The main tasks of topic D can be summarised as follows: Out of the existing problems in public energy-supply in Odessa, a concept for a decentral combined heat and power station was elaborated. Two technical alternatives were analysed by comparing of the costs for 1 kWh of electricity, and proved as profitable under the given assumptions for calculation. As financing model, either creditors' funds or a contracting-concept would be reasonable.

Situation of Energy Supply

Ukraine suffers from lack of energy resources. Oil and natural gas have to be imported from Russia (Ukraine yet has debts to the amount of estimated 3 Mia. USD). The fact that Ukraine's energy consumption is highly exceeding the OECD-average (see figure 1) and the closure of Chernobyl aggravate the problem of lack of energy-resources.
The energy market in Ukraine is controlled by the National Electricity Regulatory Commission (NERC), which sets limits of distribution and fixes pay rates. Electricity distribution itself has been partly privatised and is organised by 27 oblastenergos.
Odessa Oblenergo, which organises the electricity supply for the region Odessa (see figure 2), has to operate with the limit for power distribution fixed by the NERC. The money goes to the Wholesale Electricity Market (WEM), which fixes the rate of refund to the respective oblastenergo (< 30 % of the payments). Technical losses in the supply network amount to 16 %, another 16 % are caused by thefts.
Two different companies in municipal property (Teplokommunenergo and Odessa Heating Net) provide heat production and supply of the city Odessa (see figure 3), which pay the ZhEKs for providing the house-internal supply. Losses amount to 0.25 % water per hour or 12 % heat loss per hour. Only 12 km of the planned 50 km could have been reconstructed in year 2000.
The main problems of energy supply-efficiency emerge due to shortage of money, which causes delays in the necessary restoration measures, and, in addition, restricts the purchase of sufficient fuel. High net losses and shortages in energy reserves are the consequences. The lack of capital is caused by the still difficult economic situation of Ukraine: on one hand, energy tariffs cannot be adapted to real costs (of production); on the other hand, long-term investments are still very risky due to instable legal situation.


Implemented Project


The mentioned problems of energy-supply supported the assumption, that industrial companies are hindered in their production process by the restrictions of constant energy supply. Fulfilling the elaborated technical selection criteria, the Balta Dairy-Canning Plant of Baby Food has been chosen as exemplary company for the analysis of the feasibility of producing the needed electricity by a private, decentral combined heat and power station. (In December 2000, the company had big economic losses because of the ice storm which broke the greater part of the energy supply cables, and caused a standstill of production for two months.)

Based on the rough thermal and electric load data of the BDCP (3 MW peak in summer) a technical solution with natural gas driven Co-Gen modules is suitable (investment costs of 3 modules: 1,120,000 USD). Each module has an energy output of 1,048 kWel and 1,310 kWth. Two technical conceptions are possible:

(1) a conception of 3 modules, where the surplus is sold into the public net;
(2) a 2-modules-solution would cover up to 2 MWel (the peaks could be transferred temporarily);
The need of heat is not fully covered by the co-production; the remaining amount is produced by the existing boilers.


Economic Analysis

Based on the collected data concerning fix costs (installation and service costs), an investment calculation has been elaborated to calculate the price for 1 kWh of electricity, produced independently by the CHP-station. Data concerning interests, inflation, price developments and e.g. the lifetime of the plants, have been assumed showing four different scenarios (= Sensivity Analysis). In fact, only in the worst-case scenarios, the price for 1 kWh exceeds the limiting factor (see figure "concept (1)"). For both alternatives the result is an amortisation time of the invested capital of about 5 - 7 years.
Concerning possible financing models, the situation for investors in Ukraine is still very difficult due to legal and economic insecurities and high interest rates on local credits.
Two concepts have proved as possible for the implemented project:
(1) Creditors' Funds: for similar projects, an equity share of 20 - 40 % is common, the rest is financed through credits (assumption: 11 % interest rate. See figure "concept (2)").
(2) Contracting: the prerequisite for this financing concept is the reduction of the energy production costs, as through the savings the contractor (who builds and operates the CHP) is paid. Given no savings, it is possible to simply pay the contractor out of own capital, but due to the high contract costs, in this case a credit-financing model would be recommended.



First of all the energy audit is necessarily incomplete because of a lack of time. The production process should also be investigated more detailed.
In the economic analysis could not all costs be taken into consideration because the task of the project was a pre-feasibility study. Therefore costs for constructional measures, regulation units of the modules and necessary plants, when the surplus is supplied into the public net, have not been regarded.
Furtheron the important question if the electricity can be supplied into net has to be cleared, the group has been told by Oblenergo and BDCP that it is possible.
The topic of funding and financing the investment is also a very insecure point. It depends on the negotiating skills of the management how much will be funded or financed with outside capital.


Please contact Marc GEISS, if you want more information about this topic.
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