El Salvador LNG project could open door to gas in Central America

Invenergy’s US$900mn Energía del Pacífico project in Acajutla, El Salvador, is set to come online next year, providing 378MW of installed generation capacity to the national grid, while a new storage and regasification unit will process 280Mf3/d and store up to 137,000m3 of imported liquefied natural gas (LNG).

Sampo Suvisaari, Wärtsila’s energy business director for the north of Latin America, spoke with BNamericas about the project, which is set to become El Salvador’s largest private infrastructure investment in the country and will supply 30% of its electricity consumption once it comes online.

Wärtsila is the project’s main contractor and will operate the power plant. BW LNG will operate the regasification terminal, while Shell will supply the gas.

According to Suvisaari, the project is starting its testing phase with the arrival of the floating storage and regasification unit, which will receive LNG shipments and prepare them for use at the plant, which was inaugurated last Friday. The project is now expected to go into operation in March 2022.

According to the executive, the project has been well received by local authorities due to the jobs it creates both during the construction and operation phases.

“For a relatively small country and for a locality like Acajutla, which is somewhat distant from the capital, to host a project of this magnitude, with new technology, is very beneficial ... it's a great foreign investment to support the electricity sector,” he said.

BNamericas: Could you briefly explain to us the importance of this project for a country like El Salvador?

Suvisaari: El Salvador is a relatively small country, but it has more than 7mn inhabitants with growing electricity needs. They basically have a demand of about 1,000MW or a little more and installed capacity of 2,500MW. Installing a plant for nearly 400MW is a strong impact on that system. The system has lots of engine-driven plants and some older ones, and it also has a relatively large geothermal plant, 80MW, and several hydroelectric plants. A lot of solar plants have also come online recently, with which the percentage of solar energy has also become important. There's not too much wind power in the country; instead it's solar, hydroelectric, and everything else until now has been based on fuel oil, bunker oil.

We're delivering the generation plant as a turnkey project. Ten years ago Wartsila was supporting the development of the project when it was just an idea. Local developers contacted us, we offered them our technology and we also offered them support to develop the project. That took a long time for various reasons, because the project was novel and also because it participated in a tender in 2013 and basically won a PPA, so everything had to be developed to make that project a reality.

It's not just building a plant; you also have to build the infrastructure to import liquefied natural gas. Because of its qualities, its size, building an LNG import plant is complicated and especially in those times, 2013, 2014, the LNG market was quite active. There was talk of much larger projects, LNG sellers weren't interested in a project of this size, half a million tons a year was considered small – they were looking for projects of one million, two million tons, because there [projects of that size] at that time. For the developers, it was quite complicated. It took a long time to find the LNG supplier, which eventually became Shell, with whom they agreed on a long-term contract.

Then they looked for a bigger partner because it's quite hard for local partners to carry out a project of this magnitude when you add up all the amounts. They had to find a majority developer and they finally found it – Invenergy, which is now the main partner. And so this all took time. 

Wärtsila was always part of the project, providing the technology that we initially offered, a combustion engine-driven plant based on natural gas and combined cycle, but using internal combustion engines. The benefit is that these engines are very responsive. As there are a large number of engines, in this case 19, you can start and stop them, so there are plenty of steps to achieve efficiency and you can always be operating with the engines close to their maximum load to achieve maximum efficiency.

This also gives you redundancy or reliability, because instead of having one or two large turbines that might fail or have maintenance issues at some point, where you lose half or all of the combined cycle capacity, here there are 19 engines, and one can have, for example, one engine undergoing maintenance and you can do that without affecting the other 18, which is why it offers a lot of stability. What we're really promoting is that this type of technology offers high efficiency, but at the same time it's a good combination with renewable energies, precisely because of this flexibility. At a global level, we're promoting this, where you need a plant that's sometimes for a baseload or is sometimes complementary or for balancing renewable energies, that's the solution.

BNamericas: Where else in Latin America do you see the potential for plants of this type, which use engines instead of turbines to generate power? What are the challenges of bringing LNG to the markets in the region?

Suvisaari: We've seen potential in many countries. We have a very similar plant in the Dominican Republic that was built before [and] we're building a similar plant in Colombia, which isn't a combined cycle plant but has gas engines, for 200MW, and with a very similar function: to be ready to operate when it's needed, and when there are periods of drought it will surely be operating continuously, it has that double functionality. We see that there are lots of places where this technology can be applied. 

In the case of El Salvador, the novelty was the introduction of natural gas to the region. In small countries, it's difficult to achieve such a large project to import LNG, so all other small countries have had this problem, which leads them to use fuel oil as the only option. By achieving this import project, it will offer the opportunity to other companies from neighboring countries to buy natural gas from this company and convert to natural gas if they so wish. This opens the door to cleaner generation with competitive fuel costs in the country's energy mix.

To import liquefied natural gas you need fairly large infrastructure. There are exceptions. For example, New Fortress Energy is introducing smaller infrastructure in some countries, but when it's smaller, the cost per million BTU tends to be higher. In order to have the benefit of minimizing costs and having this fuel, you need to be able to bring in large ships, because that's part of the chain. If you can't bring in large ships that are used to transport LNG, the sources from where you can buy the fuel are very limited. 

In El Salvador, the decision was made to create a full-size floating terminal that can accommodate large ships. This gives Shell the option to bring in any ship from its global fleet, depending on the circumstances, and thereby keep the fuel price competitive.