Medupi to go on line in third quarter of 2012

15th April 2011 By: Tracy Hancock - Creamer Media Contributing Editor

State-owned power utility Eskom confirms that the first of six 800 MW units, Unit 6, at its Medupi coal- fired power station is still expected to start supplying power to the national grid in the third quarter of 2012 and offset the decrease in South Africa’s generation capacity.

The Medupi power supply ramp-up is part of plans to remedy the tight electricity supply in South Africa.

In September 2010, the utility acknowledged that the commissioning of the unit faced a further three-month delay and that it would not be commissioned by June 2012, as previously expected.


“The reserve margin on our generation capacity is becoming significantly low and it is expected that, by 2012, there might be a deficit in generation capacity, which could result in load-shedding.

“This threat, as well as the need for flexi- bility to undertake maintenance of the current plants, is a significant driver behind the completion of the first two units at Medupi,” says Eskom senior GM of project execution Kobus Steyn.

Meanwhile, to ensure that Medupi’s first unit is on line in the third quarter of 2012, Steyn explains that the pressure parts and structural work on its boiler, as well as mechanical work on the auxiliary plant that supports the operating units, need to be completed this year.

He says the completion of the boiler will be realised in phases. The first signifi- cant milestone of the boiler’s completion is the performance of a pressure test, which is scheduled for October.

“When Unit 6 comes on load, it will still be under the operation of the con- tractors for a six-month optimisation period, which involves optimising the machine’s combustion, temperature and efficiency performance, for commercial operation. “The unit will be handed over as official capacity by the end of 2012, while all the units at Medupi are expected to be fully operational by the last quarter of 2015 to assist in providing a 15% reserve margin,” says Steyn.

At the end February, Medupi was 38% complete. Most of the civil works and the foundations had been completed on Unit 6, while 40% of its boiler’s mechanical work and 10% of the work on its turbine generator had been completed.

Civil works and foundations have been completed at Unit 5, while about 80% of the civil works has been completed at Unit 4. In terms of the balance of plant, the civil works and supporting infrastructure, such as buildings, have been completed, while mechanical works are still in progress. Electrical and control instrumentation works are to follow.


Project Cost Variation

Steyn says Medupi’s drastic cost fluctuation, from R80-billion to R125-billion, is a result of including interest in the estimates made available to the press.

“The project’s initial cost estimate of R80-billion included almost no interest,” he explains.

However, as a result of funding issues, Eskom has borrowed $3,7-billion from the World Bank to fund its new build projects. In the past, the variable interest generated by this loan, as well as other capital financing, has been added to the cost of Eskom’s projects, creating cost variations.

Subsequently, the utility came to the decision that the cost of projects should exclude interest. The current cost of Medupi, excluding interest, is R98,9-billion.

Eskom has awarded all the contracts for Medupi at a cost of R56-billion, while cost escalation is calculated separately.

“Unless something unforeseen takes place, Eskom is fairly sure that the base price of the project will remain at R98,9-billion,” says Steyn.

To get Medupi’s first unit operational, about 40% of the project’s total cost will have to be spent. The second and third unit each require 10% of the total cost, while the fourth unit requires 20% and the two remaining units need 10% each.

Challenges
The project has had a significantly short lead time from its first phase. After government failed to capture the interest of foreign independent power producers between 1998 and 2004, Parliament, in October 2004, commissioned Eskom to provide for capacity.

Eksom used the national electricity- demand growth scenario, which, in 2004, was 2,7%, to identify solutions that would counter the dropping reserve margin in South Africa’s generating capacity. To achieve this aim, the utility decided to return to service its Mpumalanga-based Camden, Komati and Grootvlei power stations, which have a combined capacity of 3 800 MW. It also planned the construction of three new coal-fired power stations, which include Medupi and Kusile. At the time, Medupi also only involved the construction of three units.

However, in 2006, government announced a 6% gross domestic product (GDP) growth scenario and instructed Eskom to adopt a 4% electricity demand growth scenario to support the GDP growth. This resulted in the decision to construct six units at Medupi, instead of three, and add Kusile to the mix. Currently, South Africa’s electricity demand growth scenario is at 2,8%.

As a result, Eskom did not have sufficient time to properly perform the upfront engineering work needed to ensure that the geological conditions of the site were 100% understood before construction started.

By the time the decision had been made to start building Medupi, only 48 core holes had been drilled on the site, with the international standard being 400.

Once construction started, the rock foundations were found to be significantly different from what was expected, result- ing in the redesign of Medupi’s foundations. As a result, Medupi was delayed by one year.

In terms of construction, Medupi’s boiler contractor, Hitachi, and its value chain have made a number of mistakes concerning the construction of the Unit 6 auxiliary structures, resulting in a further loss of one month, Steyn states.

“They are slowly recovering this lost time, but Eskom is concerned that Hitachi will not be able to fully recover and, as a result, has moved the pressure test of the Unit 6 boiler from September to October,” says Steyn.

Although the completion of Unit 6 has been delayed by 13 months, Eskom does not expect the last three units to be affected. Unit 5 is about eight months late, while Unit 4 is about three months late. The utility believes that it will catch up with the original project schedule by the time it starts construction on Unit 3. The construction of the units has been staggered to meet South Africa’s demand curve, which increases steadily over time.

Kusile Power Station

The construction of the six-unit Kusile coal-fired power station, in Mpumalanga, is about 21% complete and running a month ahead of a revised schedule, with no further delays expected.

“The lessons learnt during the construction of Medupi will assist in keeping Kusile on schedule, despite the project’s initial setbacks, unless something unforeseen takes place,” Steyn believes.

Initially, the implementation of the project was delayed by 18 months, as a result of funding issues. This will delay Unit 1 at Kusile from going on load from June 2013 to the last half of 2014. The R121-billion project, with an initial cost estimate of R81-billion, is expected to reach full capacity by the end of 2018.

Most of the terracing work on site is complete; however, the founding condi- tions at Kusile posed a greater challenge than those of Medupi, says Steyn.

“In some instances, the rock bed is between 6 m and 17 m below the surface of the power station. As a result, piling is required to ensure that the power station’s foundation is sound. This involves the construction of 2 500 piles, which can each hold 50 t/m2 of pressure. This is a significant investment that was not originally envisaged when the project was started in 2008. The engineers have finalised the design of the foundation and piling,” says Steyn.

Further, 50% of the civil works pertain- ing to the balance of plant is complete, with the civil works at Unit 1 being complete. This enables mechanical work on the unit’s boiler and turbine generator to start this month.

Kusile will be the first coal-fired power station in South Africa to be commissioned with flue gas desulphurisation units, which are worth about R4-billion collectively.

The first of the six units will become operational in 2014, while the commissioning of the other units will be staggered over a four-year period. As a result of these units, Kusile will have cleaner outlet emissions, in terms of sulphur oxide, than any other power station in South Africa.

Eskom intends to commission the first flue gas desulphurisation unit at Medupi in 2018 to coincide with the first major maintenance outage of the power station’s first unit. Thereafter, the other flue gas desulphurisation units will be commissioned over the next five years to coincide with the maintenance of the remaining units.

 

Third Planned Power Station
Steyn says that it is Eskom’s aim not to build a third new coal-fired power station in the Waterberg coalfield, in Limpopo, as the utility is already heavily loaded in terms of its carbon footprint.

“Eskom is waiting for the revised Integrated Resources Plan to be finalised to identify future power generation projects,” he explains.

The utility started developing a third power station about three years ago and completed an environmental-impact assessment application; however, a specific coal source was never identified.

Activity surrounding the project has stopped and it has been shelved as a sellable product if someone should want to construct a coal-fired power station in the future.