 ORMAT IN LATIN AMERICA - 35 YEARS OF COLLABORATIOND. N. Schochet
ORMAT International, Inc. - Sparks, Nevada HISTORICAL BACKGROUND
ORMAT's history as a power equipment and technology company is intertwined with collegial and commercial relationships dating back to shortly after the founding of the company, by Lucien and Dita Bronicki, in 1965.
Historically ORMAT came into being to commercialize Organic Rankine Cycle (ORC) technology for high reliability factory integrated power systems. The first in a line of products, known as ORMAT® Energy Converters (or OECs), which have been industry standards over the years, was the closed cycle vapor turbo-generator (CCVT) for telecommunications and pipeline applications. This evolved into a highly reliable, low maintenance power package, which relied on liquid or gaseous fuel to provide between 200 and 6,000 Watts of power at remote sites.
One of the first successful commercial applications of the OEC for telecommunications was the installation of the power units for the backbone microwave system in Argentina, shown in the photograph of Figure 1. With 100 OEC units were installed by 1971, with many of the original power units continuing to operate until now. In fact over the years since then a total of 3500 OEC units have been installed in 63 countries world wide, from the TransAlaska Pipeline to Gazprom in Siberia and Pemex in Mexico. From the late 1970s ORMAT turned its technology vision toward the use of locally available energy sources, such as solar, biomass, and geothermal, to generate commercial power. By the early 1980s several 300 to 600 kW waste heat OEC units have been installed in the USA, Europe and elsewhere (Figure 2). The first geothermal project using an experimental ORC was a cooperative effort of the Instituto de Investigationes Electricas of CFE (directed by Mr. Sergio Mercado) and ORMAT in Los Azufres in 1981. (Figure 3). ORMAT'S EVOLUTION
Initially ORMAT supplied power systems based in the main on the company's added value in design and manufacture of the major components, as well in the factory integration and testing of the complete package. This proved to be a major element in producing cost effective binary power plant modules for geothermal applications. Initially the company sold these modular systems to others, and later took on the task of providing turnkey installation and construction services for geothermal power plants. This aspect of ORMAT's business is still a key element in its activities and consists of sales of packaged geothermal power plants for installation by others, in countries such as Iceland, and the continuing supply and EPC turn-key installation of major geothermal power plants for owners such as the Tuaropaki Trust in New Zealand Mokai I of 60 MW. (Figure 4). In the mid 1990s the company realized that though we had been successful in developing complete geothermal power projects, including well-field development, and arranging some one billion dollars in project financing for other equity owners, the geothermal paradigm was changing. ORMAT made the conscious decision, that in addition to providing its technology and expertise to others, we would also invest our profits and internal funds in the development, ownership and operation of geothermal power projects.
With the development of the 49 MW Leyte Optimization Project in the Philippines in 1997, and the 24 MW Zunil geothermal Project in 1999, ORMAT was committed to invest, own and operate geothermal projects. This decision has greatly spurred the company's growth in Latin America, the United States and elsewhere.
Today 700 MW of ORMAT built power plants operate in 21 countries. The largest is 130 MW in the Philippines and the smallest is 250 kW in Austria.
In fact from our entry into the geothermal field in early 1980s, the ORMAT group sales for the supply of geothermal equipment and the sale of geothermal electricity, has grown to nearly $100M annually. ORMAT's commercial and business relationships in Latin America are a major element of this growth, and as we show below, our commitment and investment in Latin America demonstrates our appreciation of these relationships. ORMAT GEOTHERMAL PROJECTS IN LATIN AMERICA
Zunil Geothermal Power Plant, Guatemala
The 24 MW Zunil I Binary Geothermal Power Plant was built in the frame of a Build- Own and Operate (BOO) agreement and is owned and operated by Orzunil as a join investment of ORMAT, the International Finance Corporation (CDC), Ing Bank N.V. and the Netherlands Developments Finance Company. The electricity generated by the power plant is sold to INDE (Instituto Nacional de Electrificacion).
The OECs utilize two-phase geothermal fluid consisting of steam and separated brine in a modular air-cooled configuration. ORMAT manufactured the OECs and supplied and installed the entire plant on a turnkey basis under an EPC contract with the investment group.
The engineering and construction, including civil works, installation, geothermal field gathering systems and electrical connections were designed and executed in collaboration with local companies.
The power plant, in commercial operation since September 1999, is operated by a subsidiary of ORMAT.
Momotombo, Nicaragua
In March 1999 ORMAT signed a 15-year concession and Power Purchase Agreement with ENEL for the successful rehabilitation of the Momotombo Geothermal power plant in Nicaragua. (Figure 5). At the time ORMAT took over Momotombo, a project constructed in 1990 was producing only 8 MW. After an investment of 35 Million Dollars in well drilling and rehabilitation as well as new generation equipment, the power output has been increased to 35 MW. ORMAT rehabilitated the existing steam plant, drilled new wells and installed an ORMAT® Energy Converter, which produces additional power from the heat previously wasted in the geothermal brine. This geothermal brine, which previously was disposed of by flowing into Lake Momotombo, now is fully re-injected back into the ground avoiding any pollution of an important water resource. The inauguration ceremony on February 19,2003 attended by the President of Nicaragua, Ing. Enrique Bolanos Geyer, ended a four-year rehabilitation process, executed by ORMAT Momotombo Power Company Inc. a subsidiary of ORMAT International, Inc. President Bolanos Geyerstated at the dedication ceremony: "...We are very enthusiastic and optimistic today at the inauguration of the new ORMAT® Energy Converter Plant, which produces clean energy using the steam arising from the depths of the volcano. This has even a higher value today, as it is accentuated by the uncertainty in oil prices, since 70% of Nicaragua's electricity is based on oil." At the ceremony Lucien Bronicki ORMAT's Chairman said: "We are very satisfied with our investment here, we provide the lowest cost electricity at 4.79 US cents a kWh while saving Nicaragua the import of 90 000 tons of fuel per year, and at the same time avoiding a yearly emission of 120 000 tons of CO2 and the pollution of Momotombo Lake. Nicaragua has an impressively large geothermal resource waiting to be tapped. We should use this advantage to diminish our dependency on oil". The equity for the $ 35 M investment was provided by ORMAT, while the long term limited-recourse debt financing is provided by Bank Hapoalim. The Multilateral Investment Guarantee Agency (MIGA), a member of the World Bank Group, supports the financing. Miravalles V, Costa Rica:
Miravalles V is part of the Electric Development Program III, financed by the International Development Bank. ORMAT was selected by ICE (Instituto Costarricense de Electricidad), as a result of an international tender to provide the power plant, construction materials, and engineering services. The Miravalles V plant consists of two binary cycle water-cooled non-polluting and fuel-free OECs that will convert into electric power the presently unexploited energy contained in the hot brine discharged from the existing Miravalles plants. The ORMAT® Energy Converters will add 18 MW to the power output from the existing Miravalles geothermal field, without increasing the overall steam consumption or necessitating the drilling of new wells. The Project is now in an advanced construction and assembly phase. The advantage of ORMAT's binary technology is twofold. First, ORMAT's technology utilizes efficiently for electrical generation brine that otherwise would be disposed of, and not just steam, . Second, ORMAT's technology re-injects 100% of the brine back into the aquifer, thereby assuring that the resource is not depleted. The Miravalles V Project is one more step in ORMAT's ongoing contribution to the development of renewable power generation in Costa Rica and in Latin America.
Maguarichic Rural Electrification Project, Mexico
As part of a pilot project to produce electricity from shallow, low temperature geothermal brines, CFE issued an international tender in 1997. ORMAT won the bid and four 300 kW binary OEC units were supplied by ORMAT and installed by CFE.
One of these units was installed in 2001 in Piedras de Lumbre Geothermal Zone, near to Maguarichic, Chihuahua. Until 2001, power for this village was limited to only a few hours a day by a very expensive and polluting diesel generator, because the distance between the village and the nearest transmission line (75 km) made any eventual connection uneconomic. After overcoming road access and other difficulties, the Maguarichic geothermal project was commissioned on April 30, 2001. According to CFE's executives, with no refrigerators, village residents rarely consumed meat, cheese or milk, and local children had never seen ice cream. Because of voltage variations, there were no TVs and residents were isolated from domestic and international events. With the installation of a continuous and high quality energy source, a public lighting system was installed as well as power consumption meters at households. Since the new access to geothermal power Maguarichic has attracted new business including a small clothing factory that employs several electric sewing machines.
After a training period by CFE's technical staff, people from the village are now operating the Maguarichic power plant. Subsequently, for such applications, ORMAT developed a small 250 kW packaged geothermal power plant for unattended operation, one of which power plant was installed at the Hotel & Spa Rogner Bad- Blumau in Austria. (see Figure 6) A water-cooled version is shown in Figure 7. The whole unit weighs less than 15 tons, fits into one 20ft (9m) shipping container. The turbine, the generator and the fluid pump are all mounted on a simple shaft without a gearbox. The unit can be installed in one day, requires no skilled operators, has minimal fluid make up losses and include a remote diagnostic feature. Amatitlan Geothermal Power Plant. Guatemala
ORMAT has received the award in a tender for construction and operation of a geothermal power plant in Amatitlan, Guatemala. The power plant will be built under a BOO arrangement, with an initial capacity of 20 MW on the basis of the existing wells in the geothermal field.
The power plant will sell electricity to the Guatemalan Electricity Company in accordance with a power purchase agreement,. The power plant is expected to start selling electricity in 2004 for a period of 20 years. According to the terms of the tender, the responsibility for the exploitation of the geothermal field will be with the company.
According to the terms of the tender, the company can continue to develop the geothermal field up to a capacity of 50 MW and raise the production capacity of the power plant accordingly.
MANAGEMENT INTEGRATION
All ORMAT owned plants in Latin America are operated and maintained from day one by the local team. The Nicaraguan highly qualified team of 75 is lead by Roger Arcia, assisted by Karla Miranda, Administrative Manager and Environmentalist, and Magdalena Perez, Geologist.
In Guatemala the plant is managed by Miguel Galicio. The integration of technology transfer to local staff through training on site and abroad is ORMAT's approach also in the plants it operates in the Philippines and Kenya. CONCLUSION
ORMAT's broad experience from basic R&D through manufacturing, project development, construction to operations, enables it to offer its customers equipment only, such as ICE in Costa Rica or Sudurnes in Iceland, assistance in all phases of the projects they are executing themselves. ORMAT's experience and understanding of financial engineering facilitates the project implementation by developers for whom ORMAT acts as an EPC contractor.
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