United Nations Development Programme and the Azerbaijan State Company for Alternative and Renewable Energy Sources




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United Nations Development Programme and the Azerbaijan State Company for Alternative and Renewable Energy Sources
Project: Promoting Development of Sustainable Energy in Azerbaijan
Pilot Project Plans for Wind, Solar and Biomass Sources of Energy

Combined Report on Feasibility Studies and Pilot Plans for Biomass, Solar and Wind in Azerbaijan


Prepared by



Rodney Hacker & Faig Mammadov
September 2012
Combined Report on Feasibility Studies and Pilot Plans for Biomass, Solar and Wind in Azerbaijan
Executive Summary

Introduction
This report presents the combined results of work on feasibility and pilot plans for three projects under Phase II of Component 5 of the project for Promoting Development of Sustainable Energy in Azerbaijan. It has been prepared by the International Consultant and the Local Consultant engaged to prepare feasibility studies and pilot project plans for wind, solar and biomass sources of energy.
Phase I of Component 5 prepared a series of reports culminating in a pre-feasibility level assessment of the potential for three pilot plants to be located at the Siyezen Chicken Broiler Farm. This report is intended to provide a full examination of the case to support the development of the project using finance from private investment. It is recognised in the report that the financial case for the projects cannot be made until the necessary regulatory changes have been implemented and renewable electricity supply tariffs established. The nature of these changes is explored further in other components of this programme. However, this report also endeavours to provide an example of the scope and nature required of a feasibility report for it to be acceptable to a potential investor as a ‘bankable’ report.
During Phase I it was found that the Siyezen Chicken Broiler Farm would be a good potential site for all three projects. The energy resources appeared to be sufficient; land was available; a grid connection was available; the environmental benefits worthwhile; and the use of one site would much simplify development and organisational costs for the agency or company promoting the programme of projects. The use of all three generation technologies on one commercial/industrial site also allows a good demonstration of how they can be integrated to make the farm more self-sufficient in energy; thus contributing towards the rural and industrial development aims of Component 5. However, it would also be possible to develop the solar and wind projects under separate management and finance from the biomass project.
Energy Demand and Resources
The site is at Siyezen Chicken Broiler farm near the coast about 95km north of Baku. The farm occupies an area of 520Ha between the main highway to the north of the country and the coast. The farm units are widely spread over the site as with space for the planned expansion to approximately twice the current output.
The biomass plant can be located in the unused areas close to the present farm operations. This can also be the location for the solar plant while the wind turbines can be spread over this area or adjacent land. The final choice of location will depend on the access to the electricity network and the optimisation of the heat distribution network if waste heat is to be used on site.
The updated forecast electricity demand is 19 million kWh per year (19,000MWh) at full capacity. Additionally, the forecast for gas usage is about 18 million cubic metres. The future electricity demand at 19,000MWh is much less than the pre-feasibility estimate of 26,400MWh/yr.
The biomass waste on the farm is chicken litter, a mixture of the manure and the bedding material on the floors of the sheds. The bedding material is hay or dried grass. The chicken litter is cleared from the broiler sheds at the end of the growing cycle and less often from the breeding chickens. The annual resource is estimated at 23,000 tonnes. The value of the resource for fuel and fertiliser depends on the processes used to extract the energy and then process the resulting ash, char or digestate for fertiliser.
Local data sources for solar and wind energy are of poor quality. The best freely available data set for solar and wind energy is from NASA, a version of which is used in the database for the RETScreen International Clean Energy Analysis software which has been developed over several years with strong support from the Government of Canada. This provides mean daily solar radiation and average wind speeds by month for 14 sites in Azerbaijan. The data for Siyezen indicates a good solar resource with an annual average daily solar radiation of 3.98kWh/m2. The wind data indicates an annual mean wind speed of 5.5m/s at 10m height with mean monthly wind speeds from 5.1 to 6.1m/s. At the same time local wind speed measurement data is said to indicate more than 7.5-8.5 m/s. This suggests a mean annual wind speed at 60 to 80m high of at least 7 to 8 m/s, which is good for wind generation. The pattern of wind direction is not clear.

System Size and Integration
The use of all three generation technologies on one commercial/industrial site allows a good demonstration of how they can be integrated to make the farm more self-sufficient in energy; thus contributing towards the rural and industrial development aims of Component 5. While the size of possible solar and wind plants is unconstrained by the size of the farm (except in terms of land available) the biomass plant is limited by the available resource of waste products. The approach to the selection of project size is therefore to maximise the generation from the biomass plant and then match the solar and wind sizes to achieve a balance that represents near self-sufficiency.
The simplest balance between demand and supply is found by matching the annual totals for each resource to the annual demand. A more accurate match might be made with monthly averages thus ensuring that there will always be sufficient supply in a given month. In both cases any excess supply or demand at any time is met by exporting to or importing from the grid. The design for the biomass system (see below) results in a forecast generation of 7,710MWH/yr. A reasonably balanced annual total renewable energy supply can be achieved with 2,280MWh/yr of solar generation and 9,110MWh/yr of wind energy, (total 19,100MWh/yr). The peak of solar energy in summer months partially compensates for the lower wind energy in summer. The estimated sizes are 1.7MW of solar and about 4.0MW of wind.
The system sizes may need to be adjusted if the resource measurements on site show significantly different values than the RETScreen data sets or if the system performance figures differ significantly.
Biomass Project Design
The waste from chicken farms, whether broilers or egg-layers, presents a particularly difficult set of processing issues to deal with and consequently the world wide experience of waste to energy transformation is still rather limited. Several different processes are in use. The diversity of intensive farming practices and the bedding materials used will account for some of this variety. An extensive review of the status of available technologies for energy conversion and the worldwide experience has been carried out.
The number of operational plants in the world designed to treat wholly or partially poultry manure is probably less than 50. Most are large scale operations and with a few exceptions have been built in the last ten years. Almost all are combustion or anaerobic digestion (AD) plants. The designs tend to be proprietary to the supplier or designing company and there are relatively few of them. In market development terms this market is very immature or at the innovation stage.
In this situation the criteria for selection of the type of plant for Siyezen was as follows:

  • A process which is proven to work reliably at a scale and with the type of wastes available at Siyezen

  • A supplier willing and able to work with agencies and industry in Azerbaijan

  • A plant, including preparation of fertiliser, which can earn sufficient income to meet the financial targets.

The biomass feasibility study is developed on the basis that an anaerobic digestion plant with fertiliser production from the digestate will be selected using a proprietary process from an experienced supplier.


The design developed for Siyezen is based on the Biogas-Nord concept for which a process flow chart and the sizes of major components have been supplied for a similar plant. Plants from most other experienced suppliers are expected to be broadly similar. They all use pre-processing of the chicken litter to improve the breakdown of the solids and recycle a proportion of the liquid digestate output. The main process stages occur in a series of large tanks through which the wastes mixed with water are pumped and biologically broken down. One exception is the Rückert Naturgas process which still uses the pre-processing and recycling techniques but also uses a plug flow, horizontal chamber system contained in one large building.
The AD process produces a dry, fine textured solid (28% total solids) which can be handled as a bulk solid or it can be dried further or turned into fertiliser pellets if the market is for product in that form. It will have a high content of potassium and phosphorus and a lower content of nitrogen compared to artificial fertilisers but this may not be a disadvantage.
The estimated annual output from the plant will be as follows:

Net electricity for use or export 7,710MWh

Net heat available to farm 5,292MWh

(equivalent to approximately 480,000 m3 natural gas)

Resource for fertiliser (maximum) 19,400t at 28% total solids

Liquid digestate to disposal 33,600t at 4.5% total solids



The budget cost is US$5,405,000.
Solar Project Design
The design for the solar plant is similar to hundreds of large-scale plants already in operation. Design calculations are based on a good quality polysilicon cells in a typical large area module. The modules are fixed at a 25 degree inclination, south facing, on long racks in an east-west direction. The analysis is made with product data and standard performance assumptions in the RETScreen program. One or more large, packaged inverters are used. The size and configuration will depend on the supplier but this will not affect significantly the energy output if well designed. The racks of modules are spaced apart to minimise shading between them. The overall area of land required is approximately 3.5Ha.
If the solar monitoring on site confirms that the proportion of direct normal irradiation is high, giving say 25% more energy capture on a tracking array than can be captured on a fixed array, the option of using tracking arrays might be considered although the extra capital and operating costs must be weighed against the improved energy capture.
The estimated annual output from a 1.7MW fixed array system is 2,280MWh.
The budget cost is US$4,590,000 using products sourced at current international prices. The indicated price of locally manufactured modules is nearly twice the international market price and, if used, would result in a system cost of US$6,460,000.
Wind Project Design
The wind project design is based on the use of conventional wind turbines of a type available from many suppliers. They are three-bladed, downwind, horizontal axis machines. The pre-feasibility study selected four 1MW turbines. The selection has been re-assessed within the constraint of using between two and five machines of between 850kW and 2000kW rating and a maximum hub height of 70m. The use of more than one machine provides security of supply and the sizes chosen can be erected with smaller cranes than the very large turbines. Ten turbines for which power curve data is available in the RETScreen software and which are currently available were analysed. The final design is based on three Suzlon S66 1250kW turbines that are estimated to produce 10,563MWh/yr at a capacity factor of 32.2%. When measured wind data becomes available selected suppliers will be able to fine tune their standard turbines to get the best results and other machines might produce a better performance. The total energy production is 15% more than the requirement but this leaves a margin for protection against finding a lesser wind speed than assumed and for poor years of wind resource.
The capital cost is estimated at US$7,500,000.

Grid connection
It is assumed that all three generators will be connected to the farm’s internal 10kV network to gain the financial benefit from displacing imported energy. The internal network is connected to the 110kV national grid through a substation on the farm that is located about 2km from the proposed site for the biomass and PV plants. The substation appears to have adequate capacity on the grid side but the busbar and switchgear on the farm side of the connection will probably need extension for an extra connection directly to the output substation of the new generators.
If only a small generation capacity is connected there may be no export of energy and it may only be necessary to arrange a parallel connection agreement. For export of power, a connection agreement and a power purchase agreement will be necessary. This seems to be the most likely case for the size of wind farm proposed or if more than one plant is connected.
Financial Analysis
The financial viability of the projects was assessed using the finance model developed in the Component 3 study on economic and financial evaluation. The financial model assumes foreign investment in the projects and therefore works with both local currency and US dollar costs, taking account of exchange rates and inflation. The variable financial parameters include loan interest rates, VAT and import duties. The criteria for identifying a viable project include return on equity for the lead developer, the internal rate of return and the debt service coverage ratio for the lender. The model is set up to estimate the level of feed in tariff required to make the project commercially viable with external investment.
There is some uncertainty in the costing at this stage of design development, and also due to the lack of relevant experience of the technologies in Azerbaijan. The first projects in the country can be expected to be more expensive than subsequent projects due to the lack of experience. The market for similar biomass projects is still very small; costs can be expected to reduce as experience is gained. The market prices for the PV modules have shown great reductions in the last two years and continue to fall. Other elements of the PV system cost are also declining as more experience is gained worldwide. Wind power costs did increase in the last decade but now have started to return to the long-term pattern of steadily reducing prices while performance continues to improve. The capital cost estimates are probably only accurate to ±15%, considering the limited data available to prepare them. Predictions of the project cost in the future are therefore uncertain and only tenders for a complete scheme will reveal a truly competitive cost in Azerbaijan.
For each project a base case has been analysed and then sensitivity analyses have been completed. For each one a different future scenario has been developed to indicate the benefit of a positive regulatory and financial environment together with an expectation of the costs two or three years into the future.
In the base case for biomass the required feed in tariff to get an adequate return on the investment is 219AZN/MWh. This reduces to 183AZN/MWh if the sale of fertiliser is included. The standard model includes for inflation on costs but not on revenues. Allowing for a tariff with an inflation index considerably improves the required starting tariff to between 100 and 116AZN/MWh. A future scenario in which changes to policies, tariffs and costs are all positive, but not impossibly so, could reduce the required tariff to about 70 to 80AZN/MWh. This is very close to the current, subsidised retail price of electricity.
The feed in tariffs for solar PV calculated on a similar basis to the biomass tariffs are in the range 210 to 538AZN/MWh. The higher tariffs relate to the present unhelpful financial and regulatory environment. Many examples can be found of tariffs in other countries in the range from 180 to 450 $/MWh (150 to 360AZN/MWh).
The feed in tariffs for wind calculated on a similar basis to biomass and solar are in the range 133 to 184AZN/MWh. A future scenario that is positive to development could easily produce an acceptable tariff below 100AZN/MWh. Examples of tariffs in other countries are in the range from 75 to 150$/MWh (60 to 120AZN/MWh).
A feed in tariff with an inflation factor is more effective at improving the cost effectiveness of the project than a modest reduction in capital costs.
Direct comparison between the calculated rates and those in other countries cannot always be made due to the different rules applied and their success in stimulating investment is not necessarily the same.
Electricity from a biomass plant remains cheaper than that from wind or solar energy plants and environmental benefit can be gained from the use of the digestate as a fertiliser.
The projects provide a major challenge for a developer to create cost effectiveness by seeking low cost funding and a supportive tariff scheme.
Further Development
Further development of these projects must include several more detailed investigations and studies that will lead to a finalised design and specification for tender purposes and also to confirmation of the consents and tariff arrangements. The full range of activities is described in the Report No 3 from the pre-feasibility stage studies. The following actions are identified as high priority and to be undertaken as soon as possible.
The detailed studies on the farm are vital for the biomass plant design and important to confirm the generation capacity if the energy supply/demand balance is to be maintained in designing the solar and wind plants:
Fuel quantity and quality – Confirmation of the quantity of chicken litter available by a measurement campaign on site and laboratory analysis of samples is required to establish the moisture content and the potential energy content.
Electricity demand at the farm – A more detailed understanding of the seasonal and daily demand patterns for electricity would confirm the potential to export energy and the cost benefit of doing so.
The calculations for solar and wind energy are interim and not providing the confidence level required by international investors or banks:
Solar and wind energy resources – The present solar and wind monitoring at Siyezen under the State Company AREA programme should be continued. When at least one year of data is available a detailed analysis should be completed. Long term data from nearby meteorological stations or other sources should be found to enable a correlation between the new data and long-term records.
The following studies are required to confirm that the projects are acceptable to the responsible authorities and to clarify costs:
Grid and substation capacity – Confirmation of the capacity of the substation and the need for additional equipment there. Linked to this work will be the assessment by the grid operator of the effect on the grids of potentially injecting energy at this point.
Connection Agreement – Essential if the renewable energy generators are to be connected in parallel with the grid connection to the farm even if power is not exported.
Power Purchase Agreement – Early negotiations on this agreement (when a suitable tariff structure becomes available) are recommended if there is to be export of energy.
Environmental Impact –It is recommended that the proposed scope of work for the EIA studies be submitted to the Ministry of Ecology and Natural Resources at the earliest opportunity in order to identify potential problems. It has been assumed that the environmental impact of the biomass and solar projects will not cause significant concerns. Wind turbines may raise more issues but the project should be quite manageable with the appropriate measures taken in design and during construction.

Combined Report on Feasibility Studies and Pilot Plans for Biomass, Solar and Wind in Azerbaijan


Contents

1 Introduction 1

1.1 Purpose of Report 1

1.2 Background 1

2 Siyezen Broiler Farm (The Project Site) 3

2.1 Site Description 3

2.2 Energy Demand 5

2.3 Renewable Energy Resources 7

2.4 Sustainable Energy Development 10

2.5 Sizes of Projects 10

3 The Biomass Plant 11

3.1 Technology Options 11

3.2 Outline Biomass Project Design 20

3.3 Cost Estimates for Biomass Plant 33

4 The Solar Photovoltaic Plant 36

4.1 Technology Options 36

4.2 Outline Project Design 41

4.3 Cost Estimates for Solar Plant 50

5 The Wind Power Plant 53

5.1 Technology Options 53

5.2 Project Design 55

5.3 Cost Estimates for Wind Plant 61

6 Grid Connection 64

6.1 Regulations and Processes 64

6.2 Design of connection 65

7 Environmental and Other Development Issues 66

7.1 Environmental Impact 66

7.2 Geotechnical Conditions 68

7.3 Other Development Consents 69

8 Financial Analyses 71

8.1 Methodology 71

8.2 Financial and Economic Data 71

8.3 Financial Analysis for Biomass Plant 72

8.4 Financial Analysis for Solar Plant 75

8.5 Financial Analysis for Wind Plant 79

8.6 Conclusion on Financial Analyses 82

9 Conclusions and Further Studies 82

9.1 Development and Design 82

9.2 Finance 84

9.3 Further Development 85

Appendix A – Notes on Farm Operations and Waste Production 87

Appendix B – Worldwide Experience of Chicken Litter as a Fuel 92

Appendix B 93

Worldwide Experience of Chicken Litter as a Fuel 93

Appendix C - Potential Suppliers’ Contacts 99

(biomass plants) 99

Appendix C 100

Potential Suppliers’ Contacts 100

Appendix D - Analysis of AD Processes 102

Appendix E - Biomass Performance Specification 110

Appendix E 111

Outline Performance Specification 111

Anaerobic Digestion Plant at Siyezen Chicken Broiler Farm 111

Forward 111

10 Overview 112

10.1 Project Objective 112

10.2 Description of Project 112

11 Performance Requirements 113

11.1 Input Resource Data 113

11.2 Process Outputs 113

11.3 Lifetime 113

11.4 Proven Design 114

12 Outline Design Requirements 114

12.1 Scope of Work 114

12.2 Approvals 114

12.3 Description of works 114

12.4 Standards, Codes and Regulations 118

12.5 Materials and Workmanship 118

12.6 Contractor’s Design Team 118

12.7 Contractor’s Design 118

12.8 Quality Assurance 119

12.9 Design Programme 120

12.10 Use of the Contractor’s Design 120

12.11 Further Investigations 120

12.12 Ambient Conditions 120

12.13 Access 120

12.14 Contractor’s Facilities 120

12.15 Environmental Best Practice 121

12.16 Permits 121

12.17 Commissioning Tests 121

12.18 Warranties and Training 122

Schedule 1- Composition of Feedstock 124

Appendix F - Biomass Cost Data 127

Appendix G - Solar Performance Specification 135

Solar Photovoltaic Plant at Siyezen Chicken Broiler Farm 136

Forward 136



1 Overview 137

1.1 Project Objective 137

1.2 Description of Project 137

1.3 Solar Resource Data 137

1.4 Energy Performance 138

2 Performance Requirements 140

2.1 Energy Output 140

2.2 Lifetime 140

2.3 Proven Design 140

3 Outline Specification 141

3.1 Scope of Work 141

3.2 Approvals 141

3.3 Description of works 141

3.4 Standards, Codes and Regulations 142

3.5 Materials and Workmanship - General 142

3.6 Photovoltaic and Electrical Systems 143

3.7 Skills and Workmanship 149

3.8 Security and SCADA 149

3.9 Contractor’s Design Team 150

3.10 Contractor’s Design 150

3.11 Quality Assurance 151

3.12 Design Programme 151

3.13 Use of the Contractor’s Design 151

3.14 Further Investigations 152

3.15 Ambient Conditions 152

3.16 Access 152

3.17 Contractor’s Facilities 152

3.18 Environmental Best Practice 152

3.19 Permits 152

3.20 Commissioning Tests 153

3.21 Verification of Commissioning 153

3.22 Warranties and Training 153

3.23 Operation and Maintenance Manuals 154

Appendix H – Solar and Wind Plant Sizing 156

Appendix J – Solar Project Costs 167

Appendix K 172

Outline Performance Specification 172

Wind Power Plant at Siyezen Chicken Broiler Farm 172

Forward 172

1 Overview 173

1.1 Project Objective 173

1.2 Description of Project 173

1.3 Wind Resource Data 174

1.4 Energy Performance 174

2 Performance Requirements 176

2.1 Energy Output 176

2.2 Lifetime 176

2.3 Proven Design 176

3 Outline Specification 177

3.1 Scope of Work 177

3.2 Approvals 177

3.3 Description of works 177

3.4 Standards, Codes and Regulations 177

3.5 Materials and Workmanship 178

3.6 General Design Requirements 179

3.7 Contractor’s Design Team 179

3.8 Contractor’s Design 179

3.9 Quality Assurance 180

3.10 Design Programme 181

3.11 Use of the Contractor’s Design 181

3.12 Further Investigations 181

3.13 Ambient Conditions 181

3.14 Access 181

3.15 Contractor’s Facilities 181

3.16 Environmental Best Practice 182

3.17 Permits 182

3.18 Power and Electrical Systems 182

a) Control 183

b) Metering 183

c) Performance Monitoring 183

d) Climate data 184

3.19 Substation Building & Enclosures 185

3.20 Grid Connection 185

3.21 Commissioning Tests 186

3.22 Maintenance 186

3.23 Warranties and Training 186

3.24 Operation and Maintenance Manuals 187

Appendix L – Wind System Design 189

Appendix M – Wind Project Costs 196

Appendix P – Feed In Tariffs 206




List of Abbreviations and Acronyms

AD Anaerobic Digestion

ADB Asian Development Bank

AREA State Company for Alternative and Renewable Energy Sources (in English) formerly known as the State Agency SAARES

CDM Clean Development Mechanism, support programme for carbon emission abatement under the Kyoto Protocol

EBRD European Bank for Reconstruction and Development

INOGATE The INOGATE Programme of EBRD supports energy policy cooperation between the European Union and the INOGATE Partner Countries.

kW kilowatts (power)

kWh kilowatt hours (energy)

MW Megawatts

MJ/m2 Megajoules per square metre, 3.6 MJ = 1 kWh

NASA National Aeronautics and Space Administration (USA)

NGO Non governmental organisation

PPA Power Purchase Agreement

PREGA Promotion of Renewable Energy, Energy Efficiency and Greenhouse Gas Abatement programme of ADB

PV solar photovoltaics

UNDP United Nations Development Programme

Combined Report on Feasibility Studies and Pilot Plans for Biomass, Solar and Wind in Azerbaijan



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