1996 – 1997 (Electrowatt-Ekono Ltd)

Client: Kievenergo and Teplokomunenergo (World Bank, EBRD)

District Heating system was first established in Kiev in 1935 and first CHP plant was deployed in 1937. The Joint Stock Company “Kievenergo” covers the main part of the power and heat demand in the city. Municipal Teplokomunenergo was in charge of smaller scale DH supply in various parts of Kiev.

The purpose of the assignment was to prepare a rehabilitation plan including technical design and a least cost investment program for the Kiev CHP DH system. The investment program was the basis for a USD 200 million loan granted by the World Bank to Kievenergo.

The DH system under Kievenergo comprised 768 km of DN50-DN1220 double pipe, with a peak demand of about 13,000MW. The rehabilitation plan also covered the municipal Teplokomunenergo with 668 km of network (including 510 km of secondary pipes).

The specific objectives of the master plan were to:

• prepare a load forecast considering anticipated efficiency improvements in consumption and in the system itself
• prepare the first-phase, 5 year investment programme
• identify a programme for longer term investment requirements
• prepare technical specifications and bidding documents and to propose implementation arrangements
• provide recommendations on improvements needed in design, operation and maintenance
• evaluate the feasibility of establishing manufacturing capability in Ukraine for energy efficient equipment

Mr. Lehdonvirta was responsible for the project management (semi-resident) including planning and supervision of the master plan work, ensuring close cooperation with local recipients and IFIs involved, and reporting. As a DH specialist, Mr. Lehdonvirta participated the technical design, assessed the energy savings and carried out the economic analysis to prepare the priority investment plan.

CHP DH Cost Allocation and Heat Tariffs

In a separate assignment, Mr. Lehdonvirta advised Kievenergo in introducing a new methodology for allocating the CHP production costs for power and heat, respectively and developing a new heat sales tariffs. The target was to prevent cross-subsidizing between heat and electricity business and as importantly, to provide justified incentives for expansion of CHP DH by fair allocation of efficiency gains in co-generation.

1993 – 1994

Client: Sheffield Heat and Power Ltd

Sheffield Heat and Power Ltd (SHP) was established in 1988 and it is one of the largest and most successful in the UK. The CHP DH system was initiated and developed based on the heat off-take from the existing municipal waste-to-energy plant. The heat network has been extended in several phases along the years.

The (original) Energy Recovery Facility in the city utilized 225,000 tons of waste to produce up to 60MW of thermal energy and up to 19MW electrical energy. After construction Phase III, around 120,000 MWh/a of heat was delivered to buildings in Sheffield City Centre and the surrounding areas, including 2,800 dwellings.

Mr. Lehdonvirta acted as the Technical Manager of Sheffield Heat and Power Ltd during extension of the system (Phase III), finalizing the expansion plans, coordinating the technical design, specifications and procurement, assessing new business opportunities, advising in tariff development, and optimizing the operation of the CHP DH system.

Client: Municipal Unitary Company “Department of Municipal Economy of the Minsk City Executive Committee”

Minsk Water Treatment Plant (MWTP) is a municipal facility built in 1960-ies for domestic and industrial sewage treatment.  The actual discharge of influent sewage is 264,700 thousand m³ per year.

The sewage undergoes mechanical and biological treatment. The mixture of raw sediment and activated sludge (3,000-4,000 m³ a day) are dewatered with eight three-phase centrifuges decreasing the moisture content by 75-78% with a 7 times reduction in volume to 540-550 m³ of sludge (or 160 tons of solids) a day.

The original design of MWTP had provided for anaerobic digestion of sludge in specially constructed methane tanks.  The generated biogas was used for the MWTP’s internal needs and for heating several residential buildings.  In 1970-ies, this technology was banned in the USSR because of an accident at a similar facility; the methane tanks were taken out of service and are inoperable.  That brings along the sludge disposal problems  which could be partially resolved by introducing a biogas facility. Currently the sludge is in open ponds outside the city area, causing various environmental problems, including smell, ground water issues and methane release to the atmosphere.

Greenfield Consulting was commissioned in a multi stage project by the World Bank to prepare a feasibility study and business plan – together with local consultants – for constructing modern anaerobic digestion biogas facilities to the MWTP and a CHP engine power plant for the use of biogas. The anaerobic digestor would process the sludge from the wastewater treatment plant of the UC “Minskvodokanal” in a controlled way and reduce the environmental issues significantly. The feasibility study provided a preliminary technical design and cost estimates for the biogas and CHP generation, complete with connections to power grid and DH network. The Business Plan presented a business model for the biogas and heat and power sales, including analysis from the financial, environmental, technical and organizational standpoints. Based on the Business Plan, Nordic Environmental Finance Corporation (NEFCO, a special arm of Nordic Investment Bank) continued the project development.

2006

Client: European Bank for Reconstruction and Development (EBRD), the City of Kharkiv, Ukraine (Greenfield as a sub-consultant to Pöyry Energy)

Kharkiv is the second largest city in Ukraine with a population of 1.5 million. Kharkiv was one of the most industrial cities in the former Soviet Union, known for manufacturing of steam turbines, tractors, military equipment and other large scale industrial products. The city is also known for its various educational institutions, cultural and political organizations.

The metropolitan area of the city is densely built. Taken the availability of excess heat from industrial plants with electricity and steam generation for their own needs, the district heating system has historically proven to be a successful method for heating the buildings in the city.  In zones where long transmission pipelines would be required or where it was difficult to install pipes, small local boiler houses have been constructed. Hence, the heating of the city of Kharkiv is a mixture of a large central system and a significant number of small boiler houses.

The city had requested the EBRD for financing efficiency improvements on Municipal District Heating and Municipal Wastewater Treatment sectors.

The overall objective of the assignment was to prepare a priority investment program and a feasibility analysis which would allow the EBRD to appraise whether the proposed CHP DH renovation program is suitable and bankable for the EBRD to finance.

The work on the Municipal DH sector included on technical side establishing the least cost investment program (Pöyry Energy). The financial side included Grant Thornton (auditors) converting the Kharkiv DH Co historical Financial Statements from the national accounting standards (NAS) to International Financial Reporting Standards (IFRS). Greenfield built the future financial model starting from the company’s current financial position and including the future estimated cash flows and investments taking into account the proposed renovation program. Greenfield’s work also included analyzing the affordability of anticipated future heat sales tariffs. The main result was the assessment of the company’s capability to cover the EBRD loan interest and payback.

2007 – 2009

Client: London Development Agency

The Royal Albert Basin is situated in East London in greater Docklands area. The development comprises mainly a newly build residential building stock and about 15 % public and commercial space. A total of about 140,000 m² floor space was considered as the potential to be connected to the district heating. The Albert Basin CHP DH Scheme was planned to be the first pilot project of the London Thames Gateway Heat Network (LTGHN).

The project design was carried out by Greenfield as part of the Decentralized Energy Delivery Team at the LDA with the purpose to evaluate the technical, environmental and financial feasibility of supplying heat and electricity from a local Energy Station.

The first stage of the work was to review the building development plans and to assess the heat and electricity demand, taking into account the anticipated energy efficiency requirements. Next, a modern DH network was dimensioned with preliminary routing to cover the new developments and some of the existing buildings as well.

Combined Heat and Power (CHP) was a key element contributing to the financial feasibility of the DH system. A private wire electricity di_stribution system was designed as part of the investment scheme to facilitate high revenue power sales to local consumers.

An optimum mix of energy generation capacity was designed to meet the estimated future local heat and power consumption. The main requirement set on heat supply was to achieve at least 20 % reduction in CO₂ emissions compared to standard approach, gas heating. Secondly, financial feasibility, and quality of supply were emphasized.

Bespoke simulation software was used for calculating the annual heat and power generation for each production unit, on hourly basis using typical heat and electricity load patterns for southern England.

Financial analysis comprised the cash flow, IRR and NPV calculations to compare various technical options. The sensitivity analysis covered the main market inputs and other variables such as energy prices and investment costs. The conclusions included an investment recommendation with an action plan and schedule for further project development and implementation.

Finally, Greenfield compiled the investment recommendations submitted to the LDA investment decision process. Albert Basin CHP DH Energy Scheme was approved as a Strategic Case in Gateway A and as a Business Case in Gateway B.

Phase I: 2007 – 2010

Client: London Development Agency

The London Thames Gateway Heat Network (LTGHN) is a vision of a region wide low carbon network which would connect low carbon heat sources and heat consumers.  The 67km hot water transmission and distribution system would transmit heat from new and existing heat sources to commercial, industrial and residential properties. This supports the Mayor’s aim of achieving 25 % of London’s power and heat from decentralized energy by 2025 and his planning aspirations. The LTGHN was divided in two geographically separate phases, Phase 1 and 2.

The Phase 1 was anticipated to tap heat from Barking Power Station (BPS), an existing 1000MWe combined cycle power plant, and initially the main heat off-taker would be the nearby industry.

The investments would include converting the BPS to CHP use and constructing the required back-up, pumping and other DH systems as well as the heat distribution network.

Greenfield participated the concept design, feasibility assessment and financial analysis. The first stage of the work was to survey the current state of heat production at the nearby industrial plants, including assessing the feasibility of converting the existing steam heating system to hot water. After the heat load assessment, the preliminary design and costing of the Phase 1 heat network was carried out, including pipeline dimensioning and routing as well as pumping, heat exchangers, water treatment, control and automation etc. Furthermore, investment estimates for the necessary CHP conversion and back-up boiler station were compiled.

The annual energy demand, investment and operation cost estimates together with the tariff assumption, formed the basis for the financial analysis.

Greenfield carried out the detailed financial analysis for Phase 1 using a PwC Financial Model, a bespoke software tool developed in cooperation with the LDA. In financial modeling, it was assumed that the investments would be financed through capitalizing a Special Purpose Vehicle (SPV) owning and operating the LTGHN and that the revenue stream would support a conservative equity/debt-ratio of 50/50. The results of financial analysis comprised the NPV and IRR for equity as well as the overall project IRR and NPV.

In addition, the financial model has been used to assess the level and structure of the proposed heat sales tariff, and for analyzing the cost structure of supplied heat for risk assessment.

Phase II: Royal Docks CHP DH Scheme (London, UK)

2007 – 2010

Client: London Development Agency

Royal Docks remained underdeveloped for decades after the harbor and industrial activities lost importance. During the past two decades, new landmarks such as the City Airport, East London University and ExCel exhibition centre have shown the way for the upgrading of the area and followed by a good number of new residential and commercial developments. These are expected to deliver 16,000 new housing units (about 1.3 million m²) as well as 420,000 m² of public/commercial space. Low carbon planning requirements imply energy efficient building designs and efficient energy supply from CHP DH and renewable energy (Lean – Clean – Green).

The concept design and project development work was carried out by Greenfield as part of the Decentralized Energy Delivery Team at the LDA with the purpose to evaluate the technical, environmental and financial feasibility of a region wide heat distribution network with low carbon heat supplied from the local sugar factory, Tate & Lyle Co. Ltd (T&L).

The first stage of the work was to review the building development plans and to assess the heat and electricity demand, taking into account the anticipated energy efficiency requirements. Based on the heat load mapping, a preliminary design was carried out for the heat distribution network, including pipe dimensioning, routing and cost estimates.

Excess heat from the T&L sugar factory was identified to be a key element in reducing CO₂ emissions and contributing to the financial feasibility. For this purpose, a number of technical options for heat off-take were identified and analyzed, including waste heat recovery, heat pumps and CHP. The work was carried out in close cooperation between the LDA and T&L. Taken the complex industrial process and a good number of options, two supporting assignments were commissioned from outside consultants (RH-Energy, JP Energy Ltd) to ensure reliable analysis and to carry out on-site process measurements.

The annual energy production was calculated using a bespoke simulation software and based on the capacity mix available at T&L. The annual energy figures were further used to assess the CO₂ emissions in one hand and as an input for financial analysis on the other hand.

The financial analysis comprised the simplified cash flow, IRR and NPV calculations to assess the viability of available technical options. The sensitivity analysis covered the main market inputs and other variables such as energy prices and investment costs. The conclusions included an investment recommendation and an implementation plan.

Subsequently, Greenfield carried out a more detailed financial analysis for Phase 2 / Royal Docks development project using a PwC Financial Model. In financial modeling, it was assumed that the investments would be financed through capitalizing a Special Purpose Vehicle (SPV) owning and operating the LTGHN and that the revenue stream would support a conservative equity/debt-ratio of 50/50. The result of financial analysis comprised the NPV and IRR for equity as well as the overall project IRR and NPV.

Based on the positive conclusions on the overall Phase 2 viability, Greenfield formulated an implementation strategy including three alternative start-up schemes and two subsequent expansion steps.

Besides the technical concept work and viability analysis, Greenfield contributed to the commercial structuring, document drafting and negotiations with potential customers within the area.