Maintenance and outage strategies under NETA IRR/Innogy workshop, London, 2001
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This document summarizes a workshop on maintenance and outage strategies for power plants under the New Electricity Trading Arrangements (NETA). The workshop agenda covers topics like asset valuation, maintenance planning, planned and unplanned outages, and risk management. Three fictional power companies - NewCo, OldCo, and GroupCo - are used to demonstrate different considerations for maintenance and outages under NETA. The workshop encourages participants to consider new approaches to asset maintenance and outage planning given changing market conditions like increasing fuel costs and penalties for plant non-availability.
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Maintenance and outage strategies under NETA IRR/Innogy workshop, London, 2001
- 1. Maintenance and Outage Strategies under NETA © Innogy 2001
- 2. Topics for Discussion 1. Introduction (0900 – 0915) 2. Asset valuation (0915 – 0945) 3. Maintenance (0945 – 1045) Coffee 4. Planned outages (1100 – 1230) Lunch 5. Unplanned outages and spares holding (1330 – 1515) Tea 6. Planning and Risk Management (1530 – 1600) 7. Review and close (1600-1630) © Innogy 2001
- 3. Objectives of the Workshop Encourage to view old problems in light of the new market conditions Workshop must be interactive, all views relevant many inputs to consider, solutions unique to each site Allow the site staff to re-consider their own strategies © Innogy 2001
- 4. Feedback…. At the end of the day three people will be asked to make a short presentation….. © Innogy 2001
- 5. Costs O&M costs Capital costs Fuel costs © Innogy 2001
- 6. New Market Conditions © Innogy 2001
- 7. Market Conditions Increasing gas prices Reducing power prices for base-load: flexibility rewarded Higher OEM prices Penalties for non-availability © Innogy 2001
- 8. The Risks of NETA NETA places a massive burden on IPPs to fulfil their contracts Plant failure before gate closure requires new contracts to be bought to cover position Plant failure after gas closure exposes the operator to the balancing market and its penalties © Innogy 2001
- 9. NETA - the balancing market 1000 900 800 700 £/MWh 600 500 400 300 200 100 0 -100 Sell Price © Innogy 2001 Buy Price
- 10. NETA - balancing market penalties Trip exposes operator to system buy price – typically £2-1000/MWh, average £100/MWh – 680MW x 3.5h = 2,380MWh – 2,380MWh x £100/MWh = £238,000 – gas trade 42,000 therms at 20p/therm – revenue of gas = £23,000 – deficit generated of £200,000 Less risk prior to gate closure © Innogy 2001
- 11. NETA - conclusions Predictability is key to minimising financial losses Conventional insurance cover is expensive Trading can mitigate some losses due to losses of availability © Innogy 2001
- 12. Three Power Companies © Innogy 2001
- 13. Three Groups Group A 'NewCo Power Ltd' Group B 'OldCo Power Ltd' Group C ‘GroupCo Power Ltd’ © Innogy 2001
- 14. Group A ‘NewCo Power Ltd’ Own and operate a brand new state-of-theart CCGT station. The CCGT has been build to a very tight price and has no systems over and above those installed as the part of the EPC contract. Many of the early bugs and warranty items are still being found. Staff numbers are very tight. Damages have been mostly taken from the OEM and the level of direct OEM support is low but can be bought at a high price. Plant redundancy is minimal. © Innogy 2001
- 15. Group B 'OldCo Power Ltd' OldCo Power is the O&M contractor for Bank PowerCo Ltd. Bank PowerCo had a PPA with LoCo Utilities until the start of NETA now they have to trade the electricity, they also have a take or pay fuel agreement. The OldCo have a simple ‘cost plus ‘ O&M agreement with the owners. The owner does not understand the technology and wants a steady return from the power plant. The O&M contractor has a fixed price contract with a limited number of starts, the owner wants to renegotiate the number of starts but not the price. The plant efficiency is lower than the new entrants. © Innogy 2001
- 16. Group C 'GroupCo Power Ltd' GroupCo Power Ltd O&M and trade a fleet of power plant, CCGT and thermal. This particular plant is just coming out of warranty and has historically high plant availability. Management want to increase the profitability of the plant whilst reducing the generation costs. It is expected that the plant will operate flexibly in under NETA. © Innogy 2001
- 17. How Much Is My Power Plant Worth? Or What Will Others Pay for It? © Innogy 2001
- 18. Power Plant Valuation Exercise 1 - baseload revenue Exercise 2 - cost of planned losses Exercise 3 - cost of unplanned losses Exercise 4 - total NPV for one year © Innogy 2001
- 19. CCGT Maintenance © Innogy 2001
- 20. Innogy’s Experience Initial position – maintenance was contracted to OEM – long-term contracts, performance based Reasons – unproven plant – ‘complex’ plant – Innogy staff undertake ‘operational maintenance © Innogy 2001
- 21. Innogy’s Experience Contracts good value in early years Contracts became expensive as Innogy learnt the ‘how's and wherefores’ Innogy bought out of contracts early Major internal programme undertaken to support change Savings of over $1m per year per gas turbine made © Innogy 2001
- 22. Innogy’s Experience Risks reduced – Innogy in full control Availability increased – make own run/no-run decisions – increase in intervals between overhauls (30,000EOH) Improved inspection, diagnostics, repair and replace procedures in place © Innogy 2001
- 23. Innogy’s Experience The OEM is focused: – on total availability – on the gas turbine – selling new plant operator is focused on: – ‘commercial’ availability – the whole plant – improving the plant Any incompatibility? © Innogy 2001
- 24. Maintenance Considerations How to evaluate the effectiveness of your current maintenance strategy under flexible running Identify what historical/running data you need Practicalities of designing your maintenance strategy Outline various maintenance strategies © Innogy 2001
- 25. Maintenance Considerations Use the prompts to consider maintenance issues based on your experience whilst being constrained by your power company. 20 minutes to consider the issues before reporting back... © Innogy 2001
- 26. Group Session Each power company should consider the issues One member will report back to the whole workshop 20 minutes available © Innogy 2001
- 29. Value Examples Exercise 7 - annual number of starts and cycles Exercise 8 - value of starts and cycles Exercise 9 - one year’s NPV Exercise 16 - two-shifting and outage planning Exercise 17 - lost EOH © Innogy 2001
- 30. Planned Outages Under NETA © Innogy 2001
- 31. Three Power Companies to Consider Managing the NETA contract around the planned outage timetable Examining the alternatives to traditional summer time outage work Managing the contract risk in case of outage over-run Strategies to minimise down-time and to get the plant generating again as soon as possible © Innogy 2001
- 32. Three Power Companies to Consider Planning for the unplanned - outlining common technical pitfalls during outage work and how to avoid them The effect of the new markets and altered running patterns on outage schedules Strategies for returning plant to service following an outage given the uncertainties of the balancing market - benefits of 2+1, 1+1 and single shaft configurations © Innogy 2001
- 33. Group Session Each power company should consider the issues One member will report back to the whole workshop 20 minutes available © Innogy 2001
- 35. Lunch Time © Innogy 2001
- 36. Unplanned Losses © Innogy 2001
- 37. Value Examples What’s more valuable? – efficiency – reliability Exercise 5 - value of efficiency Exercise 6 - value of reliability © Innogy 2001
- 38. Issues Row-one blade tip missing Cooling towers Cracking is found in blades Turbine experiences high vibration levels Retaining pin has come loose but not damaged turbine Generator transformer fails CW pump capacity is reduced © Innogy 2001 Generator earth fault occurs
- 39. Row-one Blade Tip Missing © Innogy 2001
- 40. The Story…. OEM - shut-down and install new Generator’s position - high pool price, no blades available, must generate Vibration levels within acceptable levels Engineering advice taken - O&M procedures put in place The machine ran on for six weeks with blades poor condition © Innogy 2001
- 41. Cracking on Turbine Blades © Innogy 2001
- 42. The Story…. Concern - vanes burning due to insufficient cooling OEM - only half-set of vanes available Owner - need to operate for at least six months Operator - O&M procedures put in place based on Engineering advice Outcome - machine operated successfully for six-months © Innogy 2001
- 43. Lost Retaining Pin © Innogy 2001
- 44. The Story…. Concern - minor inspection showed that the pin was missing OEM - no new pins available for six-weeks Owner - need uninterrupted operation for next six weeks Solution - installed modified re-engineered design suitable for six-months operation © Innogy 2001
- 45. CW-systems failure © Innogy 2001
- 46. The Story…. Issue - one CW-pump fails, one being overhauled, only 50% capacity available Problem - high pool prices, when to shutdown and install the overhauled pump? Short-term solution - depends on market conditions, need to consider lost revenue and cost of replacement Long-term solution - depends on cost of redundancy © Innogy 2001
- 47. Hybrid-cooling Towers © Innogy 2001
- 48. The Story…. Issue 1 - hybrid-cooling towers consuming work’s power to maintain condenser pressure Problem - how to optimise losses and allow operators to make informed choices based on market conditions Solution - new system to model the towers and condensers to allow operators to optimise the plant’s commercial output © Innogy 2001
- 49. The Story…. Issue 2 - hybrid-cooling towers causing visible plumes Problem - how to reduce incidence of plume without reducing thermal efficiency Solution - modification were made to the air-flows in the towers to reduce the water pickup without causing increase in power consumption © Innogy 2001
- 50. High Vibration Levels © Innogy 2001
- 51. The Story…. Issues - step change in vibration levels, known rotor problems Problems - premium to keep machine running Solution - allows the plant to keep running within acceptable limits then inspect when market conditions are favourable © Innogy 2001
- 53. The Story…. Issue - main transformer failure, average failure rate once every ten years Problem - not cost effective to hold spare, major loss of output if fails, 18-month delivery times Solution - condition monitoring, insurance for business interruption, spare’s insurance © Innogy 2001
- 54. Generator Earth Fault © Innogy 2001
- 55. The Story…. Issue - rewind of stator three- to sixmonths Problem - total loss of generation, not cost effective to hold spares, long lead times Solution - condition monitoring, business interruption insurance and spare’s insurance © Innogy 2001
- 56. Value Examples Exercise 10 - compressor failure loss Exercise 11 - compressor failure insurance cover Exercise 12 - generator transformer loss © Innogy 2001
- 57. Issues for Consideration Developing effective back-up plans for small- and large-scale outages Identifying repairs and maintenance with a fast turn-around during small-scale outages Maximising your resource management to respond quickly and accurately to any outage © Innogy 2001
- 58. Issues for Consideration Determining the skills required by your staff to cope effectively with outages and planning your staff training under NETA Estimation of unplanned outage likelihood in relation to running patterns and to plant condition The cost and management of partial load loss under NETA © Innogy 2001
- 59. Issues for Consideration Management of NETA contract risk prior to gate closure Risk in the balancing market Cost of losing important but non-essential plant component leading to reduced output © Innogy 2001
- 60. Group Session Each power company should consider the issues One member will report back to the whole workshop 20 minutes available © Innogy 2001
- 62. Time for Tea © Innogy 2001
- 63. Planning and Risk Management © Innogy 2001
- 64. Planning and Risk Management You can plan for all eventualities but the cost would be prohibitive But where do you draw the line How do I draw the line © Innogy 2001
- 65. Value Examples Exercise 20 - take or pay gas contract Exercise 21 - liquidity cost - generator transformer failure Exercise 22 - liquidity cost - average Exercise 23 - liquidity cost - ambient plant conditions © Innogy 2001
- 66. Review and Close © Innogy 2001
- 67. Power Company Reviews GroupCo OldCo NewCo © Innogy 2001
- 68. Close of Workshop Chris Harris to say a few words…. © Innogy 2001