NA 1600 degree

grade gas turbine

SEC A Japanese

manufacturer

23

Project type Site Capacity etc. Counterpart Japanese

participants (assumption)

5 Optimization of air

conditioning by using BEMS

NA NA SABIC Daikin Industries

3.2 Identification of high priority types

(1) High priority types

On the assumption that (1) Japanese companies participate in the project; (2) There will be many

needs in KSA; and (3) Business potential is large, the following three types of project / technology

are regarded as the candidates of JCM projects.

(1) Energy efficiency project of the seawater desalination plant (Tri-hybrid and modification of

existing plants);

(2) Energy efficiency project of the gas-fired power plant (simple-cycle to combined cycle); and

(3) Waste heat recovery in the cement plant

Table 13 Identification of high-priority types

Applied technology Reasons for selecting

1 Energy efficiency project

of the seawater

desalination plant

(Tri-hybrid and

modification of existing

plants)

(Tri-hybrid)

Technologically demonstrated with the pilot plant by SWCC,

Sasakura and Water Reuse Promotion Center.

Next phase would be commercial plant operation

(Modification of existing plants)

Sasakura has the lisence of construction method.

2 Energy efficiency project

of the gas-fired power

plant (simple-cycle to

combined cycle)

By installing steam turbine on the existing simple cycle gas

turbine system additionally, thermal efficiency is expected to

increase by 10-20%.

Japanese products are superior comparing with the same

capacity.

24

Applied technology Reasons for selecting

Japanese products are also highly rated on the maintenance.

3 Waste heat recovery in

the cement plant

Reliability and easiness to maintain of the Japanese products

are superior to the other countries’ products.

Japanese products are also highly rated on the maintenance.

(2) GHG reduction potential

By diffusing the JCM project all over KSA, the following GHG reduction is roughly expected in

the future, at the maximum.

Table 14 GHG reduction potential

Applied technology GHG reduction potential

1 Energy efficiency project of the seawater

desalination plant (Tri-hybrid and modification of

existing plants)

Tri-hybrid: 0.488 million tCO2/y

Modification: 1.46 million tCO2/y

2 Energy efficiency project of the gas-fired power

plant (simple-cycle to combined cycle)

16 million tCO2/y

3 Waste heat recovery in the cement plant 2.66 million tCO2/y

25

3. Investigation of the project plans by applying the JCM

framework

3.1 Project candidates

(1) Energy efficiency project of the seawater desalination plant

(a) Application of the Tri-hybrid technology for the newly-built desalination plant

Sasakura (Sasakura Engineering Co., Ltd.) has successfully developed the “Tri-hybrid technology”

for the seawater desalination plants, in cooperation with SWCC.

By utilizing that technology, the plant can be compact-scale and energy-efficient. It is expected

that the technology is applied in KSA that has large demand of saline water.

Outline of the technology

There are mainly two types of conventional technology for seawater desalination:

- Evaporation method: Seawater is heated and distilled. It has been mainstream method because

of its simpleness. One of the representative ways is MED (Multiple-effect

distillation), which consists of multiple stages or “effects”. However, large amount of

steam is required for evaporation.

- RO membrane method: Many types of molecules, ions and bacteria are removed by using RO

(Reverse Osmosis) membrane with making pressure into seawater. Energy efficiency

is higher than the Evaporation method because it does not use steam; however, the

technical applicability depends on the quality of raw seawater.

The Tri-hybrid method of seawater desalination technology is composed by Evaporation method,

RO membrane method and NF (Nanofiltation) membrane method, which realizes advantages

including followings:

- It can operate with higher temperature: Scale content including sulfic acid ion is removed by

using NF membrane, and as a result, it becomes not necessary to keep TBT (Top

Brine Temperature) low to avoid precipitation of scale contents inside MED stages.

TBT can be raised to approximately 125 degrees without scale content, comparing

with approximately 70 degrees with scale content. Then, effective temperature gap

can be expanded, and steam for evaporation is to be reduced by approximately 50%.

26

- Energy efficiency is high: TBT is to be raised as shown above, and recovery ratio of RO

membrane is to be raised to approximately 50% compared with approximately 30%

of the conventional methods.

As a result, saline water production is to be almost doubled with the same energy

input with the Evaporation method (only MED), which means that energy

consumption for the same amount of saline water is almost halved.

- Japanese company has the technological superiority: Only Japanese companies can apply the

Hybrid technology.

Figure 9 MED/TVC unit (6,000 t/d)5

Figure 10 Tri-hybrid unit (20 MIGD)6

5 Sasakura (MED/TVC Unit: Multiple Effect Distillation process with Thermal Vapor Compression) 6 Sasakura (MIGD: Million Imperial Gallon per Day)

27

Figure 11 Water flow of the Tri-hybrid system (200 kt/d)7

Reduction of energy consumption

By applying the technology, steam consumption can be reduced drastically comparing with the

Evaporation method as shown in the following table.

Table 15 Comparison among technologies (10 kt/d)8

Parameters TRI-HYBRID CONVENTIONAL MED RO

SWRO production 4,000 t/d 0 t/d 10,000 t/d

MED/TVC total production 6,000 t/d 10,000 t/d 0 t/d

Plant total production 10,000 t/d 10,000 t/d 10,000 t/d

Top brine temperature 125oC 67oC -

Steam requirements 1) 12.5 t/h 41.7 t/h 0 t/h

Electricity requirements 1,171 kWh 954 kWh 1,629 kWh

Seawater Intake 1,485 t/h 3,390 t/h 1,447 t/h 1) Without vent ejector steam

7 Sasakura 8 Sasakura

28

Without application of the Tri-hybrid technology, the most probable technology is either (1) RO

method; or (2) conventional Evaporation method (MED), which is regarded as the reference scenario

of JCM. Raw seawater is polluted, or, available heat is limited in some sites along the Persian Gulf,

which means it is technologically hard to apply only RO membrane method in such sites. Along the

Persian Gulf of KSA, the ratio of sites where the technology (1) or (2) is applicable is thought to be

approximately 3:7.

SWCC has the policy to introduce both conventional proven technology and newly developed

technology. For example, for one of the latest project (Ras Az Zawr Phase 1, October 2009), SWCC

specifies the capacity of the Evaporation method (70% at minimum) and the RO membrane method

(30% at maximum).

Figure 12 Requirements for the desalination project of Ras Az Zawr Phase 19

9 SWCC

29

Figure 13 Locations of Raz Az Zawr and Al Jubail along the Persian Gulf

Now we decide the JCM reference scenario as the weighted average of (1) RO membrane method

by 30% and (2) conventional Evaporation method by 70%, in the condition of the project sites along

the Persian Gulf of KSA.

The following table shows the comparion between the project scenario and the reference scenario

in case of the capacity of 200 kt/d.

Table 16 Comparison between the scenarios (200 kt/d) (1)10

Project Scenario Reference Scenario

70% 30%

Weighted Average

Tri-hybrid NF/RO/High Temp

MED

Conventional MEDat TBT 67 degC

RO

Production (m3/day)

MED 120,000 200,000 -

NF / RO 80,000 -

RO 200,000 -

In Total 200,000 200,000 200,000 200,000

Steam Requirements

t / hr 12.5 * 20 = 250 41.7 * 20 = 834 0 583.8

kt / y 2,190 5,114

Electricity Consumption

kWh / y 1,171 * 20 = 23,420

954 * 20 = 19,080

1,629 * 20 = 32,580

23,130

10 Sasakura (revised)

30

Cost

Initial investment is roughly estimated as 40 million USD (in case of 20 kt/d). As shown below,

initial investment (CAPEX) of the technology is almost the same with the conventional MED

method, and expensive than RO membrane method under the same condition. Meanwhile,

operational cost (OPEX) of the technology is also cheaper than the reference scenario, so the life

cycle cost of the project is better estimated than the reference.

It has been difficult to make the application of the Tri-hybrid system as a precondition of the

projects in KSA, because all project owner is obliged to conduct tender process in principle, and

manufacturers except for Japanese ones tend to bid with much cheaper price, therefore, price

competition has been hard for the Japanese manufacturers.

Table 17 Comparison between the scenarios (200 kt/d) (2) 11

Project Scenario Reference Scenario

Tri-hybrid NF/RO/High Temp MED

Conventional MED at TBT 67 degC

RO

Production (m3/day)

MED 0 200,000 m3/d 0

NF/RO 80,000 m3/d 0 200,000 m3/d

High Temp. MED 120,000 m3/d 0 0

Total 200,000 m3/d 200,000 m3/d 200,000 m3/d

CAPEX (US$/m3-product) 0.2091 0.2088 0.1332

OPEX (US$/m3-product) 0.4077 0.7220 0.2971

Life Cycle Cost (US$/m3-product)

0.6168 (100%)

0.9308 (150.9%)

0.4303 (69.8%)

(Conditions)

Operation Year : 30 Years

Availability : 355 days/Year

Discount Rate : 4% / Year

Inflation Rate : 2.4% / Year

Electricity Cost : SR 144/MW (Saudi Price) = US$ 38.4/MW

Construction period

Approximately 2 years.

11 Sasakura (revised)

31

(b) Modification of the existing plants

There are many seawater desalination plants in KSA, and then energy reduction potential would

be very large by improving energy efficiency.


There are the following two representative methods to improve energy efficiency of the existing

seawater desalination plants:

- Rehabilitation: Scale content includes insoluble minerals within seawater, which decreases

thermal efficiency of the plant by precipitating and adhering on the heating surface

and avoiding heat transfer. Therefore, as the rehabilitation, original thermal efficiency

is regained by removing scale precipitation using acids.

SWCC has been developing the project to remove scales to improve energy

efficiency as the CDM project (by making use of FS12 technology owned by Therma

Chem, UK). CDM methodology NM0363 has already been approved by the CDM

Executive Board, and has been registered as ACM0054 “Energy efficiency

improvement through on-line fire side cleaning technology applied to fossil fuel fired

steam boilers in existing energy and other industries” (October 2013). CDM project

by utilizing that approved methodology has not been validated nor registered yet.

Figure 14 Before and after the rehabilitation12

12 PDD (draft version) “Energy efficiency improvement at Saline Water Conversion Corporation by means of FS12

Utilization”

32

- Modification: In case of MSF, by increasing the number of stages, the effective temperature

gap is to be increased, which improves energy efficiency. Performance Ratio (PR) is

the index that roughly represents saline water production per heating steam, and the

more stages increases, the more PR also increases.

Figure 15 Impact of number of MSF stages on Performance Ratio13

The modification is feasible to implement after the rehabilitation, by utilizing

additional budget (variation order), not under the tender process. If the first

modification project is conducted in advance, it is regarded as a pilot project, and the

payment is not made until energy efficiency improvement is demonstrated.

The patent of the modification technology is taken by Westinghouse Electric (US)

about 30 years ago, and its life has already been terminated. However, the technology

has not applied to any commercial plant all over the world. Patent application of the

construction method of its rehabilitation has been already submitted by Sasakura.


In the proposed rehabilitation project, by increasing number of stages from 17 to 33, heat recovery

ratio of the circulating brine (concentrated seawater in the evaporator) is raised, and then heating

steam in the brine heater is decreased.

As a result, it is rougly estimated that the Performance Ratio will be increased by approximately

20%.

13 Sasakura

33

Figure 16 Vapor Temperature and Brine Recirculation Temperature before and after

modification (red: before, blue: after)14

Figure 17 Vapor Temperature and Brine Recirculation Temperature before and after

modification (red: before, blue: after)15

14 Sasakura 15 Sasakura

BH 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

Brine Heater

TBT 112.8 deg. C

107.64 C

106.63 C

5.16

C

6.17

C

TV(before modification)TV(after modification)

34

In principle, BaU (continue using without rehabilitation nor modification) may not be identified as

JCM reference scenario. It is thought to be one idea to regard the energy consumption of original

design (after rehabilitation) as the reference scenario.

Cost

Initial investment is roughly 3.5 -4 million USD for each unit.

Construction period

Approximately 4 months.

35

(2) Energy efficiency project of the gas-fired power plant

In this F/S, we have groped the JCM project candidate required by SEC, supported by DNA. And

we have discussed with a Japanese manufacturing company on the adequate technology suitable for

the needs of SEC.

Table 18 Needs of SEC16

Counterpart SEC (Saudi Electric Company)

Project site Not identified yet

Applied

technology Add-on to simple cycle gas turbine (conversion to combined cycle)

Needs for

JCM projects

Technology:

SEC has already launched the plan to introduce GTCC (Gas Turbine

Combined Cycle).

Spec-in for Japanese companies is welcomed. Japanese technology and

after-sales service is highly regarded.

Process of introduction:

Investment is decided by the Investment Committee.

In principle, it is obliged to make open tendering, which is hardly to be

changed. Generally, SEC’s tender process set a highest value on the applied

technology, compared with the price. And regarding the technology, Japanese

manufacturers are always highly rated with a part of EU/US companies (e.g.

Siemens and GE).

In June 2014, the suppliers’ meeting was held in Japan, targeting gas turbine.

JCM:

Finance supporing scheme for JCM project is good and acceptable.

JCM scheme is consistent with SEC’s policy:

- Spec-in by Japanese companies are especially welcomed;

- SEC is required to promote energy efficiency by the Government;

- By utilizing financial support provided by the Japanese Government, initial

cost will be decreased, which will lead to increase the opportunity of Spec-in.

16 SEC (December 2014)

36


In the project, to the existing gas turbine, steam turbine is attached additionally (Add-on:

conversion from simple-cycle to combined cycle). By conducting Add-on project, thermal efficiency

is to be improved drastically.

Combined cycle means the system which is composed by multi power generation system.

Currently, mainstream is GTCC (Gas Turbine Combined Cycle) which is composed both by gas

turbine and steam turbine. GTCC utilizes waste heat from gas turbine to drive steam turbine, which

achieves the high efficiency and small fuel consumption.

Figure 18 GTCC 17

The proposed project expects the following combination of facilities:

Table 19 Facilities for Add-on project 18

Gas turbine Existing facility

Steam turbine

Installed additionally. And by increasing the turbine blade stage,

further efficiency is achievable:

Ex) HP Turbine ⇒ Increase 3~4 stages

LP Turbine ⇒ Increase 2~3stages

Steam turbine generator Installed additionally. And by utilizing H2 Cooled Generator

instead of Air Cooled Generator, further efficiency is achievable.

HRSG (Heat Recovery Steam

Generator) Installed additionally.

17 A Japanese company 18 A Japanese company

37

Figure 19 A Japanese power station after “Add-on” installation19

A Japanese company has also been developing the GTCC system, in which gas turbine, steam

turbine and Quick Start Controlling System are combined, and it aims to achieve thermal efficiency

62% (LHV). (* It is not Add-on system but completely newly-built GTCC.)


Two cases are shown below. In each case, thermal efficiency was increased by 23%, from 34%

(simple cycle) to 57% (combined cycle).

Table 20 Cases of Add-on application 20

Before After

Japanese power

station A

Configuration: 3 x GT

Output: 265MW x 3

Efficiency: 34%+

Fuel: Natural Gas

Configuration: (GT+HRSG+ST) x 3

Output: 416MW x 3

Efficiency: 57%+

Fuel: Natural Gas

19 A Japanese company 20 A Japanese company

38

Before After

Japanese power

station B

Configuration: 3 x GT

Output: 265MW

Efficiency: 34%+

Fuel: Diesel Oil

Configuration: (GT+HRSG+ST) x 1

Output: 416MW

Efficiency: 57%+

Fuel: Diesel Oil

Conditions for the proposed project would be different from Japanese cases shown above, so

improvement of energy efficiency would also be different. Now, tempolarily, the following case is

supposed:

Table 21 Assumption of Add-on project 21

Before After

80MW×4 = 320MW

Thermal efficiency: 30%

450MW including additional steam turbine

130MW

Thermal efficiency: over 40%

In principle it is difficult to apply BaU emissions as JCM reference scenario, so we cannot sum up

total CO2 reduction between before and after the installation. It has to be investigated how to set up

the reference scenario.

Cost

Based on the assumption above, initial equipment cost for the Add-on project is supposed to be

approximately 100 – 200 USD/kW22.

21 A Japanese company (November 2014) 22 A Japanese company (November 2014)

39

(3) Waste heat recovery in the cement plant

In this F/S, we have identified the following JCM project candidate, supported by DNA.

Table 22 Outline of waste heat recovery project23

Counterpart Al-Jouf Cement

Project site Najran

Applied

technology Waste heat recovery power generation system in the cement plant

Outline of the

project

Intends to implement the waste heat recovery project in the end of 2015.

Proposed by a Chinese contractor that has constructed existing plant.

To be installed in the existing plant that has the production capacity of 5,000 –

10,000 tons/d, constructed in 2010.

Cost of construction is estimated as 70 million SAR (25 million USD), and

construction period is estimated as 9 months.

Hopes to reduce heavy oil consumption by approximately 35%.

Interest on the Japanese technology applied as JCM project.

We made a discussion with Taiheiyo Engineering as follows:

Outline of the technology24

Waste heat emitted from cement plant is recovered and utilized to generate electricity by using

turbine generator. In Japan, almost 100% of large-scale cement kiln have the waste heat recovery

system.

Approximately 90% of energy input into cement plant is consumed in the calcination process as

the thermal energy. In the calcinations process, cement clinker is made by firing materials over 1,450

degrees, so large amount of heat is consumed.

Within the heat consumption in the calcinations process, effective energy for making cement

clinker is approximately just 55%, while the rest 45% is emitted as sensible heat of exhaust gas from

preheater (PH), sensible heat of exhaust gas from clinker cooler (AQC), sensible heat taken out with

clinker and heat radiation. Among these, approximately 10% of exhaust gas heat is utilized for

23 Al-Jouf Cement (December 2014) 24 Taiheiyo Engineering

40

drying materials and coals. However, remaining 35% is emitted through dust precipitator into the air,

without utilizing again.

To recover waste heat, by using the proposed technology, WHR boilers are installed, and

generated steam is used to generate electricity.

The following figure shows the case in Japanese cement plant, which utilizes 18% energy

additionally.

Figure 20 Heat balances in a Japanese cement plant25

The system flow is shown below; it is the technologically proven system that has been used for

long time in Japan. Sensible heat in exhaust gas emitted from PH and AQC is recovered by WHR

boiler, and electricity is generated by driving steam turbine.

Except for this conventional technology, there are more energy-efficient waste heat recovery

technologies which use heat medium of low boiling point. However, to date, they are expensive

because of complicated design. Therefore, we suppose to use conventional waste heat recovery

technology for JCM projects.

25 Taiheiyo Engineering

Heat from material/air4%

Clinker burning reaction53%

Drying raw material/coal 9%

Exhaust gas heat 9%Clinker heat 3%Others 8%

Recovered by WHR powergeneration 18%

Combustion of fuel 96%

EffectiveEnergy80%

ExhaustedEnergy 20%

41

Figure 21 System flow of waste heat recovery power generation system26

Water is conveyed from PH and AQC to boilers, converted to high-pressure steam through coal

economizer, evaporator and heater, and sent to turbine generator. So as to utilize heat efficiently, a

part of heated water emitted from coal economizer is flushed, and generated mid-pressure steam is

sent to turbine generator, then it is operated with mixed-pressure steam.

The generated electricity is used inside the same cement plant (it is impossible to cover all power

consumption27). Hence, generated electricity by the waste heat recovery power generation system

replaces the same amount of electricity purchased from the power grid or provided directly from

power generators.

Superiority of Japanese technology

Superiority of Japanese technology regarding waste heat recovery includes followings:

Table 23 Superiority of Japanese technology28

Exhaust gas from preheater contains many dusts, and there have been many cases to decrease

heat exchanger effectiveness because of adhesion of dust onto heat-exchange tube of the boiler,

if the facility is cheap one made by manufacturers of China etc.

26 Taiheiyo Engineering 27 Taiheiyo Engineering (January 2015) 28 Taiheiyo Engineering (January 2015)

42

In some cases, remaining dust without brushed off adequately influences badly on operations of

the kiln (e.g. enough amount air is not obtained).

Furthermore, tube abrasion during long-time operation is concerned.

Japanese technology is designed to raise heat exchange efficiency, and it has proven facilities to

brush dust off and to avoid against tube abrasion.

Japanese waste heat recovery system operates without any maintenance more than 10 years,

which will be one of the eligibility criteria of JCM methodology (spec-in).

Although some European manufacturers have excellent technology, Japanese advantage is the

stable operation technology established from long-time experience.


Actual reduction of energy consumption has to be investigated by taking into consideration of

project conditions.

Al-Jouf Cement, the counterpart candidate of the project, hopes to reduce heavy fuel consumption

by 35%, while in a Japanese case approximately 18% of energy reduction is supposed. CO2

reduction is calculated by using the reduction estimate of electricity consumption. According to the

JCM cases, approximately 20% of electricity consumption is estimated to be reduced.

Figure 22 Waste heat balance power generation system

Combustion

of fuel

The other

Effective

Exhausted

Effective

Exhausted

Power

Generation

Electricity

consumption

Without

WHR With WHR

Recovered by WHR

Heat input Heat utilization Consumption of electricity

Correspond to CO2 reduction

43

Energy reduction or CO2 reduction under the JCM scheme have be estimated by investigating the

reference scenario.

Cost

Initial cost of the conventional waste heat recovery power generation system is supposed to be

approximately 1,500 – 3,000 USD/kW29.

Supposing to introduce 10MW power generation system for the cement plant of 5,000-10,000

t-cement/day (proposed by Al-Jouf Cement), initial cost of equipments will be 15-30 million USD.

The following table shows the cost comparison among technology types, including new

technology (Kalina Cycle and ORC Cycle).

Table 24 Cost comparison among waste heat recovery power generation technologies30

Conventional Kalina ORC

System Simple Complex Complex

Generation Efficiency 23% @1.5MPa Higher Higher

Media Water Ammonia Thermal oil

Cost info* (US$/kW) 1500-3000 5000- 5000-

Others Many applications No application Suitable to small plant

* From published source

29 Taiheiyo Engineering (January 2015) 30 Taiheiyo Engineering

44

3.2 Superiority of Japanese technology

On the highest and high priority project types, there are supposed to be superiorities of

Japanesetechnologies as follows:

Table 25 Superiority of Japanese technology 31

Type Performance Cost

Energy efficiency project of the seawater desalination plant

Seawater desalination plant Japan) Tri-hybrid Other) MED/RO

Tri-hybrid technology is owned only by the Japanese companies.

Energy consumption (mainly steam) can be almost halved32.

Technical demonstration has been conducted in the pilot plant. The next phase would be introduction of commercial plant.

Initial investment would be almost the same with MED and cheaper than RO33.

Operating cost would be cheaper than both MED and RO34.

Waste heat recovery in the cement plant

Waste heat recovery power generation system in the cement plant

If they introduce cheap facility, heat exchange efficiency is often decreased and also become out of condition35.

Japanese advantage is high efficiency and the stable operation technology36.

Although general comparison is difficult, there is a case study that made comparison between Japanese and Chinese similar technologies for developing JCM project37: Initial investment is different by

10%. A part of boiler defectives in the

third year which requires repair costs.

Because of the shutdown for installing new boiler, power generation is halved within that year.

After the fourth year, power generation is decreased by 20% from expected.

Energy efficiency project of the gas-fired power plant

Add-on Japanese manufacturers have experience than European ones, which may result the difference of thermal efficiency by 1-2%38.

Almost the same level with European manufacturers39.

31 Mizuho Bank 32 Table 16 33 Table 17 34 Table 17 35 Table 23 36 Table 23 37 JFE Engineering 38 Anonymous Japanese manufacturer 39 Anonymous Japanese manufacturer

45

4. Draft of JCM methodology and estimate of GHG

emission reductions

4.1 Target types

We regard the following types as one the targets of JCM project, for which draft JCM

methodology is to be made:

Target types

(a) Application of the Tri-hybrid technology for newly-built plants

(b) Modification of existing plants

4.2 Reference scenario

On two project types shown above, reference scenarios (draft) are supposed to be as follows:

Table 26 Reference scenarios (draft)

Project type Reference scenario

(a) Application of the Tri-hybrid

technology for newly-built plants

For newly built plant

Evapolation method : RO membrane method = 7 : 3

Steam is supplied from adjacent power generation plant


For existing plant

Rehabilitation is implemented before modification

Steam is supplied from adjacent power generation plant

In the coming detailed F/S, adequateness on the way of setting up the scenarios are to be

investigated, including followings:

46

(a) Application of the Tri-hybrid technology for newly-built plants

Reference scenario for applying the Tri-hybrid technology is (1) RO membrane method or

(2) Evapolation method. In some sites (especially along the Persian Gulf), there are barriers

against applying only RO membrane. In KSA, (1) : (2) is supposed to be approximately 3:7,

therefore, now we can result that those weighted average is regarded as the reference

scenario.

So as to establish the reference scenario as above, some facts are to be demonstrated:

Relationship between raw seawater quality and applicability of RO membrane;

Business policy of the project owner (in this case, SWCC); and

Influence on the boiler type in the adjacent power generation plant


In principle, BaU is not preferable as the reference scenario. In this case, BaU may mean the

continuous operation of existing plant without any rehabilitation and modification. One of

the alternatives is to regard energy consumption close to the nominal value (after

rehabilitation) as the reference scenario.

So as to establish the reference scenario as above, some facts are to be demonstrated:

Possibility or plans of plant owner's implementation of rehabilitation; and

Possibility or plans of implementing rehabilitation before modification

4.3 Eligibility criteria

On those two project types, the eligibility criteria of JCM methodology (draft) is as follows:

Table 27 Eligibility criteria (draft)

Project type Criteria What are to be investigated

(a) Application of

the Tri-hybrid

technology for

newly-built

plants

To apply Tri-hybrid

technology. Definition of the technology

Seawater is polluted

which makes barrier

to apply only RO

membrane; or

Relationship between raw seawater

quality and applicability of RO membrane

Business policy of the project owner (e.g.

Requirements for tender, RFP)

47

Project type Criteria What are to be investigated

Business policy of the

project owner is clear.

Steam is supplied by

steam boilers.

Influence on the boiler type in the

adjacent power generation plant

Electricity is supplied

by adjacent power

generation plant.

Case of purchasing electricity from the

power grid

(b) Modification of

existing plants

Modification includes

increasing steps in the

Evaporation method.

Definition of the technology

Steam is supplied by

steam boilers.

Influence on the boiler type in the

adjacent power generation plant

Electricity is supplied

by adjacent power

generation plant.

Case of purchasing electricity from the

power grid

4.4 Calculation method of emission reductions

Both on those two project types, the difference (reductions) of the followings are to be estimated

to calculate the CO2 emission reductions:

(1) Energy consumption (steam, fossil fuels to generate steam, electricity, fossil fuels to

generateelectricity); and

(2) Production of saline water in the same plant

Reference emissions

= ∑ , +

Where:

: Reference emissions during the year y (t-CO2/y)

i : Number of steam boilers within the project boundary , : Reference emissions from steam boiler “i” (on the consumption in the project

48

boundary) during the year y (t-CO2/y)

: Reference emissions from electricity (on the consumption in the project boundary)

during the year y (t-CO2/y)

, = , × , × ,

Where: , : Reference emissions from steam boiler “i” (on the consumption in the project

boundary) during the year y (t-CO2/y) , : Allocated annual consumption of fossil fuel “k” in steam boiler “i" (on the steam

consumption in the project boundary) (mass or volume units) , : Net calorific value of fossil fuel “k” used to generate steam in steam boiler “i" (TJ/mass

or volume units) , : Carbon emission factor of fossil fuel “k” used in the steam boiler “i" (t-CO2/TJ)

= , × , × ,

Where:

: Reference emissions from power generator (on the consumption in the project

boundary) during the year y (t-CO2/y)

: Allocated annual consumption of fossil fuel “k” in power generator (on the electricity

consumption in the project boundary) (mass or volume units)

: Net calorific value of fossil fuel “k” used to generate electricity in power generator

(TJ/mass or volume units)

: Carbon emission factor of fossil fuel “k” used in the power generator (t-CO2/TJ)

Project emissions

= ∑ , +

Where:

: Project emissions during the year y (t-CO2/y)

i : Number of steam boilers within the project boundary , : Project emissions from steam boiler “i” (on the consumption in the project boundary)


: Project emissions from electricity (on the consumption in the project boundary) during

49

the year y (t-CO2/y)

, = , × , × ,

Where: , : Project emissions from steam boiler “i” (on the consumption in the project boundary)

during the year y (t-CO2/y) , : Allocated annual consumption of fossil fuel “k” in steam boiler “i" (on the steam

consumption in the project boundary) (mass or volume units) , : Net calorific value of fossil fuel “k” used to generate steam in steam boiler “i" (TJ/mass

or volume units) , : Carbon emission factor of fossil fuel “k” used in the steam boiler “i" (t-CO2/TJ)

= , × , × ,

Where:

: Project emissions from power generator (on the consumption in the project boundary)


: Allocated annual consumption of fossil fuel “k” in power generator (on the electricity

consumption in the project boundary) (mass or volume units)

: Net calorific value of fossil fuel “k” used to generate electricity in power generator

(TJ/mass or volume units)

: Carbon emission factor of fossil fuel “k” used in the power generator (t-CO2/TJ)

Emission reductions

= × −

Where:

: Emission reductions during the year y (t-CO2/y)

: Reference emissions during the year y (t-CO2/y)

: Project emissions during the year y (t-CO2/y)

: Reference water production amount during the year y (amount/y)

: Project water production amount during the year y (amount/y)

50

4.5 Calculation of emission reductions

Now for the trial calculation, we assume a desalination plant that has production capacity of 20

kt/d. And for the sake of simplicity, only the steam consumption is taken into consideration (that is,

electricity consumption is assumed to be almost the same between two scenarios).

Table 28 Assumptions

Reference Project Source

Saline water production (1,000

m3/d) 20 Parameter

Steam consumption (t/h) 58.4 25.0 Table 16

Steam consumption (kt/y) 511.4 219.0 24h*365d

Net calorific value of fuel oil

used to generate steam in steam

boilers (TJ/t)

0.0030

65 L/t-steam(1) * 39.1 MJ/L(2) = 2.54 GJ/t-steam = 0.00254 TJ/t-steam (1) Assumption of Japanese boiler (2) Calorific value of fuel oil (A heavy oil) (Ministry of the Environment)

Carbon emission factor of fuel

oil used in the steam boilers

(t-CO2/TJ)

74.1 IPCC (2006) Gas/Diesel Oil

Reference emissions = ∑ , = , × , × , = 511.4 × 0.0030 × 74.1 = 113.7

Project emissions = ∑ , = , × , × , = 219.0 × 0.0030 × 74.1 = 48.7

Emission reductions = − = 113.7 − 48.7 = 65.0

51

5. Business opportunity and project candidate

The steps towards the commercial project to apply Tri-hybrid technology in the newly-built

seawater desalination plant are as follows:

(1) First step: Technical demonstration test

In response to SWCC’s request for research cooperation, the technical demonstration project

“Hybrid desalination research association for oil producing countries (The Kingdom of Saudi

Arabia)” was conducted by utilizing the budget of METI (2006-2009). Furthermore, after finishing

that project, the technical demonstration test has continued as the voluntary project with the

participation of the following three entities (-October 2012):

Table 29 Hybrid desalination research association for oil producing countries (The

Kingdom of Saudi Arabia)40

Role Entity

Installation and operation SWCC R&D Center (Al-Jubail)

Project management Water Reuse Promotion Center

Production of facility and technical evaluation Sasakura

The main objective of that project is technical demonstration, and for that, very small-scale pilot

plant (24 t/d) was manufactured, installed and tested, which has been already stopped operation.

The result of the project includes followings41:

1. Operation Results of the Pilot Plant

(1) Operation less than 125 degrees (nearing the maximum limit to scale deposition) was proven

possible by fully utilizing the NF membrane treatment that was found to significantly eliminate

sulfate ion and other scale components dissolved in seawater.

(2) This is known to be the first in the world, with the use of MED Seawater Desalination System.

(3) The charts of the temperatures in correspondence to the categories and the scale predictions

corresponding to the concentration levels were proven feasible though the analysis of the

saturation solubility product of scale components.

(4) The stability of operation was proven though a long term operation with temperature, salinity ,

40 Water Reuse Promotion Center 41 Water Reuse Promotion Center and Sasakura

52

and the concentration of calcium sulfate at practical levels.

(5) With the above results, the Tri-hybrid seawater desalination system was announced completed in

terms of basic demonstrations.

2. Economic Efficiency and Financial Savings

Based on the research operation of the pilot plant, the following results were revealed from

implementing the conceptual design of the device with the capacity of water production of

100,000 m3 /day (RO: 50,000 m3 /day, MED: 50,000 m3/day).

(1) Steam consumption with the traditional MED method, the water production was at 8-10 due to

the TBT being limited to 65 degrees. However with this new method, the production of 20 or

an increase by 2.2 times is possible when under identical circumstances. In financial lenses, the

cost per unit of water produced of the traditional MED method was US $0.94/m3, while this

new method shows US $0.42/m3. It is clearly a cost efficient method in addition to

performance efficiency.

(2) The desalination cost including the construction costs, electricity bills, steam volume and

chemical costs of this method was 0.75US $/m3, which is about 50% of of the MED method

requiring 1.33US$/m3.

3. Conclusion

The cost, as well as energy efficiency of the Tri-hybrid NF/RO/MED seawater desalination

system was proven by the successful erection of an actual performance replicating facility in

2008, with the support and positive relations with our counterpart, the SWCC. The collection of

engineering data, as well as further research is essential for the expansion and trust of this

technology in the Middle Eastern countries.

Figure 23 Pilot plant42

42 Water Reuse Promotion Center

53

(2) Second step: Demonstration project by the commercial plant

Sasakura has been talking with SWCC on the application of the Tri-hybrid system in the

commercial plant, and constructing strong relationship with Minister of Water and Electricity and

Governor/Deputy Governor of SWCC.

In this F/S, so as to investigate the feasibility of the project as JCM demonstration project, and to

cultivate a better understanding on the technology and JCM, we have invited 4 staffs of SWCC to

Japan.

Based on those preparations, we intend to have further talks with SWCC and progress to the

detailed JCM F/S, towards implementation of JCM demonstration project after 2016.

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

Figure 24 Steps toward the demonstration project43

43 Mizuho Bank

Technical Demonstration

(METI, SWCC, Water Reuse Promotion Center and Sasakura)

(Small-scale pilot plant)

Technical Demonstration (continue) (SWCC, Water Reuse Promotion Center and

Sasakura) (Small-scale pilot plant)

Preparation for the commercial project

(Sasakura)

JCM F/S (This project)

Voluntary preparation for JCM in the KSA

(Mizuho)

Detailed JCM F/S

JCM Demonstration Project

(Commercial plant)

feasibility study project for the jcm (2014fy) (jcm f/s to ... · 3 al-jouf cement 2014/12/11...

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