Conversion to coal

In the wake of increasing oil prices internationally and restricted supply of indigenous natural gas, the Karachi Electric Supply Company (KESC) has taken initiative to use coal for power generation at a large scale. Currently, KESC power stations are completely dependent on natural gas and residual fuel oil (RFO), and conversion to coal is seen as the only sustainable option to diversify the fuel mix, improve thermal efficiency and lower electricity tariff.
It has plans to establish a 300-mw power plant based on Thar coal, which will be a mine-mouth project. For the purpose, KESC has signed a joint development agreement on 25th June 2012 with Sindh Carbon Energy Ltd, a subsidiary of Oracle Coalfields UK. Sindh Carbon Energy will extract coal from Thar Block VI, for which it holds mine lease, by second quarter of 2014 to supply half of its 5-million tons annual lignite output to fuel the proposed power plant, which is scheduled for commissioning by 2015.
Simultaneously, KESC has decided to convert its existing Bin Qasim Thermal Power Plant-I to coal, initially using coal imported from Indonesia. In the first phase, two units of Bin Qasim power station of total installed capacity of 420-mw (2x210-mw) will be transformed into coal-firing. KESC has signed an agreement in February this year with Bright Eagle Enterprises Group Limited (BEEGL), previously known as Huge Profits Group Ltd, for jointly developing conversion-to-coal project.
Bright Eagle Enterprises, a company incorporated in the British Virgin Islands, has principal business of providing engineering solutions to convert operational RFO-based power plants to coal-fired. KESC has granted exclusive rights to this company to finance the conversion-to-coal of two units at a cost of US $200 million. The conversion equipment will be owned by BEEGL to be leased out to KESC, subsequent to successful conversion, for a period of 15 years. For the purpose, Bright Eagle Enterprises has incorporated on 25th October 2011 a special purpose vehicle in the British Virgin Islands known as BEEGL-Khalid Limited.
Subsequently, the utility company has signed an agreement for consultancy in March 2012 with world-renowned Knight Piesold of the USA, who however have subcontracted the assignment to a small and unknown company Feasibility East Ltd, UK. Besides conducting detailed feasibility study, the consultants will also undertake project engineering and design. Preparation of feasibility study is in advanced stage, scheduled for finalisation by December 2012. Environmental Impact Assessment (EIA), as required under the law and termed as an essential component of the feasibility, however will be conducted later.
Bin Qasim power station has a cumulative installed capacity of 1,260-mw (6x210-mw), de-rated capacity of 1,120-mw and firm capacity of 1,060-mw, using heavy furnace oil (HFO) as primary fuel and natural gas as secondary fuel. Its units 1 & 2 were commissioned in 1983-84, units 3 & 4 in 1989-90, unit 5 in 1991 and unit 6 in 1997. All units are dual-fuel fired and fully operational at present. Nonetheless, KESC is operating the power plant hardly at 60% of its capacity due to limited supply of natural gas, whereas it does not want to use HFO due to resultant higher generation cost.
Bin Qasim Thermal Power Plant-I will be coal-converted with the objective of using alternate fuel thereby regaining its available capacity of 352-mw net for two units being converted in first phase. Some of the existing in-plant equipment will be retrofitted and modifications made in auxiliary equipment. As boiler is the most important component of a coal-fired power plant, the existing oil-fired boilers would be replaced with coal-fired boilers or steam generators.
Conversion-to-coal is not economically and environmentally feasible in case of Bin Qasim power plant for a number of reasons. First, the proposed conversion is based on imported coal, meaning KESC will continue to have dependence on imported fuel, and fuel security will not be attained. It is claimed by KESC that Thar coal would be used as fuel in subsequent years. This however is not viable since coal-fired power plants are custom-designed according to specific characteristics of coal to be used.
Understandably, BEEGL has its own indigenous conversion-to-coal technology, which is limited to practice in China and has not proven internationally. Currently, advanced clean coal combustion technologies, like supercritical and ultra-supercritical, are being adopted by the developers of power plants world-wide. Even if BEEGL technology will be applicable to Thar coal, Bin Qasim plant will require further balancing of plant machinery since Thar coal has different characteristics compared to the Indonesian coal, and is of relatively poor quality. In such case, boiler of larger module will be required as well as coal & ash handling equipment and storage facilities of larger size compared to those envisaged now.
Second, estimated capital cost of conversion is considered to be too high. Conversion-to-coal of one unit is costing US $99,750,000 providing net 176-mw. Thus, conversion cost works out to be US $567 per kilowatt. High leasing charges will be passed on by the KESC to the consumers. Surprisingly, KESC is not making investment in conversion-to-coal project, despite repeated commitments to investment in its power generation network. Project will require 3 million tons of thermal coal annually. Major coal handling infrastructure, including port handling, is therefore required, besides infrastructure for storage of coal, handling/disposal of ash and flue gas desulphurization systems. For the purpose of developing in-plant infrastructure, acquisition and use of additional land will be required. Also, O&M costs of a coal-fired power plant are comparatively much higher than oil/gas.
Third, prices of thermal coal remained erratic internationally in recent years, having reached highest level of $141.43 per metric ton FOB in February 2008, compared to $74.30 per ton in August 2007. Though coal price in January 2012 was $124.18 per ton, it is steadily increasing and will be higher in future than anticipated due to high demand of coal in Asia for power generation. Resultantly, the targeted reduction in electricity tariff to Rs 7 per unit is not foreseen. Also, project completion will take 27 to 30 months, and there would be colossal loss during this period of about 350-mw electricity a day that is being generated at these two units at present.
But, the major and sensitive issue is that of environmental impact. Coal, though continues to be a main energy source globally for power generation, is one of the most polluting forms of energy resource. Coal burning process generates waste that contains particulates, sulphur, nitrogen oxides and volatile organic compounds depending on the type of coal used. Environmental degradation, particularly when modern clean coal technology is not applied, will be much higher and unacceptable since Bin Qasim power station is located in Karachi metropolis and health of millions of population will be put at risk.
Obviously, pollution prevention and mitigation measures, like installation of scrubbers and precipitators, will be taken by the sponsors, but uncontrollable particulates do escape in the air. Likewise, incomplete coal combustion generates prime fuel constituents in large quantities. Coal pre-treatment processing, plant boiler house, process heaters and burners also emit air and water pollutants in the form of small particles of arsenic, lead, mercury, cadmium and other hazardous chemicals. In addition, the occupational health effects at the power station site are at least 20% higher for coal than oil-based power generation.
Converting Bin Qasim project to coal is therefore not an economic and environmental solution, given the conditions. Strategic focus of the KESC, which currently enjoys the highest government subsidy, should be in providing affordable, reliable and sustainable electricity to consumers, but without compromising on public health and welfare.