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Squeezing Juice from Plants

Asset optimization is a favored utility strategy in an economic downturn.
Fortnightly Magazine - December 2002

market only will pay $26/MWh and a plant is selling at $28/MWh, there will be no interest in buying. Grier emphasized the importance of marketers, fuels management, and operations groups working closely together at fossil baseload plants. He believes that as markets move toward standard market design and locational marginal pricing, marketing departments will become even more important, providing the "headlights" to see down the path and squeeze as much as possible out of plants.

In retrospect, Hanser believes some merchant combined-cycle unit operators may need to re-think how such plants are operated.

For example, in some jurisdictions, certain combined cycle units have avoided putting on certain pollution controls (catalytic converters) because with low NO x burners one can avoid putting on a selective catalytic reduction (SCR) if the plant operates at above a 70 percent capacity factor. But if the plant drops below that capacity factor, some stage burners do not operate properly and start to produce NO x-and at that point, an SCR is required. So plant operators without the pollution control device have no flexibility to operate at below certain levels. Hanser believes those operators will re-think that decision over time, because they will want the plant flexibility.

Another example Hanser gave was a generating plant that was retrofitted in such a way that it had the capability to ramp more quickly at a lower cost. That resulted in the plant having a load-following capability that it didn't have before, and the plant began selling that service into one of the power pools. The plant operators found it was more profitable to take advantage of the new-found capability to follow load up and down, rather than to operate at maximum limits. The yield was maximized for that asset by taking advantage of a new technology, driven by allowing the plant operator to have a new product to sell.

In terms of what software can do to save money at a plant, Maxey says programs using complex algorithms can tell plant operators what spare parts to store in a warehouse, so that expensive parts are not sitting unused, while others needed to prevent outages are unavailable. Furthermore, Maxey notes that the algorithms allow managers to know when to purchase parts, stressing that there is a high carrying cost to holding nuclear plant parts. He recalls one utility warehouse that was able to cut costs by 20 percent using this type of software.

Moreover, Grier points to a shift in asset optimization-understanding not only the immediate impact of postponing a large maintenance activity (outage), but also the downside of changing the timetable. That then changes the probability of additional forced outages, or a de-rate of the plant or even some sort of catastrophic failure of the plant. It creates a tension between the immediacy of saving money in the plant, and the realization that it does impact the probability of a de-rate, a catastrophic event, or the forced outage, Grier explains. The result is that Navigant has moved toward looking at things from a probabilistic viewpoint, as opposed to just