Primer on asset management

Steve Brennan, Siemens Westinghouse Power Corp.

Superior asset management is a critical part of attaining maximum profitability. This month, EL&P invited Steve Brennan of the Instrumentation & Controls division of Siemens Westinghouse Power Corp. to provide the basics on this part of the industry.

What does asset management mean in the power industry?

Asset management generally relates to physical power generation assets and the electricity that those assets create. The focus is to maintain and enhance profitability from existing assets as well as evaluate development or acquisition of additional assets.

Most power industry organizations have professionals who focus on asset management. However, the roles and responsibilities and organizational alignment will vary, depending on a company’s emphasis (commercial vs. operational, for instance). For the purpose of this discussion, I’m referring to one who is responsible for plant operations and engineering, with a basic appreciation of the strategies and requirements of the trading and marketing functions.

With that description in mind, what does a typical asset manager do?


Steve Brennan
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Asset managers seek opportunities while overseeing the still important traditional aspects of plant management. These opportunities involve increasing the profitability of their units or plants, given existing market conditions and contracts. In many cases, regulation encouraged different plant performance than in competitive markets. Consequently, plant performance levels may possess significant room for improvement. Accordingly, these decisions must consider capital constraints, market projections, company strategy, and a multitude of other variables.

What type of improvement opportunities do asset managers consider, given current market conditions?

Three types of initiatives typically occupy the majority of an asset manager’s focus. The first type relates to adherence to state and federal environmental regulations and obligations. These initiatives require the manager to understand emissions and opacity limitations and evaluate alternatives to meet regional or federal constraints. The investment is motivated by the desire to avoid cost penalties or the requirement to shut down a unit completely.

The second type of initiative is investment to maintain unit performance. The objective is to maintain the reliability of unit production to support customer demand, contract obligations and market opportunities within reasonable operating budgets.

The third type is opportunity-driven and more strategic in nature. The focus here is to improve unit performance and competitiveness. Asset managers must evaluate projects such as how to increase available megawatts, improve unit efficiency, or provide greater operational flexibility to realize greater value from their assets.

What changes in the industry altered the types of projects to which asset managers are exposed?

The two primary drivers of change have been environmental legislation and deregulation. Environmental legislation has resulted in tighter restrictions on plant emissions-both for existing and new units-generating an increase in environmental projects. Product categories such as selective catalytic reduction equipment, scrubbers and low NOx burners have been around for a while, but have become more relevant and critical. Innovation in the software field also has occurred, typically based on neural network (or learning) technology.

Deregulation and a competitive marketplace have resulted in new profitability drivers and solutions to optimize performance under new rules. While an inexpensive base-loaded coal plant may not need to dramatically change the manner in which it operates, many units-both steam and combustion turbines-must perform differently to improve profitability. New combustion turbines possess good flexibility for fast starts and quick ramp rates, but asset managers face challenges responding to market requirements with older steam units.

What type of alternatives do asset managers have to address flexible operation with older units?

Maneuverability of older units presents a challenge. However, several solutions are available to asset managers to improve operational flexibility and unit start-up.

Operational flexibility-Fast and accurate load response can provide significant value in competitive markets. Better unit ramp rates allow for automatic generation control (AGC) or regulation participation and enable power producers to enter and exit markets quickly. Stable minimum load is important for load-following units to minimize cost during low market periods.

The traditional approach to better overall plant performance has been to upgrade the controls system, a valid yet a potentially costly and time-consuming solution. This new distributed control system (DCS) does provide reliable, accurate and sophisticated unit control. Another option involves an incremental approach: advanced controls that work in conjunction with existing controls. This alternative has appeal because of the increasing emphasis on bottom line value. Siemens Westinghouse and other vendors offer robust solutions that provide significant maneuverability improvement without the investment of a new control system. Weighing the merits of a new control system versus a more incremental solution is one of the many challenging decisions that asset managers face.

Unit start-up-A second challenge older units face that is increasingly important in competitive markets is an older unit’s ability to reliably and quickly come on-line to generate power. Economically, many companies would benefit from more flexibility to completely take a unit off-line during low demand periods. Wear and tear impact is one reason to avoid cycling units off-line, but economics may justify this type of operation if wear is minimized and the unit can reliably perform in this fashion.

How will asset management continue to evolve in the next 5-10 years?

Increasingly, asset management decisions are technology-driven, thus, staying abreast of new advances in turbine, boiler and software technology developments will be key for asset managers to increase the value of their organizations’ power generation assets. In addition to technology drivers, asset managers will continue to face the decision to recommend retiring or upgrading existing assets, or building new plants, based on evaluating modernization and upgrade solutions available from many OEMs (original equipment manufacturers). Finally, an increasing number of power generators are focusing on enhancing their in-market availability (IMA)-the certainty that their units and required megawatts will be available when committed or to exploit market opportunities.

Brennan is product manager, Power IT Solutions, for Siemens Westinghouse Power Corp. Instrumentation & Control. The Power IT Solutions group markets a suite of IT products and services, including FlexPlant Solutions, that help U.S. power generation customers increase their potential to integrate information for decision-making, efficiency and in-market availability.

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