Not surprisingly, on the eve of the MEP elections, we have a new controversy. This centres on the claims of an Israeli bidder in the tender for additional power generation capacity at Delimara. Essentially, the issue centres on whether Enemalta should opt for Combined Cycle Gas Turbine (CCGT) running on gas or Combined Cycle Diesel Engines running on heavy fuel oil. Joe Public can be forgiven for not understanding the technicalities of the issue and on relying on his political inclinations, that is - prejudice, to decide on what’s right and what’s not.
Today Enemalta can produce 267 MW from the decrepit Marsa power station, almost all of which comes from heavy oil fired boilers feeding steam turbines and resulting in an overall efficiency of 27 per cent. This efficiency is that percentage of total energy available in the fuel that comes out as saleable electricity. The EU says Marsa has to close down by 2015 or after 20,000 working hours from January 1, 2008 - whichever comes first. We have been saying that we need to close down Marsa for over twenty years and therefore there was only minimal investment in its upkeep. Its venerable age is a testament to Enemalta’s maintenance skills but it will take a miracle for Marsa to survive unscathed to the EU imposed limits. Delimara produces 304 MW, 120 MW of which come from heavy fuel oil boilers/steam turbines that according to Government figures achieve an efficiency of 32 per cent while the bulk of the rest comes from CCGT achieving an efficiency of 40 per cent. But here comes the rub. CCGT is popular worldwide where it runs on natural gas. The gas turbine in CCGT needs a clean fuel and cannot be used on heavy fuel oil. Malta does not have access to natural gas and has to run the Delimara CCGT on expensive distillate fuel – gas oil (essentially diesel fuel). This makes the Delimara CCGT power very expensive and this is a primary reason for the high cost of power in Malta.
Projections had forecast that Malta’s rising peak demand would meet total generation capacity by 2012. The increase in power rates will have reduced this demand acceleration and the lower industrial and tourism consumption caused by the global recession will also have an effect. However, as the recession abates, we will get back to normal. But total generation capacity assumes that all the plant remains available to churn out power. With the age and state of Marsa, Malta is at a real risk that sudden breakdown will mean significant, extended term inability to meet demand and that we shall suffer problematic power outages. The last increase in generation capacity was in 1998. This is the first decade since the end of WWII when there was no increase in generation capacity. This inaction further worsens the average age of all of Malta’s generation plant and increases the probability of unexpected failures. This is why government is so keen to link up to the European grid as this gives us access to other power – even if this means relying on Italy’s high voltage distribution network and on Italy’s ethics and goodwill and which, in the light of recent events, appears risky. While Europe will pay for the bulk of the cost of this linkup, government still has to find several millions to pay its share and the EU contribution stills comes out of the capped budget allocation for Malta. Forget money being available to substantially improve roads, health services, pensions, etc.
Malta needs to improve and upgrade its generation capacity. For Enemalta to do so means it has to borrow. Nobody will lend a penny to Enemalta unless it can show it is able to pay the loan back. With its abysmal financial performance, Enemalta is not creditworthy and therefore it has to spend less and make more money. The increase in power rates was therefore inescapable. Enemalta has areas where it can reduce its spending however fuel remains one of its major costs and in retrospect the decision of installing gas oil powered CCGT appears in all its glaring horror. Another error was pre-buying or price hedging of oil at the wrong time. One benefit of the global recession is reduced energy demand and oil had fallen back from its dizzy height of almost US$150 per barrel. But take heed. The oil price is creeping back and from a low of nearly US$40 it has now reached almost US$60. The world has peaked its oil production from easily available sources three years ago and future oil is inevitably going to be expensive. It is therefore vital that Malta adopts a policy of fuel efficient generation.
Alternative energy is one route. However not all alternative energy is competitive against conventional sources and, where it is, there are problems of location, area required and even environmental impact. Alternative energy today can at best only produce perhaps 20 per cent of our energy requirements and in any case requires the back up of a conventional plant for when the sun does not shine or the wind does not blow. This plant needs to be efficient in thermodynamic and economic terms. Investing in alternatives today against future oil price increases has merit and rich countries like Germany have to some extent taken this route. But Malta is not Germany.
The recently published Government Proposal for a National Energy Policy aims that Malta will have access to natural gas. This is excellent. The existing CCGT units and even the boilers could be easily converted to take natural gas. Natural gas does not carry refining costs and its cost is purely market driven and tends to be related per kilojoule to that of other basic fuels such as coal or fuel oil. Natural gas is largely methane which has four hydrogen atoms for every carbon atom. This four to one ratio decreases as the fuel gets heavier and tends to approach the 2 to 1 ratio in heavier fuels. The hydrogen part of a fuel imparts significant calorific value and for the same energy output, methane gives out about 18 per cent less carbon dioxide than fuel oil. This would go a long way in meeting Malta’s carbon footprint reduction obligations.
The problem is getting access to natural gas. A pipeline tapping in to the European network is possible but there is always the issue of dependence on third countries – as with the electricity link. For two years in succession we have seen European problems with Russian gas that passed through third countries. Then there is the cost. When the Green Stream pipeline between Libya and Sicily was being planned, Alex Sciberras Trigona had advocated that the pipeline passes through or serves Malta. The Nationalist Government ignored recommendations from the left and the then Sant led Labour Party ignored the advice of a Mintoff acolyte. Green stream is curved to apparently avoid Malta. Green Stream is a 32 inch, 512 Km long pipeline that can move eight billion cubic metres of gas per year and at the time had cost US$ 6.6 billion. If we link to Sicily, the shorter distance will reduce the cost almost in proportion but reducing the diameter for our smaller consumption requirements will not see a linear proportional decrease and economy of scale factors kick in. Such a pipeline would still cost a few hundred million Euros and is therefore unlikely to be ever realised. A Liquefied Natural Gas sea reception terminal is cheaper although reception terminals are also subject to economies of scale and require buffer storage. A sea terminal, unlike a pipeline, liberates Malta from being tied in to a specific source of supply, is less exposed to terrorist or bellicose activity but increases operating cost and the gas will have a shipping cost which the pipeline avoids. One significant problem is that small LNG ships, such as those Malta needs, are in short supply. Moreover finding a suitable location and getting planning permission for an essentially hazardous reception terminal would be a nightmare. A few months ago strong resistance to such a terminal in the south of Italy forced the Berlusconi Government to rethink its energy strategy. Shipping in compressed natural gas was also suggested. This idea has many attractive features for relatively small consumers such as Malta but is still an untried concept straight off the drawing board. The reality is we do not have access to gas and are not likely to gain access any time soon.
This fact kills the arguments of the Israeli bidders. We do not have gas. We are unlikely to have gas. Putting in more CCGT running on expensive gas oil exacerbates the current cost problems and would be more condemnable than the original decision to put in CCGT following the experience of their cost. At least until we know we can get gas, we have to forget about CCGT.
What about the Diesel engine alternative? First of all, we have to forget about the similarity between automotive engines running on diesel fuel. Both run on the Diesel Cycle invented by Rudolf Diesel but any further comparison ends there. Small engines run at high speeds. Combustion time is short and non ideal conditions (such as injector tip fouling, the commonest cause of smoking busses) lead to incomplete combustion especially on acceleration (a bus going uphill for example) when the vehicle is in low gear and the engine is revving up at faster speeds. The engines under consideration are of marine derivation where the engine has to operate without stopping for weeks and high speeds would lead to excessive wear. This slower piston speed means more time for combustion and more complete combustion.
When the price of oil soared in 1973, most large ships were powered by boiler/steam turbine arrangements. Operating efficiencies were similar to those attained by Enemalta and this type of propulsion became too expensive in fuel terms. The older ships were scrapped but newer ships were retro-fitted with Diesel engines running on the same, cheap, heavy fuel oil formerly used by the boilers. The difference was that on a slow speed Diesel engine efficiencies of 52 per cent were consistently achieved. This meant a 40 per cent decrease in fuel consumption. And additional efficiencies were also achieved. Boilers are temperamental beasts that are problematic to operate and repair. Diesel engines lend themselves to easy preventive maintenance, very often carried out by the ship’s crew during even the briefest port stops. The slow speed means low wear and these engines last a long, long, time. The ease of maintenance and problem free operation was one of the reasons for the work load decline at the former Malta Drydocks. The extreme reliability of these engines allows the most hazardous of ships, for example even the largest super tanker, to operate with just one engine.
This lesson was appreciated by power station management, particularly in small, tourism destinations which needed cheaper power and cleaner air. Small consumers cannot avail themselves of the economies of scale that come with the low capital cost per kilowatt of very large boilers – typically exceeding 250 MW. To take Malta as an example, our largest boilers are at Delimara and generate 60 MW each. Each represents more than 10 per cent of our total generation capacity and breakdown or even stoppage for routine maintenance represents a sizeable chunk out of our potential supply. In Malta’s case this is about as big a single unit as we dare have. Therefore operators in Macao, in several Greek and Caribbean islands and in isolated communities in regions as diverse as Florida, Turkey and India installed power stations using marine type Diesel engines. While such use became popular after the increase in oil prices, large Diesel engines had been used previously for power generation. Man are very proud of their 16.5 MW engine installed in the H.C. Ørsted power station in Copenhagen in 1933. This engine is still running in testament to the longevity due to low wear rates.
The Enemalta choice is centred on the combined cycle Diesel engine where waste heat from the exhaust is also transformed into useful energy. This concept raises efficiency to 58 per cent, that is double that achieved at Marsa and considerably above the 32 per cent of the Delimara steam plant and the 40 per cent from the CCGT. The fuel used is the same fuel used by steam pant today and not the expensive gas oil used by CCGT. These engines run on anything that burns. Spain has used them on vegetable oil and during the Apartheid era, South Africa run them on a slurry of coal dust in water. These engines have no problem running on natural gas and ideally Enemalta should order dual fuel engines running on fuel oil and/or gas if it believes that one day, even in the distant future, Malta will get gas. These engines will last for decades and forward thinking is important. If these engines run on gas, the carbon dioxide emissions reduction of 18 per cent inherent in the use of natural gas will be additionally achieved. The efficiency improvement of these engines compared with what we have today means that not only will we need to buy less oil, but if we burn less oil we will have lower emissions and the carbon footprint will decline accordingly. Because there is more complete combustion, there are less unburnt or partially burnt hydrocarbons (the much maligned VOCs) than in systems of lower efficiency – including the current CCGT. In fact the environmental objections by the Israeli bidder are not understood. Photographs of large plants in Europe and hence to European norms do not exhibit the ultra high smoke stacks the complaints refer to. Large Diesel engines are so efficient combustion machines that even the normally inert nitrogen in the air starts to burn and these engines can emit a higher level of NOx. NOx is very easy to remove via a catalytic convertor. If the same fuel is used as today, sulphur emissions will be in direct proportion to the amount of fuel used and using less fuel, means less sulphur compounds in the atmosphere. In Diesel engines a good proportion of the acid gasses get absorbed by the highly alkaline lub oil which has a high TBN (total base number). Besides, on these engines a good case can be made for desulphurisation to remove 97-98 per cent of all sulphur from the exhaust and to use the much cheaper 3 per cent sulphur fuel oil than the current 1 per cent sulphur fuel. The result is calcium sulphate or gypsum and instead of exporting it as the complainant says, we can make it into cheap soffit panels to create a roof/room air gap to reduce the air conditioning demand in our top floors and further reduce power demand and substitute imports. If we do not desulphurize, there is no particulate waste to collect and emissions will be substantially lower than today.
Given the advantages inherent in the technology, it is no wonder that when Delimara was at the concept stage, Dom Mintoff had opposed the choice of technology and recommended the use of Diesel engines. But his advice was not heeded. Had his advice been taken, over the past 17 years of Delimara operation, Malta would have saved billions. Our electricity rates would have been much lower, all of us would have had more spending money to pump into our economy, tourists would have found a more cost competitive Malta as well as a country with cleaner air. It is in fact surprising that the PL is getting the wrong end of the stick. They should criticise the PN Government not for going for Diesel engines today but for not opting for this technology when Mintoff brought its advantages to their attention. If this was too bitter a political pill to swallow, the PN Government similarly ignored the advice of their appointee, Enemalta Chairman Robert Ghirlando who also made similar recommendations. Joseph Muscat was too young when Mintoff made his stand and during the era under Sant, the PL chose to forget Mintoff’s advice. However some of us have longer memories.
Will our politicians ever learn?