Operating a coal fired power station in a competitive market means basing new investment decisions on a variety of factors but, depending on future wholesale electricity prices, some capital investments really do seem to make sense.

Tim Burrows, Derek Anderton, Tin Tsie Chung, GHD Pty Ltd, Australia

Operators of ageing coal fired power stations have a unique opportunity available to them – they can substantially improve their bottom line and reduce sovereign risk while simultaneously being socially and environmentally responsible.

How? Consider that around 45 per cent of the coal fired power stations across the globe have been operating for more than 25 years1, and that almost all of these stations currently operate at subcritical steam conditions, often with thermal efficiencies lower than 30 per cent2. Now consider that, depending on capacity, increasing the thermal efficiency of a typical plant by just one per cent can increase revenue by tens of millions of dollars and substantially reduce greenhouse gas emissions.

Aside from providing increased profit in the short-term, improving efficiency provides the operator with a long-term carbon price signal buffer. For those plants that are not currently participating in the European Union Emissions Trading System, it is a first step in addressing the sovereign risk of legislative carbon price signal implementation.

Our study looked at four of the many options available to the owners of legacy plants to improve their thermal efficiency, and ranked them according to their net present value (NPV). The results indicate that owners of inefficient plants will almost certainly profit if they immediately take advantage of small to medium capital upgrade opportunities, but will find that successful investment in repowering and related cycle changes is strongly dependent on future wholesale electricity prices.

Figure 1. Repowering becomes more attractive as wholesale electricity prices rise
Click here to enlarge image

To allow us to make valid comparisons, we took as our baseline a 2000 MW subcritical steam plant fuelled by brown coal from the Latrobe Valley in Victoria, Australia. This is a challenging fuel. It has a moisture content of approximately 60 per cent, and results in greenhouse gas emissions of between 1200 and 1500 kg per MWh.

We looked at three options that might be considered for a plant of this type, ranging from relatively simple equipment upgrades through to a complete cycle change:

  • Installation of a new boiler control system
  • Upgrade of turbine blades
  • Repowering with Integrated Gasification Combined Cycle (IGCC).

As an extension to the IGCC option, we also reviewed one of the more recent developments in advanced gas turbine manufacture: turbine intercooler heat recovery.

Boiler controls

One of the key issues that arises in the operation of legacy boilers is the effect of variable coal quality on the fuel/air ratio. Seams of coal that are rich in carbon require more combustion air per unit mass of fuel than those with low carbon content, but decades-old control systems are too slow to react to these changes in coal quality. Most operators respond by simply increasing the excess air setting to compensate for batches of high carbon fuel, however this leads to a sub-optimal fuel/air ratio during periods of low quality coal. The result: excess air lowers the average temperature of the turbine supply steam, reducing cycle efficiency and requiring more fuel to bring steam conditions back to design conditions.

In recent years however, boiler optimization systems have come onto the market, providing real time monitoring of coal quality. These systems can calculate the optimal combustion air setting based on the carbon content of the supply coal, enabling boilers to operate closer to their design temperature, and increasing cycle efficiency by around 0.5 per cent. As an added bonus, these systems can also reduce NOx emissions by between 10 and 30 per cent.

Blade replacement

Manufacturers have been working intently to improve turbine efficiency over the last few decades. Improved design tools, including 3D modelling and Finite Element Analysis, have allowed them to significantly increase the efficiency of their machines, in some cases by more than five per cent.

The good news is that new turbine blades, while not cheap, can be installed with almost no modification to other equipment, such as boiler tubes or feed pumps. Even better, if the changeover is timed to coincide with a scheduled overhaul, there might be no additional downtime for the plant.

The outcome can be an overall cycle efficiency improvement of more than two per cent.

IGCC repowering

The biggest returns are of course often realized from the largest investments. The subcritical Rankine cycle steam plant mentioned earlier achieves a thermal efficiency of around 30 per cent. However, it has been predicted3 that repowering a Rankine cycle via the addition of an open cycle gas turbine as a quasi-topping cycle can lift overall efficiency to more than 56 per cent. This is clearly an enormous increase when compared to the low single digit increases that can be realized from the equipment modifications described above.

In the context of a coal fired power station, the implication of such a cycle change is to fire syngas produced from a coal gasification process through a gas turbine, with the turbine exhaust generating steam for the steam turbine, a process known as Integrated Gasification Combined Cycle.

The implementation of such a modification would be a major project. Some significant assets from the existing plant would no longer be required; in particular, the pulverized coal boiler would be decommissioned. In its place, a heat recovery steam generator would be installed, drawing its heat input from the outlet of the gas turbine. Much of the balance of plant – piping, heat exchangers, instruments and controls – would be discarded, replaced with more modern equipment.

The challenges would also be significant. Brown coal gasification is a technology that has been developing for decades. Unlike black coal, it requires a suitable drying technology to make it viable. Even existing gasification plants based on black coal suffer from availability issues, with fuel plugging the gasifier unit periodically. However, the increase in efficiency and the progress currently being observed in black coal IGCC means that brown coal IGCC will likely become a key clean coal technology in the future.

Gas turbine intercooler

In the context of an IGCC repowering, one of the more recent technologies being implemented by turbine manufacturers is that of gas turbine intercooler heat recovery. Under this arrangement, the compressor stage of the gas turbine is split into low and high-pressure stages. Hot, medium pressure air is piped into a feedwater heat exchanger before being returned to the high-pressure stage of the compressor. This reduces the efficiency of the gas turbine, because it reduces the mean temperature of heat reception in the combustor, but it increases the efficiency of the steam plant, because it reduces the fuel input required to produce steam in the heat recovery steam generator. The other advantage of the intercooler is that it provides a higher power output for a given physical plant size, allowing the purchase of smaller units.

Figure 2. Upgraded boiler controls can improve cycle efficiency by 0.5 per cent
Click here to enlarge image

The process change is relatively simple: divert the low pressure air out of the low pressure compressor, install a heat exchanger in the feed heating system of the steam plant and return the cooled air to the high pressure compressor. To achieve this, an existing gas turbine would need to be replaced in its entirety, making this a viable option only in cases where a gas turbine has not yet been purchased or the existing gas turbine was ready to be retired.

While gas turbine intercooling has been in existence for some time, intercooler heat recovery is a reatively new technology that has not yet been extensively implemented, so there is little history to draw upon. At a process level, it would appear to be a valid option for consideration, but further investigation is required to determine its usefulness in a practical application.

Financial analysis

To determine which of the above options would provide the best return on investment, we performed a discounted cashflow analysis on each option using a range of wholesale electricity prices and a discount rate of ten per cent. Taxation on profits and equipment depreciation were factored into the model.

Our analysis indicated that, at low wholesale electricity prices, replacement of the steam turbine blades provided the highest NPV, followed by implementation of improved boiler controls. Repowering of the plant was not economic under these conditions.

However, as wholesale electricity prices rose, the NPV of the repowering option quickly increased (Figure 1). At the higher end of the range, the NPV of the repowering project easily outstripped the other options.

The model was thus characterized by a high degree of sensitivity to wholesale electricity prices for the repowering option, but a relatively low degree of sensitivity for the two lower capital options.

This suggests that in Australia, for example, it is likely that many legacy plants of the type described earlier would benefit from low to medium capital upgrade projects, due to the relatively low cost of electricity. Equally, any large capital investment in repowering would require careful estimation of future wholesale electricity prices before being considered.

In some respects, owners of old, inefficient coal fired plants might be regarded as being in an enviable position. Like an underdog in a sporting competition, they have little to lose, and everything to gain. The low-hanging fruit of increased revenue and reduced CO2 emissions is within easy reach, if only the necessary, but often elusive, capital can be raised to gain access to it.


  1. Ambrosini, Riccardo, “Life Extension of Coal Fired Power Plants”, IEA Clean Coal Centre, 2005.
  2. Ghosh, Debyani “Assessment of Advanced Coal-Based Electricity Generation Options for India: Potential Learning from U.S. Experiences”, BCSIA Discussion Paper 2005-02, Energy Technology Innovation Project, Kennedy School of Government, Harvard University, 2005.
  3. “Efficiency Standards for Power Generation”, Australian Greenhouse Office, 2000.