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The market for gas turbine power plants is buoyant

Issue 2 and Volume 4.

The market for gas turbine power plants is buoyant

More than 900 GW of new gas turbine capacity will be added worldwide by 2010

By Kevin Dodman, European Editor

Timothy B. DeMoss, Associate Editor

“Redesign, Reinvest and Repower” was the theme of this year`s American Society of Mechanical Engineers (ASME) Cogen Turbo Power Conference, sponsored by ASME`s International Gas Turbine Institute (IGTI). Held in Vienna, Austria, the conference highlighted a number of growth markets. By one estimate, more than 900 GW of new gas turbine capacity will be added worldwide by the year 2010. The keynote session on the opening morning was chaired by Ron Natole of Natole Turbine Enterprises, LaPorte, Texas. The speakers were Dr. Bernard Becker, Siemens KWU, Mulheim Ruhr, Germany, Gas Turbine Technology and Engineering senior director; Vikas Thapar, International Finance Corporation (IFC) chief of the Regional Mission in Prague; and Lincoln Jones III, Enron Engineering and Construction Co. president.

The future market

Bernard Becker focused on redesign and raised the issue of what types and sizes of gas turbines will be required for developing markets. He said the main selection criteria are generating cost, NOx emissions, unit power and delivery time. He estimates that 65 percent of the generating cost is for fuel, 20 percent is for depreciation and interest payments, and the remaining 15 percent is for operation and maintenance costs.

Fuel cost depends on combined-cycle efficiency. This is one reason the cost per kW generated is today 60-percent less than it was 10 years ago, he said. Becker also said reliability, availability and maintainability (RAM) will be major factors contributing to gas turbine selection. As a result, new designs are likely to include more redundancy, with back-up components enabling turbines to remain operating while individual areas, such as lubrication systems, are being maintained.

Vikas Thapar spoke about reinvestment, commenting that the economic decline in some central and eastern European markets bottomed out in 1993, followed by growth in 1994. Today, this resurgent growth has led to an urgent need to invest. He explained that the IFC, the World Bank`s private sector arm, was set up to promote and finance the private power sector. It has 160 shareholder countries and assets of about (US)$10 billion.

Thapar said there is a worldwide transition from public to private sector risk taking for power projects, estimating that more than 50 percent of new generating capacity now being built in the USA is from independent power producers (IPP). There is likely to be a shift toward IPPs in developing markets, where power growth is often in excess of 5 percent per year. In Thapar`s view, the IPP principle encourages reliability and availability, two factors mentioned by Bernard Becker as being important considerations in gas turbine selection. Thapar explained that the IFC has a number of main requirements that potential power projects have to meet:

– an acceptable legal and regulatory framework in the country where the project is to be carried out,

– satisfactory tariffs and transparent tariff setting,

– a price per kWh that is in line with economic costs,

– a private sector that operates without government guarantees, and

– the total finance package sought from the IFC should be no more than 25 percent of the total project cost (the total project cost should be at least (US)$50 million).

Lincoln Jones of Enron spoke about repowering, pointing out that power companies need to consider the scale and location of population growth. By his estimates, world power consumption will grow from 5.3 billion people consuming 11,700 TWh in 1990, to 7.1 billion people consuming 18,670 TWh in 2010. He said that 90 percent of this increase is likely to be in developing and newly industrialized countries, with IPPs accounting for about one third of the new power orders placed.

Jones commented on the possible environmental impact of the increase in generating capacity, highlighting the benefits of natural gas for reducing carbon emissions. He also felt that new technologies such as photovoltaics would have a part to play. He commented, “Rejection of technology is not the way to meet the environmental requirements of the future.”

Regional investment

Three roundtable sessions during the conference gave delegates the opportunity to discuss in greater detail the three areas highlighted by the keynote speakers: redesign, reinvestment and repowering.

During the roundtable on reinvestment, Zak Allen, Managing Director of Pan EurAsian Enterprises, Warsaw, Poland, explained that Poland has started to reinvest. Allen listed some key statistics:

– Poland`s population is 38.5 million people;

– The economy is growing more than 6 percent annually;

– The private sector now accounts for more than 60 percent of gross domestic product and around half of employment;

– The country is highly industrialized but is run down;

– There are 72 plants generating electricity; and

– Combined heat and power is widespread.

Allen said that at (US)$0.055/kWh, the retail price of electricity is below cost. However, he added, the price is rising, with some contracts already being priced at cost. For heat, the price is approximately (US)$4/GJ, but there are inflationary pressures and a rising coal price, currently about (US)$30/ton.

Poland has excess power capacity, with roughly 32 GW installed compared to a winter peak demand of 24 GW. More than 95 percent of Poland`s capacity is coal-fired, with 9,100 MWe of brown coal capacity causing significant emission problems. Only two plants are oil-fired, and there is currently no natural gas-fired capacity.

Clearly, these facts limit the country`s potential as a market for gas turbines. However, Zak Allen`s list of “Do`s and Don`ts” for companies seeking to enter the Polish market would be equally applicable in other countries, both in the context of gas turbines and in other power generation areas.

Allen also said Poland is reminiscent of post-war USA, and commented that it would be a “big mistake to think of this region as developing countries.” He continued, explaining that the main problem is bankruptcy and stressing that it is inappropriate to apply third-world concepts to the countries of the central European region. The people are highly educated, technically knowledgeable and particularly skilled in power plant engineering, he said.

During the same roundtable session, Boyd Montgomery of Enron, Houston, spoke about opportunities in South East Asia, where electricity consumption is growing at an annual rate of about 15 percent.

Montgomery focused particularly on Indonesia, where development of the gas turbine market is limited by the availability of cheap coal and by the gas contracting system. Back-to-back gas contracts exist between a government intermediary company and the supplier, and between the intermediary company and the customer. This enables the government to levy tax through contract pricing, but leads to fuel-contracting problems that are a market- limiting factor.

By the year 2004, the private sector will operate approximately 40 percent of Indonesia`s capacity and can expect a capacity growth rate of more than 7 percent per year for the next 10 years. According to Boyd Montgomery, growth would be around 10 percent to 11 percent per year, but transmission and distribution system construction cannot keep pace with demand. He commented that this is another area for potential investment.

Comprehensive conference

More than 100 technical papers were presented at the conference, covering subjects ranging from blade cooling and heat transfer to performance analysis, environmental emissions and new engine cycles.

One conference session covering Power and Cogeneration Economics included the paper, “The Future World Market for Industrial Gas Turbines1.”

In the paper, the authors suggest that new gas turbine-based plants installed worldwide between 1993 and 2000 will total around 350 GW. This figure could rise to more than 900 GW by 2010 and 1,600 GW by 2020. The authors believe that major market areas outside the USA will be Asia, Western Europe and the Middle East.

Their research was carried out in response to the DOE`s need for a credible estimate of future market size, looking at least 10 years ahead. This estimate would then help with planning long-term technology development funding.

In preparing their forecasts, the authors used hypothetical long-term and general socioeconomic projections rather than relying on extrapolation of near-term forecasts. They believed near-term forecasts were too prone to distortion by relatively minor current events.

The study used data from four categories:

– Demographics and Resources,

– Power Production and Use,

– Plant Sales and Forecasts, and

– Energy Resources.

The authors then constructed regional growth curves of per capita power consumption to forecast consumption levels and dates as shown in Table 1. They combined these results with demographic data, especially population growth forecasts, to give capacity projections.

The authors based these projections on the assumption of a 50-percent capacity factor, whereby installed capacity is double the average total demand.

They then used historical generation patterns and data on basic fuel and renewable energy supplies to estimate the percentage of new plants that would be gas turbine-based. The results are shown in Table 2.

The authors remarked, “Using a knowledge of demographic, economic and resource factors, it is feasible to construct a credible projection of electric power capacity which looks forward 25 years and perhaps more, and which is at the same time consistent with historical data.”

“The results given by this approach are largely independent of future regional perturbations and are essentially global in character, but they also are capable of providing logical long-term insights into pro-spective regional markets which can help to shape future production,” the authors said. “In these respects, the results differ from most other shorter-term forecasts which are based on selling existing product lines in known markets.”

Turbine development

General Electric and ABB Power Generation speakers presented technical papers2,3 covering various aspects of gas turbine development, where both companies are currently very active. GE recently introduced its “G” and “H” technologies, and ABB introduced its GT24 and GT26 units.

James Corman describes in one paper2 how advances in gas turbine development have resulted in their becoming the preferred choice for utility and industrial power generation applications. The paper says, “As this development trend continues, these power generation systems will be under increasing pressure to meet tighter emission standards and to accommodate lower-grade fuels. Active development programs are now in place to meet both of these challenges. Dry, low-NOx (DLN) combustion systems on advanced gas turbines will permit operation at even higher temperatures while controlling emissions.

“An integrated gasification [gas turbine] combined-cycle (IGCC) system using low grade fuels–coal, residual oil and biomass–is now approaching commercial status. The IGCC concept will provide economically acceptable fuel conversion so that these fuels can meet the purity requirements required by advanced gas turbines and ensure adherence to tight environmental control standards.”

Another paper by Hauenschild and Jury3 focuses on the selection of the bottoming-cycle configuration to achieve the most economically attractive combined-cycle power plant. The authors conclude that for the latest 165-MW, 60-Hz GT24 and 240-MW, 50-Hz GT26, which feature sequential combustion, a triple-pressure reheat cycle is the preferred solution. This configuration results in a combined-cycle efficiency of 58.7 percent.

A key application area for the ABB units will be repowering older power stations. The units have high exhaust-gas temperatures and their relatively compact dimensions mean they can be installed in the confined environment of older plants. The first application of the GT26 will be repowering the Rheinhafen power station in Karlsruhe, Germany. An existing reheat steam turbine is being extended to combined cycle using an unfired once-through heat recovery steam generator. Using this configuration with the GT26 will give live steam conditions of about 160 bar and 540 C at the steam inlet. Plant output will be increased from 100 MWe in the old coal-fired configuration, to 360 MW, with plant efficiency increased from 38 percent to 58.2 percent.

This type of repowering could become a major market for these large gas turbines, given the projected size of the replacement market shown in Table 2. New capacity is expected to be a larger market still, and the higher efficiencies possible with the large machines will undoubtedly make them attractive in many applications.

With all the recent developments in large gas turbines, especially from ABB, GE and Siemens, it would be easy to forget that many customers need much smaller installations, especially for applications such as spinning reserve. A paper by Rodriquez and van der Linden4 describes the use of three 83-MW ABB GT11N1 gas turbines in simple-cycle mode to provide system spinning reserve and grid stability on an island system. The turbines are being installed at the Cambalache Power Station in Puerto Rico, an island with a total installed capacity of 4,200 MW.

An interesting aspect of this installation is the use of a once-through steam generator (OTSG) for NOx control and power augmentation, in a process known as steam enhanced power. The OTSG is a simple heat exchanger manufactured from stainless and super-stainless steels, which allows it to operate dry and to generate the required steam flow.

It is anticipated that the power station will operate at 60-percent load, allowing for a 40-percent load increase in 5 seconds if the frequency on the grid drops by more than 1.2 Hz. Rodriquez and van der Linden conclude, “The innovative application of an OTSG allows for fast response steam generation in a simple, highly reliable system. While both power augmentation and lower emissions benefits are achieved, the enhanced performance of a simple-cycle gas turbine to meet spinning reserve and quick frequency control is the right solution.”

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References

1 “The Future World Market for Industrial Gas Turbines,” D. Anson, Battelle, M. DeCorso and D. Horazak, Power Tech Associates, W.P. Parks Jr., US Department of Energy, ASME Cogen Turbo Power Conference, Vienna, 23-25 August 1995, Paper 95-CTP-68.

2 “Gas Turbine Power Generation–Status & Environmental Considerations,” James C. Corman, General Electric Co., ASME Cogen Turbo Power Conference, Vienna, 23-25 August 1995, Paper 95-CTP-29.

3 “Economical and Efficient Combined Cycle Selection for New Plants and Repowering of Existing Steam Plants with the GT24/26 Gas Turbines,” Rainer Hauenschild & Walter Jury, ABB Power Generation, ASME Cogen Turbo Power Conference, Vienna, 23-25 August 1995, Paper 95-CTP-66.

4 “Innovative Applications of ABB`s GT11N1 in a 248 MW Power Plant for Spinning Reserve and Grid Stability on Island Generating System–Cambalache, Puerto Rico, Raphael Rodriquez,” Autoridad de Energia de Puerto Rico and Septimus van der Linden, ABB Power Generation, ASME Cogen Turbo Power Conference, Vienna, 23-25 August 1995, Paper 95-CTP-20.