The project plan involves the installation of 14 new cogeneration facilities with a total capacity of 6.5 MWe in the existing heat production plant of Termica in the city of Târgovite. A small cogeneration installation of 0.3 MWe has been installed as part of the project in 2004 already. Furthermore, new heat only boilers (HOBs) with a capacity of 14.0 MWth will be installed. An existing heat only boiler with a capacity of 58.2 MWth will be rehabilitated, as well as the existing primary heat transportation network.
At the moment the Romanian energy market is being liberalised. At the same time, energy prices for consumers will be increased to cover actual costs. Energy prices for industrial users will relatively increase less than energy prices for domestic consumers. For this reason, it will become more advantageous for domestic consumers to buy heat from a thermal energy producer like Termica than providing their own heat with individual boilers and stoves. Nuon Energy Romania (NER) is focused on realising this project, as it will create a competitive advantage for NER in its ambitions to expand steadily on the Romanian market. Termica and the Local Council of Târgovite are keen on realising the project. Without the project, economic losses for Termica will increase. For the mayor of Târgovite the project is high on the political agenda.
NER is owned by Nuon Romania bv (a Dutch limited liability company, with business in Romania) for 0.9 % and for 99.1% by Nuon Warmte NV. Purpose of the company is the development and implementation of projects in the field of electricity and heat production, transport and distribution, including the necessary financial arrangements. The company is founded specifically with the purpose of implementing the municipal cogeneration project in Târgovite. Project partner S.C. Termica S.A. supplies thermal energy for the district heating system of the city Târgovite. The municipality of Târgovite is 100% shareholder of Termica. At present Termica supplies thermal energy to about 16,000 apartments and 270 businesses, schools and kindergartens.
The four main components of the project are the installation of new cogeneration capacity, installation of a new heat only boiler, upgrading of an existing heat only boiler and the upgrading of the heat transportation networks. NER is responsible for the installation of the new equipment, while Termica is responsible for the upgrading activities. NER is responsible for the purchasing of the equipment. Selection of equipment suppliers has been finalised. The project is planned to be finalised in December 2005, although the upgrading of the transportation networks will continue until 2011. Termica will be the lessee of the cogeneration installation and new HOB in the project. After the project has been implemented, heat will be provided to the inhabitants of Târgovite. Also, electricity will be delivered to utilities owned by the municipality and to the national grid. It is assumed the heat demand at the interface between primary and secondary heat networks is 685,908 GJ/yr (based on the relatively warm year 2003). The project assumes a production of 53,961 MWhe/yr.
For the heat part of the project, the baseline scenario is that the use of the existing boilers is continued. With the specific CO2 emission factor of natural gas of 0.0561 kton CO2/TJ and a heat production of 879 TJ/yr, the baseline emissions are 75,896 kton CO2/yr. When the project is implemented, the cogeneration installations, the new HOB and the rehabilitated HOB will provide heat. This leads to an emission reduction for the heat component of the project of 94,425 ton CO2e in the period 2006-2012. For the electricity part of the project, the baseline scenario is the implementation of the long-term energy strategy as described in the “Road Map for Energy Sector of Romania”, as published by the Romanian Government in July 2003. Hydro and nuclear installations will operate at the margin. New to be built capacity (gas fired plants) will have a must run obligation according to NER. Therefore the project will compete with the rehabilitated thermal power plants. The projects emissions are thus compared to the emissions of the rehabilitated lignite fired units. With a specific CO2 emission factor for lignite of 0.1012 kton CO2/TJ this leads to an emission reduction of 458,157 ton CO2e for the electricity part of the project between 2006-2012. The project is not business-as-usual and thus additional because without the sales of carbon credits, the project is not economically viable. Without carbon credits income, the Internal Rate of Return is negative.
SenterNovem will purchase the emission reduction (ERUs)