Powering up the Mediterranean LNG market

Powering up the Mediterranean LNG market

New strict EMISSION legislation will incite power plants and ships operating in and around the Mediterranean to switch to alternative fuels, thereby increasing the need for liquefied natural gas (LNG) in the region.

Text: Isabelle Kliger Photo: iStock

The status quo in the Mediterranean energy market is about to change dramatically, following the introduction of the Medium Combustion Plant Directive (MCPD), which limits emissions of pollutants from medium-sized power plants, and the update of the Large Combustion Plant (LCP) Best Available Techniques Reference (BREF) document for large combustion plants. LCP BREF is likely to be approved by the European Union by mid-2017. The new LCP BREF document will contain, among other things, Best Available Techniques (BAT) emission levels for large new and existing liquid and gas-fired internal combustion engine plants. The BAT conclusions in the LCP BREF will provide the reference for setting the permit conditions to installations covered by the IED (Industrial Emissions Directive).

Tord Johnsson, Area Business Development Manager Europe and Africa with Wärtsilä’s Oil & Gas Business, explains that these regulations will be major game changers for the Mediterranean energy sector. “Whereas up to now there were exemptions for isolated power generation systems, such as those on the Mediterranean islands, the MCPD stipulates that they will no longer apply after January 2025.” 

“This means, if the power generation companies on the islands want to carry on operating, they will have to switch to LNG, or implement a treatment solution, the latter of which is not economical in the long run,” he continues. 

Existing LNG plants 

Despite the existing exemptions, LNG is not an entirely novel concept in the region in or near the Mediterranean. In fact, some power plant operators are already ahead of the curve.

As early as 2008, Wärtsilä began delivering LNG-ready, dual-fuel engines and related equipment to the island of Madeira, after winning a tender with Empresa de Electricidade de Madeira (EEM), a publicly owned energy company that generates and sells electricity throughout the island. (While just outside the Mediterranean, as part of the Portugal, Madeira has many features in common with islands inside the Mediterranean.) The plant is currently running on LNG, which is supplied to the island via the virtual LNG pipeline.

Later, in 2014, Wärtsilä signed a major contract with Shanghai Electric Power for the conversion of the Maltese Delimara Power Station Phase III to operate on natural gas. The first phase of the project to convert this 140-MW power plant, located in the eastern part of the island of Malta, was completed in October last year. 

Meanwhile, tenders are currently ongoing for power plant projects in the Greek archipelago and the Spanish Canary Islands.

Marine regulations

It is not only in the power segment that the state of affairs is about to change as a result of new emissions legislation. In an unrelated move, the International Maritime Organisation (IMO) recently announced the Marine Environment Protection Committee’s (MEPC 70, in London) agreement that a global 0.5% cap for fuel sulphur content for ships will come into force in 2020. This means that operators using residual fuels need to change to higher-quality liquid fuels, LNG or use a SOx scrubber.

LNG is widely recognised as the preferred fuel choice to simultaneously reduce all vessel exhaust emission components. Running on LNG reduces emissions of greenhouse gases by 5–10%, while NOx emissions and particle emissions are reduced by 85–90%. Meanwhile, sulphur emissions are close to zero.

Johnsson says that the timing of these two legislative moves can be seen as a fortunate coincidence. 

“The fact that both the power generation and maritime segments will come under new regulatory requirements at around the same time means, in theory, that the two industries could benefit from setting up a common LNG infrastructure with shared costs,” he comments.

Long-standing expertise 

With its extensive experience in the delivery of both power plants and ships that run on a combination of conventional fuels and LNG, Johnsson explains that Wärtsilä is uniquely positioned to support the transition that will need to take place in the Mediterranean over the coming years. Moreover, he adds that there are clear advantages to bundling together the delivery of the LNG infrastructure and the power plant, as it makes it possible to execute the project as one. This, in turn, allows the operator to save time and money, reduces energy consumption, and optimises the LNG input to electrical output performance.

“Wärtsilä can provide the expertise and industrial know-how to enable customers to identify the best solutions for their operations,” he says. “Regardless of whether operators want to build from scratch or convert an existing installation, we can provide both the necessary LNG infrastructure and the dual-fuel solutions for the power plants and the vessels.”

Read more:

https://www.wartsila.com/twentyfour7/gas/malta-prepares-for-an-lng-powered-future

 

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