How independent testing can convert loss into profit

5 September 2002

Independent performance testing is proving to be of growing importance in the power generation business. Jeff Parmar, TUV Energy Services, Swindon, UK, and John May, TUV Energy Services, Littleton, CO, USA

In recent years independent power producers have increasingly been turning to independent performance testing firms to validate the results of guarantee acceptance performance tests. Such tests are done at the time of commissioning new facilities or when refurbishment of existing facilities is completed.

Recovering lost dollars

With today's increasing concerns about the performance of advanced technologies being supplied by the OEMs and the large contractual penalties for underperformance, independent testing is fast becoming essential for any new plant being commissioned. In the past year alone, many IPPs have recovered millions of dollars as a result of shortfalls in performance.

One independent testing firm, TUV Energy Services, has witnessed failures to achieve either the heat rate or net electrical output guarantees.

It is quite apparent that there are difficulties with some of the new technologies being offered, as reflected in the on-going delays to final completion and acceptance of a number of projects.

In many cases these delays are well over one year from original planned dates due to failure of the units to achieve their performance contractual guarantees.

Baglan Bay in the UK, which is using the GE 9H machines - heralded to perform at 60 per cent efficiency - is also understood to be experiencing delays, although in this case the causes are not known and perhaps only to be expected in a lead project of this kind.

However, it is clear that in general the advanced technologies are taking much longer than expected to implement.

Our recent tests have also suggested that established models, eg the GE 7FA, can still have problems meeting guarantees long after initial introduction and early teething difficulties have been tackled.

All the major gas turbine suppliers have faced these types of issue and the pressure for the original equipment manufacturers to prove their capabilities in the face of competition is strong.

In the past couple of years, IPPs have become increasingly aware of how the problems associated with new technology can impact on performance.

Penalties can typically include clauses stipulating as much as $100 US dollars for each BTU under the performance guarantee.

Independent testing gives not only the OEMs but also the owners confidence in the final results.

In essence, a unit could be performing under the guarantee point and nevertheless still be "passed" as meeting the performance guarantee level.

With an average plant producing over 300 MW, this can mean as much as six MW of performance that is not available to the IPP. In fact, a one degree Celsius "misreading" in the ambient conditions can mean as much as an error of 0.5 per cent in performance. With uncertainty guarantees ranging from under 1 per cent to as much as 3 per cent any additional errors can have a major impact on the outcome of the test.

Testing the manufacturer's tests

A typical project in which the owners might bring in an outside and independent testing firm such as TUV Energy Services would be duplication of the manufacturer's test instruments. The measurements taken might include:

• temperatures at the inlet of the filter housing;

• relative humidity and other ambient conditions;

• power at the generators;

• ambient pressures;

• gas flows;

• characteristics of gas coming into the units;

• high pressure and intermediate pressure turbine inlet conditions, pressures and temperatures;

• condenser pressure;

• boiler flows (if possible).

Even the position of the temperature probes can cause a misreading of the ambient conditions and it is very important to have the test completed correctly.

While each case is different it is very important that the highest quality instruments are used. This can help reduce the amount of uncertainty that the manufacturer can use in his fight to meet the acceptance guarantee.

Very often, this instrument uncertainty is added to the overall facility uncertainty and may be the difference between the plant passing or not.

Without high quality instruments, the instrument uncertainty can be worth an additional 1.5 per cent of overall output.

TUV generally aims to discard the instrument uncertainty in the test procedure or make it as small as possible through the use of high quality instruments.

There have been several cases of tests where the independent tester did not have his instruments on site and found the OEM's instruments to be of sub-standard tolerance. It is remarkable how quickly the OEM brings better instruments to site when he knows that the independent body is testing alongside his equipment.

The same can be said for EPCs that try to run tests using only station instrumentation. This should never be accepted as there are too many anomalies in the quality of the data.

Liquidated damages

Other examples have been encountered where the OEM is aiming for higher firing temperatures using new technology.

In one case, it proved impossible to cool the blades adequately due to the high temperatures requiring the machines to be de-rated.

The de-rating was so severe that it exceeded the original estimates for potential liquidated damages built into the contract. "No one expected it to be that far off the mark and so we now have to determine how much the liquidated damages should be," said one ownership group which is currently in litigation.

In trying to outperform the competition, some manufacturers have been stretched too much and with the lack of time to get to market, the customer site has effectively become the test rig for new turbines.

Now owners need to take a stand and exercise their rights to have units perform to their expected capabilities.

Each major manufacturer has seen problems within the last six months in which units did not meet their guarantee points across a wide range of machines, proving that no new installation is safe from defects and problems.

When the OEM is proven to be out of compliance they are often given a certain period to make repairs and attempt to improve the performance.

At this point many issues become bones of contention such as degradation of the units and proper measurement of the changes.

It is recommended that the testing firm is required to come back and test the units before and after the outage has taken place, so that the situation is entirely clear when it comes to proving how much gain has actually been achieved. Without the proper representation, the ownership group may be unable to reclaim the damages owed to it.

A true picture of performance

With the large amount of scrutiny being given to independent power producers today, IPPs have found that this independent test also sits well with outside parties such as their banks and other investors. Moreover, there is peace of mind in having a true indication of the plant performance which is independently benchmarked, giving confidence in the estimates of future revenue streams from the power plant.

Even EPC contractors are enlisting independent bodies to guarantee that the OEM's are meeting their contractual obligations.

There have been a number of horror stories where the correct output has not been properly represented and where the test carried out by the manufacturer only provides net output information about the power island, with little information about how each unit performs.

Many owners now want a separate test to use for verifying station instrumentation results.

There are also benefits in benchmarking the operational performance when the plant is in new condition.

As more plants run on a merchant basis, having operational information as to how each unit performs helps with the process of profit maximisation for individual units and for the plant as a whole.

There have even been cases where electrical revenue meters were found not to be properly recording net sales of electricity to the power off taker, which could have resulted in a huge loss for the owner.

Station instrumentation alone cannot be truly relied on for a test. By its very nature it is loaded with inaccuracy due to inherent tolerance margins, improper equipment, and lack of field calibration.

Many owners are finding that gaining accurate operational information pays back many times the cost of calling in an independent test house. Moreover, any gains from liquidated damages can go part way to compensating the IPP for under-performance.

Having a totally independent firm to undertake the test is also becoming the preferred choice of OEMs and EPC contractors, where complete impartiality is important.

And independent measurement need not be confined to just heat rate and electrical output. ANP Operating Company has recently contracted with TUV Energy Services to provide additional independent testing services to obtain information about all plant components. "The information enables us to determine the most efficient operational levels and provide degradation analysis over the life of plant," said Peter Lithgow, VP of Operations, American National Power.

A state of flux

By embracing independent testing, IPPs are able to gain a better understanding of how their plants operate, giving them competitive advantage while at the same time potentially recovering significant amounts in liquidated damages.

The power industry today is in a state of flux and power companies are finding that the landscape has changed dramatically.

What was a non-issue in the past can now make the difference between operating at a profit or a loss.

Adopting this new approach of independent performance testing could improve the chances of thriving in the radically altered world of power generation.

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