MTU Aero Engines, North America

Fast Track to Independence

Issue 4 and Volume 10.

Just north of the California border in scenic, southern Oregon sits a new 6 MW cogeneration facility. The plant was developed under a fast-track schedule and allowed timber product company SierraPine to gain independence from the utility grid and a reliable source of power.

SierraPine is a limited partnership of industry leaders Sierra Pacific Industries and the Timber Products Company. Both are third generation, family-owned forest products companies, anchored by ample timberlands and a rich tradition of wood products manufacturing excellence.

SierraPine Limited, headquartered in Roseville, Calif., is the third largest manufacturer of particleboard, medium density fiberboard and MDF moulding in North America. Production levels reach 93 million m2 (1 billion square feet) across ten US manufacturing divisions.

SierraPine produces particleboard in a variety of species, each with their own unique characteristics: Douglas fir and western pine on the west coast and southern pine and hardwood on the east coast.


The new 6MW cogeneration facility at SierraPine’s Medford, Oregon manufacturing plant. The plant is equipped with two VPS3 gas turbine-generator sets provided by Vector Power Systems.
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The company’s Medford plant, part of SierraPine’s Medite Division, produces 9 million m2 (100 million square feet) on a three-quarter basis a year of Medex, Mediate and Permacore fiberboard.

Project history

After seeing the pitfalls of power industry deregulation just south of its borders, many companies in Oregon began to think twice about a deregulated power market in their state.

An article from the February 25, 2001 Medford Mail Tribune News succinctly stated the situation: “Opening up Oregon’s electricity market to competition has been touted for years as a boon for consumers rich and poor. Then, just months before the plan’s kickoff date, California’s deregulated system ran out of juice. Now some Oregon lawmakers want to delay the process or pull the plug.”1

“…California’s failed deregulation plan, combined with uncertain hydropower supplies in the Northwest, could lead to rising power prices. That’s enough reason to postpone deregulation, they argue,” stated a May 25, 2001 Mail Tribune article. “But deregulation supporters say the Oregon law doesn’t contain the flaws that contributed to California’s energy problems, including provisions that require utilities to sell off power plants.”2

Facing an unresolved energy situation, SierraPine understood the need to decrease its dependence on utility-generated power. Prior to installing the gas turbine-based cogeneration project, SierraPine dried fiberboard with a dryer that has a 42 200 MJ (40 mmBTU) natural gas burner. Electricity was purchased from the local utility, Pacific Power.


Vericor’s VPS3, AS40 3 MW gas turbine-generator set is equipped with steam injecton for NOx control.
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Sierra Pacific, one of SierraPine’s owners, has several wood-fired steam driven power plants. However, cogeneration and the use of gas turbines are new to the entire SierraPine organization.

SierraPine considered various energy alternatives, including burning sander dust to produce electricity. Another Mail Tribune article on May 15, 2001 offered a perspective on why SierraPine selected cogeneration. It quoted Department of Environmental Quality’s Environmental Engineer, Tom Peterson: “‘I think [the project] came about because of the energy [crisis],’ Peterson said. ‘[SierraPine] hadn’t had this in their earlier proposals. Of the alternatives they’ve looked at, this one looked best for the long term.'”3

“Although the electrical generation project would reduce the plant’s needs for outside electricity, it would increase the amount of natural gas it must purchase for operation,” the Mail Tribune article added. 4

Nonetheless, SierraPine made the decision to proceed with the cogeneration facility, and soon the project was under a fast-track schedule. SierraPine finalized the contract with Vericor Power Systems for the VPS3 gas turbine-generator sets in May 2001. The plant was engineered by Dubal and Associates, Portland, Ore. KBI Inc., Eugene, Ore., constructed the plant over a three-month period. August 2001 marked commercial operation of the new power plant. To date, each gas turbine has accumulated more than 2000 hours in operation.

Natural gas is supplied by Avista Utilities of Spokane, Wash., under short-term agreement with SierraPine. Additional power needed for SierraPine’s processing plant is purchased from Pacific Power, which is wheeled to the fiberboard plant via a 115 kV transmission line.

Oregon rule-makers eventually settled on a course for statewide deregulation as noted in the February 1, 2002 Business Journal of Portland article: “Oregon is itself bracing for statewide deregulation. Coming fast and furious March 1, Oregon’s deregulation plan is touted as kinder and gentler than the one that ravaged California. Here, officials have trained themselves to refer to it as ‘restructuring’.”5

VPS3 generator set

SierraPine selected two Vericor Power Systems VPS3 gas turbine-generator sets for the 6 MW cogeneration facility. Each VPS3 genset features Vericor’s ASE40

3 MW gas turbine, equipped with steam injection for NOx control. The ASE40 gas turbines were manufactured by Honeywell Engines & Systems, Phoenix, Ariz. Mendenhall Technical Services, Inc., Cincinnati, Ohio, placed the gas turbines into the VPS generator sets.

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Atlanta, Ga-based Vericor Power Systems was jointly founded by Honeywell International, Inc. and MTU Aero Engines, GmbH. It markets, sells and supports marine and industrial gas turbines as well as OnsitePower turnkey systems and services. Table 1 provides an overview of the VPS3 gas turbine-generator specifications.

The ASE gas turbines are adapted from Honeywell’s proven aero-engine designs and specifically configured for power generation. Honeywell’s family of aero-engines have accumulated over 20 million hours of operation. Advantages of using these systems for cogeneration and power generation applications are:

  • Compact size allows for easy on site installation and changeout
  • High operational readiness
  • Fast cold start characteristics
  • Low emissions and vibration
  • Flexibility to efficiently burn a variety of fuels.

The high reliability and low maintenance requirements of the ASE industrial gas turbines are attractive to customers. The modular nature of these engines allows for easy inspections on site. When repair is needed, a module replacement can also be made on site to minimize interruption in operations. This ease of care approach simplifies stocking of spares and lowers downtime and maintenance periods. Recommended maintenance cycles for each ASE gas turbine are 30 000 hours for a hot section disassembly/parts replacement/repair and 60 000 hours for an overhaul.

Providing options

Vericor Power Systems can provide the VPS3 gas turbine-generator set alone or completely installed on a customer site. For the equipment sale or turnkey solution where the customer remains the owner, Vericor can provide the complete scope and project development.

In addition, to complete gas turbine-generator sets similar to what Vericor supplied SierraPine, Vericor offers customers flexible OnsitePower build-own-operate (BOO) solutions to energy needs, including power generation and waste energy recovery, including hot gases, steam, hot water, heated glycol and/or chilled water.

These options leverage the aeroderivative gas turbine technology competencies from Vericor’s founders, Honeywell Engines and Systems and MTU Aero Engines.

Onsite economics

For SierraPine, the economics of the cogeneration facility were made more attractive because the State of Oregon offered the company an incentive to develop the cogeneration plant. SierraPine will get 35 per cent of the project cost back in tax deductions over the next five years.

For other customers looking for an alternative to utility-supplied energy, an onsite cogeneration system may make economic sense. A system based on gas turbine power generation technology with exhaust energy directly recovered, as is the case at SierraPine, is used to illustrate the economics of such a system.

Savings in the range of 15-30 per cent over current total energy costs are feasible when converting to an onsite cogeneration system. Needless to say, the key to the amount of savings is the cost of fuel, the cost of electrical power and the internal rate of return to justify the project. In general however, the larger the spread between the cost of fuel and the cost of electric power the better the chance that the project can be supported. As electric rates and fuel prices vary from location to location, a generalized formula is hard to generate. The size of the system to be installed will also help determine if the onsite cogeneration approach is right for a specific application.

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Figures 3A and 3B depict one scenario for a nominal 3 MW electrical load, with a matching direct heat requirement equal to about 31 650 MJ (30 mmBTU) at varying current cost of generating the heat. This data assumes that minimal additional infrastructure is required and the existing way of producing the heat is maintained as a back up. This curve, though not universally applicable, illustrates the relationship between fuel cost, electricity cost and heat cost. In this depiction, if the cost of electricity for the given cost of fuel and of producing the heat is at or above the respective value where the intersection of the fuel and heat lines cross, then an onsite cogeneration facility using the exhaust heat directly may be justifiable for the site.

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These charts further assume no capital credit for any planned update or replacement of the existing system, no electrical power being sold externally and no heat being exported from the facility. Any excess power sale to the grid or heat to a third party would potentially have a significant impact by lowering the break-even point. The respective intersection point on the curve would be lower thus giving a better chance for the project to be justified. Figures 3A and 3B differ only in that the number of years to a break-even position, i.e., no loss or gain compared to the current situation, occurs.

For instance referring to Figure 3A, assume the current cost of producing heat is $0.0076/MJ/h ($8.00/mmBTU/hour) and the current cost of fuel is $0.0038/MJ ($4.00/mmBTU) (LHV). The data shown would suggest that an onsite cogeneration facility might be viable if the electricity cost exceeds $0.0525/kWh and a three-year, break-even scenario meets the company requirements.

These illustrations suggest that an onsite cogeneration system for a given facility, while in and of itself may not be justifiable, an independent power producer (IPP)-type arrangement could provide the desired advantages to the host site by combining several local needs into a single facility. The arrangement presents the owner of the site with two options:

  • The opportunity to forge ahead with the system and handle the power and steam sales agreements; or
  • Have a third party own, operate, and maintain the facility on the existing site, and purchase electricity and steam from the IPP at an agreed-upon price.

Independent solution

For industrial customers looking for an alternative to utility-supplied energy, an onsite cogeneration facility may make sense. After a thorough analysis of energy alternatives, SierraPine realized that onsite cogeneration was economically feasible. Once the decision was made, SierraPine worked under a fast-track schedule to bring the VPS3 gas turbine-based plant on line in just three months. By employing this state-of-the-art system, SierraPine has achieved its goal to decrease its dependence on utility-generated power, while providing a reliable premium source to dry fiberboard.

References

  1. “Thinking twice about deregulation,” Dani Dodge www.mailtribune.com/archive/2001/february/022501n1.htm
  2. “State deregulation prospects dim,” Jessica Smith www.mailtribune.com/archive/2001/may/052501n3.htm
  3. and 4 “SierraPine proposes power plant: Natural-gas-driven generators would supply half its fiberboard production,” Shari Downhill www.mailtribune.com/archive/2001/may/051501b1.htm
  4. “Dueling Ralphs discuss divergent energy views,” Brian J. Backwww.portland.bizjournals.com/portland/stories/2002/020/04/newscolu