Hydrogen and Other Advisory
Utilities Aruba is undertaking several transformational initiatives to decarbonize the energy and water sectors in Aruba. These initiatives include a proposal to create a Hydrogen Valley where energy from a new solar PV facility would power the grid and produce green hydrogen for local uses and eventually for export. Green hydrogen would be used to power fuel-cells in buses, taxis, port and airport vehicles, hotels, and public buildings. The green hydrogen would also be blended with natural gas to power reciprocating engines that supply power to the grid.
K&M will conduct economic modeling of the solar PV plus green hydrogen project proposed to understand its impact on the energy cost to Arubans. K&M will also perform independent due diligence on the technology proposed. K&M will provide assistance exploring and applying for capital grants that could reduce the solar PV + green hydrogen project’s costs. The economic modeling work will also estimate the grant amounts required to make the cost of the green hydrogen project competitive with the alternative options.
The objective of the assignment was to assist WEB in performing a spot background check of five companies that will be invited to submit proposals for a turnkey contract for constructing an SWRO plant in Aruba. The background check will cover the companies’ activities in their country of origin (location of their headquarters) and their subsidiaries in a sample of countries where they are active.
K&M performed a background check that identified the red flags that WEB could consider when deciding if any of the five tenderers should not be invited to submit a proposal. To this end, the background check included a review of each tenderer’s legal, reputational, and financial background. The background check was performed using publicly available information.
K&M calculated the financial ratios that indicate the tenderers’ financial strength relative to the SRWO turnkey contract size and performance guarantee. K&M obtained the information to calculate these ratios from the financial statements included in the tenderers’ latest annual reports and/or the financial information submitted by the tenderers in the expression of interest.
Water en Energiebedrijf Aruba (WEB) had engaged K&M to conduct an Electric Vehicle Business Case Study. The main goal of this assignment was to support WEB in identifying and evaluating potential business models for their involvement in the electric vehicle charging industry in Aruba.
To accomplish this objective, K&M executed the following activities:
- K&M reviewed electric vehicle regulations and assessed existing business models implemented in comparable countries. This analysis served as a foundation for identifying suitable approaches for electric vehicle charging in Aruba.
- K&M identified various business models specifically tailored for electric vehicle charging in Aruba. These models encompassed scenarios where WEB would be responsible for the financing, construction, and operation of electric vehicle charging stations.
- K&M developed an economic model to assess the feasibility and potential profitability of each identified business model. Additionally, K&M scrutinized the regulatory landscape to determine if any new regulations were necessary to enable the implementation of these models effectively.
- K&M provided WEB with comprehensive recommendations on how to proceed with their electric vehicle charging business. These recommendations were based on the evaluation of the different business models and took into consideration the economic analysis and regulatory requirements.
By conducting the Electric Vehicle Business Case Study, K&M played a vital role in assisting WEB in evaluating and identifying the most suitable and viable business models for their involvement in the electric vehicle charging sector in Aruba.
K&M has been contracted by Water en Energiebedrijf Aruba (WEB) for an assignment to assist in updating the Levelized cost of electricity (LCOE) and emissions forecast of a generation scenario where all thermals are converted to run-on gas from LNG and renewable energy sources fill at least 50% of the island’s electricity generation needs.
K&M will perform the following:
- Update and confirm scenario assumptions, including the size of wind and solar power plants; battery size and duration; investment costs; timelines for wind and solar projects; capacity factors for wind and solar projects; CAPEX and OPEX for new technologies (solar, wind, and battery; and fuel prices for HFO, LFO, and LNG
- Update WEB Generation and Financial models according to updated assumptions
- Reflect any new information on other key assumptions driving the generation and financial model. For example, first gas timing, ELMAR demand, rooftop solar penetration, and others
- Include more refined estimates of parasitic load and other internal electricity consumption that affects the net generation
- Refine maintenance cost estimates based on actual running hours
- include the Task 1 agreed-on scenarios and updated assumptions.
- Run models and analyze scenarios
K&M was contracted to assist a private client on the negotiation of the Regasified LNG Sale and Purchase Agreement (RLSPA). A draft version of the RLSPA was submitted to the client on March 31, 2021. In addition to the RLSPA, the LNG supplier proposed that the client and themselves enter into a Pipeline Interconnection Agreement (PIA) that will govern the construction of the pipeline from the LNG terminal to WEB’s battery limit. K&M will review and comment on the RLSPA and PIA.
WEB is working with its parent company (Utilities Aruba) to decarbonize its generation matrix and meet the goals set by the Paris Agreement. To this end, WEB wanted to develop a set of decarbonized long-term generation scenarios for Aruba. These scenarios will include combinations of different technologies, including thermal (natural gas), solar PV, wind, lithium battery, and green hydrogen. K&M will assist WEB to develop a detailed model to estimate the Levelized Cost of the Electricity (LCOE) and emissions for each generation scenario.
K&M was retained by WEB Aruba N.V., Aruba’s main power producer, to review the business case (Phase 1), identify the optimal power generation technology and configuration (Phase 2), and competitively procure supply of LNG (Phase 3) for an LNG-to-Power project. WEB Aruba N.V. is planning on developing an LNG-to-Power project to help reduce the cost of electricity from HFO-fueled power plants.
As part of its work during Phase 1, K&M performed an independent review of the business case to ensure consistency and coherency throughout the document, as well as a review and audit of the economic and financial models. During Phase 2, K&M performed technical due diligence on the existing generation system, identified eight technology and configuration options (including reciprocating engines, gas turbines in simple and combined cycle) for improving the efficiency of the existing system, calculated the levelized cost of each option (with HFO and natural gas), and recommended the optimal option.
After confirming that there is a business case and selecting the optimal generation technology and configuration, K&M commenced work on Phase 3, which consists of assisting WEB manage a process for competitively selecting an LNG supplier. The process includes three steps: discovery (prospective suppliers are identified and consulted on their interest on the project), prequalification, and a request for proposals. K&M is performing, under a separate contract, a pre-FEED study of the terminal for receiving, storing and regasifying LNG.
Aruba has approximately 15 MW of installed solar PV capacity, of which 9 MW are rooftop installations at residential, commercial or industrial user’s premises. These installations were developed under an existing distributed generation regulation issued in 2014. In 2019 solar PV rooftop installations are expected to reduce grid sales by around 1.1%, and this is expected to increase to 3% in 2025. WEB (Aruba’s power generation utility) is concerned about the impact that lower grid sales is having on its generation business, and is also interested in exploring how to participate in the rooftop solar business. WEB engaged K&M to identify and evaluate business models for WEB’s involvement in the development of the rooftop solar PV systems for consumers in Aruba.
WEB currently has an installed thermal capacity of 213 MW, including steam & turbo generators (121 MW) and Wartsila reciprocating engines (92 MW), both of which are running on HFO. The steam & turbo generators are being replaced with dual fuel 6 x 17MW 50DF Wartsila reciprocating engines. WEB wants to switch this generation from HOF to natural gas using imported LNG. LNG will be received, stored and regasified at an LNG import terminal. WEB perform a pre-FEED to analyze 15 terminal location and configuration options and selected a selected a land-based storage and regasification facility at the Barcadera port. the LNG storage and regasification facility will be located on a new reclaimed area; LNG will be stored in a full containment tank with a net storage capacity of ~19,000 m3. Maximum cargo lot size for LNG deliveries will be 9,000 m3. LNG will be regasified utilizing in-tank booster pumps and ambient air vaporizers. Boil-off gas will be managed using send-out gas compressors. Natural gas will be delivered to the WEB power plant via a 2 km 6” gas pipeline. Dredging to ~8.5 m will be undertaken to provide a new berth and turning basin such that the Terminal can safely receive LNG carriers of up to 7.5 m draft, 145 m LOA and 17,000 gross tonnage. LNG carriers will berth on newly built quay the south side of the newly reclaimed area located to the east of the existing port quay. This quay and mooring dolphins will be constructed, and mooring systems will be installed, including Quick Release Hooks (“QRHs”). LNG transfer system (and vapor return system) from LNG carriers to/from shore will utilize industry standard aerial cryogenic hoses, Emergency Release Couplings (“ERCs”) and hose support saddles (all within the scope of the Terminal). LNG will be unloaded to the storage tank via cryogenic pipeline. The main objective of this FEED study is to perform Front End Engineering Design for the selected LNG terminal location and configuration.
K&M is overseeing site studies required to obtain the data and information needed to perform FEED which includes FEED on marine infrastructure; LNG storage, regasification and topside facilities; gas pipeline and receiving facilities; and other infrastructure / facilities required for the LNG terminal. K&M is developing Class 3 cost estimates for all the works and equipment required by the LNG terminal. K&M is also conducting an Environmental Impact Assessment (EIA), and assist WEB to request and obtain permits for construction, dredging and operation of the LNG terminal. K&M will develop technical specifications for the EPC contract(s) Request for Proposal (RFP) package.
K&M was engaged by WEB Aruba to evaluate the financial feasibility and potential tariff impacts of solid waste management investments aimed at reducing landfill waste on the island: a new sanitary landfill, hazardous waste processing facility, and a waste to energy project using mass burn incineration. K&M developed a financial model to estimate tariffs across the waste management and disposal value chain and comparing these tariffs against suitable benchmarks to evaluate the economic viability of the projects.