Today the industry is totally focused on improving the energy efficiency
The industry has realised the potential of energy savings by installing WHR systems. The technology is now mature and the industry too, has learnt the importance of contracting the project to local and technologically capable partners. Rising fuel costs and incentives for adapting green technologies are giving a further push to the sector. Vivek Taneja, Head-Business Development, Thermax, Power Division, talks about the growth potential and the benefits of setting up a WHR plant for cement manufacturers. Excerpts from the interview.
What are the main products offered by your company?
Thermax supports global clients with energy and environment solutions. We have facilities for in-house manufacturing of boilers, water and effluent treatment plants, air pollution control equipment, air-cooled condensers, speciality chemicals and resins, etc.
Thermax builds and commissions turnkey captive power plants. As of March 2014, Thermax has a portfolio of over 85 power projects commissioned in the EPC (Engineer - Procure - Construct) mode in India and abroad. More than 25 of these are for the cement sector. Power plants designed by Thermax are based on a variety of fuels such as coal (Indian as well as imported), petroleum coke, lignite, coal washery, naptha, natural gas and waste heat recovered from industrial applications such as cement manufacturing, sponge iron kiln, blast furnace, coke oven smelters, etc. Additionally, Thermax offers Operation & Maintenance (O&M) services for power plants, with more than 35 assets under its operational supervision currently.
Where are your manufacturing facilities located?
Our main manufacturing facilities for heating and cooling equipment are located in Chinchwad, Maharashtra and Savli, Gujarat. These are supported by an assembly unit for large export boilers at Mundra, Gujarat. We also have facilities for air pollution control systems, speciality chemicals and resins, respectively at Solapur, Paud, both in Maharashtra, and at Jhagadia in Gujarat. Our overseas manufacturing facilities for various subsidiaries are located in China, Denmark and Germany.
Is there a minimum plant capacity (or any other) requirement for WHR systems to be feasible?
Generally, the feasibility of a cement waste heat recovery (WHR) plant primarily depends on the net power that is generated by the power project. The amount of power generated in turn depends on multiple factors such as the gas flow that can be tapped from the cement kiln; the exhaust gas temperature that will be required for the cement manufacturing process; ambient conditions such as moisture content in the raw material; and the number of kilns in the cement manufacturing plant.
In case of existing cement plants, factors such as availability of pressure drop margins in existing equipment as well as space are key factors that influence the amount of power that can be reliably generated from the WHR project.
For cement manufacturers whose focus is on reducing their carbon footprint or reducing the CO2 emissions from their plant, even a small scale WHR plant can be highly beneficial to achieve their target. Hence, the feasibility for a WHR project will actually depend on multiple factors and can't be generalised on only the plant capacity.
How much savings could be expected from a WHR system?
The power generated from a CWHR system can actually be treated as incidental power that is generated free of cost. This is because the waste heat usually let off into the atmosphere is utilised to generate power in this case. Hence, a 1x10 MW CWHR system can deliver savings of approximately 43 crore per annum for a cement manufacturer who currently receives power from the grid at Rs 6/Kwh. However, these figures can change depending on factors such as local power tariff, auxiliary power consumption of the WHR system, design parameters of the power plant, operations and maintenance philosophy of the plant, etc. Since the concept of lifetime cost is not so well evolved, we find many manufacturers giving different part of the value chain to different stakeholders leaving the integration issues open to save on upfront capital cost. Some of the manufacturers mitigate the risks of these various factors by giving the total project from design, engineering and procurement to construction and thereafter the long term operation and maintenance to one single party who is solely responsible for overall performance. This way the partner so chosen does not compromise on upfront capital cost and concentrates more on engineering a user and maintenance- friendly plant that will give better cost returns to the investor over the lifetime of the project.
How much is the capital investment required to set up and run a WHR system?
The capital investment required to set up a WHR system depends on whether it is a greenfield or a brownfield project. Additionally, factors such as number of boilers, orientation of boilers, availability of space near the tapping points, length of boiler ducting, type of condenser, etc also have a direct impact on the project cost. Whether the plant is conceptualised and engineered to fit a specific budget or is it engineered to have optimised performance under varied operational conditions also play an important role in capital investment. The level of automation for future remote performance monitoring too plays a large role in initial investment.
As far as the operating cost of WHR system is concerned, the fuel cost is free. Hence, the cost operating cost is likely to be 50 - 60 per cent less, compared to any solid fuel-based captive power project.
How long does it take to obtain ROI and how much is the general service life of WHR systems?
The duration of getting ROI in a WHR system can vary between three - five years depending on multiple conditions prevailing at the cement plant where the system is being installed and it is usually designed for a service life of more than 15 years. The ROI can be further improved if the benefits of renewable energy projects such as accelerated depreciation, tax exemptions, etc are extended to CWHR projects, either directly or through inter-tradeability of ECerts in lieu with REC's in the market.
Which are the new developments in the WHR designs?
Today the industry is focused on improving the energy efficiency and decreasing the specific energy consumption. Additionally, unavailability of fuel (specifically coal) at low cost is also a factor that has a direct impact on the profitability of any cement manufacturer.
Hence, the current focus is on a better design for WHR systems to improve the thermal efficiency and also to decrease the specific steam consumption of the WHR system. These coupled with improved designs to reduce the down time due to maintenance related activities are some of the aspects that Thermax is currently working on. Moreover as mentioned earlier since the lifetime costs are dependent on various factors we find more and more interest in the market to give an EPCOM (EPC + integrated long term O&M) order to a single entity. Such an order ensures a plant design that facilitates maintenance friendliness and optimal opex (operational expenditure) to give long-term benefits to the investor.
Name some of your landmark projects.
Thermax has successfully commissioned the first WHR project for cement in India that was approved by UNFCCC (United Nations Framework Convention on Climate Change) for availing the CDM benefits. This project, located in Rajasthan was for one of India's leading cement manufacturers in Northern India. Thermax's scope of work included turnkey solution for setting up this power project, including engineering, design, procurement, erection and commissioning of all the equipment and their auxiliaries. Thermax is currently offering its O&M services to the project. Apart from this project, Thermax has successfully contracted two more WHR projects in India. Some of the projects under our comprehensive O&M contracts have given consistent above average availability and power output for over four years now.
Is there a trend change in the type of systems demanded by the industry?
In the recent past, the industry has shown interest in maximising the quantum of power that can be generated from waste gases. Hence , the waste gases in the AQC, earlier tapped from the end point are now tapped from mid tap location where the temperature of the waste gas is comparatively higher and thus results in higher heat recovery. Another change that we have noticed of-late is the requirement of dual pressure recovery option as compared to a conventional single pressure recovery system to extract the maximum possible heat from the system.
How did the industry perform in the year 2013-14 and what are your projections for 2014-15?
As most cement manufacturers are keen on improving the energy efficiency of their manufacturing process, acceptability of CWHR projects has increased in recent years. Earlier, most of the projects were conceptualised without any WHR system. So, with the present level of interest, we expect cement plants to be conceptualised with an integrated CWHR system. Moreover, with PAT schemes being implemented, manufacturers now have targets to reduce energy intensity in a time- bound manner and CWHR forms an integral part of the plan for significant reduction. With some CWHR power projects running and maintained well for over 4 years, investors are confident that even poorly engineered plants can be turned around. All it needs is sharp focus on the right technology and a committed EPC partner who can take on the responsibility of long term maintenance guarantees as well.
How do you view the competition from Chinese equipment manufacturers?
Chinese equipment manufacturers enter the Indian market with a low cost model and committed shorter delivery schedules. However, in several cases, projects have not been completed as per the committed schedule because of various issues such as inability to understand the local requirements, labour trouble, issues with contractor management, etc. Hence, the project life-cycle costs should be seriously considered in any plan to set up WHR projects. Moreover, the long term reliability of spares and service support too, is not well established with overseas partners, thus adding another facet of risk to the investor in the project's lifetime costs. We feel that with increased awareness on this aspect (the benefits of lifetime costs versus capital cost) and with the successful track record of Indian partners, today far-sighted manufacturers are willing to pay a certain premium for a proven model.