Prijepolje Detaljni Investicioni Plan 2019-EnGLESKI

Report
Implementation of Promotion of Renewable

Energies – Developing the Biomass Market in
Serbia
BMZ no. 2011 978 88
Client
Ministry of Mining and Energy (MoME)

of the Republic of Serbia / KfW
Document title
Biomass Project Toplana of Prijepolje: Detailed

Investment Plan and Results of the Financial
Model
Document date
13.11.2019
Revision: 0
clean energy solutions GesmbH

Schönbrunner Strasse 297, 1120 Vienna, Austria
T +43 1 521 69-0, F +43 1 521 69-180
office@ic-ces.at, www.ic-ces.at
FN 320442p
EN ISO 9001, EN ISO 14001
In association with
Norsk-Data-Str. 1, 61352 Bad Homburg, Germany

T +49 6172 8506 200
info@decon.de. www.decon.de, HRB 13333
C:\Users\zoran.cvetkovic\Documents\Bimasa\Toplane\Prijepolje\Prijepolje_Detaljni_Investicioni_Plan_2019.docx
Implementation of Promotion of Renewable Energies – Developing the Biomass Market in Serbia CES/decon
Biomass Project Toplana of Prijepolje: Detailed Investment Plan and Results of the Financial Model 13.11.2019
DOCUMENT CONTROL SHEET
PROJECT NUMBER: Project number 52x180258
PREPARED BY: clean energy solutions GesmbH

Schönbrunner Strasse 297, A-1120 Vienna
Phone: +43 1 521 69 0
Fax: +43 1 521 69 180
E-Mail: office@ic-ces.at
decon international GmbH

Norsk-Data-Str. 1, D-61352 Bad Homburg
Phone +49 6172 8506-200
E-Mail: info@decon.de
PREPARED FOR: Ministry of Mining and Energy (MoME)

of the Republic of Serbia / KfW
Sector for Energy Efficiency and Renewable Energy Sources
Address: Kralja Milana 36, 11000 Belgrade – Serbia
Phone: +381 11 33 46 755
Fax: +381 11 362 50 58
E-Mail: milos.banjac@mre.gov.rs
DATE: 13.11.2019
EDITOR: Chloé Roullet / Norbert Paetz / Bernd Brändle
Checked Approve
Date Revision No. Editor Signature Description
by d by
08.11.2019 Rev. 00 Bb, Rou Pae Initial elaboration
13.11.2019 Rev. 00 Bb, Rou Pae Comments CPIU from 13.11.19
Revision: 0 Page 2
CONTENT
1. Introduction ..................................................................................................................... 5
2. Technical Description of the Project .................................................................................. 6
2.1. Project Site ................................................................................................................................. 6
2.2. Heating Station ........................................................................................................................... 6
2.3. Network ...................................................................................................................................... 6
2.4. Heating Sub-Stations .................................................................................................................. 9
3. Fuels used ...................................................................................................................... 11
3.1. Outlook for the Project............................................................................................................. 11
3.2. Brijeg......................................................................................................................................... 11
3.3. Fuel Demand of the Toplana .................................................................................................... 12
4. Reduction of CO2 and SO2 Emissions ................................................................................ 13
5. RevisED Investment Plan................................................................................................. 14
6. Financial Modelling and results ....................................................................................... 15
6.1. Brief Analyis of The Toplana Financial Situation ...................................................................... 15
6.2. Basic Elements and Assumptions for the Biomass Plant Modelling ........................................ 15
6.3. Tariff Increased ......................................................................................................................... 16
Annex 1: Cash Flow Statement .................................................................................................... 17
Annex 2: Layout Plan of the Heating Plant ................................................................................... 18
TABLES
Table 1: Pipe Table .................................................................................................................................. 7

Table 2: List of Heating Sub-stations ..................................................................................................... 10
Table 3: CO2 and SO2 Savings ................................................................................................................ 13
Table 4: Investment Plan Biomass Project Prijepolje as of October 2019 ............................................ 14
Table 5: Selected financial data of JKP „LIM“, Prijepolje, DH sector..................................................... 15
Table 6: Selected basic elements of the financial modelling of the new biomass plant ...................... 16
FIGURES
Figure 1: Network Plan ............................................................................................................................ 8

Figure 2: Future Project Fuel Demands................................................................................................. 11
Figure 3: Future Mazut Demand for Brijeg ........................................................................................... 12
Figure 4: Future Fuel Demands for the Toplana ................................................................................... 12
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Abbreviations
BH Boiler house
BoQ Bill of Quantities
BS Balance Sheet
CAPEX Capital Expenditures
CES Clean energy solutions GesmbH (consultant)
CHP Combined Heat and Power (cogeneration)
CO2 Carbon dioxide
CPIU Central Project Implementation Unit (Team in the MoME)
CS Cash Flow Statement
DCS Distributed control system
decon decon international (consultant)
DH District heating
DHC District heating company (or toplana)
DLP Defects Liability Period (or DNP Defects Notification Period)
DNP Defects Notification Period (or DLP Defects Liability Period)
DSR Debt Service Coverage Ratio
FIDIC International Federation of Consulting Engineers
HDD Heating degree days
HFO Heavy gas oil (Gas)
HOB Heat-only boiler
ICB International Competitive Bidding
IHS Individual heating sub-station (mostly on building level)
IRR Internal Rate of Return
IS Income Statement
kJ Kilo Joule (unit used for LCVs)
JP Javno Preduzeće (public company)
JKP Javno Komunalno Preduzeće (public communal company)
KfW Kreditanstalt für Wiederaufbau (the bank)
kWh Kilowatt hour (unit for electric energy)
LCV Lower calorific value (or lower heating value)
LFO Light Gas Oil
MW Megawatt (capacity)
MWh Megawatt-hours (energy)
MoME Ministry of Mining and Energy (of Serbia)
OPEX Operational expenditures
PB (FIDIC) Pink Book
PEA Project Executing Agency (Municipality or Toplana)
PIMO Public Investment Management Office
PIU Project Implementation Unit (Team in the PEA)
RB (FIDIC) Red Book
RSD Serbian Dinar (currency unit of the republic of Serbia)
SCADA Supervisory Control and Data Acquisition (control system)
SCO Suisse Co-operation Office
SO2 Sulphur dioxide
TA Technical Assistance
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1. INTRODUCTION
This report summarizes the Consultants findings and recommendation for the further
implementation of the Biomass Plant for the Toplana of Prijepolje. The findings are based on the
revision of the preliminary investment plan and on the interactions with the financial analysis and
checking further relevant issues such as current state of project preparations by the Toplana. A
detailed pre-feasibility report has been elaborated and presented by CES and been approved by KfW
and the MoME in 2016.
There are only minor changes in the project compared to the PFS from 2015/16. The differences are
described briefly in the following sections. For project details please refer to the above mentioned
PFS report. The new boiler station will be equipped with a 1.8 MW boiler on LFO to act together with
the boiler house “Gymnazija” as back-up system. The boiler house “Valter” will be decommissioned.
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2. TECHNICAL DESCRIPTION OF THE PROJECT
2.1. PROJECT SITE
The plot is the same like that described in the PFS report of 2015/16. On the western part of the plot
there is the gymnasium of Prijepolje. The plot will be split and the eastern part (with the small
football field) will be the site for the biomass heating station.
2.2. HEATING STATION
The heating station comprises of following main components which are necessary for a proper
function such as:
 1 biomass boiler with 2.5 MW

 1 back-up boiler on LFO with 1.8 MW
 1 buffer heat storage
 Boiler house
 Electrical and control systems
 Biomass storage and conveying system
 LFO storage tank with a volume of 20.000 litres
The heating station “Gymnazia” with a 3.5 MW boiler on mazut will be integrated into the new DH
system.
2.3. NETWORK
There are no changes compared to the PFS from 2015/16. The network of “Brijeg” will stay as
separate network with a boiler house on mazut. All other networks will be merged to one network.
Route
DN Type of pipe Comment
length (m)
40 103,1 DRE 40/110 standard New
200 27,2 DRE 200/315 standard Replace
65 25 DRE 65/140 standard New
80 129 DRE 80/160 standard Replace
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Table 1: Pipe Table
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Figure 1: Network Plan
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2.4. HEATING SUB-STATIONS
The list below shows the buildings, which will be connected to the new network and to be equipped
with new heating sub-stations.
Type of
Building IHS capacity
consumer
Dečiji vrtić "Miša Cvijović" public 120 kW
Nacionalna služba za zapošljavanje public 160 kW
Osnovna Škola Valter public 610 kW
residential
Centrala "C1" 100 kW
commercial
residential
Centrala "C2" 150 kW
commercial
Centrala "C3" residential 50 kW
Centrala "C4" residential 150 kW
residential
Podvaroš 8 120 kW
commercial
residential
Podvaroš 7 160 kW
commercial
residential
Podvaroš 6 60 kW
commercial
residential
Podvaroš 5 160 kW
commercial
residential
Podvaroš 4 70 kW
commercial
residential
Podvaroš 3 170 kW
commercial
residential
Podvaroš 2 80 kW
commercial
residential
Podvaroš 1 150 kW
commercial
residential
Pijaca I 120 kW
commercial
Pijaca II residential 120 kW
residential
Pijaca III 130 kW
commercial
Pijaca IV residential 120 kW
Poslovni niz commercial 50 kW
Opštinska uprava public 190 kW
Muzej public 70 kW
residential
Apoteka 220 kW
commercial
Gimnazija public 830 kW
Šehovića Polja - Stara zgrada residential 380 kW
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residential
Šehovića Polja - Nova zgrada 380 kW
commercial
EPS public 90 kW
Vrtic (Gimnazija) public 110 kW
Dom Kulture public 630 kW
Indoor swimming pool public 400 kW
Total 6 150 kW
Table 2: List of Heating Sub-stations
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3. FUELS USED
In Prijepolje it has to be considered, that the project does not affect the entire Toplana’s heating
system. The network of “Brijeg” stays as separate DH system with its boilers on Mazut.
3.1. OUTLOOK FOR THE PROJECT
The chart below shows the fuels used in the future by the new heating station (without the network
of “Brijeg”). After the implementation of the project approx. 95% of the total heat will be generated
by the biomass boiler.
Figure 2: Future Project Fuel Demands

The back-up boiler on LFO will only be operated when the biomass boiler has an outage during cold
winter days to secure the heat supply.
3.2. BRIJEG
The network of “Brijeg” will be operated as usual and will not be affected by the project. Therefor
the Mazut demand will develop as expressed in the chart below.
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Figure 3: Future Mazut Demand for Brijeg
3.3. FUEL DEMAND OF THE TOPLANA
Figure 4: Future Fuel Demands for the Toplana

The network of “Brijeg” will contribute approx. 30% of the whole fuel demand. This has to be
considered for the emission reductions (section 4). The remaining fuel used (70%) will be biomass.
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4. REDUCTION OF CO2 AND SO2 EMISSIONS
The proposed project will significantly contribute to the reduction of annual CO2 and SO2 Emissions
as presented in the table below:
CO2 SO2 1
No project 2880 tons/yr 14,7 tons/yr
With project 590 tons/yr 6,2 tons/yr
Reduction 2290 tons/yr 8,5 tons/yr
Reduction 80% 58%
Program target indicators 70% 70%
Table 3: CO2 and SO2 Savings

It has to be considered, that the emission balance has been made for the entire Toplana. This means,
that:
 The network of “Brijeg” is not affected by the project and it will be operated as a separate
network with boilers on mazut and
 The boiler house “Gymnazija” on Mazut will act as back-up boiler with its SO2 emissions
Therefor the program target indicator for SO2 emissions cannot be achieved.
The CO2 and SO2 emission reductions have been achieved due the high share of renewables
combined with heat loss reductions due to the new equipment like boilers, pre-insulated pipes,
automatic controlled substations and the proposed SCADA.
It should be noted, that in the financial modelling no costs for CO2 Emissions are considered, but it
could be expected that in the future environmental costs be to be added.
1
According to Annex 1 “Objectives and Results of the Program and Assumptions/Risks for their Achievement” only applicable to fuel
switches from Mazut
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5. REVISED INVESTMENT PLAN
This section is describing the investment plan and results.
Main Complem.
Cost component Total
Investment Measures
Mechanical components € 1.010.000 € - € 1.010.000
Civil works € 500.000 € - € 500.000
E&C installations € 160.000 € - € 160.000
Commissioning € 90.000 € - € 90.000
Network replacements € - € 310.000 € 310.000
Sub-stations € - € 190.000 € 190.000
SCADA € - € 30.000 € 30.000
Contingencies 10% € 176.000 € 53.000 € 229.000
General contractor's fee 0% € - € - € -
Engineering € - € - € -
Total € 1.936.000 € 583.000 € 2.519.000
Table 4: Investment Plan Biomass Project Prijepolje as of October 2019

In the next step a financial analysis and modelling has been conducted. The grace period has been
shortened from five to two years within the 20 years loan tenor period.
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6. FINANCIAL MODELLING AND RESULTS
6.1. BRIEF ANALYIS OF THE TOPLANA FINANCIAL SITUATION
The financial analysis based on the financial reports of JKP "LIM", Prijepolje (BS, IS, CS) for the years
2015 – 2018.
The brief analysis of the available data of the DH sector only shows that the revenues of this sector
are not covering its operational costs. See below the relevant DH sector figures for the years 2015-
2018 below:
Table 5: Selected financial data of JKP „LIM“, Prijepolje, DH sector

It should be further noted, that the Toplana does not have a consumption-based tariff yet.
6.2. BASIC ELEMENTS AND ASSUMPTIONS FOR THE BIOMASS PLANT MODELLING
Basic Element Assumption Comment

CAPEX 2.519.000 € See Revised Investment Plan above
83,55% Loan 2.105.000 € After consultation with CPIU/KfW
16,45% Grant 414.000 € After consultation with CPIU/KfW
Loan Tenor 20 years After consultation with KfW
Grace Period 2 years After consultation with KfW
Major OPEX input items
Baseline Price for 82,65 €/MWh Derived from Toplana historical data, weighted average
DH to consumers of all consumer groups
Baseline price 35,11 €/MWh Average of 2015 – 2018 from Toplana reports
Mazut and Coal
Biomass price 18,46 €/MWh Potential suppliers from the region, namely Eurocom 98
and Intertrans suggested 14,2 €/MWh. However for
modelling purposes added conservatively 30% resulting
in 18,46 €/MWh
Tariff (expressed as 82,65 €/MWh Without price increase the DSCR >=1,15 from the
WAP) base line second year of Operation
year biomass plant
option
Annual efficiency 70% Derived from Toplana technical reports
old Mazut and Coal
plant
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Annual efficiency 85% State of the art for new biomass plant
new bio mass plant
Table 6: Selected basic elements of the financial modelling of the new biomass plant
Other OPEX items are based on the Toplanas historical data and projected in the future. Details can
be found in the financial model (separate EXCEL file).
A summary of the cash flow and DSCR development of this option is presented in Annex 1.
6.3. TARIFF INCREASED
No tariff increase is necessary.
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ANNEX 1: CASH FLOW STATEMENT
Cashflow-Statement Biomass Plant Option 0,00% Tariff Increase
Business Year Total 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036
Total Revenues 15.990 497 497 838 773 744 744 744 744 744 744 744 744 744 743 743 743 743
Opex (7.760) (483) (483) (384) (363) (353) (351) (348) (346) (344) (342) (340) (338) (337) (335) (333) (331) (329)
Major Overhaul Expenditures - - - - - - - - - - - - - - - - - -
Cash Change in Working Capital - (4) - (108) 11 5 (1) (0) (0) (0) (0) (0) (0) (0) (0) (0) (0) (0)
Tax (875) (2) (2) (48) (42) (39) (40) (40) (41) (41) (42) (42) (43) (43) (44) (44) (45) (45)
Interest Income on DSRA - - - - - - - - - - - - - - - - - -
Operating Cash Flows after WC and Tax 7.355 9 13 298 379 357 353 355 356 358 359 361 362 363 365 366 367 369
Physical Investment (2.519) (2.267) (252) - - - - - - - - - - - - - - -

Financing Costs during Construction incl. Disagio (48) (26) (21) - - - - - - - - - - - - - - -
DSRA Funding - - - - - - - - - - - - - - - - - -
Total Funding Requirements (2.567) (2.293) (273) - - - - - - - - - - - - - - -
Drawdown Grant 414 373 41 - - - - - - - - - - - - - - -

Drawdown Pure Equity 48 26 21 - - - - - - - - - - - - - - -
Drawdown Senior Debt 2.105 1.894 210 - - - - - - - - - - - - - - -
Total Drawdowns 2.567 2.293 273 - - - - - - - - - - - - - - -
CFADS 7.355 9 13 298 379 357 353 355 356 358 359 361 362 363 365 366 367 369
Interest Senior Debt (227) - - (23) (22) (21) (20) (18) (17) (16) (15) (13) (12) (11) (10) (8) (7) (6)
Principal Senior Debt (2.105) - - (106) (108) (109) (110) (111) (112) (114) (115) (116) (117) (119) (120) (121) (123) (124)
Interest received on cash balances 0 - 0 0 - - - - - - - - - - - - - -

DSRA flows - - - - - - - - - - - - - - - - - -
Cash Available to Equity 5.004 9 13 167 249 226 223 224 226 227 229 230 232 233 234 236 237 238
Dividends and Equity Redemption (5.004) - - (189) (249) (226) (223) (224) (226) (227) (229) (230) (232) (233) (234) (236) (237) (238)
9 22 - - - - - - - - - - - - - - -
Cash Balance C/f
DSCR n/a n/a 2,28 x 2,91 x 2,73 x 2,71 x 2,72 x 2,73 x 2,74 x 2,75 x 2,76 x 2,77 x 2,78 x 2,79 x 2,80 x 2,81 x 2,82 x
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ANNEX 2: LAYOUT PLAN OF THE HEATING PLANT
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Report

Implementation of Promotion of Renewable

Ministry of Mining and Energy (MoME)

Biomass Project Toplana of Prijepolje: Detailed

clean energy solutions GesmbH

EN ISO 9001, EN ISO 14001

Norsk-Data-Str. 1, 61352 Bad Homburg, Germany

DOCUMENT CONTROL SHEET

PROJECT NUMBER: Project number 52x180258

PREPARED BY: clean energy solutions GesmbH

decon international GmbH

PREPARED FOR: Ministry of Mining and Energy (MoME)

EDITOR: Chloé Roullet / Norbert Paetz / Bernd Brändle

08.11.2019 Rev. 00 Bb, Rou Pae Initial elaboration

13.11.2019 Rev. 00 Bb, Rou Pae Comments CPIU from 13.11.19

Table 1: Pipe Table .................................................................................................................................. 7

Figure 1: Network Plan ............................................................................................................................ 8

2. TECHNICAL DESCRIPTION OF THE PROJECT

2.1. PROJECT SITE

2.2. HEATING STATION

 1 biomass boiler with 2.5 MW

100 17,6 DRE 100/200 standard Replace

Figure 1: Network Plan

2.4. HEATING SUB-STATIONS

3.1. OUTLOOK FOR THE PROJECT

Figure 2: Future Project Fuel Demands

Figure 3: Future Mazut Demand for Brijeg

3.3. FUEL DEMAND OF THE TOPLANA

Figure 4: Future Fuel Demands for the Toplana

4. REDUCTION OF CO2 AND SO2 EMISSIONS

Table 3: CO2 and SO2 Savings

5. REVISED INVESTMENT PLAN

This section is describing the investment plan and results.

Table 4: Investment Plan Biomass Project Prijepolje as of October 2019

6. FINANCIAL MODELLING AND RESULTS

6.1. BRIEF ANALYIS OF THE TOPLANA FINANCIAL SITUATION

Table 5: Selected financial data of JKP „LIM“, Prijepolje, DH sector

Basic Element Assumption Comment

6.3. TARIFF INCREASED

No tariff increase is necessary.

ANNEX 1: CASH FLOW STATEMENT

Cashflow-Statement Biomass Plant Option 0,00% Tariff Increase

Physical Investment (2.519) (2.267) (252) - - - - - - - - - - - - - - -

Drawdown Grant 414 373 41 - - - - - - - - - - - - - - -

Interest received on cash balances 0 - 0 0 - - - - - - - - - - - - - -

ANNEX 2: LAYOUT PLAN OF THE HEATING PLANT

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