Towards an energy mix: The role of conventional power sources in the changing energy landscape
While renewable energy generation continues to gain traction in the region, traditional power generation from sources such as oil, natural gas and coal will continue to have a crucial position in the broader energy mix amid soaring demand for power
Early this year, GE and Japan’s Sumitomo Corporation reached a public-private partnership (PPP) milestone by signing a 25-year Power Purchase Agreement (PPA) with the Sharjah Electricity and Water Authority (SEWA) to develop, build and operate a 1.8 gigawatt (GW) combined cycle power plant located in Hamriyah.
Equipped with GE’s HA technology, including the world’s largest and most efficient heavy-duty gas turbine, the flagship project is expected to be the most efficient power plant in the Middle East’s utilities sector upon completion and will enable SEWA to substantially improve the overall efficiency of its operations.
The project will consist of three combined cycle blocks, the first of which is expected to come online in 2021. A consortium of banks and JBIC will co-finance the Project for a total private-public co-financing amount of approximately $1 billion.
The new project in Sharjah is expected to boost the emirate’s electric power supply, but most importantly, it emphasizes the critical role of gas power in the wider energy mix, as the Middle East steps up investments on renewable energy including solar, wind and nuclear.
Saudi Arabia has for instance earmarked over $100 billion for renewable energy investments. But the Kingdom is at the same time furthering investments on new gas power projects, in recognition of gas’ essential role in narrowing the electricity demand-supply gap.
“We want the best of all possible power generation sources. We do not intend to play one against the other. To cope with the fast rising demand of electricity, we will need renewable energy to complement traditional sources of power generation including gas,” Khalid A. Al-Falih, Saudi Arabia’s former minister of energy, industry and mineral resources told Utilities Middle East last year.
In Sharjah, where GE is building the emirate’s new 1.8 GW gas power plant, power generation activities are dominated by gas turbines, which represent 83.2% of its available capacity. No target policies for the large-scale deployment of renewable energy exist in the emirate.
SEWA is looking to kick-start its own renewable energy programme that will address the immediate needs of the emirate, but at the same time pursue conventional power generation, which it considers necessary for a reliable energy mix.
“What our neighbours in the region are doing in terms of new solar projects, nuclear and clean coal plants is good in terms of boosting power capacity. We would like to pursue a strategy that will guarantee sustainable and uninterrupted power supply,” says Dr. Rashid Alleem, Chairman of SEWA.
According to a report from the Gas Exporting Countries Forum (GECF), the Middle East’s demand for electricity is expected to reach 2,419 terawatt hours (TWh) by 2040, double 2016 levels. This has prompted regional utilities to explore other sources of power, including renewable energy.
However, in an energy-hungry world marked by a spiralling demand for electricity, the intermittency of renewable power means one cannot rely upon it as the sole source of electricity. The sun does not always shine down upon us through clear blue skies, winds do not always blow at stable speeds, rainfall patterns are not always reliable enough to ensure a planned, constant flow of hydropower and today’s energy storage solutions have yet to evolve to a level where they can plug in the gaps that may be caused by this intermittency.
“The world will have to depend upon a mix of conventional resources and renewable power to meet the need for dependable, affordable and sustainable energy over the foreseeable future. Traditional and alternative sources should be seen as complementary, not competing forces, to meet our electricity needs,” says Joseph Anis, President & CEO of GE Power in the Middle East, North Africa and South Asia.
“However, business as usual will not work. We need to develop solutions that are a better fit for our evolving reality. That means investments in technologies that are more efficient and flexible so they release fewer emissions, have lower life-cycle costs and are more flexible so they can ramp up and down faster to stabilise the grid in response to intermittent renewable energy. Hybrid technologies offer another viable solution.”
At GE, for example, this effort is reflected in its HA gas turbine technology, which is now available at 64% net combined cycle efficiency – higher than any other competing technology today. In fact, the gas turbine has already helped to deliver two world records for efficiency, one each in the 60 hertz and 50 hertz segments of the global power market.
“Capable of ramping up or down at up to 88 megawatts per minute while still meeting emissions requirements, the technology can support countries transitioning to greater supplies of renewable power in their energy mix by helping to balance grid instability,” says Joseph Anis.
This is the same technology that has just been adopted by SEWA for its upcoming 1.8 GW independent combined cycle power project located in Hamriyah, Sharjah.
The technology is also a good fit for developing countries looking to bring large amounts of power online to plug the energy deficit near dense population centres, without the requirement of large tracts of land that are often required for equivalent amounts of renewable energy. A prime example of that is Bangladesh, which has adopted the HA technology since 2014 to help bridge the large gap between demand and capacity.
Mixed technology integration is another means to address today’s energy needs. For example, Southern California Edison (SCE) and GE unveiled the world’s first battery-gas turbine hybrid system in Norwalk, California. The system helps balance variable energy supply and demand, including during evening hours when the sun sets and solar power production falls while electricity usage surges as people turn on lights and appliances.
At its core is a state-of-the-art control system which seamlessly blends output between the battery and the gas turbine. The energy storage capacity of the battery has been designed to provide enough time coverage to allow the gas turbine to start and reach its designated power output. Therefore, the system does not need to burn fuel and consume water in standby mode to dispatch power immediately when demand surges or renewable energy supplies decline.
More innovative solutions are also around the corner. Today, scientists are able to adapt power generation technologies such as gas turbines to burn clean resources such as hydrogen. In fact, GE has successfully utilised blended fuel with up to 95% hydrogen to generate electricity through its gas turbines.
“For now, securing our collective energy future means everyone must be on board to design a diversified, innovative global energy system that draws on different fuel sources and technologies,” says Joseph Anis
Survival in this evolving energy landscape will mean changes in business strategy as well as scaling up innovations geared towards improved performance for gas turbines, and this is what GE has firmly set out to do.
“A lot of what we are investing in right now is around efficiency gains. We want to continue to be economically advantageous for the customers we serve and to support sustainability goals by ensuring lower fuel consumption for increased power output. Through efficiency gains, power density gains and flexibility gains, we are providing much-needed optionality for our customers at a time when grid systems and the problems they are trying to solve are becoming increasingly complex.”
The world’s industrial gas turbine market is expected to rise annually and reach $10.23bn by 2026, according to the summary of a new report by Fortune Business Insights.
The gas turbine sector–led by companies such as Siemens, Mitsubishi Hitachi Power Systems (MHPS), Rolls-Royce, Ansaldo Energia and Kawasaki Heavy Industries, among others–is expected to grow at an annual rate of approximately 1.4 percent over the next seven years, the summary indicates.
Globally, sales of gas turbines have fallen sharply, under pressure from low-cost renewable energy, and are expected to remain weak for at least another couple of years. The current global industrial gas turbine market last year was estimated at more than $9bn.
German engineering conglomerate, Siemens, announced last year that it will be selling off its $33.5bn majority of its Gas and Power division, made up of conventional power generation, transmission, oil and gas, and its 59% stake in Siemens Gamesa Renewable Energy, as part of its Vision 2020+ strategy concept.
The sale of the stake, which follows speculation about the future of Siemens’s gas business since 2018, will likely see the “creation of a new “major player on the energy market.”
While the market has been shrinking, it has also been becoming more competitive. Manufacturers are now battling to improve efficiency, to cut the cost of gas-fired power. MHPS says its latest J-class turbines can produce electricity 30 per cent more cheaply than the F-class technology introduced in the 1980s.
Today, MHPS gas turbines, such as the combined cycle M501JAC with efficiency approaching 65% and reliability of 99.5%, play a pivotal role as they work with renewables to reduce carbon emissions.
Manufacturers such as MHPS and Siemens see hydrogen as the bulk energy storage solution for a sustainable, cost-effective, and reliable renewable energy future. As the build-out of wind and solar continues, excess renewable energy will increase and can be used to create renewable hydrogen through electrolysis, which uses electricity to split water into hydrogen and oxygen.
The resulting hydrogen, a clean fuel that can be used in gas turbines, can be stored for solid-oxide fuel cells, transportation, and chemical production industries.
Renewable hydrogen represents a multifaceted breakthrough. It can be generated from low-cost or free excess renewable energy. It can be stored for long durations, even on a seasonal level. And it can readily be combusted in gas turbines with the proper system design modifications.
This makes it ideal to support renewable power and achieve carbon reduction targets. This shift is a “Change in Power,” and one for which MHPS has been preparing.
Dubai has already started exploring the potential of producing and using hydrogen as a low-carbon energy source in partnership with Siemens. Last year, Dubai broke ground for its first solar-powered Green Hydrogen Project located at the Mohammad Bin Rashid Solar Park, using energy produced at the park.
Dubai Electricity and Water Authority (DEWA) and Siemens plan to have the pilot project operational for the Expo 2020. They will conduct a test and trial phase before next year to ensure maximum standards of safety and reliability.
While the adoption of renewable energy gains momentum globally, the world market for steam turbines seems set to remain resilient over the medium term, industry officials and analysts say.
They attribute this strength to a growing appetite for nuclear power plants across the Middle East and other regions, the need to quickly add capacities from heavy-fuel oil (HFO) in oil-rich markets like Iraq, and continued development of coal-fired generation in the Asia-Pacific region. In addition, an expected rebound in orders for combined-cycle gas turbine (CCGT) power stations will drive further demand for steam turbines.
"The market for steam turbines will remain significant, as turbines utilised exclusively in coal and nuclear power plants account for a higher proportion of the total steam turbine market," say analysts at Global Data, a UK-based analytics firm.
They forecast that steam turbines for coal-fired generation alone can be expected to account for 359.4GW of new installed capacity from 2019-25, only a 6% drop from 382.3GW over the previous six years.
“While renewable power generation is being added to address concerns of climate change, for many countries coal, nuclear and HFO will continue to play a key role as reliable and affordable sources of energy”, says Massimo Gallizioli, CEO of GE Steam Power MENAT.
Looking at the coal example, he points out that, while coal-fired generation capacity has been markedly reduced in Europe and the US, it has continued to increase in Asia, and some countries in the Middle East like Pakistan or the UAE are adding coal to their energy mix for greater reliability and energy security.
"We estimate that thermal generation will still play a role in this part of the world for at least another 20 years, but the nature of the role will change”, says Massimo. “Clearly, today the thermal power generation is becoming a facilitator of renewable energy. We see less and less of thermal generation as a baseload, and more to flexibly sustain the grid balance by basically kicking in when the sun is not shining or when the wind is not blowing. Thermal power generation technology continues to evolve to play that new role. Today, both gas and coal power plants can deliver the flexibility that’s needed to balance intermittency.”
The issue of intermittency from solar and wind means that it is difficult to get reliable power from either, as it is weather dependent, which is unpredictable. Since energy storage is currently not efficient enough to be cost effective, this creates the need for dependable energy sources to supplement.
Fossil fuels automatically raise the emission question, particularly coal. Can coal still be a viable source of energy in times of global efforts to address climate change? “While we all wish for abundant power generation with zero environmental impact, this is not the reality today. For some countries the is no viable alternative to coal as a major energy source today. So if we continue using coal, we should do it in the best possible way, using modern technology to limit the environmental impact”, says Massimo.
Technology has much evolved over the past few years. GE’s ultra-supercritical (USC) technology is today’s standard bearer for coal power plants across the globe. Operating at temperatures and pressures above the critical point of its predecessors, ultra-supercrititcal coal plants are capable of generating power at a higher efficiency rate with significantly reduced CO2 emissions, as well as related operational costs.
“GE is already leading the way with this technology at various coal power plants around the world, including the Hassyan power plant currently under construction in Dubai”, says Massimo. “And we don’t stop here; GE is already working on the next generation of technology that we call Advanced USC. Integrating both mechanical and digital industrial platform capabilities, this technology is projected to heighten efficiency rates by an additional 1.5%, lessen emissions by another 3%, and adding approximately $50mn to its customers’ NPV (Net Present Value) through reduced operational and lifecycle costs.”