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R EGIONAL T RANSMISSION N ETWORK D EVELOPMENT : I MPLICATIONS FOR T RADE AND I NVESTMENT R EGIONAL T RANSMISSION N ETWORK D EVELOPMENT : I MPLICATIONS.

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Presentation on theme: "R EGIONAL T RANSMISSION N ETWORK D EVELOPMENT : I MPLICATIONS FOR T RADE AND I NVESTMENT R EGIONAL T RANSMISSION N ETWORK D EVELOPMENT : I MPLICATIONS."— Presentation transcript:

1 R EGIONAL T RANSMISSION N ETWORK D EVELOPMENT : I MPLICATIONS FOR T RADE AND I NVESTMENT R EGIONAL T RANSMISSION N ETWORK D EVELOPMENT : I MPLICATIONS FOR T RADE AND I NVESTMENT Turkey – Romania Undersea Cable (Feasibility Study Support) Razvan Purdila, Director Corporate Strategy, Capital Market, Communication and International Relationships, Transelectrica November 11-12, 2009

2 USAID USEA WORKSHOP REGIONAL TRANSMISSION NETWORK DEVELOPMENT: IMPLICATIONS FOR TRADE AND INVESTMENT Istanbul, November 2009 Romania – Turkey 400 kV HVDC link, undersea cable project Razvan Purdila, Transelectrica

3 PART 1 Why HVDC ? – an introduction with technical considerations

4 Why HVDC systems ?

5 HVDC is an intelligent link. The power flow can be controlled and changed very quickly practically independently from frequency at the terminal busses, voltage or power angle at the terminal busses like in HVAC transmission. Due to the inherent properties of the electronic equipment which forms the converter bridges, the direction of the transmitted power may be also changed very quickly. The HVDC transmission has the major advantage of flexibility in power exchange in comparison with HVAC. Moreover, in case of transmission of bulk electrical energy over long distances (more than 50 km) by submarine cable, the only applicable technology is the HVDC transmission. Advantages for HVDC transmission

6 In a HVDC system, the electricity is: - Taken from a 3-phase AC network - Converted to DC in a converter station - Transmitted by DC OHL or cable (underground or sub sea) - Converted back to AC in another converter station - Injected into AC network HVDC transmission – principles and characteristics Controllable – power injected where needed, supplemental control, frequency control - Bypass congested circuits – no inadvertent flow - Higher power, fewer lines, no intermediate S/S needed - Lower losses - Facilitates integration of remote diverse resources with less impact on existing grid - Low expensive transmission line - Reactive power demand limited to terminals independent of distances - Narrower ROW, no EMF constraints - No limit to underground or submarine cable length

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8 Cable laying

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10 PART 2 Project scope and premises, short history

11 The scope of this project is to install a submarine cable between the Romanian and Turkish TSOs, Transelectrica and TEIAS respectively. Business concept : commercial interconnector, separately regulated The Project is in line with the policies of both Romanian and Turkish Governments and fits well into the EU Green Paper on Energy and EU strategy of Priority Network Projects. The project also brings a significant contribution and stability to the regional electricity market in South-East Europe. The Project is on going, in the Feasibility Study phase Project scope

12 Short history of the project 2004 – April – energy cooperation protocol between Romania and Turkey at ministries level –The first mentioning of the cable project June – MOU between Transelectrica and TEIAS for the HVDC link project –Main scope : to prepare the oportunity study by a joint project team 2006 – November - JPP ( joint position paper ) between Transelectrica and TEIAS –Approval of the opportunity study; –Decision to continue the study at feasibility study level 2007 – first attempt to launch the feasibility study with minority financing of private investors ( 50 % Swedish grant available ) –No success; replacement of the private investor with Nuclearelectrica 2008 – first tender for the FS in new financing conditions; –Incompatibility of the grant with open tender requirements 2009 – secont tender; contract signature in June

13 ELEMENT 01 TEL Constanţa Nord Substation ELEMENT 02 TEL Converter station and link to Constanţa Nord substation ELEMENT 03 TEL Underground cable between converter station and HVDC cable connection ELEMENT 04 HVDC cable ELEMENT 05 TEIAS Underground cable between converter station and HVDC cable connection ELEMENT 06 TEIAS Converter station and link to Alibeyköy substation ROMANIA BLACK SEA ELEMENT 07 TEIAS Alibeyköy Substation TURKEY Romania – Turkey HVDC interconector overview

14 Part 3 The feasibility study

15 Connection point with Romanian Power System: 400kV S/S Constanţa Nord; Connection point with Turkish Power System: 400kV S/S Alybeiköy, in Asia; The cables voltage level: 400 kV; The capacity: 600MW; The length: about 400 km; Losses on the cable:- in 600MW transfer: ~ 12MW; in 500MW transfer: ~ 9MW

16 Deliverables The nominated Designer will submit the following documents: Inception Report Terms of Reference – Objectives for procuring the services and works required for the seabed survey and Geological Study EIA – Environmental Impact Assessment Study, including environmental approval Feasibility Study (draft), including the necessary documentation for approvals and advices Feasibility Study (final), including the approvals and advices Documentation for urbanism certificates in Romania and Turkey Technical Specifications Progress Reports Final Report

17 Client Consultant FICHTNER ENGINEERING Romania Client TRANSELECTRICA & NUCLEARELECTRICA Romania Client Designer VATTENFALL Sweden Technical Consultant TEIAŞ Turkey Project team members and their responsibilities

18 Electricity market team Technical team Economical, institutional and legal, commercial and financial team -Environment expert -See bead expert -Overhead transmission line expert -Electrical substation expert -Converter expert -HVDC submarine cable expert -Permits and approvals expert -Contract legislation expert -Price electricity forecasting expert -Electricity market expert - Macroeconomic modeling expert - Financial analyze expert - Investment analyze expert - Contract legislation expert - Romanian & international legislation expert Environmental team Procurement team -Commercial expert -Overhead transmission line expert -Electrical substation expert -Converter expert -HVDC submarine cable expert -Environment expert -Romanian & international legislation expert -Permits and approvals expert EXPERT TEAMS

19 The Feasibility Study will: Establish the design parameters, capacity and cost estimation for the HVDC link including the most suitable routing, based on previous studies and existing data which include geological, morphological and seabed structure analyze and initial sea depth survey as well as on its own investigations; Assess the legal and environmental impediments and propose the most appropriate and viable way forward for the Project from an operational and legal framework point of view, including also the EIA Study with the afferent approvals, in accordance with legal stipulations from both countries and from EU; (Transelectrica, Nuclearelectrica and TEIAŞ will in this respect support the Designer in this process);

20 Contain the necessary documentation for obtaining permits and approvals in accordance with existing legislation in Romania and in Turkey, as applicable at the date of project elaboration and corresponding to this phase of the engineering; Contain the necessary documentation to obtain the urbanism certificate; Analyse the financial and economical feasibility of the interconnection project considering private benefits and costs and external effects such as public benefits and costs; Assess suitable possibilities to finance the Project; Propose a time schedule for project implementation and operation; Highlight the commercial, environmental and technical conditions of direct interconnection of the national grids of Turkey and Romania through a submarine cable across the Black Sea, through system studies performed in both countries.

21 Technical Specifications for procurement and execution will include, at least, a minimal content as follows: - Scope; - Definitions; - Standard and recommendations; - Functional and technical requirements - Testing and inspections - Execution - Provision of information Terms of Reference for procuring the services and work required for the seabed survey and geological study will be established based on our experience in similar projects. For the feasibility study we will perform a study based on existing materials/documentation related to Black Sea seabed survey and geological studies.

22 1. Inception report (within 6 weeks of commencement of the project). 2. Terms of Reference for the Seabed survey and Geological Study. (The draft issue to be submitted within 6 weeks of commencement of the assignment). 3. Plans and Terms of Reference for the Environmental Impact assessment. (To be submitted as an annex to the first Progress report). 4. Environmental Impact Assessment (EIA), incl. environmental approvals. (The draft issue within 8 months and the final issue within 10 months after the commencement of the assignment.) 5. Feasibility Study – draft, incl. the necessary documents for approvals and advices. (8 months after commencement of the assignment). 6. Feasibility Study – final, incl. approvals and advices. (10 months after commencement of the assignment). 7. Documentation for urbanism certificates, in Romania and Turkey (10 months after commencement of the assignment.) 8. Technical Specifications. (Within 14 months after the commencement of the project.) 9. Progress Reports. (To be reported quarterly, no later than the 10th working day after the reporting period.) 10. Final Report. (The final report shall be submitted upon finalisation of the assignement DELIVERABLES

23 - Costs for Submarine cables - material and installation; - Costs for HVDC land cables and/or HVDC OHTLs and/or HVAC – type overhead electric lines, as applicable in Romania – material and installations; - Costs for HVDC land cables and/or HVDC OHTLs and/or HVAC – type overhead electric lines, as applicable in Turkey – material and installations; - Costs for converter station, including the A.C. connection in Romania; - Costs for converter station, including the A.C. connection in Turkey; - Telecommunication equipment based on optical fibers - Site costs in Romania; - Site costs in Turkey; - Engineering, project management, project control and commissioning; - Other investments, if any; - Interest rates during construction calculated separately for each of the above mentioned parts of the HVDC link; - Total investment costs for the HVDC link. - Payment for provisional and final expropriations. Investment needs - Investments in the HVDC Link

24 Investments in the Romanian AC Grid - AC grid investments exclusive the breaker bay for the HVDC link; - Telecommunication and remote control equipment; - Interest rates calculated separately for each part; - Total investments due to the HVDC link in the Romanian A.C. grid Investments in the Turkish AC Grid - AC grid investments exclusive the breaker bay for the HVDC link; - Telecommunication and remote control equipment; - Interest rates during construction calculated separately for each part; - Total investments due to the HVDC link in the Turkish A.C. grid Investment needs - Investments in the Romanian and Turkish AC grids

25 The price forecast has to be calculated from different perspectives Long term off-take contract 60 % and 80 %; Market price for the remaining 40 % and 20 %; Sufficient Average Price Level (SAPL). COMMERCIAL and FINANCIAL ANALYSIS Based on the recommended investment and operational plan the Designer shall establish a financial model and analyse the investment over a time horizon of both 20 years operation and 30 years operation. The output of the model shall be presented in nominal terms

26 PART 4 Business and regulatory model. Trade and investment roadmap

27 Tranzit scenarios 1000 MW from Romania to Turkey

28 Tranzit scenarios 1000 MW from UCTE (Poland&Slovakia) to Turkey

29 Tranzit scenarios 1000 MW from Russia (IPS/UPS) to Turkey

30 budget Tranzit scenarios 1000 MW from Turkey to Romania

31 Tranzit scenarios 1000 MW from Turkey to UCTE (Serbia and Austria)

32 Tranzit scenarios 1000 MW from Turkey to UCTE (Poland and Slovakia)

33 Activities to be done in parallel with the feasibilty study Preliminary business model –List of main commercial, regulatory and financial hypothesys –Documentation on the business experience of existing commercial interconnectors in EU –Discussions and clarifications with the regulatory authorities –Legal due diligence for the preliminary business model –TOR for the complete business study Exploration and identification of potential private partners –Letters of intent –Develop procedure for the selection of the private investors Full clarifications on TEIAS participation in the project, including Turkish applicable legislation Preliminary legal preparations for the project company ( SPV )

34 Opportunity Study Joint Position Paper Feasibility Study ( 75 % TEL- 25% NE ) Business Study Joint Position Paper - Final International Agreement between Romania and Turkey Project implementation Financing, contracting, supply and instalation MOU -1 MOU -2 Selection of private investors SPV – the project company First tentative road map

35 THANK YOU FOR YOUR ATTENTION ! phone: fax: web-site:www.transelectrica.rowww.transelectrica.ro


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