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Power-Gen 2016 Coal to Gas Conversion Paper

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2016 Bowen - Burns & McDonnell presentation at Power-Gen, covering the challenges and benefits of Coal to Gas Conversion. Presented by Bowen's Ed Storrs, and Burns & McDonnell's Dary Burnett.

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Power-Gen 2016 Coal to Gas Conversion Paper

  1. 1. ► 2015 Historical Snapshot ► Midcontinent Independent System Operator (MISO) ► Assumes current coal unit owner considering shutdown ► 4 Alternatives evaluated: 1 Overview of Economic Analysis Coal Operations Coal to Gas Conversion New 1x1 F-Class Combined Cycle New 1x F-Class Simple Cycle New Reciprocating Engines Plant COAL TO GAS CONVERSION: THE CHALLENGES AND BENEFITS POWER-GEN NATURAL GAS – 2016 – COLUMBUS, OH
  2. 2. ► 2015 Historical Snapshot ► Midcontinent Independent System Operator (MISO) ► Assumes current coal unit owner considering shutdown ► 4 Alternatives evaluated: 2 Overview of Economic Analysis Coal Operations Coal to Gas Conversion New 1x1 F-Class Combined Cycle New 1x F-Class Simple Cycle New Reciprocating Engines Plant COAL TO GAS CONVERSION: THE CHALLENGES AND BENEFITS POWER-GEN NATURAL GAS – 2016 – COLUMBUS, OH ECONOMIC ANALYSIS DESIGN CONSIDERATIONS CONSTRUCTABILITY FACTORS
  3. 3. ► 2015 Historical Snapshot ► Midcontinent Independent System Operator (MISO) ► Assumes current coal unit owner considering shutdown ► 4 Alternatives evaluated: 3 Overview of Economic Analysis Coal Operations Coal to Gas Conversion New 1x1 F-Class Combined Cycle New 1x F-Class Simple Cycle New Reciprocating Engines Plant ECONOMIC ANALYSIS DESIGN CONSIDERATIONS CONSTRUCTABILITY FACTORS
  4. 4. 4 Economic Analysis Assumptions Generic Technology Assumptions Coal to Gas Conversion2 1x1 F-Class CCGT - Natural Gas (Fully Fired)1 1xF-Class SCGT - Natural Gas Reciprocating Engine (6 x 18MW Engines) Operating Capacity (MW) 450 400 210 110 Net Plant Heat Rate, Btu/kWh (HHV) 10,000 6,900 9,500 8,300 Fixed O&M Cost, 2015 $/kW-Year $20 $10 $9 $10 Total Variable O&M Cost, 2015$/MWh $3.00 $1.90 $1.30 $3.10 Total Project Costs, 2015 MM$ $60 $380 $130 $120 Total Project Costs, 2015 $/kW $130 $950 $610 $1,100 ECONOMIC ANALYSIS DESIGN CONSIDERATIONS CONSTRUCTABILITY FACTORS
  5. 5. 5 Locational Market Prices & Natural Gas Forecast $1.50 $2.00 $2.50 $3.00 $3.50 $4.00 $20.00 $25.00 $30.00 $35.00 $40.00 $45.00 NaturalGasPrice($/MMBtu) LMP($/MWh) Locational Marginal Price Natural Gas Price ECONOMIC ANALYSIS DESIGN CONSIDERATIONS CONSTRUCTABILITY FACTORS
  6. 6. Hourly Economic Dispatch Results Coal to Gas Conversion 1x1 F- Class CCGT - Natural Gas (Fully Fired) 1xF-Class SCGT - Natural Gas Reciprocating Engine (6 x 18MW Engines) Annual Unit Generation (MWh) 878,000 2,679,000 497,000 435,000 Avg. Capacity Factor (%) 22% 77% 27% 45% Market Revenues ($M) $32.9 $80.1 $17.7 $15.2 Fuel Costs ($M) $24.3 $52.7 $13.0 $10.3 Variable O&M Costs ($M) $3.4 $8.0 $2.1 $1.4 Gross Margin ($M)2 $5.2 $19.4 $2.6 $3.5 Gross Margin ($/kW)2 $12 $49 $12 $31 Capital Recovery, 2015 $/kW-year $12 $84 $54 $97 Fixed O&M Cost, 2015 $/kW-Year $20 $10 $9 $10 Annual Fixed Costs, 2016 $/kW1 $32 $94 $63 $107 Implied Capacity Costs, 2016 $/kW $20 $45 $51 $76 6 Economic Analysis Results
  7. 7. ► Overall, the Coal to Gas Conversion was a lower cost source of capacity than other options evaluated ► Even if not considering a long-term solution, may make economic sense for as short as 5-10 years to delay investment in a new build option and waiting for more market certainty ► Market price exposure is a potential risk of a coal to gas conversion, but risk is still hedged with a peaking resource ► Needs to evaluated on a case-by-case basis, but current market conditions with low LMPs and natural gas prices often favor a lower capital investment cost of a coal to gas conversion 7 ECONOMIC ANALYSIS DESIGN CONSIDERATIONS CONSTRUCTABILITY FACTORS Economic Analysis Results
  8. 8. ► 2015 Historical Snapshot ► Midcontinent Independent System Operator (MISO) ► Assumes current coal unit owner considering shutdown ► 4 Alternatives evaluated: 8 Overview of Economic Analysis Coal Operations Coal to Gas Conversion New 1x1 F-Class Combined Cycle New 1x F-Class Simple Cycle New Reciprocating Engines Plant COAL TO GAS CONVERSION: THE CHALLENGES AND BENEFITS POWER-GEN NATURAL GAS – 2016 – COLUMBUS, OH ECONOMIC ANALYSIS DESIGN CONSIDERATIONS CONSTRUCTABILITY FACTORS
  9. 9. ► NFPA requirements for Gas Conversion • Area classification • BMS compliance requirements ► Fuel Gas Piping System • Pressure reducing station • Burner Connection ► Boiler modifications • Surface area modifications • Flue gas recirculation • NOx and CO 9 ECONOMIC ANALYSIS DESIGN CONSIDERATIONS CONSTRUCTABILITY FACTORS Design Considerations
  10. 10. ► Area Classification • Gas supply piping and gas train components that contain the gas and prevent it from entering surrounding electrical components are considered closed piping systems • There is a risk that these systems can be opened and release gas to the atmosphere through the burner or vent through operation of valves. • However, in the case of release through the burner, there is already an ignition source present (the pilot / igniters) that cannot be removed. • Mitigating the associated risks of such operation is achieved though designing the systems and associated safety provisions per applicable NFPA codes (such as NFPA 8506) to operate safely and reliably provided they are maintained regularly. • Relative to the vent, the risk is mitigated through terminating the vent at a safe location outside the building. 1 0 ECONOMIC ANALYSIS DESIGN CONSIDERATIONS CONSTRUCTABILITY FACTORS Design Considerations NFPA Requirements
  11. 11. ► Area Classification • Natural gas is lighter than air leading to dissipation of a leak from the closed piping system. • The boiler enclosure needs to have adequate ventilation. ► Needs to be reviewed closely with operations ► Some plants don’t use their ventilation system all year around. ► Whenever gas is in the building the ventilation system needs to be in service to meet NFPA. ► Change in operation standards for most plants 1 1 ECONOMIC ANALYSIS DESIGN CONSIDERATIONS CONSTRUCTABILITY FACTORS Design Considerations NFPA Requirements
  12. 12. ► BMS Requirements • All BMS controls should be within the same cabinet. • Many BMS systems don’t comply • The existing DCS cabinets may not have the I/O space to comply ► Ignitors • Natural Gas Burners require one ignitor for each burner • Coal units can use one ignitor to light two burners • Modifications will be required for compliance. 1 2 ECONOMIC ANALYSIS DESIGN CONSIDERATIONS CONSTRUCTABILITY FACTORS Design Considerations NFPA Requirements
  13. 13. ►Model FLY Through 1 3 ECONOMIC ANALYSIS DESIGN CONSIDERATIONS CONSTRUCTABILITY FACTORS Design Considerations Fuel Gas Piping Systems
  14. 14. ►Pressure Reducing Station • Location of the station • Station can be loud ►Burner Connection • Flex Hose Connection • Boiler deformation over time • Flexibility in the pipe design 1 4 ECONOMIC ANALYSIS DESIGN CONSIDERATIONS CONSTRUCTABILITY FACTORS Design Considerations Fuel Gas Piping Systems
  15. 15. ► Boiler modifications • Capacity Installation – Low Cost Option ► Only install gas piping ► Make surface area modifications ► Higher heat rate • Full Capacity Installation – High Cost Option ► Flue gas recirculation installation ► Better heat rate ► Potential draft system modifications 1 5 ECONOMIC ANALYSIS DESIGN CONSIDERATIONS CONSTRUCTABILITY FACTORS Design Considerations Boiler Modifications
  16. 16. ► Other Potential Boiler modifications ► NOx and CO catalyst ► Bottom Ash system modifications ► Back pass vibration potential ► FGD Bypass 1 6 Design Considerations Boiler Modifications ECONOMIC ANALYSIS DESIGN CONSIDERATIONS CONSTRUCTABILITY FACTORS
  17. 17. ► 2015 Historical Snapshot ► Midcontinent Independent System Operator (MISO) ► Assumes current coal unit owner considering shutdown ► 4 Alternatives evaluated: 1 7 Overview of Economic Analysis Coal Operations Coal to Gas Conversion New 1x1 F-Class Combined Cycle New 1x F-Class Simple Cycle New Reciprocating Engines Plant COAL TO GAS CONVERSION: THE CHALLENGES AND BENEFITS POWER-GEN NATURAL GAS – 2016 – COLUMBUS, OH ECONOMIC ANALYSIS DESIGN CONSIDERATIONS CONSTRUCTABILITY FACTORS
  18. 18. ► Project work in an active facilities ► Work is very outage-based ► The most efficient pipe routings are already taken ► Spaces for work and equipment are crowded ► Emergent work is a factor 1 8 ECONOMIC ANALYSIS DESIGN CONSIDERATIONS CONSTRUCTABILITY FACTORS Constructability
  19. 19. ► Eliminate variables and risk ► Free time for emergent work certain to surface in an existing facility ► Examples • Valve Trains / Burner Management I/O complete before outage • Electrical Marshalling Cabinets • FGR Ductwork outside boiler building 1 9 ECONOMIC ANALYSIS DESIGN CONSIDERATIONS CONSTRUCTABILITY FACTORS Constructability Moving work out of outage
  20. 20. ► Clearly delineate lines of demolition ► Demo = cost + risk ► Some Abandoned Processes • FGD / Precip • Coal Conveyors • Wastewater processes • Associated pipe, equip., buildings, etc. 2 0 ECONOMIC ANALYSIS DESIGN CONSIDERATIONS CONSTRUCTABILITY FACTORS Constructability Demolition
  21. 21. ► Locate as much of the ductwork as possible outside the boiler building ► Use of bottom supported ductwork is significantly faster than top (hangar) supported ductwork ► Consider production changes of duct segments as work areas become more crowded 2 1 ECONOMIC ANALYSIS DESIGN CONSIDERATIONS CONSTRUCTABILITY FACTORS Constructability FGR Ductwork
  22. 22. ► Unknown conditions in an existing plant ► Due to thermal expansion and contraction wind boxes may be damaged over time ► Extensive repairs required for installation of tight tolerance burner nozzles 2 2 ECONOMIC ANALYSIS DESIGN CONSIDERATIONS CONSTRUCTABILITY FACTORS Constructability Emergent Work
  23. 23. ► 2015 Historical Snapshot ► Midcontinent Independent System Operator (MISO) ► Assumes current coal unit owner considering shutdown ► 4 Alternatives evaluated: 2 3 Overview of Economic Analysis Coal Operations Coal to Gas Conversion New 1x1 F-Class Combined Cycle New 1x F-Class Simple Cycle New Reciprocating Engines Plant COAL TO GAS CONVERSION: THE CHALLENGES AND BENEFITS POWER-GEN NATURAL GAS – 2016 – COLUMBUS, OH ► Cost effective, quickly implemented solution for utility in today’s market ► Modification to existing, active facility comes with a variety of additional engineering and construction considerations that should be factored during evaluation of a utility’s alternatives Conclusions
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