Export of Icelandic geothermal hot water for district heating in the Faroe Islands
Annað veldi ltd Skuli Johannsson skuli@veldi.is
28.04.2010 / SJ
Export of Icelandic geothermal hot water for district heating in the Faroe Islands
Introduction
In 1975 a preliminary study was performed on possibilities of exporting hot geothermal water from Iceland to Gothenburg in Sweden. The hot water would primarily be used for residential heating but additionally the 30°C lukewarm water, after leaving the district heating network, could be used for swimming halls, amusement parks, pavement heating, greenhouses etc. The idea was to export 10-30 million tons of hot geothermal water yearly using 250.000 tons oil tank ships. The study was conducted jointly by Reykjavik Energy and a Swedish company named Wilong.
In the following study we assume, without any loss of generality, that Thorshavn in the Faroe Islands is the port of delivery.
Table 1 show statistics for Reykjavik and Faroe Islands and also for Copenhagen for comparison purposes.
Table 1. Statistics of Reykjavik, Faroe Islands and Copenhagen
Thors-
Item
Unit
Reykja-vik havn
No of inhabitants
210.000 60.000
Hot water use pr inhab as % of Reykjavik
100%
80%
Total Market for hot water (heat+potable)
M.tons/year
85,0
19,4
Specific hot water usage
tons/year/inhab 405
Specific hot water energy usage
MWh/year/inhab 27,7
22,1
Copenhagen 1.100.000 60% 267,1 243 16,6
Tank ships are assumed to transport the hot water from Iceland across the Atlantic to the Faroe Islands. As a first phase, we will base our calculations on one 50.000 tons ship carrying 2,4 Mtons/year. As seen in table 6, the transport capacity is then 2,4 million tons/year in 48 round trips. This will cover ca 12,5% of the total market for hot water in the Faroe Islands. Feasibility analysis in table 6 reveales a nice 14% in yearly pre-tax profit.
Fuel Consumption According to table 2 rough calculations for a 50.000 tons tanker reveal that ca 15% of the energy in the hot water cargo, according to utilization of the water from 90°C down to 30°C, equals energy in the quantity of oil needed for the ship to sail from Reykjavik to the Faroe Islands and back. Total yearly fuel usage of 2.400 tons/year amounts to 0,10 l/sec. The fuel could be a conventional diesel oil or DME DiMethyl Ether. Reykjavik Energy recently joined
Table 2. Fuel Consumption
Fuel Consumption of one vessel
Price of fuel
550 USD/ton
Consumption
10 Tons/day
Price per journey
27.500 USD/journey
Yearly fuel price
1.320.000 USD
Total fuel 1 ship
2.400 tons/year
Hot water capacity
2.400.000 tons/year
Heat capacity
164.000 MWh/year
Heat of combustion
40.000 kJ/kg
Total combustion heat
24.000 MWh/year
15% of Heat Capacity
forces with Mitsubishi Heavy Industries Ltd on cooperation in studies of DME production from gas associated with geo-thermal power generation. We assume temporarily the same purchase price for DME as for diesel. Table 3 Energy Prices
Price of Energy
Energy Prices (Energy part of tariff system) USD/MWh
Table 3 shows structure of the tariff system in Reykjavik and Copenhagen and the prices used in feasibility study in table 6. The price in Faroe Islands is estimated based on similar information from Copenhagen (Flemming Andersen Teknisk direktør VEKS). The table reveals the price difference between Reykjavik on one hand and Copenhagen/Faroe Island on the other hand.
Item Price of hot water Price of Energy Energy Tax CO2-Tax SO2-Tax VAT Total
Reykjavik 7,50 8,38 0,16 0 0 0,60 9,14
Thorshavn 59,00 119,82
Copenhagen 50,00 66,65 12,86 1,75 0,08 20,34 101,68
Tank ships
Table 4. Cost Model for Transport Vessel
There are two ways to estimate transport-
Cost Model for transport vessel
ation costs, buying or renting. In the follow- Item
Value
Unit
Ref.
ing we assume buying but it should be noted
that probably a more practical way to oper- Size
50.000
tons
ate is by renting.
Price
50.000.000 USD
Ec.lifetime
years
The largest tank ships to-day are 500.000 tons. Tankers are often sold second-hand.
Int.rate Annuity
5,0% 3.547.623
USD/year
Some representative prices for year 2005
Crew
500.000 USD/year 1,0%
include:
Operation
350.000 USD/year 0,7%
$ 43 M for a 40.000 DWT tanker $ 61 M for a 80–95.000 DWT $ 73 M for a 130–150.000 DWT $116 M for a 250–280.000 DWT
Fuel Harbour dues Maint Insurance
1.320.000 305.290 550.000 400.000
USD/year USD/year USD/year USD/year
2,6% 1,1% 0,8%
Assuming $50 M for a 50.000 tons tank ship leads to a transport price of 2,91 USD/ton
Sum Unit price
6.972.913 2,91
USD/year USD/ton
according to assumptions made in table 5. Until further notice, we assume that the tank ships for
transportation of geothermal hot water have been properly insulated. The ships would sail from
Reykjavik to the Faroe Islands fully loaded and without cargo from the Faroe Islands back to Reykja-
vik.
Land tanks The land tank structures have not yet been designed but we assume without further notice that the tanks will be built in similar way as was assumed in the former mentioned study from 1975, see figure 1. Some technical issues regarding the tank structure are explained in table 5.
Table 5. Some technical issues in Reykjavik
Technical issues at provider in Rvk
Unit
1 Steady inflow of hot water to land tanks
l/sec
2 Flow during loading
l/sec
3 Nozzles during loading and unloading
nozzles
4 Flow in each nozzle
l/sec
5 Height of tanks
6 Diameter of main tank
7 Diameter of service tanks
8 Number of service tanks
9 Capacity of main tank
m3
10 Capacity of each service tank
m3
11 Total tank capacity
m3
Value 100 1.160 4 290 18 60 20 4 50.868 5.652 73.476
Some assumptions and feasibility In figure 1 we show the reference points for calculation of feasibility. 1. The geothermal hot water provider in Iceland would deliver the water FOB thereby assuming the provider would finance and install all necessary infrastructure in Iceland. 2. We assume a contract with a shipping company which would provide required shipping capacity with sufficiently insulated tanks to ensure a temperature drop of < 1,5°C during ocean transportation. 3. The geothermal hot water buyer in Thorshavn would receive the water into its water tanks system, delivering the geothermal water onwards to the district heating network.
Figure 1 Reference point of geothermal water buying
Reference points for business transaction Reference point of geothermal water selling
Geothermal boreholes Iceland
Tanks & pipes infrastructure Iceland
Tankship Transportation
Tanks & pipes infrastructure Copenhagen
District Heating Network Copenhagen
Feasibility of this setup is shown in table 6, reveling a yearly profit of 1.373.000 USD/year or 14% of revenue of 9.976.000 USD/year.
Table 6. Feasibility Analysis (pre-tax)
Item
Unit
Value
Tankships
ship
Transport capacity of each tankship Tankships utilization Round trips Number of Round Trips Hot water – total quantity Hot water – Thorshavn Tour temperature Hot water – Thavn Retour temperature Hot water – Temp Difference utilization Energy for district heating Total Energy in hot water FOB hot water energy price Rvk FOB total hot water price Unit price of transportation Total price of transportation CIF hot water energy price Thorshavn CIF total hot water price Thorshavn Staff and office Net result Net specific profit
tons/journey days/journey journeys/year M.tons/year °C °C °C MWh/tons MWh/year USD/MWh M.USD/year USD/ton M.USD/year USD/MWh M.USD/year M.USD/year M.USD/year
50.000 67% 5 48 2,4 90 30 60 0,068 164.000 7,50 1,230 2,91 6,973 59,00 9,676 0,100 1,373 14%
Comments
Auxiliary sources of income Following sources of income could contribute to better feasibility of the project: Cost benefit of pollution free energy production (carbon credit, tax benefits etc.) Lukewarm water, with 30°C retour temperature, for swimming halls and amusement parks etc. Pavement heating. Greenhouse heating. Use the tank ship for cold water transport in the summertime when demand for hot water for district heating is at minimum.
Timeline Using economic lifetime of 25 years we would assume contracts of same period of time with Hot water provider in Iceland, Sea transport company and District heating company as the hot water buyer in the Faroe Islands.
Ocean route Figure 2 explains the ocean route.
Figure 2. Ocean Route from Reykjavik to Thorshavn in the Faroe Islands