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Empresarios Agrupados: the best investing in CSP project is engineering

There is a fact that in traditional CSP market, some roles in CSP plant like architect-engineering, owners’ engineering are common. However, it seems a little strange in China CSP market. Then what on earth do they mean for us in a CSP project ? Why should we invite this role to join the project? Are they worthwhile for us in CSP plant? However, on China International CSP station conference & CSPPLAZA 2016 annual conference (CPC2016), an engineering company named Empresarios Agrupados attracted attendees’ eyes. CSPPLAZA journalist interviewed Xavier Lara, Services Director in Empresarios Agrupados to learn several questions concerned by China CSP people.

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About architect engineer and owners’ engineer 

CSPPLAZA: As far as I know, Empresarios Agrupados (EA) has established for forty-five years by engineering business including the architect-engineering, owners’ engineering. Could you tell us a bit of these two roles in CSP plant especially architect engineering?

Xavier Lara: We think that maybe in China some people could be confused with architect-engineer, because in China our business is known as Design Institute, so following the Chinese nomenclature, we are like a Design Institute, with capabilities to perform from the conceptual design, to the basic engineering and the detailed engineering. But in the case of EA, our capabilities are not limited to that, but we have also the capabilities and experience as Owner´s Engineer and also as performing the complete EPCM (Engineering, Procurement and Construction Management) and also a partial scope of it as i.e. CM (Construction Management).

This means that in fact EA has the experience in CSP working in some Projects for the EPC Company (the Construction Contractor) as the Architect Engineer performing the design of the Power Plant and in other Projects we are working for the Owner of the Plant (Project Company) as Owner´s Engineer.

For example, in CSP in this moment we are working as Owner´s Engineer in Morocco in NOORo-II (200 MWe Parabolic Trough with Thermal Energy Storage System (TESS)) and in NOORo-III (150 MWe Tower with Molten Salts Central receiver and TESS) and we are working in South Africa as Architect Engineer of Redstone (100 MWe Tower with Molten Salts Central receiver and TESS) doing the conceptual design, basic design and detailed design of the overall Power Plant and also in Shagaya in Kuwait (50 MWe Parabolic Trough with TESS).

So there is not any other Engineering Company that is working at the same time, obviously in different Projects, as Architect Engineer and as Owner´s Engineer of two CSP Molten Salts Towers and two parabolic troughs power plants, totalizing at this moment these on-going 4 CSP Projects a total of 500 MWe.

We are proud to say, that we are the leader Design Institute in Spain, with more of 48.5 GW of power plants portfolio designed by us. We design Nuclear Power Plants (NPP), the nuclear island and the turbine island, we design supercritical and subcritical coal power plants, we design Combined Cycles Power Plants and we design Solar Thermal Power Plants. In CSP Projects we were involved in Projects totalizing 731 MWe, and involving Molten Salts Central receiver towers, direct steam central receiver towers and parabolic trough.

CSPPLAZA: It is widely acknowledged that EA participated in Crescent Dunes. What does EA play in Crescent Dunes plant ?

Xavier Lara: In Crescent Dunes, the architect engineer it was another engineering company, not EA. There were some design problems that generated some issues during the commissioning, and the EPC Company decided finally to hire EA to perform a peer engineering review of the molten salts system, we perform several simulations with our in-house unique hi-tech software EcoSimPro and we help to fix that design problems of the Plant. Right now, as yesterday Mr. Kevin Smith explained in his speech, Crescent Dunes is not only working perfectly but has a daily production higher that expected, and EA with his top engineering capabilities is proud of that.
Moreover, SolarReserve is also the molten salts central receiver technology provider in Redstone, as well as part of the Project Company, and as we commented, we are the Architect Engineer of the EPC, developing the overall engineering of the Power Plant. We think that this clearly suggest the quality of the work commented above that we made in Crescent Dunes.

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CSP FIT with RMB1.1, higher or lower?

CSPPLAZA: If FIT is RMB 1.1, how would you think of this price?  Do you think 1.1 Yuan is higher or lower in international level?

Xavier Lara: For the pilot projects, and in a way to help the local players to set a CSP industry in the Country, this FIT is not bad, but for the future projects shall to be lower. In fact, in the last May CSP Conferences in Dubai, everybody was expecting that China announces a lower FIT tariff. 1.1 yuan is roughly at this moment 16.4 cents of USD, and I will give you one example: one year ago, it was signed the lowest CSP PPA until the date, the NOORo-II 200 MWe parabolic trough project, with a FIT after convert the currency from Dirhams to USD of about 14 cents per kW/h. This is about 0.94 Yuan. Here, during this days, some Chinese players were talking 1.1 Yuan is very cheap. It is true that there is a difference between DNI, the solar radiation Ouarzazate in Morocco and the DNI in some places in China. Here is lower, in some cases in about a 20%, but this doesn’t means that the LCOE increases in a 20%, it is not lineal and as simple. So as I told, I think that maybe 1.1 is good for the pilot projects, but for the next 9 GW, it needs to be down. And this is something that only could happen because critical competition is necessary to do projects. And then Chinese projects can go overseas and win Projects in MENA and other countries.

The MENA players are expecting LCOE that allows them to sign PPAs about 8-10 cents of USD/kW/h for their very high DNI Sites, and the European Union it is investing to reduce the LCOE and allow to sign PPAs in 2020 of 10 cents of EUR/kW/h for sites in South Europe (with DNI about 20% less that in MENA and very similar to the Chinese DNI).

Cooperation and Marketing plan in China

CSPPLAZA: Many domestic enterprises in China think the consultation cost is too high so that they would not choose a consultation company. Are there any possibilities for EA to decrease the consultation fee to cooperate with domestic companies?

Xavier Lara: I also would like to explain you something that some people maybe could think sometimes, that the engineering fees are expensive. We don’t think that, the money invested in engineering is the best invested money, because if you have a good engineering delivered also on time, you are minimizing the possibilities that your Project became jeopardized by delays. Moreover, do you think that if we are very expensive and we don’t have add values, SEPCO-III would award us with two CCPP megaprojects in Oman that will generate about 3,500 MW (3,5 GW)?.

If for example, the engineering of a 100 MW molten salts central receiver tower about the 2% of the EPC cost, if an EPC company hires a non-so good engineering company for a 1.5% of the EPC cost, probably they will not save a 0.5% but will suffer a lot of problems in the delivery of docs and drawings, the quality of the engineering work, the specifications for equipment purchase, etc., and at the end they probably would face an over cost between a 5 to 20% of the EPC cost, in form of delays, LDs, etc. So my advice, invest in a good, skilled and experienced Engineering Company as EA, and you will save money, starting from optimized BOQ and finalizing with a plant on time and workings as the Owner´s specifications required.

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CSPPLAZA: What’s EA’s plan in China CSP market? How would you think of the future of CSP China?

Xavier Lara: We’re open to establish here in China a branch. In fact, we are very interesting in China. We think that right now the future is in China.

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One comment

  1. The success of Crescent Dunes project is critical for the future of CSP market. Failure of its operation will negatively impact the believe that CSP with storage can become a credible base-load alternative.
    Crescent Dunes started commissioning on February 2014 and was declared operational in September 2015. According to Mr. Lara, the reason for the extremely long commissioning was bad design. According to Mr. Smith (see above) “Crescent Dunes is not only working perfectly but has a daily production higher that expected” and obviously Mr. Lara is proud of that.
    Looking to the official data published by the US Energy Information Administration, Crescent Dunes generation is far from being as expected:
    September 2015=0; October 2015 = 0; November 2015 = 1,831MWh; December 2015 =0; January 2016 = 1,504MWh; February = 9,095MWh; March = 7,099MWh; April = 2,158MWh.
    The plant is expected to produce about 500,000MWh per year. In half a year it only produced 21,687MWh. Considering the amount of electricity the plant is taking from the grid for circulating the molten salt and keeping it hot, it may be that the plant consumed more electricity from the grid that it generated to the grid.
    These are bad news. For the sake of the market, EA and Solar Reserve must tell the truth, disclose the problems encounter during commissioning and first months of operation together with the planned solutions.

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