''Reliability issues in the power industry of Russia often go by the wayside in favour of short-term economic interests''

''Inefficient facilities must be removed from service''

Mr. Akhmetzyanov, today many people talk about a crisis of the centralised heat supply...

Perhaps, you are right in something. Let's recall the Soviet Union. In those days, all powerful CHPPs were designed as sources of heat supply for large industrial consumers. For example, Naberezhnye Chelny CHP — for KAMAZ, Nizhnekamsk CHP — for petrochemistry and refining, Kazan CHP-1 — for the factories of synthetic rubber, Kvart, Melita, and other industrial enterprises of the Privolzhsky district of Kazan. First of all, they served the heat load of large industrial enterprises, which were primary heat consumers of these stations. This provided electric power generation in combined cycle with high efficiency and with good heat supply to consumers in hot water and with exhaust steam. Social burden of these CHP plants was expressed in heat and hot water supply of the residential sector of large cities. This primary industrial load helped to smooth the heat consumption peaks for centralized heat supply connected with seasonal factors. Accordingly, the equipment installed at these stations was designed to operate in that mode, that is, its efficiency was defined by heat supply volume. In this mode, if there are no large industrial consumers of heat, it is very hard to operate the station and to ensure its competitiveness, efficiency, because if there is no heat supply, energy is produced in uncombined mode with large specific consumption of fuel for production. Perhaps I will say a seditious thing, but I think that working with existing equipment of CHP designed to meet large heat supply to industrial consumers, the centralized heat supply from large CHPPs is uncompetitive without primary industrial heat load. Besides, the price of energy they produce becomes also uncompetitive. Large CHP power plants become unprofitable in such mode.

Without major industrial heat load, large thermal power plants become unprofitable

What happened at our plants? For example Kazan, where there are three large CHPPs — KCHPP-1, KCHPP-2 and KCHPP-3. In fact, only KCHPP-3 out of the three Kazan stations has retained a large industrial load. So, I well understand associates from Tatenergo and from other Russian energy companies, at power plants of which there remained only the load of the centralized heat supply of population. It is very difficult to maintain the equipment of their stations in good technical condition, to ensure their competitiveness. It is possible to receive a sufficient cash flow under these conditions only through raising rates. But it is impossible to do forever, even in the case of certain loyalty of the regulator. By the way, similar problems are arising at Naberezhnye Chelny CHPP, where a huge number of equipment stand idle due to the lack of thermal load.

How do you assess the actions of neighbouring generators on construction of additional facilities under the PDM (capacity delivery contract) program under current conditions?

From the point of view of Tatenergo, the actions are absolutely correct. Because when heat goes away, you need to put a power plant providing the most effective production of electricity in combined cycle, albeit at minimal level of heat. Here, wittingly or unwittingly, you have touched upon another acute problem. The PDM program is a very expensive program. It has led to a significant increase in electricity tariffs for Russian and Tatarstan consumers. It has also resulted in excess generating capacity in the Russian Federation. DPM projects were brought to Tatarstan from other platforms of the regions where they were not needed. The projects were transferred under the terms of withdrawal of excessive, inefficient facilities of Tatenergo. The project of 220 MW CCGT unit at Kazan CHPP-2 was implemented two years ago, the CCGT project at Kazan CHPP-1 is in progress, but as far as I know, Tatenergo is not planning to decommission old facilities at these stations. Although, as follows from what I have said earlier, the cost price of heat produced by these old facilities primarily because of load at summer in uncombined mode in average for a year is probably even higher than the cost price of heat from district boiler plants. A paradox of our time — a boiler is becoming more efficient than CHP.

A paradox of our time — a boiler is becoming more efficient than CHP

What about winter? Will there be enough capacity for heating? What to do with old facilities?

If to say in short – change is needed. I came from Nizhnekamsk CHPP-1. Once I was lucky to pass through the territory of Nizhnekamskneftekhim. I saw working plants, and suddenly there was a non-operating facility, I do not remember what exactly. I asked — why? And the answer was simple — the market environment changed, the product was not in demand anymore. The facility was stopped and decommissioned. They were going to find a technology that would be in demand, a popular product, to demolish this facility and to construct on its place a new one. For some reason, the idea to increase the price of products did not arise, because it was impossible. Market conditions! They were not going to continue to exploit it and to cover losses at the expense of other plants either. Change is needed. First and foremost, changes should take place in the minds because the situation in the energy sector has changed. Inefficient facilities should be removed from service, and the consumer should not pay for their inefficient work. At the same time, specific solutions to the problems can be different and the results will be different, too. But if every time try to find a balance of interests of the energy producer and the final consumer, the right solution can always be found. Now I have the impression that there is just delaying of finding a solution on the principle of ''maybe it will resolve itself''. It will not. We need to make decisions, we should not postpone them any longer. In this case, in finding solution we should consider not only the heat supply scheme but also the scheme of power supply of the city of Kazan, including taking into account its drastic changes.

''The industry took a step back in ensuring the reliability of heat supply to consumers''

What solution of the problem do you see? There is still a shortage of electricity of the city of Kazan. Many wrote and spoke about this.

If to speak about Kazan, it is necessary to highlight several points:

1. After completion of 220 kV ring around Kazan, when the power centers of the city will be three sources — Kazan CHPP-3, the substation Kinderi and the substation Centralnaya, the issue of power shortage of the city of Kazan and the Kazan power district will be resolved. The new scheme of power generation of Kazan CHPP-3 will allow to deliver all its power without limitations to the 220 kV network, including from the new unit of the gas turbine plant; the substation Kinderi has always been the power centre of Kazan and it is connected with the unified energy system and Zainskaya GRES power plant by lines of 500 kV; and the third source — the substation Centralnaya, where this fall there will come a 220 kV line from the substation 500 kV Schelokov. All three sources are linked by lines of 220 kV, by which from these sources there can be transferred the backup power in the case of local shortages or outages. We have long been forward to this goal, but due to the efforts of our associates from the Grid Company and due to adopted decisions by the Republic's leadership, this goal will be achieved already this year.
2. CHP, having a year-round industrial load and a seasonal heat load, can generate electric and heat energy at the existing equipment with the cost price at the level of modern CCGT units and substantially below the cost price of the boiler. Even taking into account the heat loss for transportation through main heating systems.
3. CHP not equipped with gas turbine topping and having heating load only in winter and forced to generate electricity in summer in uncombined cycle is not competitive on the wholesale electricity market, and the cost price of its thermal energy is comparable to or exceeds the cost of heat produced by a powerful modern boiler.
4. Being introduced and introduced under the DPM program CCGT units at CHP must operate with maximum load of electricity and heat.

Now about solutions. Considering the first and third points, we can say the following: ineffective, due to the lack of year-round thermal load, use of equipment with a low coefficient of generating capacity at CHP plants can and should be decommissioned without risk of power supply reliability of the Kazan power district. The CCGT units, introduced and being under construction at Kazan CHP, should operate with the greatest possible power production in combined cycle. To do this, the equipment should be, first of all, provided with the maximum possible heat load. This will give the greatest effect from its use in combined cycle. It is obvious that the thermal capacity of CCGT will not be able to serve the entire heating load of the centralized system of heat supply during the autumn-winter peak loads. Therefore, in the second place, available and not served by CCGT heating load should be transferred to Kazan CHPP-3, which has retained a year-round industrial heat load. This will allow to upload existing equipment with acceptable efficiency and cost price to produce additional heat and electric energy in combined cycle. In the case of absence of reserves of thermal power at Kazan CHPP-3 for heat production with exhaust steam from the steam turbine, the remaining heat load in the third place is reallocated to the boilers.

There are problems with the reliability of heat supply in Kazan, inherited, so to speak, from the Soviet Union

Under this approach, the benefit will be gained by the consumer of electricity, who will cease to pay in the form of fees for facility, maintenance of equipment of power-generating companies with low utilization rate, which remain idle most of the time. The power producer will benefit either, their losses due to maintenance and operation of inefficient and idle equipment will be reduced. The consumers of heat will benefit from industrial CHP because electricity and heat production will increase, respectively cost price and tariff for supplied heat energy will decrease. The supply reliability of the Kazan power district will benefit because it will increase electricity production due to redistribution of heat from boiler houses to CHPP. The unified heat supply organization in the city of Kazan will benefit, it will be able to buy thermal energy from heat sources with lower rate under a fixed final tariff for heat. It will finally has an opportunity to engage in networks and reduction of losses during transportation of heat. Because there are a lot of questions to the condition of heat networks. The population of the city of Kazan will benefit, they will receive at minimum a reduction in growth rate of tariffs for heat and at maximum a decrease in tariffs for heat. The effect is huge. You just need to slightly change the approach and look at the problem comprehensively.

In general, there are a lot of questions to reliability of heat supply for the population. Given our climate, reliability of supply of consumers (population) with heat is the primary task. The law stipulates higher requirements for electric power facilities from the point of view of reliability. After all, unlike industrial enterprises and factories, power stations never stop for repair, they must work night and day. By the way, Kazan CHPP-3 has been working non-stop for almost 50 years, only individual power units are repaired according to the schedule. Unfortunately, in the Russian power industry, these issues go by the wayside in favour of short-term economic interests. There are problems with the reliability of heat supply in Kazan, inherited, so to speak, from the Soviet Union. But they must be solved. And if we, from the point of view of increase of reliability of power supply, in the last five years, together with associates-power engineers of the Republic have made a huge step forward, from the point of view of ensuring the reliability of heat consumers, especially population, the industry not as much as advanced but took a step back. In my opinion, all participants of process of heat supply need to reverse this situation as soon as possible.

Rash decisions determined by a certain benefit for a specific company should not come at the expense of reliability of heat supply of the population of the million city

What problem do you see?

As for Kazan, at that moment, backup fuel in the case of termination of gas supplies exists only at KCHPP-3 and KCHPP-1. The work of this newly built and being under construction under the program DPM CCGT power units on backup fuel is not provided. That is, if, God forbid, something happens in the gas supply system, the nearest power station — Kazan CHPP-2 – will be stopped. They have a coal household, but an unplanned transition from gas to coal takes a long time. There is no possibility to transfer station on coal for 5-10 minutes. There is no backup fuel at boilers in Azino, Savinovo. It is a huge problem. We hold a lot of technical measures, including maintaining of reserves of fuel oil, repair of fuel management, training of operating staff. Because we know and understand that if something happens we should be able to ensure the reliability of heat supply in Kazan and to help associates at Kazan CHP-2.

There is a bottleneck that worries us. These are two heat lines (No. 13 and No. 14), which connect us with the Kazan CHPP-2. This year when adjusting the heat supply scheme of Kazan, associates from Tatenergo decided to withdraw the heat line No. 13 from service because they do not want repair it and do maintenance. In fact, it is a flagrant violation of requirements of construction norms and rules for provision of reservation of heat lines from a remote thermal energy source. There must a one hundred percent reserve. It one tube is damaged, there must be another. Most interestingly, the life itself has confirmed the correctness of these requirements, rules and regulations. In March this year, an accident occurred at heat line No. 14. If the thirteenth heat line was removed, the accident at the fourteenth heat line would actually cut off Kazan from heat coming from Kazan CHPP-3. So, three major areas of the city could remain without heating. It is when night temperatures were below 10 degrees. But I think we still find understanding of our associates in this issue, as well as the leadership of the Republic and the Executive Committee of Kazan. After all, rash decisions determined by a certain benefit for a specific company should not come at the expense of reliability of heat supply of the population of the million city.

Once we are talking about reliability of heat supply of the population, what do you think about the problem of installation/transition to the individual heating plants (IHP)?

You know, the transition to individual heating plants (IHP) will be definitely effective for thermal grid companies. But the work in TAIF Group have taught me that any solution that looks at first glance effective should be analyzed from different angles, first from the point of view of those consequences that the consumer might have. The question requires careful consideration. If you look at the installation of heating plants wider, from the point of view of the complex effect, it will become obvious that this program has a number of ''grey'' zones. In my opinion, these zones require more careful consideration both from the point of view of ensuring the reliability of heat and hot water supply and from the point of view of balance of heat consumption, consumption mode, the mode of load and operation of power plants, main heating systems. The declared reduction of tariffs for the population is not obvious, the mechanism for further maintenance of these heating units is unclear, and the question arises — who will pay for it. Here, perhaps, it is better to involve the expert community of power engineers. But most importantly, as experts there should be consumers, especially homeowners associations and management companies. Because, as I understand it, today the main and only beneficiaries from this programme — thermal grid companies belonging to the structure of big energy. The effect for the population is far not unambiguous, as the costs for operation and maintenance of IHP will ultimately be reflected on the bills for utilities.

If you look at the installation of heating plants wider, from the point of view of the complex effect, it will become obvious that this program has a number of ''grey'' zones

What are the future plans of the Kazan CHPP-3, TGC-16?

We have a lot of plans. They all are closely connected with our consumers because many of them are currently in the process of preparing the launch of new investment projects. Our goal is to provide reliable infrastructure, heat and electricity supply for the implementation. Most importantly, we need to provide all their customers with heat at the most competitive prices. This is especially true for the population. We do have reserves in order to increase the supply of heat to consumers for at least another 2 million Gcal per year. By the way, despite the fact that we constantly upgrade equipment, invest huge money in upgrading the power plants, our heat tariffs for the population in Kazan remain the lowest. For clarity, in comparison with the rates of heat sources of Tatenergo, our rates are actually two times lower. That is, if we have an opportunity to increase the supply of heat in district heating networks of Tatenergo JSC, it will significantly reduce payments for heating for the end user. Thus, our main advantage is that TGC-16 has formed approaches that help to develop the company and ensure the output of competitive products, supply of heat and electricity at the most competitive rates in the region.