GAS TURBINES FACING INCREASING DEMAND

GAS REMAINS THE LOGICAL CHOICE FOR A MAJORITY OF NEW POWER PLANT PROJECTS, AND WILL CONTINUE TO DO SO FOR YEARS TO COME

During the last year, two major events occurred that will contribute to increased demand for gas turbines for power generation. The Fukushima nuclear reactor incident will most likely result in a worldwide decrease in new nuclear power plant construction, and resulting increase in combined cycle construction. Germany relied on nuclear power for 23% of its electricity, but shut down eight of its plants last March, and announced plans to phase out all civil nuclear power plants by 2020.

The second event was the announcement by four major OEMs – Alstom, GE, Mitsubishi and Siemens - that they have broken the 60% efficiency barrier (July/August 2011, p. 18), making combined cycle plants even more desirable. Manufacturers are gearing up to meet the increasing number of orders for gas turbines,with the current trend towards natural gas as the fuel of choice.

Alstom has announced the launch of its upgraded GT24 gas turbine and the correspondingKA24 combined cycle power plant offering for the 60Hz market, to be manufactured in Chattanooga, TN. GE posted one billion dollars in North American annual sales of aeroderivative and heavy duty gas turbines by third quarter 2011.Moreover, the recent addition of the 50 MW LM6000-PH FlexAero machine to GE’s offerings underscores the need in arid locations for dry, low NOx machines.

Reducing fuel overhead

Fuel prices account for nearly 70% of an operating power plant’s budget, thus seemingly incremental increases in plant efficiency can amount to serious savings over the life cycle of a power plant. Since less fuel is required to maintain the same power output profile, savings add up. As an example, a two-percent increase in efficiency on a baseloaded 500 MW plant would yield a reduction in fuel gas purchases of nearly a quarter million dollars per year. This also underscores the need for continuousmonitoring of plant performance and heat rate, as degradation from fouled heat exchangers or dirty blades can quickly decrease your margins.

Factors that drive the demand for gas turbines will be explored in more detail to follow, but a quick review shows that some of the drivers of GT demand are multiple fuel capabilities, including renewable and synthesis fuels; short construction lead time and modular construction; low power generation operational cost; low installed cost; reducing emissions; and very high efficiency.

A detailed review of the factors that drive the effectiveness of gas turbines as standards of the industry will help explain why they remain the logical choice for a majority of new power plant projects, and will continue to do so for many years to come.

One of the benefits of gas turbine machines is their comparable ease of installation and adaptability. Hospitals and colleges are good applications for 200-kilowatt units; small towns can be powered by 200- megawatt units. Heat recovery units add the ability to co-generate with industry and provide steam for power or processes, or even supply a municipality with combined heat and power (CHP). This also highlights the fact that in combined cycle and CHP applications, efficiencies up to 60%are now realized. Simple cyclemachineswith ICR(intercooled recuperated) systems can see upwards of 40% efficiency.

Gas turbines, increasingly in combined cycle applications with heat recovery steam generators (HRSGs) converting waste heat into steam, and steam turbine generators (STGs) using that steamfor increased generation efficiency, will continue to be the workhorses in the power generation industry. While gas turbines accounted for 15%of the power generation industry in 1998, according to the U.S. DOE, they are expected to account for 40%ofU.S. generation by 2020.

World energy markets

Study of world energy markets leads to the determination that there are no simple answers. There is no doubt we need tomove toward efficient, sustainable, environmentally favorable and renewable energy resources. Energy independence is a matter of national security. Gas turbines are well situated to be part of sound energy policy across the spectrum of solutions.

It is time to develop a comprehensive energy policy that strikes a balance, moving toward renewable and sustainable goals without hobbling the horsepower of economic and technological development.

It is a logical deduction that no solitary source will meet all of the world’s power requirements, but gas turbines are increasingly being adapted to many schemes to improve the efficiency and reliability of power projects. Renewable fuels show promise, as well as synthetic fuels from coal and biomass; careful consideration of the energy demand for energy investment is required. It makes no sense to processmaterials through so many steps that the cost to make them is greater than any value derived fromthem.With each transformation there is inherently some energy loss. With the energy demand projected in the next decade, there will be room for unprecedented development in all sectors and regions.

When the need becomes critical, new electrical power generation capacity can come from several sources: fossil-fuel-burningmachines such as gas turbines (including microturbine machines of under 250 kW) and the newwave of gas engines and diesels; hydroelectric, nuclear, solar, and wind power; waste-to-energy plants (which burn paper/wood, scrap, food waste, and bagasse —from sugar cane); and exotic alternatives such as geothermal energy, ocean currents, and fuel cells.

Demand-side management

One source of electrical power, often dismissed as not showing immediate profit, is demand-side management or conservation. Though itmay slowthe requirement for new machine installations, there is a positive side to concerted conservation efforts in established markets. First, showing concern for overall efficiency helps build credibility with the customer. As many original equipment manufacturers (OEMs) are entering into long-term operations and maintenance contracts, they must be realizing that steady, baseloaded machines and unencumbered transmission and distribution lines are favorable in terms ofmaintenance costs and overall financial performance.

Fuel cells are still considered to be in the demonstration stage despite their immense appeal stemming from their relocation or removal of harmful emissions, but we believe they will be abundant from about 2015. In conjunction with Carbon Capture and Sequestration (CCS) and Integrated Gasification Combined Cycle (IGCC) plants fueled by coal or even biomass harnessed to generate hydrogen during off peak periods, fuel cells could be a major improvement in technology.

Both wind and solar offer the challenge of improving energy storage technology due to their inherent inconsistent nature. Nuclear power and hydroelectric plants are expensive and require a long period of hearings, followed by attempts to obtain financing and approvals, and finally, construction. Solar power is appealing, but shares the drawbacks of wind power — it is not available everywhere, electrical power storage technology is immature and cannot handle the capacity, and it, too, is expensive on a dollar per-kilowatt- hour basis.

Balanced energy profile

Given the current need for new baseload capacity, as well as for power plant capacity additions, Forecast International believes that the worldwide demand for the latest technology gas turbine-based power plants will result inmodest production of the superlarge gas turbine machines, those of 180 MW and larger. Those machines can be expected to be procured by China, India, Vietnam, Indonesia, Thailand, Brazil, and theMiddle East.

With combined cycle installations touching the 60%mark for net plant efficiency ratings, we do not believe that gas turbine machines will continue to get significantly larger in terms of power output. A gas turbine machine having a firing temperature of about 2,400°F (1,316°C) has about a 56% net plant efficiency level in combined-cycle configurations; at about 2,500°F (1,371°C), a 57.2-57.3% net plant efficiency; and at about 2,600°F (1,427°C), close to a 60%net plant efficiency.

Gas turbines can often be incorporated into renewable energy projects. When the topic of renewable energy is raised, the first items to come to mind are likely rows of towering wind turbines or large solar plants. Gas turbines are too often tied to images of fossil fuels: oil- and gas-powered plants, cleaner and more efficient than their coalburning predecessors, but still dependent on a limited fuel supply.

There are advantages to having a balanced energy profile that includes a share of renewable fuels in themix.Gas turbines lend themselves to this end overtly and covertly. In a direct manner, any number of fuels derived from renewable sources can be provided to a combustion turbine in an IGCC arrangement to derive the cleanest and most efficient use of that fuel. Covertly,more conventional gas turbines with fossil fuel applications can be paired with the wind or solar plants to give a more reliable and dispatchable service profile required by the market until storage and smart grid technologies catch up with generating capability.

Without endangering the food supply, a large number of agricultural products and by-products can be adapted as renewable fuels in gas turbines. Sawdust and sawmill waste can be fermented and distilled into cellulosic ethanol; corn cobs, sorghum stover and bagasse may be converted to gases or oils through pyrolysis and Fischer-Tropsch Synthesis (F-T). Methane is being derived from manure on large-scale farms and powering gas turbines in all corners of the world.

Natural gas forecast

The fastest growing source of primary energy is projected to be natural gas. Consumption of natural gas is projected to surpass coal use (on a Btu basis) this year, and grow increasingly faster through 2025. Much of the growth is driven by demand for natural gas as the fuel for new gas turbine power plants due to its environmental and economic advantages, as well as the expectation that the young gas markets of emerging nations will develop rapidly in the near future. Recovery of the vast reserves in North America is becoming technically and economically viable.

Marketed natural gas production is expected to average 65.8Bcf/d in 2011, a 4.0 Bcf/d (6.4%) increase over 2010. The majority of this growth is centered in the onshore production in the Lower 48 States, which will more than offset steep projected declines in the Federal Gulf of Mexico (GOM). The forecast is that GOM production falls 0.9 Bcf/d (13.9%) in 2011. The Energy Information Administration (EIA) expects that overall production will continue to grow in 2012, but at a slower pace, increasing 1.1 Bcf/d (1.7%) to an average of 66.9 Bcf/d.

Current natural gas prices are in the range of $4.20 per million BTU at the Henry hub, and increased domestic onshore exploration and production are likely to keep those prices below $5.00 for the next decade. Innovations over the last five years have led to development of the Marcellus and Devonian (or Utica) shale gas reserves. Both formations require horizontal drilling with hydraulic fracturing. The Marcellus play is estimated to yield in the range of 84 trillion cubic feet of gas, where the Devonian is typically deeper, more expensive to recover, and will most likely deliver about a quarter of the gas the Marcellus yields. Of the total 2,632 trillion cubic feet estimated to be recoverable onshore, current domestic production is estimated at 20 trillion cubic feet per annum, meeting 90% of U.S. domestic need, with most of the remainder imported from Canada.

Growing domestic natural gas production has reduced reliance on natural gas imports and contributed to increased exports. EIA expects that pipeline gross imports of natural gaswill fall by 4.1%to 8.7Bcf/d during 2011 and by another 3.8%to 8.4Bcf/d in 2012; projected U.S. imports of liquefied natural gas (LNG) fall from 1.2 Bcf/d in 2010 to 1.0 Bcf/d in both 2011 and 2012; and pipeline gross exports to Mexico and Canada are expected to average 4.1 Bcf/d in 2011 and 4.2 Bcf/d in 2012, compared with 3.1 Bcf/d in 2010.

World coal use will account for a gradually decreasing share of world energy consumption, even though its use in tons is projected to grow at a rate of 1.5-1.7% per year through 2025. World oil consumption is projected to increase 1.7 to 1.9%annually in the years ahead—from the 77 million barrels per day (mmb/d) consumed in 2003 to 85 mmb/d in 2005 and 2006, and to a projected 110 mmb/d in 2020.

Top OEMs and turbines

In the decade to come, Forecast International projects that 12,508 gas turbine machines will be built for electrical power generation, having a value of production in excess of $150.8 billion (in current U.S. calendar-year dollars). GE is projected to again be the leading market player in terms of value of production, with a 43% share. In terms ofmachines to be produced, we project that Solar Turbines in San Diego, CA, will be the leading player, producing over 30% of the machines.

As the growing demand for gas turbine machines becomes translated into orders for machines, we foresee annual gas turbine production rising to a plateau in the range of 1,300 units per annum in the period 2012- 2014. After that, production should gradually taper off and return to normal sinusoidal trends.These trends result fromgrowth periods leading to installation of excess generation, then some lulls occur until power demand increases and the majority of units are base loaded.

Gas turbine machines with a power output of 125 MW and larger are projected to account for over 20% of total gas turbine production in the decade to come. In that group are the GE Energy Frame 7 and Frame 9, Siemens SGT5- 2000E/3000E/4000F, and the Siemens SGT5-8000H, Alstom GT24/26 and Type 13E, Siemens Westinghouse SGT6 3000F/5000F/6000G, and Mitsubishi Model 501 and 701 series.

As the public becomes more concerned and educated in energy technology, we predict increased public acceptance of CCS and IGCC clean combustion technologies. For a well-balanced energy portfolio, nuclear, biofuel, and clean coal will all be required, but in the interim, the pendulum most likely will swing toward less coal and liquid fuels, and more gas fuels, even biofuels being burned in increasingly more efficient gas turbines.

Author

Bill Schmalzer has been active in the operations and maintenance of power plants since 1982. He began his career as aMachinist'sMate in the U. S. Navy, and was Engine Room Supervisor on board the ammunition/logistics ship USS Flint (AE-32). As analyst for Forecast International's Industrial & Marine Turbine Forecast, Bill's primary focus is on gas turbine engines used for electrical generation, mechanical load drive duty, and surface transportation— and on large steam turbine machines used in combined-cycle installations.