CT/CCPP O&M Cost Analyzer:

Software Capabilities and

Development

ERCOFTAC conference
Athens, GREECE
March 31 April 2, 2004

Herman Annendyck, Technical Manager, EPRI, Brussels,

BELGIUM
Dale Grace, Senior Engineer CT Program, EPRI, Palo Alto, CA,
USA
John Scheibel, CT Program Manager, EPRI, Palo Alto, CA, USA
 CT/CC O&M Cost Analyzer Software
within the EPRI CT/CCPP Program

P80. New CT/CCPP P79. CT/CCPP P88. HRSG

Design and Risk O&M Dependability

Gas Turbine Experience and
Intelligence Report
Durability Surveillance
Project Risk Framework
Combined-Cycle Plant Design
SOAPP Workstation
CT/CCPP Environmental
Control Issues
Fuel Supply and Generation
Markets
Condition Monitoring and HRSG Cycle Chemistry
Inspection
Tube Failures and Life
CT advanced repair Assessment
technologies
Inspection and NDE
Hot Section Life Prediction
and Improvement Application Training
Services
Plant Maintenance
Management
Advanced F-Class Life
Management
Operational Flexibility
Simulator & Training

The CT/CCPP O&M Cost Analyzer software development is part of EPRI R&D Program P80
New Combustion Turbine (CT)/Combined Cycle Power Plant (CCPP) Design, Repowering,
and Risk Mitigation.

The idea is that realizing maximal benefits from advanced gas turbine based power plants
involves a detailed assessment of the technology risk inherent to various CT models,
especially the newer, high temperature models (F-class and higher technology). Quantifying
this risk requires a quantification of the CT operation and maintenance (O&M) costs and a
comparison of these costs with various risk mitigation options (insurances, warranties, long
term service agreements, ).
 CT/CC O&M Cost Analyzer Software
CT/CC O&M Cost Analyzer
Input Summary sheet

Plant / Economic Basis User Selection Menu

Excel Spreadsheet
Gene ra l Electric (GE)
Combustion Turbine Manufacturer
GE 7 FA+e
CT Model
Combined Cycle / Cogen
Cycle Type
Base load: 40-95% Servic e Fac tor
Duty Cycle - Mission

Cost Estimates
Yes (for CC or Cogen)
SCR of NOx in Flue Gas
User Input Default Value
Number of CT's 2
Number of HRSG's 2 2

Fixed and Variable (non-fuel)

Number of Steam Turbines 1 1
Plant Net Output, MW Rating 491.0 491
Service Factor (SF) 75.0% 75.0%
Annual Operating Hours 6,570
Capacity Factor (CF) 70.0% 70.0%

Operations Percent Time on Natural Gas

Percent Time on Distillate Oil
Other Fuels (by difference)
95.0%
5.0%
0.0%
Percent Time at Peak Load 1.0% 1%

Maintenance
Number of Normal Starts/Yr 17 17
Number of Full Load Trips/Yr 3 3
CT Model First Commercial Year of Use 1994 1994
Base Year (1st Quarter for cost reference) 2002
Plant Startup Year 2004

Insurance Plant Economic Life, Years

Inflation/Escalation - Average Annual
Escalation - CT Maintenance Parts
Present Worth Discount Rate
30
2.5%
2.5%
15.0%
30
2.5%
2.5%
15.0%

Maintenance Contracts
Combustion Turbines and Combined Cycle Power Plants
Emphasis on the CT but also includes the ST, HRSG and
BOP

In December 2003, EPRI released a major update of its CT/CCPP O&M Cost Analyzer
software.

This presentation illustrates some possible applications and capabilities of this software in the
context of CT/CCPP life management and full cost analysis. The CT/CCPP O&M Cost
Analyzer software operates as an Excel 2000 workbook, compatible with Excel 97 as well as
higher versions

Its original purpose was to quantify technical risks associated to the maintenance of
combustion turbines from a project developer perspective. To properly address that issue, a
full O&M estimate was required. Today, the software allows to assess lower cost combustion
turbine component repair/replacement options and CT/CCPP project risk mitigations.
 CT/CC O&M Cost Analyzer Software (continued)

Cost Framework Economic Life of Plant

Present Worth and Annualized Costs
Use in Pro Forma Cash Flow for Project IRR
Smart Defaults & Flexibility for the Analyser User
Variability
Unplanned Maintenance (7FA and 501F)
Scheduled Maintenance Intervals
Continuously updated and extended under the EPRI
CT/CCPP R&D program

The CT/CCPP O&M Cost Analyzer software provides an extensive framework utilizing
present worth economics. Costs are annualized based on a geometric gradient i.e. inflation
rate adjusted.

The smart defaults change depending on the inputs before them, and basic estimates can be
made by changing just a few inputs. However, the intermediate values are also available if
the user wants to override the defaults.

The software includes a statistical simulation capability for looking at the variability in
unplanned maintenance costs and duration, as well as the impact of variation in scheduled
maintenance intervals.
 Operations Costs

Direct Labor Plant Staffing

Indirect Benefits and Home Office
Operating Services and Modes : open cycle, combined
cycle, peaking, two-shifting, base loaded,
Variable Operating Costs
Non-fuel (water, catalyst, etc.)
(Fuel not included)

(Details Used to Build Up Costs)

The estimate of operating costs is based on a level of personnel staffing that is sensitive to the
type of plant, duty and number of CTs.

Operating services are generally contracted services, such as accounting services, emissions
testing, outside chemical analyses, etc. that would be considered as fixed costs. There is
substantial detail provided in order to build up these various cost categories.
 Maintenance Costs

Annual/Periodic Services
Scheduled CT Maintenance/Overhauls
CI (Combustion Inspection)
HGPI (Hot Gas Path Inspection)
MJ (Major Overhaul)
Other Scheduled Maintenance
HRSG
Steam Turbine
Balance-of-Plant
Unplanned Maintenance Allowance
CT
HRSG, ST, BOP

6
 EPRI CCPP O&M Analyser Cost Components
2 x 7FA+ base load (75% service factor)
Annual Cost
Fixed Costs
Direct Operating Labor (Base, OT, Bonus) $786,000
Direct Maintenance Labor (Base, OT, Bonus) $486,000
Annual Services, Materials & House Power $300,800
Indirect Labor (Benefits & Home Office) $770,900
Variable Costs
Scheduled Maintenance Parts & Materials $4,996,900
Major O&M Cost Components
Scheduled Maintenance Labor $591,300
Catalyst Replacement Unplanned Maintenance (Allowance) $210,500
0.9% Catalyst Replacement $87,300
Unplanned Maintenance Other Consumables $1,066,600
(Allowance) Other Consumables
2.3% 11.5% Disposal Charges $13,500
Scheduled Maintenance Disposal Charges $9,309,800
Labor 0.1%
6.4% Direct Operating Labor
(Base, OT, Bonus)
8.4%
Direct Maintenance
Labor (Base, OT,
Bonus)
5.2%
Annual Services,
Materials & House
Power
3.2%
Indirect Labor (Benefits
& Home Office)
8.3%
Scheduled Maintenance
Parts & Materials
53.7%
7

The above figure shows the typical cost fractions per year (annualized) for a base loaded
CCPP consisting of 2 7FA+ gas turbines (75% service factor).

The annualized costs consist of :

Fixed Costs :
Direct Operating Labor (Base, OT, Bonus)
Direct Maintenance Labor (Base, OT, Bonus)
Annual Services, Materials & House Power
Indirect Labor (Benefits & Home Office)

Variable Costs :
Scheduled Maintenance Parts & Materials
Scheduled Maintenance Labor
Unplanned Maintenance (Allowance)
Catalyst Replacement
Other Consumables
Disposal Charges
 CT Inspection Intervals - Maintenance
Intervals - Relative Hours and Starts
800

GE (FH, FS)
700

S-W (EBH, EBS)

600
MHI
(EOH, WS)
500

Siemens & Alstom (GT24/26)

(EOH)
Alstom/ABB
400

300
(EOH)

200

Accepted/safe CT
100
operation zone

0
0 5000 10000 15000 20000

Hours

The above figure illustrates the different OEM algorithms that determine their inspection and
maintenance intervals, and which are incorporated in the CT/CCPP O&M Cost Analyzer :

General Electric : Factored Hours (FH), Factored Starts (FS)

Siemens-Westinghouse : Equivalent Baseload Hours (EBH), Equivalent Baseload Starts
(EBS)
Alstom : Equivalent Operating Hours (EOH)
Siemens KWU : Equivalent Operating Hours (EOH)
Mitsubishi : Equivalent Operating Hours (EOH), WS (future)
 CT Maintenance Costs

Details per Component Type (i.e. 1st Stage Blade, Transition Piece)
Costs
Repair
Replacement
Tax Category (Capital or Expense)
Repair and Replacement Frequency
Hours
Starts
Inspection Costs
Consumables
Labor
Spare Parts Rotation
Repair Fallout Percentage for Blades and Vanes (Scrap
Rate)
9

The fallout percentage (scrap rate) is determined by components that need to be replaced at an
inspection date prior to its scheduled replacement.

The replacement costs incurred consist of a portion of repair costs also incurred (user-
defined) and applies to blades and vanes with repair:replacement intervals of 1:1, 2:1 and 3:1.

Example :
Blade Repair @ 24,000 hr, Replacement @ 48,000 hr
20% Incur 30% of nominal repair cost before scrapping and replacing with new blades
the new parts are also subject to a certain fallout at the next HGPI
This leads to a complex accounting through the project life.
 Spare Parts Rotation

Rotation Sparing
Option to Incur Replacement Parts Costs Early
(At Time of First Repair)
Repaired Parts Become Spares for a Next Interval
(Roll In Roll Out)
Timing Increases Net Present Cost of Maintenance
May Choose More Than One Set If Multiple Units
Depends on Maintenance Strategy/Timing
Example with 2:1 Repair:Replace
No Rotation New Repair Repair Replace Repair Repair Replace Repair

Rotation Sparing New Replace Replace Replace

Repair Repair Repair Repair

10

The user can choose which parts are subject to rotation. When selected, procurement of
replacement parts is accelerated to the time of the first repair cycle. Removed parts are
repaired and used in a later repair cycle in the same machine or another machine. The timing
of procurement of replacement parts and parts repair based on rotation sparing is therefore
changed, which affects the cash flow and present worth economic analysis.

CT parts rotation sparing can accept any number of spares, up to the number of CTs being
considered, to provide flexibility in the sparing decisions.
 Results

Quarterly Cash Flow for Scheduled CT Maintenance

Repair
Replacement
Labor
User-defined Cost Adders
Annual Cash Flow
Operations
Maintenance
Project Summary Report
Present W orth Basis
Annualized Basis
Fixed
Variable
Graphical visualizations by O&M costs pie charts, bar charts,
curves illustrating the probabilities of risk mitigation costs (uses the
Crystal Ball Add-In)
11

As new CT models attain higher firing temperatures, maintenance risk has become a central
concern for project profitability. Over its life cycle, a turbines maintenance costs can run two
to three times higher than its capital cost.

To help manage this risk, OEMs and third-party service providers are offering long-term
agreements for parts repair and/or replacement, as well as more comprehensive maintenance
agreements and contractual service agreements, commonly known as long term service
agreements (LTSAs). These agreements may include planned and unplanned maintenance,
extra work (as mutually agreed), enhanced field assistance, monitoring and diagnostics, initial
spare parts, and other elements, in addition to specified parts supply and repair.
 Risk Mitigation Costs
CT Risk Mitigation Inputs

CT Risk Mitigation Options User Selection Menu

Standa rd Warranty - No Charge
OEM Warranty
Yes - Payments and Deductible

OEM Warranty
Machinery Breakdown Insurance
Scheduled Maintenance Only
Maintenance Contract (or LTSA)
Yes - Replacement Power Ba sis
Business Interruption Insurance
None - Deterministic Values Only
Monte Carlo Simulation Options

Insurance CT OEM Warranty Inputs-Per CT Basis

User Input Default Value

Standard Warranty Duration, Yr 1 1

Machinery Breakdown Ext. Warranty Duration, Yr (beyond Std)

Initial Payment (Startup)
Annual Payment (subsequent)
$0
$0
0 0
$0
$0

Business Interruption
Escalation for Payments 2.5% 2.5%
Annual Deductible * $11,000 $11,000
Maximum OEM Liability per Yr $2,550,000 $2,550,000
Escalation for Deductible and Max. Liability 2.5% 2.5%

Property Percentage of Costs Covered by OEM Warranty in lieu of actual costs (subject to maxim
Unplanned CT Maint Parts & Labor 100%
CT Machinery Breakdown Insurance Inputs-Per CT Basis
100%

Contract Duration, Yr 30 30

Maintenance Contracts Annual Premium

Escalation for Payments
Deductible (per Event) *
$255,000
2.5%
$1,700,000
$255,000
2.5%
$1,700,000
Policy Limit (Max.Insurer Liability/Yr) $25,500,000 $25,500,000

Parts Only Escalation for Deductible and Max. Liability 2.5% 2.5%
Percentage of Costs Covered by Insurance in lieu of actual costs (subject to maximum
Unplanned CT Maint Parts & Labor 100% 100%
CT Maintenance Contract Inputs-Per CT Basis

Scheduled Maintenance Only Contract Duration, Yr

Initial Payment (Startup)
Annual Payment (subsequent)
7
$3,145,000
$2,975,000
7
$3,145,000
$2,975,000
Escalation for Payments 2.5% 2.5%

Scheduled and Unplanned Annual Deductible *

Max.Liability per Yr for Unplnd Maint
Esclation for Deductible and Max. Liability
$0
$0
2.5%
$0
$0
2.5%
Percentage of Costs Covered by Maint Contract in lieu of actual costs (depends on con

Maintenance and Operations Plant Operations Labor (fixed)

Plant Maintenance Labor (fixed)
Annual O&M Services and Materials
0.0%
0.0%
0.0%
0%
0%
0%
Non-operating Purchased House Power* 0.0% 0%
Unplanned Non-CT Maint Parts & Labor 0.0% 0%
Unplanned CT Maint Parts & Labor 0.0% 0%
Sch. Non-CT Maintenance Parts 0.0% 0%
Sch. Non-CT Maintenance Labor 0.0% 0%
Scheduled CT Maintenance Parts 100.0% 100%

12

Version 3.0 of the CT/CCPP O&M Cost Analyzer provides :

O&M Estimates for Existing Plants : estimates of O&M on a going forward basis are
now allowed. For existing plants that have run for a period of time and perhaps have already
had maintenance inspections, the user can enter the accumulated factored hours and starts for
aged parts on a component type basis, as well as factored hours and starts since the last
inspection of each type. The software then uses this information as a starting point for
estimating maintenance intervals and parts repair and replacement intervals, in the same
method as for new plants.

Insurance Premium Revisions : the methodology and cost estimates for boiler and
machinery insurance (i.e., machinery breakdown) and for the associated business interruption
insurance have been significantly reworked to provide more accurate estimates based on
current market conditions and industry input.

Property Insurance : Premium estimates for property insurance, with and without additional
business interruption coverage, are now provided. Property coverage insures against a broad
range of property damage exposures including fire, explosions, floods, earthquakes and other
perils. Property insurance covers not only the process equipment but also support equipment
and buildings.
 Probabilities of Risk Mitigation Costs
Total Operations & Maintenance Cost Variability

Without Contracts & Insurance With Contracts & Insurance

Mean w/o C & I Mean with C & I
$14,000,000

$12,000,000

$10,000,000
Annual O&M Cost

$8,000,000
Ideally, the intersection
$6,000,000 point has to be as far as
possible to the right to
$4,000,000
stimulate CT self-
maintenance by the
owner/operator
$2,000,000

$0
0% 20% 40% 60% 80% 100%
Probability of Cost Being Less Than Given Value
13

Quarterly Analysis : a quarterly calendar basis is provided for scheduled CT maintenance

intervals and inspection/overhaul costs. Present worth calculations are based on costs
assigned quarterly, providing a finer resolution to changes in operating scenarios for
sensitivity analysis. Factored hours and starts can be modified per quarter if desired to fine-
tune inspection intervals. Quarterly escalation factors are also readily available for use with
the user-defined maintenance cost and contract cost adders.

Maintenance Intervals Refinements : additional flexibility is provided in defining the

frequency of inspections and CT parts life. The user may modify factored hours and starts
intervals for combustion inspections, hot gas path inspections, and major overhauls. Timing
of inspections is determined based on cumulative factored hours (and starts as applicable)
since the last inspection. Parts repair/replacement timing is also determined based on
cumulative factored hours (and starts) since the last repair or replacement.

User override feature : has been added to the quarterly inputs sheet to provide more realistic
scheduling of major inspections for certain unique circumstances. The user can specify the
minimum time interval following the hot gas inspection prior to a major inspection. In
circumstances where the maintenance interval is a mixture of starts-limited and hours-limited
intervals (a condition that can occur with GE and S-W algorithms only, depending on
inspection limits), a major inspection (starts limited) could occur shortly after a hot gas path
inspection (hours limited). A provision has been added such that the hot gas inspection is
redefined as a major inspection if it would have occurred within several quarters time frame.
 Effects of Risk Mitigation Options

Most Options Classified as Fixed Costs

Potentially Reduced Costs for Unplanned Maintenance
Some Costs (Above Deductible) Covered by Insurance
Some Costs Covered by LTSA
Reduced Exposure to Potential Revenue Loss from
Business Interruption

Results With Risk Mitigation

Annual Cash Flow
Project Summary Comparison of O&M Costs w/wo Risk
Mitigation
Cost:Benefit Comparison (with Risk Simulation)

14

Repair Fallout : parts replacement costs due to fallout during the repair cycle are rigorously
calculated throughout the project life based on a user-specified fallout rate. In addition, the
user specifies the extent that repairs must be made before deciding that the parts must be
scrapped and replaced prematurely.

Maintenance Costs : model-specific maintenance estimates now include the 501D5A and
V84.3A(2) machines, as well as an update on the S-W 501F costs. These are in addition to the
GE 7EA, 7FA+e, and ALSTOM GT11N2 machines currently included. Any Alstom/ABB,
GE, Siemens KWU, or S-W machine can now be modeled using the framework provided.

User-Defined Costs : additional user-defined CT maintenance costs for variable

parts/materials and labor, either capital or expense categories, can be entered on a quarterly
basis for self-performed maintenance. Additional user-defined costs associated with
maintenance contracts can also be assigned on a quarterly basis.

Capital and Expense Categories : scheduled CT maintenance estimates now include user
selection of the tax category (capital or expense) for parts replacement, repair and labor.
Rotation Sparing
 CT Maintenance Costs - Variability

Self-directed, third party

parts
Agreement, OEM
Services
Probability

Self-directed, OEM list

price

Insurer-
Shared Risk

Maintenance Cost to Owner

15

For various scenarios, the above Figure illustrates the uncertainty of maintenance costs for CT
owners, including self-directed (no insurance) OEM list price (for parts); an LTSA agreement
using OEM services; and self directed using lower-cost third-party parts. The decision
whether to chose an LTSA or self-maintenance requires understanding of the alternatives
and having a sound basis for assessing the technical risk.

The predictions of maintenance cost also has a range of uncertainty. At the high end, the
insurance covers the low probability-high cost, unplanned events.
 CT Maintenance Cash Flow - Base Load 7FA

Reference Costs Reduced Costs

$35,000,000
Total Savings: $40,000,000 (30 year life, 2.5% escalation)
Annual Savings: $700,000 (15% discount rate)
$30,000,000
Hours-based Maintenance (70% capacity factor)
CT Maintenance Cost, $

$25,000,000

$20,000,000

$15,000,000

$10,000,000

$5,000,000

$0
04

06

08

10

12

14

16

18

20

22

24

26

28

30

32
20

20

20

20

20

20

20

20

20

20

20

20

20

20

20
Year

16

The above figure illustrates the actual O&M costs for a base loaded 7FA gas turbine, based on
listed OEM prices(reference) versus a scenario which uses alternative repair and replacement
part suppliers of the emerging after-sales market. The latter prices are based on realistically
achievable 35% reductions on replacement parts, 40% repair cost reduction and 50% scrap
rate reduction against the reference situation, thanks to market competition stimulation,
improved repair techniques, avoiding that components are running into an unrepairable
situation by tracking the hot section components damage at the most critical locations
(thermal-mechanical fatigue, creep, coating).
 F-class CTs Life Cycle Cost Reduction
Potential
Annual Parts Maintenance Savings
(9FA extrapolated from 7FA)

35% Replacement Cost Reduction 40% Repair Cost Reduction 50% Scrap Rate Reduction

$1,200,000

$1,000,000
Annual Savings

$800,000

$600,000

$400,000

$200,000

$0
Daily Start-Stop Intermediate Baseload (70% CF)
(240 Starts) (35% CF, 130 Starts)

17 Load Profile

The above figure shows the annualized costs of the reference situation versus the alternative
situation for a 7FA gas turbine. It shows that the biggest savings can be achieved by
alternative lower cost replacement parts and alternative repair services. This can however only
be achieved by stimulating competition on the after-sales market, achievable with the support
of the utility industry itself.
 Assumptions for 9FA/V94.3A Life Cycle
Cost Reduction Potential
Parts Prices Typical OEM List Values
Repair Prices and Scrap Rate Typical Values
Maintenance Intervals and Repair/Replace based on GER-3620J
Economic Assumptions:
30 year project life, 2.5% escalation, 15% discount rate
Daily Start-Stop Load Case: 20% capacity factor, 240 starts/yr
Intermediate Load Case: 35% capacity factor, 130 starts/yr
(starts-limited maintenance)
Base Load Case: 70% capacity factor, 17 starts/yr (hours-
limited maintenance)
Extrapolation to 9FA: 30% higher parts costs (55% higher output)
Extrapolation to V94.3A: Assume similar savings as 9FA

18
 Interested ?

Herman Annendyck, EPRI

Tel : +32 2 639 27 74
Brussels, BELGIUM
Email: hannendy@epri.com

Dale Grace, EPRI

Tel: +1 650-855-2527
Palo Alto, CA, USA
Email: dgrace@epri.com

19

The CT/CCPP O&M Cost Analyzer software can assist in :

Technical Risk Factors and Reliability : provide reliability statistics, highlight specific
events, and comment on known issues for particular vendor model, based on proposed duty
cycle and based on a suitable sample size of units currently in service.

Unplanned Maintenance : estimate unplanned maintenance costs on annualized basis for

future operation based on extrapolation of statistical events and current cost estimates.

Third-Party Parts Suppliers : provide a status summary of the potential vendors for third-
party parts that may be equivalent or improved over OEM designs, a timeline for parts
introductions for a particular vendor model, and an estimate of potential cost reductions based
on industry sources.

O&M Cost Evaluation : compare costs, on a present-worth basis, with other maintenance
alternatives.

Insurance Cost Evaluation : estimate costs for boiler and machinery insurance and
business interruption insurance as it relates to plant size and configuration.

Pro Forma Financial Evaluation : provide project financial comparisons between

relatively fixed cost maintenance contracts and self-performed maintenance.