Insert Heading

Devro Cogeneration: Energy efficiency in

the food and manufacturing industry

AIE Conference 2012 Presentation | 19th November 2012

Session Aims

• You will hear from people today discussing:

– Coal, Gas, Nuclear power generation

– Renewables

• But what is actually going on in our industry?

– None of the first three

– Wind, PV, nothing large scale

• Who is Devro, what do they do and how did SMEC assist?

– Cogeneration: a good fit for industrial and manufacturing applications

– Cost benefits, funding opportunities

– How it was done

Where does cogen fit in the market?

• Changes in the Power Generation industry

• Utility scale generation

– In NSW approx. 4 GW of plants planned, but not being built.

– Coal is out of favour

– OCGT: Gas prices rising, wholesale electricity prices too low, peak demand softened

– CCGT: Gas prices rising, wholesale electricity prices too low, base load demand flat

• Industrial scale generation

– Retail prices are climbing, combination of factors (solar PV, Clean Energy legislation, network infrastructure upgrades)

– What does the food and manufacturing industry do to remain competitive (nationally and internationally)? Reduce operating costs

Power Generation - Utility Scale

Cockburn Power Station, Kwinana, WA (Alstom Power) 240 MW combined cycle power plant Design and documentation of all buildings, structures and fire and services engineering, major structures, underground services and civil components

Pelican Point Power Station (ABB) 480 MW combined cycle plant DSC (SMEC now part of SMEC) was responsible for design and documentation of all buildings and major structures on site, including architectural, structural, fire and services engineering.

Power Generation - Utility Scale

480 MW Pelican Point Combined Cycle Power Station (ABB) DSC (now part of SMEC) provided design & documentation of all buildings & major structures on site, including architectural, structural, fire and services engineering

Power Generation - Utility Scale

Year Project Awarded Status

2009 Shaw River No Decision Postponed

2009 Wellington Awarded Postponed

2009 Braemar 3 Awarded Postponed

2010 Kumbarilla Park No Decision Postponed

2010 Dalton Awarded Postponed

2010 Tarrone No Decision Postponed

2011 Braemar 3 Re-priced Postponed

2012 Marulan No Decision Postponed

• Many of the utility scale gas projects have been put on hold

• The last open cycle gas plant built in NSW was Colongra in 2009

Power Generation – Industrial Scale Devro Cogeneration Project, NSW 1.2 MW Gas Turbine and Heat Recovery Steam Generator. SMEC provided complete engineering, procurement and construction management services

Policy impacts

• Businesses need to evolve with the changing environment

– Identify opportunities to improve competitiveness

– Respond to the opportunities

– Policy change has been too fast for business to react

• Some examples:

– Small scale PV has boomed, consumers could respond quickly to the policy change

– Large scale PV and solar thermal too slow and funding window is closing fast

• Clean Tech Investment Program

– Industry needs to respond quickly, as the funding availability will close in 2 years or sooner if funding exhausted

– May close sooner with a change in government

Competing in a global market

• Food and Manufacturing Industry

– Competing in a global market

– High AU$ (from US$0.8 to around US$1.04 in past 5 years)

– Increasing local operating costs (wages and entitlements, OHS, etc.)

• How to compete?

– Competitiveness through reduced operating costs

• Two avenues:

– Technology improvements to efficiency

• Build new state of the art facilities

• Retrofit/retooling latest technology equipment (automation, robotics, new tech)

– Energy efficiency

• Multitude of options, can be applied to new or old plant

1963 • First facilities established by Johnson & Johnson in USA and Scotland

1976 • Devro Bellshill plant in Scotland opened

1979 • Devro Bathurst plant opened in Australia

1991 • Management Buy-Out from Johnson & Johnson

1993 • London Stock Exchange float – creation of Devro plc

1996 • Acquisition of US (Coria brand) and Czech (Cutisin brand) collagen plants

2000 • Expansion of Devro Bathurst in Australia

2006 • Expansion of Devro s.r.o plant in Czech Republic

2010 • Further expansion of both Devro Australian and Czech collagen plants

Devro History

Slavkov / CR

Sandy Run / USA

Jilemnice / CR

Bellshill / UK Moodiesburn / UK

Bathurst / Australia

Total Employees Europe 1,484 Asia / Pacific 275 America 386 2,145 Sales Offices Germany, Russia, New Zealand, China, Hong Kong & Japan

Devro Today

World’s leading provider of collagen products for the food industry (approx. 34% market share in edible collagen casing sector)

Strong expertise in collagen technology for both food and non-food (biomedical) applications

Manufacturing edible collagen casings and film suitable for a wide range of sausage / processed meat applications

Devro Group products sold in over 100 countries in the world

Devro Bathurst produces up to 1.4 million meters of sausage casing a day.

Devro Today

The Carbon Tax

• Large Emitters

– The carbon tax liability is determined on Scope One emissions with a facility threshold of 25 ktCO2-e

• Small Emitters and the rest of us

– Devro’s scope one emissions (9 ktCO2-e) have increased but still fall below the threshold of 25ktCO2-e, so will not be directly liable to the carbon pricing.

– Energy providers will pass through the cost to Devro

– The carbon pricing scheme commenced on 1st July 2012 and increases over 3 years until the flexible pricing period commences

Year 2012 2013 2014

Carbon Price ($/tCO2-e) 23 24.15 25.4

Project development

• Energy audit

– Through an energy audit, minor improvements were identified

– A major opportunity to improve energy efficiency through cogen identified

• Feasibility study

– Considered various technologies

– Solar thermal hot water

– Roof mounted PV, ground mounted PV

– Biogas for steam generation by converting the aerobic lagoons

– Cogeneration or trigeneration identified as biggest impact and shortest payback

• Options study

– Considered multiple configurations of gas engines, turbines and HRSGs

– Determined most suitable plant configuration 1.2MW GT + 8 tph HRSG

Cogeneration Overview

• What is cogeneration?

– Cogeneration is the simultaneous production of more than one form of energy

– In Devro’s case this is electricity and steam

– The cogeneration plant replaces the three aging package boilers

• Why cogeneration?

– Reduction in greenhouse gas emissions

– Using slightly more natural gas than the original package boilers, the cogeneration

plant produces the same amount of steam along with up to 60% of the site’s electrical load

– Reduced operating costs through efficient energy usage with an overall efficiency of around 80%.

Cogeneration Overview Devro Cogeneration Project, NSW 1.2 MW Gas Turbine and Heat Recovery Steam Generator. SMEC provided complete engineering, procurement and construction management services

Cogeneration Process

GTG - Overview

• The gas turbine generator (GTG) package is supplied by Solar Turbines Inc., who are a division of Caterpillar.

• The GTG is manufactured in Mabank, Texas and Solar Turbine’s local office is located in Melbourne.

• Devro have a Service Agreement in place with Solar Turbines, which includes online data logging and diagnostics, allowing Solar technicians to provide technical support by phone.

• The service agreement includes for an engine overhaul after 40,000 hours operation.

GTG - Overview

GTG - Diagram

Cutaway of Solar Saturn 20

The main specifications of the Gas Turbine:

• Manufacturer: Solar Turbines Inc.

• Model Number: Saturn 20 (T1601)

• Rated Power: 1.2 MW gross electrical output

• Normal/Maximum Exhaust Temperature: 512 ˚C / 544 ˚C

• Turbine Speed: 22,300 rpm

• Generator Speed: 1,500 rpm

• Fuel flow at rated power: 15.57 GJ/hr

• Normal Exhaust Flow: 21,085 kg/hr

• Core engine weight: 463 kg

HRSG - Overview

• The heat recovery steam generator (HRSG) takes the exhaust heat from the turbine and uses it to generate steam

• If the steam demand exceeds the heat available from the turbine, a duct burner will operate

• The HRSG is a single drum natural circulation boiler, which provides benefits in:

– Small footprint

– No parasitic loads from circulating pumps

– Fast start up time (50 minutes from cold)

• The HRSG is fitted with an economiser which increases the efficiency by preheating the feedwater

HRSG - Specifications

The main specifications of the HRSG are as follows:

– Manufacturer: Gasco Pty Ltd

– Designer: ERK EckRohKessel GmbH

– Design Code: AS 1228

– Attendance Category: Unattended Operation

– Steam rating: 8 tonne/hr

– Steam pressure: 10 bar (g)

– Steam temperature: 185˚C

– Burner outlet temperature: 847˚C

– Economiser outlet temperature: 122˚C

– Thermal duty: 5.43 MW

Electrical system - Overview

• The generator is connected to a power transformer

• The power transformer steps the voltage up from 415V to 11,000V

• The transformer is then connected via a HV cable and then circuit breaker to the HV busbar

• The HV busbar then connects to the existing Devro step-down transformers (via HV cables) and then LV switchgear

• Power can be either provided completely by the network, or part load supplied from the cogeneration plant

• On a network outage, Devro’s load shedding system will drop non-essential loads and the cogen plant will carry the facility at part load (essential loads) till the network resumes

Electrical System - Diagram

Construction Sequence

Geotechnical testing to confirm ground conditions for foundation design

Turbine and Boiler foundations under construction

Construction Sequence

Boiler being lifted into position

Construction Sequence

Gas Turbine Package being lifted into position

Construction Sequence

Steelwork erection for access platforms and walkways

Construction Sequence

Bypass stack, economiser and turbine ancilliaries installed, handrails being installed

Construction Sequence

Existing step-up transformers and HV switchroom, and area for new HV switchroom

HV Switchroom Upgrade

New HV Switchroom being lifted into position

Construction Sequence

Construction Sequence

New HV Switchroom being lifted into position

New HV Switchroom completed

Construction Sequence

Inside the new HV Switchroom

Construction Sequence

Devro operator hands-on training

Commissioning

Devro operator hands-on basic training

Operator training

Project challenges

• Gas supply

– Replacement of gas metering station with floating pressure meter set

– Required negotiation of new agreement

– Devro > Retailer > Network owner > Meter Upgrade – delays to commissioning

• Electrical connection

– Lack of technical data/drawings for existing switchgear

– High plant outage risk offset additional cost of complete new switchroom

– Extended project completion date

• Operator training

– Service agreement signed up for turbine, remote support works well

– HRSG more complex than a package boiler, operator training insufficient for troubleshooting

– First 6 months higher than planned downtime

Cogeneration key benefits

• Plant savings

– 8% increase in gas consumption

– 54% reduction in electricity imported

– $510,550 in plant energy cost savings per annum

• Reduction in exposure to rising electricity price

• Avoided Carbon Tax pass-through cost of $160K in first year alone

• Clean Technology Investment Program - $800 million grants program will help manufacturers invest in low pollution technologies

– Project too early for CTIP funding to be available

– Projects of this type eligible for grant covering 33% of the project cost

Thank you SMEC Australia Pty Ltd

Mathew Moore Team Leader – Power Generation

mathew.moore@smec.com