General Electric (GE) has signed a long-term agreement to provide a total plant solution for the Norte III gas-fired power plant in Mexico, in a deal recognised through winning the “2017 LatAm Power Deal of the Year” prize awarded by Thomson Reuters’ Project Finance International.

Power Engineering International spoke to Terrence Schoenborn, General Manager of GE Power Services’ Global Operation & Maintenance (O&M) business.

Aligning with Mexico’s Ministry of Energy’s National Electric System Development Program (PRODESEN) 2017-2030 plan, GE’s Power Services business (NYSE: GE) signed long-term agreements with a consortium formed by Macquarie Capital and Techint valued at approximately over $330m.

The Multi-Year Agreements (MYA), include two fully integrated contracts, including an Operation and Maintenance (O&M) agreement and a Contractual Service Agreement (CSA), these together will provide 25 years of total plant services solutions for the 907 MW combined cycle power plant, located in the municipality of Ciudad Juárez, in the state of Chihuahua, Mexico.

Schoenborn acknowledged the significant contribution GE’s Predix technology makes to such a plant.

“This project has brought the total value that GE can bring to bear for a customer. Some customers want select aspects but, in this case not only do we run the plant as O&M provider, we will also have a 25 year- multi-year agreement.”

“The Predix asset performance management solution really brings to bear all of our strengths and, from the total plant perspective, brings the best value to the customer. Digital gives us that visibility into that asset to really optimize its performance.”

Schoenborn added that the Power Deal of the Year award indicated recognition of the challenges associated with the project and its importance to Mexico’s electric power infrastructure.

“In Mexico they had a centralized utility in CFE and have now deregulated the market. This project initially commenced in 2015 but the financials and EPC weren’t really coming together. Macquarie formed a consortium with Techint and from a financing and construction perspective took over this plant.”

“Its critical to Mexico and on a certain node in central Mexico where power is much needed. The risk to the project in terms of financing, and all the different contracts that needed to be in place were instrumental in it being awarded project of the year. Factored in are the critical need for power, the latest technology involved and the region in the world where it is sited.”

The Chihuahua region is identified in the PRODESEN 2017-2030—the 15-year infrastructure development program for Mexico’s national electric system–as a “deficient node,” given its expected growth in the next decade.

Under the terms of the 25-year agreement, GE will utilize its Fleet360* platform of total plant solutions for the Norte III plant which operates on four of GE’s 7F.04 gas turbines as well as two Toshiba steam turbines. The platform also provides a full spectrum of digital solutions and plant improvement services, regardless of which original equipment manufacturers (OEM) generation equipment they have installed.

Predix, an open source industrial Cloud-based platform is a vital tool for what is a vital plant in Mexico’s overall system, and essential in helping customers eliminate risk.

“Each year we are expanding our ability to predict failures in advance and the analytics associated with that, trying to correlate our systems against each other. Every year we’re trying to combine it all to better optimize the plant.”

Part of the appeal for GE’s clients is the company’s willingness to share the risk.

“CFE (Mexico Federal Electricity Commission) signed a power purchase agreement and in that there are guarantees on capacity and a lot of those guarantees have been taken on by GE, we take on the risk. The digital solutions allow us to manage that risk in a more effective fashion to mitigate it. It’s a big reason its such a good solution for investors.”

“Our total power plant services solution provides greatly improved risk mitigation while offering capacity and efficiency guarantees tailored to meet Macquarie – Techint Consortium‘s needs. We’re sharing both the benefits and risks with Macquarie by guaranteeing the performance of the facility and sharing the impact of any unplanned maintenance.”

GE was synonymous for many years in the power sector as primarily an exponent of gas turbine development. But acquisitions and the broadening of its digital skillset means it has expanded its footprint, expertise and scope into total plant.

“We look at it from the customer prism. They can have a small piece of equipment in a plant that fails and brings their plant down – if we take that total plant perspective, we are better at providing solutions to our customers and better positioned to do that. There’s shared risk and reward and we can view the plant through the customers eyes.”

“With O&M agreements like this that can be coordinated or combined with a CSA, we can prevent conflicts or gaps in scope and operate and maintain the power plant for our customers, taking the burden off their shoulders”

During its peak construction period, Norte III will employ approximately 2,000 workers and is expected to provide electricity to more than 500,000 houses in Mexico once completed. During commercial operation Norte III will provide for highly specialized on-going jobs including power plant staffing and additional maintenance staff during outages for 25 years.