JI PROJECTS IN BULGARIA

JI PROJECTS IN BULGARIA

Project : Reduction of Greenhouse gases by connecting Sofia Municipality to the natural gas grid

Contracted amount: 500,000 ERUs

Supplier: Overgas Inc. AD

Project type: Fuel switch

Validator: KPMG Certification

Donor country: The Netherlands

Sponsor : SenterNovem purchases the emission reduction generated by this project

Source : www.carboncredits.nl

Summary

The project aims to reduce GHG emissions in the region of Sofia Municipality by substituting solid and liquid fuels for natural gas as well as by improving the energy efficiency of end-users' combustion installations. The project includes construction of a gas distribution network in Sofia Municipality and the equipment of combustion installations for end users.

The natural gas will be transported to Sofia Municipality through the national gas main pipeline ring. The project comprises the construction of a local network enabling the transport and distribution of natural gas to 135 industrial customers, 210 public and administrative sites and over 31,800 households. The fuel switch to natural gas will contribute to both a reduction of greenhouse gasses as well as reduce air pollution on a local scale.

Justification

Regardless the environmental advantage Sofia had no access to gas supply pipelines. By enabling gas supply to end-users in the Bulgarian capital the company creates access to more environmentally friendly and energy efficient technologies for municipal and industrial applications.

State licenses entitle the company to the exclusive right of being the sole supplier of natural gas to the consumers from the three sectors: "Industrial", "Public and administrative" and "Household".

Project partners

Overgas Inc. AD is primarily involved in the engineering and construction of regional gas supply networks and equipment in Bulgaria and distribution of gas to industrial and public consumers as well as to households. Overgas Inc. AD is the biggest private investor on the gas market in Bulgaria. It was established in 1992 and gained the experience, professional potential and financial resources to guarantee to their partners and clients reliable implementation of all projects and to help the development of the natural gas market in Bulgaria.

Overgas Inc. AD is a shareholder in 31 companies. Of these, 26 are local gas distribution companies, in which Overgas Inc. AD has the majority stake. They invest, design, construct, operate, and repair the gas distribution networks, facilities and equipment for the use and sale of natural gas.

The project will be executed in co-operation with municipalities, distribution company "Sofiagas" and "Overgas Engineering" AD.

Project description

The work plan envisages the development of the gas transport network, the local distribution network and the switching of end-users to natural gas. The project aims at connecting 9 enterprises, 25 municipal buildings and 3,500 households in 2004. Until 2008, a total of 135 industrial customers, 210 public and administrative sites and over 31,800 households will be connected to natural gas.

Overgas Inc. will manage the overall project implementation. Overgas will use German natural gas piping for the project. The industrial end users will install gas combustion burners in existing equipment or they will purchase new gas appliances.

The government licenses for natural gas distribution in the Sofia area have been obtained by Overgas in 2003. Overgas will purchase the gas from Bulgargas, which is a state owned company responsible for the operation of the countrywide 50 bar main gas pipe network ring.

Emission reductions

For the estimation of the emissions reductions by the project, the future customers in the projected area have been identified in a thorough marketing investigation by Overgas. Also an independent research done by Gallup marketing research was used.

In the baseline scenario, households and industrial companies will continue to use fossil fuels. Given the economic forecasts, it is assumed that energy consumption will increase with 15% between 2012 and 2004. This is conservative growth rate estimation by the Ministry of Economy. For each sector the fuel mix and quantities for the energy consumption have been determined for the year 2002. Subsequently, the mix is projected to remain unchanged until 2012, which is a conservative estimation. Finally, while taking into account the current and expected energy efficiency figures of the combustion installations, the baseline for the whole project was calculated. The largest part of the required energy in the baseline scenario would be provided by fuel oil and gas oil.

After implementation of the project, natural gas will gradually replace solid and liquid fuels used in industry, the public and administrative sector and households. Within four years from the beginning of the gasification, heavy fuel oil and a large part of the gas-oil will be almost entirely replaced. Replacement of solid fuels will be a relatively slower process, because the predominant users are households, where technology diffusion is generally slower. For the replacement of electricity by natural gas, figures from the guidelines of the Dutch Ministry of Economy are used.

Project : New cogeneration station at the Biovet factory

Contracted amount: 307,000 ERUs and 179,000 AAUs

Supplier: Biovet

Project type: Cogeneration

Validator: KPMG Certification

Donor country: The Netherlands

Sponsor : SenterNovem purchases the emission reductions generated by this project

Source : www.carboncredits.nl

Summary

The project consists of the installation of a cogeneration station of 18 MWe on Biovets premises to replace the existing heating installation, which consists of natural gas fired boilers. With this facility, Biovet will be able to partly produce its own electricity and steam for its pharmaceutical factory, thereby reducing the dependency on the national electricity grid and lowering the production costs. GE power systems will provide the gasturbine. The company can sell a little excess electricity to the Bulgarian grid according to the Bulgarian Energy law of November 2003. The project is envisaged to enter into operation before the summer of 2005.

Justification

In Bulgaria there will be a shortage of power capacity due to the closure of nuclear facilities. In addition, with the policy of the Bulgarian government to gradually remove the subsidies in the energy market, prices will rise. Biovet currently buys its electricity from the grid and produces its own steam. The uncertainty about the generation capacity in the national grid and the rising prices make a case for investment in own cogeneration technology. This is supported by current new energy legislation which gives these types of efficient energy production preferential dispatch and feed in tariffs. The strategy of the Bulgarian government also aims to develop more clean and efficient technologies. The project will be capable of lowering the production costs for the Biovet pharmaceutical factory. In addition, it will provide future certainty about the production of the energy needed for the core business process.

Project partners

Biovet JSC, located in Peshtera, is a leading manufacturer of antibiotic feed additives and pharmaceuticals (bulk and finished dosage forms) for farm animals and pets. The company is established in 1961. Since its founding, Biovet has expanded its production facilities fourfold.

In 2000 the company was privatized and the Sofia based Bulgarian Pharmaceutical company (BPC) bought a 54 % stake in Biovet.

GE Packaged Power Inc. will be the equipment manufacturer. GE has extensive experience with selling gasturbines worldwide.

Project description

The project comprises a gas engine, of which the exhaust gases will be led into a heat recovery steam generator. The set will be installed together with a high level automation process control system.

Biovet contracted GE Packaged Power Inc. power systems for the delivery of the gas turbine of the type LM2000. This turbine is capable of delivering 18 MWe at 36.4 percent thermal efficiency. The turbine is expected to run at maximum efficiency at 95 percent of the available hours per year. The flue gas stream will provide the heat to generate the steam for the process. The supplier is still in negotiation with several suppliers for the waste heat recovery boiler.

Emission reductions

For the baseline study the existing situation was analyzed to be able to construct the most likely baseline scenario. In the current situation the Biovet factory produces steam with natural gas fired boilers on site of the factory. In addition, it consumes more than 20 MWe supplied by the electricity grid. With the construction of the baseline scenario, the Biovet factory has taken into account a conservative growth scenario of 2 percent for steam demand every year, slowing down to 1 percent from 2010 onwards. The electricity consumption is expected to grow at a somewhat faster pace with 3 percent per year between now and 2010. The growth slows to 1 percent from 2010 onwards.

Subsequently, the emissions from the new project are calculated and extrapolated against the same growth scenario. The emissions from the gasturbine and heat waste recovery boiler are calculated with specifications from the supplier. The avoided emissions from the electricity grid are calculated according the ERUPT guidelines for baselines. The existing boilers will be used as back up boilers, but were not accounted for in the baseline study.

Emission reductions mount up to 527,000 CO2e in the period 2006-2012.

The project is not business-as-usual, as it is only viable with the sales of the emission reductions.

Project : Reduction of greenhouse gases by gasification

Contracted amount: 350,000 ERUs

Supplier: Overgas Inc. AD

Project type: Fuel switch

Validator: KPMG Certification

Donor country: The Netherlands

Sponsor: SenterNovem purchases the emission reduction of this project

Source : www.carboncredits.nl

Summary

The project aims to switch from carbon rich liquid and solid fuels to natural gas. The project involves construction of a gas main branch, and gas distribution networks, and restructuring of the end users installations. The project will involve end users in industries, public and administrative sector plus households in the towns of Veliko Tarnovo, Gorna Oryahovitsa and Lyaskovets. The energy efficiency of their combustion installations will be increased. This switch will lead to essential reduction of carbon dioxide emissions. The Project implementation will contribute significantly to the sustainable development of the three towns involved. The conclusions of the independent experts, who prepared the environment impact statements, provide strong evidence for the lasting positive impact of the substitution of solid and liquid fuels for natural gas on the environment components and peoples health. This project has been awarded a contract under ERUPT 3. The contract has been signed on 26 April 2004.

Justification

In the three towns of Veliko Tarnovo, Gorna Oryahovitsa and Lyaskovets, as of this moment, there is no gas supply infrastructure available.

The state licenses entitle the company to the exclusive right of being the sole supplier of natural gas to the consumers from the three sectors: Industrial, Public and administrative and Household in the project area.

The implementation of the project has strategically regional importance with the following economical, social and ecological impacts:

* improvement of the environmental condition of the towns;

* introduction of contemporary technologies;

* decrease of the energy consumption of the Gross Domestic Product (GDP);

* overall revival of the regional economy;

* cheaper product due to the use of cheaper fuel;

* decrease of unemployment.

Project partners

Overgas Inc. AD is the biggest private investor on the gas market in Bulgaria. It was established in 1992 and gained the experience, professional potential and financial resources to guarantee to their partners and clients reliable implementation of all projects and to help the development of the market for natural gas in Bulgaria.

The company carries out marketing research and technical and economic studies, analyses, evaluates and develops gas investment projects, secures their financing and manages the investment process. Overgas Inc. AD is a shareholder in 31 companies. Of these, 26, established jointly with municipalities, are local gas distribution companies, in which Overgas Inc. AD has the majority stake. They invest, design, construct, operate, and repair the gas distribution networks, facilities and equipment for the use and sale of natural gas.

The project will be executed in co-operation with municipalities, Gastec BG AD, the Bulgarian centre for gas (in which Overgas Inc. AD has the majority stake) and Overgas Engineering AD.

Project description

The implementation of the project for the gasification of the towns of Veliko Tarnovo, Gorna Oryahovitsa and Lyaskovets started alongside with the design and construction of the 50 km gas main branches and two Automatic Gas Regulation Stations. The project envisages the construction of 200 km gas distribution network of steel and polyethylene gas pipes, 9 690 ancillary facilities in the towns of Veliko Tarnovo, Gorna Oryahovitsa and Lyaskovets and the re-equipment of the end users installations.

Adjustment of the fuel installations for using natural gas has to be made for 43 industrial enterprises, 83 public and administrative buildings and over 17 000 households.

Gas supply is planned to start simultaneously in the three towns, and the starting date varies for the different sectors for the industrial in 2004, for public and administrative and households in 2005.

Emission reductions

According to a marketing survey of Overgas Inc. AD for the gasification of the towns of Veliko Tarnovo, Gorna Oryahovitsa and Lyaskovets the structure of energy sources in Bulgaria in 2002 is as follows: 54% solid fuels, 21% liquid fuels and 25% electric power. This structure is supposed to retain the same during the whole period from 2002 up to 2012.

The baseline scenario represents the greenhouse gases amount without project implementation for each year up to 2012 inclusive. It is assumed the energy consumption will increase due to an expected positive economic development. For the calculation of emissions caused by electricity consumption, the standardised emission factors (Dutch Ministry of Economic Affairs) for Bulgaria are used. When comparing the emissions of the baseline with the emissions of the project, 484,356 tons of CO2e will be reduced in the period 2008-2012. These units will be generated due to the fuel switch of the customers of Overgas. The company agreed in a contract that it will give discount to the customers with the revenues from ERU sales.