Tailored operational maintenance contracts: powering performance of cogeneration plants

In managing a technology very different from their core business, operators of large cogeneration plants need to find ways to limit risks. A tailored operation and maintenance (O&M) contract from the original equipment manufacturer can, as Bill Mercer writes, provide an effective way of managing such risks as well as providing access to strategies that can improve the performance of their plant.

For many years industrial, commercial and institutional facility owners have looked at on-site cogeneration as a way of increasing overall cycle efficiency and improving operating margins. With recent increases in energy prices and the liberalization of energy markets in many parts of the world, this trend is likely to continue and even accelerate. This presents many choices and options for companies wishing to capture the benefits of cogeneration while limiting the risks associated with managing a technology that differs from their core business.


The choice of technology is crucial as this will provide the most benefit over the life-cycle of the facility. In some cases, the technology will be small to medium size gas engines or turbines that are either matched to on-site generation or the plant’s thermal requirements with only small supplies of energy going to the local grid. In other cases, facility owners will want to capture the economies of scale and efficiency possible with the use of advanced technology combustion turbines in combined cycle mode. These are often designed in complex configurations, with production and extraction of steam at several levels supplying process requirements with significant amounts of electrical energy being sold to the grid.

Once the technical choice is made, owners need to consider carefully the best method of managing the assets associated with this investment so as to achieve the best return over their expected life. This decision is a strategic one and involves the choice of how to manage the engineering together with fulfilling the operation and maintenance (O&M) requirements of the technology they plan to install. The options for asset management range from complete internal supply at one end of the spectrum to the complete outsourcing of the facility management to a specialist company at the other end. This choice will be made primarily on the owner’s capability, capacity and appetite for risk.

Smaller embedded systems often closely resemble existing systems and facilities within the overall complex. These are more often handled by existing engineering and O&M groups within an industrial facility, with only some of the overhaul and maintenance contracted out to companies specialized in these tasks.

The operation and maintenance of large output cogeneration facility is more complex and less familiar to many industrial or institutional owners. In many ways, it is more complex than either a power station supplying to a grid market or running an energy plant for a process. This is because it involves the joint demands of two vastly different energy off-takers. The success of the venture is tied to the facility’s ability to produce both electrical and thermal power when needed and with high reliability.

The complexity of the main components and the process means that many facility owners often choose to contract out some or all of the O&M functions of large cogeneration plants. Such decisions can produce high value for the owner by reducing their need to build up an expensive internal engineering resource for what is a non-core activity. Linking to a specialist service supplier also reduces risk.


Industrial facilities often have considerable experience in O&M within their own process but, for many, the management of cogeneration power stations is not a core competency. Rather than invest heavily in developing this competence for what may be a small part of their total business, a better option may be some form of O&M contract to provide the skill immediately.

When evaluating possible suppliers of O&M service, asset owners should consider what competencies they need the supplier to be able to provide. The selection process should take into account the many attributes a supplier will need to provide the level of reliability and risk mitigation to enable the company to meet its specific strategy. These attributes include:

  • a long and successful background in the operation and maintenance of similar equipment
  • a strong record of delivering cost-effective results with high availability and reliability. Cost-effectiveness in this context is measured in terms of value produced for the money invested and should take into account the ability of the supplier to maintain the value of the plant over a long period of time.
  • an in-depth technical knowledge of all plant components, preferably including engineering expertise in the design and maintenance requirements of key components
  • world-class O&M business systems, which can be customized for use in the specific environment of the cogeneration facility such as computerized maintenance management systems (CMMS), safety permitting systems, RAM data collection and real-time remote monitoring of key equipment with expert support on a 24-hour seven-day schedule
  • these systems coupled with a well-developed and consistent maintenance strategy specific to combined cycle and cogen eration power stations. Such a strategy needs to be built on reliability principles for both operations and maintenance, and incorporate all the critical plant equipment, not just the combustion turbine and heat recovery systems.
  • ability to supply, support and evaluate key condition-based monitoring programmes
  • access to skilled staff to provide the knowledge base for the facility and the ability to train new recruits in an efficient method
  • the ability to put forward proposals to improve plant and efficiency to adapt to continually evolving turbine and combined cycle plant technology
  • expertise in project management and project development covering all areas of the facility
  • excellence in the management of health, safety and environmental (EHS systems
  • a strong EHS performance record and, preferably, ISO 14001 and OSHAS 18001 certification
  • legal compliance systems adequate to reduce the potential risk for the owner.

O&M type contracts represent long-term partnership arrangements. It is therefore important that the owner and supplier maintain common goals and incentives throughout the life of agreement. This can often be accomplished through the use of incentive-based contracts where some form of bonus/penalty clause can help to motivate both partners towards mutually beneficial solutions. This form of risk sharing also allows owners to evaluate their O&M partner over time and can be an important part of the selection process. The supplier should be able to provide flexible guarantees that align with the customer’s key business drivers.


The need for cogeneration projects to fit into an overall process and facility means that each one is unique in either its demands or operational requirements. In addition, each owner or operator of the main processes will have different levels of engineering and maintenance capability and skills, which in turn will create different service level requirements. Facility owners therefore need to be very careful and thoughtful about the method they use to select an O&M supplier based on their internal needs and strategy. The following methodology can be used to determine the best supplier based on the company’s internal needs.

  • At a high level in the organization, determine the best strategy option for the company in terms of how to operate and maintain the cogeneration facility based on whether this operation will be part of the core function of the business or not.
  • Before even considering going to tender, examine the company’s existing core competences and engineering capabilities carefully. Are there significant gaps between what exists and what will be required for the technology being considered?
  • Before tendering, investigate what services are available on the market for the type of equipment being considered. This allows different configurations and service levels to be evaluated.
  • Create a list of attributes that it is critical for the supplier to be able to supply based on the needs of the facility, the host company and the owner’s strategy. Use these attributes to configure the request for tenders to ensure alignment between the company’s strategy and the service on offer.
  • Based on the needs and strategy of the owner/operator, establish a target level performance for each attribute identified. Use a scale of 1″10 to create a visual representation as shown in the example depicted in Table 1 and Figure
  • Following the tendering process, use a consistent and systematic method to evaluate each supplier based on the attributes required. The profile of the supplier of choice should match closely the needs of the customer. The supplier should also have the capacity to negotiate a flexible agreement.
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Figure 1. O&M Supplier selection tool
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It is the role of the O&M supplier to provide access to expert engineering support for complex and difficult issues regarding plant components. With advanced technology, this support should include the ability to assess the technical integrity of the existing equipment as well as using fleet knowledge and detailed design understanding to manage component configuration for the best optimal performance.

Original equipment manufacturers (OEMs) often have this expertise within their organizations for equipment they supply. In many cases they can also provide contract services for maintenance, or even full or partial O&M type contracts. This can be a good option for customers as it provides assurance that the company entrusted with the asset management of their facility also has the expert knowledge of its components.

As a leading supplier of energy equipment, Alstom has made a significant commitment to the development of specific O&M services for plants using its gas turbine and combined cycle equipment. With more than 18 years of power station management experience, the company has developed a complete portfolio of O&M contracts with over 60 active and committed contracts worldwide. These contracts cover a full range of services and risk-sharing arrangements, with customers ranging from the provision of maintenance only on main machine sets up to full operation and maintenance of complete plants. These contracts cover both pure power generation plants and cogeneration facilities for a wide range of end customers.

To provide this level of service, Alstom has invested in the development of a comprehensive power station management system with supporting structures and tools focused specifically on O&M. These processes and tools are maintained centrally within a single purpose division within the Alstom organization in Switzerland and are deployed internationally in partnership with local sites. This arrangement allows its customers to have a close relationship with a local supplier while having the security of knowing full support is available from the engineers and specialists at the central office. This network of supply allows the company to capture fleet experiences and best practice to support continuous improvements for both the equipment and the processes involved.

One of Alstom’s main drivers is the improvement of EHS standards and performance in all its functions. These areas are fully covered within the integrated quality management system (QMS) of its O&M group such that they become part of the way business is done on a day-to-day basis. EHS culture is encouraged and developed within all Alstrom’s O&M operations and methods are implemented to capture and disseminate fleet experience and best practice. This integration of EHS together with quality has allowed Alstom O&M to achieve worldwide multi-site certification to ISO 9001, ISO 14001 and OSHAS 18001.

As a large industrial and infrastructure business, Alstom has in-house expertise for all major plant components including gas and steam turbines, heat recovery units and environmental systems. Alstom Power O&M has direct access to this expertise for support, problem-solving and improvement suggestions which it can utilize in its asset management of a cogeneration facility.

This technology and fleet-based philosophy allows for advanced monitoring and diagnostics in real-time by Alstom’s plant support centre as part of the O&M package. This service can produce early warnings from trends, which can be analysed by experts in the engineering centre to allow many problems to be corrected before damaging outages occur. This on-line monitoring is augmented by the company’s off-line condition-based maintenance concepts for balance of plant and auxiliary equipment to provide a comprehensive predictive maintenance programme. This in turn is supported by an experience-based reliability and maintenance strategy.


O&M contracts provide possibly the most effective form of operation and maintenance planning for a cogeneration facility. With a tailored mix of risk and rewards, suiting the needs of each individual plant, these contracts provide access to a host of tools and systems that are designed to optimize plant performance and efficiency.

Bill Mercer is with Alstom Power Service, Switzerland.
e-mail: bill.mercer@power.alstom.com

Powering UTE Celso Furtado quickly after stand-by

UTE Celso Furtado (formerly Termobahia) is a gas-fired cogeneration plant at Sàƒ£o Francisco do Conde some 60 km from Salvador, the capital city of the Brazilian state of Bahia. The plant, which is owned by the major Brazilian energy company, Petrobras, provides electrical energy when needed to the domestic electrical grid and steam to the adjacent Landulpho Alves refinery operated by Petrobas. The plant is designed around GT24 technology and produces 190 MW of electrical energy and up to 350 tonnes/hour of process steam.

The UTE Celso Furtado facility
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The UTE Celso Furtado facility is built around a KA24-1single shaft combined cycle block supplied by Alstom. The block includes a gas turbine, a high pressure (HP) steam turbine, a heat recovery steam generator (HRSG) with auxiliary firing, plant control system, 13 km of transmission line, two bays added to an operating high voltage (HV) switchyard and an intermediate switchyard.

The plant is configured to have closely integrated processes. Because 100% of the steam supply from the exhaust of the HP turbine is supplied to the refinery operations, there is no low pressure or condensing system. Demineralized water and low pressure steam for de-aeration are provided from the refinery to complete the circuit. This close linkage means the reliability of the facility is critical as unplanned, forced outages can have a serious impact the refinery process.

The fuel is supplied from a local gas field, which can be high in both C2+ components and nitrogen. The power plant has to be able to handle the higher nitrogen content and respond quickly to the change from normal fuel to high C2+ gas, which could occur if there are difficulties with the gas treatment facility. The switchover is handled automatically by the power plant control system with very little system disturbance.

The advanced gas turbine design and complex control systems of UTE Celso Furtado have been supported by an Alstom O&M contract since operations began. This support allows direct access from the plant to the technical experts within Alstom’s gas turbine (GT) and combined cycle power plant (CCPP) groups to augment the on-line support provided by the plant’s support centre.

After the construction and initial commercial operational testing of the UTE Celso Furtado facility, the situation changed in Brazil with regard to power and fuel systems. The abundance of hydroelectric power and a high demand for natural gas between 2003 until 2007 made it necessary to put the plant on stand-by and into preservation for extended periods of time.

This created a different challenge from an O&M perspective as it was necessary to put systems in place to ensure the equipment was kept in top condition and also that plant personnel were ready to put the plant into operation at short notice. On the maintenance side, this meant an extensive and thorough preservation system had to be implemented for every component in the facility to prevent loss of function.

This system was achieved by chemical and mechanical experts from Alstom’s Swiss engineering group working closely with site staff to develop a strategy for all key components. This strategy was managed through the computerized maintenance management system and the appointment of periodic operator project managers.

On the people side, extensive refresher training ” including the use of personnel from Alstom’s Swiss training centre and a powerful plant simulator ” was organized by the site management in collaboration with the O&M lead centre. This served to keep both people and machinery ready for action when needed. When the available gas supply eventually increased in early 2007, the plant was able to start up without a problem and has run reliably since with only a few short planned maintenance inspections.

Powering repairs for greater reliability at Kalaeloa

Located in the beautiful surroundings of the island of Oahu, Hawaii, the Kalaeloa cogen plant has been in operation since May 1991 and is in its 18th year of a 25-year power purchase agreement. During this period, it has been a stable and reliable mainstay of the local power grid, producing approximately 20% of the island’s demand.

The plant is built around two Alstom GT11NM gas turbines fired by heavy fuel oil (No. 6 low sulphur fuel oil) with two dual pressure Deltak heat recovery steam generators and one steam turbine running as a block to produce 209 MW at normal operating conditions.

Kalaeloa cogen plant, Hawaii, USA
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The plant provides process steam to the adjacent Tesoro Hawaii oil refinery at three pressure levels. During operations, the combined cycle plant provides the refinery with up to 90% of its energy requirements. A reliable and consistent supply is therefore crucial. Power output is augmented through the use of evaporative cooling on the air intake, which has proved effective even in the tropical environment.

The plant normally runs at base load to satisfy the power demand, though the high ash content in the fuel means a weekly shutdown is needed to permit washing of the turbine blades. The fuel constituents also result in significant deposits and erosion within the boiler tubing sections. These have reduced cycle efficiency over time. With the increasing price of oil, this increase in heat rate has necessitated significant plant improvements to reduce these impacts. These efforts have focused on improved boiler deposit removal systems for use on-line together with a modified system to perform off-line tube washing of several boiler sections.

Replacement of tube harps at Kalaeloa
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When the corrosive and erosive effect became extensive, the plant owner worked with Alstom to develop a beneficial solution to replace whole sections of the boiler tube harps to recover efficiency and maintain the plant reliability. This major engineering effort involved replacing more than half the panels on one unit within a 29-day window coinciding with a gas turbine outage. Alstom provided the engineering, equipment supply and project management for the works.

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