Austria’s VTU Energy, which specializes in designing accounting models for power and water cogeneration and long-term power purchase agreements, summarizes the various phases of an IWPP project and explains how it can effectively support developing consortium from initial concept to final plant production, using the Fujairah 1 IWPP expansion project as an example.

Independent power and water plants (IWPPs) enable a highly competitive process for the buyers – in both financial and technical terms – as well as legal and long-term economic safety for the bidders.


Fujairah 1 IWPP prior to the plant extension
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Companies can effectively contribute to their success through engineering services and software products supporting the developing consortium from the initial concept to the final production plant.

IWPP development process

The development and optimization of a plant concept usually begins well before the official request for quotation (RFQ) is released. In the first phase of concept optimization a base configuration of the plant is developed that fulfils the production requirements by making use of best available technology and equipment.

Several alternatives are developed and ranked based on investment and operating costs, as well as maintenance and risk considerations.

Once the RFQ provides more details on the project requirements, the concept development can be further refined. The final concept for bid submission is selected based on a rigorous financial evaluation that combines the developer’s operating schedule with the investment and operating and maintenance (O&M) cost data provided by the EPC consortium.

The contribution from companies such as VTU Energy in terms of ‘conceptual design and financial optimization’ is high-level consultancy, which not only ensures that the tender requirements are met, but also helps in the mediation – in technical terms – between the partners in order to maximize the synergies, identify common targets and work out optimal solutions. The ability to apply state-of-the-art modelling technology in order to combine performance information of the individual equipment into an accurate model of the overall plant is key to establishing a common language and a climate of trust between the partners.

Using these agreed models for scenario calculations enables the optimization of the project’s life-cycle costs by balancing investment and maintenance costs with fuel consumption.

Finally, the refined model for the selected concept will also be used to reach an agreement on the performance guarantees for the bid. In the bid evaluation phase, subsequent to the bid submission, the authorities involved compare offers, and a short list of bidders, as well as eventually a preferred bidder, is selected. During this phase, companies like VTU Energy can provide bid support and load and outage scenarios in terms of supporting the bid with technical clarifications and further information.

Supporting PWPA negotiations

After a developer has been announced as the preferred bidder, companies such as VTU Energy can also support the power and water purchase agreement (PWPA) negotiations and refine the plant model to generate the final performance and availability guarantees to be used in the contract.


PASS invoice generation module for supplemental payments
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In particular, the development of the so-called outage modes (i.e. load scenarios at off-design conditions and variations in power and water demand) requires in-depth knowledge of power generation and desalination technology, and the expertise to quickly turn around the information received from the members of the consortium. In addition, further contract chapters may require detailed performance evaluations, such as the ‘early power period’ when the first units start to operate while the remainder of the plant is still under construction.

Preparing for commercial operation

With contract award and PWPA signature the EPC consortium starts with the basic and detailed engineering based on the winning concept and the actual construction of the plant begins. VTU Energy and similar companies can make a contribution at this point by providing a ‘Fuel Demand Model’ (FDM) and ‘Plant Accounting & Settlement System’ (PASS).

It is important to note that the FDM and the ‘Availability Model’ of the plant, which are used to calculate expected performance and availability as per the PWPA, are much more complex than the models developed in the bid phases, since the FDM has to calculate the expected plant capacity and performance at every possible operating mode of the plant. Thus, the FDM development starts with a rigorous functional design specification that defines the validity range, the features as well as the content and options of the user interface of the FDM.

An audit of the completed FDM software by an independent third party will ensure that the FDM calculations are correct and in full accordance with the data of the PWPA.

Covering all aspects of the PWPA, the PASS includes various features such as manual input screens. Sophisticated validation checks of the input data, detailed logging of events and interactions, as well as a well-structured design make sure that all contract parties benefit from the transparency of this system. In addition, a wide variety of reports allow the IWPP to effectively monitor and control all aspects of the plant’s production and consumption.

Fujairah 1 IWPP settlement system

In the course of the privatization of the power and water utilities in the UAE, which began back in 1998, Emirates SembCorp Water & Power Company (ESC) acquired Fujairah 1 IWPP and embarked upon a plant extension to significantly reduce the specific heat consumption of the plant and at the same time increase the power output capacity from 535 MW to 760 MW at reference site conditions.


Different phases of an IWPP project
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The plant configuration after the extension includes: four GE 9E gas turbines plus four heat recovery steam generators (existing) one GE 9FA gas turbine with its associated heat recovery steam generator (extension); two back pressure steam turbines (existing); five multi-stage flash seawater desalination units, each with a 12.5 million imperial gallons/day (MIGD) production capacity (existing); and two trains of RO units with a total capacity of 37.5 MIGD (existing).

VTU Energy’s team had worked with ESC during the bid phase for the privatization project to help develop an offer with the most competitive technical concept for the plant extension.

PASS, a key element

After ESC was awarded the Fujairah 1 project, VTU Energy was engaged to design and install the PASS compliant with the PWPA and the system integration requirements of ADWEA and the off-taker Abu Dhabi Water and Electricity Company (ADWEC). The PASS is a key element in every privatization project as the financial settlement between ADWEC and the project company over the entire contract term – 20 years in the case of the Fujairah 1 plant – is managed and controlled by this system.

As part of the PASS, the FDM evaluates the guaranteed plant performance under actual operating conditions. Deviations between the measured plant performance and the performance benchmark calculated by the FDM result in bonus or penalty payments.

This has the effect of driving the operating company towards optimal plant operation and maintenance for best performance.

The bonus-penalty procedures ensure that the benefits of such attentive plant operation, which effectively lead to considerable savings in fuel consumption, are shared between ADWEC and the plant.

Since the PASS is mission-critical for the plant to create monthly invoices and – together with its subsystems – also evaluates plant performance against the contractual baseline, it is obvious that the development and implementation of such system is of high importance to all stakeholders.

VTU Energy’s approach to this project was to actively engage all affected parties from the very beginning. This created an environment of trust. Regular updates, as well as consideration and open discussion of all suggestions and concerns of the stakeholders supported the cooperation.

Flexible design philosophy

Technically, the integration work not only covered the Fujairah data communication system but also included the integration of the system to the TRANSCO load dispatch centre. Such a complex system integration project had to deal with a wide variety of other data handling systems, and fortunately VTU Energy’s software design philosophy supported highly flexible interfaces.


User interface for online fuel demand model
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A further critical item for the project execution was the request from one of the parties to modify the settlement procedures half way through the project. While the system integration activities continued as planned, the software itself had to be customized to the new requirements. However, due to the smooth design phase, project delays were reduced to a minimum. The system was commissioned within an impressive 14-month periodfrom contract award.

The Fujairah 1 extension project is due to be completed in 2009 and VTU Energy, continues to support ESC with engineering services to further optimize the plant, including the generation of plant correction curves for use in capacity tests, development of performance test procedures, as well as project management. MEE

Dr Josef Petek, VTU Energy GmbH, Austria