BUSINESS & TECHNOLOGY FOR THE GLOBAL GENERATION INDUSTRY SINCE 1882

Vol. 161 No. 2 February 2017

Combined Heat & Power 2.0

Managing Coal Contracts

NERC Regulation Compliance
Nuclear Fuel Supply Challenges
 ON THE COVER
DONG Energys Avedore Power Plant is
part of a growing trend of combined heat
and power plants moving away from coal.
Once Denmarks largest coal-fired plant,
it now fires primarily wood pellets, with
Established 1882 Vol. 161 No. 2 February 2017 backup from natural gas and fuel oil. Unit
1 completed the conversion from coal in
late 2016. Courtesy: DONG Energy

SPEAKING OF POWER
Energy R&D Is Essential to Any Great Country 8
GLOBAL MONITOR
Global Developments Giving CHP a Much-Needed Boost 10
India to Freeze Coal Construction, Focus on Expanding Renewables 10
District Power and Heating from a Wastewater Plant 11
THE BIG PICTURE: The Nuclear Fuel Cycle 12
South Korea Reports Fusion Research Progress 13
New Solar Roads Unveiled 13
POWER Digest 14
FOCUS ON O&M
Counterfeit Parts: Why Authenticity Is Imperative 16
Proper Scaffold Access Plan Helps Reduce Radiation Exposure 17
LEGAL & REGULATORY
Fitness for Purpose Obligations for the Offshore Wind Sector
By Rebecca Williams and David Wright, Watson Farley & Williams LLP
24 11

COVER FOCUS: CHP AND INDUSTRIAL POWER

CHP 2.0: New Fuels and New Business Models 26
Combined heat and power (CHP) plants have been around for well over a
century, and even though they account for a much smaller percentage of total
generation than grid-connected power-only plants, their numbers are poised
to grow as they adopt new fuels, configurations, and operating scenarios.
Meanwhile, new containerized technology is making CHP easier than ever to
deploy.

New Options in Industrial CHP Boost Efficiency and Returns 31

A shift to cleaner fuels and adoption of the latest digital technologies are two
big trends for owners of industrial CHP facilities around the world. Other in-
triguing options include a microturbine packaged with an integrated heat-
recovery module.
26

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31
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February 2017 POWER www.powermag.com 1
Do the plants that power your grid
Dont settle for less.
 REVOLUTIONARY
ENERGY

achieve greater than 63% efficiency?

Join the revolution.

changeinpower.com
 FUELS
Coal Fuel Contracts: A Moving Target 34
One critical aspect of the changing U.S. coal-fired power industry that is
rarely addressed publicly is the difficulty of managing fuel contracts in a
much more volatile market than coal plants have previously experienced.
This POWER exclusive looks at the nature of the problems as well as some
innovative solutions.

Global Nuclear Fuel Update 37

Normally, power plant owners see low fuel prices as a good thing, but in the
case of nuclear power, depressed prices for uranium could create some sup-
ply challenges in the foreseeable future.

REGULATIONS
34 Where Are We After 10 Years of Bulk Electric System Reliability
Standards? 42
Its hard to find anyone who loves regulations, but Critical Infrastructure Pro-
tection (CIP) standards grew out of an even worse scenariothe 2003 North-
east Blackout. As North American Electric Reliability Corp. CIP standards hit
their decade anniversary, compliance approaches are evolving even as the
standards grow more complex.

Start Generator Relay Loadability Study Now for Timely NERC PRC-025-1
Compliance 48
PRC-025-1 was created to increase grid stability during system disturbances
by reducing the number of nuisance trips due to incorrect settings. Though
its October 2019 compliance deadline may seem far off, there are several
reasons to start your planning now.

COMMENTARY
Yesterdays Retail Tariff and a Transforming Grid 56
By Ashley Bernstein, Calpine Corp.

37

NEWS STORIES BY POWER EDITORS ON POWERMAG.COM

Experts: If Clean Power Plan Perishes, GHG Regulation Almost Certain Under
NAAQS Program
U.S. LNG Exports Surge in 2016But Not Where They Were Expected
China Plans $363 Billion Investment in Renewables Over Five Years
Oregon Wave Energy Center Gets $40 Million for Test Facility
Westinghouses Losses from Nuclear Business Deal Mount
NRC Issues License for Dukes Lee Nuclear Project, but Future Uncertain
Obama and Trudeau Ban Oil & Gas Leasing in Arctic, Parts of Atlantic
DTE Energys Fermi 2 Nuclear Reactor Gets License to Operate for 20 More
Years
U.S. and Canada Join Forces to Battle Cyberattacks on Electric Grid
FERC Proposes Rule Changes on Interconnect, Fast Start
U.S. Fish & Wildlife Service Finalizes Rule on Wind Turbine Eagle Deaths
48 First U.S. Commercial Offshore Wind Farm Starts Operation

4 www.powermag.com |
POWER February 2017
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POWER February 2017
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 SPEAKING OF POWER
Energy R&D Is Essential to
Any Great Country
ill Gates is taking on another global
B challenge: Reliable, affordable en-
ergy for the world. On December
11, the richest man in the world announced
yet another commitment to effecting radi-
cal change. Its called Breakthrough Energy
Ventures (BEV). Together with fellow inves-
tors, Gates is betting that private money can
help create a carbonless future by spurring
breakthrough technologies around the world.
BEV has made a commitment of $1 bil-
lion over 20 years with an investment fund
described as patient, flexible, and commit-
ted to the guiding principles of the Break-
through Energy Coalition. BEV investments
will be guided by solid research as well as
by market priorities.
Given Gates prior financial support
for nuclear power company TerraPowers
traveling wave reactor technology, some
have speculated that nuclear energy will
be a beneficiary of BEV funds. However,
while Gates has been noncommittal about
nuclear, he has said there will be a focus
on renewables, storage, and transmission.
Public R&D Financing Is
Foundational
Theres no question that private investment
in energy sector research and development
(R&D) is important, but Gates acknowl-
edges private money cant achieve success
alone. BEVs website says, Public support
continues to be crucial in providing the
foundation of basic research that unlocks
private investment in company-building
and industry creation.
Corporate R&D commitments to basic
research come and go because they are
driven by short-term shareholder return
calculations. Private sector initiatives also
may lack easy access to research facilities
and staffs. Governmentthat is, publi-
cally fundedR&D on the other hand, is
able to sustain long-term projects at uni-
versities, national labs, and elsewhere. Of
course, such projects should be account-
able to receive continued funding, but
visionary programs committed to substan-
tially new breakthroughs require reliable
financial and institutional support. That
sort of stability is also necessary to at-
tract top human talentfor which there
is steep, global competition.
8 www.powermag.com
Current Budgets Are Insufficient
Recent U.S. budgets for energy-related R&D
increased from 2015 to 2016, as well as in
the 2017 budget request. That includes the
Department of Energys Advanced Research
Projects Agency-Energy (ARPA-E), whose
budget increased from $291 million in 2016
to $500 million in 2017. (Watch for my on-
line reports from the ARPA-E Summit at
the end of February, posted at powermag.
com.) Additionally, beginning in November
2015, the U.S., Canada, and Mexico, along
with 19 other countries and the European
Union, have made a Mission Innovation
pledge to double public funding for clean
energy R&D over a five-year period in sup-
port of economic growth, energy access
and security, and an urgent and lasting
global response to climate change.
But even these latest increases arent
enough. A December report by the non-
partisan technology think tank Informa-
tion Technology & Innovation Foundation
(ITIF), showed that, despite increasing
budgets, the U.S. ranks only 11th in en-
ergy R&D investments as a percentage
of gross domestic product. China spends
three times as much as the U.S.
The authors say that, Asian countries,
in particular, have vaulted to the forefront
of global trade in clean energy technol-
ogy, and China in particular, is the world
leader in the production of solar panels,
batteries, and wind turbines, and it is
quickly taking the lead in next-generation
nuclear power and technologies to capture
carbon. The United States is losing this
race because Asian countries are out-in-
vesting it and dictating the terms of com-
petition, often flooding the market with
low-cost, unimaginative products.
The ITIF report makes several recommen-
dations to the new president and Congress,
including increased support for programs
like ARPA-E that fund end-use driven re-
search programs. Basic science is crucial
to breakthrough discoveries, but there also
needs to be a game plan for applying those
discoveries to commercially viable technol-
ogies. We dont, for example (in my view),
need another novel approach to convert-
ing solar energy into electricity that relies
upon materials that will never be economic
at scale. We do need simple, cheap, reliable
carbon capture and use technologies to
make the worlds fossil-powered plants part
of the near-term and medium-term solution
to climate change.
Government funds were instrumental in
developing nuclear power and fracking tech-
nologies, which led to early American domi-
nance in those fields. In ways large and small,
public money has supported every aspect of
todays power sector, from prime mover tech-
nologies to environmental controls, and the
innovation needs continue to evolve.
Science Is Not Democratic or
Republican
When it comes to power sector leadership,
the path is clear: Its forward, not backward.
Other nations are investing in next-genera-
tion technologies that buyers around the
world want today. Old coal technologies
are being challenged globally on economic,
emissions, and climate change grounds. To
help coal and gas plants continue to supply
needed baseload generation in many parts
of the world, cleanerbut also cheaper
and more reliabletechnologies need to be
introduced. It bears noting here that ARPA-
Es mandate to advance high-impact energy
technologies that are too early for private
sector investment (including carbon capture)
has enjoyed bipartisan support since it was
introduced under President George W. Bush.
In a December interview with E&E News,
Gates said he told Donald Trump in No-
vember (before Trump chose Rick Perry for
energy secretary) that energy and climate
change provide a chance for American lead-
ership and that theres a lot of opportunity
for innovation generally and that energy can
provide a lot of return on the right type
of research. He told E&E that his next con-
versation with Trump would emphasize the
importance of federal clean energy research
as well as its impact on jobs and exports.
Because the power industry relies on
innovative technologies to keep electric-
ity reliable and increasingly clean, I urge
you to tell your representatives in Con-
gress that supporting increased energy
R&D budgets is important to this keystone
industryand to all Americans and Ameri-
can businesses, which rely upon the ser-
vices power provides every day.
Gail Reitenbach, PhD is POWERs editor.
|
POWER February 2017
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Global Developments
Giving CHP a Much-
Needed Boost
According to the International Energy
Agency (IEA), global power production
from combined-heat-and-power (CHP)
technologies has stagnated since 2000,
lagging far behind growth in conventional
power technologies and commercial heat
generation. Despite having an average ef-
ficiency of 59%, CHPs share of global gen-
eration in 2013 stood at just 9% (Figure
1), the bulk of it at industrial sites in the
chemicals, metal, oil refining, pulp and
paper, and food processing sectors (see
this issues cover stories).
That may be poised to change, how-
ever: Along with the Paris agreement and
a renewed drive for increased energy effi-
ciency, a number of countries have of late
implemented policy initiatives that could
spur growth for CHP.
U.S. In the U.S., where CHP has a long
history in the industrial sector, several
market drivers are emerging, the Depart-
ment of Energy noted in an April 2016
report. These include lower energy oper-
ating costs, environmental regulations,
resiliency initiatives, utility support, and
project replicability (for more, see CHP
Update: Policies, Partnerships, and Chal-
lenges in POWERs February 2016 issue).
Recent policy initiatives on a federal
level include a 10% investment tax cred-
it for CHP. In August 2012, meanwhile,
President Obama issued an executive or-
der creating a goal to add 40 GW of new
CHP capacity. Many states have also is-
sued policies to encourage CHP growth.
The long list of measures (which can be
found in a database curated by the Envi-
ronmental Protection Agency at http://
bit.ly/2iLnszC) include electric rates,
feed-in-tariffs, grants/rebates, loans,
portfolio standards, production incen-
tives, energy plans, and tax incentives.
European Union (EU). CHP thrives in
the EU, generating about 10.5% of elec-
tricity and 15% of heating in Europe.
But according to the European Commis-
sion (EC), increased cogeneration could
lower greenhouse gas emissions within
the EU by up to 250 million metric tons
by 2020, and small cogeneration facilities
could easily supply energy to remote areas
without the need for expensive grid infra-
structure. The executive body for the EU in
November 2016 issued a pivotal package
that renews the blocs commitment to en-
10
1. Co-generation trends. Source: International Energy Agency (2016), Tracking Clean
Energy Progress 2016, OECD/IEA, Paris
Electricity generation n OECD n Non-OECD
Heat generation n OECD n Non-OECD
ergy efficiency and introduces provisions
that could enable member states to create
new opportunities for the CHP sector or
reward the added value of cogeneration.
Yet, according to the European Associa-
tion for the Promotion of Cogeneration,
the EC could do even more to encourage
CHP, such as tackling lengthy grid connec-
tion times for CHP installations, which re-
mains a barrier in many member states, it
said in November. Incentives should also
reach biomass CHP plants smaller than the
proposed 20-MW threshold. In addition, it
urged, It is . . . important that the se-
curity of heat supply is one of the main
criteria when grid access rules for indus-
trial CHP (i.e. priority of dispatch and pri-
ority access to the grid/curtailment) are
decided.
China. China, which has struggled
to manage endemic air pollution in ma-
jor cities, is pursuing active programs
and strict regulations to lower emission
levels and increase energy efficiency.
A specific rule calling for companies in
industrial capitals to switch off and re-
place coal-fired boilers before 2018 has
prompted a number of companies to re-
place coal plants with gas-fired CHP sys-
tems. In January 2016, for example, MAN
Diesel & Turbo put online a CHP system
for the SAIC Volkswagen Automotive Co.
in Shanghai. Beijings recently shuttered
coal plants have also reportedly been
partly replaced by four CHP plants.
Japan. Interest in cogeneration in
Japan kicked up in the wake of the 2011
Tohoku earthquake and tsunami under
stricter government energy-efficiency
mandates and proposed carbon dioxide re-
duction goals. Japans CHP sector is gain-
ing ground because it provides distributed
energy resources that can help prevent
and mitigate disasters. In 2015, the Japa-
nese government set goals to raise CHP
www.powermag.com
n World n OECD n Non-OECD
generation to 119 billion kWh by 2030.
Canada. In 2015, Canada had about
9.5 GW of installed cogeneration electric
capacity, nearly half (4.5 GW) of which
was installed in Alberta for use in oil
sands and petrochemical operations. Co-
generation expansion has increased in
tandem with oil sands production, and Al-
bertas Electric System Operator expects it
will continue to do so, rising to 5.3 GW by
2022. Cogeneration in other provinces is
commonly produced by utilities and paper
and wood product makers.
Mexico. Mexicos launch of a wholesale
market with retail competition as part of
a wide-scale reform of its power sector is
also provoking interest in CHP projects
(for more, see Mexico Makes Rapid Prog-
ress on Energy Reform in the January
2017 issue).
Other Countries. Increasing renew-
able energy projects along with falling gas
prices and supportive government policies
to incentivize projects and replace aging
infrastructure in Asia Pacific and Latin
America are expected to drive CHP equip-
ment demand in the near future.
India to Freeze Coal
Construction, Focus on
Expanding Renewables
A draft national electricity plan published
in December by Indias Central Electricity
Authority (CEA)a statutory organiza-
tion that is overseen by the Ministry of
Powerlooks to add 101,645 MW of new
conventional capacity during the current
12th Five-Year Plan (20122017), nearly
85% of which will be coal-fired. But af-
ter that, through 2022, the country will
refrain from building any new coal capac-
ity, shifting its focus instead to install a
total of 175 GW of renewable capacity by
that year.
|
POWER February 2017
2. A renewables surge. A draft national electricity plan published by the Indian govern-
ment in December outlines a capacity expansion from 302 GW in March 2016 to 523 GW by the
end of 2022. The expansion will be characterized by a surge in renewables capacity. The govern-
ment anticipates non-hydro renewables will comprise 33% of installed power capacity by 2022,
while coal will have a much smaller 47.5% share. Source: Central Electricity Authority
n As of March 2016 n By 2021-2022
600,000
500,000
400,000
300,000
MW
200,000
100,000
0 ity. The achievement is notable because
Coal and lights Gas
As of March 2016, about 61% of the
countrys installed capacity was coal-
fired, 14% came from hydropower, 14%
came from other renewables (mostly
wind, followed by small hydro and bio-
mass), 8% from natural gas, 2% from
nuclear, and 1% from diesel. Seeking
to eliminate power shortages and make
electricity accessible to all households
over the next five years, the country has
embarked on an ambitious infrastructure
expansion that has seen its installed ca-
pacity swell from 1,713 MW in 1950 to
302,088 MW as of March 2016. Recent
undertakings include the integration of
regional grids into a single national grid.
That has helped tamp down the countrys
debilitating peak demand deficit, from
12,159 MW (9.0%) in 2013 to 4,903 MW
(3.2%) in 2016, the draft national elec-
tricity plan says.
Conventional generation capacity ad-
ditions during the 12th plan exceeded
targets by 115%, the draft says. While
coal makes up the bulk of new additions,
the remainder will come from lignite
(1,290 MW), natural gas (6,080 MW),
hydro (5,525 MW), and nuclear (2,500
MW). However, future additions through
2022 (Figure 2) will take into account a
low carbon growth strategy, the CEA
said, which will mean no new coal ca-
pacity is required. It will instead entail
ramping up generation from hydro (by
15,330 MW), nuclear (2,800 MW), wind
(29,034 MW), and solar (81,237 MW).
Still, the country will continue to depend
on coal for reliability, at least 39% of it
from supercritical plants, owing to an
acute natural gas shortage, it said.
While gas power provides the advan-
|
February 2017 POWER
Hydro Nuclear Renewables Diesel Total
tage of fast ramping capability as more
renewables are added, and about 4,340
MW of new gas-fired generation is ready
for commissioning or under construction,
the CEA noted the countrys gas supply
hasnt been keeping pace with growing
demand, including from the power sector.
The gas supply for gas based power sta-
tions in the country is inadequate and the
country is facing huge generation loss, it
said. Presently, existing gas based power
plants are operating at very low [plant
load factor] of about 23% and [a] few gas
based power plants are lying idle due to
non-availability of natural gas.
Coal supplies are expected to be ad-
equate through 2027, even if the mon-
soons fail and the country sees a drastic
reduction in hydropower, the CEA noted.
The country will now have to grapple
with an assortment of other issues. One
is that main plant equipment suppliers
are seeing a general lack of orders. Oth-
ers involve carbon mitigation, workforce
issues, and project financing.
3. Energy-positive wastewater plant. In 2015, the Marselisborg Wastewater Treat-
ment Plant, which serves Denmarks second-largest municipality of Aarhus, had a total energy
production of 9,628 MWh per year and an energy consumption of 6,311 MWh per year, which
is equivalent to a net energy production of 153%. Courtesy: Aarhus Water
www.powermag.com
District Power and Heating
from a Wastewater Plant
A wastewater treatment plant in the
Danish city of Aarhus is reportedly pro-
ducing enough power to cover all of the
energy used for the whole water cycle in
its catchment areafrom water produc-
tion and water distribution to wastewater
pumping and treatmentas well as 40%
excess electricity and 2.5 GW of heat,
without adding external organic waste or
carbon emissions.
Upgrades that have been ongoing at the
Marselisborg Wastewater Treatment Plant
(Figure 3) since 2010 have enabled the fa-
cility to supply the district heating system
in Denmarks second-largest municipal-
water and wastewater treatment facilities
are typically the single largest electricity
consumer for a municipality, accounting
for between 25% and 40% of the average
municipalitys electricity consumption in
Denmark, owing to energy-intensive pro-
cesses that are continually operating.
Plant owner Aarhus Water, a company
that supplies and treats the municipalitys
water, said that it worked with environ-
mental consultants to improve the plants
energy balance. Among the strategies it
eventually implemented were: optimiz-
ing the nitrogen-removal process using
online sensor control; implementing an
advanced supervisory control and data
acquisition control system; upgrading
the blower technology to a high-speed
turbo blower; installing frequency con-
verters (from engineering group Danfoss)
on more than 100 motors in almost all
rotating equipment (including blowers,
pumps, mixers, and dewatering pumps)
to allow the plant to adapt to load varia-
tions; implementing a sludge liquor treat-
ment based on the anammox process; and
optimizing the fine bubble aeration sys-
tem. This has resulted in a reduction in
11
THE BIG PICTURE: The Nuclear Fuel Cycle
The worlds nuclear fuel cycle associated with the production of nuclear power is an intricate series of processes that
starts with mining of uranium and ends with the disposal of nuclear waste. The front end of the nuclear cycle involves
mining and milling, conversion, enrichment, and fuel fabrication. The back end typically involves temporary storage,
reprocessing, and recycling before wastes are disposed. Here are key things to know about each stage today. Sources:
POWER, World Nuclear Association, International Atomic Energy Agency, Vecteezy.com
Copy and artwork by Sonal Patel, a POWER associate editor
Fuel fabrication capacity for light-wa-
ter reactors considerably exceeds
demand (7,000 metric tons per year
[mt/y]) today. Pressurized heavy-water
reactors (PHWRs) account for an Fuel rods Today, 450 nuclear power
additional 3,000 mt/y and gas-cooled FUEL reactors operate globally with a
NUCLEAR capacity of 392 GW; 61 others
reactors, around 400 mt/y. FFABRICATION are under construction.
REACTOR
Nearly all commercial MOXa type
3% to 5% U-235 of nuclear fuel widely used in Europe
In 2015, the worlds and Japan, consisting of a blend of
enrichment facilities, most
MIXED OXIDEE uranium and plutonium oxidesis
of which used centrifuges, (MOX) FUELL fabricated at AREVAs MELOX plant in Spent fuel
produced 58,600 separative France, though India and Japan also
work units (SWU)/y, have plants.
compared to a demand of
47,285 SWU/y. Some
reactors, such as heavy Plutonium
water types, do not require Depleted Storage of used fuel is normally
The worlds total civil under water for at least five years
uranium to be enriched. uranium reprocessing capacity is and then often in dry storage.
currently 5,370 mt/y,
ENRICHMENT mostly in France, the UK, STORAGE
Russia, Japan, and India.
Between 2010 and 2030
some 400,000 mt of used
fuel is expected to be
generated worldwide,
including 60,000 mt in
North America and 69,000
mt in Europe. REPROCESSING
CONVERSION
The worlds larger TO UF6 Reprocessed
conversion plants are found
in the U.S., Canada, France,
uranium
Wastes
UK, and Russia. Smaller
plants in Argentina, China,
and Iran. U3O8

VITRIFICATION
MILLING
TAILINGS Surface and near-surface
Generally carried out disposal facilities are
close to a uranium operational in the UK, Spain,
mine. France, Japan, and the U.S.
Sweden and Finland have
disposal facilities in caverns
below ground level. Plans for
disposal of spent fuel are
well-advanced in Finland,
Most uranium mined in 2015 DISPOSAL Sweden, and France. In
FRONT END MINING (60,494 mt) was from was Canada and the UK, deep
from Kazakhstan (39%), disposal has been selected
BACK END Canada (22%), and Australia and the site selection process
(9%). has commenced.

12 www.powermag.com |
POWER February 2017

4. Fusion star. Construction of South Koreas KSTAR superconducting tokamak began in
December 1995 and was completed in August 2007. Researchers at the National Fusion Re-
search Institute (NFRI) have been conducting a variety of experiments and tests on the reactor
in four planned phases that are expected to culminate in the development of nuclear fusion
reactor technologies. Courtesy: NFRI
power consumption of approximately 1
GWh/year which corresponds to about 25
percent in total savings, the company
said in December.
Over the same time, it also installed
new biogas engines in its combined heat
and power plant, which ramped up power
production by about 1 GWh/year. A new
heat exchanger enabled it to increase heat
by 2 GWh/year, allowing it to sell surplus
heat to the district heating grid.
South Korea Reports
Fusion Research Progress
A superconducting tokamak at the National
Fusion Research Institute (NFRI) in South
Korea has achieved a world record of more
than 70 seconds in high-performance
plasma operation. Researchers hailed the
achievement as a huge step forward for
the realization of fusion power.
According to NFRI, researchers used a
fully non-inductive operation modea
high poloidal beta scenarioto achieve
the long and steady-state operation at the
experimental KSTAR tokamak (Figure 4).
They also used a high-power neutral beam
and various other techniques to alleviate
the accumulated heat fluxes on plasma-
facing components.
While research to harness fusion pow-
erenergy that is generated by the fu-
sion of two lighter atomic nuclei (typically
hydrogen) to form a heavier nucleuswas
revived in the 1970s following a break-
through at a Soviet tokamak, the cost and
complexity of projects has tempered ad-
vancements.
Foremost among technical challenges is
|
February 2017 POWER
controlling plasma, a fourth state of mat-
ter that is produced by heating a gas to
several million degrees. As some research-
ers describe it, plasma can be compared to
a soup, where nuclei and electrons are
no longer linked and move around freely.
When two light nuclei collide at high
speed, they can fuse, forming a heavier
nucleus and releasing energy as a result
of the fusion. But controlling plasma op-
eration in a steady state has proven chal-
lenging. Thats why KSTARs steady-state
plasma operation for more than a minute
is significant.
According to NFRI, about 15 fusion
devices exist around the world, with re-
search underway in the European Union,
the U.S., Russia, Japan, China, and South
Korea. Most are conventional tokamaks,
though much research has been car-
ried out on stellarators, similar devices
that use a different approach to plasma
containment. At the end of 2015, for
example, Germany switched on the Wen-
5. The road to a solar future? The Wattway photovoltaic panels used to pave experi-
mental roads in the U.S. and France are covered with a resin containing fine sheets of silicon,
making them sturdy enough for all traffic. Courtesy: Colas
www.powermag.com
delstein 7-X stellerator, a device that is
producing three-dimensional magnetic
fields as predicted. The most-watched
project, however, is ITER in southern
France, a large tokamak experiment led
by an international effort that seeks to
produce roughly 500 MW of thermal en-
ergy using deuterium and tritium fusion
fuels. In November, the ITER Council
endorsed a schedule that projects first
plasma will be achieved in 2025 and deu-
terium-tritium operation by 2035.
New Solar Roads Unveiled
Solar roadwaysroads that incorporate em-
bedded photovoltaic cellshave piqued in-
terest for several years. A few examples are
finally being rolled out, though their practi-
cal applications are still being evaluated.
On December 20, global transport infra-
structure group Colas completed install-
ing a solar panel paving system it calls
Wattway (Figure 5) over 50 square me-
ters (m2) at the Georgia Visitor Information
Center in West Point, Ga. Two days later, it
completed a 1-kilometer stretch running
through the small town of Tourouvre-au-
Perche in Frances Normandy region.
The bigger project in France covers
about 2,800 m2 and is connected to the
Enedis electricity distribution network.
The 5 million project was financed by the
French Ministry of the Environment, which
said the road will allow for the evaluation
of construction techniques for solar roads
at a large scale and of the technologys
durability and energy efficiency. While
more details will emerge during its two-
year test period, the roadway is expected
to produce 280 MWh annually.
The daily production will fluctuate ac-
cording to weather and seasons, Colas
noted. On average, the estimated elec-
trical output will reach 767 kWh per day,
with peaks up to 1,500 kWh per day in
summer. An information panel installed
13
near the road will show immediate produc-
tion as well as total production of power
since the installation.
In 2014, a Dutch research institute
installed a 70-m-long bike path connect-
ing Amsterdam suburbs of Krommenie and
Wormerveer at a hefty cost of 3 million.
The SolaRoad project, which comprises
rows of crystalline silicon solar cells en-
cased within concrete and tempered glass,
has reportedly generated just 3,000 kWh.
POWER Digest
Canada Inches Closer to Nationwide
Carbon Price. Canadas government in
early December struck a deal with eight
of the countrys 10 provinces to introduce
its first national carbon price. The gov-
ernment has proposed that carbon would
cost C$10 per metric ton in 2018, rising
by C$10 a year until it reaches C$50 in
2022. Only Manitoba and Saskatchewan,
a province that relied on coal for about
46% of its power in 2015, declined to sign
the deal, Canadian Prime Minister Justin
Trudeau told reporters on December 9.
Trudeau also said that the government
would impose a carbon price on provinces
that refused to voluntarily implement a
carbon tax or cap-and-trade market. The
move follows Ottawas announcement in
November that the country would phase
out the use of coal-fired power generation
by 2030. However, the federal government
later agreed to let Saskatchewan continue
operating its coal-fired power plants be-
yond 2030 as long as it achieves equiva-
lent emission-reduction outcomes. In
late November, Albertas government an-
nounced that it would pay three coal-fired
generating companiesCapital Power
Corp., TransAlta Corp., and ATCO Ltd.a
total of C$1.36 billion in compensation for
its decision to close their plants early.
Netherlands to Phase Out Renew-
ables Subsidies. In an Energy Agenda
published by the Dutch government on
December 7, the Netherlands explains
that it plans to gradually phase out sub-
sidies for renewable energy and focus on
energy saving and carbon capture. The
country, which is struggling to reach
2020 renewables targets under Euro-
pean Union (EU) goals, in November an-
nounced a 33% increase in subsidies for
2017 compared to the year before, up to
$12.9 billion for solar, wind, geothermal,
and other renewable projects. The Energy
Agenda issued by the Economic Affairs
ministry outlines how the country will
cut its greenhouse gas emissions 80% to
14
95% compared with 1990 levels by 2050.
Among its key points are that offshore
wind turbines will no longer require sub-
sidies by 2026 and that the EUs cap-and-
trade market wont affect the Netherlands
until the 2030s. The agenda also calls for
newly built houses to be built off the gas
grid, while existing houses will be gradu-
ally disconnected from the gas grid. By
2050, the country expects that houses
will be heated in part with waste heat
from industrial processes and geothermal
heat. The agenda, notably, does not in-
clude plans to shutter existing coal-fired
power plants.
Massive Power and Water Gen-
erating Plant Begins Operations in
Kuwait. ENGIE on December 12 said
it started full commercial operations of
the 1,539-MW Azzour North One project,
a $1.7 billion facility that is Kuwaits
first integrated water and power plant
(IWPP). Construction on the natural gas
fired combined cycle gas turbine plant
(which is capable of firing fuel oil as a
back-up fuel) began in January 2014. It
has the capacity to generate 10% of Ku-
waits power requirements at peak capac-
ity with five General Electric (GE) GTG
9F-3 gas turbines generating 225.8 MW
each and two GE STG D1 steam turbines
generating 251 MW each. The facility
also produces 20% of the countrys water,
with 107 million gallons per day (mgd)
produced by a seawater desalination
plant that uses a multiple-effect distil-
lation unit. The plant is owned and oper-
ated by Shamal Azzour Al-Oula KSC, a
company that is 40% owned by a private
consortium comprising ENGIE, Sumitomo
Corp., and A.H. Al Sagar & Brothers. The
remaining 60% is owned by the Kuwaiti
government, though the government is
mandated to sell 50% of its ownership
to its citizens through an initial public
offering. The power and desalinated wa-
ter produced by the plant will be supplied
to the national grid, which is operated
by the Kuwait Ministry of Electricity and
Water under a 40-year energy-conversion
and water-purchase agreement. Kuwait is
looking to expand its generating capac-
ity to meet an anticipated demand of 25
GW by 2025. To meet this goal, the IWPP
in the Azzour area will be expanded to a
total capacity of 4.8 GW and about 280
mgd of desalinated water.
DONG Energy, Eversource Partner
to Build Mass. Offshore Wind Farm.
DONG Energy and Eversource Energy
are taking equal stakes in a partnership
to build the Bay State Wind project, an
www.powermag.com
offshore wind farm proposed to be built
about 15 to 25 miles south of Marthas
Vineyard in Massachusetts. DONG Energy
Wind Power U.S. and Eversourcea com-
pany formed in 2012 via the merger of
Northeast Utilities and NSTAR Electric
and Gaswill seek to jointly develop,
build, and operate the utility-scale project
under the joint company Bay State Wind.
DONG Energy, which has built several off-
shore wind farms in Europe, will develop
and build the projects offshore generation
and transmission assets, while Eversource
will develop and build the onshore trans-
mission system. DONG Energy won rights
to a 300-square-mile ocean area offshore
of Massachusetts in a 2015 lease auction
held by the Interior Department. NSTAR
had agreed to buy 27.5% of the power
from the 130-turbine Cape Wind project,
a proposed project in Nantucket Sound
that failed to obtain financing before that
contract was terminated. In August 2016,
Massachusetts became the first state in
the U.S. to mandate that its utilities pur-
chase offshore wind power, specifically
1,600 MW by 2027.
Google Eyes 100% Renewable Pow-
er for All Operations in 2017. Internet
service mogul Google will power 100% of
its global operations, including data cen-
ters and offices, with renewable energy by
the end of 2017, Urs Hlzle, Google senior
vice president of technical infrastructure,
announced in December. The company be-
came one of the first corporations to cre-
ate large-scale long-term contracts to buy
renewable power directly when it signed an
agreement to buy all the electricity from a
114-MW wind farm in Iowa in 2010. At the
end of December 2016, Google had pow-
er-purchase agreements that surpassed
2.6 GW for wind and solar power from 20
projects sited in diverse locations from
Grady County, Okla., and Rutherford Coun-
ty, N.C., to the Atacama region in Chile
and municipalities in Sweden. To achieve
its 100% goal as quickly as possible, the
company pioneered a fixed-floating swap
model. This approach, described in a De-
cember white paper, essentially involves
purchasing fixed-price renewable energy
in competitive wholesale markets and
then reselling that power into the market
at a variable market rate. The company
then buys smooth 24/7 energy at the
data center from its regulated utility and
applies renewable energy certificates from
its power purchase agreements to that
consumption. The companys data centers
require tremendous amounts of power,
and renewables are increasingly becom-
|
POWER February 2017
ing the lowest cost option, Google said.
Electricity costs are one of the largest
components of our operating expenses at
our data centers, and having a long-term
stable cost of renewable power provides
protection against price swings in ener-
gy. The company added that in 2017 it
will also broaden its purchases to a variety
of energy storage resources.
Sumitomo Completes 1-MW Con-
centrator Photovoltaic System in Mo-
rocco. Japanese manufacturer of electric
wire and optical fiber cables Sumitomo
Electric Industries in November cel-
ebrated the completion of its first 1-MW
concentrator photovoltaic (CPV) power
plant in Ouarzazate City, Morocco. The
company embarked on development of a
thin, lightweight module for concentrating
solar power generation in 2010 (originally
for use in space) and commercialized the
product in 2014. By September 2015, the
company had installed a demonstration
20-kW CPV system at a site owned by the
Moroccan Agency for Sustainable Energy
in Ouarzazate. It later expanded the proj-
ect to 1 MW. The system comprises sev-
eral modules, each about 120 millimeters
thick and weighing about 8 kilograms. It
consists of lenses that directly collect sun-
light, as well as compound semiconductor
cells that convert that light into energy
twice as efficiently as standard crystalline
silicon solar cells, the company says on its
website. The modules, which are mounted
on trackers, have little temperature depen-
dence, making them suitable for regions
with high radiation and high temperatures.
Another verification test is underway in
Mexico. Conversion efficiency is being
improved by 1% each year, said Takashi
Iwasaki, a Sumitomo engineer affiliated
with the power system research and devel-
opment center. In the meantime, we are
trying to develop a technique to reduce
optical loss to eliminate variance between
each product, improve efficiency, and ex-
pand the application range.
Sudan Readies for Five New Gas
Power Units. Sudans state-run power
provider Sudanese Thermal Power Gen-
erating Co. will get five SGT5-2000E gas
turbines from Siemens to amp up the na-
tional grids power capacity by 850 MW,
the companies said on December 2. All
five power plant units are scheduled to
commence commercial operation at the
end of 2017. Three of the turbines will
be installed in the Garri Power Station,
north of Sudans capital of Khartoum,
while the remaining two will generate
power further east in Port Sudan on the
countrys Red Sea coast. All five of the
E-class turbine-generator sets will be
initially commissioned as simple cycle
units. However, later add-on of steam
turbines is planned to expand the units
to combined cycle configurations, Sie-
mens said. The German firm said the Re-
public of Sudan, which has struggled to
emerge from decades of violent conflict
and saw a recent surge of instability in
Darfur, has substantial market poten-
tial for power plant components and
solutions. The country, which has electri-
fied only 35% of its total population, has
embarked on extensive investments in its
energy infrastructure to meet the rising
electricity demand.
Sonal Patel is a POWER associate
editor.

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|
February 2017 POWER www.powermag.com 15
Counterfeit Parts: Why
Authenticity Is Imperative
When it comes to running a power plant,
its easy to take the little things for grant-
ed. Yet its the little things that often
have the greatest impact on plant manag-
ers ability to deliver reliable service for
their customers.
Take power, for instance. Plant manag-
ers are focused on bringing power to their
customers. But are they thinking about
the quality of energy powering their own
plants? If a plant experiences downtime
or a service delay due to power outages
or disruptions, the consequences in terms
of revenue loss and business impact could
be dramatic.
This is an all-too-real possibility for
many plants due to the proliferation of
non-genuine, and even counterfeit, elec-
trical products in the marketplace. These
productswhich can make their way into
a plant in a number of ways that make
them difficult to trace to the original
product manufacturercan wreak havoc
on a plants power infrastructure, with
significant fallout for the business.
1. The case for buying authentic.
In the long run, counterfeit products can cost
much more than authentic merchandise.
Courtesy: Eaton
16
This article examines the risks of buying
with uncertainty, that is, procuring elec-
trical products that cannot be traced to
the original product manufacturer. It also
looks at steps plant managers are taking
to avoid this uncertainty and ensure that
only genuine products are powering our
infrastructure.
Buying with Uncertainty
Its not uncommon for people to shop
around, after all, everyone wants to get
the best deal, but when cheap products are
of unknown quality and cannot be traced
to their point of origin, the risk associated
with them is unacceptable. Power genera-
tors have too much to lose to allow ques-
tionable electrical products in a plants
infrastructure (Figure 1). Safety and reli-
ability could both be compromised.
Products purchased through channels
not supported by the original manufactur-
er may be damaged or broken, or possibly
refurbished by someone without proper
knowledge or expertise in refurbishing
them. In many cases, these products may
be faulty in ways that arent immediately
apparent, meaning damage only becomes
known when these components are in-
stalled or implemented. This can lead to
equipment that either doesnt function,
functions poorly, or, in the worst-case
scenario, creates significant safety haz-
ards for the user.
Contractors and distributors use various
business practices to procure electrical
equipment. Often, contractors will pur-
chase from a distributor or dealer special-
izing in a specific type of product, some
offering the product in question at a sig-
nificantly lower price than is typical (that
should be your first red flag). In some cas-
es, the nature of distributor-manufacturer
agreements makes it difficult to procure
products from competing manufacturers,
leading distributors to look to the gray
market to procure equipment at a better
rate.
The key takeaway is that, when procur-
ing electrical products, plant managers
are often in the dark about their original
source, and this uncertainty can lead to
risk.
The Rise of Counterfeits
Another major risk of buying with uncer-
tainty is the risk of counterfeit products.
When we think of counterfeiting, we often
www.powermag.com
think of money or consumer goods such
as handbags or jewelry. But counterfeiting
is also a pervasive problem in the electri-
cal industry and, as outlined above, its
one that carries great risks for power plant
managers.
Counterfeit electrical products, such as
molded case circuit breakers, can enter the
supply chain at any number of points. In
some cases, they can be offered at prices
substantially lower than that of authen-
tic products, making them attractive for
contractors or distributors. Because of the
increasingly sophisticated nature of coun-
terfeiters, these products can be virtually
indistinguishable from the real thing (Fig-
ure 2). And, as the practice of combatting
them evolves, so too does the process for
creating them.
The counterfeiting of electrical prod-
ucts isnt something that can be solved
by one company or person alone; instead,
it requires a coordinated effort between
global authorities, manufacturers, and us-
ers to stem the tide. As law enforcement
officials endeavor to identify and stop
counterfeiters, manufacturers have cre-
ated tools to help end users identify and
report potential counterfeit products to
the proper authorities.
At Eaton, for example, weve devel-
oped an authentication tool, conveniently
called our Molded Case Circuit Breaker
(MCCB) Authentication tool, which is ac-
cessible via our PowerEdge mobile app.
This easy-to-use tool was created to give
users or purchasers a simple way to detect
possible counterfeit circuit breakers, up to
400 amperes. All users have to do is scan
the serial number bar code to immediately
verify the product authenticity, access re-
lated technical information, or locate an
authorized manufacturers representative
to purchase genuine products.
This is just one example of the tools
the industry is making available to help
combat counterfeiting as more companies
and users are waking up to the risks and
prevalence of counterfeit products. For-
tunately, by taking the right steps, plant
managers can take the risk out of buying
and ensure they are getting only genuine,
authentic products to keep their facilities
running reliably.
How to Buy Authentic
To avoid the unknown and mitigate the
risk of procuring faulty products, plant
|
POWER February 2017
2. Real or fake? Counterfeiters do their
best to disguise non-genuine products. In this
image, the circuit breaker on the left is genu-
ine while the one on the right is counterfeit.
Courtesy: Eaton
managers should take the following steps.
Do Your Due Diligence. When work-
ing with a contractor or distributor, its
critical to know where products were pro-
cured and to seek evidence that products
have been purchased from the manufac-
turers authorized distributors or resellers.
Traceability to the original manufacturer
through the supply chain is widely sup-
ported by manufacturers, industry, and
regulatory agencies alike. Procurement
should be cautious of bargains or low-cost
alternatives. Compare the price of prod-
s premium
product showcase
for the latest
products and
technologies in the
power generation
industry.
to subscribe to the e-letter, please visit
www.powermag.com/e-letter-signup
26032
|
February 2017 POWER
ucts to similar products at a different re-
tailer. If the price seems too good to be
true, it likely is.
Observe, Evaluate, and Verify. As
mentioned, to the untrained eye, it can be
difficult to differentiate between authen-
tic products and lookalikes. Plant man-
agers need to ensure that the receiving
process is robust and thorough.
Receiving teams should be leery of
poor-quality labels, legacy branding, old
or missing date codes, and extraneous
markings or labeling that was not applied
by the original manufacturers. The original
manufacturers will use branded packaging
on nearly all component products for eas-
ier identification.
Report to Manufacturers and Au-
thorities. If you find evidence of a non-
genuine product, take the proper steps to
ensure the suspect material is removed
from the supply chain. Quarantine the
suspect or potentially counterfeit prod-
uct and seek assistance from the original
manufacturer.
The timely reporting of suspect material
may improve the ability of the manufac-
turer to find similar products and remove
them from the marketplace to protect us-
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ers. When reporting potentially danger-
ous products, make sure to disclose the
product vendors name, business name, ad-
dress, domain name, and any other identi-
fiers.
Tom Grace is anti-counterfeiting and
brand protection manager for the Americas
Electrical sector with Eaton.
Proper Scaffold Access
Plan Helps Reduce
Radiation Exposure
Pipes, valves, turbines, pumps, condens-
ers, and other mechanical components in
the radiologically controlled area (RCA,
or hot side) of a nuclear power genera-
tion facility require routine inspection,
testing, maintenance, and, eventually,
replacement or repair. When technicians
need to work at height, erecting a scaffold
often provides the safest and most effec-
tive method of access. This article notes
best practices for scaffolding, rigging, and
hanging lead-filled shielding blankets in
RCAs.
When scaffolding needs to be erected
in an RCA, the paramount concern is mini-
mizing exposure time. Title 10, Part 20,
of theCode of Federal Regulations, Stan-
No Feeler Gage Required
Weatherproof
Self-Marking
Inspection on Your
Schedule
the best way to bolt!
17
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3. Systems Scaffold. The design utilizes unique 360-degree ring
sets spaced 21 inches apart, allowing up to eight horizontal members
to attach securely. Courtesy: Safway Group

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dards for Protection Against Radiation, establishes the dose lim-
Urbanization, the scarcity of resources, and
itsfor radiation workers. Although the limits vary, depending on climate change present major challenges
the affected part of the body, the annual total effective dose when it comes to generating energy with even
equivalent for the whole body is 5 rem. Often, a facilitys gen- greater efficiency. Kelvion is the experienced
eral (or maintenance) contractor works with a scaffold supplier
that can provide the necessary support services to complete work partner at your side for all heat exchange-
safely and efficiently, thereby minimizing dose. related processes in both conventional and
alternative energy systems with an out-
Choosing a Scaffold
standing level of reliability and availability that
The two most common types of scaffold used in power plants
are Systems Scaffold (which offers fast erection and the versatil- aspires to cut life-cycle costs to an absolute
ity of 360-degree placement on the vertical post ring sets) and minimum. www.kelvion.com
tube-and-clamp scaffold (a highly adaptable system that can be
erected and dismantled easily).
Systems Scaffold (Figure 3) has passed all seismic qualification
tests of Class 1E equipment, meaning that the scaffold is in full
compliance with American National Standards Institute (ANSI)
requirements and the Institute of Electrical and Electronics En-
gineers (IEEE) Standard 344-1987. During testing performed in
May 2010, equipment performed satisfactorily with no damage
or dislodging of diagonals, toeboards, or planks. Tube-and-clamp
and other scaffold can also pass seismic tests, but Systems Scaf-
fold has been tested to greater extremes.
Systems Scaffold is the preferred choice for work in most areas
of a power plant, because it erects and dismantles quickly. How-
ever, the geometry of post ring sets and end connectors makes
decontamination more complicated. If scaffolding will be disman-
tled and brought back out of an RCA, tube-and-clamp is usually
the preferred choice because its simplicity makes it the easiest to
decontaminatethe surface areas of all components are easily
accessible.
Because of tube-and-clamps nearly unlimited adaptability, Wherever low investment, operat-
contractors also often select it for semi-permanent residence ing, and maintenance costs are
in RCAs. Once installed, it can meet almost any access need. It key, the new plate generation of
is also the lowest component cost option. In addition to the the NT series always proves its
ability and thats just one of the
standard 2-inch-wide clamp (Figure 4), 4-inch-wide military (fat product solutions Kelvion offers
clamps) are available, which meet or exceed U.S. Navy specifica- the energy market!
tion MIL-S-29180.

|
February 2017 POWER www.powermag.com 19
Discover the Power
of Digital
From generation through transmission and distribution to usage management
digital has the power to transform electricity across the Electricity Value Network.
Visit us at the Connected Plant Conference, and learn how GE Power Digital
Solutions drive reliability, eiciency and productivity for power and utility leaders.

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4. Tube-and-clamp scaffold. Only
four basic parts are needed to assemble tube-
and-clamp scaffold. Courtesy: Safway Group
Engineering Support Services
Planning often begins by managing clash
and detecting clearances using software
such as Navisworks or Intergraph Smart
3-D for plants. If up-to-date drawings
are not available, 3-D laser surveying can
produce point-cloud images to create
3-D drawings and models. The tool can
enhance site/plant documentation and
improve project planning by reducing or
eliminating costly bill of material overruns
and identifying clearance issues.
Although 3-D scanning has been used
successfully in numerous other industries,
its use in nuclear facilities has been lim-
ited. Thats because problems with decon-
5. Underhung trolleys. Systems Scaffold can be used for rigging, but load ratings
based on I-beam and beam trolley capacitiesmust not be exceeded. Courtesy: Safway Group
|
February 2017 POWER
taminating equipment could result in an
expensive ($100,000) scanner being sac-
rificed. Nonetheless, those in the nuclear
industry should be aware of this technol-
ogy in case the need arises.
To help scaffold erection crews become
familiar with the design of a particular
scaffold, or for training purposes, the en-
gineering team can create animations and
fly-throughs that bring a 3-D model to
life. When scaffold needs to support or lift
heavy objects, the engineering team can
use software such as STAAD.Pro and RISA
to design and analyze simple to complex
structures. This can be done for a wide
range of load conditions such as for strain
induced by gravity (dead or live loads),
skip conditions, and lateral loads (includ-
ing from seismic events).
Local Labor, Delivery, and Tracking
Scaffold transportation and erection with-
in the RCA requires careful planning be-
cause of exposure limits. A scaffold that
would ordinarily take four workers eight
hours to build could take five times as
much labor in an RCA. To properly manage
exposure, scaffold builds inside the RCA
literally get planned to the minute.
In one situation, for example, a single
5-ft x 5-ft x 30-ft tower scaffold took 25
workers one week to erect due to exposure
limitations. A technician would hand carry
HIGH
in his load of parts, set them down, and
walk out. Another technician would fol-
PERFORMANCE
low behind him and clamp those parts in
place. Once those tasks were completed, Electric actuators for the
the technicians had to spend the rest of
power plant industry
the day in low-dose areas, because they
had reached their exposure limits. Reliable, powerful, precise
control. AUMA offer a large
portfolio of actuator and
gearbox type ranges.
Automating all types of
industrial valves
Standardised interface for
various site control systems
Plant Asset Management
functions
Service worldwide
Learn more about
our automation
solutions
www.auma-usa.com
www.powermag.com 21
 IS YOUR POWER
PROJECT A WINNER?
Find out by nominating it for a POWER award

The 2017 categories are:

Plant of the Year Award
Reinvention Award
(formerly Marmaduke Award)
Water Award
Smart Grid Award
Commercial & Industrial
Generation Award
Top Plants Awards (in gas, coal,
nuclear, and renewable subcategories)
COMMERCIAL &
INDUSTRIAL GENERATION

All nominated projects must be in commercial operation by

the nomination deadline of April 28, 2017. Youll ind award
information, lists of former winners, and nomination forms at
http://www.powermag.com/power-awards/

NOMINATION DEADLINE: APRIL 28, 2017

29171
 Scaffold suppliers can help contractors provides increased flexibility in handling. While lead is heavy, the load-bearing ca-
track every aspect of a project including Perimeter grommetsspaced every 12 pabilities of scaffold are well known and
build and dismantle time, part in-service inchesenable the blankets to be easily easily calculated.
time, total man-hours, cost per part, total affixed to scaffold with zip ties. The re- A good access provider will help the
job cost, and comparison against projec- duction in dose rate varies from 20% to contractor increase both safety and pro-
tions. For powerful evaluation capabilities, 31% depending on the thickness of the ductivity through outstanding planning,
some scaffold suppliers also offer software lead wool blanket installed. Typically, engineering resources, on-site support,
tracking programs that provide costs down thicknesses ranging from 3/8 inch to 3/4 andmost importantlygood communi-
to the fraction of a cent. The supplier typi- inch with densities of 10 lb/ft2 to 20 lb/ft2 cations.
cally manages the tracking software as a are used. Stacking multiple blankets can Darrell Domikos is director of national
value-added service. achieve a linear reduction in dose rates. equipment sales for Safway Group.
After engineering and planning, the
ability to provide local labor and sup-
port is probably the factor contractors
value most. A good scaffold supplier will
maintain an inventory of tube-and-clamp
materials and be able to deliver several
thousand pieces at a moments notice.
Delivery often takes place in wire stor-
age racks that hold up to 700 clamps and
300 to 400 tubes. Racks arent just filled
with parts; rather, all the components for
a specific scaffold are pulled and placed
in a rack. These predesigned, self-erect
sets eliminate unnecessary handling. De-
pending on the simplicity of access and/
or weight issues, the entire rack may be
placed on a handcart and wheeled into the
RCA.

Rigging and Shielding

While many RCAs have overhead cranes,
heavy components (notably valves, flang-
es, and pipes) that need replacement
dont always fall within the accessibil-
ity range of installed lifting equipment.
In that case, Systems Scaffold can be
configured to lift a center load of up to
3,750 lb and an off-center load of up to
1,875 lb.
Configuration involves adding a bearer/
runner, truss bearer, or I-beam to standard
Systems Scaffold. For lifting and hori-
zontal movement, Systems Scaffold can
be configured with header beams and an
underhung trolley I-beam between them
(Figure 5). Depending on the length, size,
and configuration of the beams, a trolley
I-beam can support loads of 1,250 lb to
10,000 lb. Trolley I-beams are available in
lengths from 5 ft. to 10 ft.
To shield technicians from hot pipes
(high-dose areas) during maintenance and
repair work, scaffold provides a means for
hanging lead-filled blankets. If a supply
of tube-and-clamp scaffold is stored in
the RCA on a semi-permanent basis (and
it often is), using scaffold to hang lead
blankets utilizes components already on
hand, a significant convenience compared
to fabricating a custom rack.
While lead plate can be used, lead wool

|
February 2017 POWER www.powermag.com 23
 Fitness for Purpose
Rebecca Williams David Wright
Obligations for the
Offshore Wind Sector
he United States has just joined the offshore wind com-
T munity with the commissioning of the Block Island Wind
Farm in Rhode Island. As this community continues to grow,
any decision of a common law court that provides guidance on
the interpretation of contractual terms, or of the application of
established common law to this new and fast-growing industry,
is welcome. A recent decision by the UKs Technology and Con-
struction Court (TCC) contains important guidance on fitness for
purpose obligations in a supplier contract and how these obliga-
tions apply to an offshore wind project.
Fluor entered into a contract with Greater Gabbard Offshore
Winds Ltd. (GGOWL) to supply the foundations and infrastructure
necessary to support 140 wind turbines for the Greater Gabbard
Offshore Wind Farm in the North Sea, some 26 kilometers off the
coast of Suffolk, England. To ensure the quality of the welds in
these massive structures, the contract required that nondestruc-
tive testing (NDT) be carried out on the foundation monopiles,
which were in turn supplied by Shanghai Zhenhua Heavy Indus-
tries Co. Ltd. (ZPMC).
Two different scanning patterns can be used to test for weld
quality: Scanning Pattern E (spE) and Scanning Pattern D (spD).
The NDT provisions in the contract provided that spD was to be
used when welds were ground flush, while spE was to be used
when the welds were not ground flush. However, the parties did
not appreciate at the time that spD was much more effective
in identifying transverse cracks than spE testing, meaning that
many of the monopile welds passed inspection when they in fact
contained imperfections.
When GGOWL received the first shipment of monopiles, it car-
ried out its own tests on some of them, and transverse cracking
was detected. Fluor had to retest all the monopiles in the first
shipment and repair any cracks found. Two additional shipments
were also tested, and transverse cracking was detected in these
as well, forcing Fluor (assisted by ZPMC) to carry out an oner-
ous (and expensive) program of testing and repair for all of the
projects monopoles.
Fitness for Whose Purpose?
Fluor subsequently brought a claim against ZPMC in the TCC for
the substantial costs incurred in the extra testing and repair
work, which it said was necessary as a result of the monopiles
not being fit for purposea legal term broadly meaning good be unable to meet their required service life, the court still found
enough to perform the job it was designed for. The judge was
asked to decide if the monopiles were fit for purpose, and if not,
whether this constituted a contractual breach by ZPMC.
Fluor argued that the monopiles had to be fit and sufficient
for the purposes for which they were specifically intended,
meaning onward supply to GGOWL and installation at its wind
farm off the Suffolk coast. Fluor contended that these fitness
for purpose obligations had to be met upon delivery. ZPMC, by
24 www.powermag.com
contrast, argued that the test for fitness for purpose was an
objective one. The intended purpose of the monopiles was to act
as part of a foundation for offshore wind turbines for 25 years.
Whether or not the buyer thought that the goods were fit for
purpose was irrelevant: Either they were fit, or they were not.
(Fluor never argued that the monopiles could not achieve a 25-
year service life.)
The court concluded that the transverse cracking discovered
by the spD scanning was a result of various failures by ZPMC to
maintain correct preheat temperature of the welds. However, it
also noted that there was little case law on the objective na-
ture of the fitness for purpose test, and instead referred to the
concept of merchantability. When considering merchantability,
the court felt the key question was, What is the position if the
buyer knows of [the goods] true condition but is unable to dis-
cover, without lengthy investigation, whether or not that condi-
tion affects that use? It found that the buyer would impose a
condition that the necessary investigation is carried out before
agreeing to buy the goods. This effectively amounted to the im-
position of a special term in the contract, namely the satisfactory
outcome of the investigation.
Not So Objective
The court held that because the cracks were discovered by GGOWL
in the first shipment, the only reasonable course available to Flu-
or was to carry out an investigation into the true condition of the
monopiles and establish the extent to which the cracking might
affect their performance in service. As far as Fluor was concerned,
the monopiles had to be in a condition such that any reasonable
purchaser in its position could, without further inquiry or inves-
tigation, load them out onto the installation vessels and install
them in the sea bed. In the judges view, they were not delivered
in such a condition and so in my judgment they were not fit for
purpose. As a result of the cracking, which was attributable to
breaches by ZPMC of its obligations, the monopoles could not be
installed without further examination, testing, and repair.
All of this was despite the fact that ZPMC had, in fact, car-
ried out testing to the standard required in its contract with
Fluor. What mattered was that the monopiles contained cracks
that were discovered upon testing by GGOWL. Even though Fluor
never argued that the monopiles would, as a result of the cracks,
that they were not fit for purpose.
For both contractors manufacturing goods and those supplying
them to an end user, this case contains important lessons, particular-
ly if, as was the case here, the contractor is uncertain as to whether
a flaw detected by the end user affects the use of the goods supplied
in terms of merchantability and fitness for purpose.
Rebecca Williams and David Wright are senior associates with
Watson Farley & Williams LLP in the firms London office.
|
POWER February 2017
@amec_fw
https://www.linkedin.com/company/amecfw
www.youtube.com/user/amecfw
https://www.facebook.com/amecfw

Amec Foster Wheeler 2017

 COMBINED HEAT AND POWER
CHP 2.0: New Fuels and New
Business Models

Courtesy: DONG Energy

A variety of approaches have been used to capture new benefits from combined
heat and power (CHP) facilities. Some owners have transitioned to new fuels or
added renewables to the mix, while others have implemented unique business
models to spur development. As district heating systems are brought into the 21st
century, the CHP sector seems destined for more change.
Aaron Larson and Thomas W. Overton, JD

A History of Coal Usage

O
ne of the oldest and least dynamic
sources of distributed generation is fi-
nally starting to evolve. For more than
a century, combined heat and power (CHP)
has been a staple of universities, hospitals,
and other industrial sites with large energy
needs, as well as municipal district heating
(DH) systems, but the approaches to gener-
ating power and how these systems are de-
veloped and paid for have changed relatively
little in decades. But now, the economic,
environmental, and regulatory pressures
that are remaking the power sector at large
are also beginning to foster some significant
changes with CHP. As large utility-owned
power plants are transitioning toward cleaner
generation, greater efficiency, and innovative
business models, the CHP world is follow-
ing suit.
On college campuses, administrators have
long recognized the value of CHP plants.
Institutions are a natural fit for the solution
because their facilities not only have a large
demand for electricity but also have massive
heating and cooling needs.
CHP offers universities a win-win solu-
tion because electricity can be produced from
high-pressure steam, while thermal energy can
be extracted at appropriate pressures for heat-
ing or cooling needs. Efficiency is improved
from what is often less than 40% when the
services are supplied separately to more than
75%, in some cases, using CHP technology.
That not only saves money on energy costs,
but it also reduces environmental emissions.
And the environmental considerations are fre-
quently a driving factor for change.
That was the case at Michigan State Uni-
versity (MSU). MSUfounded in 1855sits
on a 5,200-acre site in East Lansing, Mich.
The campus includes 532 buildings with
about 21.7 million square feet of floor space.
Near the center of it all rests the Simon CHP
plantthe fifth in a long history of MSU
power plants. The Simon plant has four dual
fuelcapable boilers with a total steam ca-
pacity of 1.2 million pounds per hour at 900
psig. Each unit was designed to operate at full
power on either coal or natural gas.
The first two units were built in 1965,
and a third boiler was added in 1973. That
unit was required to burn low-sulfur coal to
comply with the Environmental Protection
Agencys (EPAs) Prevention of Significant
Deterioration (PSD) rule. In 1993, a circulat-
ing fluidized bed boiler was constructed at

26 www.powermag.com |
POWER February 2017

1. Before. This image shows Michigan State Universitys (MSUs) coal yard prior to the coal-
to-gas switch. Courtesy: MSU Infrastructure Planning and Facilities
2. After. This is MSUs coal yard after the fuel switch. The front two-thirds was seeded, and
gravel was placed in the back third. Courtesy: MSU Infrastructure Planning and Facilities
the plant, and this fourth unit was the first to
include flue gas desulfurization technology.
The most recent addition was in 2006 when a
13.5-MW combustion turbine was installed.
That unit includes a heat recovery steam gen-
erator, which feeds into the plants combined
steam header. The facility has five steam
turbine generators with a total capacity of
85 MW. Each of the turbines has controlled
steam extraction to supply thermal loads, as
needed.
Bob Ellerhorst, director of Utilities and
Waste Management for MSU, explained to
POWER in an interview that the Simon plant
used coal as its main source of fuel from the
outset. Natural gas was simply not economi-
cal. But in 2009, the university decided it
wanted to transition out of using fossil fuels
and into more sustainable energy sources. To
do so, it needed a long-range energy transi-
tion plan.
Switch to Gas Makes Sense (and
Cents)
The school formed an Energy Transition
Steering Committeea 24-member group
|
February 2017 POWER
as flipping a switch. Although the dual-fuel
of students, faculty, and staffto handle the
planning task. The group was to develop a
strategy to help MSU reliably meet its future
energy needs while managing costs and envi-
ronmental consequences.
Some students got involved in other ways
to help promote change. At the time, a na-
tional campaign to end coal use on several
university campuses was in progress; MSU
students got heavily engaged in that effort.
But economics and regulatory require-
ments were also changing. The price of nat-
ural gas was in a historic decline. In 2010,
as prices softened, natural gas began to
displace the low-sulfur coal that was being
used in the plants PSD unit. When the EPA
finalized its Boiler Maximum Achievable
Control Technology (MACT) rule in Janu-
ary 2013, the decision was easy: Rather than
install a $7 million retrofit to comply with
the rule and continue burning coal, MSU
would make the all-out switch to natural
gas. Although plant managements prefer-
ence might have been to keep coal capabil-
ity as an option, the concession was made to
completely discontinue its use.
www.powermag.com
COMBINED HEAT AND POWER
However, the change wasnt as simple
boilers were designed to run at full capacity
on natural gas, the fuel supply was another
matter. Because usage throughout the region
had increased since the line was installed, the
infrastructure from the local gas distribution
company was no longer adequate to operate
on 100% gas. For that reason, MSU had to
work with Consumers Energy to reestablish
1993 capacity guarantees.
Those changes were paid for by the utility,
but MSU had to fork out some money of its
own. Inside the plant, the gas supply lines to
each boiler had to be modified to more reli-
ably supply gas to the burner front of each
unit. The university also paid to have a sec-
ond gas line installed from the distribution
system to the plant for reliability, so it now
has a 100% redundant gas supply.
Finally, discontinuing the use of coal re-
quired that the conveyance systems, rail
tracks, and coal pile be removed. Those
grounds have since been remediated and, for
all practical purposes, theres no evidence
that coal was previously stored on-site (Fig-
ures 1 and 2).
CHP Goes Renewable (Again)
Other shifts are also afoot, but in ways unique
to CHP. CHP plants powered by renewable
sources are far from new, and the paper and
forestry industries worldwide have long re-
lied on captive biomass plants burning waste
materials from their operations, as have sugar
refiners (see Bagasse and Blended Biomass
Cogeneration Advances in the Cuban Sugar-
cane Industry in the February 2016 issue).
In some countries, such as Finland, where
forest products are a significant industry,
the majority of industrial CHP is fired by
biomass. The rationale behind such opera-
tions is simple: Where industrial processes
create large combustible waste materials, its
cheaper and more efficient to use those waste
materials as fuel than it would be to purchase
and transport fuel from elsewhere.
Plants like these continue to be reliable
contributors, but theres also been a recent
shift toward renewable CHP outside of those
sectors. A number of large coal-fired CHP
plants have converted to biomass, particu-
larly in Europe, where aggressive carbon-
reduction schemes have disfavored coal.
In December 2016, what was once Den-
marks largest coal plant, the Avedore Power
Station in Copenhagen (shown on this issues
cover and in this articles header photo),
completed a conversion to firing wood pel-
lets. Owned by DONG Energy, the two-unit,
793-MW plant was already firing a variety of
fuels in its newer Unit 2. Unit 1, completed
in 1990, initially fired coal, but the decision
27
 COMBINED HEAT AND POWER
erance, choices were offered, such as buying
3. Price-risk-management matrix. Basing decisions on market approach and risk tol-
solely on the cash market or hedging from
erance gave MSU stakeholders more comfort in their choices. Source: U.S. Energy Services
some to all of the anticipated demand. The
team then developed a consensus on the best
Market motivated In market for competitive advantage
5

approach.
Some strategy flexibility Accepts price risk exposure
The university has the authorization and
High

Retain ability to lock target prices May trade in and out of positions
20% to 80% hedged 0% to 100% hedged
the approval to hedge varying percentages
4

by year, out to five years into the future, for

Risk tolerance

3 to 36 months out Time frames not critical

budget certainty, said Bruce Hoffarber, vice
president of market development for U.S.
3

Budget driven Budget sensitive Energy Services.

Definite price targets Quantifiable price target range A group, known as the gas operations
2
Low

Locking margins important Very defined risk strategy team, was established with members from
60% to 80% hedged 40% to 75% hedged plant operations, the schools budget office,
Up to 24 months out Up to 12 months out administration, and U.S. Energy. The team
1

meets quarterly to review market changes

1 2
Conservative
Market approach
4. Gaining steam. Duke Energy and Duke University intend to partner on a campus-locat-
ed combined heat and power (CHP) plant, shown here in a computer-generated image. The facil-
ity is expected to reduce the schools energy-related CO2 emissions by about 25%. Courtesy:
Duke Energy
was made in 2013 to convert the entire plant
to biomass. The project was overseen by the
Ramboll Group, and DONG says Avedore, as
a result of supporting Copenhagens DH sys-
tem, can now achieve 89% efficiency. (Unit
2, which fires straw and wood pellets but can
also fire natural gas and fuel oil, will convert
to pure biomass by 2027.)
The company is pushing ahead with other
such conversions. Thomas Dalsgaard, the
firms executive vice president, said when the
Avedore conversion was nearing completion,
Our target is that at least half of the electric-
ity and heat generated at our power stations
in 2020 will be based on sustainable biomass
instead of coal and gas. Avedore is in fact
the third such coal-to-biomass CHP project
DONG has undertaken. The Herning CHP
Plant was converted in 2009, while the Stud-
strup Power Station was converted in 2016,
reaching completion shortly before Avedore.
A New Risk Management Process
But making these kinds of shifts in generation
is not without risk. Back at MSU, the univer-
sity was concerned about the potential for
3 4 5 and, if necessary, establish new triggers.
Aggressive
price volatility once it began relying solely
on natural gas for its energy needs. The cost
for coal had always been fairly stable, but the
university knew that the price for natural gas
was much less predictable. The plan was for
MSU to transition from burning 248,320 tons
of coal and 0.46 billion cubic feet (Bcf) of
natural gas in fiscal year (FY) 2008 to burn-
ing 6.5 Bcf of gas and no coal by FY 2017.
The price risk was troubling.
That transition caused us to look for ex-
pert buyers in the natural gas industry, and
thats when we connected with U.S. Energy,
Ellerhorst said.
U.S. Energy Services (recently renamed
Kinect Energy) helped the university develop
a formal, written, price-risk-management
plan for purchasing natural gas. The goal of
doing so was to build a consensus among all
of the stakeholders, so gas procurement de-
cisions could be made based on the schools
price-risk aptitude.
The process included conducting individ-
ual surveys with all of the decision-makers to
determine their willingness to accept natural
gas price risk (Figure 3). To assess risk tol-
The four heads try to come up with the
best answers based on the risk strategy that
was laid out for us, Ellerhorst, who repre-
sents the operating component, said.
Although the process has been a learning
experience, the results have been encour-
aging. Ellerhorst said MSU is about 95%
hedged for the 20162017 winter, which will
insulate the university from recently forecast
price increases. Hoffarber suggested that the
average hedge price was beating the market,
even though that is not the goal. In the end,
having a structured and disciplined approach
to layering hedges provides budget certainty
and reduces risk over the long term.
In our next meeting with U.S. Energy,
well be talking about the un-bought pieces
for fiscal year 2018 and 2019, Ellerhorst
said. Whats the wisdom? What do we do?
Those are questions theyll help answer.
Partnering on CHP Projects
While MSU owns and operates its own CHP
plant, Duke University has taken a different
approach to CHP. In a university-published
overview of a proposed project, the school
said, The regulated-monopoly framework
on which North Carolina allows utility com-
panies to operate makes self-ownership un-
attractive. Therefore, it proposed leasing
an acre of land to Duke Energythe cam-
puss current electric service providerfor
35 years, which would allow the company
to build, own, and operate an on-site natural
gasfired CHP plant.
Duke Energy chose Burns & McDonnell
as the engineer of record for the proposed
plant (Figure 4), which is expected to include
a 21-MW combustion turbine generator and
a heat recovery steam generator capable of
producing about 75,000 pounds per hour of
steam for the university. The CHP facility
would be connected to an existing Duke En-
ergy substation located on the campus.
Duke Energy said the $55 million project
would lower energy-related CO2 emissions

28 www.powermag.com |
POWER February 2017
 COMBINED HEAT AND POWER
at Duke University by about 25% by dis-
5. Duck power. 2G Energys containerized CHP system uses biogas produced from this
placing the current electricity mix and boil-
Indiana duck farms multiple waste streams to supply onsite heat as well as power to the local
ers currently serving the university. The grid. Courtesy: 2G Energy
proposed project would be designed with an
island-mode feature, allowing critical cam-
pus loads to be isolated from the grid and
powered by the plant during crises.

Students Raise Concerns

But just as students at MSU took a stand
against coal, some students at Duke Uni-
versity have objected to the planned CHP
plant. According to a story published by The
Chronicle, the universitys student-run news-
paper, there seem to be two main concerns
about the project: The lack of transparency
leading up to the proposals announcement
and the continued use of fossil fuels to power
the campus.
Duke University President Richard Brod-
head responded to students apprehensions
about the project in a letter to The Chronicle.
In it, he said the university was pursuing the
project for energy reliability and security.
He pointed out that the medical center and re-
search center must have a continuous source
of electricity that is impervious to weather
events and other emergencies that can cause
widespread and lengthy power outages.
Beyond the plants dependability, Brod-
head underscored the improved efficiency
that CHP plants provide, and he noted that
the technology has always been a compo-
nent of the universitys Climate Action Plan,
which calls for carbon neutrality by 2024.
To ease fossil fuel concerns, Brodhead sug-
gested that renewable fuel sources would
eventually replace natural gas at the facility.
We are continuing to discuss the plant us-
ing bio-gas when it becomes commercially
available, as well as the commitment that the
university and Duke Energy would make to
help that occur, he wrote.
As this story goes into production in late
December, the project still requires approval
by the North Carolina Utilities Commission
(NCUC). Although very optimistic about
the prospects, Duke Energy filed a request
with the NCUC on December 1 to suspend
the discovery and procedural dates until af-
ter May 2017 to allow time for the univer-
sity to work with stakeholders regarding the
role of CHP in the schools broader sustain-
ability goals.
The Duke University CHP plant is a first-
of-a-kind project on the Duke Energy Caroli-
nas system. However, in its application with
the NCUC, Duke Energy noted that it has
been soliciting interest in CHP from large in-
dustrial, institutional, and military customers
since 2015. The company claims that there
are several interested parties, and it suggest-
ed that experience from the Duke University
project would benefit all of its future CHP
ventures.
Community and Containerized
CHP
Compared to university projects like MSUs
and Dukes, large-scale renewable CHP proj-
ects are usually driven by policy rather than
economics. But in recent years, theres been
more attention paid to smaller plants that are
designed from the start to provide renewable
energy for its own sakeand these projects
are typically set up for economic reasons,
allowing their owners to capture energy and
heat from waste streams that would other-
wise be lost.
Anne Hampson, project manager with
ICF, told POWER in an interview that much
of the growth in renewable CHP is being
driven by improvements in technology and
standardization that have substantially re-
duced the cost of generation. With some
of the CHP systems that are available in the
market, they can really reduce the capital ex-
penses for these smaller sites because they
are prepackaged, she said. A lot of them are
built into shipping containers so the engine
and heat recovery is all combined. Its really
bringing the cost of those installations down
and opening up a whole new market.
ICF estimates that about 4,500 MW of
renewable-powered CHP is in operation
across the U.S., Hampson said. This includes
traditional large-scale biomass but also an
increasing amount of small-scale genera-
tion. One trend Hampson has seen might be
dubbed community CHP. Much as groups
of homeowners and businesses have com-
bined resources to install centralized solar
(see Solar Gardens: A Fast-Growing Ap-
proach to Photovoltaic Power in the May
2015 issue), farms and ranches in a growing
number of areas are working together to build
anaerobic digester systems that serve the sur-
rounding community and use the produced
biogas to generate heat and power.
In the past, you saw these mostly in Cali-
fornia and the Northeast, but lately were see-
ing a lot more traction in the Midwest and
even parts of the South. Again, the primary
driver is the falling cost of plug-and-play
CHP systems, which make small-scale bio-
mass and biogas streams economic to exploit
where they once were not.
One company offering these containerized
CHP solutions is 2G Energy, which is based
in Germany but which has supplied systems
across the U.S. and Canada, mostly in the
500-kW to 2-MW range. It recently built
a 1,200-kW system at a large duck farm in
Middlebury, Ind. (Figure 5). The farm oper-
ates an anaerobic digester using animal waste
and processing plant by-products, as well as
corn silage and other substrates. The three 2G
agenitor 212 generators run on biogas from
the digester. Those generators supply power

|
February 2017 POWER www.powermag.com 29
 COMBINED HEAT AND POWER
6. Green steam. An extensive upgrade to the Kendall Cogeneration Station in Cambridge,
Mass., which began operations in 1949, has doubled its output to the regional district heating
system. Moreover, converting its once-through cooling system to an air-cooled condenser re-
duced the plants impact on metropolitan Bostons Charles River ecosystem. Source: POWER/
Gail Reitenbach
that is sold to the local utility and heat pro-
cess water that is used on-site at the farm and
processing plant.
The options for this kind of plug-and-
play CHP are growing rapidly. Other com-
panies such as Dresser-Rand and Czech firm
Tedom are also offering turnkey, container-
ized CHP systems in the hundreds-of-kilo-
watts range. Most of these are engine-based
systems, but Hampson said microturbines
are seeing increasing use because of their
efficiency. For locations with access to solid
fuel, such as wood waste rather than biogas,
there are also solutions available. Entrade
and Spanner Re2 manufacture systems in
tens-of-kilowatt capacities that gasify and
combust wood pellets or chips to produce
heat and power.
Another growth area is wastewater treat-
ment plants, which Hampson said accounted
for the largest share of new CHP installations
by type of facility that ICF saw in 2015. Its
been a major source of new capacity, she
said. These projects are growing not just in
number but in size as well: The Marselisborg
Wastewater Treatment Plant in Aarhus, Den-
mark, recently installed a biogas-powered
CHP system that not only makes the plant
fully self-powering but also allows it to sup-
ply excess power and heat to the local grid
and DH network (see the item in this months
Global Monitor).
Yet another trend is the use of landfill
30
gas (LFG). LFG has long been captured
and exploited for power on site, but re-
cently, developers of institutional CHP
projects have looked at building pipelines
to carry LFG to their facilities, rather than
relying on their utilitys natural gas hook-
up. (One example is the Duke University
project, which hopes to eventually transi-
tion to biogas.)
District Heat: Everything Old Is
New
DH and CHP have long gone hand-in-hand,
with DH systems often set up to take steam
from a thermal plant supplying power to the
same area. Systems like these have often
been operating for many decadesthere are
DH networks in the eastern and northeastern
U.S. that are more than 100 years old. Natu-
ral gasfired DH has drawn renewed interest
in recent years because of efficiency and en-
vironmental advantages offered over fuel oil
(not to mention the cost advantages as gas
prices have fallen), but making the best use
of these aging systems can require some sub-
stantial upgrades.
One such project was recently completed
by Veolia at the Kendall Cogeneration Sta-
tion in Cambridge, Mass. (Figure 6). The
256-MW, 7FA-based plant has supplied
power to the surrounding area since 1949,
and it currently supplies DH services to
more than 250 medical research institu-
www.powermag.com
tions, hospitals, hotels, museums, and gov-
ernment buildings throughout Boston and
Cambridge. But for many years, it was un-
derutilized: The plant was capable of sup-
plying substantially more steam than the
DH system used. There was also another
problem, an issue that wasnt recognized
when the plant was built but that began
drawing attention in the 1990s. The plants
use of cooling water from the Charles River
was having an impact on the aquatic eco-
system, as the warmer temperatures caused
by the cooling effluent were contributing to
toxic algae blooms. As a result, environmen-
tal groups and the EPA began pressuring
the plants owners to phase out its original
once-through cooling (OTC) system.
Veolia acquired the DH system in 2005
and began looking at an upgrade and ex-
pansion project that would fully leverage
Kendalls capacity while making the overall
system more efficient and environmentally
friendly. The first step was running a second
steam pipeline from Kendall (which was then
owned by GenOn) to Veolias DH system.
That 7,000-foot extension, which came on-
line in 2013, doubled the amount of steam
it was able to take from Kendall. With the
upgrade, Veolias 26-mile-long DH network
now gets 75% of its steam from the plant, re-
ducing reliance on smaller on-site boilers and
increasing overall efficiency.
When Veolia and its partner, I Squared
Capital, acquired Kendall in 2014, the second
phase began. That $112 million project, com-
pleted in October 2016, replaced the old OTC
system with a new air-cooled condenser. To-
gether, the upgrades have reduced both air
pollution in the surrounding area and thermal
pollution in the river.
Boston is not the only eastern city to look
at upgrades to its DH system. Pittsburgh is
also in the midst of a multi-faceted project to
improve the efficiency and carbon footprint
of its downtown DH system, which is actu-
ally two different networks in and around the
city center. NRG operates one of them, and
it has been tasked by the city with building
a third. The planned Uptown EcoInnova-
tion District will employ a modern steam
plant powered by Cleaver-Brooks boilers
and serve several major customers, includ-
ing the Consol Energy Center and the UPMC
Mercy medical center. The $61 million proj-
ect received approval from the city council in
September 2016 and is only one of four new
energy districts the city is looking at devel-
oping. NRG is also looking at adding a new
combined cycle CHP plant to the DH net-
work it operates and helping develop a series
of CHP microgrids.
Aaron Larson and Thomas W. Overton,
JD are POWER associate editors.
|
POWER February 2017
 COMBINED HEAT AND POWER
New Options in Industrial CHP
Boost Efficiency and Returns

Courtesy: MAN Diesel & Turbo

Combined heat and power (CHP) has long been a popular option for industrial self-
generation, but new technologies and business partnerships are taking the sector
well beyond the traditional boilers and diesel gensets.
Thomas W. Overton, JD

T
he Erving Paper Mill in the western
Massachusetts town of the same name
has operated for more than 100 years.
Once part of a thriving industry, its now one
of a few remaining New England paper mills
still clinging to life. Battered by foreign com-
petition, paper mills like Erving have contin-
ued operating by finding profitable niches
(Erving supplies products like recycled nap-
kins to the food service industry) and keeping
costs as low as possible.
Opting for modern self-generation is one
way the mill has helped safeguard its role as
one of the towns largest employers. Paper
mills have long relied on captive combined
heat and power (CHP) plants, often fired by
waste materials, but these aging boilers are
drawing attention from environmental regu-
lators concerned about emissions. Erving
had a small fuel oilfired boiler and steam
turbine, but this old system was no longer
sufficient even after being converted to natu-
ral gas. The mill needed to improve the reli-
ability of its power and steam supply while
increasing its energy efficiency and reducing hook-up. Storing fuel on site insulates it from
overall energy costs. disruptions in the local natural gas system, a
In 2014, the mill turned to New Hamp- problem New England has experienced dur-
shirebased Waldron Engineering & Con- ing recent winters (see New England Strug-
struction, which partnered with Maine firm gles with Gas Supply Bottlenecks in the
Engineered Construction Services to supply June 2013 issue). When necessary, it can also
a new gas-fired, gas turbinebased CHP plant
(Figure 1). Built around a dual-fuel Solar 1. Not papered over. Erving Paper
Taurus 60 turbine and a 600-psig heat recov- Mills 105-year-old paper plant has a new Solar
ery steam generator (HRSG) equipped with Tauruspowered combined heat and power
Honeywell Eclipse duct burners, the plant (CHP) facility that supplies most of its power
now supplies most of the mills power and and all of its process steam. The highly ef-
all of its process steam. Emissions are kept ficient plant has cut Ervings energy costs
low by a selective catalytic reduction system. while improving the reliability of its power and
steam supplies. Courtesy: Waldron Engineer-
The plant completed testing and entered
ing & Construction
operations this past October, having met all
the mills targets for improving costs and ef-
ficiency. Waldron Engineering CEO Terry
Waldron told POWER that the improve-
ments in efficiency also earned the mill re-
bates from the utility and state.
One wrinkle with Ervings CHP plant is
that it relies on compressed natural gas de-
livered by tanker trunk instead of a pipeline

|
February 2017 POWER www.powermag.com 31
 COMBINED HEAT AND POWER
operate on ultra-low-sulfur fuel oil.
The industrial sector has long been a
strong proponent of CHP generation. Though
CHP makes up a small fraction of total U.S.
electric power generation, the overwhelming
majority of industrial and commercial gener-
ation (about 85% as of 2012, according to the
Energy Information Administration [EIA])
incorporates CHP. This has traditionally been
because some of the largest industrial loads
also have very large needs for process heat
and steam. Chemical plants, petroleum refin-
ing, and paper processing remain the largest
users of CHP, with significant demand also
coming from food processing, breweries, and
biofuel producers.
Fuel Shifts
But the sector is no longer as staid and settled
as it once was. Many of the trends that have
remade the wholesale electric power sector
have also reached into industrial CHP. While
total industrial generation has changed little
since 2005, according to the EIA, the relative
percentages of fuels used have changed quite
a bit. Between 2005 and 2014, coal use fell
33% and fuel oil use plummeted more than
85%, while natural gas use grew by 17%, ris-
ing from 50% of the total in 2005 to 60% in
2014. The use of waste products, biomass,
biogas, and similar fuels has fluctuated but
remains close to 2005 levels as the second-
most-common source of energy. As with the
power sector at large, falling natural gas pric-
es and tightening emissions standards have
been the main drivers.
Such shifts are also taking place globally.
China has been struggling for years with
endemic air pollution in major cities like
Shanghai, and the nations traditional heavy
reliance on coal has been challenged head-
on by new government policies seeking to
cut emissions, reduce the carbon intensity of
the power sector, and meet the nations am-
bitious goals under the Paris climate agree-
ment. While major advanced coal plants and
Chinas massive build-out of its nuclear and
renewables capacity have grabbed headlines,
industrial generation is feeling the same pres-
sures. Much of Chinas pollution problems
stem from thousands of small, inefficient
coal boilers that the government has moved
to shut down. But those generation sources
have to be replaced with something.
One example can be found in the SAIC
Volkswagen Automotive Co. factory in Ant-
ing, northwest of Shanghai. SAIC Volkswa-
gen was founded in 1984 as a joint venture
between Volkswagen Group and Chinas
SAIC Motor Corp. The facility, one of the
largest in the country, manufactures automo-
biles for the Chinese market under the Volk-
swagen and koda marks.
32
2. Clean sweep. SAIC Volkswagens new CHP plant at its factory in Shanghai, supplied by
MAN Diesel & Turbo, replaced a set of old, inefficient coal-fired boilers and helps reduce seri-
ous air pollution in the area while substantially improving efficiency and reducing power costs.
The new plant supplies power and steam to both a car plant and a neighboring gearbox plant.
Courtesy: MAN Diesel & Turbo
The plant originally used coal-fired boil-
ers to generate electricity and process steam,
but these boilers were ordered shut down by
the government, and with regulations prohib-
iting any new coal-fired generation in Shang-
hai, SAIC Volkswagen looked to natural gas
and small CHP.
The new CHP plant, supplied by MAN
Diesel & Turbo, a member of the Volk-
swagen Group, comprises four MGT 6200
gas turbines with a combined total output
of 26.5 MW (see Figure 2 and the header
photo). The plant produces 60 tons/hour of
steam and 4.42 MWt of hot water. This is
enough to supply 100% of the electricity
needs of Car Plant 3 and a neighboring gear-
box plant, and most of their process steam
(the balance is supplied by auxiliary gas-
fired boilers).
India is also working to improve its air
quality and move away from dependence on
coal and fuel oil (see India Refocuses Coal
Future in the November 2015 issue). Like
China, its industrial base relies on numerous
small diesel gensets and coal-fired boilers.
But that, too, is beginning to change. Kanodia
Technoplast, outside the capital of Delhi, sup-
plies a variety of packaging materials domesti-
cally and internationally and is typical of the
many companies that have sprung up as part of
Indias economic boom since the 1990s. In an
effort to reduce power costs and improve reli-
ability at its Kundli plant, it recently installed
a gas-fired GE Jenbacher trigeneration system
supplied by Clarke Energy. The 1.5-MWe sys-
tem provides 1.4 MW of electricity as well as
450 kW of heat for the thermic fluid used in
the plant and 200 tons/hour of refrigeration.
The plant had previously suffered from fre-
quent outages on the local grid.
www.powermag.com
Meanwhile, in Saudi Arabia, most in-
dustrial CHP is fired by crude oildespite
the countrys large gas reservesbecause
of constraints on the domestic gas market.
But a shift toward gas is under way there
as well. In December, ENGIE and Doosan
announced a partnership to build a $900
million CHP plant at the Fadhili gas plant,
85 kilometers northwest of the Jubail Indus-
trial port in Saudi Arabias eastern province.
The Fadhili gas plant is itself part of the
kingdoms multi-billion-dollar initiative to
make more natural gas available for power
generation. The 2.5-Bcf/day gas-processing
plant is expected to come online by the end
of 2019 and will cost a staggering $13.3
billion altogether. The 1,500-MW Fadhili
Combined Cycle Plant will supply 400 MW
of its output, plus process steam, to the gas
plant beginning in November 2019, while
the remainder of the power goes to the na-
tional grid.
Industrial CHP Goes Digital
The same technologies that are being used to
improve efficiency and output in the larger
power sector are coming to industrial CHP as
well. GE has been pushing hard to deploy its
digital power plant solutions to large grid-
connected facilities (see Big Data and the
Industrial Internet Meet the Power Plant in
the January 2016 issue and Disruptive Digi-
tal Technologies Are Key to Power Industrys
Future in the June 2016 issue), but some of
the same tools can also be applied to smaller
distributed generation.
GE announced in November 2016 that it
was working with Clarke Energy to deploy
its Predix-based Asset Performance Man-
agement (APM) software across Clarkes
|
POWER February 2017

3. The internet of CHP things.
Clarke Energy is working with GE to deploy
the latters Asset Performance Management
(APM) software across all of the Jenbacher
engines in Clarkes customer network. The
APM software will allow for remote monitor-
ing and predictive analytics that promise to re-
duce downtime and maintenance costs while
increasing profitability, GE says. This Jen-
bacher CHP system operates on biogas at the
Maize Products Kathawada corn milling plant
in Gujarat, India. Courtesy: Clarke Energy
4. Turnkey CHP. Capstones C1000S up-
grade to its five-turbine C1000 system incor-
porates a variety of improvements, including
an optional integrated heat recovery module
above the turbine unit that can capture up to
1.5 MW of heat for CHP applications, in addi-
tion to improved filtration and cooling. Cour-
tesy: Capstone Turbine
installed base of 3,300 Jenbacher gas and
diesel engines in 19 countries, representing
5.4 GW of capacity, much of it incorporat-
ing CHP (Figure 3). Clarke is a major service
provider for Jenbacher engines, and accord-
ing to GE, the APM software will enable col-
lection of performance data across the fleet.
Rather than reacting to outages, the software
can predict potential problems before they
occur, thus reducing downtime and repair
costs. Using APM, a substantial amount of
diagnosis and troubleshooting can occur re-
motely.
One CHP-specific deployment of APM re-
cently came in the Netherlands, where a toma-
to greenhouse growers collective is using it to
remotely monitor 50 Jenbacher cogeneration
plants (150 MW in total) that provide power
and heat to the groups 40 greenhouses. The
greenhouses also recover carbon dioxide from
|
February 2017 POWER
5. Raising the flag for CHP. Chesapeake Utilities Eight Flags Energy CHP Plant on
Amelia Island, Fla., supplies steam and hot water to an adjacent cellulose products manufactur-
ing facility and 20 MW of electricity to Chesapeake subsidiary Florida Public Utilities. Building
the plant improved flexibility at the cellulose facility while reducing electricity costs for island
residents. Courtesy: Chesapeake Utilities
the engine exhaust and use it to enhance plant
growth. This is an approach GE first used at
a tomato-growing operation in California in
2013 (see Reciprocating Engines Expand
Roles in the September 2014 issue).
New Options and Partners
While large-to-very-large industrial CHP fa-
cilities continue to be built, for smaller ap-
plications, fully integrated turnkey systems
that combine generation and heat recovery
into one unit are carving out a growing seg-
ment of the market. One niche is farms and
wastewater treatment plants, where these
containerized units can be connected directly
to onsite biogas streams (for more on this ap-
proach, see CHP 2.0: New Fuels and New
Business Models in this issue).
Capstones microturbines have been de-
ployed in CHP applications for decades,
with the turbine exhaust being directed into
a boiler or HRSG in the conventional co-
generation approach. But the company also
recently began offering turnkey microtur-
bine packages with integrated heat recovery
modules (HRMs) that generate hot water
or steam without any additional equipment.
Capstone recently sold one of its new 1-MW,
five-turbine C1000S systems (Figure 4) with
HRMs to a major food processing facility in
New York. The new C1000S will offset the
use of existing gas-fired boilers and improve
the facilitys energy efficiency, which made
it eligible for support from New Yorks Clean
Energy Fund.
The growth of technology options and
abundance of inexpensive natural gas is
also drawing a variety of new participants
into the industrial CHP arena. One example
is Chesapeake Utilities Corp. (not affiliated
www.powermag.com
COMBINED HEAT AND POWER
with Chesapeake Energy), a natural gas lo-
cal distribution company with operations in
Maryland, Florida, and Texas, which recently
built its first CHP plant on Amelia Island,
Fla. Chesapeakes subsidiary Florida Public
Utilities (FPU) has about 31,000 electric dis-
tribution customers in northern Florida. One
of its partners, Rayonier Advanced Materials,
a manufacturer of cellulose products, has a
small boiler plant in its facility on Amelia
Island that sells excess power to FPU. Ray-
onier wanted to boost the flexibility of its
operations and reduce its energy costs, while
FPU wanted to improve reliability of its pow-
er supplies on Amelia Island.
The two companies agreed to build a 20-
MW CHP plant at the Rayonier facility. Pow-
ered by a Solar Titan 250 gas turbine and a
Rentech HRSG, the $40 million Eight Flags
Energy CHP Plant broke ground in March
2015. It began producing power in June 2016
and supplying steam and hot water to the
plant in July. The electricity, meeting about
50% of Amelia Islands demand, is pur-
chased by FPU for its retail customers under
a power purchase agreement, which FPU es-
timates will save the utility about $28 million
over the 20-year term.
This new facility not only benefits both
companies stockholders but it also provides
significant value to the residents of Amelia
Island through more dependable and cost-ef-
fective electric service, Paul Boynton, Ray-
oniers chairman, president, and CEO said.
Chesapeake and FPU have proven to be
great partners and Rayonier Advanced Mate-
rials is excited to be an integral part of their
combined heat and power plant project.
Thomas W. Overton, JD is a POWER
associate editor.
33
 FUELS
Coal Fuel Contracts: A Moving
Target
In recent years, coal power generators have faced increasing difficulty predict-
ing annual fuel requirements due to more cycling and low-load operation.
That presents problems for the people negotiating fuel contracts. Not all
mining companies are amenable to contract changes, but some unique
solutions have been developed.
Aaron Larson

R
emember when coal-fired power
plants supplied baseload power
24/7/365 (when they were not offline
for scheduled maintenance)? It seems like
ages ago. Nowadays, load is as unpredict-
able as the weather, which is to say, if the
sun is shining or the wind is blowing, renew-
able resources are often putting a crimp in
coal-fired generation.
But renewable energy isnt the only thing
pushing coal plants to the sidelines; low-cost
natural gas has played a role as well. Con-
sequently, some gas turbines previously used
as peaking units are now being dispatched
for baseload power. That has meant various
coal units have had to run at reduced loads or
even to shut down for economy from time
to time.
Spiritwood Station (a 2015 POWER Top
Plant) are the only power plants supplied by
the Falkirk Mine. As such, GRE works close-
ly with the mine, including through a joint
planning and budgeting process.
We are not dealing with the common
model where utilities have fixed commitments
to fuel supply and shipping, GRE spokesper-
son Lyndon Anderson told POWER. If the
future market reduces demand for fuel, the
joint planning process will take advantage of
the flexibility the mine plan has to adjust to
variable needs.
Many fuel managers dont have the same
luxury. Those who bring coal in by rail often
have contracts not only with multiple mines,
but also with the railroad (Figure 1). One fuel
procurement specialist for another Midwest
generator said his company has been work-
ing with its coal suppliers to restructure con-
tracts, if there are shortfalls, and it has been
looking to add greater flexibility into future
deals.
We dont have remedies as part of our
contracts. The coal mines have really just
worked with us to adjust tonnage, he said.
Its a little bit more than that now, but no
penalties.
Brett Phipps, Duke Energys managing
director for fuel procurement, suggested that
all coal-based power generators face similar
challenges. He said the increased volatility
in unit dispatch has driven Duke Energy to
review and update its fuel procurement strat-
egies. He noted that the process is dynamic
and changes with market conditions. Some of

Changing Roles Mean Changing 1. Choo, choo! For some generators, the cost of rail transportation exceeds the cost of the
Fuel Strategies coal itself, and contracts can include penalties for plants that miss delivery targets. Courtesy:
Altered operating regimes can make a fuel Gail Reitenbach
managers job much more difficult. In days
of yore, fuel burn was fairly easy to calculate.
But when load varies as it does today, fore-
casting usage can require a crystal ball rather
than a calculator.
Coal Creek Station, North Dakotas larg-
est power plant, with a total capacity of 1,146
MW, offers one example of the predicament.
In late December, Great River Energy (GRE)
announced that Coal Creek had made a num-
ber of operational changes and minor modifi-
cations that enable the plant to ramp down to
less than 300 MW.
In the past, we wanted to park our power
plants at the top, Rick Lancaster, vice presi-
dent and chief generation officer for GRE,
said in the release. In todays energy market,
there is added value for plants that can reduce
outputflexibility is an enviable trait.
Coal Creek has one advantage most other
plants lack: It is a mine-mouth operation and
has a coal contract structured favorably for
flexible operation. Coal Creek and GREs

34 www.powermag.com |
POWER February 2017

2. Robert Murray, CEO of Murray
Energy Corp. Murray mortgaged every-
thing he owned to buy a single continuous
mining operation in 1988. Today his company
is the largest underground coal mining com-
pany in the U.S. Courtesy: Murray Energy
Corp.
the companys high-level initiatives include:
Increasing the percentage of spot coal pur-
chases.
Targeting seasonal purchases and deliver-
ies to align with high-demand periods.
Raising inventory targets for marginal
coal units.
Requiring flexibility in new contracts,
such as the ability to vary volume by
20% on a quarterly basis.
Looking for transactions that tie natural
gas and coal purchases together.
Developing an integrated fuel procure-
ment strategy team with key stakeholders
from various departments.
Improving analytical tools that forecast
fuel needs.
Common Struggles
At least some of the mining companies un-
derstand the problem. For the most part, they
feel the same pain that generators do and
have a self-interest in seeing coal-fired plants
succeed.
We recognize that the landscape has
changed and, in response, we have an open
dialogue with our customers and the entire
supply chain to help all parties meet their ob-
jectives, a spokesperson for Alpha Natural
Resources, a company with 18 active mines
in Kentucky and West Virginia, said.
Robert Murray (Figure 2), CEO of Mur-
ray Energy Corp., the largest underground
coal mining company in the U.S., said his
company is doing some very unique things
to market its coal.
|
February 2017 POWER
There are many ways to do it, Mur-
ray told POWER in an exclusive interview.
Weve been at it now for several years.
For example, Murray said his company has
worked with several very large power plants
that were not being dispatched consistently.
Murray agreed to reduce the purchase price
for his coal so that the plants would be more
competitive in the market. As part of the deal,
the plants are obligated to share some of their
profits with Murray Energy. Murray said his
company is getting 30% of the earnings from
425 MW that was not committed to the grid
at one plant, while it participates on a sliding
scale at another plant.
We become partners with the power
company in these contracts, Murray said.
Theyre all different.
Of course, Murray still offers physical sale
agreementsthe more conventional type of
contractif thats what the buyer wants, but
he said power off-take agreements and price
participation agreements seem to provide
more flexibility for buyers and less potential
for default. Murray doesnt see the situation
changing anytime soon.
That has to continue going forward. It will
continue going forward, he said. I dont look
for the [coal] markets to improve. Theyll stay
about where they are at best. (For more of
Murrays comments on the future of the coal
industry under the new administration, see
Coal Magnate Tells Trump to Lower His Ex-
pectations at powermag.com.)
I dont look for the [coal] markets to im-
prove. Theyll stay about where they are at
best.
Robert Murray, CEO Murray Energy Corp.
Lets Make a Deal
But even when generators and mining com-
panies attempt to settle shortfalls agreeably,
things can go awry. Homer City Generating
Station offers a case in point.
Homer City is a three-unit coal-fired pow-
er plant with aggregate net capacity of 1,884
MW, located in Indiana County, Pa., roughly
45 miles northeast of Pittsburgh. The facil-
ity is a PJM capacity resource and primar-
ily sells its capacity through PJMs annual
capacity auction, but it also has the ability
to sell energy in the New York Independent
System Operator (NYISO) wholesale mar-
ket.
In an August 2016 presentation, Homer
City noted that its fuel strategy is to procure
multiple coal types to meet its 4 to 5 million
www.powermag.com
FUELS
3. Pitt 8. Homer Citys ready-to-burn coal
comes from Pittsburgh Seam #8. Courtesy:
CONSOL Energy Inc.
ton annual usage. It said the facility receives
three types of coal: scrubber, raw, and ready-
to-burn (RTB). Scrubber coal made up the
majority of 2015 usage (52.4%), with raw
and RTB (Figure 3), split about evenly, mak-
ing up the rest. Scrubber coal costs about
30% less than RTB coal, but it emits nearly
twice the SO2/MMBtu. Raw coal (post-wash-
ing) emits the least SO2/MMBtu.
The facility has numerous transportation
options, which it said creates competition.
Most mines supplying Homer City are within
40 miles of the plant, and a number of them
are inside a 10-mile radius. Consequently,
truck transportation rates are often less than
$3/ton. The Buffalo and Pittsburgh Railroad
provides direct rail service to the plant, while
Norfolk Southern Railroad offers a combi-
nation of rail and truck service, adding even
more flexibility for the station.
Homer City Generation and its owners,
which include GE Capital, are embroiled in a
court battle with one of the plants coal sup-
pliers. CONSOL Pennsylvania Coal Co. filed
a complaint in the Court of Common Pleas
of Allegheny County, Pa., on July 8, 2016,
alleging breach of contract by Homer City.
According to CONSOL, Homer City en-
tered into a coal sales agreement with the com-
pany on January 6, 2014. The contract was to
run through December 31, 2015. However,
when Homer City fell behind the delivery
schedule prescribed by the contract, an exten-
sion agreement was negotiated, extending the
purchase period for two additional years.
The extension agreement was said to have
mutually agreed upon targets with monthly
delivery schedules running from October 1,
35
 FUELS
4. Longwall technology. CONSOL
Energys underground mines, such as the one
shown here, utilize longwall mining systems,
a highly productive, mechanized technique.
Courtesy: CONSOL Energy Inc.
2015, through December 31, 2016. Homer
City was given the option of deferring up to
125,000 tons of coal per calendar quarter, if
necessary, with the deferred quantities carried
over into 2017. Nevertheless, by the end of
April 2016, CONSOL said that the plant had
failed to purchase 639,842.5 tons of coal, even
assuming two quarterly deferrals of 125,000
tons each, which it said Homer City had not
validly requested under terms of the contract.
When Agreements Go Bad
With Homer City seemingly in breach of the
36
extension agreement, CONSOL claimed it
proposed a forbearance agreement pursuant
to which CONSOL would have continued to
ship coal and forbear, for a period of time, ex-
ercising its rights and remedies with respect to
Homer Citys default. The forbearance agree-
ment was rife with stipulations, including a
requirement for Homer City to deliver a letter
of credit or cash deposit to CONSOL in the
initial amount of $10 million as security for
Homer Citys performance. However, Homer
City rejected the forbearance agreement.
Instead, the parties entered into a letter
agreement, which required Homer City to
prepay for each train of coal at least 24 hours
before the train arrived at the mine (Figure
4). It also modified the extension agree-
ments delivery schedule with a new monthly
plan. Nevertheless, CONSOL claimed that
just three weeks after executing the letter
agreement, Homer City notified the company
that the plant would not accept any future de-
liveries of coal at the contract price. Homer
City subsequently sourced coal elsewhere at
a lower price, according to CONSOL.
In an effort to mitigate its losses, CON-
SOL said it entered into a second letter
agreement with Homer City. Under that deal,
CONSOL agreed to sell coal to the plant at
www.powermag.com
an interim price while retaining its right to
recover the difference between the interim
and original contract prices.
Homer City, for its part, has been evalu-
ating ways to address its long-term capital
structure. Owners put the plant up for sale
in the first quarter 2016. Although bids with
implied total enterprise value of up to $535
million were received, none were found to
be acceptable. Meanwhile, in its court filing,
CONSOL made clear that the company fears
a third-party purchaser may not assume all
of Homer Citys obligations under the agree-
ments, leaving it with no viable remedy for
the alleged breach of contract.
In Homer City Generations financial
statements dated September 30, 2016 (the
most recent available as this story goes into
production in early January) management
noted, Homer City and the other defendants
named in the complaint dispute the allega-
tions therein and intend to assert defenses
against Consols claims. Homer City report-
ed 1,298,000 tons of coal remaining under
contract for 2016 and 2.5 million tons under
contract for 2017 at the time, but it did not
list details of the agreement(s).
Aaron Larson is a POWER associate
editor.
|
POWER February 2017
 FUELS
Global Nuclear Fuel Update
Uranium oxide, the basic fuel for nuclear power plants, has recently sold at
prices not seen in the past 13 years. In fact, the price is less than the cost
of production in many cases. That could be a problem, because little is be-
ing done to increase the fuel supply, even though the world is adding new
and larger reactors.
Aaron Larson

L
ate last year, the Organisation for Eco- tin or zincthat is found in many rocks on 2. Well done. In this image, uranium is
nomic Co-operation and Developments Earth in concentrations of two to four parts being extracted from a site near Crow Butte,
Nuclear Energy Agency and the Inter- per million. It is also found in seawater, but at Neb., using the in situ recovery method. Wells
national Atomic Energy Agency released a about three orders of magnitude less than on are drilled into the deposit and a solution is
joint 550-page report titled Uranium 2016: land (around three parts per billion). circulated through the ore. Courtesy: Cameco
Resources, Production and Demand. It was The nuclear fuel supply chain is divided Corp.
the 26th edition of the now-biennial report, into four key processes: mining, conversion,
commonly referred to as the Red Book, with enrichment, and fabrication.
data current as of January 1, 2015. Mining. Most U.S. uranium is mined us-
One potentially concerning revelation was ing the in situ leach mining technique, also
that total identified uranium resources had known as in situ recovery (ISR). In the in situ
only increased by 0.1% since the previous method, wells are drilled into the uranium
report had been issued. A reason cited for the deposit, and then a solution, such as oxygen-
minuscule uptick was that very little invest- ated groundwater, is circulated through the
ment had been made in exploration due to ore (Figure 2). That causes the rock to oxi-
depressed uranium market conditions. dize.
Indeed, the price for uranium oxide (U3O8) Oxidized uranium is soluble and leaches
has been in a death spiral (Figure 1). In No- into the circulating solution. After the preg-
vember 2016, U3O8 was selling at prices not nant mixture is pumped back to the surface,
seen since 2004. At roughly $18/lb, the price a treatment process is used to extract the yel-
was less than the cost of production for most low-colored uranium. The yellowcake is mining techniques are also widely used. In
suppliers. then dried and packaged in 55-gallon drums conventional mining, rock is excavatedei-
for shipment to a conversion facility. ther from underground mines (about 27% of
The Nuclear Fuel Supply Chain While ISR accounted for about 51% of world production) or from open-pit mines
Uranium is a metalabout as common as world uranium production, conventional (about 14%)and transported to a mill. At
the mill, the ore is ground or crushed and
1. A rollercoaster ride. The spot price for uranium peaked at about $136/lb in June 2007 placed in big tanks, where it leaches into sul-
bolstered by hype of a nuclear renaissance. An economic downturn and the Fukushima disaster furic acid or an alkaline solution. The solu-
quickly dashed hopes of a resurgence, causing the market to plunge. Recently, U3O8 traded at tion, similar to the one produced during the
13-year lowabout $18/lb. Source: The Ux Consulting Co. in situ process, is taken through a series of
refinement steps to extract the U3O8.
A few other uranium recovery techniques
not covered here make up the balance of pro-
duction.
Conversion. Although uranium is not
particularly rare, the fissile isotope (U-235)
$US/lb U3O8

accounts for only about 0.7% of natural

uranium. Most reactors are designed to use
enriched uranium, that is, uranium in which
the U-235 has been concentrated to between
3.5% and 5%. Before uranium can be en-
riched, however, it must be converted to its
gaseous form.
During the conversion process, impurities
are removed and the uranium is combined
with fluorine to create uranium hexafluoride
(UF6) gas. The gas is pressurized and cooled
until it liquefies. The liquid UF6 is drained
Year into 14-ton cylinders, where it is further

|
February 2017 POWER www.powermag.com 37
 FUELS
Mixed Oxide Fuel
Mixed oxide fuel (MOX) is a blend of plu-
tonium dioxide and depleted uranium diox-
ide that can be used as fuel in commercial
nuclear power plants. MOX fuel has been fab-
ricated and used in Europe for many years.
There, plutonium and uranium separated
from commercial spent fuel is recycled to
produce MOX fuel.
In the U.S., the Department of Energy
(DOE) proposed irradiating surplus pluto-
nium from dismantled nuclear weapons to
produce MOX fuel. CB&I AREVA MOX Ser-
vices is under contract with DOEs National
Nuclear Security Administration to design,
build, and operate a MOX Fuel Fabrication
Facility (MFFF) at the Savannah River site
in Aiken, South Carolina. Construction was
authorized to begin in 2007 (Figure 3),
but progress has been slow due to funding
shortfalls.
Even so, MFFF construction activities
have advanced with admirable nuclear
safety and quality records. Summary reports
released by the Nuclear Regulatory Com-
mission have identified no areas needing
improvement for six consecutive years. Ac-
cording to AREVA, the rework rate during
construction has been less than 1%.
In February 2016, AREVA said that about
cooled to its solid state. The cylinders are
then shipped to an enrichment plant.
Enrichment. Although a number of
uranium enrichment processes have been
demonstrated, only two have operated on a
commercial scale: the gaseous diffusion pro-
cess and the gaseous centrifuge process. As
recently as 2000, half of all enriched uranium
was produced using the gaseous diffusion
technique; however, today the centrifuge pro-
cess has completely replaced gaseous diffu-
sion.
The gas centrifuge enrichment process
uses several rotating cylinders in series and
parallel formations. The machines are in-
terconnected to form trains and cascades.
When rotated at high speedsfrom 50,000
revolutions per minute (rpm) to 70,000
rpmthe heavier UF6 gas molecules, which
include the most common uranium isotope
found in nature (U-238), move toward the
outside of the cylinder, while the lighter
molecules, containing U-235, remain closer
to the center.
Streams of slightly enriched uranium are
withdrawn from the centrifuge and sent to the
next-higher stage, while streams of slightly
depleted uranium are recycled back to the
38
3. New fuel fab facility. When fin-
ished, the Mixed Oxide Fuel Fabrication
Facility will support the U.S. governments
nonproliferation program by converting nu-
clear weapons-grade plutonium into reactor
fuel for commercial power plants. Courtesy:
CB&I AREVA MOX Services
$5 billion had been spent on construction.
Although most of the project procurements
were complete, it still expected about $3
billion more would be needed to finish the
jobmostly allocated to labor expenses. As
of July 2016, progress included 93% of con-
crete and 96% of rebar installed; 325 glove
boxes on contract with 129 installed; 27 of
28 long lead glove boxes tested; 72 of 73
tanks installed; and 22 of 31 active gallery
modules installed.
next-lower stage, until eventually the desired
enrichment level is obtained. The enriched
UF6 is then packaged in cylinders for ship-
ment to a fuel fabrication plant.
Fabrication. There are various types of
fuel fabricated for different reactors around
the world (see sidebar), but the most com-
mon fuel is low-enriched uranium (LEU)
fuel for light-water reactors. The fabrication
process begins by heating the solid UF6 to
return it to its gaseous form. The gas is then
chemically processed to form LEU uranium
oxide (UO2) powder.
The powder is pressed into pellets, sin-
tered into ceramic form, and loaded into
zirconium alloy tubes. The alloy typically
contains about 95% zirconium combined
with various other metals designed to en-
hance mechanical properties and resist cor-
rosion. Zirconium is a good choice due to its
low cross section for absorption of thermal
neutrons, effectively making it transparent
to the fission process in the reactor core.
The tubes, known as fuel rods, are con-
structed into fuel assemblies containing up
to 264 rods. Some of the more common as-
semblies have a 5-inch to 9-inch cross sec-
tion and measure about 12 feet long.
www.powermag.com
Abundant Resources, Difficult
Decisions
Today, Kazakhstan is the worlds leading
uranium producer (Table 1). And while Aus-
tralia leads the world by a wide margin in
reasonably assured recoverable uranium re-
sources (Table 2), Canada has the most tier-
one (best-margin) assets.
The Temrezli project in Turkey offers one
example of the difficult situation faced by
uranium mining companies under current
market conditions. The project, located near
the town of Sorgun, approximately 125 miles
east of the capital city of Ankara, is central
Turkeys largest identified uranium deposit.
Uranium Resources Inc. (URI) acquired the
project in 2015 when the company merged
with Anatolia Energy Ltd.
According to URIs 2016 annual report,
an independent pre-feasibility study (PFS)
was completed in February 2015. The PFS
assumed the project would produce an aver-
age of 825,000 pounds of U3O8 per year dur-
ing an initial 12-year mine lifetime. Under
such conditions, the study projected the all-
in sustaining production costs for the project
would be $30.12/lb of U3O8.
With the price of U3O8 less than $18/lb,
the decision to move forward is a difficult
one. However, as one of AREVAs experts
explained to POWER, mining projects such
as Temrezli often take 10 years to go from
discovery into production, so putting them
on hold because of market price fluctuations
isnt always practical. Often, companies have
to move forward with the hope that prices
will recover sufficiently to make the project
successful in the long run.
Tim Gitzel, president and CEO of Cam-
eco Corp., one of the worlds largest uranium
producers, with headquarters in Saskatoon,
Saskatchewan, expects prices to rebound. It
is a question of when, not if more urani-
um is needed, Gitzel wrote in the companys
most recent annual report. There is still go-
ing to be a need for more uraniumperhaps
even more so now that many projects have
been delayed or cancelled in the wake of low
uranium prices.
Cameco follows a unique stage-gate pro-
cess when developing its projects. The pro-
cess includes several defined decision points
during the assessment and development stag-
es. According to the company, it reevaluates
each project based on current economic, com-
petitive, social, legal, political, and environ-
mental considerations, and it only proceeds to
the next stage if the project continues to meets
the companys criteria. Cameco has scaled
back development of its Yeelirrie and Kintyre
properties in Australia and at its Millennium
deposit in the Athabasca Basin of Saskatch-
ewan, based on this methodology.
|
POWER February 2017
 FUELS
Table 1. Top uranium-producing countries. Kazakhstan and Canada accounted ration budgets have both been cut by about
for more than 60% of all the worlds mined uranium in 2015 (values shown are in tons). Of coun- 50% over the past few years. But the com-
tries not listed here, none produced more than 400 tons. Source: World Nuclear Association pany is not cutting production at one of its
newest developmentsCigar Lake (Figure
Country 2011 2012 2013 2014 2015 4). In fact, the company expects Cigar Lake
Australia 5,983 6,991 6,350 5,001 5,654 to reach full production of 18 million pounds
Canada 9,145 8,999 9,331 9,134 13,325 per year in 2017.
China (est) 885 1,500 1,500 1,500 1,616
Will Demand Grow?
Kazakhstan 19,451 21,317 22,451 23,127 23,800 Most industry observers agree that the price
Namibia 3,258 4,495 4,323 3,255 2,993 of uranium will recover. They point to new
Niger 4,351 4,667 4,518 4,057 4,116 nuclear power plants in China, Russia, South
Korea, and India as demand drivers, even as
Russia 2,993 2,872 3,135 2,990 3,055
questions loom over reactors in Japan and
U.S. 1,537 1,596 1,792 1,919 1,256 other parts of the world. But as markets have
Ukraine (est) 890 960 922 926 1,200 proven again and again, they are not always
Uzbekistan (est) 2,500 2,400 2,400 2,400 2,385 predictable. Many experts believed U3O8 was
poised for an uptick last year when prices
were in the $30s, but that obviously didnt
Table 2. Theres uranium in them thar hills. Uranium resources are found all materialize.
around the world. This table shows the tons of uranium available in various recovery cost cat-
According to the Red Book, 437 reactors
egories for the 10 countries with the largest estimated reserves. (NA = data not available)
totaling 377.4 GW of net capacity were con-
Source: Organisation for Economic Co-operation and Development Nuclear Energy Agency and
the International Atomic Energy Agency nected to the grid when its data was com-
piled. As such, it estimates that the worlds
Cost ranges uranium requirements were 56,585 tons per
year. Looking forward, the Red Book esti-
Country <$18.14/lbU <$36.29/lbU <$58.97/lbU <$117.93/lbU
mates that between 418 GW and 683 GW
Australia NA NA 1,664,100 1,780,800 of nuclear capacity will be online in 2035.
Brazil 138,100 229,400 276,800 276,800 Based on the projected increase in capacity,
Canada 251,200 321,800 509,000 703,600 it says as much as 104,740 tons of uranium
would be needed per year by then.
China 98,900 206,300 272,500 272,500
Although the industry appears capable of
Greenland 0 0 0 228,000 meeting the demand, it may not be as easy
Kazakhstan 97,500 667,200 745,300 941,600 as it sounds. AREVA, which has its 23 mil-
Namibia 0 0 267,000 463,000 lion pound annual production split roughly
in thirds between Canada, Kazakhstan, and
Niger 0 17,700 291,500 411,300
Niger, said various permitting hurdles, en-
Russia 0 47,700 507,800 695,200 vironmental impact studies, governmental
South Africa 0 229,500 322,400 449,300 and local hearings, and build-out challeng-
es make bringing mines into production a
4. Tier-one asset. The Cigar Lake project in northern Saskatchewan, shown here, began lengthy process.
commercial production in May 2015. It is the worlds highest-grade uranium mine. Courtesy: The company spokesperson said AREVA
Cameco Corp. maintains close relationships with govern-
mental representatives. In Niger, its opera-
tions represent a significant contributor to
the countrys employment and economy, and
in Kazakhstan, its properties are partially
owned by the state entity Kazatomprom.
Situations such as those can help maintain
stable and secure operations.
As the Red Book concludes, The chal-
lenge in the coming years is likely to be less
one of adequacy of resources than adequacy
of production capacity development due to
poor uranium market conditions. Is the mar-
ket going to bounce? Only time will tell. If
you were speculating, would you be buying
or selling uranium? Share your insights in the
With uranium prices down, Gitzel implied decision to take down production at Rabbit comments section at the bottom of the online
that Cameco has had to make other tough de- Lakenot an easy decision to take but we version of this story by visiting powermag.
cisions. Weve been very active in 2016, he did. At the same time, we took down produc- com.
said in a question and answer video posted tion in Wyoming and Nebraska. Aaron Larson is a POWER associate
on the companys website. We made the Camecos capital expenditure and explo- editor.

|
February 2017 POWER www.powermag.com 39
 Conference: April 10-13, 2017
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29346
 REGULATIONS
Where Are We After 10 Years of
Bulk Electric System Reliability
Standards?
As concerns about grid security increase globally, its a good time to review the
history, scope, and effect of North American electric system reliability stan-
dards. As the threat landscape changes, standards alone are not enough.
James Stanton
M
andatory. Thats the key word in the
Energy Policy Act of 2005 (EPAct)
where grid security is concerned.
Within two years of that legislative action,
the electric power industry was welcomed
into the world of operation and planning
regulation far beyond anything that had come
before. As of June 18, 2017, we will have 10
years of experience with mandatory reliabil-
ity standards. Are we better off as a result?
Are the costs of compliance commensurate
with the benefits? Will changes in approach
to compliance currently under way enable a
more efficient regulatory environment going
forward? This article examines how we got
to the current system and where we may go
from here.
The Triggering Event
The April 14, 2003, blackout of much of
the northeastern United States and parts of
Canada was the impetus for EPAct and the
accompanying changes to Section 215 of the
Federal Power Act. The power to enforce
mandatory reliability standards was granted
to the Federal Energy Regulatory Commis-
sion (FERC).
This was not the first cascading event
on the bulk power system resulting in a
widespread blackout, and despite the best
intentions of regulators and the law itself,
it will not be last. Laws and regulations
are about managing risks to acceptable
levels and providing an incentive for com-
pliance with requirements. Managing the
risk of a major event to a near-zero value
of probability would be prohibitively ex-
pensive. So, we are left with a system of
regulations intended to minimize the risks
while incorporating cost considerations
into the equation.
The amendment to the Federal Power Act
included a description of an Electric Reli-
ability Organization (ERO) that would de-
velop and enforce compliance with reliability
standards. FERC is not granted the ability to
42
develop standards; instead, it contracts that ac-
tivity to the ERO, which is the North Ameri-
can Electric Reliability Corp. (NERC). (For a
short history of NERC, visit nerc.com/About-
NERC/Documents/History_Dec12.pdf).
In early December, Federal Energy Regu-
latory Commission (FERC) staff released
a 78-page electric Reliability Primer
that provides an overview of FERCs role
in overseeing the reliable operation of the
nations bulk power system. The primer
outlines the basic structure of how the bulk
power system operates with an explanation
of fundamental concepts and functions re-
lated to power system operations. As FERC
explains, reliability standards impose re-
quirements on the users, owners, and opera-
tors of the bulk power system to assure that
they fulfill their responsibilities in reliable
grid operations, consistent with the basic en-
gineering functions and concepts discussed Bargaining came into play as Registered
in the primer. Entities experienced their first audits and
Many industry participants wrongly be- learned that being perfectly capable of
lieve that the NERC staff develops reliability verbally describing processes or activities
standards. That particular activity is actually was not the same as having documented
carried out by industry volunteers who par- evidence.
ticipatesometimes for yearson standard- Depression was experienced most deeply
drafting teams. by the health, safety, and environmental
The period between introduction of the staffers or junior engineers who had the
mandatory reliability standards and where NERC standards thrown into their basket
we are today mirrors the five stages of grief: of duties by management teams that had a
less-than-firm understanding of what they
We experienced denial that there was ac- were asking for.
tually a need for enforceable standards, As company compliance programs began
especially given the documented potential to form and be implemented, a semblance
of $1 million per day per violation sanc- of order emerged. Acceptance came with
tion. (As of the end of 2016, approxi- the realization that mandatory compliance
mately $47,800,000 in sanctions had been is here to stay; now the industry figures
assessed through the NERC compliance out how to comply in the most efficient
monitoring and enforcement program, way possible.
with additional penalties in conjunction
with FERC.) As we near the 10-year anniversary
We felt anger at the amount of extra time of mandatory standards, we have to ask
and effort required for the industry to whether we are better off now, from a BES
produce and archive actual evidence of reliability perspective, than when we start-
compliance. ed 10 years ago. There are dozens of mea-
www.powermag.com |
POWER February 2017
 REGULATIONS
sures available to help us in our assessment.
1. Bulk power system transmission-related events resulting in load
Some examples are the Reliability Indica-
loss. Source: NERC
tors from NERC that track the components
of the Adequate Level of Reliability defini- 16
tion. These include Reserve Margin, BPS
Transmission Related Events Resulting in 14
Loss of Load, Interconnection Frequency
Response, and Energy Emergency Alerts, 12
among others.
One of the most compelling data sets is in-
cluded in the NERC State of Reliability 2016 10
Report. The metric for bulk power system

Events
events resulting in a loss of load (excluding 8
weather-related events), M-2, is considered
to be improving, according to NERC (Figure 6
1). Certainly, when you look at the load af-
fected over time, the improvement since the
4
2003 blackout is notable (Figure 2).

Cyber and Physical Attacks 2

Although no North American service out-
ages have been attributed to cyberattacks to 0
date, the inherent risk of such an occurrence 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
continues to be at the top of the list of risk
elements identified in the NERC Compliance 2. Total annual load loss. Each band of color represents a different event. The vertical
axis scale has been truncated due to the large value (see number) of the 2003 Northeast black-
Monitoring and Enforcement Implementa-
out event. Source: NERC
tion Plans.
12,000 64,850
At the same time, the set of Critical In- 11,045
frastructure Protection (CIP) standards are 10,212
10,000
Total annual load loss (MW)

among those most violated by Registered En- 8,942

tities. Of the top 10 most violated standards
through the first three quarters of 2016, half
of them are CIP standards (Figure 3).
The reason for the relatively high incidence
of violations can be attributed to two factors:
complexity and the newness of CIP measures
to a large portion of the industry. (See sidebar
An Important Cybersecurity Resource.)
Although the latest versions of the CIP
standards have clarified expectations, a
learning curve remains in effect, particularly
for small and medium-sized entities. While
large vertically integrated utilities enjoy the
benefits of skilled and dedicated CIP experts
on their staffs, smaller participants often
struggle to assimilate the constantly chang-
ing requirements and various implementation
timelines into their programs. In addition, the
smaller programs are often designed, ex-
ecuted, and updated by a single individual
responsible for regulatory compliance as a
small part of their overall duties.
No one argues that the CIP standards are
not extremely important, but the history
of the standards and the constantly chang-
ing requirements represent a unique chal-
lenge even for those who strive for 100%
compliance 100% of the time. For small to
medium-sized Registered Entities, a com-
bination of networking with other entities,
selecting which notices to receive from
NERC relative to your compliance risk,
and outsourcing certain serviceslike up-
8,000 7,085
6,000
4,950
4,000
2,000
0
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
dating procedures and monitoring changes
in standards and requirementshave prov-
en effective.
Threats to the physical security of certain
elements of the interconnected systems are
also a significant concern. Current standards
require utilities to identify the most opera-
tionally significant areas on transmission
systems and have a plan to protect those
elements and locations. While a successful
cyberattack might take months or years to
plan and execute, a physical attack can be
carried out quickly, with very little prepa-
ration time. The physical security standards
continue to be implemented, and we can
look forward to ongoing enhancements as
lessons are learned and best practices iden-
tified in the current work.
An early admonition from industry stake-
holders on the content of reliability standards
was, Tell us what, dont tell us how. This
4,432
4,078
3,763
2,249
1,055 1,339 1,160 1,426
ideal is largely preserved to this day. For
both the CIP and the Operations and Plan-
ning standards, there is ample opportunity to
fulfill the reliability requirements in different
ways. The ability to account for and describe
specific or unique approaches to compliance
is built in to auditor tools like the Reliability
Standard Audit Worksheets. The questions
pertaining to how one complies with the stan-
dard or requirement in question is a legacy of
the what, not how industry advice.
In responding to a question about the
diversity of compliance measures, Rocky
Sease, CEO of SOS International, puts it
this way, I dont think anyone realized
how many different solutions would be ap-
plicable to any one standard. Compliance
solutions vary from utility to utility based
on governance, culture, technology, his-
tory, and many other factors. There is no
one-size-fits-all solution, and each utility

|
February 2017 POWER www.powermag.com 43
 REGULATIONS
3. Most violated standards. Critical infrastructure protection (CIP) standards were, in
aggregate, the most violated North American Electric Reliability Corp. (NERC) standards in the
first three quarters of 2016. Source: NERC Compliance Monitoring and Enforcement Program
Report Q3 2016
Q1 Q2 Q3
60
Instances of noncompliance discovered in 2016
50
40
30
20
10
0 in monitoring efforts and rightly assigns
CIP-007 PRC-005 CIP-006 CIP-004 MOD-025 PRC-019
An Important Cybersecurity Resource
The Electricity Information Sharing and
Analysis Center (E-ISAC), operated by the
North American Electric Reliability Corp.,
establishes situational awareness, incident
management, coordination, and communi-
cation capabilities within the electricity
sector through timely, reliable, and secure
information exchange. The E-ISAC, in col-
laboration with the Department of Energy
and the Electricity Subsector Coordinat-
ing Council, serves as the primary security
communications channel for the electricity
sector and enhances the sectors ability to
prepare for and respond to cyber and physi-
cal threats, vulnerabilities, and incidents.
Among E-ISACs recent work is an eight-
page Internet of Things DDoS White Pa-
per, published for a public audience in
response to the fall 2016 distributed deni-
al of service (DDoS) attack that used con-
sumer Internet of Things (IoT) devices.
As E-ISAC notes, existing attack surfaces
and new malware payloads were exploited
in unique ways, using custom attack soft-
ware. The E-ISAC developed the following
recommendations for defensive capabili-
ties in the Electricity Subsector with sug-
gestions to improve the overall posture of
strives for a resolution compatible with its
unique challenges.
The best approach is to achieve a full
and complete understanding of the scope
of standards and requirements applicable to
your specific operation. With that achieved, a
unique Internal Compliance Program can be
44
degree of sanity to the mechanics of com-
CIP-003 VAR-002 CIP-005 FAC-008
network security and cybersecurity within
our community.
Although the October 21, 2016, DDoS
attack on the Dyn Managed Domain Name
System used consumer IoT devices, the
white paper notes that Devices using
high bandwidth connections, such as se-
curity cameras in plants, facilities, substa-
tions, and switchyards have the potential
to create a substantive impact on the
Electricity Subsector.
There are several factors highlighting
the wide attack surface that similar de-
vices provide, including:
usually open access to the Internet;
the use of default login credentials and
weak passwords that are implemented
across entire product lines;
implementation of common operating
systems without the benefit of deacti-
vated daemons or services, and removed
executable files that could be remotely
or programmatically activated.
To learn more, download the white pa-
per from https://www.esisac.com.
Gail Reitenbach, PhD, Editor
developed to guide the day-to-day activities
around compliance. This program should ad-
dress the who, what, when, and where of
compliance activities and the production of
documented evidence. Another essential fea-
ture is to identify the subject matter experts,
compliance performers, standards owners,
www.powermag.com
and a repository for evidence.
Shift to a Risk-Based Approach
A fairly recent development has brought a
pliance. In 2014, NERC launched the Reli-
ability Assurance Initiative to develop and
implement a risk-based approach to compli-
ance monitoring. This program entails an In-
herent Risk Assessment for each Registered
Entity to bring clarity to the relative risk each
represents to the reliability of the BES based
on size, operation, and other factors. Al-
though this assessment does nothing to affect
the population of standards and requirements
applicable to each Registered Entity, it does
lay out those standards and requirements that
will be monitored for compliance.
This approach enables more efficiency
the greatest degree of monitoring to those
entities with the highest relative risk to re-
liability. This concept generally results in
smaller entities, like renewable generation
(see sidebar, Yes, Renewables Are Includ-
ed) and distribution providers, being mon-
itored on a reduced set of standards, while
larger utilities retain the greater share of
monitoring attention. These measures will
help alleviate the backlog of compliance
monitoring projects at the various Regional
Entities and allow the greatest monitoring
efforts to be directed toward organizations
that have the greatest potential to affect
overall reliability. (For more on risk-based
management, see Risk-Based NERC
Compliance: Assessing Risk to Bulk Power
System Generation in the June 2016 issue
or at powermag.com.)
Internal Controls
Another fairly recent development has been
the formal introduction of internal control
into the mix of compliance considerations for
Registered Entities. Internal controls should
relate to the inherent risk posed by a par-
ticular Registered Entity and any associated
NERC Reliability Standards. The assessment
of ones internal controls plays a significant
role in the Compliance Oversight Plan used
by the Regional Entity to monitor for com-
pliance. Internal controls are generally cat-
egorized by types that define where in the
compliance process they can be employed.
These categories are Preventive, Detective,
and Corrective.
Internal controls are not mandatory, but
their usefulness in managing any process
with inherent risks of underperformance is
well established. They may be relatively new
to the power industry, but they are common
practice in other businesses like financial and
healthcare companies. While not mandatory,
|
POWER February 2017
 REGULATIONS
Whats Next? nificance. More accurate data, both in system
Yes, Renewables Are Our 10 years invested in the creation, revi- monitoring and planning, and greater partici-
sion, and assimilation of the mandatory re- pation in programs like the Generator Avail-
Included liability standards allows us to make some ability Data System will enable planners to
Renewable generation continues to repre- logical assumptions for likely developments both identify trends in BES element reliabil-
sent new operating and compliance con- over the coming years. ity and implement more precise modeling of
First, we can look forward to ever-increas- system operating limits.
siderations. While many solar and wind
ing complexity in the standards, especially in Second, training will continue to escalate
facilities are inherently very dependable
the areas of cybersecurity and system model- as a critical issue for Registered Entities.
within the envelope of their intermit- ing. Constantly changing threat landscapes Factors that contribute to this escalation in-
tent nature, it is becoming increasingly in cyber threats are not unique to the electric clude retirement of highly capable system
apparent that the one-size-fits-all attri- power industry and are issues of global sig- operators and the need to train their replace-
butes of the reliability standards do not
always deal realistically with renewable
generation.
From a standard perspective for exam-
ple, a generator is a generator, whether
it is a 1,500-MW baseload facility or an
80-MW wind farm in a cornfield. Measures
have been taken in the area of protection
system maintenance and testing, even in
the BES definition, to bring clarity and
a recognition of relative risk to the dis-
crete components that make up renew-
able generation facilities.
The industry as a whole has done an POWER is the leading source for power
incredible job of incorporating intermit- generation news, technology, and analysis
tent renewables into dependable system
used by more than 65,000 plant managers,
operation and power market scenarios. As
for reliability, both revisions to existing engineers, technicians, and those who
standards and new ones should recognize support the power industry.
the sometimes unique operating attri-
butes of renewables.
POWER covers the industry across
internal controls can be highly useful in man- multiple channels:
aging the risk of noncompliance in a regu-
latory environment. A Registered Entity can
elect to have an Internal Control Evaluation
(ICE) performed by its Regional Entity. The
POWER magazine
digital and print
Careers in POWER

job board and e-newsletter

ICE allows the Registered Entity to provide
powermag.com
information to its respective Regional Entity

POWER Store
books and reference material
about internal controls that address the risks

POWERnews e-newsletter
applicable to the entity and for identifying,


DecisionBriefs
assessing, and correcting noncompliance

COAL POWER e-newsletter

with reliability standards and demonstrating POWER Buyers Guide
the effectiveness of such controls. GAS POWER e-newsletter print and website
Internal controls should have a stated
purpose or goal, such as Maintain effective
error-free communications or Ensure test-
ing activities are accomplished on time. Ex-
amples of internal controls includes training
(to help enhance human performance), peer facebook.com/ POWER Magazine and Women
review of procedures (to ensure broad input POWERmagazine in Power Generation groups
and achievable metrics), and review of com-
@POWERmagazine POWER magazine
munication logs (to verify proper and timely
communications and highlight areas for im-
provement). From a compliance perspective,
strong internal control conveys a high level
of confidence that measures are in place to
powermag.com
promptly prevent, detect, and correct any
25967
gaps in compliance.

|
February 2017 POWER www.powermag.com 45
 REGULATIONS
4. People remain critical. Regardless
of the number and nature of reliability stan-
dards, well-trained and diligent staff are the
most important element of a reliability pro-
gram. Courtesy: Getty Images
ments, more training requirements for gen-
erator owners and operators required by the
standards, and CIP awareness and procedure
measures for Low Impact Cyber Systems.
Under the bright line criteria of the CIP-002-
5.1 BES Cyber System Categorization stan-
dard, any BES element that employs Cyber
Systems is at least a Low Impact Cyber Sys-
tem. This would include all wind and solar
generators who meet the BES registration
criteria and who utilize some form of cyber
control or monitoring of their facility.
Third, as compliance programs continue
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46
to evolve and mature, and as Registered
Entities implement comprehensive compli-
ance programs, the risk of the requirements
becoming a matter of routine presents other
challenges. David Hilt, a former vice presi-
dent of compliance at NERC, and a key
contributor to the 2003 blackout investiga-
tion and report, was asked what he sees as
the greatest threat to reliability in the com-
ing years. He answered: Complacency. As
NERC and the regulators throughout North
America have implemented a regime of man-
datory reliability standards that have focused
on improving reliability of this most critical
infrastructure, we cannot become complacent
about reliability and believe it has been taken
care of. We will continue to face emerging
issues and new challenges to the reliable op-
eration of the Bulk Electric System.
Fourth, the cost of compliance remains
a high priority both among regulators and
Registered Entities. In 2016, NERC initiat-
ed a pilot program to consider the balance
of cost and benefits for the implementa-
tion of reliability standards. Reliability
Standard TPL-001-4 Transmission System
Planning Performance Requirements was
selected as the pilot standard. The pilot
sought to define the relative risks of not
complying with the requirements within
Marketing solutions it for:
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www.powermag.com
the standard, followed by industry input
on costs. There was a wide variation in the
responses that ranged from one additional
FTE to considerable costs.
On an industry-wide basis, a fair average
is $40,000 to $50,000 for small Registered
Entities to manage their compliance risks
through additional staff duties or staff aug-
mentation from outside advisors. For larger,
transmission-oriented entities, a core compli-
ance staff of four to six experts and support-
ing personnel, with input and associated time
contributed by dozens of subject matter ex-
perts and process owners, can easily run into
the hundreds of thousands of dollars.
Finally, as the electric power industry
continues to improve its approach to system
reliability, we come back to where we start-
edwith the people who operate, monitor, and
maintain the interconnected grids (Figure 4).
Human performance was identified as one of
the key risk factors to reliability in the NERC
Compliance Monitoring and Enforcement Im-
plementation Plan, because the performance of
personnel who make the decisions, both in real
time and in the planning of the system, is per-
haps the single greatest risk factor.
Until we have a system monitored and oper-
ated by robots or software (which could present
its own unintended consequences), the people
who manage the production and delivery of
electric power are absolutely vital to everything
the regulators and the reliability standards are
trying to achieve. Human performance is, of
course, a vital issue in many industries, but the
BES can pose unique challenges.
When asked if there is a difference in how
electric system operation approaches human
performance when compared to other indus-
tries, Pam Ey, PhD, a widely acknowledged
expert on human performance, describes it
this way: Absolutely. Our electric grid is an
amazing complex system, plugged into busi-
ness architectures that make optimization of
Human Performance initiatives particularly
challenging. We can see impacts in our in-
dustry in the way that work instructions are
written, information is shared, and metrics
are used, for instance in training programs.
But I am energized by discussions with lead-
ers in utilities concerned with creating pro-
active HP practices as a sturdy framework
for resilient operations. Thankfully, both the
medical and airline industry have paved the
way.
Standards and processes, procedures and
audits are all important, but the talented and
dedicated people who keep our lights on and
our security intact will always be the critical
element.
James Stanton (james.stanton@sosintl.
com) is director of advisory services at
SOS International.
|
POWER February 2017
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27706
 REGULATIONS
Start Generator Relay Loadability
Study Now for Timely NERC PRC-
025-1 Compliance
Complying with reliability standards requires considerable resource planning.
The tools and suggestions provided here may help engineers conform to
new generator relay loadability requirements. But compliance isnt the
only reason to be an early adopter; doing so can also avoid unnecessary
downtime and reduce maintenance costs.
Steve Nollette

I
f you are the owner or operator of a gen- of not demonstrating compliance by the has driven generator owners and generator
eration facility connected to the bulk elec- deadline are significant. The Federal Energy operators to streamline workforces in order
tric system (BES), starting a new year Regulatory Commission can impose fines of to reduce overall operational costs while in-
may trigger some anxiety regarding regula- up to $1 million per violation per day. creasing reliability and the availability to pro-
tory requirements. In particular, the October duce. This strategy often results in operating
2019 deadline to demonstrate compliance Realize the Benefits of Early with limited engineering resources. Under
with the North American Electric Reliability Adoption typical conditions, this approach is economic
Corp.s Generator Relay Loadability Stan- It is important to start planning your com- and appropriate. However, with looming
dard (NERC PRC-025-1) just got a little pliance efforts now. Early adoption of PRC- compliance deadlines, working with limited
closer. But not to worry, there are resources 025-1 and other reliability standards helps engineering resources can prove challenging.
that can streamline the work required and generation sites remain competitive in the Because regulatory requirements govern-
make your job a little easier. energy market and attractive to investors. By ing operations continue to change, single-
PRC-025-1 is just one of the reliability avoiding UH or FOH due to misoperations, site generators that have a lean workforce
standards created following the 2003 elec- and subsequently reducing the equivalent will likely need to rely heavily on external
tric power blackout that affected 50 million forced outage rate, facilities can achieve in- or outsourced engineering resources, such
people in the U.S. and Canada. As the most creased revenues, as well as lower operation- as contractors. Multi-site generation enti-
widespread blackout in North American his- al, maintenance, and repair costs. ties often already utilize an engineering
tory, it is estimated to have cost between $7 Another reason to start early is to have team specializing in matters pertaining to
billion and $14 billion. The event clearly ex- access to qualified engineering resources. NERC compliance. However, they may also
emplified the vulnerabilities of the BES and The sheer nature of todays deregulated BES need additional assistance if their engineer-
the need for regulation.
An analysis of this blackout and other ma-
jor disturbances in the past 25 years revealed Table 1. Relay loadability evaluation criteria. Setting options for load-responsive
protective relays are shown here. Courtesy: Vertiv Services
that generators tripped for conditions that
did not pose a direct risk to those generators
and associated equipment. In many cases,
this tripping was found to have expanded the
scope and/or duration of these disturbances.
PRC-025-1 was created to increase grid
stability during system disturbances by re-
ducing the number of nuisance trips due to
incorrect settings. According to the State of
Reliability 2015 report, 31% of all misopera-
tions resulting in unplanned hours (UH) or
forced outage hours (FOH) were due to in-
correct settings, logic, or design errors.
Like many reliability standards, PRC-025-
1 is currently enforceable by law. Achiev-
ing compliance is mandatory and can take
a significant amount of time. Noncompli-
ant facilities may need to budget for system
modifications or incorporate changes during
a planned system outage. The consequences

48 www.powermag.com |
POWER February 2017

Table 2. Choosing the best option. These are some of the benefits and detriments
of Option A and the software simulation option. Courtesy: Vertiv Services
1. Assessing the protection scheme. This diagram offers one example of a synchro-
nous generator protective relay system. Courtesy: Vertiv Services
ing team is focused on disseminating new
standards to the fleet and preparing for au-
dits, rather than on the highly technical tasks
needed to meet new regulatory requirements.
Determine the Extent of Needed
Resources
As requirements for system stability and load-
ability are enacted, a surge in demand for en-
gineering support of a much more technical
nature becomes apparent. However, you may
not know the precise scope of your efforts
without first considering compliance options
or performing a preliminary assessment.
PRC-025-1 provides multiple options for
setting load-responsive protective relays, as
outlined in Attachment 1, Table 1 of the ap-
|
February 2017 POWER
plication guidelines. Each relay may have
up to three options availableA, B, and C.
Table 1 illustrates the requirements for the
phase distance relay (21), including three
compliance options.
This article focuses on two options. The
first is Option A, which is the simplest to ap-
ply, but it generally results in a less-accurate
assessment. The second, referred to as soft-
ware simulation (and either Option B or Op-
tion C in the application guidelines), is more
accurate because it models the machines
reactive power capability using field-forcing
simulations. You should evaluate the benefits
and drawbacks of each option, summarized in
Table 2, when determining which approach is
best for your generating facility.
www.powermag.com
REGULATIONS
Given the conservative nature of the criteria
in Option A, which may not be achievable by
all generating units, an alternative method
software simulationwas created to deter-
mine the reactive power capability. Option
A requires less engineering effort, yet it may
not provide the most accurate assessment of
generator capability. Although this option
does help to improve grid stability, it is less
accurate than software simulation and may not
provide optimal generator unit protection.
In these cases, the thresholds of the load-
sensitive relays typically need to be in-
creased, which requires coordination with the
transmission system prior to implementation.
This coordination effort may take as much
or more time than what would be needed to
simply perform software simulation from the
start. Additionally, any changes made to pro-
tective relay settings must be fully tested at
the time of implementation, which generally
requires the generation site to take a mainte-
nance outage.
For the average single-unit plant with
limited engineering resources, the pro-
cess of assessing how close a system is to
compliance can be quite a challenging task
without assistance. Even for the multi-site
owner with a dedicated NERC team, the
task of analyzing tens, or even hundreds
of sites, is a significant effort without a
systematic process and supportive tool for
making initial assessments. Some owners
might elect to centralize engineering re-
sources, but this typically translates into
less familiarity with each site and limited
data-gathering capacity.
Streamline Efforts with a System-
atic Process and Support Tool
PRC-025-1 application guidelines carefully
detail the steps necessary to assess compli-
ance using Option A. This process must be
performed for each site and requires a signif-
icant amount of effort to manually perform
each time. A quality assessment tool will au-
tomate tasks of the process that require little
supervision and are repeatable from project
to project.
Although engineering teams could cre-
ate their own tool, the engineers of Vertivs
Electrical Reliability Services (ERS) have
already done the work to help generators
simplify the assessment process and encour-
age early adoption. This downloadable tool
reduces the compliance-checking steps to the
most essential components and makes the as-
sessment process scalable for all generation
site configurations.
By working through the following six-step
procedure, using the ERS tool, youll be better
able to plan the effort, time, and cost needed to
meet the NERC standards requirements.
49
 REGULATIONS
Step 1: Gather Generation Unit Data. A minimum amount of
information should be collected prior to performing assessments
of the relay settings. This basic generation unit information is used
throughout the assessment process. Required information can be
found in the following documents: one-line drawings, three-line
drawings, protective relay settings, relay test reports, and com-
ponent nameplates. Each document will contain key information,
such as the following:
Maximum rated megavolt amperes (MVA) for the generator
Rated power factor and voltage
Maximum MVA for generator step-up (GSU) and unit auxiliary
transformer, and associated impedances
Rated primary and secondary voltages at the set tap position for the
GSU
Utility voltage
Megawatts reported to the transmission planning coordinator
Step 2: Determine Which Load-Sensitive Protective Relays
Within the Generation Unit Will Require Study for Generator
Loadability. PRC-025-1 application guidelines illustrate an example
protective relay scheme for a generation unit. This scheme is com-
prehensive in order to assist users in determining how the standard
applies to a given plant. However, not all relays illustrated will neces-
sarily exist in every system (Figure 1).
Once the generation system protective relays have been sorted into
the appropriate options as seen in Figure 1, the remaining protec-
tive device information is gathered to assess each protective relays
compliance. This information is also found within the documentation
gathered in Step 1.
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Step 3: Populate Each Tab of the Tool with Data. Using the ba-
sic unit information gathered in Step 1, enter data into the nameplate
tab of the assessment tool. Continue this data entry on the correspond-
ing tab for each protective relay identified in Step 2.
The tool delivers a compliant or not-compliant assessment for
each synchronous generator relay by comparing the protective relay
settings with Option A of the standard, which derives the reactive
power rating from conservative calculations. Additionally, the mini-
mum settings required to become compliant with Option A are also
calculated and presented. This gives the user valuable information
indicating how close each load-sensitive relay setting is to Option A
compliance.
Step 4: Decide Whether to Demonstrate Compliance to
the Standard Using Option A or Using Software Simulation.
If choosing Option A, you will need to make necessary adjust-
ments to protective relay settings and create the reporting nec-
essary to demonstrate compliance. If you want to ensure more
accurate relay settings that improve generating unit protection,
you should investigate further through field-forcing. This will al-
low you to model the machines reactive power capability during
a transient sufficient enough to lower utility voltage to 85% of
steady-state values.
Once an approach has been selected, the original equipment
manufacturer and the protection engineers responsible for up-
stream coordination should carefully review any changes to the
existing settings prior to implementation.
Step 5: Perform Corrective Actions as Needed. Whether
determining the reactive power rating through conservative cal-
culation or through software simulation, corrective actions will
likely need to be taken. Actions will include scheduling an out-
age for implementation, testing, and documenting protective re-
lay setting changes.
Step 6: Compile All Information to Complete the Demonstra-
tion Report. A thorough report for generator loadability will contain
all information that was gathered during the assessment phase; sup-
portive calculations from PRC-025-1 application guidelines; results
from the software simulations (if performed); and documentation of
any corrective actions and testing.
Assimilating reporting characteristics that make the auditing
process efficient will contribute to a successful audit with the
Electric Reliability Organization. Reporting methods that support
a searchable document such as an electronic format employing op-
tical character recognition conversions, a linked table of contents,
bookmarking, and embedded links to supportive documentation
should be an integral part of the demonstration report. These at-
tributes allow an auditor to quickly navigate through the report to
find critical information.
When reviewing reports, an auditor will be more likely to recog-
nize formulas similar to those published in PRC-025-1 application
guidelines, so all calculations should follow the guidelines as closely
as practical. A high-level summary of all load-sensitive protective re-
lays should be listed in a format that clearly shows the reader which
relays were considered as part of the generator loadability study and
which were not applicable.
Whatever your approach to achieving PRC-025-1 compliance,
there are a few actions that will clearly benefit your business. By
choosing to adopt the standard early, working with qualified engi-
neering resources, and leveraging available assessment tools, you can
simplify the compliance process. And you can feel good about doing
your part to better protect the grid while effectively protecting your
own operations.
Steve Nollette is supervising engineer for Vertiv Services
(NERCcompliance@VertivCo.com).
|
POWER February 2017
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52 www.powermag.com |
POWER February 2017
 PRODUCT Showcase
POWER PLANT BUYERS MART

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 ADVERTISERS INDEX

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POWER February 2017
Now Available
POWERs Country Report
It is critical that todays industry professionals exchange ideas and experiences to
help increase productivity, encourage technological development, and improve on best
practices. Whether a business is regional or global, more knowledge can be gained
from worldwide information exchange than from limited regional knowledge.
Articles Include:
Chinas 12th Five-Year Plan Pushes Power Industry in New Directions
Abundant Clean Energy Fuels Brazils Growth

Vietnam Works Hard to Power Economic Growth

Chiles Power Challenge: Reliable Energy Supplies

Chinas Power Generators Face Many Business Barriers

Post-Fukushima Nuclear Power Development in China

Renewable Energy Development Thrives During Chinas 12th Five-Year Plan

The Russian Power Revolution

Wind Power Incidents in China: Investigation and Solutions

China Wrestles with Power Shortages

Chinas Shale Gas Development Outlook and Challenges

Germanys Energiewende at a New Turning Point
The Energy Industry in Xinjiang, China: Potential,
Problems, and Solutions

New Zealands Geothermal Industry Is Poised for the Future

Mexicos Electricity Sector Reform in Perspective

Southeast Asias Energy Juggernaut

UK Struggles to Attract Low-Carbon Investment
Japan Ramps Up Renewables

Power in India: Opportunities and Challenges in a

Fast-Growing Market

Indonesia: Energy Rich and Electricity Poor

Delivered in a PDF format, 105 pages.

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store.powermag.com 29202
 COMMENTARY
Yesterdays Retail Tariff and
a Transforming Grid
Ashley Bernstein
esterdays retail tariff is prohibiting the optimal dispatch
Y of cogeneration resources as our grid is transforming with
high levels of solar generation and potential overgenera-
tion issues.
An Unintended Consequence of Policy
California has some of the most ambitious energy efficiency
and renewable energy goals in the world. Investments in re-
newable energy and other clean energy technologies have been
substantial, and California has established itself as a true lead-
er in the fight against climate change. A clear example is the
investment in solar energy. California currently has more than 8
GW of grid-connected solar and more than 5 GW of rooftop pho-
tovoltaic solar. Californias continued leadership in renewable
energy has yielded climate change benefits but also created
some challenges, including the potential for significant over-
generationthat is, more generation than can be integrated
reliably into the grid.
The state has been exploring several solutions to overgen-
eration, including energy storage, facilitating exports through
more integrated markets with the rest of the West, and flexible
loads that can be increased in overgeneration conditions. While
storage is a potential game-changer, the technology is still im-
mature, and it is unclear that it can be deployed cost-effectively
in the volumes necessary to really address overgeneration. Inte-
grating markets across the West has raised many vexing market
design, jurisdictional, and political issues. Flexible loads, on
the other hand, provide a potentially low-cost and easily imple-
mentable solution to overgeneration.
A Potential Solution: Cogeneration
One type of potentially flexible load that is often overlooked
is load associated with Californias large fleet of cogeneration
plants. Cogeneration plants generally use natural gasfired gen-
eration to produce both power and steam for an industrial host,
such as a large factory. Most host loads are subject to standby
tariffswhen their electrical loads are not served by on-site
cogeneration facilities, they pay a retail rate of approximately
$100/MWh. This rate generally exceeds prevailing wholesale
prices by a wide margin. The structure of standby tariffs en-
courages host loads to rely on on-site generation even when it
is significantly more expensive than power from the wholesale
market, for example under overgeneration conditions.
An example is Calpines Los Medanos Energy Center (LMEC)
in Pittsburg, Calif. The power plant provides power and steam
to both the Dow Chemical Co. (Dow) and USS-POSCO Industries
(UPI). The electric load of both entities combined rarely exceeds
90 MW, which is smaller than the minimum load at which LMEC
can operate (190 MW). Consequently, operating LMEC entails not
only serving the Dow and UPI loads but also exporting at least
100 MW to the grid.
56 www.powermag.com
The Tariff Problem
Given the standby tariff, even if the wholesale price is zero,
and accounting for the cost of liquidating any excess generation
beyond what is needed to serve their loads into the market, it is
generally less expensive for Dow and UPI to rely on generation
from LMEC, rather than meeting their needs from the wholesale
market. Consequently, LMEC generally sends power to the grid,
regardless of wholesale prices and overgeneration conditions.
Flexible loads, on the other
hand, provide a potentially low-
cost and easily implementable
solution to overgeneration.
If standby tariffs were modified to better reflect wholesale
prices and market conditions, cogeneration facilities such as
LMEC would be encouraged to decrease generation and effec-
tively increase load under overgeneration conditions. In the case
of LMEC, not only might it stop sending excess power to the grid,
but it could also draw from the grid to meet host loads, result-
ing in a swing of 190 MW and allowing excess solar generation
that might otherwise be curtailed or exported to other states to
be used to support California manufacturing and jobs. This large
flexible load is available with essentially no additional capital
investment.
More rational rate design could open additional opportuni-
ties for cogeneration units to address overgeneration conditions
above and beyond replacing the generation from cogeneration
facilities with wholesale market purchases when wholesale prices
are low. For example, when LMEC is not operating, steam for
Dow and UPI is provided from gas-fired auxiliary boilers. These
auxiliary boilers could be replaced with electrical auxiliary boil-
ers that could consume significant amounts of grid power under
overgeneration conditions. Presumably, similar opportunities ex-
ist at other cogeneration facilities meeting substantial steam
requirements.
Just as the grid needs a balance of resources to meet demand
throughout the day, the overgeneration problem will be solved
in many ways. But leveraging existing infrastructure and making
some basic rate changes could make a real impact in the over-
generation problemnot in a few years, but today.
Ashley Bernstein is director of origination and development at
Calpine Corp.
|
POWER February 2017
 4th Annual

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