Areva bets on a carbon-free future

1 April 2008

French nuclear giant Areva has taken over the Brazilian biomass and small hydro specialist Koblitz, a move in line with its nuclear-plus-renewables low carbon strategy.

French nuclear generation company Areva has acquired a 70% stake in Koblitz, a Brazilian provider of integrated solutions for power generation and co-generation from renewable sources. Its founder Luiz Otavio Koblitz and some other company executives will retain a 30% stake.

The acquisition is a good fit with the long term ambitions of the state-owned company, which is busy building up a renewables portfolio to go with its nuclear build capability, a combination that it sees as a formidable carbon-free combination appropriate to the present political, not to mention meteorological, climate. Bertrand Durrande, vp of Areva’s renewable energies business unit, commented ‘This acquisition is a significant step for our biomass activities. After the 2007 acquisition of Multibrid, it confirms the will of the group to build up a renewable industrial division’. He might also have mentioned that Areva had been obliged to look further afield in building a renewables position after it lost out to Suzlon in the 2007 battle to gain control of leading wind turbine maker REpower.

This acquisition also strengthens the group’s position in Brazil, where renewable sources, mainly hydro, already provide 90% of electricity demand. There is also a strong biomass industry centred on the ready availability of bagasse, a waste product of Brazil’s enormous sugar industry. It is expected that the use of sugarcane bagasse should increase by 50% in the next five years because of the expansion of the ethanol sector. Brazil’s renewable energy market therefore offers great potential with required total capacity growing by at least 5% (5 GW) per year just to avoid electricity shortages. Bagasse biomass could one day be supplying the energy equivalent of several nuclear power plants:

Schematic of the Lages Bioenergetica plant

Areva says it will provide Koblitz with project management and engineering, procurement and construction skills for the building of turnkey power plants, an added dimension of doubtful necessity in view of Koblitz’ track record but it will certainly benefit from Areva’s financial support and its international sales network.

Areva, which built the Angra 2 nuclear power plant, is becoming a key player in Brazil with a 2006 sales revenue worth r211 million and more than 1200 employees. In the transmission and distribution sector, Areva has manufacturing sites located in Interlagos, Itajuba and Canoas.

Its global renewables activities, mainly concentrated around wind, biomass and hydrogen, were grouped into one business unit in November 2006. The company sees them as a natural complement to its nuclear activities, which it is promoting under the slogan ‘delivering CO2-free electricity’.

Biomass presence

Of all the renewables, biomass is considered by many to be the most cost-effective and flexible for the generation of power and heat, particularly when the solid biofuel needed is grown in an efficient way, as in the tropics and the subtropics, and it is attracting the attention of major energy companies, some of which are now investing in the sector. Not least Areva, which currently has 20 biomass power plants under operation or construction around the world, representing 220 MWe of total installed capacity. Six of them are in Brazil.

In 2005 Areva’s then recently acquired transmission and distribution division (part of a re-arrangement brokered by the Fench government to save Alstom from looming bankruptcy) won a turnkey contract worth r16.6 million to build two 12.3 MW biomass power plants in Parana state, Brazil. The contract, which was with the German company CCC Machinery, a subsidiary of Munchmeyer Petersen, also commited Areva T&D to connecting the two new plants to the electricity grid.

The plants were up and running by February and June 2006, respectively. They burn sawdust, bark and waste by-products from the region's many woodworking and furniture factories.

The project was part of Brazil's renewable energy incentive program, PROINFA, and contributes to the government's objective of having 10% of the country's electricity generated from clean energy sources by 2022.

Then in March last year Areva won contracts worth more than r70 million for the construction of six biomass power plants – four in Brazil and two in Thailand. The four Brazilian plants, which represent the largest turnkey plant order ever received by Areva’s renewable energy division, will have a unit capacity of between 10 and 12 MW and will also be fuelled by wood waste and agro-forestry residues.

They are expected to supply competitively priced electricity to the rural regions where they will be installed and generate carbon emission reduction certificates tradeable under Kyoto Protocol provisions.

About Koblitz


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