Taking it up a notch: NeuCo links enterprise decisions from generation through trading to boost profitability

By Pam Boschee, Managing Editor

This month’s EL&P’s financial rankings offer a glimpse of U.S. electric utilities’ bottom lines. With market operations ranging from fairly smooth to malfunctioning to failures, IOUs know their capital is precious. It’s precious for many reasons: to satisfy shareholders; to expand the reach of their diversified businesses; to pay for infrastructure improvements/expansions; and to incorporate new technologies that will help them optimize their assets.

Curt Lefebvre
President of NeuCo
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NeuCo’s president, Curt Lefebvre, recently spoke with EL&P about facilitating the latter with integrated, real-time performance monitoring, cost tracking and optimization solutions.

NeuCo announced in March a business agreement with Black & Veatch to integrate Black & Veatch’s information technology solutions for power generation into NeuCo’s ProcessLink software architecture. The companies are combining the intellectual property in Black & Veatch’s Online Performance Monitoring (OPM) and Power Plant Desktop (PPD) products with NeuCo’s optimization technology.

EL&P: What benefits will this technology deliver to power generators’ operations and ultimately to their bottom lines?

Lefebvre: ProcessLink is enterprise optimization software. Optimization is really about understanding the impact that a decision or action has on some performance index. When you combine optimization with the word enterprise, you imply that you’re optimizing the profitability of your business. What we’re doing inside of enterprise optimization software is mapping the impact of all decisions and actions taken in the operation of that business-including the impact on profitability and shareholder value-and then figuring out new strategies of control or new strategies of operations that can help us better meet those overall objectives.

EL&P: How will the solutions be integrated?

Lefebvre: ProcessLink is a collection of software pieces. It consists of servers, services, tool kits and interfaces that support development of optimization applications-and that’s where we tie it back into Black & Veatch’s OPM and PPD products.

To explain ProcessLink’s integration capabilities, let’s start by thinking about physical assets and the process control challenge of getting equipment to run. At this level in the enterprise, we care about the individual performance of the equipment, making sure that it’s within its specs, and then making sure that performance is optimized. For combustion optimization, we have a product called CombustionLink, which controls the processes taking place in the furnace, including overfire air. It controls the amount and the way in which fuel and air are injected. The outputs of that process include NOX, CO and other forms of emissions, but also efficiency.

To understand the impact that decisions about combustion have on overall profitability, we need to move from performance of the equipment to the net plant performance. And that’s where OPM steps in.

OPM is Black & Veatch’s online performance monitoring product. We are taking the engineering equations imbedded in OPM and re-writing it inside the ProcessLink framework to provide optimization capabilities. This new product is called PerformanceLink. Not only will it calculate the unit’s performance, it will be able to tell how to improve that performance. PPD is a product that moves from performance of the individual pieces of equipment (or net plant performance)-to real time cost and real time revenue models.

[To summarize,] ProcessLink is a platform that supports integration of these pieces. CombustionLink is a solution for optimization of the furnace. PerformanceLink will be a performance monitoring system that incorporates not only the ability to understand total net plant heat rate and other unit performance characteristics, but also relate that back to actions that improve overall performance. And PPD will translate those performance indications to dollars; it will “dollarize” on a plant level. Future products will bring in the ability to actually take those variables and relate them to overall financial assets and the ability to buy and sell energy and to make money.

EL&P: Are there particular markets that you are initially targeting?

Lefebvre: Initially we focused on plants with near-term emissions compliance challenges. While that is clearly still a key target for us, our integrated optimization solutions also allow us to target entire enterprises with portfolios of plants. One of the things to make clear is that NeuCo is not trying to solve all these problems ourselves. We’re looking for partners that actually have existing products, because what we really consider ourselves is a bit of the glue.

EL&P: Do you already have power plants onboard for these integrated systems, or is this very early on in the process?

Lefebvre: We actually have the largest number of running boiler optimization systems in the market, and we’ve been 100 percent successful with demonstrating the benefits of those systems. Those systems-as you just pointed out in your question-are not tied together; they are not tied with other integrated systems.

We have the largest number of alliance relationships with customers, and our alliance relationships are there because they recognize that their initial investment into combustion optimization will lead to subsequent leveraged investments into wider solutions. So, while we don’t have that prototype fully implemented yet, it’s something we’re all working together on.

EL&P: Are customers already using boiler optimization systems receptive to this proposed integration? Are they concerned about cost?

Lefebvre: They’re more than receptive. Enterprise optimization is a long-term goal. What’s important about making it work for a business is that that goal can be broken down into smaller goals to be achieved in short periods of time, with individual payback. One of our overall business goals is to have a solutions strategy that actually has a return on investment.

For example, our combustion optimization system has a very fast installation time that is between 10 and 12 weeks. It requires no outage at the plant and has initial benefits demonstrated actually before the 10 to 12 weeks. Our oldest system has been running for a little over four years. They [the systems] continue to improve, even after the project is done. There’s significant improvement a year after development-or after installation-and in subsequent years there continues to be new improvement because these systems are constantly adapting to changes and constantly learning as they try new operating strategies. That’s part of the artificial intelligence side of them. The ROI is about 10 to 1 on average, and the payback is within months. They’re ready to be snapped into a larger solution without having to do any re-engineering of the combustion optimization system.

EL&P: How is combustion optimization applied across an enterprise to control, for example, emissions?

Lefebvre: The problem can’t be solved by the local process control system. It has to be solved globally. If you understood the impact that NOX and boiler efficiency had on the overall profitability of the plant, the objectives for NOX and boiler efficiency would be set for you. But even then, you might have one plant that has a dirty coal pile today and is polluting a bit too much, and it’s close to another plant-and you have a regional restriction on overall emissions. So, you might need to go to another plant and say, “Lower your NOX, even if it costs you some fuel efficiency, in order to make sure that we’re still under our total regional cap for NOX emissions.”

Therefore, you may have a plant running what locally might seem to be sub-optimally, but globally it’s optimal in terms of the enterprise and in terms of its overall impact on profitability.

EL&P: For customers installing ProcessLink, are there compatibility issues or hurdles that could be identified in trying to integrate their existing legacy databases

Lefebvre: No, it hasn’t been a problem at all. We’ve started off with contemporary software architectures that are very open and very easy to customize. So, we’ve been able to integrate with all of the legacy systems. ProcessLink provides application integration because it has the interfaces that can be easily developed to get into just about anything.

EL&P : Is there a particular type of power plant that stands to gain the most benefit from this type of integrated solution?

Lefebvre: The more diversity within a portfolio, the more difficult it is to come up with a strategy. We’re talking about a technology that can use computers to go in-with real knowledge of the behavior of these very diverse units-and determine how to best dispatch them. I think the real benefit will come out of managing a portfolio where they are diverse.

EL&P: Looking out five or 10 years, what trends do you anticipate?

Lefebvre: Right now we deal with process control and business strategies as being in two very different camps. It involves financial managers and engineering managers, and they don’t do a very effective job in communicating to one another and tend to make decisions in islands of isolation.

I think the trend is going to be that the basic methodologies and methods are going to integrate. We have an enormous amount of data, both on the process side and on the business side. The next revolution in terms of information technologies will be in what we do with all of this data.

It’s highly correlated; it’s highly redundant. It’s very difficult to understand where the real knowledge is. Data is information; it’s not knowledge. Where are the cause and effect relationships, and once we understand them, how do we act on them?

I think we’re going to have very integrated solutions. We won’t turn on a piece of equipment in isolation without understanding how it impacts the overall profitability of the business. And we won’t make corporate business decisions in isolation without thinking about the impact that it has both up the chain and down the chain.

I think we’re going to find there’s a lot of talk of digital dashboards and linking generation to the trading floor so they [traders] can see in real time what the heat rates are and where the units are.

In the future, you’re really going to have the ability to not only know where all of your assets are and how they are performing, but you’re also going to have the ability to understand how to maneuver them to better perform.

Lefebvre may be reached at lefebvre@neuco. net, or at phone 617-425-3500.


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