The Master Plan is the first stage in preparing the Aplication, to achieve investment financed from Cohesion Fund in the Sectoral Operational Program Environment 2007 – 2013 – Priority Axis 3 in the district heating sector (Support the financing of Large Combustion Plants (IMA) owned by local authorities, under operation in the municipal heating systems, to reduce pollutant emissions and emissions of greenhouse gases at IMA level, and aimed at improving energy efficiency and network installation).The Master Plan is prepared for Large Combustion Plants (IMA) and centralized heat-supply systems in: Botosani, Focsani, Resita, Ramnicu-Valcea, Oradea, covering production, transport and heat distribution to the consumers for a period of 20 years.
The purpose of the Master Plan was to identify and prioritize investment needs to meet – at the low cost – the compliance with the EC directive of the environmental sector, taken into account the supportability of the investments by the population and local capacity of project implementation.
There were analyzed scenarios and options that took into account :
- relevant national strategic context
- current situation of district heating system
- district heating system issues
- evolution of heat demand
- identify the options for heat supply
- the master plan analysis included
- estimated investment effort in the options identified
- supportability analysis
- financial analysis, economic analysis
- investment priority
- action plan for project implementation
Feasibility studies is the second stage in developing the Application for achievement of investment financed by the Cohesion Fund within the Sectoral Operational Program Environment 2007-2013 – Priority Axis 3 in the district heating sector (Support the financing of Large Combustion Plants (IMA) owned by local authorities, under operation in the municipal heating systems, to reduce pollutant emissions and emissions of greenhouse gases at IMA level, and aimed at improving energy efficiency and network installation).
The Feasibility studies were prepared for Large Combustion Plants (IMA) and centralized heating system in: Botosani, Focsani, Resita, Ramnicu-Valcea, Oradea, covering the production, transport and distribution of heat to the consumers for a period of 20 years.
Studies analyzed three strategic scenarios of heat supply:
- scenario I, based on centralized heat supply, and maintaining the current organizational structure
- scenario II, characterized by the power of more centralized energy sources, obtained by dividing the current system, companies will have to operate energy sources and transmission and distribution and thermal
- scenario III, characterized by individual heat supply.
The three strategic scenarios of heat supply were compared in the multi criteria analysis, on the following criteria:
- CO2 emissions reduction reported at equivalent energy generated
- reducing pollution distributed in the residential zones
Social aspects, estimating the percentage of population level impact scenario:
- impact of investment achieving on people welfare
- direct investment cost impact on people economic standard
Scenarios II and I have analyzed different options.
Basic principles taken into account in defining the options were:
- compliance with environmental protection requirements
- compliance with BAT – BREF requirements and using the most efficient technologies
- compliance with European requirements on the use of renewable energy
- minimizing the investment and operation costs
- compliance with legislative requirements on fuel availability
- compliance with provisions on pollutant emissions and emission trading
- possibilities of local implementing
- operator ability to operate complex technologies
The options were compared based on financial analysis and have been calculated on the financial performance indicators of the project. The analysis was carried out in terms of project beneficiary by the incremental cost-benefit method, taking into account the updating technique. The financial analysis also contained incomes resulted only from heat and expenses during the entire period of analysis. Options resulted were ranked based on cost benefit analysis of financial investment. In order to select which option to be financed from grants an economic analysis was used, which assesses the project in terms of economic impact on society (economic, social and environmental).
Economic analysis is conducted from the perspective of society as a whole and not just a facility owner, as in financial analysis. The economic analysis took into account the externalities which lead to costs and economic, social and environment benefits, which were not considered in the financial analysis, because it does not generate monetary incomes or expenses.
The starting point for the economic analysis was the incremental financial analysis of investments and was adjusted to reflect the economic cash flow obtained:
- fiscal corrections and the conversion price
- integration (monetary) externalities
The option recommended for the rehabilitation of district heating systems were selected on the basis VNAF/C maximum, CIA minimum.
Also, in determining the economic cash flow, there were taken into account all cost regardless of funding sources (both for investment and for operation). Cost-Benefit Economic Analysis included the following steps:
- determination of Flow Incremental revenue (FVC) during the analysis
- determination of economic performance indicators:
- Present Economic Net Value (VNAE)
- Internal Rate of Economic Return (RIRE). The option deserving to be co-financed by grants is the one having the positive economic performance indicators (VNAE>0, RIRE> social discount rate).
The feasibility study prepared for the option chosen includes:
- technical data of the investment
- demolition and strengthening works required to implement the project
- necessary works in plant by technical disciplines
- necessary works pertaining to the district heating system
- industrial risk management
- estimative cost of the investment
- cost-benefit analysisFinancing sources
- main technical indicators of the investment
- master plan
- feasibility studies
Country and location:
Romania – Focsani, Botosani, Govora, Oradea, Resita
Ministry of Environment – Directorate General for Management of Structural Instruments
Start / Completion date:
2009 – 2010