understanding fleet optimization

Tom Snowdon, Emerson Process Management

The economics of power generation have chang-ed. Utilities are being challenged to reevaluate their unit operations and dispatching strategies to take advantage of new market scenarios. Optimizing assets across a generating fleet offers opportunities to realize significant savings beyond what would be possible by looking at each unit or plant individually. Ultimately, this enables utilities to more effectively deploy limited resources to provide higher levels of customer service and reliability while balancing other obligations, such as financial objectives or tightening environmental regulations.

a new endgame

Power generators have always looked to asset management to boost individual plant performance, reliability and service, and to do so cost-effectively. To get the most out of an individual plant, it is important to analyze and benchmark current plant performance, evaluate and prioritize options for improvement, define and execute performance improvement programs, and validate and sustain realized gains. Focusing on plant processes, technologies and human factors that limit unit or plant performance yields real-world results, including improved heat rate and environmental compliance, increased ramp rates, enhanced reliability and lower maintenance costs.

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This approach certainly has value, but the plant-centric view is no longer the endgame. While optimizing operations at the unit or plant level can yield significant results, this represents only the tip of the iceberg. The value of generation asset management increases exponentially across a fleet of plants.

fleet-wide focus

Because the old business paradigms don’t necessarily apply in the new power landscape, it’s critical to evaluate assets in a broader context. Participation in a traditional vs. unbundled market; participation in an ISO; the mix of plants (baseload, peaking, reserve, load following) in the fleet; the unique operating characteristics of each unit (heat rate, ramp rate, minimum load, maximum load, NOX rate, startup cost, minimum run time and automatic generation control capability): just a few of the many variables that must be considered together to conduct an informed analysis. Understanding the nuances of these interdependent variables and optimizing assets accordingly offers power producers the flexibility to adapt to changing industry dynamics and realize a significant competitive advantage.

Power producers operating in a lean, competitive environment are often fully engaged in, and time-constrained by, the day-to-day pressures of plant operation, commercialization, scheduling and dispatch. Plant staff is understandably focused on the processes and mechanics of their individual plants, so who is focusing on the big picture?

Some utilities are beginning to take a step back and, in some cases, turn to outside sources for a broader, more objective view of each plant’s role within the fleet, as well as how the fleet operates within its specific marketplace.

Understanding what opportunities exist to improve overall performance and maximize ROI can help power producers develop a master strategy to meet specific business objectives. Fine tuning the operating characteristics of individual plants within the fleet can put power producers in the best position to take advantage of larger market-driven opportunities.

With the Midwest Independent Transmission System Operator (MISO) coming into full operation in 2005, and other ISOs, such as PJM (Pennsylvania, Jersey, Maryland) extending their markets to new players, many utilities are being challenged to reevaluate their operations and dispatching strategies to take advantage of these new market scenarios. By analyzing the dynamics of a particular ISO market, it is possible to evaluate alternative operational improvements that maximize revenue potential within that market.

seeing the big picture

It’s important to be able to see the “big picture.” Consider the experience of a power producer operating within the PJM ISO. This utility initially considered a $400,000 investment to optimize operations at a single 500 MW coal-fired plant. Analysis by a third party indicated that this investment would yield a modest net gain of $50,000 annually. Instead of stopping there, an alternative optimization strategy was considered, one that looked at the plant in the larger context of the utility’s fleet as well as the ISO in which it operates.

Because this ISO’s regulation service market has had high market clearing prices year round, it was determined that the utility’s improvement investments could yield a three-to-five times greater return if they were focused on implementing automatic generation control (AGC) on this 500 MW plant. The bottom line: AGC capabilities could result in $3.4 million of additional annual revenue through regulation service market participation. While both projects are worthy of consideration, it is clear that an examination of the market along with an examination of the unit provided the utility with a larger, more valuable menu from which to choose.

For another utility, it was determined that a relatively small investment in optimization software running across a fleet of 30 plants would result in decreased NOX emissions, heat rate improvement, reduced boiler tube failures and improved fleet dispatch, translating into savings of more than $12 million per year.

In addition, analyzing changes in dispatching strategies can offer dramatic opportunities for determining the most efficient-and cost-effective-deployment of a fleet of units. Utilities are often reluctant to cycle plants off, due to potential equipment wear and tear, start-up costs, and a general lack of confidence that a given unit will start at the time it’s needed. However, looking at cycling from a broader, fleet perspective can help mitigate these concerns.

As a case in point, during one week in April, a performance analysis was conducted for a 15-unit subset of a major utility’s 59-unit fleet. The purpose of the analysis was to determine how much could be saved by altering the number of units cycling off daily. In this case, it was determined that the utility could achieve the biggest bang for its buck-more than $607,000 in savings-by cycling just four of the 15 units nightly, for just one week. That magnitude of savings certainly justifies an investigation into investments aimed at enhancing startup reliability, mitigating wear and repair, and reducing startup costs. The opportunity to achieve such a considerable financial benefit illustrates why, in almost every case, it is worth investigating the economic feasibility of cycling. The important nuance here is that choosing the units to cycle is an exercise in fleet and market modeling.

Tom Snowdon is director, fleet performance improvement, for Emerson Process Management, Power & Water Solutions. Before joining Emerson in 2004, Tom was director of operations planning for a major power generator. Contact Tom at Thomas.Snowdon@EmersonProcess.com.

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