Our Combined Heat and Power plant and district heating business in Kramatorsk showcases our ability to modernize and turn around existing operating businesses.
Located in eastern Ukraine, Kramatorsk boasts a population of approximately 250,000 and a diversified industrial base producing mining and railway machinery, cast and forged metal, coke chemicals, ceramics, building materials, food products, and consumer goods. In recent years, higher prices for natural gas and poor operational practices have plagued the city’s electricity and heating supply—critical challenges in a region where average wintertime temperatures drop to -6° C.
In December 2006, together with the City government, we formed KramatorskTeploEnergo (KTE) to acquire ownership in a 150 megawatt combined heat and power plant. Subsequently, in January 2007, KTE signed a 49-year operating contract to provide electricity and heat to the city.
Modernizing Soviet-Era Technology
At the time of our acquisition, the 70-year-old plant had been starved of investment over many years and thus inconsistently generated 120 megawatts of electricity and was unable to reliably supply heat to its customers. Over the past year, our Kiev Engineering team has been working together with our General Contractor, and the Kramatorsk plant staff to completely rebuild one of the boilers. On January 24, 2008, Boiler No. 7 was finished and placed into operation, enabling the plant to achieve 60 megawatts of reliable generation on coal, (the first time in many years) while providing more cost efficient and just as importantly, more reliable district heating to its customers.
This upgrade represents a capital investment of approximately US $3.2 million and is one of the first modern upgrades in the 70-year history of the plant. The boiler reconstruction and other improvements have increased coal-burning efficiency to approximately 84%. Our technical experts in Ukraine, the United Kingdom, Denmark and the United States have supported the modernization efforts by focusing on technical best practices and staff training. This year, a similar effort will be undertaken on Boiler No. 9 with similar results expected, and with the modernization of the steam turbine and cooling towers, the plant will be able to achieve a production of 120 megawatts on coal, while contributing approximately 320 metric tonnes per hour steam load to the district heating system.
Carbon Reduction
By dramatically increasing plant and district heating efficiency we are substantially reducing carbon emissions of the business. So far our modernization has reduced CO2 emissions by 20,000 tonnes per year. We expect an additional reduction of 10,000 tonnes per year in the coming year and these programs qualify as Joint Implementation Projects under the Kyoto Protocol.
