MID-SIZED NEW GENERATION: RECIPROCATING INTERNAL COMBUSTION ENGINES OR COMBUSTION TURBINE?

Presented to Power-Gen International 2017

Melanie J. Schmeida, P.E., Louis Perry Group, a CDM Smith Company 165 Smokerise Dr., Wadsworth, OH 44281, [email protected], 330-760-0645

Abstract For any new natural gas-fired power generation project, a developer or owner must wrestle with the question “what is the right technology?”. For very small projects, the answer often defaults to reciprocating engines. For very large projects, it is combustion turbines in a combined cycle configuration. But for the facilities in between, the right answer is not always so clear. This paper compares reciprocating engines to simple cycle combustion turbines for a nominal 50 MW gas-fired plant in the Midwest, connected to the electric grid. It evaluates capital costs, operating costs, reliability, operational flexibility, system responsiveness to dispatch requirements, and site considerations.

Background Inexpensive shale gas has resulted in an increased interest in natural gas-fired power generation in many parts of the nation. The profusion of this new generation, its implications on the utility and distributed generation markets, and project viability are topics of many publications. For the purposes of this paper, it is sufficient to say new natural gas-fired electricity generation is attractive for an owner in the Midwest, and evaluation of their needs indicates approximately 50- MW electric generating capacity is the appropriate size. Additionally, the purpose of the facility is electric generation only; no thermal energy in the form of steam or hot water is being considered.

For all generating facilities, the best-fit technology needs to be evaluated carefully. Developers and owners are making large investments, and need to consider many factors to ensure appropriate returns on that investment. However, conventional wisdom would dictate that a “small” natural gas-fired generating facility is best served by reciprocating internal combustion engines (RICE), as it would be expected to operate intermittently, and that a “large” generating facility is best served by a combined cycle system(s) as it would be expected to operate nearly continuously. But what about this 50-MW facility, which is “mid-sized”? What is the appropriate technology for this installation?

When this study was first contemplated, the primary technology options were intended to be RICE, a simple cycle combustion turbine (CT), and a combined cycle system. However, we quickly determined that the combined cycle arrangement was not going to be cost effective. It is conceivable that a combined cycle plant might be the right choice for a mid-sized facility if the

Page 1 of 13 thermal energy can be used and/or the facility will run continuously, but with our premise that the thermal energy has no value beyond additional electric generating capacity, the payback for the additional capital expense was not reasonable. Therefore, this paper focuses on a comparison between RICE and simple cycle CT for this application, contemplating the major questions of:

• How much should it cost? • How will it be used? • Where will it be located? • How much will it actually cost?

It is also worth noting that, while this study utilizes a specific example site, the items evaluated can be applied to any project.

How Much Should It Cost? As a starting point in the evaluation, typical engineering, procurement, and construction (EPC) costs for the technologies were evaluated to establish viability. Property costs were excluded, as the site was already owned, as were permitting and other owner costs since those would be similar regardless of the technology selected.

Estimated EPC Costs 1800

1600

1400

1200

1000 RICE

$/kW 800 CT

600

400

200

0

Figure 1: Published Estimated RICE and CT EPC Costs (see References)

Based on a sampling of published cost information, average EPC costs for RICE technology is approximately $1100/kW, and $800/kW for CT. The sample selected was based on installations in the 20-100MW size range, where such delineation was possible, and data points that appeared to be outliers were discounted.

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Similarly, typical O&M costs were evaluated for the two technologies. Fuel costs, which represent the largest portion of overall operating costs, were excluded, as differences in those costs can be accounted for in the differing efficiencies of the equipment. Apples-to-apples data comparison for these costs proved more difficult, since the data can be represented in a variety of ways.

The non-fuel O&M costs in Figure 2 address both fixed and variable costs for a typical installation. For the most comparable data, over the expected unit life, the average annual O&M cost for RICE was approximately $0.016/kWh and $0.007/kWh for CT.

Estimated O&M Costs 0.030

0.025

0.020

RICE 0.015

$/kWh CT

0.010

0.005

0.000

Figure 2: Published Estimated RICE and CT Non-Fuel O&M Costs (see References)

Operating and maintenance costs for RICE include maintenance labor, engine parts and materials such as oil filters, air filters, spark plugs, gaskets, valves, piston rings, and electronic components, and consumables. The recommended service includes inspections/adjustments and periodic replacement of engine oil and filters, coolant, and spark plugs every 500 to 2,000 hours. A top-end overhaul is recommended between 8,000 and 30,000 operating hours, which includes a cylinder head and turbocharger rebuild, and a major overhaul is performed after 30,000 to 72,000 operating hours, which involves piston/liner replacement, crankshaft inspection, bearings, and seals.

For CTs, the maintenance requirements are less than RICE, and include labor for routine inspections and procedures, and major overhauls. Generally, routine inspections are required every 4,000 operating hours to ensure that the turbine vibration is within tolerance. A gas turbine overhaul is needed every 50,000 to 60,000 operating hours, which includes a complete inspection and rebuild of components to restore the gas turbine to nearly original performance. Note that operating hours for CTs are not directly comparable to RICE operating hours, as virtual hours are added to CTs for starts/stops and excessive load changes.

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As shown, typical installed and non-fuel O&M costs are lower for CTs than RICE. The potential advantage of a RICE facility comes into play when operating characteristics and usage considerations are evaluated. Since maintenance costs for RICE installations do not increase with cycling and multiple starts and stops of the equipment, effective O&M costs begin to levelize between the technologies when employed in facilities that will experience this type of operation.

How Will It Be Used? As engineers, we often seek an optimized solution, a “best fit”. With this mindset, the intended purpose of the generating facility can often drive the technology selection, since the technical characteristics of the equipment inherently lend themselves to different applications. However, careful consideration is still needed, and final selections are, of course, still rooted in economics.

These technologies can be used for a variety of purposes in generating facilities, such as peaking generation, frequency stabilization and renewable generation support, to address reliability and resiliency concerns, and for capacity sales. As part of the comparison for these uses, some of the key differing technical features are shown in Table 1 below.

Table 1: Basic Technical Comparison RICE CT Heat Rate (Btu/kWh) 7400-8200 8100-9200 Max Efficiency (%) Full Load 48-50 40-43 50% Load 48-50 30-33 Footprint (ft2/kw) 0.28-0.38 0.02-0.08 Time to Full Load (min) 5 15 Ramp Rate (%/min) 100-130 20-50 Turndown (singe unit) 25% 30% CHP Applications Hot Water/Steam Steam Dual Fuel / Fuel Range Low BTU Low and High BTU

RICE heat rates are lower and efficiencies higher than CT, which results in lower fuel costs for the same output. Since fuel is the single largest operating expense for a generating facility, this is an important factor. Additionally, RICE efficiency remains steady throughout the load range, whereas CT efficiency decreases at reduced loads. The load range is broader for RICE than CT, both for a single unit, as well as for the total facility due to multiple smaller machines instead of one larger machine.

Reciprocating engines are also able to start-up and reach full load capacity more quickly, and can withstand dramatic changes in load and many starts and stops with minimal impacts to the equipment and maintenance cycles. The ramp rate, both up and down, is substantially higher for RICE than for CT. Although CTs can be cycled, excessive load changes and starts and stops effectively adds operating hours, dramatically increasing maintenance costs.

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Based on these characteristics, either RICE or CT appears to be the better fit for certain operational scenarios. When the hours of operation and load range are closer to intermediate load than to a high-cycling type of operation, the lower capital and O&M costs for the CT typically result in a higher return on investment, despite the lower efficiency. When the load profile is more volatile, the lower fuel and O&M costs for the RICE typically results in a higher return on investment, despite the higher installed cost.

Table 2: Operating Characteristics – Best Fit RICE CT Load Profile Peaking to Intermediate Intermediate to Base Starts/Stops Many Few Capacity Factor Low High Hours of Operation Low High Operating Range Low Load Mid Load

Peaking Generation For peaking applications, both RICE and CT can be viable options. Most of the literature advocates RICE for its fast start capabilities and broader load range as a better match to changing grid needs. Reciprocating engine facilities can reach full load within 3-5 minutes, and depending on the number of units, can operate from 10-100% of total plant load, or even lower. As stated above, they do not decrease in efficiency at reduced load operation, and can withstand many load changes and starts and stops without penalizing maintenance costs.

When evaluating the cost implications of these attributes (reduced fuel and maintenance costs), RICE may very well be superior. However, CTs can still be an attractive option for peaking applications depending on the specific conditions. For example, many regional organizations have excellent peak prediction tools. This information allows operators to make informed decisions regarding start-up and run time for their CT plants, reducing concerns about response time and cycling operation, as they can choose to respond only to longer duration peaks.

Frequency Stabilization and Renewable Support Different from peaking applications, the use of generating facilities for frequency stabilization requires fast response. This is most often needed to support the grid as a result of the increased use of renewable generation, due to the non-synchronous generation of wind and solar power. Wind and solar may account for 20% of installed power capacity by 2035, but only contributes about 2% of firm capacity that can be relied on to generate at any given time. Other factors that can lead to grid instability include fast variations in consumption, errors in forecasting, and unexpected disturbances in capacity or loads. As a RICE facility can ramp quickly, it is the rational choice if this is the goal of the facility.

Reliability and Resiliency

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Recent natural and man-made disasters have placed reliability and resiliency of our electric power supply at the forefront of national discussion. Both RICE and CT facilities are highly reliable, with up to 98% availability with proper maintenance; this equipment can be counted on to operate when called upon. However, RICE does have some advantages in this area. For our 50-MW plant, a single CT would be employed, as that would be the most economical installation. Since there is only a single unit, versus multiple RICE, the RICE installation has inherent redundancy that the CT could not match. In the event one engine was out of service, the remainder could still produce power. In the unlikely event emergency power was required during a turbine rebuild/replacement, there would be no option for generation. Additionally, RICE facilities can be used for black-start support, as they can be started without auxiliary power. Combustion turbines require auxiliary power to start system components.

Capacity Sales Some facilities exist for electricity sales to wholesale capacity markets. In this case, either technology is well-suited for the application. Both technologies are completely dispatchable, so they can be utilized when the price of electricity is advantageous for them to do so or when called upon by a grid operator. However, some operators attempt to capture very short-term price spikes, in which case RICE may have an advantage due to its faster response time.

Where Will It Be Located? Every site is unique, and specific site attributes can have a major impact on the financial viability of a project in general, and on the selection of the appropriate technology. In many cases, these will override the well-established rules discussed above.

Footprint As illustrated in Table 1, CT systems utilize approximately one-third to one-quarter of the area needed for equivalent RICE generation. Additionally, CTs are relatively lighter weight and do not require substantial support foundations, resulting in less site work overall. This difference in footprint is accounted for in the installation cost of the project, including the typical EPC costs referenced in this paper. However, beyond the common installation costs, this difference in footprint can result in additional costs to the project. For a brownfield site, this may mean additional demolition or remediation services are required. Or for a landlocked area, the expense to purchase additional land could make selection of RICE prohibitively expensive.

Ambient Conditions Reciprocating engine performance is impacted very little by changes to the incoming air conditions, therefore air pressure reductions at high altitude (up to 3,000-ft above sea level or more) and large ambient temperature ranges (up to 100 °F) do not significantly affect operations. Conversely, CT performance may degrade as much as 10-15% from ISO conditions for the same range due to incoming air properties. High altitude installations need to adjust heat rate/efficiencies in their performance model to properly represent the expected output. To combat the degraded performance for CT at high air temperatures, an inlet air cooler is often

Page 6 of 13 installed. This results in improved efficiency of the CT, but requires additional capital expenditure, and operating expense in the form of water usage. Either technology can be effectively utilized, but RICE has the advantage of maintaining base performance.

Natural Gas Pressure Combustion turbines require much higher inlet gas pressure than RICE, 300-600 psig vs 75-150 psig. If the site has access to a high pressure natural gas line, this may not be of much concern. However, most owners do not have such luxury, and therefore will need to install gas compressors for a CT installation. These compressors are noteworthy pieces of equipment in their own right, with significant capital and O&M expenditures required.

Noise Both technologies will generate far-field noise when in operation, so proximity to receptors will be a concern regardless of selection. Typically, specifically engineered sound enclosures and/or buildings will be sufficient; however, RICE tend to generate higher frequency noise that is more difficult to control than the lower frequencies produced by CTs. If the site is in an area with sensitive receptors, additional sound mitigation measures may be required, resulting in increased capital costs for the RICE.

Emissions Both technologies are efficient combustors and have low resulting emissions, and both can be outfitted with selective catalytic reduction (SCR) systems for NOx and CO control. This is an area where the fast start and response time of RICE can be a detriment, as the emissions control equipment does not respond as quickly. During start-up or fast ramping, emissions levels may fluctuate, causing temporary spikes. Average emissions limits are not likely to be a concern in most parts of the U.S., however, permits need to be reviewed carefully for instantaneous or peak allowable emissions levels. Restrictions on instantaneous levels may restrict operational flexibility, resulting in loss of function that impacts the project pro forma.

Water Availability As noted above, for high ambient temperature installations, CTs will often be outfitted with an inlet air cooler, which will require high purity water. Some CT models also require water injection for cooling and emissions controls. If water scarcity, or the cost of demineralized water, is a concern at a site, the resulting operating costs may favor RICE. Reciprocating engines require an external cooling circuit, but typically utilize a closed-loop system with minimal make-up water needs.

Future Expansion Both CT and RICE equipment can be supplied as modular units, which can reduce installation costs by shifting labor from the field to the shop. Additional units can be added on site as a path to expand generation capacity in the future. Due to the smaller size of the RICE units, it is far more practical to incrementally expand capacity by adding one engine at a time than it is for CT.

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If incremental expansion is a possibility for a facility, RICE will permit that expansion, whereas additional CTs will result in major step changes.

Unique Site Considerations The list of potential site considerations is nearly inexhaustible. There are many unique features to any location that could impact cost and/or technology selection. In many cases, the outcome will be the same regardless of the technology selected, but consideration is still warranted. Some items to evaluate include: • Does the site share utilities with other facilities? What is the impact of installing new generation capacity on these utilities. For example, will the natural gas consumption restrict capacity or impact pressure for the other users? Will a substation connection or upgrade impact operations? • For a re-development site, are there opportunities to re-use existing infrastructure, such as electrical distribution equipment, water or compressed air systems, buildings, etc. to reduce capital costs? • Is there the potential for unknown subsurface conditions, contaminated soil, hazardous materials, or other similar brownfield issues? In cases like these, the smaller footprint of the CT could result in significant savings over the RICE. • Air permit considerations were noted above, but are there other permitting concerns that could impact the installation? Siting and connection permits can be just as challenging as air permits. • Does the owner or community have aesthetic concerns or preferences to incorporate? • Does the installation need to consider future development in the area?

Example Facility

How do the criteria above play out for our 50-MW example facility in the Midwest?

How Much Should It Cost? As noted in the background, new natural gas-fired electricity generation is attractive for an owner, who intends to generate electricity only; no thermal energy use is being considered. The rough pro forma indicated a breakeven EPC cost of $1100/kW, dependent on the actual estimated O&M expenses. This alone leaves either RICE or CT squarely in contention.

How Will It Be Used? Like most installations, the facility is intended to address many needs. Its primary purpose is peak shaving, where the owner feels they can save their customers money by avoiding utility peak rates. It is also viewed as a resiliency addition, as many customers in the area are served by a single utility feed; if the primary line goes out this generation can serve as back-up for those users. Also, if electricity prices increase in future PJM capacity auctions, this operator may choose to sell into the open market and take further advantage of their investment. Again, this

Page 8 of 13 blend of needs leaves RICE and CT both as viable options, although many would argue that RICE would be the better option for a peaking application as well as for redundancy.

Where Will It Be Located? The site is an existing electric generating facility that has been decommissioned, but the building and some equipment remains. Figure 3 below shows an edited aerial view of the example site.

Some of the typical site considerations discussed above do not heavily influence the technology selection for this site. The location is in the Midwest, so altitude or extreme ambient temperature effects are generally negligible. There is an existing gas line to the property at approximately 150-psig operating pressure. Therefore, a gas compressor will be required for CT, which will be accounted for in the EPC and O&M cost estimates; the owner has no concern with installing or operating the compressors. Water is available, and in fact an existing demineralized water system is still functional. There are no specific permitting concerns for either technology. Again, clear drivers towards one technology or the other have not presented themselves, although the added expense of the gas compression may slightly favor RICE.

Figure 3: Example Site for New Generation Installation

At this point, the paths start to diverge. The site is large, and has ample clear space. As shown in Figures 4 and 5 below, it appears that the footprint for CT or RICE can be accommodated.

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Figure 4: Example Site CT Footprint

Figure 5A&B: Example Site RICE Footprint Options

What’s not clear upon first glance are the unique site considerations. As seen in Figure 3, there are currently residences across the street from this facility, and there are plans to modify the same area as a recreational/entertainment district in the future. Therefore, the community has strong preferences to maintain the vintage appearance of the old boiler house, and keep any new equipment out of view from the road. They are also dictating noise restrictions at the road. These restrictions rule out the RICE A arrangement without erecting a barrier wall or upgraded

Page 10 of 13 building walls to create an aesthetically pleasing façade and provide additional sound attenuation.

This is an old site, that has had equipment added and removed over its lifetime. The potential to encounter unknown subsurface utilities and structures is high, so a smaller footprint presents less risk. Specifically, regarding the RICE B arrangement, in the half of the clear area near the neighboring building, there are groundwater remediation and monitoring wells for a nearby site. Obtaining approval and relocating these wells to accommodate the RICE B arrangement would be a costly endeavor.

In addition to the demineralized water system already mentioned, the existing stack shown is in good condition for re-use, as is the compressed air system, and some electrical distribution gear. The differentiator is the stack; the single CT could possibly utilize the stack, whereas multiple RICE cannot.

The owners of the proposed generation facility also prefer to leave space for additional capacity. There is space for another CT unit, but increasing the size of the RICE facility would only exacerbate the aesthetic, noise, and subsurface situations.

How Much Will It Actually Cost? Typical EPC and O&M costs were presented at the beginning of this paper. While average numbers are good to use for screening purposes, as shown in Figures 1 and 2, the actual figures can vary widely. EPC costs for RICE varied from $700/kW to $1700/kW, and from $400/kW to $1100/kW for CT. Non-fuel O&M costs varied from $0.007/kWh to $0.025/kWh for RICE and $0.004/kWh to $0.015/kWh for CT. Based on the factors presented here regarding facility use and location, the reader can gain appreciation for why that variation exists.

For our example project, the system’s essential purpose and expected usage would tend to favor RICE. In a vacuum, that’s likely what the owner would choose to deploy. But footprint, noise, future expansion, and other unique site considerations favor CT. Fortunately, the financial implications of those site factors could be evaluated to select the technology best suited for the project overall.

The EPC cost for the CT installation is approximately $850/kW and the cost for the RICE installation is approximately $1250/kW. In this case, the financial models showed that CT was the preferred choice. Over the lifecycle of the facility, the additional capital associated with site modifications for the RICE installation was costlier than the lower efficiency and O&M penalties associated with less than ideal operation of the CT.

The owner evaluated changing the plant size to see if the financial model would favor RICE at another output. As the facility decreased in size, the differential did close. However, concerns

Page 11 of 13 then arose regarding the ability to meet peak load requirements. As the facility increased in size up to approximately 100MW, the preferred technology remained CT.

Conclusion For a mid-sized generating facility, approximately 50-MW, either RICE or CT technology can be the “right” choice depending on the specific attributes of the project. Conventional wisdom exists for a reason, and often points to the best fit solution. However, like our example facility, care needs to be taken to account for many competing factors before making a final selection, some of which have been discussed in this paper, and others that may be completely unique to an owner/developer or to a specific site. With proper diligence, the proper selection emerges.

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References

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