BUSINESS PLAN FOR ENERGY EFFICIENCY INVESTMENTS AT...

To change this cover photo:

• Click on View > Slide Master.

• Right click on this photo > Change Picture… > Choose

a Picture > Insert.

• Click on Picture Tools tab > Crop > drag straight

cropping handles to inside edges of white frame. You

can resize the photo within shape, while locking the

photo’s aspect ratio, by holding shift key and dragging

the photo’s round corner handle. You can also use the

mouse to drag the photo to desired position within the

shape. Click outside the photo.

• Add photo credit to the text box at top right of page.

• Delete this instruction text box.

1/9/2020 FOOTER GOES HERE 1

BUSINESS PLAN FOR

ENERGY EFFICIENCY INVESTMENTS

AT CHP-1, CHP-2, AND CHP-3

IN THE CITY OF ALMATY, KAZAKHSTAN

Pho

to: C

reat

ive C

om

mo

ns

By Experts of Power the Future Regional Program

POWER THE FUTURE REGIONAL PROGRAM

• The objective of this Task of Regional Project “Power the Future” is to accelerate energy efficiency (EE) opportunities implementation at selected CHPs

1/9/2020 2

TASK OBJECTIVE

ASSESSMENT OF ENERGY EFFICIENCY OPPORTUNITIES AT CHP-1, CHP-2, AND CHP-3 IN THE CITY OF ALMATY, KAZAKHSTAN

• Visiting Almaty CHP-1, CHP-2, and CHP-3 and the Kyzylorda CHP, examining

equipment, interviewing staff and identifying EE opportunities (May to

November); over 40 EE measures proposed to CHP management & owners

• Analyzing, verifying and reconciling technical and economic data

• Modeling and analysis of all identified priority EE measures

• Preparing and discussing Draft Report with JSC AlES and JSC Samruk-Energo

(October 31 - November 2)

• Preparing Final EE Opportunity Report for CHP-1, CHP-2, and CHP-3:– Engineering assessment and preliminary economic evaluation of 26 EE measures

– Suggested next steps for securing project financing

• Developing a Business Plan for the financing and implementation of the

investment portfolio, which consists of nine selected by JSC AlES priority

energy efficiency measures at CHP-1, CHP-2 and CHP-3 in Almaty

1/9/2020 3

IMPLEMENTED SUB-TASKS


1/9/2020 4

ENERGY AND FUEL SAVINGS

OR OTHER MONETIZABLE BENEFITS

ENERGY EFFICIENCY MEASUREDIRECT SAVINGS FUEL

SAVINGS DUE TO HEAT SAVINGS

INCREASE IN ELECTRICITY PRODUCTION

WATER SAVINGS

ELECTRICITY HEAT FUEL

kWh/year Gcal/year tonn/year tonn/year kWh/year m3/year

Reconstructing boiler ash-handling pumps and ash-handling systems (CHP-1) 3,289,800 - - - - 100,000

Installing additional waste-heat recovery economizers behind boilers BKZ-160-100F KA No. 12 and KA No. 13 (CHP-1)

-72,600 13,695 - 2,052 -1,682,753 -

Restoring pumps with hydrophobic coatings(CHP-1) 22,575 - - - - -

Improving the water treatment system of the service water supply system to prevent salt deposits on heating surfaces and in cooling towers (CHP-2)

-43,800 - 32,350 - - -


Rehabilitating the steam turbines ПТ-80-130/13 (CHP-2) - - 29,667 - - 91,000,000

Reconstructing the cooling tower No. 5 (CHP-3)

2,903,040 - 2,586 - 115,200,000 280,320

Replacing steam turbine seals during overhauls (CHP-3)

- - 12,356 - - -


TOTAL 6,595,346 13,695 76,959 2,052 113,517,247 91,380,320

ПЕРВОНАЧАЛЬНАЯ ОЦЕНКА ВОЗМОЖНОСТЕЙ ПОВЫШЕНИЯ ЭНЕРГОЭФФЕКТИВНОСТИ НА ТЭЦ-1, ТЭЦ-2, ТЭЦ-3 В АЛМАТЫ

• Estimated annual savings from priority EE measures:

– Electricity: 6 595 MWh

– Thermal energy: 13 695 Gcal

– Natural gas: 2 052 thousand m3

– Coal: 76 959 tonnes

1/9/2020 5

SUMMARY: ENERGY AND FUEL SAVING


1/9/2020 6

PROJECT COSTS, BENEFITS AND PAYBACK PERIODS

ENERGY EFFICIENCY MEASURE PROJECT COST

ELECTRICITY SAVINGS AND

REVENUES FROM

INCREASE IN ELECTRICITY PRODUCTION

TOTAL FUEL SAVINGS

SAVINGS OF OTHER COSTS

SAVINGS DUE TO

EMISSIONS REDUCTION

TOTAL COST SAVINGS

AND REVENUES

PAY-BACK

PERIOD

tenge tenge/year tenge/year tenge/year tenge/year tenge/year years

Reconstructing boiler ash-handling pumps and ash-handling systems (CHP-1)

33,515,805 27,404,034 - 5,478,100 - 32,882,134 1.02


129,738,600 -,14,622,086 47,093,083 - 3,526 32,474,523 4.00

Restoring pumps with hydrophobic coatings(CHP-1)

786,938 188,053 - 124,000 - 312,053 2.52


113,259,150 -364,854 162,735,153 - 14,876,660 177,246,959 0.64


7,194,637 2,940,456 - 372,000 - 3,312,456 2.17

Rehabilitating the steam turbines ПТ-80-130/13 (CHP-2) 7,250,000,000 758,030,000 149,236,102 - 13,642,625 920,908,728 7.87

Reconstructing the cooling tower No. 5 (CHP-3) 404,534,146 983,798,323 13,007,453 -475,141,253 1,136,469 522,800,991 0.77

Replacing steam turbine seals during overhauls (CHP-3) 44,821,840 - 62,155,636 1,600,000 22,688,351 86,443,987 0.52


3,763,413 1,193,984 - 248,000 - 1,441,984 2.61

TOTAL 7,987,614,529 1,758,567,910 434,227,427 -467,319,153 52,347,631 1,777,823,815 4.49


• Estimated payback periods of proposed EE measures:

– Four measures have payback periods of one year or less

– Three projects pay off from 2.17 to 2.61 years

– One measure pays off in 4 years

– Reconstruction of the steam turbine PT-80-130 / 13 needs 7.87

years for payback

• The implementation of the entire investment portfolio pays

off in 4.49 years

• The estimated payback periods of each EE measure and the

entire investment portfolio indicate attractiveness of the

proposed energy efficiency projects at CHP-1, CHP-2 and

CHP-3

1/9/2020 7

ESTIMATED PAYBACK PERIODS


• The proposed portfolio of EE measures will lead to a significant

reduction in fuel consumption and, accordingly, a significant

reduction in atmospheric emissions:

– Sulfur oxides (SO2): 1 908 tonnes

– Nitrous oxide (NOx): 864 tonnes

– Dust: 1 366 tonnes

– Carbon dioxide (CO2): 184 653 tonnes

– Methane (CH4): 3 tonnes

– Carbon monoxide (CO): 25 tonnes

• Emissions reduction will lead to:

– Annual savings in emissions charges in the amount of more than

52.347 million tenge

– Environmental improvement in Almaty

– Contribution to global climate change mitigation1/9/2020 8

ENVIRONMENTAL BENEFITS


1/9/2020 9

ENERGY EFFICIENCY MEASURE MONTH, YEAR

BEGINNING ENDReconstructing boiler ash-handling pumps and ash-handling systems (CHP-1) April 2021 June 2021

Installing additional waste-heat recovery economizers behind boilers BKZ-160-100F KA No. 12 and KA No. 13 (CHP-1) January 2021 October 2021

Restoring pumps with hydrophobic coatings (CHP-1) June 2021 July 2021


June 2020 August 2020

Restoring pumps with hydrophobic coatings (CHP-2) June 2020June 2021

August 2020August 2021

Rehabilitating the steam turbines ПТ-80-130/13 (CHP-2) February 2021 October 2022

Reconstructing the cooling tower No. 5 (CHP-3) January 2021 October 2021

Replacing steam turbine seals during overhauls (CHP-3) January 2021 September 2021

Restoring pumps with hydrophobic coatings(CHP-3) July 2021 August 2021

IMPLEMENTATION SCHEDULE


1/9/2020 10

INDICATOR tenge %

Total Project COst 7,987,614,529 100.0%

Financing Scheme # 1. Equity Financing 7,987,614,529 100.0%

Financing Scheme # 2. Debt and Equity Financing

Equity 1,088,014,529 13.6%

Debt 6,899,600,000 86.4%

Total Investments 7,987,614,529 100.0%

POTENTIAL FINANCING SCHEMES

БИЗНЕС-ПЛАН ДЛЯ ПРОЕКТОВ ПОВЫШЕНИЯ ЭНЕРГОЭФФЕКТИВНОСТИ НА ТЭЦ-1, ТЭЦ-2, ТЭЦ-3 В АЛМАТЫ, КАЗАХСТАН

• Potential investments in energy efficiency projects were

discussed with representatives of the World Bank (IBRR),

European Bank for Reconstruction and Development (EBRD)

and Asian Development Bank (ADB)

• Samruk-Energy JSC has an ADB line of credit, the terms of

which include, in particular, long-term financing in tenge of

energy efficiency projects

• The most detailed discussions of potential investments took

place with ADB representatives in Astana and Almaty in

October 2018, February and June 2019

1/9/2020 11

POTENTIAL INTERNATIONAL SOURCES

OF DEBT FINANCING


1/9/2020 12

Currency • Tenge (KZT)

Disbursement Schedule• By agreement of the parties• Monthly and quarterly tranches are possible• Possible synchronization with the procurement schedule

Максимальный срок погашения кредита • Up to 10-12 yearsМаксимальный льготный период • Typically six months to one yearManagement Fees • Very small, much less than 0.5%Advance Fee • About 1%Commitment Fee • In the amount of 1-2%

Other Fees • Perhaps, but not typically

Interest Rate• Competitive with market interest rates• May be fixed or floating• The index is the official Consumer Price Index of Kazakhstan• Margin reflects project risks

Interest Rate Payment Schedule• For projects shorter than three years, usually monthly• Otherwise (most typically) quarterly• Maybe even once every six months

Principal Repayment Schedule • Subject of negotiations

Early Repayment of Loan• Payments depend on the terms of early payment of loan and the cost of placing

bonds, usually fees are reduced after three to five years from more than 5% to less than 1%

• For loans in tenge, early repayment attempts are a common problem for ADB

Loan Security • Subject of negotiations• Directly affects the interest rate

PRELIMINARY LENDING TERMS

FOR ASIAN DEVELOPMENT BANK

БИЗНЕС-ПЛАН ДЛЯ ПРОЕКТОВ ПОВЫШЕНИЯ ЭНЕРГОЭФФЕКТИВНОСТИ НА ТЭЦ-1, ТЭЦ-2, ТЭЦ-3 В АЛМАТЫ, КАЗАХСТАН

1/9/2020 13

CASH FLOW PROJECTION (EQUITY FINANCING)


Тенге (KZT) Year Year Year Year Year Year Year2020 2021 2022 2023 … 2028 2029 2030

Cash Flow form Operating ActivityReconstructing boiler ash-handling pumps and ash-handling systems (CHP-1) 0 10,994,027 32,882,134 32,882,134 32,882,134 32,882,134 32,882,134


0 13,777,070 32,474,523 32,474,523 32,474,523 32,474,523 32,474,523

Restoring pumps with hydrophobic coatings(CHP-1) 0 156,026 312,053 312,053 312,053 312,053 312,053


44,311,740 177,246,959 100,358,719 100,358 719 100,358,719 100,358,719 100,358,719

Restoring pumps with hydrophobic coatings(CHP-2) 331,246 1,766,643 3,312,456 3,312,456 3,312,456 3,312,456 3,312,456

Rehabilitating the steam turbines ПТ-80-130/13 (CHP-2) 0 0 230,227,182 920,908,728 920,908,728 920,908,728 920,908,728

Reconstructing the cooling tower No. 5 (CHP-3) 0 0 3,839,052 522,800,991 522,800,991 522,800,991 522,800,991

Replacing steam turbine seals during overhauls (CHP-3) 0 21,610,997 86,443,987 86,443,987 0 0 0Restoring pumps with hydrophobic coatings(CHP-3) 0 432,595 1,441,984 1,441,984 1,441,984 1,441,984 1,441,984

Interest Rate 0 0 0 0 0 0 0Depreciation -7,228,585 -52,616,633 -576,848,510 -1,936,223,510 -40,453,415 -40,453,415 -40,453,415

Income Tax -7,482,880 -34,673,537 0 0 -332,096,432 -332,096,432 -332,096,432

Net Flow from Operating Activity 37,160,105 191,310,780 491,292,090 1,700,935,575 1,368,839,143 1,368,839,143 1,368,839,143Cash Flow from Financing Activity

AlES’ s Contribution (Equity) 115,657,362 731,957,167 7,140,000,000 0 0 0 0Increase in Borrowing 0 0 0 0 0 0 0Loan Principal Repayment 0 0 0 0 0 0 0

Net Cash Flow from Financing Activity 115,657,362 731,957,167 7,140,000,000 0 0 0 0Net Cash Flow from Investing Activity -115,657,362 -731,957,167 -7,140,000,000 0 0 0 0Increase (Decrease) in Cash 37,160,105 191,310,780 491,292,090 1,700,935,575 1,368,839,143 1,368,839,143 1,368,839,143

Cash, Beginning of Year 0 37,160,105 228,470,886 719,762,976 8,832,122,985 10,200,962,127 11,569,801,270

Cash, End of Year 37,160,105 228,470,886 719,762,976 2,420,698,550 10,200,962,127 11,569,801,270 12,938,640,412

• Financing Scheme # 1. AlES’s Equity Financing:

– As of December 31, 2021, Net Cash from Operating Activity in 2021

will amount to more than 191 million tenge

– By the end of 2022, Net Cash from Operating Activity in 2022 will be

more than 491 million tenge

– In 2023-2026 Net Cash from Operating Activity will exceed

1 640 million tenge per year

– Starting from 2027, Net Cash from Operating Activity will amount to

more than 1 368 million tenge for each calendar year

• As of December 31, 2030, Cumulative Net Cash provided by the

implemented energy efficiency measures will amount to more than

12 938 million tenge, which is 1.6 times more than the total

capital expenditures

1/9/2020 14

CASH FLOW ANALYSIS (EQUITY FINANCING)


1/9/2020 15

CASH FLOW PROJECTION

(DEBT/EQUITY FINANCING)


Tenge (KZT) Year Year Year Year Year Year Year2020 2021 2022 2023 … 2028 2029 2030

Cash Flow from Operating ActivityReconstructing boiler ash-handling pumps and ash-handling systems (CHP-1) 0 10,994,027 32,882,134 32,882,134 32,882,134 32,882,134 32,882,134


0 13,777,070 32,474,523 32,474,523 32,474,523 32,474,523 32,474,523

Restoring pumps with hydrophobic coatings(CHP-1) 0 156,026 312,053 312,053 312,053 312,053 312,053


44,311,740 177,246,959 100,358,719 100,358,719 100,358,719 100,358,719 100,358,719

Restoring pumps with hydrophobic coatings(CHP-2) 331,246 1,766,643 3,312,456 3,312,456 3,312,456 3,312,456 3,312,456

Rehabilitating the steam turbines ПТ-80-130/13 (CHP-2) 0 0 230,227,182 920,908,728 920,908,728 920,908,728 920,908,728

Reconstructing the cooling tower No. 5 (CHP-3) 0 0 3,839,052 522,800,991 522,800,991 522,800,991 522,800,991

Replacing steam turbine seals during overhauls (CHP-3) 0 21,610,997 86,443,987 86,443,987 86,443,987 86,443,987 86,443,987Restoring pumps with hydrophobic coatings(CHP-3) 0 432,595 1,441,984 1,441,984 1,441,984 1,441,984 1,441,984

Interest Rate 0 0 -532,483,333 -667,600,185 -100,619,167 -7,985,648 0Depreciation -7,228,585 -52,616,633 -576,848,510 -1,936,223,510 -40,453,415 -40,453,415 -40,453,415

Income Tax -7,482,880 -34,673,537 0 0 -311,972,599 -330,499,302 -332,096,432

Net Flow from Operating Activity 37,160,105 191,310,780 -41,191,243 1,033,335,389 1,288,343,809 1,362,450,624 1,368,839,143Cash Flow from Financing Activity

AlES’ s Contribution (Equity) 115,657,362 731,957,167 240,400,000 0 0 0 0Increase in Borrowing 0 0 6,899,600,000 0 0 0 0Loan Principal Repayment 0 0 0 -766,622,222 -1,149,933,333 -383,311,111 0

Net Cash Flow from Financing Activity 115,657,362 731,957,167 7,140,000,000 -766,622,222 -1,149,933,333 -383,311,111 0Net Cash Flow from Investing Activity -115,657,362 -731,957,167 -7,140,000,000 0 0 0 0Increase (Decrease) in Cash 37,160,105 191,310,780 -41,191,243 266,713,167 138,410,476 979,139,513 1,368,839,143

Cash, Beginning of Year 0 37,160,105 228,470,886 187,279,642 816,617,843 955,028,318 1,934,167,831

Cash, End of Year 37,160,105 228,470,886 187,279,642 453,992,809 955,028,318 1,934,167,831 3,303,006,974

• Financing Scheme # 1. Debt/Equity Financing :

– As of December 31, 2021, Net Cash from Operating Activity in

2021 will amount to more than 191 million tenge

– By the end of 2023, Net Cash from Operating Activity in 2021

will be more than 266 million tenge

– As of December 31 декабря 2029 (last year of loan repayment)

Net Cash from Operating Activity in 2029 will amount to more

that 979 million tenge

– Starting from 2027, Net Cash from Operating Activity will

amount to more than 1 360 млн tenge for each calendar year

• As of December 31, 2030, Cumulative Net Cash provided by the

implemented energy efficiency measures will amount to more than 3

303 млн tenge despite loan service until 2029

1/9/2020 16

CASH FLOW ANALYSIS (DEBT/EQUITY FINANCING)


• Internal Rate of Return (IRR): 20.0%

• Net Preset Value (NPV): 3 896 million tenge (at Discount Rate

of 10%)

• Therefore, an analysis of the project cash flow projections

(before financing) indicates that the proposed investment

portfolio of nine energy efficiency measures is financially viable

1/9/2020 17

CAPITAL INVESTMENT DECISION INDICATIORS


1/9/2020 18ПЕРВОНАЧАЛЬНАЯ ОЦЕНКА ВОЗМОЖНОСТЕЙ ПОВЫШЕНИЯ ЭНЕРГОЭФФЕКТИВНОСТИ НА ТЭЦ-1, ТЭЦ-2, ТЭЦ-3 В АЛМАТЫ

IRR IRR DECREASE NPV NPV DECREASE

% % tenge tenge

Project Cost Overrun Risk: project cost increase by 10%

17.6% 2.4% 3,230,693,933 665,428,353

Operational Risk: savings decrease by 10%

17.4% 2.7% 2,844,301,096 1,051,821,189

Worse Case Scenario: project cost increase by 5 % and : savings decrease by 5%

17.5% 2.5% 3,037,497,515 858,624,771

RISK ANALYSIS

1/9/2020 19

RISK ANALYSIS


• The project portfolio estimated cost increase by 10%, the IRR decreases slightly from 20.0% to 17.6% and the investment portfolio remains financially attractive

• A possible reduction in savings of fuel and energy and production costs of all measures by 10% leads to a decrease in the IRR to 17.4%, which nevertheless remains quite high and attractive for modernization projects of large CHPs

• Even a combination of two adverse events: an excess of estimated cost by 5% and a decrease in all energy savings on fuel and other production costs by 5% leads to a decrease in the IRR from 20.0% to 17.5%, which is a good financial indicator

• The technical, economic and risk analyses of each EE measure, as

well as the cash flow projection of the entire investment portfolio

and analysis of the risks of its implementation and operation

showed that the proposed projects are financially attractive and

should be recommended for implementation in conjunction with

other plans for the development of enterprises JSC "AlES“

• In addition, the implementation of the proposed EE measures will

provide a significant contribution to the environmental protection

• Therefore, the investment portfolio implementation will contribut

to the achievement of the JSC AlES’s objectives:

– “Pursuing a policy of energy savings and energy efficiency”

– "Reduction of environmental impact on the environment through

the equipment modernization“

1/9/2020 20

CONCLUSION


Pho

to: C

reat

ive C

om

mo

ns

1/9/2020 21

POWER THE FUTURE (PTF) REGIONAL PROGRAM

CHIEF OF PARTY ARMEN ARZUMANYAN

SARY ARKA 6, OFFICE 1430

ASTANA, KAZAKHSTAN 000010

WWW.PTFCAR.ORG

DISCLAIMER This product is made possible by the support of the American People through the United States Agency for International

Development (USAID). The contents of this presentation are the sole responsibility of Tetra Tech ES, Inc. and do not necessarily

reflect the views of USAID or the United States Government.

Date post:	26-Aug-2020
Category:	Documents
Upload:	others
View:	2 times
Download:	0 times

BUSINESS PLAN FOR ENERGY EFFICIENCY INVESTMENTS AT...

Documents