First firing of Australia’s largest ever coal fired unit is scheduled for later this year. Its game plan is to be the lowest cost producer serving Queensland/NSW.
As a pure generator, “plant, fuel and people is what our business is about,” says Mark Chatfield, chief executive of Brisbane based CS Energy – a Queensland-government-owned company. An opportunity to see whether he and his senior management have got the mix right will arise in August of next year when Kogan Creek – in terms of unit size the largest coal fired plant in Australia and by far the largest in CS Energy’s fleet – is scheduled to go into commercial operation, with first firing of the boiler due in December 2006 and grid synchronisation in March 2007.
Although state-owned, this 750 MWe (gross), 711 MWe (net), coal fired station, located in Queensland, about 280 km northwest of Brisbane, must make its way in Australia’s pool based national electricity market (which could be described as “corporatised” rather than privatised) as a purely merchant player, with no power purchase agreements to fall back on.
The project involves building a Aus $ 1.2 billion asset with a projected life of around 40 years, but without any long term contracts. As Mark Chatfield says, if you are going to take a “punt” of this magnitude you have to be sure you are “at the bottom of the cost curve,” particularly in a market where electricity prices have been falling in recent years, with pool prices averaging about 28-31 Aus $/MWh recently, but where demand has been growing rapidly thanks to a booming economy – the peak now occurring in summer, due to the air conditioning load.
The CS Energy game plan with Kogan Creek is, put simply, to be the lowest cost electricity producer serving Queensland and New South Wales, and to do this by building a large scale highly efficient and automated baseload plant close to a source of high quality low cost fuel with the minimum number of power plant operating staff – 37 to be exact, or 120 if you include people employed in the mine, which is under development alongside the power plant. CS Energy estimates that Kogan Creek will even be competitive with the lignite fuelled baseload generators of Victoria.
The power plant, which is based on the Siemens Varioplant 700 concept – a pre-engineered and in-part standardised 700 MWe class coal-fired plant – is supercritical, employing a once-through Benson boiler with steam conditions of 25 MPa (250 bar)/540°C (HP inlet)/560 °C (IP inlet). CS Energy drew back from going to so-called ultrasupercritical conditions – to steam temperatures of over 600°C – because it wanted to avoid what Mark Chatfield calls “unacceptable risks.” The “electricity market doesn’t reward risk takers,” he notes.
CS Energy wanted to maximise efficiency, but “didn’t want to get too far out on the leading edge” – the classical dilemma of the power generator.
Reliability is indeed crucial to the success of a purely merchant baseload plant such as Kogan Creek, so “we are totally reliant on the Siemens and Hitachi equipment,” says Chatfield. The plant is being supplied by a 70/30 Siemens/Hitachi consortium under a lump-sum fixed-price EPC contract, with a 39 month construction period that started in May 2004. Siemens scope includes the steam turbine and generator, while Hitachi is responsible for the boiler, including coal mills and baghouse filter. PB Power/Sigma is acting as owner’s representative for CS Energy.
There have been worries that a unit size of 750 MWe may be too large to serve the Queensland/NSW grid, with a peak demand in the region of 8800 MWe. But John Harten, CS Energy project manager, says the single unit configuration has “lower whole-of-life costs” than a plant with two smaller units – with capital cost per MW 10% less than for a 2×450 MWe plant and 20% less than for a single 450 MWe plant. Operating costs ($/MWh) are also lower, while efficiency is higher. The overall efficiency of Kogan Creek is estimated to be 37%, which is impressive when the high ambient temperatures (25-43°C) and use of dry cooling is taken into account (comparable to about 43% efficiency in, say, Danish conditions, with seawater cooling).
Water, or rather lack of it, has been a primary consideration in the design of the Kogan Creek plant, which is located in an agricultural area where competition for this precious resource is particularly intense. The plant is therefore equipped with an air cooled condenser, provided by GEA, one of the largest, if not the largest, such facility in the world. This will result in 90% less water consumption compared with a conventional, water cooled, plant of similar capacity. For use on very hot days the air cooled condenser is fitted with a water spray system to provide evaporative cooling for air forced through the heat exchangers, giving a significant increase in efficiency.
What water the plant will need – about 1500 million litres/y for power plant plus mine – will be met from three local boreholes tapping into the Great Artesian Basin, 700-1000 m below ground level, ensuring that, as John Harten puts it, “even these minimal water requirements place no pressure on the fragile Condamine River system.” The water from the boreholes is of high salinity and not in demand for other purposes, but renders the plant “drought-proof”, making it independent of any surface water sources and able to continue to operate when such water is in short supply. Siemens’ project manager Thomas Scherer notes that “The integration of these…bores and the design of the water pipeline provided extra challenges for the engineering and selection of materials due to the high salt and gas contents in combination with high water temperatures.”
Perhaps the key to being a low cost generator and therefore a successful merchant plant is the proximity of the coal source – the “world class” Surat coal deposit. There is “nobody between us and the coal mine,” as Mark Chatfield puts it. The mine, which is also owned by CS Energy, will supply 2.8 million t/y of high quality low sulphur coal to the power plant (via a 4 km long conveyor system being supplied by Roberts and Schaefer) – totalling about 85 million t over a station life of 30 years. The mine, which will employ open cut techniques, has estimated reserves of about 390 million tonnes – so would be well able to supply a second power plant at the site. And indeed a second plant, which would almost certainly employ ultrasupercritical steam conditions, is under serious consideration, with allowances made in the site plan.
The site is also well placed in terms of grid connection, with a new 28 km 275 kV line linking the plant to the National Electricity Market via the Braemar switching station on the Queensland–NSW Interconnector, allowing power to be routed to load centres up north or down south as needed.
As well as coal handling the EPC contract also covers ash conditioning, transport and storage/disposal. The coal is burnt in an as-mined condition, without washing, leaving an ash residue of about 30% of the material burnt, but the environmental regulator did not approve use of a traditional ash dam on the site. For the first three years of operation ash will be installed in landfill adjacent to the power plant. After that time ash slurry will be pumped back to the mine to backfill worked out areas. The plant will use a dense phase ashing system in which the ash is mixed with waste water to produce a dense slurry, which is pumped to the storage/disposal areas and soon hardens. This concept is already in use around the world, including at Stanwell and Callide C in Australia, but only for fly ash, Thomas Scherer explains. At Kogan Creek the technique will be extended to bottom ash and coal mill rejects.
Another distinguishing feature of the plant is that the entire control system is implemented in Teleperm XP, without any of the “black boxes” that are commonly found in systems such as water treatment, and coal and ash handling. Integration of these “third party components” into Teleperm required special attention and a lot of work by the control system specialists but it helps to minimise the number of operating staff. Only two people are in fact needed to run the entire plant.
As the I&C system had to be operational immediately after delivery to the Kogan Creek site, factory acceptance testing was extensive, with assembly of all I&C components at Siemens in Germany and testing of the system on a plant specific simulator. This modelled the entire water/stream cycle, as well as all actuators and sensors.
There has been talk of building a power plant at Kogan Creek for at least 20 years. The current project can trace its origins back to 1999 when competitive tenders were received by Consolidated Electric Power Asia (CEPA), which Southern Company (later Mirant) had acquired from Gordon Wu’s Hopewell Holdings in 1997. A single 750 MWe plant was selected, designed and supplied by Siemens, with Babcock Borsig to be boiler supplier. In 2000 CS Energy acquired a 40% stake in the power station and in June a limited NTP was issued, but the project was shelved a month later, with CS Energy requesting an extension to the validity of Siemens’ EPC contract. Timing of entry into the market is critical for such a project, and at that time CS Energy considered that there was no room for a new 750 MWe unit. In mid 2002 CS Energy bought the remaining 60% of the plant plus the coal mine from Mirant. By 2003 the power demand picture had changed dramatically. According to the 2003 forecasts of NEMMCO (the Australian National Electricity Market Management Co) there would be a growth in summer demand of nearly 3500 MWe between 2002/3 and 2007/8 for Queensland and New South Wales (excluding any proposed major industrial projects). By summer 20007/8 the Queensland reserve plant margin was projected to fall to 10%, with no spare capacity left in NSW to support Queensland. This created an opportunity for CS Energy and Kogan Creek that could not be ignored.
Meanwhile, Siemens had to contend with the problem that the original boiler supplier, Babcock Borsig, had become insolvent. A new supplier was found, Babcock Hitachi Kure of Japan, a wholly owned subsidiary of Hitachi (and at that time no relation to the Babcock of Babcock Borsig), with extensive experience of supplying boilers to Australian power plants. “After prolonged negotiations” the Siemens/Hitachi consortium eventually received the Notice to Proceed, in early 2004 (by which time, just to confuse matters further, BHK had acquired the steam generator technology interests of Babcock Borsig).
Siemens’ senior site manager at Kogan Creek, Reinhold Kraus, describes the location as “the middle of nowhere”, with no mobile phone coverage or internet at the start of the project, for example. “But now its quite comfortable,” he says. The project was “more than an ordinary green field power station project” with the turn key contract covering a number of infrastructure upgrades, including measures to accommodate 25% more people in the host town of Chinchilla, the “melon capital of Australia.” To minimise the effects of the influx on the local people, two “villages” were constructed on the outskirts of Chinchilla. the “stayover village”, which can accommodate 600 non-local workers, and the “Siemens village”, for longer term accommodation of site management and their families, with a population of about 80.
Other infrastructure upgrades have included refurbishment and upgrade of several roads and bridges, and improvements to the water and power supply.
All site activities must be conducted in accordance with a “cultural heritage management plan” agreed with the five traditional owner groups (Aborigines). This has included a “walk over” of the site in search of historical artefacts, which have been collected, and the monitoring of all site activities and design changes to suit conservation of heritage sites, where practicable. The site appears to have included important Aboriginal travel routes, with evidence of rock wells, small depressions where rocks were placed to provide a source of fresh water for travellers – evidence that careful water management is nothing new at this site.
The environmental management plan also includes measures such as seed and weed control and wheel wash for earth moving machinery.
With Australia’s strongly unionised workforce, more than a little attention had to be given to industrial relations issues. What is called an “Enterprise Bargaining Agreement” – essentially a project-specific wage contract – was negotiated with the four unions representing the trades required at the site, with “the parties coming to site reflecting the agreement in individual undertakings.”
Safety at the site has been a primary concern for the EPC consortium and the health and safety provisions in force go well beyond the requirements of Queensland’s regulations. Concerns extend to road safety and the avoidance of fatigue when workers drive home after a shift. John Harten says he has been very impressed with the way workplace safety has been approached.
Community liaison has also been a key element in the project, with information sessions, regular impact and progress reports to local communities, and participation in and sponsorship of local events – notably the Chinchilla Melon Festival, described by Reinhold Kraus as “unique.”
Sub contracts were placed strictly in accordance with the Local Industry Participation Plan, the Australian government’s initiative to ensure that local companies get bidding opportunities and are fairly evaluated. All work packages were posted on the web site of the government sponsored Industry Capability Network, where interested parties can register on-line and the scope of supply for each component is summarised.
First preparatory activities on site began in September 2004, with clearing of bushland. Before any significant work could start three storm water dams (with a total holding capacity of about 400 000 m3) had to be constructed to retain surface water and prevent it leaving the site. No run-off is allowed from any site activity, for environmental reasons. Site levelling could then be done, followed by pouring of foundations. This was followed by erection of structural steelwork for the boiler, turbine building and air cooled condenser, with, in parallel, pouring of individual floors for the switchgear building and construction of the 160 m high stack, now a local landmark visible for miles around. Installation of main components could then get underway.
Major milestones were reached in July 2006, with a successful boiler pressure test, and in September 2006, with “back energising”, ie connection of the plant to the 275 kV grid, allowing commissioning to get underway. In the words of Reinhold Kraus this grid connection is an “event which signifies the turn over from a heavy construction site to a place where the beginning of commissioning of modules and subsequent energising of systems takes place.”
View of the Kogan Creek site, 28 September 2006 (all other photographs taken on the same date). From left to right, stack, baghouse, boiler, turbine house, amd air cooled condenser View of the plant showing, to the right, route of the 4 km long coal conveyor that will bring coal from the adjacent mine Part of the coal conveyor under construction Steam turbine Air cooled condensor Control room under construction. Very spacious considering that only two operators are needed, and they do not need to be in the control room all the time Coal mills