A partnership lifts returns by turning waste heat into power
3 min read
22 Sep 2020
3 min read
22 Sep 2020
Thanks to a partnership with Wärtsilä, a major utility provider in the Middle East is recovering waste heat to reduce its carbon footprint and improve its bottom line.
Utico group is one of the largest private power and water utility providers in the United Arab Emirates (UAE) serving four out of the six Emirates. Its group turnover is over EUR 500m. It is also one of the country’s leading green companies — it was the first utility provider in the Middle East to receive ISO 50001 certification for energy management from Quality Austria.
One of Utico’s biggest challenges has been finding ways to improve returns and reduce costs. In the UAE, independent water and power producers are typically tied to a regulated tariff regime with the government, according to Louis Strydom, Senior Manager, Project Development, Wärtsilä Energy.
“Returns are locked in, and you drive value through cost and operational improvements,” Strydom says.
In this situation, working with partners who can co-create solutions to improve efficiency is an important way to create additional shareholder returns.
Utico partnered with Wärtsilä to find new solutions for unutilised waste heat produced from its power plants.
Taking efficiency to the next level
Finding ways to improve operational efficiency requires a willingness to ask bold questions. Wärtsilä and Utico formed a specialist team to do just that. In a detailed discovery process, the team identified a project with excellent potential. At Utico’s Ras Al Khaimah operations, one of the most extensive integrated utility operations in the Middle East, exhaust gas waste heat could generate additional electricity
Utico’s existing 100MW power facility which includes a 58 MW power plant with six Wärtsilä 20V34SG gas engine generator sets, operates as a baseload application. Given the baseload running profile, Wärtsilä identified an opportunity to install a waste heat recovery project. A steam turbine generator could utilise the exhaust gas to capture an additional ~6 MW of electricity from the plant.
“Exhaust gas will pass through individual steam generator boilers connected to each of the generator sets to produce high-pressure steam at about 16 bar (G). The steam will pass through a steam turbine connected to an electrical generator, producing electricity,” says Loganathan Venkatachalapathi, Business Development Manager, Wärtsilä Energy.
“The team focused on valorising waste streams. We identified reverse osmosis wastewater as a cooling media in the waste heat recovery process, saving substantial auxiliary power consumption,” he says.
From concept to project – including expertise in financing
For Utico, one of the benefits of partnering with Wärtsilä for this project was the company’s comprehensive project offering. Wärtsilä Energy provided the engineering, procurement, and construction as well as operation and maintenance (O&M) support. Wärtsilä Development & Financial Services, the company’s project development and investment arm, helped identify the business case and supported the commercial and financial development of the project.
“We adapt our financial solutions to the needs of the project and the owner. This could mean that we invest equity in the partner’s company or support with other financial solutions,” Strydom says.
A common misconception is that you cannot finance new projects once they are operational. With the right partners, it is possible to finance new projects that enhance existing operations either stand-alone or as part of a second investment round. In this case, Wärtsilä co-invested in a new project vehicle, the Green Electricity Company, to implement the project.
“The bottom line is that the waste heat-to-power project creates increased electricity sales and a reduced carbon footprint for Utico,” says Strydom. “Developing complementary projects to existing operations are great ways to drive economic and environmental value. The special purpose company will run for 15 years.”
“Realising nearly an extra 10% power for the same quantity of gas input at full load conditions by recovering the exhaust heat energy demonstrates the value of such projects," Venkatachalapathi says.
“We are a partner throughout the project lifecycle. As part of Utico’s operations, Wärtsilä’s O&M support in providing spare parts and technical services enables reliable operation of the power plant, especially during the extreme conditions of peak summer in the Middle East,” he adds.
The Utico case exemplifies how Wärtsilä can partner with a client to “realise energy efficiency opportunities to enhance their business model,” says Venkatachalapathi. “This, in combination with the ability to support the project
development and investment, results in a comprehensive business solution to enhance existing projects.”