Heating Bills Padded by Worn Heat Economy

2009-12-11

The burden of outdated Kaunas heat economy lies on the shoulders of residents. Padded bills for heating are the result of worn boilers and pipeline lines. Even though Kaunas Heat and Power Plant (KHPP) generates the least expensive heat in the city, Kaunas residents are paying almost the highest price for heating in Lithuania due to inefficient economy.

The only way to reduce the heating costs of Kaunas residents is to modernise the heat economy. Energy experts noticed a while ago that a paradoxical situation had been developed in Kaunas. Heat generation price is one of the lowest in Lithuania but the heat distribution and sales price is, on the contrary, one of the highest. Therefore, the final prices to consumers also reach a high level.

Energy specialists assert that unless the renewal of the entire heat sector takes place there is no sense in expecting for lower heat prices in Kaunas.

“Modernisation of Kaunas city heat network is indispensable because a lot of heat is being lost and this must be compensated by consumers. After all, urban heating lines were laid during the Soviet times still. Pipes are large in diameter because at that time an increase in the number of heat consumers was predicted”, stated professor Eugenijus Ušpuras, Director of the Lithuanian Energy Institute.

According to him, the current situation is opposite – heat consumers are likely to decrease in Kaunas city because part of the households are disconnecting from district heating, whereas large-sized business companies have their own pipelines. Thus, it should be well thought over how the current situation of heat economy might be improved in the city. One of the solutions is to replace the existing pipes by those of smaller diameter and better insulation.

State of Pipelines is Critical

Networks, controlled by Kauno energija, were planned to be renewed a couple of years ago when financial injection (116 million litas) for the sold thermal power plant was received from the Russian concern GAZPROM in 2003. However, the money was used to cover up debts only.

The former Kaunas city government failed to turn Kauno energija into a successful company. On the contrary, in 2007 losses suffered by Kauno energija made up 8.6 million litas. Part of company’s assets was sold out also: steam pipe – for 2.03 million, gas pipeline – for 3.46 million litas. Even the price of heat production, which had not been augmented by KHPP for five years, did not save the situation.

“Receiving heat at the lowest prices, the government failed to do anything to modernise heat distribution networks during all these years. This is an example of mismanagement; pipelines are worn out to a critical threshold. It requires around 50 million litas per year to renew the lines”, said an energy expert, who preferred staying anonymous.

Rimantas Bakas, the Director General of Kauno energija, approved that the status of the urban heat lines was just sufficient.

“For the renewal of networks we allot up to 10 million litas per year. So that the average working life of networks stops increasing at least, it is necessary to allot twice as much, i.e. around 20 million litas on an annual basis”, explained the Head of Kauno energija Mr Bakas.

A New Power Plant in Projects

The major and cheapest heat producer in the second largest Lithuania’s city is Kaunas Heat and Power Plant. This power plant generates more than 95 % of heat to Kaunas and its price reaches 14.7 cents per kilowatt-hour. This is likely to be one of the lowest prices in Lithuania. Prices of other heat generators in Kaunas are by about 10 cents higher.

Hopes to renew the heat economy in Kaunas are, first of all, related to the combined heat and power plant, which is already drawn in the designs. At this moment such power plants are distinguished for the most efficient energy generation technology.

“The future power plant, the capacity of which may reach 350 megawatts, will use natural gas, but in the future, once special equipment is installed, it will be possible to burn biogas and use the steam, produced by domestic waste incineration company”, said Arvidas Ladyga, the Technical Director of Kauno elektrinė, which is implementing the project for the power plant construction.

Technologies of combined cycle gas turbines stand out for low level of pollution and high efficiency in energy production. Let it be assumed that efficiency of energy generation at Goteborg power station (Sweden) reaches 92.5 % (electricity – 43.5 %, heat – 49 %).

Boiler Rooms Operate Inefficiently

According to Mr Ladyga, current facilities at KHPP are already out-of-date as there have been no essential reconstruction works at the power plant during the last 20 years. Moreover, other boiler houses in Kaunas, which belong to Kauno elektrinė, are also dated.

“Heat production boilers in Kaunas are old and their performance is not productive. Average working life of boiler at boiler houses at Petrašiūnai Power Plant, Šilkas and Inkaras districts exceeds 40 years. Weighted average working life of boilers at Pergalė district boiler house, as well as boilers maintained by KHPP, is approaching the critical limit of performance, i.e. 30 years. Thus, on the basis of such figures only, we may notice that investment striving for the increase in the reliability of energy production is indispensible”, asserted representative of Kauno elektrinė Mr Ladyga.

Considering Incineration of Waste Too

Kaunas heat economy could be modernised in two stages: 2010-2015 and 2016-2022. During the first stage a new combined heat and power plant would be constructed and the heat capacity would reach up to 350 megawatts. Optimal capacity of a new power plant must be determined by bringing in the experience of experts from Finland or Switzerland.

In order to increase the reliability of heat distribution, reserve heat sources of integrated network and water heating boilers with the capacity not less than 200 megawatts would be renewed. This would allow reducing maintenance costs. Moreover, in boiler houses, where fuel is relatively expensive, wood waste may be started to be burnt.

Once the works of the first stage are accomplished, heat price to Kaunas residents will be at the lowest level, whereas heat economy would be one of the most modern in the European Union. At the second stage the issues of the construction of domestic waste and biomass incinerators will be considered. Waste and biomass facilities may be equipped also in the place of old facilities of Kaunas power plant. Such a model would be the cheapest to the city.

Investment to Reach A Billion

The new combined heat and power plant should come into operation in 2013. At the moment preliminary works for the construction of the power plant are about to be completed. Even during these hard times Western finance institutions agree to finance the project. Shortly, procedure for drawing up a detailed plan with Kaunas Municipality will be given a start.

Investment into this power plant will be likely to reach around one billion litas. An international contract tender will be announced for project implementation. It is clear, however, that the major suppliers will be from the West, namely the energy concerns “Siemens” (Germany), “General Electric” (USA) or “Alstom” (France).

Additional income will be obtained by the state and the city municipality from commercial activity of Kaunas Power Plant. It has been estimated that within 30 years taxes to the state and municipality will make up 280 million litas (35 million to the municipality). In the course of construction works taxes to the state will reach around 22 million litas and about 3 million to Kaunas city.

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