Performance Of Generating Plant

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Performance of Generating Plant Committee

Case Study of the Month - January 2004
Changing Gas Turbine Design Requirements Prepared by Robert Richwine Reliability Management Consultant Chairman, Workshops and Communications Working Group Performance of Generating Plant Committee World Energy Council Background

The worldwide movement towards more competitive, market-based systems of power pricing is leading electric utilities and independent power developers to change methods of making technology and manufacturer decisions to more fully integrate these new financial influences into those choices. This, in turn, should cause gener suppliers to rethink the processes they use in designing, developing and marketing their products so as to incorporate their client's value system into their design tradeoptions evaluations and to be flexible enough to more effectively tailor their products to match particular user applications.
Gas Turbine Applications Examples

As an illustration of the new relationships emerging between gas turbine designers and owners, we can look at three different gas turbine powered generating plants developed. The owners and managers of each of these plants face different challenges in trying to meet their goals of improving their company's profitability. Plant A consists of simple-cycle gas turbine generator sets, used almost exclusively for meeting the company's peak load requirements. Each GT is expected to operate fewer than 200 hours per year at 4 to 5 hours per start. Plant B will be made up of gas turbine generator sets connected to heat recovery steam generators, which power steam turbines and will be used for daily cycling duty. Th plant will therefore start up each day and run on average for 12 hours before being shut down each night. Plant C will be an integrated coal gasification combined-cycle power plant that, because of its thermal efficiency and low fuel cost, will be continuously dispatched at full except when it is out of service for maintenance or because of a forced outage.
Past

In the past most electric generating companies have been highly regulated and the price a company charged its captive customers was determined by taking its "prude incurred cost" and adding a legally mandated return on investment (in the United States that might be 12-14 %) so that PRICE = COST (prudent) + PROFIT (mandated 12-14%). Therefore, in this business structure a generating company's primary concern was whether or not an investment decision could be defended as "prudent", regardless of t actual effect the decision had on the cost of electricity. With no real competition among generating companies, the rates one company charged had little effect on anot

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Performance Of Generating Plant

http://www.worldenergy.org/wec-geis/wec_info/work_programme2007/tech/pgp/studies/2004-1.asp...

decision making, leading to a strong risk-avoidance mindset (risk in this context refers to the outcome of an investment decision that in not absolutely certain). Fro stockholder's perspective risk-avoidance was the most appropriate criteria to use since a very successful "risky" decision (one that might give a 10 to 1 return but is guaranteed) could only yield a profit legally allowed (12-14% in the US) while an unsuccessful investment might be entirely disallowed in a prudency review. Therefor maximum return a series of "risky" investment decisions could yield would be no greater than the return from a series of "safe" decisions. And because not all "risky investment would be successful (otherwise they would not be risky) the return is very likely to be less. When considering a new plant in this environment, a generating company would consider its needs and the various technologies and manufacturers available in terms of initial cost while specifying certain performance expectations to be demonstrated during relatively short-term tests. Little, if any, weight was given to differences in the long-term impact on the company's cost due to such items as maintenance requirements, reliability, efficiency degradation over time, operator training and other factors Turbine designers, when evaluating design trade-offs, had to consider the evaluation process its clients would use and develop their products accordingly so as to make sales. Designs thus emphasized low initial cost (achieved in part by developing a standard design for all user applications) and high efficiency (achieved with high temperatures, tight tip clearances on rotating blades and sophisticated controls and instrumentation systems, etc.). This did not necessarily lead to investment decisions would lower the company's cost of generating electricity, but they could be defended as "prudent" because that was the industry standard method of evaluating bids.
Future

In the new evolving competitive business environment the price of electricity will be determined by the marketplace and the basic equation governing a generat decision-making changes to PROFIT = PRICE (market) - COST Now profit is the dependent variable (instead of price) and will force a basic change in the decision maker's attitude toward risky investments since the higher risk options can lead to higher returns (profitability). Instead of avoiding risks, the decision maker must now become adapt at identifying, quantifying and managing risks in order to economically evaluate their cumulative impact on his company's financial performance. Since the generator decision maker will be evaluating his purchasing options on the basis of their risk/reward ratio, the gas turbine designer must now identify all of the elements that will enter the generator's decision process, transform them into useable cost figures and incorporate them into his design trade-off decisions. These elements will include all cost and revenue streams over the life of the project including performance incentives and penalties. In addition the designer, instead of designing one g product for all applications (and requiring his marketing force to try and convince the customer that it's best for his specific application), should now develop a series o products to meet the needs of particular power segments and customers.
Gas Turbine Applications Reconsidered

We can now reconsider our three plants: Plant A, a simple-cycle gas turbine plant needs a simple, low cost design with high starting reliability. There is less concern with efficiency since the plant will not generate many MW-HRS per year, but it needs a very low Operations and Maintenance Cost. Plant B, a combined-cycle daily cycling plant with its almost constant transient loading conditions, requires a more sophisticated instrumentation and controls system with increased emphasis on efficiency. This is balanced against the risk of increased forced outages due to its more difficult operating regime. Because this plant values Availability more than Plant A, additional expenditures can be justified for increased operator and maintenance personnel training, spare par inventories, condition monitoring systems, outage planning and other needs. Plant C, the integrated coal gasification combined-cycle plant, will run almost continuously at full load. Ideally, it would start up; run for 8000+ hours at full load, if

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Performance Of Generating Plant

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possible; then shut down for annual maintenance. The plant staff must be careful during startups to avoid blade tip rubs, etc. but does not have to worry about transient conditions until it is time to shut down. The primary concerns are efficiency and running reliability, and additional money can be justified for more elaborate on-line performance monitoring systems and other diagnostic tools to maximize the plant's reliability and efficiency during steady state operating conditions. The following generic table indicates the relative* importance of several key factors influencing a power producer's gas turbine equipment purchase decision accordin anticipated future duty cycle. RELATIVE* IMPORTANCE OF CHARACTERISTICS BY APPLICATION Gas Turbine Gas Turbine Plant Application Characteristic Peaking Cycling Baseload Low High (day)-Low (night) High Availability High High Low Start-up Reliability Low Medium Very High Running Reliability Low Medium Very High Efficiency High Medium Low Initial Cost High Medium Low O & M Cost * The actual relationships among the factors listed in the table (plus other factors not mentioned) will depend on their value in the specific application. For example, a plant sited where fuel is relatively cheap would value efficiency less than a plant located where fuel is expensive. Another example might be for an off-shore oil platform where any interruption in generation could have overwhelmingly large financial consequences due to reduced oil production. Its value of availability would be much greater than for a similar facility that had a reliable source of back-up power. The important principle here is that these factors must be quantified in monetary terms according to the customer's specific value system in order to provide the optimal design. (See our Case Studies for Jan-April 2003 for a discussion on quantifying the value of plant performance).
Summary

Changes in the basic economic framework of power generation in many countries around the world, fostered by increasing competitive pressures, are altering the decis making criteria traditionally used by power generators. This has created incentives for increased cooperation between power producers and equipment manufacturers. Th most successful manufacturers, in this author's opinion, instead of using a one-design-fits-all approach, will take aggressive steps to understand and quantify their customer's priorities and values and incorporate them into a range of designs, each one optimal from the owner's perspective, in order to help meet the requirements of a changing business environment.
Reference

Richwine, R.R.; Newton, T.U.; Gas Turbine Design Requirements Changing for U.S. Utilities; published in the Global Gas Turbine News; Jan. 1996. For copies of this reference or to make comments or ask questions about this case study contact Robert Richwine at richwine@worldenergy.org.

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