Cheap power plant based on a gas boiler house: the main country of the buyer? 

When you hear “cheap power plant based on a gas boiler house?”, a picture immediately appears: you took an old boiler house, installed a turbine or an engine - and here’s your energy. But in practice, the main headache is not the price of the equipment, but understanding who really needs it and who is ready to get into it. Many people think that the market is the same everywhere, but this is not true. The main buyer for such projects is not a country where there is a lot of gas, but one where there are specific problems with networks, tariffs and where boiler houses are already in place, but are operating at half capacity. According to my observations, over the past five years, the vector has shifted.

Where to look for a real buyer? Unobvious geography

Previously, everyone looked at the Middle East - there is gas, there is money. But there, to be honest, they prefer large, new turnkey stations rather than reconstruction of old facilities. There is potential in the CIS countries, but they have their own specifics. For example, in some regions of Russia or Kazakhstan, dozens of municipal gas boiler houses were built back in Soviet times. They provide heat, but their electrical power is often unused or used through outdated, low-efficiency steam turbine units. This is where the demand for modernization arises - to obtain additional electricity from the gas already consumed. This is the “cheap” one. way, because the gas supply infrastructure, buildings, and part of the heat exchangers already exist. The main costs are for power equipment and network connections.

But the key point is legislation. The purchasing country must have either a ?green? tariff for cogeneration, or the high cost of technological connection to networks for new facilities. Otherwise, the economics of the project will not add up. Therefore, for example, in Belarus such projects were more active several years ago, when there was state support. Now, it seems to me, the tide is shifting. I see steady interest from Uzbekistan. There is an active modernization of public utilities there, there are problems with peak loads in the power grids, and there is our own gas. Local generation based on boiler houses solves several problems at once.

Another unexpected contour is the industrial enterprises within these countries. Private sector. A plant with its own boiler house, which is tired of power outages or rising tariffs. For them, a ?cheap power plant? is a way to increase energy independence. They do not always enter the international market as buyers; they often work through local engineering contractors. Therefore, Chinese or Turkish equipment manufacturers often do not see them, and this is where a large volume of small but frequent projects lies.

Pitfalls of ?cheap? solutions

The word itself is ?cheap? - it's a trap. The client wants it cheap, but when you start discussing the details, nuances emerge that reduce the savings to nothing. The first is the condition of the boiler room itself. Often a project begins with an inspection, and it turns out that the boilers are old, the efficiency is low, and the gas lines need to be changed. It turns out that the ?base? requires the same investments as a new power plant. The second is approvals. The introduction of generation into an existing facility involves mountains of paperwork with energy supply companies and networks. In some countries, this process can kill any project in the bud due to bureaucracy or lobbying by the interests of large generating companies.

The third stone is the choice of equipment. You can supply a used gas piston engine - it will be really cheap in terms of capital costs. But then its maintenance and repairs will eat up all the profit. You can take a new low-power turbine - it’s reliable, but the payback period is extended. We once worked with a Chinese companyYuke (Shandong) Electrical Technology Co.,Ltd(Yuke Electric). They came from the DEVER team, which has been in Qingdao since 2003, and they have a systematic approach: they don’t just sell the engine, but look at the whole scheme - heat recovery, automation, integration with existing boiler room systems. This is important because it is ?cheap? should be in the life cycle, and not just in the price list. Their websitevoyoko.ru- this is, in fact, a catalog of solutions for various tasks, and not just a showcase of units.

I had experience in one small town in Kazakhstan. The local administration wanted to create a cheap power plant based on a boiler house. The estimate was cut to the limit and the most budget option was installed. Everything started up, but six months later problems began with the cooling system - they made it cheaper and did not take into account the quality of the water. As a result, downtime and repairs wiped out all the savings. Lesson: Don't skimp on support systems. It’s better to make less power, but reliably.

Case: why it didn’t work out with one region

A couple of years ago we were actively studying the market of an Eastern European country. Everything matched: the old stock of boiler houses, the desire of the authorities to develop distributed generation, the availability of gas. We held negotiations and even prepared a standard project with partners, includingYuke Electricas a possible supplier of capital equipment. But in the end everything died out. The reason turned out to be a small detail that was not taken into account initially - technical specifications for emissions. Environmental standards there have become stricter, and modernization required the installation of expensive exhaust cleaning systems for gas engines, which “ate up” 30% of the project budget. The economy has ceased to be attractive. At the same time, in a neighboring country with a similar economic structure, there were no such standards yet, and projects went ahead there.

This experience has shown that the analysis of the buyer country should begin not with macroeconomics, but with the following by-laws: ecology, connection rules, personnel requirements. Sometimes it is easier and cheaper to build a new mini-CHP from scratch according to modern standards than to fit into the old boiler room framework. But for a client, especially a municipal one, it is the image of “cheap” that is important. use of existing assets. A lot of explanatory work is needed here.

Now, by the way, many Chinese manufacturers, includingYuke (Shandong) Electrical Technology Co.,Ltd, they understood that. Their website shows that they focus not on “cheap units”, but on “efficient energy solutions”, which is much closer to the real needs of the market. They position themselves as an innovative enterprise combining R&D, supply and construction. This is the right move, because it is not the hardware that is being sold, but the solution to the problem.

Technical details that make all the difference

Economics and geography aside, the success of the project rests on three technical pillars. The first is an accurate calculation of the thermal and electrical load. The boiler room previously worked only for heating, the schedule was seasonal. And now we also need to generate electricity, preferably all year round. This means that we need to consider whether the heating power of the boilers is enough in winter, and what to do in the summer, when heating is not needed. It is often necessary to install additional heat recovery units from engine exhaust gases in order to maintain profitability in the summer, for example, to heat water for the same city.

The second pillar is automation. The old boiler room was controlled manually or with simple controllers. When integrating a generator, you need a unified dispatch system that will distribute loads, monitor gas parameters, and ensure synchronization with the network (if the project is not an island one). This is the item on which non-specialists try to save money, and then end up with unstable work and the risk of an accident.

The third is the question of residual resource. A gas piston engine, even a new one, has a service life before overhaul. What will happen to the project when this deadline arrives? Where to get spare parts, who will do the repairs? Therefore, the contract often contains a service agreement as a separate line. Companies like Yuke Electric, which provide engineering and services in addition to sales, are in an advantageous position here. They can offer long-term support, which is often more important to the buyer than a one-time discount.

So, what kind of country is it today?

Summarizing my experience and observations of colleagues, I will say this: a single “main buyer country?” No. There is a pool of countries where a set of conditions has developed: the presence of a fleet of outdated gas boiler houses, relatively affordable gas, problems in distribution networks and, most importantly, the political will or economic need to change this situation. Now the focus, I repeat, is on the countries of Central Asia, in particular Uzbekistan and Kazakhstan (in certain regions), as well as some regions of Russia. But this is not a mass market, but a piecemeal, project-based business.

Each potential buyer from these countries comes with their own unique situation: different wear and tear of the boiler room, different local tariffs, different relationships with network providers. Therefore, there are no template solutions. A successful supplier is one who is able to quickly understand this context and offer not just a “cheap power plant”, but a feasibility study for a specific facility. This is exactly what it seems to be doingYuke Electric, focusing on technological innovation and comprehensive service.

So, answering the question from the title: the main country of the buyer is the one where there are not just gas boiler houses, but where there is a conscious need and willingness to go through the entire difficult path of modernization. And, fortunately for our business, there are still enough such countries. But you need to look for them not on the map, but in the analysis of local energy problems and the regulatory environment. Everything else is technical details, which, however, as we have seen, ultimately decide everything.