Biomass power plant 4 MWe

TECHNICAL AND ECONOMICAL

PROJECT PRESENTATION

©KOŠICKÁ ENERGETICKÁ SPOLOČNOSŤ A.S. 2009

 Introduction

 Košická energetická spoločnosť a.s. (KES) is well recognized professional company in the
energy sector with excellent know-how in combine production of heat and electricity

 KES based on the agreement with VSS a.s. is developing Biomass power plant in areal of VSS

 KES obtained license from Ministry Economy to build biomass power plant and approvals from
National electricity network operator (SEPS) and Distribution electricity operation company
(VSD) for connection to network

 Based on the technical-economical feasibility study KES prepared basic design for 4 MWe
biomass power plant with heat combine production :

 Next main consideration were applied:

 Size of existing building and space for biomass stock
 Available biomass capacities in the region
 Capacity for heat deliveries
 Sustainability of the project

 Based on the engineering studies and pricing by international companies the total investment
is estimated to 15,3 mil. EUR

2 BIOMASS POWER PLANT, KES a.s, Nov-09 CONFIDENTIAL

 DESIGN LAYOUT

 Visualization and
future view from the near road
 © 2009 KES a.s.

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 LOCATION

 Biomass power plant

is proposed to be
build in the areal of
VSS, which is located
in south – industrial
part of Košice with
use of existing
buildings and
infrastructure to bring
maximum efficiency
into the project. The
proposed location has
next strong strong
points: existing
connection to Central
heating system of city,
existing high voltage
22 kV line for
electricity connection © 2009 KES a.s.
and transport logistic
including railway line.

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 Technology

 The combine heat and electricity production was selected for the biomass power plant
 Based on the analysis of sensitivity, the price of biomass was found as most critical
 The different turbine and boiler manufacturers were included in the pre-tendering procurement phase
including local and international companies
 Pre-tendering process documentation was prepared with description of supply and main technical
parameters
 Main technology components:

 Biomass fuel handling equipment

 Fuel warehouse with automatic feeders – daily capacity
 Biomass furnace
 Steam boiler
 Condenser and Condensate pumps
 Air cooler
 Feed water tank and feed water pumps
 Water treatment
 Reduction station
 Electrostatic precipitator (ESP)
 Combustion air fan
 Flue gas fans
 Wet bottom ash container
 Dry fly ash container
 Transformer station and connection to 22 kV electric cable
 Stack
 Control systems
 Commissioning

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 High pressure steam boiler

 BFB (Bubbling
Fluidized Bed) type
of steam output 22
t/h at 485 oC and
55 bar(a) with
efficiency 89%
nominal power.
The advanced
design of boiler
enabling operate
boiler in the range
between 30% -
100% and bringing Image is intellectual
advantage for the

property of MW Power

available
parameters of fuel.

Image is intellectual property of RENEWA

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 Extraction-Condensing Turbine

 Extraction
condensing
turbine with
maximum power
4 MWe enabling
to operate with
heating in the
extraction mode
and in the
condensing  Images are intellectual

mode. The main

property of MAN TURBO

advantage of
condensing
mode is to have
possibility of
operation power
plant during all
year.  Image is intellectual
property of SIEMEN

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 Basic process flow diagram

The energy inlet is expected

in the form of biomass fuel,
steam boiler is recovering
energy from the furnace
burning solid biomass fuel
at average calorific value 9
MJ/kg. The steam is
connected by piping to
extraction condensing
turbine and reduction
steam station to have
possibility to by-pass
turbine. Part of the steam
extracted from the turbine
will be used for
technological process and
for preparation of the hot
water for heating purposes
and connection to primary
network of central heating
system and to secondary
heating system in the
industrial park of VSS. The
electricity production was
estimated around 20.000
MWh and heat production
around 200.000 GJ.

 Image is intellectual
property of MW POWER
8 BIOMASS POWER PLANT, KES a.s, Nov-09 CONFIDENTIAL
 List of contacted companies
during pre-tendering phase

 WEISS – France
 MW Power – METSO – WÄRTSILÄ Joint venture
 MAWERA – VIESSMAN group
 MAXXTEC – Germany
 MAN TURBO - Germany
 SIEMENS Group
 EKOL – Czech republic
 KOVOSTA FLUID – Czech republic
 BRONSWERK HEAT TRANSFER – Czech republic
 SPIG – Italy
 FANS – Czech republic
 Jeffrey Rader – Sweden
 ISTROENERGO – Slovakia
 ABB Group
 RENEWA – Finland
 TGM KANIS – Germany
 VAS – Austria
 BACOCK WILCOX – Denmark
 KALUGA - Russia
9 BIOMASS POWER PLANT, KES a.s, Nov-09 CONFIDENTIAL
 Bids and investment structure

 Companies make pricing based on the scope of supply, which was

selected by them as it was not strictly limited and therefore we
received proposals for individual parts of technology for turbine
(MAN TURBO) or boiler (WEISS), respectively for technology of
power plant without civil works, installation cost, supportive system
and ect. (EKOL, RENEWA). Based on their offer and continues
detail engineering works we projected next investment structure:
Investment costs
Num. Part 000 EUR in mil. SKK
1 Turbogenerator 4 Mwe and control system 3 100 93 391
2 Fluid steam boiler and flue gas treatment 6 746 203 230
3 Air condenser, electrical transformator and supportive systems 2 300 69 290
4 Fuel handling system 600 18 076
5 Civil works, additional infrastructure, engineering, installation 2 549 76 797
Spolu 15 295 460 783

 In the this investment cost are not include investments needed for
acquisition of land, buildings and infrastructure from VSS a.s. and
preliminary development costs.
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 Electricity price

 Price – regulation num. 7/2009 by national regulation

officeURSO, article.1, B, 1/e/2:
 production of el. from biomass ………… EUR/MWh 125,980

 Price modification based on law 309/2009, §6, 5) based

on supporting from public financial sources (grants)
 from 30% to 40% ………………..…… -8 %
 from 40% to 50% …………………….. -12 %
 < 50% ……………………………………… -16 %

Price support is based on law 309/2009, §3 for

period of 15 years.

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 Heating price

 Price is calculated based on the regulatory

framework of ÚRSO
 Competiveness of price is
 Based on cost of variable part of heat produced from gas in the
local sources, which represents price around 11 EUR/GJ
 Heat prices of the plants connected central heating network,
which represent 8,19 EUR/GJ – KOSIT a.s. (0049/2009
regulated price
 Competitive heat price for our project is around 8 EUR/GJ
 For the first year of operation in our model heat price is
calculated based on regulation rules on the level 8,082
EUR/GJ

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 Sales
Sales 2011 2012 2013 2014 2015 2016 2017 2018 2019
heat sales in units GJ 0 201 646 201 646 201 646 201 646 201 646 201 646 201 646 201 646
price EUR/GJ 8,00 8,00 8,00 8,00 8,00 8,00 8,00 8,00 8,00
annual growth index index - 1,030 1,042 1,044 1,033 1,044 1,026 1,058 1,058
growth index - 1,000 1,030 1,073 1,120 1,157 1,208 1,240 1,312 1,388
total sales of heat 000 EUR 0,00 1 661,56 1 731,35 1 807,53 1 867,18 1 949,33 2 000,01 2 116,02 2 238,74

electricity sales in units MWh 0 22256 22256 22256 22256 22256 22256 22256 22256
price EUR/MWh 115,9 115,9 115,9 115,9 115,9 115,9 115,9 115,9 115,9
annual growth index index - 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000
growth index - 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000
total sales of electricity 000 EUR 0,00 2 579,54 2 579,54 2 579,54 2 579,54 2 579,54 2 579,54 2 579,54 2 579,54

Sales total 000 EUR 0,00 4 241,11 4 310,89 4 387,07 4 446,72 4 528,87 4 579,56 4 695,56 4 818,29

 Prices are estimated based on legislation and assumptions related to local market
 The total volume is estimated based on technology process flows and specific
conditions for heat supplies
 Growth indexes were applied due to DCF method used internally.

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 Costs

Costs 2011 2012 2013 2014 2015 2016 2017 2018 2019
biomass consumption t 0 36 363 36 363 36 363 36 363 36 363 36 363 36 363 36 363
biomasss price EUR/t 35,000 35,000 35,000 35,000 35,000 35,000 35,000 35,000 35,000
growth index - 1,000 1,030 1,061 1,093 1,126 1,159 1,194 1,230 1,267
Biomass costs 000 EUR 0,00 1 310,88 1 350,21 1 390,71 1 432,43 1 475,41 1 519,67 1 565,26 1 612,22
el. service kW 0 4000 4000 4000 4000 4000 4000 4000 4000
price of el. service per month EUR/kW 34,400 34,400 34,400 34,400 34,400 34,400 34,400 34,400 34,400
growth index - 1,000 1,030 1,107 1,148 1,182 1,221 1,263 1,316 1,371
Cost of el. service 000 EUR 0 142 152 158 163 168 174 181 189
number of employess 0 6 6 6 6 6 6 6 6
average cost pre month EUR 20000 20000 20000 20000 20000 20000 20000 20000 20000
growth index - 1,000 1,030 1,107 1,148 1,182 1,221 1,263 1,316 1,371
Cost of salaries 000 EUR 0 124 133 138 142 147 152 158 165
maintenance EUR 0 100 000 100 000 100 000 150 000 150 000 150 000 200 000 200 000
cost of fuel handling EUR 0 12 000 12 000 12 000 12 000 12 000 12 000 12 000 12 000
other operational cost EUR 459 000 125 000 125 000 125 000 125 000 125 000 125 000 125 000 125 000
sum EUR 459 000 237 000 237 000 237 000 287 000 287 000 287 000 337 000 337 000
growth index - 1,000 1,030 1,107 1,148 1,182 1,221 1,263 1,316 1,371
Total other costs 000 EUR 459 244 262 272 339 351 362 443 462
Total costs 000 EUR 459 1 820 1 898 1 959 2 076 2 141 2 207 2 348 2 427

Costs structure depends mainly on biomass as fuel for the process, what is calculated based on technical
parameters. Other costs are define by legislation (el. service for back up, insurances, structure of wages) other
costs as maintenance and service are on the minimum level due to guarantees and high quality standards
used for production of technology. Some other costs will specified during specification of detail operation
modes .
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 Economical summary of project

2011 2012 2013 2014 2015 2016 2017 2018 2019

Depreciation tis. EUR 0 706 706 706 706 515 515 515 515

Depreciation is calculated based on structure of the investment depreciation ,

where major part is investment. The total investment used for depreciation
calculation is decreased for the amount of grant.

in 000 EUR 2011 2012 2013 2014 2015 2016 2017 2018 2019
Sales in project total 0,000 4241,105 4310,891 4387,070 4446,719 4528,874 4579,557 4695,558 4818,287
Costs in project total 459,000 1820,319 1897,753 1958,549 2076,002 2140,504 2207,309 2347,564 2427,379
Depreciation assets of project 0,000 706,350 706,350 706,350 706,350 515,100 515,100 515,100 515,100
Profit on project before tax and interest -459,000 1714,436 1706,788 1722,172 1664,367 1873,271 1857,148 1832,893 1875,808

Structure of project financing Parameters in our DCF model for IRR

Own sources 000 EUR 2 790,00 Interests % 7,0
Grant 000 EUR 6 000,00 Loan, maturity with 1 year grace period years 6,0
Bank loan 000 EUR 6 510,00 IRR (15 years) % 12,6

The project shows good parameters of profitability with grant support. Total investment is
projected on 15,3 mil. EUR. Grant represent 39% and bank loan 43%. The amount of own
financial resources was set up based on ratio to bank loan on the level of 30%. For our internal
needs we are working with DCF method and interest rate 7%. Bank loan which we have in
model has the maturity 6 year with grace period of 1 year.
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 Sensitivity analysis

In our internal model we make sensitivity

analysis for expected values according legislation
and market. Analysis shows to us, that highest
sensibility lay on biomass. This was the reason
for deciding for fluid technology, which enable to
us use alternative fuels to wood chips, which are
highly competitive. Fluid boiler is increasing total
investment cost, but on the other site, use of fluid
technology brings to project long term confidence
for profit generation without any biding
agreements with producers or traders with wood
chips.

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 Technical assumptions for the model

Month of the year Jan Feb Mar Apr Maj Jun Jul Aug Sep Okt Nov Dec
Days 31 28 31 30 31 30 31 31 30 31 30 31
Heat supply MWt 9 9 9 9 4 3 2 2 3 9 9 9
Electricity supply MWe 4 4 4 4 2 1 1 1 1 4 4 4
Heat supply per month GJ 24106 21773 24106 23328 9641 7662 6108 6601 6783 24106 23328 24106
Total heat supply GJ 201646
Electricity supply per month MWh 2976 2688 2976 2880 1190 946 754 815 837 2976 2880 2976
Consumption MWh 446 269 298 288 119 95 75 81 84 298 288 298
Total electricity supply MWh 22256
Energy in biomass per month GJ 39123 35337 39123 37861 15647 12435 9914 10713 11008 39123 37861 39123
Total energy supplied in biomass GJ 327266

Data in the figures above are estimated based on the preliminary technical
parameters and expected operation mode, which depend on the possibility
to supply the heat. In the winter season is expected to operate the plant on
a full load with delivery within the areal of the VSS and to the network.
Based on heat demand in VSS, we can expect, that ratio of this heat
supplies will be 50:50. Dependence on the supplies of heat during the
summer is minimized by condensation turbine and air condenser, which
will allow to operate turbine at maximum 2 MWe.

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 Grant schema 2.1

 Code of call from 26.10.2009 for project is KaHR – 21SP – 0901, call
represents amount of 57 mil. EUR dedicated to energy efficiency and
exploitation of renewable sources.
 Specifically for biomass power plants the limit is max. 10 MWe or 30 MWt
thermic energy. In both parameters our projects is well below.
 The maximum financial aid for one project is 6 mil. EUR or 50% of all eligible
investment costs.
 The maximum of total eligibible cost for project is 25 mil.EUR.
 The deadline form submitting of proposal is 22.2.2010.

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 Time schedule

Decemeber 2010 January 2010 February 2009

Time schedule 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22
Indicative proposal from bank to finance project
Closing day of buy contract with VSS
Binding proposal from bank to finance project
Civil construction permission from local authority
Public tender
Grant application preparation

To the engineering preparation is dedicated team including 17

professionals in cooperation with engineering office ECONS -
Košice, which successfully prepared documentation for land
approval in September – October 2009.

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 List of approvals

 The list of approvals and agreements added:

 Licence to build power plant from Ministry of economy

 Approval for connection to GRID – SEPS a.s.
 Approval for connection to GRID – VSD a.s.
 Agreement from City Kosice and District Kosice - South
 Agreement from City Architect Authority
 Agreement from Regional Environment Authority

The list of approvals agreements obtained and not added to presentation:

 Civil Aviation Authority of the Slovak republic
 Regional authority of Fire and Rescue Services
 Owner of industrial park VSS a.s.
 Owner of primary heating network in the city – TEKO a.s.
 Regional authority of Public Healthcare
 Airport Košice
 District office of civil defend and crisis operation

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 Other attachments and contacts

Other attachment:
 Architectonic study
 Bids in the pre-tendering process
 Commercial register
 Audited financial results 2008

Contacts:
Košická energetická spoločnosť a.s.
Teplárenská 3/A
042 92 Košice

Statutary representative: Ing. Vladimír Dolný

Contact person: Ing. Miroslav Fáber
Tel./Fax: 055 – 6192836 / 055 - 6192835
E-mail: kes.ke@centrum.sk

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