Published November 4, 2009

Stalled $2b plant set to steam ahead

Tuas Power gives go-ahead to unit to get a jump on its rivals

By RONNIE LIM

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(SINGAPORE) With the economy healing, China Huaneng - the new owner of Tuas Power - has decided to go ahead with building a $2 billion clean coal/ biomass cogeneration plant on Jurong Island.

BT understands that the project has just been given the green light on strategic grounds. Tuas Power apparently wants to be first-in, ahead of other competitors, at the island's new Tembusu sector to supply utilities such as steam and electricity to incoming petrochemical investors there.

Besides, electricity demand here - which had earlier been hit by the global downturn - has returned to a growth path since July. Latest October electricity demand numbers show a 5 per cent increase over the same month last year.

Another important plus is China Huaneng's financial clout, not to mention its experience with the fuel as China's biggest coal-fuelled power producer. The coal for the Singapore project is, however, expected to be sourced from around this region.

The 2,670-MW-capacity Tuas Power, the third largest generation company here, currently uses piped natural gas from both Natuna and Sumatra to fuel its plant. It had been planning the coal/biomass cogen project since 2006, even before its $4.2 billion sale by Temasek Holdings to China Huaneng in March last year.

But the genco in January this year decided to hold off building the project as potential customers such as Germany's Lanxess postponed investments here.

The brighter outlook now - including the possible resumption of yet another long-delayed project, the US$2 billion Jurong Aromatics Corporation - has clearly pushed China Huaneng into reversing that earlier move.

Sources said that China Huaneng intends to maintain the scale of the earlier planned stand-alone clean coal (80 per cent)/biomass (20 per cent) project.

When operational around 2012, Tuas Power's cogen project, which includes a 20 million gallons per day desalination plant and waste-water treatment facility - will produce mainly steam, at about 900 tonnes per hour.

It will also produce 180MW of electricity, half of which will be for Tuas Power's own consumption, with the remainder to be sold through the islandwide electricity grid.

In September last year, regulator Energy Market Authority (EMA) had already given Tuas Power the go-ahead to import a small quantity of coal for the project. EMA said then that it is banning the use of coal solely for power generation, or on a large scale, to avoid affecting Singapore's planned imports of liquefied natural gas, which will start in 2013.

When it first announced the project in September last year, Tuas Power also said that to address environmental concerns, it will transport the coal in covered barges to the Tembusu cogen plant.

There, the coal will be unloaded through fully enclosed conveyors and stored in covered silos.

The 'top' ash generated will be reused, while 'bottom' ash will be recycled into value-added products such as construction materials.

Meanwhile, the carbon-neutral biomass part of Tuas Power's cogen project will help reduce the CO2 emissions to a level comparable to that of an oil-fired plant.

Besides, the plant will enjoy 70 per cent operational efficiency versus the 50 per cent efficiency level of today's combined cycle gas turbine plants.

This means the Tuas Power plant will use less resources to produce the same unit of electricity, leading to less carbon emission.

China Huaneng has also embarked on a couple of cutting-edge carbon-capture pilot plants back in China, and may apply the technology here in future.