Ethical Energy for Belina: Karsson’s Initial Rocommendations

(A) EXECUTIVE SUMMARY

1. Belina’s proposed energy policies stand a chance of handling its latest needs in an appropriate matter that serves the people, especially those that have been neglected in previous policy decisions.
2. Transferable technologies that attract local investment in local business are important and they help foster strong international commercial relationships for local consumer needs.
3. Meeting the essential needs of the region within its ethical and environmental frameworks require appropriate stakeholder consultations and an Environmental Impact Assessment.
4. The initial recommendation for Karsson’s internal discussions is the selection of:

1. RelRose: 3x300MW combined cycle units. The first unit will be installation in Phase I and the rest in Phase II.
2. Windiber: 2 wind farms with a combined capacity of 100MW.

This would provide opportunities for added local expertise, ensure the potential for energy independence, independence in environmental protection and provide for reliable as well as cheap electricity.

(B) INTRODUCTION

Karsson, a major engineering consultancy is providing services on advising the investment in energy technologies that can be disseminated in African countries. This project is focussing on Belina, because of its potential as a base case for future projects, having abundance in natural resources, and with clear skills gaps, most notably only 5,000 graduates, a good opportunity to combine infrastructural improvement with skill development.
The Belina government is proactively seeking international assistance in developing its energy supply systems. Bids are being reviewed by Karsson, who will advise the Belina government during the bid evaluations up to the purchase order phase. Whilst the deterministic factor in winning the work mainly lie in price of supply and the means of provision, the eventual winners of the contracts will need to demonstrate the technical capacity to deal with social and environmental conditions particular to the location, without making generalisations and abstractions (Murphy,2001, p8). Figure 1 depicts how this technical capacity needs to be demonstrated at an early stage:

(C) ANALYSIS

Energy Needs

The main need for energy solutions lies in Belina’s two main towns. The Government in the past has been unable to implement policies that deal with the rapid internal migration from rural areas to the cities. The poor municipal planning allowed for an undersupply of electricity to households, without consideration of the informal settlements that have come up. Latest surveys have shown that the acute need of energy is equivalent to about 1GW. Planned developments are relatively cheaper to hook up to an electrical distribution network but connections to informal settlements require more careful planning (Jacobson, 2007, p156). Belina has an ambitious plan to industrialise and thus add more investment opportunity to the energy sector. However, both industrial and residential needs must be met with the same importance. In order to understand these needs, the energy provider will have to consider that urban consumers would not readily distinguish which source of energy is satisfying their need. The Governmental and Karsson will be instrumental in linking energy infrastructure development to real consumer needs (Wilkins, 2002). Figure 2 shows how this demand is derived.

Initial Assessment

An initial geographic, meteorological and geological assessment can point out the most feasible sources of energy.
1. Wind
The ridge that runs alongside the towns funnels steady strong winds. This gives a good ground for wind power optimisation and implementation. Whilst harnessing wind energy may be simple, after the wind farms are built, a reliable transmission is essential since wind energy harnessed would not be readily stored. Lack of in-house experience make privatisation of energy sourcing critical, particularly with wind energy.
The advantage of wind power is its versatility to provide to varying demand and is thus optimal for peak demand alongside another source that serves base demand. Also the low intensity of energy generated per turbine allows for lean energy provision, with minimal losses in production.
The main disadvantage of wind power is its initial capital cost, as running costs have become cheaper over the years (Jamasb et al, 2006, p83, p87-94). This is for the site preparation, procurement, construction, installation, and testing. The sale of electricity will pay back for capital and running costs but how quickly the payback occurs will depend on the returns on an overall investment involving an energy mix.
2. Nuclear
The availability of cooling water near the main towns provides a good case for building a nuclear power plant. Nuclear power has been successful in industrialised nations where they provide base load for general residential and commercial uses as well as critical industrial and medical applications due to reliability. But it is not necessarily compatible with the local technology capabilities (Murphy, 2001, p175).
Nuclear energy attracts major capital investment, more than for wind. Its energy intensiveness allows a better and quicker payback. However, to serve a 1GW need, nuclear may actually be an overspecification. Capital investment for a lower specification nuclear power plant might not necessarily be cheaper. In addition, nuclear power cannot be a peak load power provider as bringing online a nuclear power plant is done gradually. If the peak load is small, nuclear does not have the same versatility that wind power does to adjust to that demand for a couple of hours, and there is risk of overloading the electrical transmission and distribution networks.
3. Gas
The presence of gas fields of the Belina coastline gives promise for gas powered power stations. However the depth of the fields will need offshore oil and gas specialists and further surveys and testing to turn around a feasible source of supply. The length of time this would take may make the case for gas power as a main source weaker, unless the development of power plants starts with initial imports.
4. Biofuels
Belina has considerable arable land that is underdeveloped and within good proximity of the main towns. This makes a biofuel option worth taking into account. However, as most of the population subsist, i.e. cultivate the land to feed themselves, attention must be taken to make sure that they do not lose access to arable land (Wilkins, 2002, p19).
Location of the energy source and its proximity to the main infrastructure for electricity generation, distribution, and maintenance is critical to successful implementation.

Evaluation of Bids

1. EUROGEN – Nuclear engineering company
The operational support for a EUROGEN nuclear plant is indeed attractive from a financial point of view. As nuclear plants are typically expensive to build, loans from the Sudeten financial companies offer flexibility in Belina’s ability to pay for the capital costs to start with. However, the provision and disposal of fuel attracts a lot of risk as it is completely dependant on Sudeten’s strategic plans for nuclear power generation at home and abroad. In addition, a considerable amount of consultation with the public, interest groups and local government would need to be done for reassurance on safety, reliability and societal benefits. On the issue of reliability, whilst cooling water is adequate, dependence on a single plant for the additional 1GW is not ideally for essential base power demands. For EUROGEN to qualify, they would need to go into a joint venture with another power company to mitigate risk and provide power provision options.
2. Windiber – Wind engineering company
Wind power is good for peak power provision. It is recommended that Winderber should build 2 wind farms of 50 turbines each, with a combined capacity of 100MW, thus capable of providing 10% of the Belina’s town’s extra power needs. The reasoning behind the 2 wind farm recommendation is to allow for one farm to operate at capacity during peak times, and the other to operate at sub-capacity. This allows more time for maintenance and upgrade activities. The low unit costs allow the operator to budget for improvement and maintenance for the infrastructure. Windiber have a strong bid.
3. RelRose – International engine builder
RelRose’s medium power engines provide flexibility to build a low capacity train of gas power generators as each gas reservoir comes online. Therefore, it is recommended that 1 train with one 300MW combined-cycle unit is built, to provide a third of the intended power output. This initial train will take on imported LNG and test Belina’s gas stream. The 2nd and 3rd trains can be built after 6 months successful operation of the first train. RelRose’s, experience in the Middle East and the USA can provide Belina with the logistical support for LNG provision as well as the experience of joint ventures with key Middle Eastern LNG plant operators.
4. Atishi – Conventional oil-fired system conglomerate
Atishi’s oil fired systems have the best proven reliability and experience, with many project references from the Pacific Rim over the past 30 years for offshore as well as onshore installations. Their modular arrangements make the unit costs low, as construction costs are the cheapest compared to all the other options. Another advantage is its ability to provide emergency back-up power at such high specifications for power supply (2 x 500MW units). The drawback in the bid is its lack of alignment with environmental low-carbon policy and security of supply matters regarding fuel oil supply transport and storage.
5. NATFUEL – Consortium of biomass system developers
NATFUELs 100MW units are fed by an array of anaerobic digesters. An assessment of harvest volumes of the woody crops will need to be done to determine the number of anaerobic digesters needed to generate biogas. The overall cost of operation will be dependant on equipment, fertilizer, and labour costs. The generators of biogas and electricity are relatively cheaper to build. As land itself is a commodity of varying value due to varying demand for agricultural and fuel crops, a good grasp of land usage costs is needed, thus requiring support from the Ministry of Agriculture and local authorities.
6. MINIGEN – Nuclear engineering company
MINIGEN provides a very competitive option to the EUROGEN bid. The 100MW Pebble Bed Reactor units provide adequate base load capacity to combine with other medium capacity base load power providers such as gas power units. The building contract attracts less risk than EUROGEN as the consortium provides balanced and better consulted advice on key decision making, and certainly audit MINIGEN’s ability to deliver a successful installation, from construction to operation.

(D) DISCUSSION

One of the main challenges for the Belina government decision making is the satisfaction that the key stakeholders have been approached. The commitment to learn from mistakes in previous policy consultations is a good start.
The choice of energy supplier is not as large a matter as is the choice of the key benefit that it brings to the population. Whilst the facilitating stakeholders, including the selected IPPs (Independent Power Providers) or energy suppliers, are well defined there exist stakeholders that have been otherwise neglected:

1. The people living in the locale of energy extraction who might not necessarily need the electricity for domestic usage
2. Local cottage industries, cooperatives and other small businesses outside the main towns
3. The residents of the informal settlements in the main towns
4. Local water authorities, energy companies and other ministries
5. Interest and activist groups

A lack of coordination of energy experts and local leaders, representing the above mentioned stakeholders, at an early stage hampers a satisfactory consultation. Its facilitation will prevent fundamental conflict during construction, implementation and operation as the selected plant becomes present on the site and imposes certain strains on its environment. A depiction of local participation can be outlined thus:

The Belina government has no expertise in performing an environment impact assessment (EIA) for new technologies such as nuclear power. Therefore, proponents for nuclear systems would need to demonstrate that the operators, both local and international, have the necessary training and knowledge on the environmental risks. This is similarly the case for fossil fuels, but however the disposal of nuclear fuels is even more costly as opposed to flue gas scrubbing of a gas power plant. It is necessary that a new development in the energy sector does not conflict with the environment (Forsyth,1999, p5). Therefore the main areas of an EIA that address this are:

1. Lifecycle Impacts (during the life of the plant)
2. Water, Land and Air pollution Risk Assessments
3. Mitigation Preparedness

(E) CONCLUSION AND RECOMMENDATIONS

The key point in development practice and implementing ethical energy policy decisions is that it is easy to identify the needs. However, a one dimensional approach to solution provision bends the planners/engineers perception of problem solving resulting in the need not being met and justification being done by disjointed success indicators. Decision making needs to be multi-dimensional.
For the consultation with Karsson’s nuclear and fossil fuel proponents, my final recommendation is for the Belina government to award the following contracts:

1. RelRose: 3x300MW combined cycle units. The first unit would be installation in Phase I and the rest in Phase II. The contract would leave provision for an agreement on Belina’s preferences on electricity pricing, consumer subsidisation, importation of LNG, proportion of local gas usage.
2. Windiber: 2 wind farms with a combined capacity of 100MW. They would both be connected to the national grid system, and also be optimised for decentralised power provision to local industries and homes for the villages in the ridge.

The combination of fossil fuel and renewable energy provides a good energy mix that:

1. Provides opportunities for added local expertise: engineers, consultants, mechanics, clerks etc.
2. Ensures the potential for energy independence (local gas and local wind sources) and, equally, independence in environmental protection.
3. Reliable and cheap electricity that the Belina government can afford to subsidise through local revenue and international financial agreements.