1t335 INDUSTRY AND ENERGY DEPARTMENT WORKING PAPER ENERGY SERIES PA?ER No. 43 Guideline for Diesel Generating Plant Specification and Bid Evaluation FILE COPY Report No. :11335 Type: (MIS) Title: GUIDELINE FOR DIESEL GENERATIN( Author: Ext.: 0 Room: Dept.: Reprinted September 1991 SEPTEMBER 1991 (Originally Published in July 1983) - V.~ ~~~ ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ 44' v T Worl Ba - - . PRE ''''' ~ '' '' ' '-. The Wol Ban Indsti an Enrg Dea.mn PRE >'_ Guideline for Diesel Ge;serating Plant Specification and Bid Evaluation Prepared for The World Bank by C.I. Power ervices, Inc. Toronto. Ontario. Canada August 1991 Copyright (c) 1991 The World Bank 1818 H. Street. N.W. Washington, D.C. 20433 U.SA This paper is one of a series issued by the Industry and Energy Department for the information and guidance of World Bank staff. Ihe paper may not be published or quoted as representing the views of the World Bank Group, nor does the Bank Group accept responsibility for its accuracy and completeness. ABSTRACT This report was prepared for the World Bank by C.I. Power Services Inc. (Canada) as a guideline for use by Bank staff and consultants on power generating projects which employ large diesel engines as prime movers. It explains the characteristics and comparative advantages and disadvantages of large low speed two- stroke diesel engines and medium speed four-stroke engines Intended for electric generating plant service, and develops a bid evaluation procedure to permit comparing bids for both types. The report was originally published in July 1983 as Energy Department Paper No. 9 of the former Energy Department. It is being reprinted as a reference for the use of World Bank staff. TABLE OF CONTENTS Section Page 1 Introduction and Summary ....................... 1 2 Background .................................. 7 3 Diesel Plant Features .......................* ... 13 3.1 General ... ..........................- 14 3.2 Operating Principle of Diesel Engines ...., 16 3.3 Supercharging and Scavenging .............. 20 3.4 Design Features .................... . . , , ..... 23 3.5 Physical Dimensions of Diesel Plants ...... 25 3.6 Effects of Fuel Quality on Engine Operation ........... .. .............. 28 3.7 Lubricating Oil ........................... 30 4 Relative Advantages of Medium Speed and Low Speed Engines ;........................ ... 31 4.1 Introduction .... ....................... 32 4.2 Desirable Attributes of a Diesel Plant .... 32 4.3 Undisputed Advantages of the Medium Speed Engine ............................. 35 4.4 Undisputed Advantages of the Low Speed Engine ..... ................ 36 4.5 Debatable Advantages ...................... 37 ii Section Page S Outline Specification and Contract Documents.. 41 5.1 Introduction .........*..**.***.**...... 42 5.2 Instructions to Bidders ................... 43 5.2.1 General System and Project Information ... .... . .. . . .. .. . ..... 43 5.2.2 Scope of Work to be Contracted .... 44 5.2.3 Invitation to Bid .................. 44 5.2.4 Criteria for Qualification of Tenderers ...... ... ..... .... *.. 44 5.2.5 Content and Format of Tenders ...... 44 5.2.6 Project Time Schedule .............. 45 5.2.7 Familiarity with Local Conditions .. 45 5.2.8 Interpretation and Changes to the Specification ................. 45 5.2.9 Tender Price and Format of Presentation . ........ ...... ....... . 45 5.2.10 Bid Bond ........................... 46 5.2.11 Validity of Tender and Bid Bond .... 46 5.2.12 Performance Guarantees ............. 46 5.2.13 Method of Tender Evaluation ........ 47 5.2.14 Effective Capacity ................. 48 5.2.15 Engine Operating Experience ........ 48 5.2.16 Basic Warranty ...................... 49 5.2.17 Spare Parts . .. ......... ...... ...... 50 5.2.18 Project Experience of Supplier ..... S0 5.2.19 Financial Stability of Engine Manufacturer . ........ ........ . 50 5.2.20 Service Facilities of Supplier ..... 51 5.2.21 Commercial Terms ................... 51 5.2.22 Engine Specific Fuel Consumption ... 51 5.2.23 Generator Losses .................. 52 5.2.24 Transformer Losses ................. 52 iii Section Page 5.2.25 Lubricating Oil Consumption ....,, 52 5.2.26 Mechanical Design Features ......... 53 5.2.27 Prime Contractor.................... 54 5.2.28 Supplier's Past Performance ........ 54 5.2.29 Miscellaneous . ......................... . 54 5.3 Conditions of Contract .................... 55 5.3.1 General Conditions of Contract ..... 55 5.3.2 Penalty for Delay in Completion .... 55 5.3.3 Maintenance Period ................. 55 5.3.4 Terms of Payment ................... 56 5.3.5 Price Variations ................... 56 5.3.6 Customs and Import Duties and Taxes ............. *0400.00**O* 56 5.3.7 Performance Bond ................... 56 5.4 General Specifications ................... . 57 5.4.1 Description of the Project ......... 57 5.4.2 Financing of :he Project ........... 57 5.4.3 Existing Power Station Facilities .. 57 5.4.4 Site and Local Conditions .......... 58 5.4.5 Applicable Standards for Materials, Design, Manufacture and Testing ... 58 5.4.6 General Requirements for Design, Construction Materials and Equipment ......... ... ............. 58 5.4.7 Tests ......................................... 58 5.4.8 Spare Parts ........................ 59 5.4.9 Tools and Maintenance Equipment .... 59 5.4.10 Staff Training ..................... 60 5.4.11 Documentation ... .................... 60 5.4.12 Project Drawings ................... 60 5.5 Mechanical Work Specification ............. 60 5.5.1 General ....... .. ......,......... 60 5.5.2 Scope of Work . ............ ......... 61 iv Section Page 5.5.3 Fuel Data .......................... 61 5.5.4 Heat Rate ............. *.......... 61 5.5.5 Cooling Water ..................... . 62 5.5.6 Equipment Supply and Erection . 62 5.5.7 Factory Tests . ............. ,** . . 64 5.5.8 Commissioning Procedure ............ 64 5.5.9 Site Tests ........................ 64 5.6 Electrical Work Specification ........ ... 64 5.6.1 General .................... . 9.00 64 5.6.2 Scope of Work ................ . . .... 65 5.6.3 Equipment Supply and Erection ...... 65 5.6.4 F?actorv Tests ..................... . 66 5.6.5 Commissioning Procedure ............ 67 5.6.6 Site Tests ..... . . ......... 67 5.7 Civil Works Specification ........ 67 5.7.1 General .. .... .. .. .... .... 67 5.7.2 Scope of Work ...................... * * 67 5.7.3 Building Design .................... 68 5.7.4 Soil Conditions .................... 68 5.7.5 Cleaning, Excavations, Backfilling.. 68 5.7.6 Formwork, Reinforcing and Concrete.. 68 5.7.7 Engine Foundation .................. 69 5.7.8 Structural Steel, Siding, Roofing .. 69 5.7.9 Others .......................... 69 5.7.10 Overhead Cranes .................... 69 5.7.11 Grading and Landscaping ............ 70 5.7.12 Fuel Storage ....................... 70 5.7.13 Temporary Offices and Facilities .... 70 5.7.14 Material Quantities ................ 70 5.8 Miscellaneous Work Specification .......... 70 5.8.1 General ....... 70 5.8.2 Fire Fighting Equipment ............ 71 5.8.3 Lighting System ................ .., 71 v Section Page 5.8.4 Heating, Ventilation, Air Conditioning ..................... 71 5.8.5 Miscellaneous Eguipment and Furniture ................. ......... 72 5.9 Price Schedule and Bid Form............... 72 5.9.1 General .... . *.. .. .. . 72 5.9.2 Civil Works ....................... 73 5.9.3 Mechanical Works .................. 74 5.9.4 Electrical Works .................. 76 5.9.5 Miscellaneous Works ............... 77 6 Bid Evaluation ............................... 79 6.1 Introduction ............................. 80 6h2, Value of Reliability ....... 83 6.2.1 General ............0.... 83 6.2.2 Generation Expansion Planning .... 85 6.2.3 Application of 'Effective Capacity' to Bid Evaluation .... 90 6.3 Fuel Consumption, Generator Losses, and Transformer Losses ................... 95 n6.3.1 General ................ 95 6.3.2 Value of Efficiency ............... 98 6.4 Lubricating Oil Consumption .............. 101 6.4.1 General ........................................ 101 6.4.2 Effect of Engine Design on Lubri- cating Oil Consumption ........... 101 6.4.3 Indicators of the Need for a Change of Oil ............. .............. 102 6.4.4 Measures to Increase the Life of Lubricating Oil .................. 103 6.4.5 Effect of Lubricating Oil Con- sumption on Fuel Consumption ..... 103 6.4.6 Value of Lubricating Oil Con- sumption in Bid Evaluation ....... 103 vi Secti.n Page 6.5 Maintenance Cost........................... 104 6.5.1 General .... ...................... 104 6.5.2 Factors Influencing Cost of Maintenance . ................ .. ... 105 6.5.3 Maintenance Cost from Maintenance Contract ........................ .. 105 6.5.4 Maintenance Cost Based on Number of Components ........................ 106 6.6 Arrangements for Training ................. 106 6.7 Mechanical Design Features ................ 107 6.7.1 General ........................ ... 107 6.7.2 Mechanical Design Evaluation Data .. 108 6.7.3 Evaluation Methodology ............. 109 6.8 Equipment Equalization .................... 110 6.9 Prime Contractor for 'Turnkey' Package..... 111 6.10 Similarity to Existing Engines ... ......... 111 6.11 Supplier's Past Performance ............... 6.12 Engine Operating Experience ............... 112 6.12.1 General ..................... 112 6.12.2 Reliable Operation ....................................... 113 6.12.3 Differences in Engines ............. 115 6.12.4 Differences in Operating Conditions ................ 116 6.12.5 Procedure for Investigating Experience ........ 118 6.12.6 Marine Versus Land Based Experience ...*............ ........ 119 6.13 Effective Capacity Requirement ............ 119 6.14 Basic Warranty .......................... 120 6.15 Spare Parts ................................ 120 6.16 Experience by Supplier on Similar Projects ..................... 121 6.17 Financial Stability of Engine Manufacturer ............................. 122 vii Section Page 6.18 Service Facilities of Supplier ............ 122 6.19 Commercial Terms .................. 122 6.20 Life of Plant ............................. 123 6.20.1 General ...*.........................* 123 6.20.2 Effect of Plant Life on Bid Evaluation .*....................... 124 7 Test Procedures and Performance Penalties ...... 125 7.1 Introduction ......... *... ............ **. 126 7.2 Overall Plant Tests Versus Component Tests .................................. 128 7.3 Engine Efficiency Measurements ............ 130 7.4 Generator ad Transformer Testing ......... 133 7.5 Enetrgy Consuiz tion of Auxiliaries 134 7.6 Fuel Purification Plant ................... 135 7.7 Performance Penalties ..................... 136 8 Relationships Between Owner, Consultant and Contractor ....................... i .... .139 8.1 Introduction ....................... . 140 8.2 Phases of Project ......................... 141 8.3 Forms of Contract ............ . .......... . 142 8.4 Insurance Requirements ................... 144 9 Future Development ... ........... ................ . 145 Appendix A - Calculation of Effective Capacity.. 149 Appendix B - Outline of Diesel Plant Maintenance Contract ................ 161 Appendix C - Comparison of Projected Life Cycle Costs ............... 169 Appendix D - Evaluation of Alternative Finan- cial Offers ...... 175 viii Section Page Appendix E - Defiz&ition of Terms ............. 181 Appendix F - Terms of Reference .............. 185 Appendix G - Example of Typical Bid Evaluation ............... 18' ix LIST OF FIGURES Figure Page 3.1 Typical Diesel Plant .............. ** ** ** * . .... 14 3.3 Four Stroke Operating Principle ..*.............. 17 3.4 Two Stroke Operating Principle ................. 18 3.5 Four Stroke Trunk Piston Engine ............,... 19 3.5 Two Stroke Crosshead Engine ................... 19 3.7 Operation of Turbocharger ...................... 21 3.8 Scavenging Methods .......................... 22 3.11 Layout of Low Speed and Medium Speed Diesel Plants ....... 26 6.2 Effective Capacity of Added Unit ............... 88 6.3 Required Effective Capacity .................... 91 6.4 Sequence of Unit Additions .............. 93 6.5 Typical Plant Block Diagram .*****.............. 97 6.6 Typical Heat Rate Curve ........................ 99 7.1 Input-Output Diagram for Overall Efficiency Measurement ......... .............. ...... 128 7.2 Input-Output Diagram for Engine Efficiency Test .. ..... * 131 7.3 Input-Output Diagram for Generator and Trans- former Efficiency Measurement ................. 133 7.4 Input-Output Diagram for Auxiliary Usage Test ** 135 7.5 Input-Output Diagram for Fuel Purification Efficiency Test ............. ....... 0136 A-1 Graphical Approximation of 'mi *................O 151 A-2 Plow Chart for Comparing Effective Capacities *. 159 x LIST OF TABLES Table Page 3.2 Typical Cost Breakdown for a Diesel Plant ...... 15 3.9 Factors Limiting Maximum Values of Engine Parameters ............ *........................ 24 3.10 Typical Engine Parameters ...................... 25 3.12 Properties and Contaminanits of Residual Fuel ... 28 6.1 Typical Evaluation Summary Sheet ............... 82 6.7 Mechanical Design Evaluation Data .............. 109 A-2 Utility Input Data ............................. 156 t-_; Comparison of Projected Life Cycle Costs for Two Plant Alternatives .................... 172 C-2 Plant Comparison Using Levelized Annual Cost ... 173 G-1 Sample Evaluation of Two Bids .................. i89 G-2 Present Worth of Fuel Differential Cost for Bid 'A' 196 G-3 Present Worth of Fuel Differential Cost for Bid 'B' 197 G-4 Present Worth of Differential in Maintenance Cost for Bid 'A' .............................. 199 G-5 Present Worth of Differential in Maintenance Cost for Bid 'B' ........ 200 1 SECTION 1 INTRODUCTION AND SUMMARY 2 1. INTRODUCTION AND SUMMARY This guideline has been prepared to assist organizations purchasing a diesel generating plant in producing a compre- hensive specification and in systematically evaluating alternatives. The suggested approach allows parallel evalua- tion of bids for residual fuel fired medium speed and low speed diesels. These two engine types are, in many cases, the most cost effective prime movers for base load generation in power systems with peak loads of up to approximately 100 MW. Manufacturers of both types have been working unrelentingly and with success to improve plant efficiency and to overcome some of the problems associated with burning residual fuel. A fair evaluation of the two types is possible by incorporating a cost 1/ associated with reliability into the bid evaluation. A method of incorporating the cost of reliability is one of the main contributions of this guideline. The cost of reliability may be included in a bid evaluation by specifying the effective capacity of the plant required rather than its site rated capacity. The, effective capacity of a plant is the amount by which the load on a power system may be increased, after the plant is installed on the system, while maintaining a predetermined reliability level. It depends both on the characteristics of the plant and on the characteristics of the system to which it is added. 1/ The cost of reliability consists of three main components: reserve cost, replacement energy cost and repair cost. See for example, 'Evaluating Reliability in Purchasing Decisions' by Paul F. Albrecht - Presented at the Pacific Coast Electrical Association Engineering and Operating Conference, Los Angeles, California, March 15-16, 1979. 3 The concept of effective capacity is used implicitly in generation planning employing probabilistic methods (e.g. loss of load expectation method). The procedure suggested here allows a final decision on the type of diesel plant required to be deferred to the time of the bid evaluation, thus permitting the purchaser to benefit from prevailing market trends at that time. A formula and certain input data 1/ given to the potential suppliers, in the specification, allow them to select a unit or combination of units from their standard inventory that best meets the required effective capacity. The purchaser, on the other hand, is able to compare the offered plants with reasonable confidence that he may expect the same quality of service from each, although the actual site rated capacity of each may differ. In Section 2 we review some of the circumstances leading up to the development of the types of engines available for power generation today. As we mentioned above, the two main contenders for base load generation using residual fuel oil are the four stroke medium speed trunk piston engine, and the two stroke low speed crosshead engine. These engines, especially the medium speed engine, were rapidly developed and uprated during the past two decades. During this period many users experienced problems caused by the overstressing of components due to too rapid increases in engine output. These problems were exacerbated by the use of poor quality residual fuel just before and since the fuel crisj.s. 1/ The most important input data are the forced outage rates of the two types of diesel plants. Ideally these should be based on statistics obtained from existing plants. 4 In Section 3 we show the components of a diesel generating plant and discuss the operating principles and characteristics of the medium speed engine and the low speed engine. The relative advantages for power generation of these two engine types are discussed in Section 4. The discuss .on includes both the undisputed physical advantages of each and the relative advantages, mainly dealing with performance, which are currently being challenged by the proponents of each type. The opinions we express are based mainly on our recent survey of residual fuel fired diesel plants. 1/ Section 5 describes some of the items essential for inclu- sion in a specification for a diesel plant. The purpose of the specification is to inform the bidder of the purchaser's requirements and to provide a uniform format for the responses of the bidders. In general, the specification for a 'turnkey' plant should be more comprehensive than that for a 'consultant engineered' plant to ensure that all of its components are of a high quality. In Section 6 we show how weights may be assigned to the various advantages of each type of plant. Some features of a plant may be more, or less desirable depending upon the power system on which it is to be installed. It is important to define performance test requirements in a plant specification. Appropriate penalties for noncom- pliance should also be included to discourage suppliers from overstating the expected performance of their equipment. Section 7 defines various tests for verifying the performance of the tendered plant and discusses the conditions for applying performance penalties. 1/ See Diesel Plant Performance Study prepared by C I Power Services Inc. for the World Bank, August 1980. This study is being updated for issuance as a World Bank Energy Depart- ment Paper. 5 Section 8 is devoted to defining the relationship between the owner, supplier and consultant. The lines of responsibility must be clearly defined for the project to be implemented successfully. The main thrust of this guideline is to clearly define the issues relating to the purchase of a diesel plant so that all of the cost implications are properly assessed in the evaluation of bids. The total cost of producing electricity with a diesel plant is made up of: * cost of plant * cost of operation * cost of mAintelance * cost of fuel * cost of lubricating oil * cost of reliability Methods of quantifying most of the above items are well esta- blished but are reiterated here for completeness. Finally in Appendix G, we evaluate a hypothetical case of two bids to further clarify the suggested procedures. 7 SECTION 2 BACKGROUND . 8 20 BACKGROUND Diesel engines are the prime movers most frequently used in the thermal generating plants of small power systems. The main reason for their extensive use is the higher efficiency of the diesel engine compared witn other prime movers in the same size range such as gas turbines and small steam turbines. Another reason is the higher availability of local staff familiar with diesel engines compared to those familiar with steam turbines or gas turbines,in developing countries where most of the small power systems are located. Although in recent times diesel engines of up to 40 MW have been built, the most frequently used sizes are in the 5 to 10 MW range. Diesel engines are usually classified by their rotational speed as high speed, medium speed or low speed. No universal standr d exists for this classification. It is generally accepted that low speed refers to two stroke crosshead engines with rotational speeds of up to about 300 rpm, medium speed refers to four stroke engines with rotational speeds ranging between 300 and 700 rpm and high speed refers to two or four stroke engines with rotational speeds in excess of 700 rpm. The fuels burned by diesel engines range from light distillates to residual fuel oils. 1/ Gas is also used, usually in conjunction with a small quantity of distillate to stabilize combustion. The distillates are refined fuels and are relatively free of contaminants. Residual fuels, byproducts of the refining of crude oil, contain the heavy fractions of the crude oil as well as metals, sulphur, and other contaminants. i/ See Standard Specification for Fuel Oils ANSI/ASTM D396-76. 9 After the end of World War II diesel engines began to replace the steam engines used in ships. The first replacements were large two stroke low speed engines, which were directly coupled to the propeller. These were -iequently replaced by lighter, more compact medium speed enginesa, although it was necessary to use a gearbox to reduce the rotational speed to match that required for the ship's propeller. The engines developed for marine use were also used for stationary electric generation applications. The fuels used at that time were almost exclusively distillates which were relatively inexpensive. The cost of equipment and cargo space and the ship's speed were of far more significance than the cost of fuel. In the mid 1950's and into the 1960's engine manufacturers began to develop engines which could operate on heavier grades of fuel. These fuels, although heavier than the distillates previously used, were relatively free of contaminants. The main concern at that time was the control of viscosity of the fuel. Then came the fuel crisis in 1973. Almost overnight, fuel became expensive relative to other operating costs. Higher efficiencies and the ability of engines to successfully burn the cheaper low grade fuels became of paramount importance. Initially, attempts were made to burn the cheap residual fuels using the plant that was developed for heavy but relatively clean residual fuels. The incidence of engine component failures in the medium speed engines increased and manufacturers began to change their designs to accommodate the poorer quality residual fuels. The fuel crisis had another effect. In the shipping industry, the ship's speed became secondary to efficiency. There was a trend to using slower, more efficient propellers, and to eliminate the gearbox where possible. De- velopment work on the low speed engine was intensified. 10 In the late 1970's many diesel electric generating stations using residual fuel were reporting serious operational diffi- culties. There were frequent breakdowns and many operators found it necessary to derate the engines or to revert to the use of distillate fuel to reduce the number of failures. The engine manufacturers attributed the difficulties, especially in developing countries, to poor maintenance and operational practices. The owners attributed the difficvlties to inadequate engine design to cope with the fuel being used and overrating of the engines by the manufacturors. World Bank engineers became concerned that many of the power projects funded by the Bank in developing countries were falling short of expectations. At the same time the manufac- turers of low speed diesels began to claim that their engines were inherently more suited to burning poor quality residual fuels than the medium speed engines. C I Power Services was engaged by The World Bank to evaluate the operating experience of eighteen diesel plants in sixteen countries. An effort wAs made to determine if there were any differences in basic design that made low speed diesels more suitable than medium speeddiesels for use with residual fuels in developing countries. In particular: * Is the low speed diesel more reliable than the medium speed diesel when burning poor quality fuel? * Are there any features which make it more immune to abuse by partially trained staff? * Does it require less frequent maintenance? C I Power Services found that only five of the plants surveyed used low speed engines. Good records were available only at one, so the sample was too small to make definite conclusions about the performance of low speed diesels. However, the results obtained from the plant with relatively complete 11 records were very encouraging. The low speed diesels there were operating reliably, with a forced outage rate 1/ of only 3%. On the other hand, enough data was collected for medium speed diesels to be reasonably confident of the numbers d-rived. The mean forced outage rate was 23% and the best plant had a forced outage rate of 16%. It is evident that there are many factors which should be considered when determining the appropriate type of generating plant for a given application. We must consider both the characterictics of the available engines and the characteristics of the system to which the plant will be added. Many of the factors are accounted for in the traditional approach to evaluating bids. The ones most often overlooked are the relative reliability of the eagines, their relative maintenance requirements and other more nebulous factors such as resistance to abuse, spare part compatibility with existing engines, etc. This guideline presents some of the tools that may be used to evaluate bids for medium speed and low speed engines in parallel, making allowances for their relative advantages and disadvantages. It defines the required input data. Some of the data, especially the relative life, forced outage rate, maintenance requirements and lubricating oil requirements of the two types, are still highly controversial. A more recent survey of plant performance covering the period 1980 to 1982 would supply better data than is currently available 2/ since more low speed diesels are now in service and there has been continuous development of the medium speed diesel for residual fuel applications. / Forced outage rate is defined as FOR = poH ° SH where POX is forced outage (or breakdown) hours, SE is service hours. g, See Diesel Plant Performance Study prepared by C I Power Services Inc. for the World Bank, August 1980. 13 SECTION 3 DIESEL PLANT FEATURES 14 3. DIESEL PLANT FEATURES 3.1 General Of the various subsystems that comprise a diesel plant, the engine is the most complex and accounts for about 33% of the total cost. It effectively determines the reliability of the plant since the generator is inherently very reliable and the other subsystems such as fuel treatment also are very re- liable provided sufficient equipment redundancy is incorporated in their design. The subsystems comprising a plant are shown in figure 3.1, and a typical breakdown of costs is shown in table 3.2. The two types of engines normally used with residual fuel are the medium speed four stroke trunk piston engine and the low speed two stroke crosshead engine. The physical charac- teristics and operating principles of each are described in the following paragraphs. Fuel quality, engine maturity and the Luibe Oil EsctStelof -r - -- -- -- --- -Sy-stem* Air System Au -Iw 3onsrs. Trans- powe I I~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~I w-T-@'J W t 1 ~~~L lP L igre 3._________: _ T l D eCol Figure 3. 1: Typ2ical Diesel Plant 15 Table 3.2: Typical Cost Breakdown for a Diesel Plant Percentage of Total Plant Costs Engine 33 Lube Oil System 1 Cooling Water System 6 8 Control System 1 Fuel Oil System 2 Misc. Equipment 5 Shipment Cost 3 Erection & Installation 7 TOTAL MECHANICAL CONTRACT 58 Generator 8 1Misc. Equipwunt 8 X Shipment Cost 2 Erection & Installation 4 TOTAL ELECTRICAL CONTRACT 22 '.4 Civil Worlcs 20 including foundations 16 quality of staff in the plant determine the operating cost and quality of service provided by a diesel plant. The effects of properties of residual fuels on engine operation are also discussed in the following paragraphs. 3.2 Operating Principle of Diesel Engines Both four stroke and two stroke engines operate on the air-standard Diesel Thermodynamic cycle 1/ and depend on the following physical processes: o Air is drawn (or forced) into a cylinder and is compressed by a piston. a Fuel is injected into the cylinder and is ignited by the heat of compression of the air. * The burning mixture of fuel and air expands pushing the piston. * The products of combustion are removed (scavenged) from the cylinder. * The sequence repeats. One of the major differences between the four stroke and the two stroke engine is the way in which air is admitted to the cylinder and the products of combustion are removed from it. Figure 3.3 shows the four stroke operating principle. As the piston moves down the cylinder, air is drawn in'through an open intake valve. The piston reverses direction and, as it moves up the cylinder with both the intake and exhaust valves closed, the air is compressed. Fuel is injected, just before the piston reaches the end of its travel, and after mixing with the hot compressed air it ignites. The burning expanding mix- ture forces the piston back and thus does work. The final stroke of the piston forces the products of combustion out of the cylinder through the open exhaust valve. Thus there is one 1/ See, for example, Engineering Thermodynamics Work and Heat Transfer by Rogers and Mayhew - Longman. 17 rower stroke for every four strokes of the piston. Air ' fuel a Exhcust 1~~~~~~~~ INTAKE COMPRESSION IGNITION EXHAUST Figure 3.3: Four Stroke Operatinvg Principle T-he two stroke engine combines some of the above steps tio attain one power stroke for every two strokes of the piston (see figure 3.4). AS the piston starts its upward movement, air is blown into the cylinder, through ports in the cylinder wall,, to remove the products of combustion and to charge t'ne cylinder with fresh air, As the piston moves.past the ports it compresses the air in the cylinder. Fuel is injected just before the end of the upward stroke, The mixture ignites and forces the piston back, thus doing work. The sequence then repeats. The arrangement shown in fgc gure 3.4 is for uniflov t scavenging of the two stroke engine. This yields higher efficien- cies than loop scavengingdthe prime alternate meshiot ih derend for their operation on the use of compressed air (turbocharting) to scavenge and charge the cylinder. The effects of the scaven- 18 ging method and of turbocharging on engine efficiency are dis- cussed later in this section. ,^ Exheutt Fuie Air SOI SCAVENGING COMPRESSION IGNITION Figure 3.4: Two Stroke Operating Princigle Another major difference between the two types of engines being discussed is that the four stroke engine is of the trunk piston design (figure 3.5) whereas the two stroke engine is of the crosshead design (figure 3.6). This difference is significant since with the trunk piston design, products of combustion which escape past the piston rings enter the crank- case of the engine. With the crosshead design, it is possible to isolate the combustion space from the crankcase using a dia- phragm (piston rod stuffing box shown in figure 3.6). The relative advantages and &Lsadvantages of the two types are dis- cussed in section 4. 19 Fuel Injeellon N"zb ~ ~ VW \ / / ExhoNuul t0ftPl Phstoan ! aConnectino Rod Figure 3. 5 Four Stroke Trunk piston Engine r \: < ~~~~~~~~Crank Pin \Crnsat W $ht Mauln 8eatlaq Fuel Injection IEsM Volve No2is lO Figure 3.6 PnU fad Two Stroke I P Crosehead Engine Conneting Red fJ 1 <= M e~~~~~min &woing L - - - - - - L…_________ 20 3.3 Supercharging and Scavenging Most modern diesel engines are supercharged. That is, combustion air is compressed before being admitted to the cylin- der. The three main benefits of supercharging are: * It increases the output power of an engine. * It provides excess air for cooling the cylinder. * It assists with scavenging. 1/ By admitting a greater mass of air to the cylinder than would occur at atmospheric pressure, it is possible to burn more fuel per cycle and thus increase the output power of the engine. By providing adequate quantities of excess air, the cylinder and exhaust passages are maintained at safe temperatures. In addi- tion, the excess air is sometimes required to satisfy emission control standards. The two stroke engine is more dependent on super- charging for scavenging than the four stroke engine since, unlike the four stroke engine, the piston does not sweep the exhaust out of the cylinder. The most commonly used device 2/ for supplying com- pressed air to the engine is a turbocharger. It consists of a centrifugal compressor coupled to a turbine which is driven by the exhaust gas from the engine (see figure 3.7). y Scavenging: The removal of products of combustion from the cylinder. 2/ Other devices used include reciprocating compressors, Os- cillating compressors, Roots blowers and axial flow rotary compressors. These are either directly driven by the engine, or by auxiliary electric motors. 21 Exhaust G3as 0 Air in Exhaust Gas inft Cemore sed Atf y ~~~~~~~~~~~~~ta Engtne Figure 3.7: Operation of Turbocharger Two types are commonly used: constant pressure turbo- chargers and pulse turbochargers. The turbine of a pulse turbo- charger utilizes the kinetic energy of the exhaust gas. Conse- quently, special exhaust manifolds are required to bring the exhaust gas from either individual cylinders or groups of cylinders into the turbine. The turbine of the constant pressure turbo- charger expands the exhaust gas which is supplied to it from a large manifold that acts as an air receiver. The constant pressure turbocharger is more efficient than the pulse turbocharger, especially at the higher exhaust pressure found in modern engines. The pulse turbocharger, on the other hand, allows better engine acceleration at low loads since the turbocharger responds faster to changes in the energy of the exhaust gases. Two stroke engines which depend entirely upon super- charging for scavenging usually require some form of auxiliary supercharger at low loads. This is usually either a separate auxiliary motor driven turbocompressor or an auxiliary compressor driven directly by the engine. In some cases a clutch is used to drive the main turbocharger at low loads. It disengages as soon as the exhaust gas has enough energy to take over the drive. 22 The efficiency of the engine depends, in part, upon how effectively the cylinders are scavenged. In the case of the four stroke engine, one stroke is devoted to scavenging and thus the engine can operate naturally aspirated (without turbocharging) at low loads. The two stroke engine is almost totally dependent on supercharging for its scavenging. The two types of scavenging commonly used with the two stroke engine are loop scavenging and uniflow scavenging (see figure 3.8). Uniflow scavenging is more effective, but requires the provision of an exhaust valve. It is becoming the preferred method of scavenging as manufacturers strive to produce more efficient engines. 4 Exhaust Exhaust Ailt Suoolyt Afr Suply r (UNIFLOW) (LOOP) Fiqure 3.8: Scavenging Methods 23 3.4 Design Features Some -'J the parameters which describe an engine are: * Rotational speed (rpm) * Number of cylinders * Output per cylinder (kW) * Bore (mm) * Stroke (mm) * Brake mean effective pressure - bmep (bars) * peak pressure (bars) * Exhaust gas temperature - before turbocharger (OC) * Mean piston speed (m/sec) * Cylinder configuration (vee or in-line) The expression for the output power of an engine shows some of the interrelationships between the above parameters. output Power (kW) = N x bmep x (bore)2 x stroke x rpm C Where: N is the number of cylinders of the engine. bmep is the brake mean effective pressure in bars. It is a derived quantity 1/ and is equal to the mean indicated pressure of the cylinder multiplied by the mechanical efficiency. bore is the diameter of the cylinder in mm. stroke is the distance swept by the piston in mm. rpm is the rotational speed of the engine. C is a constant.2/ 1/ See Standard Practices for Low and Medium Speed Stationary Diesel and Gas Engines - Diesel Manufacturers Association, New York. 2/ C - 7.64 x 108 for a two stroke engine and, C = 15.28 x 108 for a four strohe engine. 24 From equation (1) we see that the output of an engine may be increased by increasing either its speed, its bmep, its bore, its stroke or the number of cylinders. The limits on these parameters are dictated mainly by the maximum allowable stress and temperature for various engine components. Table 3.9 indicates some of the factors limiting the maximum values of the above parameters: Table 3.9: Factors Limiting Maximum Values of Engine Parameters Number of Cylinders Length of engine and consequently torsional stress in crankshaft. bmep Stress on cylinder components. Maximum attainable fuel pump pressure. bore Stress in connecting rods and crankshaft. Lubrication of bearings. stroke Height of engine. rpm Maximum piston speed that allows effective lubrication. Stress on moving components. Time for complete combustion. The relationship between the rotating speed of the engine and the mean piston speed is also important. Mean Piston Speed (m/sec) = stroke x rpm x 2 (2) where stroke is in mm. 60000 The mean piston speed is dependant on both the rotation- al speed and the stroke. It is more important than the rotation- al speed since it determines the inertial forces on the moving components and the time allowed for combustion of the fuel. 25 Table 3.10 shows engine parameters published by two manufacturers, one for a four stroke medium speed engine and one for a two stroke low speed engine. Table 3. 10: Typical Engine Parameters 4 Stroke 2 Stroke No. of Cylinders 10 9 Total Output 11 MW 14.4 MW Cylinder Diameter 570 mm 670 mm Piston Stroke 620 mm 1400 mm Engine Speed 400 rpm 150 rpm Mean Effective Pressure 20.9 bar 13 bar Mean Piston Speed 8.3 m/sec 7.0 m/sec Total Weight 175 tons 460 tons 3.5 Physical Dimensions of Diesel Plants Low speed two stroke diesels are usually larger than medium speed four stroke diesels of the same rating. This can be deduced from equation (1) in section 3.4. If the bmep and number of cylinders are the same, a lower rpm must be offset by a larger bore or longer stroke to yield the same power output. In practice, the land area required for a station with two stroke engines is slightly more than that required for -a station of the same output using four stroke engines. Figure 3.11 shows a medium speed four stroke plant with a total output of 20 MW and a low speed two stroke plant with an output of 25.6 MW at the same site. The difference in area for these plants is 25%. 26 I tt I ' | I | 2g\l I'L rii il 3 I U. 1I.t_ttt I. ' .I ,I I | w - _ . an~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~4 i- - Bl. O~~~~~~' F _. -- ~~~~~~~~~~~~~~- _1e s. + _ ~~~~~~~~~~~~~~~~~' 1 xra ---i--l;^i~~~~~~~~~ fi iX ¢E 10 2AL1~~~~~~~~~~~~~0 .- I 11 2? Figure 3.11 also highlights the difference in land area required for two cooling methods. The two stroke low speed plant uses cooling water from wells, whereas the four stroke medium speed plant uses radiators. The cooling water pumps occupy only a small fraction of the space used by the radiators. Either method of cooling is suitable for both engine types. In the installations shown the low speed diesels have been more recently installed than the medium speed diesels. Well cooling at this site was shown to be feasible after the medium speed engines were installed. 28 3.6 Effects of Fuel Quality on Engine Operation The viscosity 1/ of residual fuel is often taken as an indication of its suitability for use in a particular engine. Manufacturers quote their engines as being capable of burning fuel up to a certain viscosity limit. This emphasis on viscosity is misleading 2/ since viscosity is only one of the many properties of residual fuel which affect the reliabil- ity of an engine. Indeed, it is possible to have fuel with a low viscosity containing unacceptably high quantities of harmful contaminants such as vanadium and aluminium silicate. 3/ Table 3.12 summarizes the effects of some of the more important physical properties and contaminants associated with residual fuels, along with measures to mitigate their harmful effects. Table 3.12: Properties and Contaminants of Residual Fuel Property/Contaminant Effect Comments High Viscosity Poor atomisation, Fuel may be heated to excessive pressure maintain acceptable in fuel pumps viscosity at fuel pumps. Specific Gravity Difficulty in sepa- Separation is possible rating water from providing a specific fuel gravity differential of about 1.5% exists. If the specific gravity of the fuel approaches unity, water soluble additives may be used to change the specific gravity of the associa- ted water and thus attain the required differential. I/ See: Standard Specification for Fuel Oils - ANSI/ASTM Standard D396-76. 2/ See Det Norske Veritas Fuel Quality Testing Programme - Paper No. 82 P048 - July 1982. 3/ See How Do We Live With Heavy Fuel Oils by Ing. H.F. de Jonge - Diesel and Gas Turbine Worldwide, June 1980. 29 Property/Contaminant Effect Comments Stability Poor stability re- Stability of the fuel sults in the precip- depends upon its blend itation of sludge and on temperature con- which may block trol. Proper blending filters is the responsibility of the refiner, avoid- ing temperature cycling is the responsibility of the user. Cetane Number If too low: poor The cetane number de- combustion; diffi- pends upon the blend cult starting; of the fuel. Stock rough running derived from a crack- ing process usually has a low cetane num- ber. Asphaltenes Poor combustion; Accurate injection rapid rise in firing timing and effective temperature; thermal atomization of fuel overloading of lu- required to obtain bricating oil film; complete combustion. fouling of ports and turbocharger; turbo- charger fires Carbon* Residue Wear; friction; Carbon deposits cause (Conradson) fouling abrasive wear. Fuels with high Conradson Carbon residue are not acceptable. Sulphur Corrosion of parts Corrosion may be mini- in combustion mized by the use of space and exhaust alkaline lubricating system oils and by ataintaining cylinder temperatures above the acid dew point. Vanadium/Sodium Hot corrosion, Ratio of sodium to especially on ex- vanadium important haust valves since sodium lowers melting point of vana- dium oxides. Engine design must avoid hot spots in cylinder. 30 Property/Contaminant Effect Comments Solids (rust, sand, Blocking of fuel Solids may be re- aluminum silicate) pumps; liner wear. moved by using set- tling tanks and centrifuges. Water Injector problems, water may be removed poor ignition. by centrifuging. The problems outlined above require the efforts of the oil suppliers, the users of diesel engines and the manufacturers of diesel engines to solve them. The oil suppliers are respons- ible for quality control of the oil. This includes ensuring that it is stored properly and not contaminated by water and other materials prior to delivery to the user. The user of the diesel engine must check the quality of oil received and provide adequate fuel treatment facilities to remove those contaminants that can be removed using current technology. The manufacturers of diesel engines must continue to develop materials and tech- niques to make engines more resistant to the products of com- bustion of low grade fuel oil. 3.7 Lubricating Oil Lubricating oil serves three main functions in an engine. It lubricates the moving parts, assists in cooling and assists in neutralizing the acid products of combustion. The SAE grade of the oil describes its viscosity range. The TBN number describes its basicity. The TBN of the lubricating oil must be increased as the sulphur content of the fuel increases. In addition, lubricating oils usually have other additives to improve stability and to improve their detergent effect. The selection of a lubricating oil is usually left to the engine manufacturer who bases the selection on the duty of the engine and quality of fuel used. 31 SECTION 4 RELATIVE ADVANTAGES OF MEDIUM AND LOW SPEED ENGINES 32 4. RELATIVE ADVANTAGES OF MEDIUM SPEED AND LOW SPEED ENGINES 4.1 Introduction Both medium speed four stroke and low speed two stroke engines have unique features which give one type some advantage over the other. Some are undisputed physical advantages which are easily quantified. Others, mainly those relating to relia- bility and efficiency, are the subject of much debate. To be objective, we first establish the desirable attributes of a diesel plant and then discuss the merits of each type of diesel engine in this context. The discu3sion relates to individual advantages of each engine type without regard for the relative importance of the advantage. In Section 6, we show how the individual features are weighted, with regard to their relative importance, when choosing the diesel plant that best meets the objective of minimizing the cost of electricity while maintaining an acceptable quality of service. Any opinions we express in the following paragraphs are influenced by a survey of eighteen residual fuel fired diesel plants in sixteen countries 1/ and on our review of recently pub- lished papers on the subject 2/. The survey gives the user's point of view, and the published papers usually give the manu- facturers' point of view. 4.2 Desirable Attributes of a Diesel Plant The overriding objective when a diesel plant is contem- plated usually is to minimize the cost of producing electricity 1/ See Diesel Plant Performance Study, August 1980 - Prepared by C I Power Services Inc. for the World Bar.k. 2/ Various Trade magazines and manufacturers' literature. 33 while maintaining an acceptable quality of service. To achieve this the engines used should have: * Low Investment Cost * Low Operating and Maintenance Cost * High Reliability The investment cost consists of two components: the initial price of the plant and its economic life. The initial price depends on market conditions at the time of purchase. The economic life is more difficult to judge. Although,theoreti- cally, a plant can be made to last forever by replacing parts as they wear out, there comes a point at which it becomes obsolete because of technological advances: Spare parts become unavail- able and have to be specially manufactured at high cost; the efficiency of the plant becomes too low relative to new designs; or the plant becomes too small for the system. As a result, a plant that is state-of-the-art and is manufactured by a company with a relatively large market share is likely to have the longest economic life. To achieve a low operating and maintenance cost, a plant should have the following qualities: Fuel: * High fuel efficiency o The capability of burning cheap fuel Lube Oil: * Low lubricating oil consumption (oil burned in cylinder) * Minimum contamination of lube oil charge (thus few oil changes needed) * Ability to use cheap lube oil (minimal additives) Operators: 0 Simple operation %,hus few operators per engine and low level of skill for operation) Maintenance: 0 Low spare part cost * Low wear rates * Long time between overhauls 34 .fSimple assembly requirements (to minimize maintenance time) Research on making engines more efficient continues. Most of the effort is in improving the combustion process. Heat rates as good as 8000 Btu/kWh have been obtained. Lower grades of fuel usually cost less than more refined products. It is therefore desirable for a plant to be capable of using heavy residual fuel with high levels of contaminants. There are three concerns about the lubricating oil used in a diesel plants cost of the oil; time between requiring a complete change due to contamination; and the quantity required to replace that which is burned in the cylinder. The cost of the oil is mainly influenced by its TBN number, which reflects the quantity of additives required for neutralizing the products of combustion. The higher the sulphur content of the fuel, the higher the TBN need be. The number of operators and level of skill required are important considerations. If the plant, because of its simplicity, requires only relatively unskilled operators, it is more likely to be successful in a developing country. If the diesel plant is required for base load operation, it is essential that it has a high availability. This is achieved if the need for routine maintenance is minimized, and if the plant is designed to facilitate maintenance and thus reduce its down time. High reliability implies that the plant will start when needed and that it will not breakdown between the scheduled maintenance times. The cost implications of high reliability are not as obvious as some of the others. If a given quality of service 35 is required from the total generating system, the capacity of the plant we install to satisfy the requirement depends upon its reliability. There are three costs associated with relia- bility 1/: the cost of repairing a breakdown, the differential cost of providing the energy normally supplied by the faulty plant, and the investment cost of providing back-up plant. One measure of reliability of a plant is its forced outage rate.2/ 4.3 Undisputed Advantages of the Medium Speed Engine The undisputed advantages of using a medium speed trunk piston four stroke engine for power generation are: * Price * Weight * Size * Compact alternator * Small engine components The price of a medium speed engine is usually of the order of 40% lower than a low speed engine with the same output power. This is primarily because less material is required to construct the medium speed engine. Since it is lighter than a low speed engine of equivalent power, the medium speed engine requires smaller, less costly foundations and is cheaper to transport. It is also more compact than a low speed engine, especially if built in the vee formation. Being a lighter engine and 1/ See Evaluating Reliability in Purchasing Design by Paul F. Albrecht - A paper presented at the Pacific Coast Electrical Association, Engineering and Operating Conference, Los Angeles, California - March 15/16, 1979. 2/ The forced outage rate (FOR) of a plant is defined as FOR = FOH where FOH is the forced outage hours and SR SH + FOH the service hours. 36. having smaller components, a smaller station crane is required for construction and maintenance. Another advantage of the medium speed engine is that of requiring a smaller alternator than a low speed engine, with a directly coupled alternator, of similar output. 1/ 4.4 Undisputed Advantages of the Low Speed Engine The undisputed advantages of using a low speed cross- head two stroke engine for power generation are: * High output per cylinder * Simplicity of design * Few valves to maintain * Long combustion time With the two stroke engine, there is a power stroke for every revolution of the crankshaft. With the four stroke engine there is a power stroke for every two revolutions of the crankshaft. Consequently, we obtain a higher power output per cylinder from the two stroke engine than from the four stroke if all other factors are equal. 2/ The two stroke engine is usually of simple construc- tion with large easily accessible components. This simplifies maintenax4ce. With earlier two stroke engines there were problems with handling the large components and tensioning bolts, etc. These have been overcome by the use of special 1/ The relationship between frequency and engine speed is f = nsp when f is the system frequency, n5 is the speed and p is the number of pole pairs. For a given frequency, a lower speed requires more poles and thus a larger alternator. 2/ See Section 3.4 Equation (1) and footnote 2. 37 tools and fittings, for example, hydraulic bolts. 1/ Two stroke engines usually have, at most, one inlet/ exhaust valve per cylinder as opposed to the minimum two per cylinder for a four stroke engine. This reduces the valve and maintenance requirement by at least a half. 4.5 Debatable Advantages Some of the relative advantages of medium speed and low speed engines that are currently being debated relate to: 0 Availability 2/ * Reliability 0 Ability to burn low jrade fuel successfully * Lubricating oil usefe *"Ruggedness" *Life of plant We distinguish between availability and reliability deliberately. The availability of our engine is influenced both by outages caused by breakdowns and by outages caused by scheduled maintenance. Reliability relates more to unscheduled ,(forced) outages. An engine may be highly reliable,, in that, when it is put on-line it runs until taken off, but yet it may have a low availability if it requires frequent long periods of scheduled maintenance. M/ The bolt is fitted with a hydraulic cylinder. When it is pressurized the bolt stretches. The nut is put on and the correct tension is achieved when the hydraulic pressure is removed and the bolt shrinks. 2/ See Definitions in Report on Equipment Availability by Edison Electric Institute - 90 Park Ave., New York, N.Y., U.S.A. 38 There is an argument for low speed diesels that because of their relative simplicity, because of having few valves, and because of their higher output per cylinder, the time required for scheduled maintenance is less than that required for a medium speed engine of the same capacity. Supporters of the medium speed counter this by the argument that it is more diffi- cult to handle the larger components of the low speed engine. In our opinion, the medium speed engine requires about a week more per year for scheduled maintenance than the low speed engine. With proper tooling and manpower scheduling both types, used for base load, can be maintained in four to five weeks per year. The reliability of the engines is a far more conten- tious issue, and often so, because unlike conditions are being compared. Many factors influence reliability 1/. The most important are the engine design, the quality of fuel used, the level of skill and dedication of the operating and mainten- ance staff and the timely availability of spare parts. If there are high levels of vanadium and sodium in the fuel many eng- ines suffer hot corrosion. This most often manifests itself in damage to the valves and valve seats. Low speed engine manufacturers claim that since they have no valves (loop sca- venged) or only one valve (uniflow scavenged) they are less succeptable to the effects of hot corrosion 2/. Furthermore, they claim, the cylinder temperatures are lower than most medium speed engines and thus the vanadium oxides, which in the molten state cause hot corrosion, are less likely to melt. Medium speed manufacturers usually counter this by the argument that they have developed valve materials and cooling methods which minimize hot corrosion and consequent valve breakages. In our opinion, the low speed engine has a definite advantage in that it is easier to cool the cylinder components since they are 1/ See Diesel Plant Performance Study, August 1980 - Prepared by C I Power Services for the World Bank. 2/ See Table 3.11 in Section 3.6. 39 larger. Measures taken by medium speed manufacturers to improve the cooling of their valve gear often increase the complexity of the engine and require more skill for maintenance. This question can be resolved only by the collection of accurate statistics on engine performance, so that both types of engine of the same generation are compared under similar operating conditions. Another area of contention between proponents of the medium speed engine and those of the low speed engine is lubri- cating oil usage. Again the argument is often at cross purposes since on the one hand medium speed manufacturers stress a low consumption of lube oil and low speed manufacturers stress their engine's infrequent need of complete oil changes. The user is interested only in spending the minimum amount to lubricate the engine effectively. The cost of lubrication depends both upon the grade of lubricating oil required and on the amount used. The grade of oil is determined by its lubricating properties (mainly viscosity) and its additives which assist in cleaning the engine and neutralizing the acid products of combustion. The TBN number of the oil is a measure of its ability to neutral- ize acid and generally oils with high TBN numbers are more expen- sive than those with low TBN numbers. The most significant difference between the lubrication of a medium speed engine and a low speed engine is that in the medium speed engine, the combustion space is not effectively isolated from the crankcase, whereas in the low speed crosshead engine it is. Consequently, all of the oil in a medium speed engine is exposed to the products of combustion, whereas in the low speed engine only the oil injected into the cylinder is exposed. The oil in the crankcase of the low speed engine need not neutralize products of combustion and thus may be a lower grade requiring very infrequent changes. This is offset some- what by the fact that oil of a higher TBN is required for the 40 cylinder lubrication of the low speed engine than is required for the lubrication of the medium speed engine. However, since the entire charge in the medium speed engine requires frequent changes due to contamination it is our opinion that the overall cost of lubricating the medium speed engine will usually be higher than the cost of lubricating the low speed engine. The question of the relative "ruggedness" of low and medium speed engines is often debated. This is very subjective and it is our opinion that any engine subjected to excessive abuse will fail. However, there is one advantage with the low speed engine: it can continue to run with a cylinder deactivated. In the case of a failure say of an injection pump, the engine can continue to run at part load. This is not usually possible with a medium speed engine. The relative life of medium speed and low speed engines is very difficult to assess. Much depends upon the rate of development of the engine. If many innovations are rapidly added, it tends to shorten the economic life of an engine since manu- facturers rapidly move to new models and are less inclined to carry spare parts in stock for the older models. In addition to this, a user may be forced by the availability of more efficient or more reliable engines to consider early retirement of his existing plant. It is our opinion that since there is much develop- ment work in progress, decisions should not be unduly weighed by engine life since the economic life is probably shorter than the 15 to 25 years normally quoted. 41 SECTION 5 OUTLINE SPECIFICATION AND CONTRACT DOCUMENTS 42 5. OUTLINE SPECIFICATION AND CONTRACT DOCUMENTS 5.1 Introduction A specification for a diesel plant should achieve three main objectives. It should: * Provide the prospective supplier with the scope of supply and technical requirements of the plant including the precise plant capacity and reliability requirements, guarantees required, test methods and penalties, the characteristics of the intended fuel, environmental con- ditions and the characteristics of the existing system. P Provide the supplier with a format for presenting details of his bid. * State the proposed bid evaluation procedure. Two types of information are required from the supplier: performance data, and the scope of supply. The capacity and expected performance of the overall plant are required for the bid evaluation. A bill of material listing major items is re- quired for use at the time of installation to ensure that the equipment supplied is the same as was promised in the package tendered. A bill of materials is especially important when con- sidering plant auxiliaries, the quality and quantity of which may vary widely. It is often used as a basis for negotiating the supply of extra auxiliary equipment which may be identified as necessary after the contract has been awarded. Information not required for the bid evaluation of imple- mentation of the contract should not be requested. Such a re- quest increases the cost of bidding and unnecessarily complicates the bid evaluation. In the same vein, prequalification of bidders is recommended. The cost of preparing a good tender is high and is ultimately passed on to the purchaser. It is therefore in the best interest of all concerned to reduce the list of tenderers to four or five qualified suppliers. 43 The specification outlined in the following paragraphs is intended for use with a 'turnkey' package. It is divided into eight parts to enable a project to be separated into smaller packages if necessary. The parts are: 5.2 Instructions to Bidders 5.3 Conditions to Contract 5.4 General Specification 5.5 Mechanical Works Specification 5.6 Electrical Works Specification 5.7 Civil Works Specification 5.8 Miscellaneous Works Specification 5.9 Price Schedule and Equipment Data This outline deals with the preparation of a specification in a general way. A purchaser who is financ3.ng a plant through a financial institution should conform to its specific procurement guidelines 1/. 5.2 Instructions to Bidders This part of the specification defines the general procedures for bidding, receipt and delivery of tender documents, and the conditions under which bids will be evaluated. The fol- lowing items are suggested for inclusion, but these may be amended or supplemented if necessary for specific contracts. 5.2.1 General System and Project Information In this section, an overview is given of the type of plant required, existing system and the proposed financing arrangements. 1/ See for example: Guidelines for Procurement under World Bank Loans and IDA Credits, March 1977 and subsequ.mt revisions. 44 5.2.2 Scope of Work to be Contracted A brief but concise overview of the scope of work enables the prospective bidder to make a preliminary assess- ment of whether or not the project is within his competence and is worth further effort ir. preparing a bid. 5.2.3 Invitation to Bid Procedural items are included under this heading. These comprise the time and place of receipt of bidding documents, number of copies, language and any requirements for signing of documents. 5.2.4 Criteria for Qualification of Tenderers This part may not be required if a prequalification was carried out. Documentation to qualify tenderers should include evidence of a well established manufacturer or contractor with good financial resources, commercial and technical know-how and proof of experience on similar projects and under similar condi- tions. 5.2.5 Content and Format of Tenders The tenderer should be instructed in this section regarding the content and format of his bid presentation. It is important that this information be supplied to achieve some degree of uniformity in the tenders received and thus facilitate evalua- tion. 45 5.2.6 Project Time Schedule The milestone dates of the project and proposed time for the award of a contract are provided under this heading. The supplier can match these dates with his existing work schedule to determine if the proposed project can be included. 5.2.7 Familiarity with Local Conditions In most cases it is imperative that the bidder visit the project site and become familiar with local conditions. This paragraph in the specification should state the arrangements and the local contacts for such a visit. 5.2.8 Interpretation and Changes to the Specification Procedures for clarifying points of the specifi- cation or for making amendments to the specification should be defined. The emphasis here is that any clarification of content, or changes in intent should rapidly be communicated to all of the prospective tenderers. 5.2.9 Tender Price and Format of Presentation The instructions included under this heading define the requirer. ,rmat for presenting the tender price. Details which are provided include the required breakdown of bid prices, the currency to be used and any applicable exchange rates. A break- down of bid prices for major items is often required if alter- native schemes are to be offered. 46 5.2.10 Bid Bond The requirement for a bid bond is of questionable value. If the suppliers have prequalified, they are likely to be serious and are unlikely to make errors in bidding that would cause withdrawal of their bids. Thus the bid bond which adds to the cost of tendering is probably not justified in most cases. If a bid bond is deemed desirable, it should, to maintain confidentiality, be a fixed amount and not expressed as a percentage of the bid price. 1/ 5.2.11 Validity of Tender and Bid Bond The required period for validity of the tender, and the bid bond if specified, should be provided. 5.2.12 Performance Guarantees There are certain performance attributes of a plant which, since they significantly affect the total cost of owning and operating the plant, are included in the bid evaluation. Suppliers should be required to guarantee these values to protect the purchaser from awarding the contract on the basis of a per- formance level that could not be realized. If there is a guarantee the purchaser can apply liquidated damages to, as a minimum, recover the difference in life cycle cost implied by the short fall in performance. Items for which guarantees are usually required are: 1/ If the bid bond is expressed as a percentage of the contract price, a supplier could discover the bid price of another by obtaining information on the bid bond purchased. .47 * Specific fuel oil consumption of engine. * Plant availability. * Auxiliary plant energy consumption. * Generator efficiency. * Main power transformer efficiency. This paragraph of the specification should list each item for which a guarantee is required, the test method pro- posed for confirming compliance and the magnitude of the penalties associated with failure to realize the promised performance. 5.2.13 Method of Tender Evaluation The specification should state clearly the method which will be used to evaluate tenders. This method, which should reflect the requirements and objectives of the purchaser, must be presented in sufficient detail to allow each supplier to present the most suitable package from his available inventory. The information which must be presented is: * A list of mandatory requirements. * A list of desirable features of the plant along with the weight assigned to each in the evaluation. * A list of any data that may be required in determining the effective capacity of the proposed plant when it is added to the existing power system. In addition to specific tender price adjustments to equate the auxiliary plant to that shown in the detailed speci- fication and general adjustments for exchange rates, etc., the detailed information in the following paragraphs may be necessary. 48 5.2.14 Effective Capacity The concept of effective capacity and its use in evaluating bids is shown in Section 6.2 (Value of Reliabili- ty). The information which must be included in the specifica- tion is: * Required effective capacity expressed as a mean with upper and lower limits (e.g. 20 t 1 MW). * Maximum number of units of which plant may be comprised (e.g. 3 units). * All units comprising plant to be of same nameplate capacity and same type. * Equation for determining effective capacity. The equation which is used recursively is presented in Section 6.2.2 with an example of its use. Y Value of 'm' for existing system (see Section 6.2.2). c Forced outage rates to be used for low speed two stroke and medium speed four stroke diesels. * Whether the effective capacity calculation should be based on the site rated maximum continuous rating, or on the short time peaking rating. 5.2.15 Engine Operating Experience This paragraph of the specification should require the supplier to provide proven engines. Ideally, to be classified as proven, the engine in its tendered model and configuration should have run successfully, for a reasonable time, on fuel with levels of contaminants comparable to the specified fuel. This requirement often has to be relaxe4 to avoid excluding all engines. Adequate operating experience is a mandatory requirement, a lack of which should exclude the plant from further consideration unless substantial insured financial 49 guarantees are provided, including guarantees to compensate the owner for loss of production in the event of excessive failures. The definitions of successful operation, comparable levels of fuel contaminants, and reasonable operating time must be carefully determined. For base load plant in the absence of any other influencing factors reasonable figures are: * Successful Operation - Service hours of at least 6000 per year, with no load restrictions due to plant problems and with a maximum of 10 unscheduled stoppages. * Comparable Levels of Fuel Contaminants - Within 10% of the vanadium content, sodium content and the CCR.1/ If the sodium content of the proposed fuel is considerably higher than that of the fuel presented for the experience requirement, a supplier may include fuel treatment to remove sodium. 3 Reasonable Operating Time - two years. These requirements may be tightened as the ability of engines to successfully burn poor quality residual fuel improves. The experience presented by a supplier should be taken as valid only if it is independently verifiable by communication between the prospective purchaser and the user of the plant presented. To this end the supplier should be asked to list the names of users for independent verification. 5.2.16 Basic Warranty The usual warranty offered by suppliers is for one year. The specification should state the date of effective- ness of such a warranty. It is suggested that the warranty be valid 1/ This requirement may prove to be very stringent since fuel quality appears to be worsening rapidly. If it excludes all engines then the four or five that have operated on the highest levels of contaminants should be allowed. 50 for one year after the plant is accepted for full commercial operation by the owner. A supplier may be willing to improve on this to help offset deficiencies in the experience require- ment. 5.2.17 Spare Parts The minimum spare parts requirement must be specified. It is best to specify spares as per the require- ments of a licencing authority such as American Bureau of Shipping, Norske Veritas or Lloyd's Registry of Shipping for the engine. Spares for the auxiliaries should be based on previous experience. 5.2.18 Project Experience of Supplier This paragraph should state a requirement for the supplier to have executed at least one project of similar size and complexity in the recent past. The object of this requirement is to ensure that the supplier has demonstrated the necessary expertise in administering a complex project. 5.2.19 Financial Stability of Engine Manufacturer Since the engine is the major component of a power plant, it is essentidl that we seek some indication of its maker's financial stability. If the engine manufacturer goes out of business it could shorten the economic life of the plant because of the unavailability of spare parts. Some evi- dence of financial viability such as a recent balance sheet should be requested. In this respect, it may be wise to deal with manufacturers who hold a reasonable share of the market. 51 5.2.20 Service Facilities of Supplier The supplier should be required to demonstrate the existence of service facilities and service personnel in reasonable proximity to the proposed plant. Proximity here may be defined in terms of time of response to a request for service rather than in strict geographical terms. Language may be a con- sideration in this respect, since the quality of service depends upon the ability of service personnel to communicate with the plant personnel. 5.2.21 Commercial Terms This paragraph should indicate any special require- ments for commercial terms. For example a financing offer may be a mandatory requirement. 5.2.22 Engine Specific Fuel Consumption The specific fuel oil consumption (SFOC) of the engine is of particular concern due to the high cost of fuel. The specification should include the monetary value of each gram per kilowatthour the SFOC is above or below a reference SFOC, which must be supplied. (Refer to section 6.3.2.) Since the heat rate curve of an engine is not flat, a weighting formula miay be pro- vided to determine a weighted average heat rate on which the evalu- ation will be based. The reference conditions for measuring the heat rate must be included here if they are not already included in the paragraph dealing with guarantees. It is particularly important to state the standard by which the calorific value of the fuel will be determined. 52 5.2.23 Generator Losses The monetary value of each percentage point of efficiency above or below a specified efficiency must be given in this paragraph. The standard test procedure, if not already detailed in the paragraph on guarantees should also be included. 5.2.24 Transformer Losses Although transformer losses consist of two parts, iron losses and copper losses, it is best for this appli- cation to treat losses in a composite way. This is done by assuming a continuous load on the transformer equal to the eco- nomic loading of the plant (most efficient load for engine). The value of each kW of losses and a reference value for losses must be stated. 5.2.25 Lubricating Oil Consumption The frequency of lubricating oil changes is often more significant than the quantity consumed in the cylinder through combustion. Consequently the bid evaluation should be based on the total projected cost of lubricating the engine. To facilitate evaluation, this paragraph of the specification should request the supplier to provide the. following information: * The grade of lubricating oil required for cylinder lubrication and for crankcase lubrication. 1/ 1/ In the case of the four stroke engine only one grade is usually required. 53 * The quantity of lubricating oil required for a complete oil change. * The expected frequency of oil changes based on the pro- posed duty of the plant. * The consumption rate of lubricating oil by combustion in the cylinders. It is also necessary that clear procedures be set down for determining whether or not an oil change is caused by normal operation, or by accidents such as a broken water pipe, etc. The penalty for exceeding the total lubrica- tion cost estimated for the above data should be stated if a penalty is to be imposed. l/ 5.2.26 Mechanical Design Features To accommodate variation in reliability perfor- mance within the general types, medium speed four stroke and low speed two stroke diesel, weights are assigned for mechanical features. The features chosen are those likely to enhance the ability of an engine to operate successfully on residual fuel. The weights are applied to a small percentage of the total cost of the plant, for example to 2% of the capital cost. The amount of adjustment and the point system used is subject to the judge- ment of the person preparing the specification. Typical items included as mechanical design features are detailed in section 6.7, along with a weighting 1/ It may be difficult to impose a penalty on exceeding lube oil usage since at least two years of operation may be required to show that the usage is exceeded. By that time the owner will have little leverage on the supplier. 54 procedure. This paragraph of the specification should state the items which will be considered, the weighting system, and the per- centage of the bid price to which the weights will be applied. 5.2.27 Prime Contractor The engine manufacturer should preferably be the Prime Contractor for a 'turnkey' package, since the engine is the major component of a diesel plant. A small adjustment of the total bid price may be made to reflect this preference. It should be no more than about 0.5%. The amount should be stated in this paragraph of the specification. 5.2.28 Supplier's Past Performance The past performance of a supplier especially with respect to meeting contract deadlines, responding to pro- blems and providing after sales service is an indication of his likely performance on the contract under consideration. If the consultant preparing the specification has information on file concerning the suppliers, a small adjustment of the bid price may be made to reflect these considerations. If a supplier's evaluation is being applied, it should be so stated in the specification and the information on file regarding any supplier must be made available to that supplier on request. 5.2.29 Miscellaneous Any other factors which are judged important to the successful completion of the contract, and which will contri- bute to the bid evaluation should be listed in this paragraph. 55 5.3 Conditions of Contract 5.3.1 General Conditions of Contract In this paragraph we define the conditions of contract under which the successful bidder will perform the works. The use of widely accepted conditions with specific amend- ments for the project facilitates the understanding of the speci- fication. The recommended form of contract is the Conditions of Contract (International) for Civil and for Electrical and Mechanical Works published by the International Federation of Con- sulting Engineers (FIDIC). The FIDIC form requires completion to clearly indicate definitions, deviations and additions for the particular application. Some of the items of particular interest are: 5.3.2 Penalty for Delay in Completion The magnitude of this penalty should be related to the loss suffered by the owner as a result of the delay. The loss is not usually easy to define since it often involves oppor- tunity costs. In the absence of definite information, a penalty of 0.5% per week, and not exceeding 5% of the'total tender price is recommended. It is usual if a penalty clause is included, to include a bonus for early completion. 5.3.3 Maintenance Period If not specified elsewherfe, a maintenance period must be specified here. Eighteen months or eight thousand oper- ating hours is recommended. This may be superceded in many cases by a separately negotiated maintenance contract including spare parts and maintenance supervision. 56 5.3.4 Terms of Payment The terms and currency of payment as well as the procedure for certifying progress payments should be defined in this paragraph. We must ensure when preparing the payment schedule, that an adequate sum is held back to cover penalties and outstanding warranty related items which become apparent at acceptance teating and during the maintenance period. 5.3.5 Price Variations It is sometimes advantageous, for deliveries over one year, to accept a bid which is index linked to infla- tion rather than a firm bid into which the supplier must build price contingencies. It is most common to index link offshore costs. The formulae showing the adjustment for variations in material costs, shipping costs and labour costs, and a ceiling cost should be included in this section. 5.3.6 Customs and Import Duties and Taxes The status of customs and import duties, and applicable taxes should be detailed in this paragraph. 5.3.7 Performance Bond The performance bond is intended to compensate the purchaser, in the event that the supplier fails to complete the contract. It is normally of the order of 10% of the tender price. I This paragraph should include the magnitude of the performance bond, and the. term of its validity. The duration 57 should be such that it remains in force until all claims or warranty adjustments are settled. 5.4 General Specifications This part should provide the tenderer with the general informationg, and the conventions under which the contract or project is to be carried out. The following should be some of the contents: 5.4.1 Description of the Project The quantity and range of capacity of the diesel- generator units, transformer and switchyard, fuel storage and other equipment should be described. In the description, the limit of supply of the project or contract should be defined,if possible, by means of a sketch. Procedures for interfacing with existing facilities must be clearly specified. 5.4.2 Financing of the Project Information on the amounts, conditions of loans, names of financing institutions and details of other financing sources should be provided. 5.4.3 Existing Power Station Facilities The information should include data on the prime movers, generators, system load, gross generation and load factor and transmission system so that the 'tenderer can assess the system capability and offer his most competitive diesel plant package. This information should be more detailed than the minimum pro- vided in section 5.3.14. 58 5.4.4 Site and Local Conditions In this part the location of the project the geo- graphy, topography and environmental conditions, should be described. Furthermore the accessibility by sea, air and road, the avail- ability of services such as telephone, telex, electricity, and water and the cost thereof should be indicated. 5.4.5 Applicable Standards for M4aterials, Design, Manufacture and Testing The acceptable International Standards Organiz- ations and a selected list of applicable standards should be provided. Units of measurement, preferable the International Sys- tem of Units (SI) should also be specified in this paragraph. 5.4.6 General Requirements for Design, Construction Materials and Equipment This section should describe the general require- ments for design and construction, drawings, specifications and instructions as well as for cleaning, painting, welding, galvani- zing, fire prevention, piping identification and thermal insula- tion, lubrication,instrumentation, electrical materials, tools and interchangeability of materials and equipment. 5.4.7 Tests Materials tests, workshop acceptance tests and performance tests should be specified. Particular care should be exercised when defining the performance tests, acceptance of 59 results, and application of liquidated damage charges. 5.4.8 Spare Parts The general specification for spare parts, their manufacturing, labeling, packaging and storage should be stated. Specific spare parts for both programmed maintenance and breakdowns should be included with the equipment supply. In addition to the specified spare parts, the manufacturer should be requested to recommend his own quantity and type of spares for a given maintenance period usually 2 to 5 years. Unit prices of all spare parts should be requested. It is important to state that the contracted spare parts are those left after commissioning and acceptance of the project. On many occasions spare parts are used during construction and are not replaced. 5.4.9 Tools and Maintenance Equipment Although some tools and equipment should be specified, it is recommended that the manufacturer or contractor be allowed to list and quote additional tools and equipment, which he feels are necessary on site for a good maintenance program after his departure. The contractor's or manufacturer's understanding in carrying out maintenance on site can thus be assessed. Again it should be stressed that the contracted tools are those available for maintenance after commissioning and any missing tools shall be replaced. 60 5.4.10 Staff Training The basic training for the supervisory and trade level personnel should be specified to include the number of personnel and the duration of their instruction in the specialized areas. Again the contractor or manufacturer should be invited to make his own recommendation. 5.4.11 Documentation The timing and the flow of documentation such as drawings, schedules, correspondence between the owner, engineer and the contractor or manufacturers should be specified. 5.4.12 Project Drawings The contractor or manufacturers should be pro- vided with general project drawings including the following: Reference Map General Plant Layout Powerhouse Drawings Substation or Switchyard Layout Generating Station Single Line Schematic Substation or Switchyard Single Line Schematic More detailed drawings such as for piping, wiring, etc. should be listed in the particular specification. 5.5 Mechanical Work Specification 5.5.1 General Data, drawings and other information such as 61 standards for the mechanical works should be described or listed. Any data provided should allow the tenderer to quote on either a two or four stroke diesel engine with its specific accessories and auxiliaries. The specification should state the capacity range and minimum and maximum number of units allowed. The drawings provided to the tenderer should show intended orientation, elevation and location of engine components and auxiliaries making allowance for minor changes by the tenderer. 5.5.2 Scope of Work A scope of work should outline the work to be considered mechanical in the context of the tender. 5.5.3 Fuel Data Fuel specifications should be provided for Bunker 'C' and distillate fuel giving all test methods. The fuel specification should also indicate the quality of fuel believed to be available in 10 to 20 years' time with an indication of limits in vanadium, sodium, CCR, specific gravity, cetane number and other characteristics of the fuel. 5.5.4 Heat Rate Guaranteed heat rages a- various load points (e.g. 50%, 75%, 100% and 110% of MCR) may be requested. The formula showing the weighting for the purpose of evaluating the .62 tender should be provided. Other%ise, if a single heat rate is used for the guaranteed performance, the load level at which it should be taken must be specified. 5.5.5 Cocling Water A cooling water chemical analysis shouid be included giving details of both primary and secondary cooling water available at the site. For cooling systems with radiators,the maximum expected solar flux should be indicated to the tenderer for the sizing of the radiators and systems. 5.5.6 Equipment Supply and Erection Under this heading the requirement for the prime movers and the associated equipment should be described. The following equipment and material should form part of the mechanical supply: * Diesel engine with foundation frames and anchor bolts, attached components such as combustion air systems, exhaust gas system with waste heat boilers, pumps, piping, valves, turning gear, governor, control equipment and instrumentation, wiring, control panels, motor control centres and cabling, gratings, stairs and operating plat- forms. Consideration should be given, when specifying, to the potential use of waste heat other than for fuel heating. * Heavy and light fuel oil systems with treatment plant including water washing, centrifuges and homogenizers as required, tanks, purmps, heaters, piping and steam tracing, 63 valves, control equipment and instrumentation, motors, motor control centres and cabling. * Lube oil systems with tanks, pumps, preheaters, piping, valves, filters, motors, piping, centrifuges and treat- ment plant, controls and instrumentation, motor control centre and cabling. * Jacket, valve and other primary or secondary cooling water systems, complete with tanks, pumps, heat exchangers, piping, valves, make-up and water treatment system, strainers, oil separators, control equipment and instrumentation, motor control centres and cabling. * Starting air systems, with air receivers, piping, valves, air compressors, motor control centres and cabling. The number of starts and the rate of filling of the tanks should be specified. For instrumentation air the quality should be specified. 3 Heating system, with auxiliary boiler for startup and for sludge disposal, condenser with tank, surge tank, piping, pumps, motors, chemical treatment plant, control equipment and instrumentation, motor control centres and cabling. * Central control equipment with annunciators, instrum ats, alarm devices including wiring. * Specific spare parts, tools and chemicals. The equipment specification should be functional as much as possible, leaving the tenderer to select the equipment. However, capacities of the equipment, number of units, redundancy of equipment, the changeover capability without service interruption of strainers, filters, heat exchangers, etc. must be specified. Also it may be desirable to specify the heat exchanger tubing based on local experience. Noise limitations of various locations should be defined. * Packing, sea, air and land transportation and transportation insurance for the mechanical works. * Cost of erection, commissioning, site and performance tests and erection insurance. 64 5.5.7 Factory Tests Workshop and material tests, certificates, and the witnessing of tests should be specified to allow proper assessment of equipment performance and of materials at an early stage. Fuel oil consumption tests are of particular importance. 5.5.8 Commissioning Procedure The commissioning procedure should be defined to include the duration and witnessing of operational tests as well as responsibility of the contractor, engineer and owner during the commissioning up to commercial operation of the plant. 5.5.9 Site Tests These tests should include checks for proper erection such as for completeness, alignments, functional alarm control and protection tests,. load rejection tests. The most im- portant test however, is the performance test. The duration of loads, measuring techniques for fuel and lubricating oil, toler- ances, points of "input" and "output" must be clearly defined to calculate deviations from the guaranteed figures (see section 7). The accuracy of the measuring instruments should be specified by the Engineer and be included as part of the scope of supply of the contractor. 5.6 Electrical Work Speoification 5.6.1 General Drawings, schematics and other information and data including specific electrical standards and norms should be provided. 65 The drawings should show cable routings for inter- connection with existing facilities, the location of switchgear, structures and transformers. The schematics should provide the tenderer with adequate data to enable him to supply equipment com- patible with the existing system. 5.6.2 Scope of Work The scope should outline the electrical works considered for the tender. 5.6.3 Equipment Supply and Erection A complete description of all electrical equip- ment should be provided. Special emphasis should be paid to de- tails to assure compatibility with existing system components. Some of these items include protective relaying equipment, in- sulation levels, system stability considerations, flywheel effect, system short circuit capability, excitation response and voltages. Below is an abbreviated list of items considered for an electrical supply. Some items however, may form part of another contract or may not be required for the particular project: * Generator complete with coolers, bearings, foundation frame and bolts, terminal equipment, static or rotating excitation system, and special tools. The guaranteed efficiency of the generator and exciter at 50%, 75%, 100% rated capacity should be requested. * Step-up power transformer complete with bus or cable duct connecting to the generator terminal equipment. The sizing of the power transformer should be specified such that at normal operation of the plant, no fan cooling is required. 66 * High and low voltage switchgear as required for the gener- ator terminal equipment, step-up transformer, station ser- vice transformer and black start facility. * Station service transformer or transformers to operate all plant auxiliaries with a high degree of reliability. The transformer should be sized to produce the least losses at normal operation. * Complete self-contained diesel/electric generator for black start of the diesel plant and other emergency duty. Although this diesel/electric generator may only be required on rare occasions it is normal practice to start and operate the unit on a weekly basis. The fuel consumption should there- fore be reasonable. * Complete control system with boards, relay panels, dc bat- teries, chargers and panels. A complete description of the minimum required relays should be provided. * Complete HV switching station to terminate the step-up power transformer complete with circuit breakers, disconnects, potential and current transformers and protection. * All high and low voltage power cables between equipment of this tender and others as specified and grounding. * Specific spare parts. * Packing, sea, air and land transportation and transportation insurance for the electrical equipment. * Erection, commissioning, site and performance tests and erection insurance. 5.6.4 Factory Tests Workshop, material tests, certificates and the' witnessing of tests should be specified to allow assessment of equipment performance at an early stage. 67 5.6.5 Commissioning Procedure This should be similar to 5.5.8. 5.6.6 Site Tests The tests should indicate verification of proper erection, insulating tests, verification of motor data, HV, dc test of the stator winding and transformer, characteristics of generator and exciter, temperature rise tests, parallel operation, load re- jection and functional tests of all protective devices, control and alarm functions. The performance tests should be made to veritY guaranteed values and the specification shall describe the re- quired instrumentation and accuracy of the devices to determine generator efficiency, step-up transformer and station service transformers, losses and the power requirement to operate the units. The required instruments should be supplied as part of the contract. 5.7 Civil Works Specification 5.7.1 Gc-.eral Under this heading all general information per- taining to the civil contract and not already provided in other sections should be described. This includes applicable standards and particular testing norms. 5.7.2 Scope of Work The scope of work should define the civil works of the tender. 68 5.7.3 Building Design The tenderer should be provided with drawings and details showing special arrangements for offices, washrooms, lock- ers and shower rooms, control room, storage room, water test la- boratory, maintenance areas,workshops and pumphouses. Building design limits for high wind and flood conditions should be provided. The buildings should preferably be designed for self-ventilation, but pressurized or forced air ventilation may be required under certain conditions. 5.7.4 Soil Conditions A soil profile consisting of sub soil cfiaracter- istics as well as special conditions like ground water should be provided. Although the Engineer may interpret the results of the soil tests and subsequently recommend a certain foundation type it is preferred to leave this task to the contractor. 5.7.5 Cleaning, Excavations, Backfilling Only normal general requirements need be specified. 5.7.6 Formwork, Reinforcing and Concrete The requirements for formwvrks, coating, rein- forcing steel, concrete materials, proportioning, mixing, 69 pouring, testing and curing of concrete should be specified. Special procedures for hot weather concreting should be detailed as required. 5.7.7 Engine Foundation The engine foundations should be specified in such a way as to assure that the engine manufacturer will warrant the foundations along with his engines and will provide adequate supervision during the construction of the engine foundations. 5.7.8 Structural Steel, Siding, Roofing Only sufficient details need be provided to assure good end results. 5.7.9 Others The appropriate standards and functional require- ments should be specified for items such as floors, masonry, painting, floor grates, ceilings, glazing, doors, frames, hard- ware, etc. 5.7.10 Overhead Cranes Only the functional requirement need be specified. An auxiliary hoist for the main engine room crane should be in- cluded-.. The capacity for the main hoist would depend on the maxi- mum component to be lifted and the selection should therefore be left to the tenderer. 20 5.7.11 Grading and Landscaping The extent of responsibility of the tenderer with regard to the grading and landscaping should be specified. 5.7.12 Fuel Storage The capacity of the required fuel storage tanks should be specified by the Engineer. This should take into account shipment intervals and adequate reserves in case of an emergency. Also safety features such as containment dykes and other protection should be specified in compliance with applicable codes. 5.7.13 Temporary Offices andT Facilities Any requirement for Engineer's offices or for the tenderer's personnel should be indicated. 5.7.14 Material Quantities Estimated quantities of materials, specific data for equipment and supplies as well as specified suppliers should be included in the data sheets as described in 5.9. 5.8 Miscellaneous Work Specification 5.8.1 General The following miscellaneous equipment and works could form part of the main contract or separate supplies inclu- ding local contracts. For any such separate contract adequate data 71 schedules, drawings and specifications will have to be supplied to assure good timing and proper erection and supply. 5.8.2 Fire Fighting Equipment Location, capacity and type of portable fire extinguishing equipment must be specified. For stationary equipment, the capacity of the water tank, pump and type of drive as well as the routing and sizing of the ring main, location of standpipes, hoses and type of spray nozzles ahould be specified. Where CO2 or dry chemical equipment is required, the capacity, control and location of the tanks and spray nozzles should be specified. 5.8.3 Lighting System T The type of lighting and intensities should be specified in the various work areas. Any high pressure dis- charge lighting should be supplemented by fluorescent or dc light- ing to provide minimum lighting levels following voltage dips or power outages. The limit of supply should be clearly defined. 5.8.4 Heating, Ventilation, Air Conditioning The location of the equipment, capacity amount of units, and the environmental parameters should be defined for the various work areas. 72 5.8.5 Miscellaneous Equipment and Furniture The equipment and furniture required for an efficient operation of the plant should be specified. These include furniture for offices and control room, mechanical and electrical workshop furniture, machines, tools and other equip- ment, and chemical laboratory equipment and furniture. 5.9 Price Schedule and Bid Form 5.9.1 General The purpose of the price schedule is to facili- tate the evaluation and comparison of the tenders. The format of the price schedule must be provided to the tenderers and include units of measurements (preferable SI) and the estimated or pre- ferred quantity of materials or equipment. The components should be broken down into major equipment in order to make adjustments and in order to serve as a basis for civil works price adjust- ments in the constructio phase and to indicate spare part costs for future purchases. The price schedule should also show the local and foreign components of materials, supplies and equipment as well as local and foreign labour costs for the erection, .om- missioning, testing and subsequent maintenance of the equipment. The equipment data sheets on the other hand should provide values, dimensions, weights and otheA. information to allow an assessment of the quality and suitability of the equipment being supplied. The content of the data sheets will also serve as a check list to verify the installation of the offered materials and equipment. 73 Other information to be supplied with the ten- der includes a list of drawings, instruction manuals, a time schedule showing the equipment supply and an estimate of the manpower requirements for the installation. Provision should also be made for the names and functions of possible subcontrac- tors to be listed. In the case of projects where cost escalation is allowed, cost index data sheets for the different components and the source for indexing should be provided to the tenderers. We list below a selection of specific break- downs by contract or discipline for costing purposes. This how- ever, may be arranged depending on subsequent contractual arrange- ments. Typical data requirements for equipment and supplies are also provided below. The suggested data and breakdown is not intended to be complete, but provides a guide for preparing the specification. 5.9.2 Civil Works The breakdown of costs for the civil works should be divided into local and foreign costs by unit of measure- ment and for the estimated volume and quantity. By providing the unit costs, any unforeseen quantity adjustments during con- struction are facilitated. Major components for civil works of a diesel power plant project are: Engineering Windows Mobilization Doors Clearing Ceilings Steel Structure Ventilators and Louvers Piling Tiling 74 Excavation Flooring Backfilling Asphalt Formwork Painting Concrete Supplies Masonry Transportation Roofing Insurance Siding Erection Drainage Temporary Buildings The information to be supplied in the data sheets should include building ventilation data for example and depend- ing on the supply information such as speed, power, capacity, and overload factors for cranes. 5.9.3 Mechanical Works As for the civil works the identifiable mechanical works should be divided into local and foreign cost components. The desired qiantity of identical equipment should be listed in such a way as to allow a meaningful comparison between the two types of diesel engines. The price schedule should also allow tenderers to quote additional equipment for improved reliability. Major headings for the mechanical works are as follows: Diesel engine and attachments. Compressed air starting system. Combustion air system. Exhaust gas system. Hot water or steam (waste heat) system. Lubricating system. Cooling water systems. Fuel oil system. Fuel oil storage system. 75 Other mechanical equipment. Controls, cable and wiring. Routine and strategic spare parts. Tools and maintenance equipment. Shipment and insurance. Erection. Commissionina. Testing. Training. Maintenance contract. A performance schedule providing the basis for guarantee and possible liquidated damage claims should be pro- vided with the other equipment data sheets. The data sheets should cover all mechanical works equipment such as: Pumps Strainers Valv s Filters Tanks Control valves Heat Exchangers Controls Compressors Pipework Centrifuges Insulation Motors and Controls Some of the information to be supplied by the tenderer on the above equipment is as follows: Maker's name Arrangement Quantity Capacity Type Dimensions Size Weights Materials Plate thickness Working pressure Motor nameplate data Capacity Efficiency Power requirement Motor insulation Flow rates Starting and stalling torque of motors 76 Design pressure Type of enclosure Design temperature Safety devices 5.9.4 Electrical Works The electrical equipment supply should also be divided into local and foreign cost components and quantities should be indicated where possible. Major electrical equipment for a power station includes: Generator and exciter. Controls and protection. Outdoor substation. RV Switchgear. Main power transformer. Station supply transformer. Auxiliary transformers. RV and LV cabling. Battery and charger. Motor control panels. Switchboards and panels. Other electrical equipment. Routine and 3trategic spare parts. Shipping and insurance. Erection. Commissioning. Testing. Training. A performance schedule for the major equipment such as generators, exciter, power transformers and emergency generator set should form part of the data section to be com- pleted by the tenderer. This schedule would form the basis for 77 guarantees and possible liquidated damage claims. The items of information to be provided by the tenderer for the supply of the electrical equipment is too numerous to be listed and only a selection of the more important data is listed below. These can be divided into three main categories namely basic nameplate data, performance data and design data as well as informative data to check adaptability of the equipment to the existing system. Manufacturer's Name Voltage Taps Speed Limits Harmonics Flywheel Effect Short Circuit Capacities Withstand Voltages Short Circuit Rating Currents Impulse Voltage Power Factors Withstand Insulation Accuracy Class Efficiencies Ratios Weight Materials Resistances Dimensions Reactances Impedances Time Constants No Load and Load Losses Type of Cooling Temperature Ratings 5.9.5 Miscellaneous Works As mentioned in 5.8.1, the miscellaneous works could form pert of the main contracts and/or be tendered separately through local contractors. In any case, the cost schedules should be issued for completion to make a comparison easy. Items falling under the miscellaneous category are: 78 Indoor and outdoor lighting. Fire fighting systems. Heating. Ventilation. Furniture and appliances. Office equipment. Erection. Transportation. Insurance. The data sheets for the above items should request information from the tenderer such as: Manufacturer Power Requirement Type Controls Ratings Materials Capacity Weights Pressures Dimensions Voltage Power Factor 79 SECTION 6 BID EVALUATION 80 6. BID EVALUATION 6.1 Introduction The parallel evaluation of bids for medium speed four stroke and low speed two stroke diesel generating plant is usu- ally preceded by the following circumstances: * The prospective purchaser needs additional generating capacity to meet increasing loads and to maintain or im- prove the quality of service. * Preliminary planning has shown diesel generating units burning residual fuel to be the least cost of the various generating technologies suitable for the application. * A number of suppliers have been invited to compete for the contract to supply the required generating unit or units. The objective of the evaluating process is to select the bid which provides the necessary generating plant capacity with the required quality of service at the lowest cost. To achieve this objective we proceed with the following steps: * We check whether or not the alternatives being considered offer essentiallr the same quality of service to the pur- chaser (are we comparing apples with apples?). * The prices of alternatives are adjusted, where necessary, to account for any additional equipment that may be necessary to attain the required quality of service. O For each alternative we calculate the cost of producing the required energy for the expected lifetime of the plant. * If the life expectancy of the engines used in the various alternatives is different, we adjust the price to reflect this. The above evaluation steps may be broken into a series of small logical decisions. The process is further simplified if we recognize that there are certain essential requirements, 'musts', 81 and certain desirable items, 'wants', associated with the evalu- ation.l/ Failure to satisfy a 'must' results in disqualification of the bid. The 'wants' are assigned weights proportioned to their importance to the purchaser. We must consider the time value of money when deter- mining the total cost of owning, operating and maintaining each plant through its expected lifetime. Some costs are incurred at the time of purchase and others accrue annually throughout the life of the plant. The present value of each future cost is calculated prior to adding it to the initial cost. one way to calculate this life cycle cost is first to determine the expenditure in constant dollars 2/ for each year of the life of the plant, and then to calculate the cumulative pre- sent value of the resulting cost stream. A related technique is to take a 'snapshot' of one year's cost by using levelized values to cater for the present value of future costs. The results in both cases may be expressed as total cost for the life of the plant. (See Appendix C for an example of the two approaches applied to a hypothetical case.) Table 6-1 is a typical summary for a bid evaluation. The mandatory items are listed first. This table is not exhaustive and indeed should be modified to reflect the unique requirements of a purchaser. Some of the most frequently encountered issues are listed. 1/ See the Rational Manager by Charles H. Kepner and Benjamin B. Tregoe - McGraw-Hill Book Company. 2/ For economic comparison, inflation must be ignored. Escalation of costs should be shown if the cost of the item in question increases at a rate different from the average rate of inflation. 82 Table 6.1: Typical Evaluation Summary Sheet E V A L U A T I N G I T E M B I D S NUMBER DESCRIPTION A B 1 Engine operating experience. 2 Effective capacity requirement. 3 Basic warranty. 4 Minimum spare parts requirement. 5 Experience by supplier on similar projects. 6 Financial stability of engine manufacturer 7 Service facilities of supplier. 8 Commercial terms. 9 Tendered price of plant. 10 Equipment equalization. 11 Base price (adjusted for equipment equilization). 12 Price after adjustment for life expectancy. 13 Specific fuel consumption. 14 Generator losses. 1S Main power transformer losses. 16 Auxiliary power consumption. 17 Lubricating oil consumption. 18 Maintenance cost. 19 Mechanical design features. N 20 Engines similar to existing engines in plant. 21 Arrangements for training of staff. 22 Engine manufacturer as prime contractor. 23 Supplier's past performance. 24 Miscellaneous. TOTAL EVALUATED COST 83 We will emphasize a technique for quantitatively estimating the quality of service expected from the plant offered by a sup- plier. This aspect of the evaluation was often ignored in the past since the engines being compared exhibited very similar reliability characteristics. With the increasing use of poor quality residual fuel, it has become evident that some engines can burn this fuel more successfully than others. Consequently to ignore an estimation of reliability in the evaluation process is likely to lead to incorrect purchasing decisions. The discussion so far has been directed to the economic evaluations of bids. If financing offers are sought and are pertinent to the purchase decision, the cost of financing as implied by each offer should be determined separately and added to the costs obtained from the economic evaluation. The remainder of section 6 is devoted to suggesting methods of expressing the worth of the items listed in table 6-1. 6.2 Value of Reliability 6.2.1 General The reliability of a diesel plant has a significant effect on the cost of producing electricity. Three costs, related to reliability, which should be considered are: repair cost, re- serve cost, and replacement energy cost.l/ The repair cost associated with an unscheduled stop (breakdown) may be estimated by assessing the likely extent of damage and the cost of spare parts and labour for the resulting 1/ See Evaluating Reliability in Purchasing by Paul F. Albrecht - A Paper presented at the Pacific Coast Electrical Association Engineering and Operating Conference, Los Angeles, California, March 15-16, 1979. 84 repair. This is a subjective assessment unless it is based on a well documented operating history of the engine in question. Of greater importance are the reserve cost and replacement energy cost. Every generating unit included in a power system needs to have some portion of its capacity covered by a backup unit to cater for the time when it is being maintained or is defective. The percentage of its capacity required in reserve is a function of the time that it is unavailable for use. The cost of providing the backup generating capacity is the reserve cost. The reserve required also depends upon the amount of time that the new unit is required to run and the capability of exist- ing units to back it up. Reserva cost is therefore a function both of the characteristics of the new. unit and the characteristics of the existing system. it is usual for the reserve capacity of a base load unit to be provided by low capital cost units with relatively low efficiency. Alternatively in the case of an interconnected system the backup may be provided by energy purchases. The dif- ferential in cost between producing energy by the base load unit and its replacement is the replacement energy cost. In the con- text of residual fuel fired diesels in developing countries, there is almost always a replacement energy cost since the residual fuel fired engines are usually the base load units. The concept of effective capacity j/ helps us to quantify the reserve cost and in this special application, the parallel evaluation of low and medium speed diesels, the re- placement energy cost. The replacement energy cost is included since the use of the concept ensures that enouah plant of the same efficiency is provided to cover reserve requirements. 1/ See Effective Load Carrying Capability of Generating Units by L.L.Garver - IEEE Transactions of Power Apparatus and Systems, Vol. PAS-85, No. 8, August 1966. 65 The effective capacity of a generating unit is the amount by which the existing system load may be increased, without violating the terget reiiability level, after addition of the new unit to the system. We must emphasize that in planning or in bid evaluation the primary concern is the performance of the power system after the addition of a generating unit and not the per- formance of that unit in isolation. If the existing system is ignored during the decision to purchase a new unit, there is no assurance that the objective of the plant addition will be met. It is especially important that we consider the consequences of reliability in the comparison of medium speed four stroke and low speed two stroke engines, since there is evidence to suggest that there are significant Cifferences in the reliability of these engine types when burning residual fuel. We will show in the following paragraphs how we can estimate the number of units and capacity of either type of engine required to satisfy the effective capacity needs of a sys- tem. This is best done by first reviewing the generation expan- sion planning process. 6.2.2 Generation Expansion Planning When planning generation expansion, we try to develop a sequence of generating plant additions which for the least cost will provide a predetermined standard of service over the selected time period. The additions are chosen from the standard equipment lines of various manufacturers. The standard of service may be set to maintain or improve upon the service presently offered. It is becoming 86 more usual, however, to attempt to equate the incremental, cost of reliability with the cost to the economy of failing to supply the required energy.l1/ Once a target reliability level is established for the generating system, we select a number of technically feasible alternative expansion plans and test them to ensure that within reasonable limits they all provide the same quality of service. We then determine the total life cycle cost of each al- ternative and select the least cost option. The costs used at this stage are budgetary estimates based on past experirc. Deterministic methods are still used by some utilities and consultants to equate the quality of service pro- vided by alternatives. These methLods are based on the objective of maintaining a certain level of reservre generation in excess of the peak demand. The three most popular are: * Reserve equal to various combinations of units on the system. For example, the largest and smallest, the two largest, etc. ' Percent reserve based on the peak demand. * Percent reserve based on the installed capacity. Despite the advantages that these methods are easily understood and explained to non-technical people, there are two serious disadvantages, especially for small utilities using diesel plant: * The deterministic methods are subjective and results vary depending upon which criterion is chosen. * They do not take into account the fact that the relia- bility of diesel engines may vary considerably depending 1/ Set for example The Economics of Power System Reliability and Planning by Mohan Munasinghe - A World Bank Research Publication - John Hopkins. 87 upon their type (two stroke low speed vs. four stroke medium speed) and the quality of fuel burned. The alternative to the above deterministic methods is the use of probabilistic methods whose main disadvantages are: * They are difficult to explain to non-technical people. * They require a good historical data base to facilitate the estimation of the various probabilities required as input data. The most used of the probabilistic indices is the Loss of Load Expectation (LOLE) 1/ often referred to Ps the Loss of Load Probability (LOLP). The calculation of this parameter involves the convolution of two mathematical models, a load model and a generating system capacity model. The load model is a table consisting of the forecasted system loads and the probability of their occurence, usually on a daily basis. The capacity model is a tabulation of probabilities for the availability of various levels of generating capacity. Allowance is made for those generating units which are unavailable due either to planned maintenance or to random forced outages. The Loss of Load Expectation is the expected number of days per year that the available capacity is less than the daily peak load. It is calculated as the sum of the probabilities of generation shortage for each daily peak over the period. The method for using the LOLE index to equate alternatives prior to Life cycle costing involves plotting a curve of the system risk level (ZOLE in days/year) against system peak load. If this is done for the existing system, and for the system 1/ See Reliability Indexes for Power Systems - EPRI Report No. EPRI EL-1773, March 1981 - Prepared by the General Electric Company, Schenectady, New York. with various alternatives added, we can determine the benefit of each addition. The benefit to the system of the additional unit is the effective capacity of that unit (see figure 6.2). vs em (AGWiA. IETgR hl0IMON1 _AR 44W1 OF R.* lw UNIT 0 40 so so To LO" MEGAWATTS Figure 6.2:. Effective_Capacity of Added Unit The effective capacity of the new unit depends' upon its forced outage rate, its capacity relative to the capa- city of the system and the forced outage rates an-d capacities of t.he units comprising the system prior to the addition of the new generation.. The effective capacity is usually less than the nameplate capacity. 89 Garver 1/ derived an equation which may be used to estimate the effective capacity of a generating unit addition t.o a system without computing the new risk curve. He defined a parameter 'm' (with units of megawatts) which contains the infor- mation we need about the existing system. The parameter 'm' is defined as the amount by which the system reserve must change to change the risk level 'e' times where 'e' is the base of the natural logarithm. The equation for effective capacity is: c* = c - m ln {(l-r) + r ec/m} .............,(6.1) where c* is the effective capacity of the added generating plant, in megawatts. c is the site rated capacity of the new unit, in megawatts. r - is the forced outage rate of the new unit expressed in per unit. m - is a parameter defining the reliability characteristics of the existing system (with units of megawatts). The value of 'm' may be derived from the slope of the risk level - reserve curve (see Appendix A for details of the calculation of 'm'). The forced outage rate 'r' is the probability of the existence of a forced outage of the unit. A good estimate for a base load unit is given by the equation: r = FOE . , (6.2) SH + FOR where FOR - is the total forced outage hours over the period (usually a year). SR - is service hours for the period. S/ See Effective Load Carrying Capability of Generating Units by L.L. Garver - IEEE Transactions on Power Apparatus and Sys- tems, Vol. PAS-85, No. 8, August 1966. 90 6.2.3 Application of 'Effective Capacity' to Bid Evaluation The concepts of the system parameter 'm' and the effective capacity c*, outlined in the preceding paragraph, are powerful tools for the bid evaluation process. The para- meter 'm' is a vehicle by which the bidder can be informed of the reliability characteristics of the existing system. The effective capacity c* indicates the value, to the purchaser, of the offered plant. To enable bids to be compared on the basis of effective capacity, potential suppliers must be provided with the effective capacity requirement and the value of m for the system. In addition they must be given the forced outage rates for various plant types and practical limits relating to the number of capacity of units that may be used to satisfy the effective capacity requirement. The use of effective capacity for bidding is best explained by an example. The system supplying an island has an installed capacity of 94 MW consisting of a mix of diesel, gas turbine and steam plant. The load carrying capability of the existing system at an LOLE of one day per year is 44 MW (see figure 6-3). The value of the parameter 'm' for the system is 6.2 MW (see Appendix A for method of calculating 'm'). The effective capacity addition required is 20 MN * 1 MW to raise the load carrying capability of the sys- tem, at ap LOLE of one day/year, to 64 MW. 91 to I IIm -nR ~ ~ ~~~a WMu m 10M g OUIA SY T n IUIM _A / "44MW AM Figure 6.3: Required Effective Capacity Two possible options for a supplier to meet the required effective capacity could be: OPTION 1 Low speed two stroke diesel generators with a short time peaking capacity of 12 MW each. Forced outage rate r - 0.05 per unit. V/ 1/ The forced outage rates used here are for the purpose of demonstrating the technique. Actual values should be assigned by the engineer preparing the specification based on the best available data. 92 OPTION 2 Medium speed four stroke diesel generators with a short time peaking capacity of 7 MW each. Forced outage rate r 0.18 per unit. There are of course many other possible solutions, for example, using smaller low speed diesels or larger medium speed diesels, but the above are adequate to demonstrate the technique. For the low speed diesel option (option 1), when we add the first unit the effective capacity, using equation 6.1, is: c* 12 - 6.2 ln {(1-0.05) + 0.05 el2/6-2} , 10.4 MW We now estimate the new value of 'm' for the system after the addition of the first unit, using the approximate equation: mnew mold + rc (6,3) where * is the forced outage rate of the unit added * is the capacity (nameplate peaking) of the unit added In this case, innew 6.2 + 0.05 x 12 2 6.8 The effective capacity of the second unit is now calculated to be: c* = 12 - 6.8 ln {(1-0.05) + 0.05 e12/6 .8 , 10.5 NW The totaL effective capacity added is therefore: 10.4 + L0.5 - 20.9 MW 93 Thus a nameplate peaking capacity of 24 MW of the low speed two stroke diesel plant is required to obtain an effective capacity of 20.9 MW on this power system. The process of adding the two units is shown in figure 6.4. The curves used in figure 6.4 are those generated by using a computer program, and would not normally be available for bid evaluation. There is close agreement between the actual values shown by these curves and the values obtained using the approximate method above. IWL)pe r _s _s su Figure 6.4: Sequence of Unit Additions 94 We now estimate the capacity (nameplate peaking) of medium speed four stroke diesel required to supply the re- quired effective capacity of 20 MW. Taking Option 2 we have after addition of the first unit: cl* = 7 - 6.2 ln {(1-0.18) + (0.18)e7/6.2} Using equation 6.3 to estimate the new 'm' of the system we have: mnew 6.2 + 0.18 x 7 " 7.5 The effective capacity of the second unit added is: a2* = 7 - 7.5 ln {(1-0.18) + (0.18)e7/7.5 - 5.2 MW The new 'mi' after this addition is: Mnew 7.5 + 0.18 x 7 8.8 The third unit added has an effective capacity of: c3* = 7 - 8.8 ln {(1-0.18) + (0.18 e 7/8.8 5 5.3 MW After adding a total of 21 MW (nameplate capacity) we have achieved an effective capacity of only 15.5 MW. A fourth unit is therefore required. The new system 'm' is given by: mnnew = 8.8 + 0.18 x 7 a 10 c4* 7 - 10 ln t((-0.18) + 0.18 e7/10 5.3 MN The total effective capacity is thus 20.8 MW and it requires the addition of 28 MW (nameplate peaking capacity) of medium speed four stroke plant. 95 Assume that the cost of the low speed plant is U.S. $1 200.00 per kW and the medium speed plant is t.S. $700.00 per kW based on the nameplate maximum continuous site rating. Assume also that the short time peaking rating is 10% over the maximum continuous rating. Then the cost of the low speed plant is $26 160 000 and that of the medium speed $17 920 000. The base price thus obtained is further adjusted by various weighting factors including the expected useful life span of the plant. For practical purposes, limits must be put on the maximum number of individual units allowed. In the example shown above more than four units wou.d probably have been un- acceptable because of the logistics of dealing with large num- bers of valves and pistons. It is also usually des.Lable to specify, in the case of multiple units, that they should all be of the same type and size. The results of the approximate effective capacity calculations are less accurate in situations where the generating unit being added has a high forced outage rate or is large com- pared to the existing system. Appendix A shows a method of modi- fying equation (6.1) to provide acceptable results for these situations. 6.3 Fuel Consumption, Generator Losses, and Transformer Losses 6.3.1 General Considering the high cost of fuel, both present and predicted, small reductions in fuel consumption or electrical losses can result in savings which, over the useful life of a plant are significant relative to its capital cost. For example, 96 a tpn percent improvement in the fuel consumption of a diesel generating unit, from say 220 grams/kWh to 200 grams/kWh, will result in an annual saving of U.S. $264 000.00. (Based on a 10 MW unit run for 7000 hrs. per year on fuel costing U.S. $30.00 per barrel). Even if the capital cost of the plan- is as high as U.S. $1200 per kilowatt, the saving over five years at at discount rate of 12% is equivalent to $95.00 per kilowatt, about 8% of the capital cost. Looking at this another way, we can justify spending up to 8% more at the time of purchase to achieve a 10% reduction in fuel consumption. Significant savings can also be realized by the use of a more efficient main power transformer 1/. A reduction of the losses through the transformer by as little as 0.07% will result in savings, over a five year period, as high as 15% of its capital cost. It is clear therefore that fuel consumption and energy losses in a plant warrant careful attention in the evaluation of bids. The flow of energy through a typical diesel generating unit is shown, in simplified form in figure 6-5. It is the desire of the purchaser to maximize the quantity of electrical energy (the product) out at © for a given quantity of fuel (the raw material) in at®A . Steam or hiot water is a byproduct for which there may be a market. By far the major source of energy losses is the engine. About 60% of the energy entering at © is unavailable for doing work. This is accounted for in the bid evaluation by putting a value on fuel consumption. The other items which are usually quantified are generator losses, energy consumed by the 1/ A power transformer is not always included if there is spare transformer capacity at an existing installation. 97 auxiliaries, and losses in the main power transformer. Losses in fuel pre-processing (® to © ), which are as high as 3% of purchased fuel, are not usually accounted for since these are similar for most engines. They may be reduced by the use of an incinerator shown in figure 6-5. The incinerator also solves the environmental problem of sludge disposal. Exhaust Gas Hotm Mor } R¢||AuzObie Hat Water Ai Sa TreatmenE Le H~~~~~~eat Losses, Electrical Losses, Electrical Losses Sludge, Mechanical Lossess, Mechanical Losses Vbter Etanraa ngine Oriven Auxiliaries -~~~~~~~~~~~~OM #11s -I C n~~~~~~~~~~~~~~~~Ta =*am*_h _OTE' MUSS NSA? UtCOSY Figure 6.5: Typical Plant Block Diagram To account for the above elements of efficiency in bid evaluation, we must determine the differential life cycle cost,, for each alternative, relative to a reference set of efficiencies. These are arbitrary, and relative values are used instead of absolute values to keep the numbers workable. In the comparison of bids it is the relative values that are significant. The differential costs are then added to the bid prices. 98 6.3.2 Value of Efficiency Since the highest losses occur in the engine, we will outline the methods of determining the monetary value of relative efficiency by referring to the calculation for the engine. The procedure is similar for the generator, trainsformer, etc. First, a note about units of measurement. The fuel consumption of a generating unit is quoted usually as a specific fuel oil consumption. (SPOC) with units of grams per kilo- watt-hour or pounds per kilowatt-hour. It may also be qucted as a heat rate with units of Btu per kilowatt-hour or kilojoules per kilowatt-hour. Before alternatives are compared using any of the above it is important to ensure that the ambient conditions and the points in the process at which measurements are taken are defined. If the heat rate is being used it is also necessary to defile the calorific value of the fuel. These details are dealt with In section 7. We will use grams/kWh for the SFOC in the following discussion. We first choose a reference SFOC, which is near to the values expected, say 210 grams/kWh. The annual differential fuel cost for each alternative is given by: C 2 (E1- o x U x F .(6.4) Ei is the SFOC of the ith alternative (grams/kWh) Bo is the reference SPOC (grams/kWh) U is the energy generated annually (kWh/yr) F is the fuel cost ($/gram) C is positive or negative depending upon whether the alter- native considered has a higher or lower fuel consumption than the reference fuel consumption of 200 g/kWh 99 Since the heat rate curve of a diesel is not flat, (see figure 6-6), Ei must be defined as a weighted average SFOC to account for differences in fuel consumption at various load points. FUEL----- -- CONSUMPTION - - . - - - ($rmm/ kwh.) too -I 20 50 68 100 LOAD % Figure 6.6: Typical Heat Rate Curve The weighting depends upon the power system in which the unit will be used, especially on the load factor of the system. A typical weighting is: Ei X la50% + 4E75% + 4E1% ...............1. (6-5) 9 The energy production depends upon the load factor of the system, the availability of the unit and its ranking in the dispatch list. For a baseload unit, 7000 hours per year at 85 to 90 percent of full load is -not unreasonable. The number of hours per year may be reduced toward the end of the economic life of the unit. The cost of fuel F which is expressed in constant dollars should be based on the world market price and must be free 100 of all taxes and subsidies to reflect the true economic cost. Fuel prices should be escalated only by the amount by which the price is expected to increase above the average inflation level. (i.e. only escalation in real terms is allowed). Since some residual fuel fired engines require distillate fuel for startup and shutdown, the percentage of distillate fuel required over the year should be used to weight the cost of fuel. Having determined the differential fuel cost for each year of the economic life of the plant, we need to determine the cumulative present value of the differential, given by: n Cumulative Present Value E Cr Dr .........(6.6) r=l r r where Cr is the differential fuel cost in year r. Dr is the discount factor for year r at the chosen discount rate. If we assume the annual production of energy to be constant we simply multiply the annual differential fuel cost by the present worth of an annuity factor 1/ for the appropriate number of years. Escalation (in real terms) of the fuel is accommodated by varying the present worth factor. For example, if the annual differential cost is Cr the economic life of the plant is 15 years and the discount rate is 12%, the cumulative present worth of the differential fuel cost is 6.8 x Cr. / See Compounding and Discounting Tables for Project Evaluation - A World Bank Publication, Distributed by the Johns Hopkins press. 101 6.4 Lubricating Oil Consumption 6.4.1 General Lubricating oil is consumed in two ways by an engine. ; is burned in the cylinders; it is contaminated or loses i%-. efticacy and needs to be replaced. There are differ- ences i, r.A- design of four stroke medium speed and two stroke low speed eng:ies which affect the rate of use of lubricating oil. In general, the four stroke engine, in the capacity range of inter- est, burns about 1.4 g/kWh, and the two stroke between 0.6 and 0.8 g/kWh. We recommend that the lube oil burned be included in the bid evaluation as a fixed amount based on experience. The amount is controllable, in the case of the low speed engine, and the consequence of inadequate lubrication is increased wear, which is not readily detectable during acceptance testing. The relative frequency of complete oil changes and quality of oil required are often ignored. They are both affected by the design of the two types of engine. These differences and their consequences are outlined in the following paragraphs. 6.4.2 Effect of Engine Design on Lubricating Oil Consumption Most two stroke low speed engines are designed with a crosshead bearing which facilitates isolation of the combustion spaces from the crankcase by a diaphragm. Two lubricating oil circuits are used, one for cylinder lubrication and one for crank- case lubrication. Oil is injected into the cylinder for lubrication, cooling and to ner.tralize the acid products of combustion which otherwise would cause corrosion. This oil must have a high TBN 102 number (measure of basicity) especially if fuels high in sulphur are burned. The oil injected into the cylinder is burned, at a rate which is controllable, and needs to be continually replaced. If sufficient oil is not injected, high wear rates result. The oil in the crankcase, isolated from the com- bustion process, is consumed at a very low rate and will last for long periods, as long as 40 000 hours. Since its only function is lubrication, it is a less expensive grade of oil than that used for cylinder lubrication. The combustion spaces of the four stroke medium speed engine are not effectively isolated from the crankcase. Consequently, the entire charge of oil is contaminated by the pro- ducts of combustion. The entire charge must be high quality oil with a relatively high TBN number (not usually as high as the cylin- der oil for the two stroke). There is no direct control over the amount of lubricating oil burned, although some manufacturers inject oil directly into the cylinder rather than relying on splash lubri- cation. The oil, if untreated, needs to be changed every 4 000 to 5 000 hours. 6.4.3 Indicators of the Need for a Change of Oil The most common conditions which signal the need for a change of oil are: * The presence of excessive solids. * The loss of its detergent properties. * The presence of acid. * Water contamination causing it to emulsify. 103 The above are detected by analysis of the oil which should be done at regular intervals. The consequences of ignoring the above signals vary between increased wear of the engine and catastrophic breakdown. 6.4.4 Measures to Increase the Life of Lubricating Oil The presence of excessive solids is usually the condition which occurs first. The li4e of a charge of oil in a medium speed engine can be increased from the average 4 000 to 5 000 hours to as much as 10 000 hours by proper purification. An adequately sized centrifuge along with filters will remove solids and water and thus increase the useful life of the oil. 6.4.5 Effect of Lubricating Oil Consumption on Puel Consumption The lubricating oil consumed in the cylinder re- places an almost equivalent amount of fuel. The engineer super- vising a specific fuel oil consumption test should be aware of this and should ensure that excessive cylinder lubricating oil is not being injected to enhance the apparent efficiency of the engine. This is especially important if the specific fuel oil consumption has been guaranteed within close tolerances. 6.4.6 Value of Lubricating Oil Consumption in Bid Evaluation It iiay be counterproductive to require a supplier to guarantee lube oil consumption (oil burned in cylinder) since, in the case of the low speed engine, it is possible to obtain low values at the expense of future wear. The amount consumed should 104 be checked during acceptance testing to ensure that it is not excessive. A suitable test procedure is described in ISO Standard 3046. The bid evaluation should include the relative cost of oil required for complete oil changes, due to contamina- tion, over the life of the plant. It is best to base this assess- ment on previous experience and take into account the quality of the lubricating oil purification plant included in the tender. 6.5 Maintenance Cost 6.5.1 General For the purpose of bid evaluation, we are con- cerned with the relative cost of maintenance associated with the various plants offered. The absolute cost of maintenance has been as low as 4% and as high as 30% of the total annual cost of pro- ducing electricity using dies'l plant. Although much .of the spread in cost is caused by factors relating to the location of the plant, there is likely to be a significant spread between alternatives offered for a specific application. It is difficult to accurately predict the mainten- ance cost for a plant at the time of bid evaluation. Supplier's claims are not verifiable at this time, and therefore are useless for evaluation. It would appear.that the best estimate of mainten- ance cost, is the cost of a maintenance contract with-the supplier. A maintenance contract, which should be covered by a performance bond, reflects the maintenance cost to which the supplier is willing to commvt himself, and is a fixed cost to the purchaser for the duration of the contract. 105 In the event that it is impossible to obtain a maintenance contract, relative maintenance cost may be estimated based on historical data for similar installations. 6.5.2 Factors Influencing Cost of Maintenance The maintenance cost consists of labour, super- vision and spare part costs. The cost of spare parts is set by the manufacturer and is influenced by the location of the plant. The labour cost depends upon the location of the plant and the level of skill available. For a given location and a given quality offered, the major factors influencing the cost of maintenance are: * Design of the engine (quality of lubrication, materials used, maintainability, etc.) * The number of exhaust valves. * The number of injectors. * Time between major overhauls. The number of injectors and exhaust valves (pro- viding exhaust valves are used) is proportional to the number of cylinders. 6.5.3 Maintenance Cost from Maintenance Contract A maintenance contract usually consists of pro- visions for the supply of spare parts and maintenance supervision for a period of three to five years. The annual cost of local labour may be estimated and added to the annual cost of the contract to yield the total-cost of maintenance. It is essential that the period of the maintenance contract quoted be long enough to cover at least one major overhaul. 106 The main advantage of using a maintenance con- tract to assess maintenance cost is that it includes the cost of repairs resulting from breakdown. 6.5.4 Maintenance Cost Based on Number of Components A rough indication of the cost of maintenance may be obtained by comparing the number of components with high repair requirements. If it is necessary to use this approach, a points system is recommended, where for example, an engine with few exhaust valves is given a high rating and one with many for the same power output a low rating. The final points accumulated may then be used to weight the bid price. 6.6 Arrangements for Training Training arrangements are best treated in a qualitative way in the bid evaluation. Attempts to identify training costs separately and to use them in the evaluation may be counter- productive since there is no simple way of measuring the effect- iveness of training provided. Ideally we would prefer a supplier to train main- tenance and operating staff and to certify these people as being competent to perform their job function. It would be difficult, however, for the supplier to bind himself to such an arrangement since he has no control over the educational level and aptitude of the personnel provided for training. On the other hand, if we require the supplier, in a competitive situation, to quote a price per hour of training supplied, we may not obtain the ser- vices of. his most competent (and usually highest priced) people. 107 A possible approach to evaluating training, therefore, is simply to ensure that the bid includes training arrangements within some broad outlines. The outlines, provided in the spec- ification, should include a list of the job functions and number of people to be trained, and the minmimum number of hours of training required. The training offered should have a practical bias. Usually it is provided in the manufacturer's works. It is imperative that the maintenance personnel assist in the final assembly of the engine, and the operating personnel in the initial runs. This gives them the opportunity to become familiar with the peculiarities of the specific engine. Finally, training should not be confused with the mainten- ance and operating assistance contract. If the supplier provides sup rvisory personnel under such a contract, their primary fun- ction is to ensure proper operation and maintenance of the engine. Any training which may occur in this process is incidental. The purchaser's operating and maintenance staff should be adequately trained before the plant is put into commercial operation. 6.7 Mechanical Design Features 6.7.1 General In a bid evaluation, the main distinction between the quality of service provided by medium four stroke engines and low speed two stroke engines is made by comparing the effective capacity of each when added to the existing power system (see section 6.3.2). We use a mean forced outage rate derived from historical data of a group of each of the two generic engine types for the calculation of the effective capacity. Consequently, the calculation does not account for differences in the expected performance of engines within each group. 108 By weighting each bid price with points awarded on the basis of various mechanical design features, we are able to account for some of these differences, and thus refine our evaluation. The design features chosen -1 those which have the greatest effect on the ability of the plaict to operate reliably using poor quality residual fuel. We are therefore able to give due credit to manufacturers who, by virtue of superior design and development, have overcome some of the problems of using residual fuel. In the following paragraphs we will identify some of the more important design features, and suggest a method of awarding points. Relative to the overall bid evaluation, the adjustments for mechanical design features should change the bid price by a maximum of about 5%. A purchaser may change this limit, at the time of preparing the specification, if the value of these mechanical design features is perceived to be higher or lower than 5% of the overall plant price. 6.7.2 Mechanical Design Evaluation Data The engine data (table 6-7) should be stated at the maximum continuous rating of the engine for the site condi- tions specified. As can be seen from the evaluation factors, certain items influence performance and engine service life more than others. Since there is continuous engine development work in progress, it may be necessary to change the emphasis on various design features as experience dictates. The best reference for assigning evaluation factors is an identical engine with a good performance record under similar environmental conditions and burning simil.r fuel. 109 Although the performance of an engine is dic- tated by a complex interrelationship of the design parameters listed, a simple weighting system based on the individual para- meters will yield adequate indications of the quality of the engine. Table 6.7: Mechanical Design Evaluation Data Evaluation Evaluation Engine Data Factor Method Exhaust valve seat or valve port metal temperature 0 to 70 A Brake mean effective pressure 0 to 60 A Mean piston speed 0 to 50 A Excess (continuous) brake horse- power over net brake horsepower required to maintain maximum continuous power at generator terminals 0 to 40 A Fuel inJection pump pressure 0 to 30 A Cylinder arrangement (in-line or Vee) 0 to20 B 6.7.3 Evaluation Methodology METHOD A: The evaluation factor is assigned according to the range of values given for the various engines offered. The engine with the highest value of the parameter considered would be awarded zero and that with the lowest, the maximum evaluation factor listed. Those engines between the high and low would be pro-rated. For example, if we have four tenders with mean pis- 110 ton speeds of 6.3, 7.8, 8.0, and 8,2 meters per second respect- ively, the award of evaluation factors would be: Piston Speed Evaluation (mJs) Factor 6.3 50 7.8 11 8.0 5 8.2 0 METHOD B: In-line engines will be awarded 20 points and Vee engines zero. This reflects the simplicity and ease of mainten- ance inherent in the in-line engine design. After the points are awarded for each engine, they would be.expressed as a per unit of tnie maximum number of points possible and applied to the portion of the purchase price being weighted. The resulting number is subtracted from the base price. For example, if an engine rated a total of 200 points out cof 270, or 0.74 per unit and if 5% of the base price of $6 000 000.00 were to be adjusted, then the adjustment is $(0.74 x 0.05 x 6 000 000) - $222 000.00. This value of $222 000.00 is the worth of a superior engine design to the purchaser and is sub- tracted from the baseprice of $6 000 000.00 prior to comparison of the bids. 6.8 Equipment Equalization The equipment equalization portion of the bid evaluation is used to adjust the bids to reflect departures from the supply of auxiliary equipment listed in the specification. The prices used for this equa' ization should be those quoted by the supplier, and in cases where a separate price is not quoted, a reasonable price may be assigned by the evaluator. ill The equalization is done prior to other bid evaluation adjustments. It is applied to the total price of the offered package. 6.9 Prime Contractor for 'Turnkey' Packase Since the engine is the most complex and expensive part of the entire power plant, it is usually advantageous to have the engine manufacturer as the leader of the group putting together a 'turnkey' package. Response tc queries and attention to pro- blems with the engine are usually faster and the supplier has an interest in the long term performance of the plant. The value, to the purchaser, of having the engine manu- facturer as leader varies from case to case, but is unlikely to exceed one percent of the bid price. The assigned value is subtracted from the bid price in those cases where the engine manufacturer is leader. 6.10 Similarity to Existing Engines It is desirable where possible to avoid mixing engine types in the same plant. Maintenance and operating personnel who have become familiar with one type of engine often make mistakes if another type of engine is added to the same plant. An adjustment should be made to the bid price in favor of plant which is similar to that existing. 6.11 Supplier's Past Performance A supplier who responds quickly and attends to the needs of a prichaser competently can save the purchaser time and money in the execution of a contract. Such a supplier should be re- 112 warded in the bid evaluation. Some of the marks of a good supplier are: * Accurate pricing of bid. * Delivery on schedule. * Quick and efficient response to reqvests for modifications. * Easy and amicable settlement of contractural differences. * Good communication. * Clear and precise drawings and manuals. * Interest in communicating latest technological developments to the purchaser. Benefits for the above can be awarded only if a record of previous dealings with the supplier has been kept. Some consultants, having dealt with a wide cross section of the suppliers, can pro- vide a reliable comparison. l/ The value of the supplier's performance is relatively small in the overall evaluation and should usually affect only about one to two percent of the bid price. 6.12 Engine Operating Experience 6.12.1 General We must be cautious when selecting an engine for applications in which unreliable performance would be dis- astrous, such as for power generation in a developing country. The best indicator of whether or not an engine will perform reliably in a proposed application is the operating history of identical engines working under the same conditions. Another 1/ See The Supplier's Evaluation by Charles Hendrickson, Arizona Public Service Company - Transmission and Distribution, March 1980. 113 indicator of reliability, commonly presented by suppliers, is the result of development testing. These results are inadequate for predicting reliability mainly because all conditions in the field and their complex interrelationships cannot be duplicated in the laboratory. Prototypes 1/ therefore are usually unacceptable, and verifiable operating experience is a mandatory requirement in the evaluation of bids. Only in extenuating circumstances should a prototype be considered, and then only with insured guarantees from the supplier, including compensation for loss of production due to engine failure. To check if the experience presented in support of a tendered engine is adequate, an evaluator must visit the plants cited as references and examine them with reference to the following: 3 A definition of reliable operation. X A definition of allowable differences between the design of the tendered engine and reference engines. * A definition of allowable variations between the pro- jected operating conditions of the proposed engine and those of the reference engines. we will outline the considerations leading up to the above definitions in the following paragraphs. 6.12.2 Reliable Operation We must have some benchmark against which we compare the performance of an engine presented as a reference 1/ Prototypes in this context include engines which have been dependable in the past, but are tendered with a critical design change (e.g. an increase in the bmep, or the use of residual fuel for the first time). However, since rapid developments in engine design are occuring some flexibility in the definition of prototypes may be required. 114 by the supplier. The benchmark must be set to reflect the average performance of the generic type of engine under consideration, since our planning is done using mean statistical values. The implication is that if the engine being considered has performed at least as well as the mean of the group, the performance of the proposed engine is likely to be similar and thus conform to the results predicted by the expansion planning study which trig- gered the purchase. To set the benchmark for assessing reliability or the quality of service provided by the reference engines we must specify: - The number of hours of operation of the engine. * The elapsed time over which the operating hours were accrued. * The loads at which the engine operated. * The total energy production. * The number of outages experienced. * The maxim-mm permissible outage time for a single incident (this defines the magnitude of incidents). * The availability of the engine. * The forced outage rate of the engine (probability of existence of an outage state). All of the above parameters which should be included in the spe- cifications, must be reasonable. The measurements of reliability: number of outages, etc., should be set about the mean for the type of engine considered. For example, a survey 1/ of residual fuel fired medium speed four stroke engines in developing countries yielded a mean availability of 73%. To require demonstration of availabilities significantly higher would be unreasonable and would severely circumscribe the available pool of bidders. 1/ See Diesel Plant Performance Study - prepared by C I Power Services Inc. for the World Bank, August 1980. 115 6.12.3 Differences in Engines It is unlikely that the engine tendered will be identical to those listed as references. We must ensure that any variations are those which have no potential to affect the inherent reliability of the engine. Permissible variations are subject to the judgement of the engineer and must be included in the specification. To facilitate this control two things must be done. First we must classify design variations according to function. Second, we must establish a coding system to identify criteria for the acceptability of variations. The following ex- ample illustrates both of these steps. Three categories for acceptability of change are: A - any variation is acceptable provided it does not cause deviations from the functional requirements. B - a variation is acceptable provided it has the approval of the engineer. C - no variations are permissible. A possible functional classification is as follows: DESIGN CONSTRAINTS ACCEPTABILITY OF VARIATION bmep C Rotational Speed C Number of Cylinders C Bore C Stroke C 116 ACCEPTABILITY OF VARIATION DESIGN DETAILS - physical dimensions, materials and methods of fabrication for: Bedplate C Box frame C Cylinder Block (configuration: Vee vs. in-line) c Cylinder liners B Cylinder heads c Foundation A Crankshaft C Bearings B Pistons c Piston rings B Connecting rods C Valves and associated equipment B Fuel System B Cooling System A LubricatiLn System A Air intake and turbocharging A system Exhaust gas system A Instrumentation B Controls A 6.12.4 Differences in Operating Conditions Various operating conditions iffect the per- formance and reliability of an engine. If the conditions at the proposed plant are not identical to those at the reference plant, we must be aware of th%e implications of each variation to judge whether or not the experience proffered is valid. The most significant operating conditions are: 117 * Fuel quality. * Load pattern. * Ambient conditions (temperature, pressure and humidity). * Presence of airborne contaminants (e.g. sand or salt, salt spray). * Management of the plant. It is desirable that there be close similarities between the fuel proposed in the new plant and that used in the reference plant. The majority of the problems encountered in oper- ating residual fuel fired engines are caused by properties of the fuel and contaminants associated with it. Currently fuel treat- ment techniques, namely filtering, centrifuging and homogenizing, do not remove vanadium, the chief contributor to valve failures. The vanadium is associated with the fuel as an organometallic compound and thus cannot be removed by mechanical means. As a result the engine must be capable of reliable operation in the presence of vanadium contamination, and any other properties of the fuel which cannot be modified by the treatment process. The fuel ed must therefore be similar, so that we may judge the chances of success of a proposed engine based on the behaviour of the reference engines. The load cycles applied to the engine are impor- tant. The results of loading, however, are predictable and may be accommodated once they are recognized. For example, an engine used for peaking duty is likely to suffer from problems associated with part load operation and frequent thermal cycling. Part load operation promotes incomplete combustion which among other things causes coking and a buildup of asphaltenes. Thermal cycling causes problems with joints, especially in the exhaust system. If we are purchasing an engine for base loading, and the reference engine was used for peaking, we would ignore these problems since they would be unlikely to show up in base load operation. 118 Ambient conditions and the presence of air- borne contaminants are catered for by derating, changing cooling requirements and filtering combustion air as applicable. These conditions therefore need not be identical in the proposed and reference plants. The quality of plant management is a variable which must be accounted for when considering reference engines. Ideally we would like to inspect a reference plant where the calibre of operating and maintenance is similar to that expected in the proposed plant. If this is not possible,. an experienced evaluator can assess the possible contribution of operation and maintenance practices to the performance of the reference plant. 6.12.5 Procedure for Investigating Experience The evaluator must visit and rigorously examine the operating history of at least one of the reference plants list- ed by each potential supplier. A standard form should be used to ensure a systematic investigation of the relevant parameters. To ensure that the information collected remains confidential and is without bias it is essential that no supplier's representatives be present. The evaluator should first establish whether or not the plant visited satisfies the criteria for a reference. Then he should determine the degree of success of the operation. If either of these is not satisfactory, the other plants listed by the supplier should be closely examined. Finally, every effort should be made to minimize the inconvenience to the personnel of the reference plants, since visits for confirmation of experience disturb their normal oper- ations. 119 6.12.6 Marine Versus Land Based Experience Suppliers whose engines lack adequate oper- ating experience in land based applications often cite shipboard experience to demonstrate dependability. There is some difficulty in using this experience directly s.nce the definition of relia- bility for power generation is different to that for ship pro- pulsion. Although more judgement is required on the part of the evaluator, the experience is relevant and may be used. The two conditions which must be similar for the proposed and reference engines are the fuel used and the loading conditions. The require- ment for similarity of fuel is as stringent as for comparing two land based plants. With reference to loading, a good rule of thumb is that the operation of the engine on an oceangoing vessel is similar to a base load plant, whereas that of a ship doing short runs and frequent manoeuvering is similar to a peaking plant. 6.13 Effective Capacity Requirement The specification will require suppliers to offer plant to yield an effective capacity (see section 3.3.2) within a given narrow range. This requirement is mandatory on the lower limit of the range given. For example, if an effective capacity of 10 t 1 MW is required, anything less tnan 9 MW will not satisfy the requirements upon which the economic decision to buy plant is based. Offers over the top limit should be considered only if the total evaluated project prie's is the least of those tendered. Although there is economy of scale as plant size increases, we must satisfy only the needs of the system. Thus we cannot con- sider-a plant larger than the one we requira simply because it is cheaper on a per kilowatt basis. 120 6.14 Basic Warranty Each bid must include a warranty which offers at least the level of protection commonly offered by suppliers. This is a mandatory requirement, and any bid which excludes a warranty should be rejected. Most suppliers offer a warranty of twelve months dur- ation which covers the replacement of parts which fail because of defective materials or workmanship. Secondary damage is usually excluded. For example, if a valve breaks and fragments go through the turbocharger wrecking it, the supplier's responsibility, as defined by the warranty, stops at replacing the valve. Good suppliers usually go beyond this and offer concessions to assist in correcting the secondary damage. If in the bid evaluation it is noted that a supplier has offered more than the basic warranty coverage, the value of the extra coverage should be assessed and a benefit given. One way of assessing the value of extra coverage is to use the cost of insurance to cover the incidents which are included in excess of the normal warranty. In cases where a maintenance contract is included, we must be careful to determine if there is overlap with the war- ranty. This is necessary to ensure that all potential failures are covered. 6.15 Spare Parts The inclusion of spare parts in a bid is usually a mandatory requirement. There are two main reasons for this re- quiremenit. 17irst, is: ensures that spare parts are available on site for the initial period of operation (three to five years). In this period a pattern of use can be established to guide further 121 purchases. Second, it fixes the price of spares for this period and establishes a benchmark for future negotiations if the supplier attempts to increase the price of spares unreasonably. There are a few practical details that must be attended to. The minimum quantity of spares required should be listed in the specification with allowance for suggestions by the supplier. The minimum amounts, for the engine, may be based on the require- ments of a licencing authority such as the American Bureau of Shipping, Norske Veritas or Lloyd's Registry of Shipping. If the amounts suggested by the supplier differ signi- ficantly from the minimum specified, some equalization may be necessary prior to comparing bids. It is important that a complete list of spares included in the bid be retained. It should be used to audit the spares on site at the time of signing the take-over certificate. Such an audit is necessary to ensure that the spares supplied have not been used up by the supplier during the engine commissioning process. If a maintenance contract is included, spare parts are usually included along with supervision of operation and main- tenance. 6.16 Experience by Supplier on Similar Projects The mandatory experience requirement in this case re- lates to the ability of the supplier to manage a complex project. The experience need not have been acquired constructing a diesel plant although this is desirable. Experience gained in the ad- ministration of projects of similar or greater value and complex- ity is acceptable. The supplier must of course list past pro- jects in sufficient detail to facilitate this assessment. 122 6.17 Financial Stability of Engine Manufacturer Since the engine is the most costly component of a plant, we need to be assured that the engine manufacturer is financially stable and thus is likely to be in business through the life of the plant. Evidence of financial stability may take the form of past financial reports. 6.18 Service Facilities of Supplier The supplier must demonstrate the existance of facili- ties to give prompt and efficient service when needed. These facilities include accessible service shops, adequately trained service personnel and readily available spare parts. The quality of service offered by the supplier should be further assessed during visits made to reference plants for confirmation of engine operating experience. 6.19 Commercial Terms The commercial terms offered must be acceptable to the purchaser. The obvious criteria relate to the timing and method of payments. In certain cases there may also be restric- tions in the purchaser's country on trade with specific countries. In this case certificates of origin of major components may be required. 123 6.20 Life of Plant 6.20.1 General The expected life of a plant affects its life cycle cost, since it determines the period for which the capital investment generates revenue. Theoretically an engine could be kept in service indefinitely by repairing and replacing parts as they become worn. The factors which dictate the retirement of an engine are: * Cost of repairs. * Cost of operation (fuel consumption). * Size of plant relative to system. a An ability to burn available fuel. The cost of spare parts for an engine increase if the model is not widely used, since the spares become 'specials' rather than production items. Because of constant development and improvements in technology most engines reach this economic re- tirement point after twenty to twenty-five years. The other effect of improving technology and general engine development is the improvement in fuel consumption. It may become economic to replace an engine based on fuel savings. Finally, if fuel quality deter- iorates as predicted, some engines built today will be unable to cope in the future. At present, it is usual to assume the expected life of a medium speed four stroke engine to be 20 years, and a two stroke low speed engine to be 25 years. One of the reasons given for this is the claimed 'ruggedness of the low speed engine and thus its tolerance to abuse. Since this is a contentious issue, it may be safer to base the expected economic life on other factors such as the financial standing of the manufacturer and the number of similar engines sold. If many engines have been sold, even if the manufacturer goes out of business, it would be worth- 124 while for another manufacturer to produce spare parts. The availability of reasonably priced spare parts is one of the two most important factors in prolonging the economic life of a plant. 6.20.2 Effect of Plant Life on Bid Evaluation The life of the plant may be applied to the bid evaluation in two ways. If a cost stream is established to determine the life cycle cost of a plant with an expected econo- mic life that is longer than the specified period of the costs stream, the plant is credited twith a residual value at the end of the period. If a levelized carrying charge approach is used (see Appendix C), the fixed charge rate is adjusted to reflect the expected life. 125 SECTION 7 TEST PROCEDURES ' 126 7. TEST PROCEDUUS AND PERFORMANCE PENALTIES 7.1 Introduction Before a diesel plant is put into commercial operation it is usual to perform a number of tests to confirm that it has been installed correctly and meets the specified perfor- mance criteria. The tests start with checks 1/ on various subsystems as they are completed and culminate in a fuel efficiency test of the entire plant. One of the most important is the fuel efficiency test since adjusting the bid prices to reflect relative plant efficiency is futile unless we can verify the promised per- formance. The value of even small efficiency improvements is sufficient to warrant careful testing. We will therefore emphasize the efficiency testing procedure in the remainder of this section. The following steps should be taken to avoid disputes and delays in commissioning. They are also necessary to enable the test results to be used with confidence in support of the imposition of penalties if performance criteria are not met. * The type, duration and method of performing all tests must be clearly specified in the specifi- cation and contract documents. ^/ The checks include verification of the operation of all the auxiliaries, measuring crankshaft deflections on the engine, engine starting, net power output, load rejection, governor response, overspeed, operation of protection devices, operation of voltage regulator, etc. See for example American Society of Muchanical Engineers, Test Code No. PTC 17-1975. 127 * The standards 1/ to which tests must conform should be specified. * The degree of accuracy of the required instru- mentation, the accuracy of the test procedure 2/ and the procedure for independent calibra- tion of instruments 3/ should be specified. * A specific laboratory and test procedure should be designated for determining the calorific value of the fuel used.. * Areas of responsibility must be clearly set out. 4/ The parties performing and witnessing the tests should be clearly designated. * Procedures for arbitrating disputes must be clearly stated. / See for example International Standard ISO 3046/1 - Per- formance testing of Internal Combustion Engines. t The efficiency of the plant is determined by a series of calculations through which individual instrument errors are propagated and compounded. An error bound should be determined to allow a realistic tolerance on results to be specified. It is desirable for all instruments used in the test to be calibrated and sealed by an independent agency. SI When performance tests are done during commissioning, there are inherent conflicts of responsibility. The integrity of the power system, which supplies the load for the test, is the responsibility of the owner, whereas the safety of the plant is the responsibility of the contractor. Some arrangement is usually needed to satisfy their conflicting interests. 128 7,2 Overall Plant Tests Versus Component Tests The purchaser is usually interested in maximizing the electrical output of the plant for a given fuel input. Consequently it is desirable to measure these two quantities accurately, on site, and under the operating conditions envisaged over the life of the plant. The overall input-output approach (see figure 7.1) to measuring efficiency is especially attractive in cases where the plant is supplied on a 'turnkey' basis. Site specific conditions and interfacing arrangements which are difficult to simulate in factory testing are included using this approach. hi~~~~~~~~~~~~~~~~~. .. .s.,.;1E .ui1O J ,Hot Losse:.x *ctrloel L , :s::,-Electrical:: :M echanical Lose ti'X:...ehos loo Losss ,Lessee ,.ngtn Driven Auglll ierl w*s ::::::fi::>:::R: ::::: : :* ->. >:: . . . . . ..U@ .N . .A?macwa en*ener ST £ Mlm U3gR*oa Figure 7.1: Input-Output Diagram for Overall Efficiency Measurement 129 On the other hand the results of overall efficiency tests in the field are often inadequate for verifying the attainment of promised performance for the following reasons: * The instrumentation supplied is not sufficiently accurate to yield meaningful results. * The plant is not designed to facilitate efficiency testing. * It is difficult to control environmental conditions. * The conditions and boundaries of the measuremerts are poorly specified. As a result of the high value of efficiency improve- ments, measures to promote accurate efficiency testing may be Justified not only for the commissioning procedure but for long term monitoring of plant performance. These include providing good quality instrumentation, and design features to facilitate testing. 1/ In the event that an accurate (say up to 3% tolerance) overall field test is not possible, a two stage approach is recommended. The major components, engine, generator, and power transformer (if included) may be tested in the factory where test conditions may be carefully controlled. This would be followed by an overall test performed in the field to confirm that the interfacing is acceptable and to estimate auxiliary energy usage. There is even greater need when using this approach to carefully specify the various tests, their limits and objectives. / Efor example, in a plant with two engines, separate day fuel tanks fitted with load cells may be provided to allow accurate measurement of the fuel input to each engine. 130 In the following paragraphs we will outline the procedure for major component testing in the factory followed by an overall field test. 7.3 Engine Efficiency Measurements The efficiency of the engine is related to a thermo- dynamic process, and thus many variables must be considered. Some of the major factors affecting efficiency are the timing of the engine, adjustment of the injectors and turbocharger performance. These settings change as the engine is used and need periodic adjustment to maintain peak efficiency. When the efficiency of the engine is certified in the factory with a subsequent overall plant test in the field, the factory test and field test have different objectives. The objective of the factory test is to establish the fuel consumption and lubricating oil consumption to close tolerances under carefully controlled conditions using high quality certified instrumentation. The results of this test may be used as a primary reference, for assigning penalties (liquidated damages) in cases where the performance promised by the supplier is not realized. A second test should be done In the field. The field results should be within a specified tolerance 1/ of the value attained in the factory. The objectives of the field test are to verify the fuel con- sumption under field conditions and to establish the energy usage of the plant auxiliaries. If the energy usage of the auxiliaries exceed a predetermined limit, a penalty should be applied. 1/ The tolerance is determined largely by the quality of the instruments used in field testing. 131 The efficiency test in both factory and field should be done by measuring clean fuel in at @ and electrical energy out at ® , see figure 7-2* at the various load points agreed upon (e.g. 20% load, 50% load, 85% load and 100% load). The environmental conditions must of course be measured and the results adjusted to standard conditions. Hot Waft gW A eatment c Neat Leaps, ~Electrical Losss, Eleotricul Lessee Sludge, MeobaulcaiLeesos, ~~Mecaniclal Losses fter rwEagtfe Driven Auslllerles Figure 7.2: Input-Output Diagram for Engine Effic4.ency Test 132 ISO Standard No. 3046 outlines the conditions and procedures for fuel consumption and lubricating oil consumption tests. It provides conversions to relate actual ambient conditions to standard conditions which, briefly, are: Barometric pressure 100 kPa Air Temperature 300 k (27°C) Relative Humidity 60% Charge air coolant temperature 300 k (270C) Lower calorific value for fuel 42 000 kJ/Rg The output is usually measured at the generator with allowance being made for losses through the generator. The measurement of fuel, especially where heavy fuel is used, is probably the most difficult part of the procedure. Many fuel flow meters are unreliable when used with residual fuel. A procedure in which the fuel is weighed is preferable. This is easily done if the plant is designed to facilitate fuel measurement. A suggested method involves the use of a 'day' tank with flexible 'pipe couplings mounted on load cells. The load cells provide an accurate measurement of weight, and by batching fuel into the tank accurate measurements of fuel consumption are possible. The tank of course should be the final 'clean' tank from which the engine pumps its fuel. Another important aspect of the initial field test is that it provides a reference data base, against which performance of the plant may be compared through its operating life. This facilitates correct maintenance of the engine. 133 7*4 Generator and Transformer Testing The losses associated with the generator and trans- former are relatively insensitive to the plant operating cond- itions and do not change appreciably through the life of the plant. The results of an efficiency test done in the factory and adjusted for local ambient conditions are likely to be representative of their long term performance. The losses for the generator are mee.sured between ®and ® and include the power used in the exciter. They consist of electrical losses due to resistance of the windings and mechanical losses due to windage and friction. Losses for EsAu Gs Fuel vSlter negi te Driven Auxiliaries ROT. MSG -hT 6tOV6Y Figure 7.3: Input-Output Diagram for Generator and Transformer Efficiency Measurement 134 the transformer are measured between 0 and @ and include losses due to resistance of the windings as well as magnetizing losses in the core. Procedures for testing both of these devices are well documented by various standards organizations. 1/ The applicable standard should be specified. 7.5 Energy Consumption of Auxiliaries The energy consumption of the auxiliary plant may be measured only in the field. The test should be done over a long enough time span to include items which are used inter- mittently. We must carefully specify the conditions under which the tests will be done, and the auxiliary included in the test. For instance, the number of starts on the engine will influence the amount that the starting air compressor runs. It is preferable to include all station equipment in the test including lighting and air conditioning of control room, etc. This may be difficult in cases where the plant is installed In an existing station. Thus, clarity of the specification is important to achieve a meaningful test. The consumption is measured either by a kilowatt hour meter installed on the main supply to the auxiliaries or by calculating the difference of measurements taken at (j and o (see figure 7-4). g/ See for example, Test Standards for Efficiency - Power Transformers - International Electrotechnical Commission IEC No. 76-1 and Method for Determining Losses and Effi- ciency of Rotating Electrical Machinery from Tests IEC No. 34.2. 135 Mtom or A not Wator~~~Ed~stGa A~~ ! T4aet Losy.., Eloctrical Les, Electrical Lese '.ter flIC.e L essee, tIehealcelo L es Ee ~ ......... EPgti Driveo Auilhrles alga. ^s ¢Ne" Figure 7.4s Input-Output Diagram for Auxiliary Usase Test 7.6 Fuel Purification Plant The prime purpose of the fuel purification plant is to supply fuel free of water and sludge and of the correct viscosity. We therefore should test the viscosity and quality of the fuel supplied to the injectors to establish that the purification plant is performing correctly. This test should be done not only to establish contractural compliance but at regular intervals throughout the useful life of the plant. Suitable permanent instrumentation should therefore be provided. 136. Hot WftrA. IwdEarlos A A Leaks, ~~~~~Heat Losses, Electrical Losses, Electrical Losses Slu..e. Masboialcl Lasso, Mechanicloo Losses Wbter Engine Driven Auidliarles Figure 7.5: Input-Output Diagram for Fuel Purification Efficiency Test The other quantity which should be monitored on a long term basis is the weight of sludge and water removed per unit weight of fuel processed. A test should be done at commissioning and at regular intervals thereafter to establish trends. Variations may indicate either that the fuel received is varying in composition, or that the fuel purification plant is malfunctioning. 7.7 Performance Penalties The inclusion of performance penalties in the contract is intended to discourage suppliers from quoting overly opti- misti3 values for the performance of their plant. The penalties should be based on the cumulative present value of the monetary 137 value of the difference in performance. They should also have a punitive aspect, and values of twice or three times the economic cost are usual. The adjustments for penalties based on a failure to meet expected performance standards should be settled prior to making the final contract payment. 139 SECTION 8 RELATIONSHIPS BETWEEN OWNER, CONSULTANT AND CONTRACTOR 140 8. RELATIONSHIPS BETWEEN OWNER, CONSULTANT AND CONTRACTOR 8.1 Introduction The relationships between the owner, consultant and contractor(s) are defined by contracts established between the owner and consultant and between the owner and contractor(s), The relationships depend on whether the project is imple- mented by a number of subcontracts under the control of the consultant or is a 'turnkey' project. - The functions of the owner and contractor(s) are ob- vious. The consultant is required for three main reasons: X To supply expertise which the owner cannot justify keeping in-house based on his day to day operation. * To avail the owner of the benefit of experience gained on similar projects. a To relieve the overload that would be placed on the owner's staff in implementing the project. The consultant's main objective is to protect the interests of the owner insofar as those interests are not ini conflict with his code of professional ethics. In the following paragraphs, we will explore the form of contracts and limits of responsibility of the owner, con- sultant and contractor through the various phases of the project. In addition, we will outline the requirements for insurance coverage to protect the three; owner, consultant and con- tractor. We will emphasize the 'turnkey' project since this has become predominant in recent years. 141 8.2 Phases of a Project There are five identifiable phases of a project. The period leading up to the award of a contract, construction, commissioning, the warranty period and the post warranty period. Before the award of a contract the consultant is employed by the owner to study tne feasibility of the project, prepare functional or datailed specifications, assist with financing negotiations, obtain bids and recommend the award of a contract. The consultant during this phase works as an ad- visor to the client and maintains close communication with him to properly define his needs. If the project is not to be purchased 'turnkey', then the consultant is more involved in design and takes responsibility for equipment interfacing. During the construction period the consultant often directs the project on behalf of the owner. His main function is one of auditing. He checks the quality of work and ensures, as far as is practical, that the equipment installed is the same as that listed in the bid document. The consultant may at this time also give some technical assistance to solve unforeseen problems. His other major responsibility is the certification of progress payments to the contractor(s). In the commissioning period, the consultant monitors tests and recommends acceptance of the plant based on the results. In some cases adjustments are required to compensate for failure of the plant to perform as promised. The con- sultant advises the owner on the reasonableness of settlements offered by the contractor. In a 'turnkey' project, it is of course the respon- sibility of the contractor to deliver a plant which meets all of the specified performance criteria. The consultant has no 142 responsibility for this and acts only as the owner's technical representative. During and after the warranty period, the owner usually deals directly with the contractor. The consultant may be retained to advise the owner on any warranty claims, and to assist in maintaining the engine at optimum performance. 8.3 Forms of Contract The FIDIC 1/ model form for an agreement between a client and consulting engineer for project management is an excellent document for defining the relationship between the client and consultant through the life of a project. It is particularly useful for a 'turnkey' project where the design input from the consultant is minimal. In cases when the consultant designs the plant or does extensive interfacing of component modules, the form for design and supervision of construction of works 2/ is probably more applicable. 1/ International Model Form of Agreement Between Client and Consulting Engineer and International General Rules of Agreement Between Client and Consulting Engineer for Project Management - EGRA 1980 PM. Produced and issued by the International Federation of Consulting Engineers - FIDIC. 2/ International Model Form of Agreement Between Client and Consulting Engineer and International General Rules of Agreement Between Client and Consulting Engineer for Design and Supervision of Construction of Works - IGRA 1979 D & S. Produced and issued by the International Federation of Consulting Engineers - FIDIC. 143 Por the contracts between the owner and contractor the appropriate FIDIC document may also be used. The scope of work is of course based on the specification. Contracts between the owner and supplier for main- tenance of the plant after it is put into commerical service have become more frequent. There are four basic areas to t, considered in a maintenance contract: * Supervision * Replacement Parts * Labour * insurance Supervision is straight forward. The contractor agrees to supply personnel to supervise maintenance and in some cases operation of the plant on a monthly or annual basis. The responsibilities of such personnel along with their liability should be clearly defined. Replacement parts are in two categories - normal wear parts and breakdown parts. It is usually best to include both of these in the contract. If wear parts are included, the in- tended use of the engine must be defined with provision for ad- justing the cost of wear parts if the use changes significantly. Labour is best supplied by the owner. Importing foreign labour is usually frowned upon and often triggers problems with labour unions etc. Insurance is covered in the next paragraph where we review insurance requirements for an entire project. 144 8.4 Insurance Requirements After the contract is awarded, the contractor needs a series of insurance policies to protect his interests. These include: * Marine insurance (to cover goods in transit). * Construction insurance (to cover fire, theft, etc. of goods on site). * Third part insurance (to cover damage to property or person). * Commissioning insurance (to cover damage to the plant during commissioning). The contractor may also carry insurance to cover his liability during the warranty period. Since most warranty agreements cover only the replace- ment of parts failed due to faulty material or workmanship, the owner should obtain major breakdown insurance upon taking over the plant. In addition, he requires all risk insurance to cover fire, storms, etc. and comprehensive liability insur- ance to cover damage to persons or property. The consultant can often advise the owner on the extent of coverage required. If a maintenance contract is in place, the direct insurance requirement of the owner may be reduced. This depends upon the agreement for maintenance. If the maintenance contract includes all parts, wear and breakdown, then the contractor 'kely to be covered by a major breakdown insurance policy. Care must be taken, however, to ensure that the owner is fully protectad, and this includes the assignment of the 'deductible' that is usually associated with the break- down policy. The consultant normally maintains insurance to cover himself to the extent that he is liable. 145 SECTION 9 FUTURE DEVELOPMENT . 146 9. _FUTURE DEVELOPMENT There are a number of tools which should be developed to enhance our decision making capability in plant acquisi- tions. Some of these lie in the areas of computational tech- niques, planning philosophy and input data. The need for further engine development is also evident. The major computational requirement is in determining, during bid evaluation, the life cycle cost of plants. At present we use mean values for a number of input parameters and derive a single number which is used for deciding on the least cost plant. Our decision to purchase is therefore based on the mean cost only and is insensitive to assumptions in the input parameters. A more reliable decision could be made if we had an assessment of the risk associated with each alter- native. A composite decision would then be made using the expected mean life cycle cost and the risk associated with each alternative 1/. This could in some cases lead to the purchase of a plant with a higher mean cost, but with a higher probability of remaining within the projected life cycle cost than an alternative with a lower mean cost 2/. The input variables of interest are forced outage rate, 1/ See for example Risk Analysis in Capital Inve,stment by David B. Hertz - Harvard Business Review 'anuary - February 1964. 2/ See for examplesElectric Generation Mix Decisions Using Portfolio Analysis by A.E. Miscally and L.L. Garver - Presented at the CORS/TIMS/ORSA Conference, Toronto, Canada, May 6, 1981. 147 fuel cost and the cost of operating and maintenance. If we represent each of these as a probability distribution, we can take the distribution through the calculation and derive a result which is the distribution of life cycle costs for each alternative. We can then use utility theory as outlined in reference 2 to make a decision. The requirement for a distribution of the input parameter value implies that we need to collect more data. This of course would lead to greater confidence in the results. A major issue which relates back to the planning stage is the determination of the optimum effective capacity re- quired by the system. All of our bid evaluation efforts pre- sume that the required effective capacity has been already determined. In determining the effective capacity required, we often use a year by year expansion and add various alternative units to satisfy the reliability criteria prior to doing pro- duction costing. This approach does not adequately determine tne optimum size of unit or block of effective capacity re- quired. A horizon year approach is probably more relevant. The two main issues associated with the size of unit are those related to the effect of multiple units on reliability, and the economy of scale associated with larger units. Another issue of which planners should be aware is the extent to which engine failures are fuel related. A diesel generating plant with a forced outage rate of 18% may be improved to as low as 5% by changing from residual to distillate fuel. In some cases the required effective capacity may be obtained by making this change, of course with the attendant higher fuel cost. However such a change should be considered as a possible alternative to adding new 148 plant. Further effort is required in analyzing failures and assessing the extent to which they are fuel related. A classification of the quality of fuels available in various parts of the world would also be of benefit 1/. 1/ A programme has been started by Det Norske Veritas which supplies such a listing to member shipping companies. The information would be useful to utilities. For more information see Det Norske Veritas Testing Programme, Paper Series No. 82 P048 July 1982. 149 APPENDIX A CALCULATION OF EFFECTIVE CAPACITY 150 APPENDIX A: CALCULATION OF EFFECTIVE CAPACITY A.1 Factors Important to the Calculation of Effective Capacity The effective capacity of a new unit added to a gener- ating system is a function of both the characteristics of the existing system and of the new unit. The important character- istics of the added unit include its site peak rating and its expected forced outage rate (FOR). The expected FOR is based on forced outage statistics for units of size and type similar to the new unit which are subject to conditions of service and fuel quality similar to those anticipated for the new unit. The ability of the existing system to accommodate in- creases in peak demand is significant in calculating the effective capacities of new additions. Garver 1/ uses a single parameter, in to measure this ability. He defines m as the amount (in megawatts) by which the peak demand must increase, to cause the system risk level to increase by a factor of e, the base of the natural logarithm. It therefore has the units of megawatts. If the plot of loss of load expectation (LOLE) vs. peak demand is graphed on semilogarithmic paper, the value of m can be calcu- lated directly as the slope of the curve. It is taken at the target LOLE level since effective capacities are measured at this point. The value of m can also be approximated as the sum- mation of the products of the peak capacity and FOR (in per unit) for each of the units in the existing system. The importance of this approximation will be shown later. The following illustration shows how the value of m can be determined from the Risk vs. Load curve: 1/ Effective Load Carrying Capability of Generating Units by L.L. Garver - IEEE Transactions on Power Apparatus and Systems, Vol. PAS-85, No.8, August 1966. 151 4M 4WL3 ~ ~ APNON Me r u -AT WAMT hIAtuW La ma~~~~~2 Fiuea-1:Grpica-ApoiainOm \-~k<_w euz ca b cosn anduse in1 Graheicalowingox_mation:o m Consquenly,m = L23- L1 ................... (2) ln R3 3 II~~R Equation (1) is just a special case of equation (2) in which the denominator has a value of one. 152 A.2 An Approximate Calculation Technique The approximation developed by Garver for the effective capacity of an added generating unit is given in the following equation: c*= c - m x in {(l-r) + rec/mi ........................ (3) where - c* is the effective capacity (MW) of the new unit - c is the site peak rating (MW) of the new unit - m is the characteristic value for the existing system - r is the expected FOR (in per unit) of the new unit This relationship was developed on the basis of data from medium and large sized electric utilities. Consequently, it is most accurate in application to utilities of those sizes. Garver gives a hypothetical example of a system with a peak rating of 4600 MW to which is added a 600 MW unit with a FOR of 0.05. The approximation yields a value of effective capacity of 341 M which is within 6% of the 362 MW value obtained with digital computing techniques simulating system operation. Direct application of equation (3) to plant additions for smaller utilities in developing countries results in errors which may range up to 30%. An analysis of the problem reveals that the value of the term rec/m is subject to a large variation. The physical significance of the variation is evident wher. the circumstances surrounding the development of the approximation are borne in mind. A contrast between these circumstances and those surrounding the application to developing countries is summarized by the following points: 1) The rate of growth of demand is far higher and more erratic for utilities in developing countries than it is for Garver's model utilities. Consequently, indivi- dual plant additions there generally constitute a much larger fraction of the existing system capacity than in 153 the study cases. Thus both the ratio c/m and the expression ec/m are larger. 2) Because diesel power plant is installed more frequently in developing countries than thermal plant, due to practical size limitations, forced outage rates, r, of new plant are generally greater, averaging as high as 18% for medium speed four stroke units burning residual fuel. A.3 A Modified Approximation In cases where direct application of equation (3) would result in large errors, a modified version, equation (4), is proposed. c* - - m x ln (-r + krec/m ..............c (4) The modifying constant, k, has the following form: k = 1 .................(5 where: Bl is a constant and k (B2)(c )B3 ...............(6 where: B2 and B3 are constants r is the forced outage rate of the new unit c is the site peak rating (MW) of the new unit C1 is the installed peaking capacity (MW) of the existing system The intent of the multiplier, k, is to moderate the second bracketed term in equation (4). Its characteristics are such that for "small" values of r and the ratio c/cl, k tends to unity, while for 'large" values of these parameters, k tends to zero. Consequently, it is possible to achieve greater accuracy in comparing diverse plant types for application to a given System despite the wide variations in size and forced out- age rate that characterize them. 154 The inaccuracy discussed thus far may be termed Urelative" inaccuracy. It results from a shortcoming in the modelling technique that introduces a significant degree of bias when comparing different types of plant. The modification proposed in equation (4) attempts to minimize this bias. A.4 Absolute Error Absolute error is introduced by several factors which are independent of the plant being considered for addition. Because of the discrete nature of the blocks of existing gener- ating capacity, and because of the simplification necessary to model the system load, the actual relationship between LOLE and system peak load is discontinuous. The absolute error results from the convention of approximating this discontinuous relation- ship by a smooth and continuous curve. The degree of discontin- uity depends largely on the size of the existing units relative to the total capacity of the utility. In this respect, the model- ling technique has limitations even for large utilities. It is important to note, however, that since the absolute error affects consideration of each alternative equally, its elimination is not essential to unbiased selection of a generating unit. Consequently, no attempt is made to apply a correction. A.5 Evaluation of the Constants Appropriate selection of the constants Bl, B2 and B3 in equation (4) is vital to the accuracy of the approximation since each combination of an existing utility and the proposed additions to it, is unique. Through an iterative approach, these constants can be determined to the desired accuracy if the following infor- mation is available: 155 * the value of m for the existing system; * values for the effective capacity of various plant additions to the existing system. The value of m is necessary for insertion into equation (4). It is available from the computer output of a generation planning study.l/ Actual values of effective capacity are obtain- ed from the same source 2 and are of value only if the plant size and type they represent is bsing given serious consideration as an alternative. They are used as the standards against which the approximate values of effective capacity are tested during the iterative process. To give equal consideration to each plant size and type, the effective capacity of each proposed addition is calculated for each combination of values considered for Bl, B2 and B3. These approximate values of effective capacity are then subtracted from their respective standard values and an absolute value taken to obtain a set of deviances. Appropriate selection of the con- stants results in the lowest average value of deviance for the given system and set of alternative additions. A.6 Application of the Approximation The procedure described in the previous section yields a set of constants that permit a high degree of accuracy in the approximation of effective capacities for a given application. However, the lack of input information (mi, etc.) sometimes makes it impossible to evaluate the constants for equation (4). It is still possible to use the method under these circumstances, .~~~~~~~~~~~~~~~~ Lt m can either be read directly from the printout or calculated as shown in Figure A-1. 2/ effective capacities are determined as shown in Figure 6-1. 156 but two approximations are necessary which further limit its accuracy. The first, an estimate for the value of m, was men- tioned briefly in subsection A.1 and is summarized by the following equation: N m t£ ciri ............................ 7) where: m is the characteristic value for the existing system ci and ri are the peak capacity and forced outage rate for the ith unit in the system N is the total number of existing units in the system The second approximation involves using the following values for the constants in equation (4): Bl - 10.0 B2 = 0.11 B3 = 1.80 These values were derived using the method outlined in subsection A.S. Data from three existing utilities was used as the basis for the calculation. The utilities are descri- bed briefly in table A-2. The plant alternatives considered ranged in size from 1.2 to 12 MW while the forc.'d outage rate, r varied from 0.04 to 0.18. Table A-2: Utillty Input Data Utility C1(MW) m(MW) #1 95 .6.2 #2 17 1.2 #3 7 1.0 On the basis of the utility and plant input data used to derive the above constant values, they should produce reason- able accuracy in application to small utilities in developing countries. 157 A.7 Multiple Addit'ons The modified form of Garver's approximation (equation (4)) is of considerable value in comparing the effective capa- cities of dissimilar plant types at various stages of the gener- ation expansion program. A particularly significant attribute is the ability to accurately model a number of simultarneous or successive plant additions. This is important during generation planning when it is desired to evaluate the statue of the system at each stage of a proposed expansion screme. It is even more important at the tender evaluation stage since for a given plant addition, each tender may propose the addition of a different combination of units. The only way to accurately compare the tenders is on the basis of the total effective capacity added. Because each unit of a generating system operates in- dependently, an accurate assessment of a multi-unit addition requires the effective ctpacity of each unit to be calculated separately. In each calculation, the capacity of the existing system, Cl, and the system characteristic value, m, are deter- mined as follows: N-l -1N = CIO + £1 Ci-l -- --...................... 8 i=l N-1 MN ° MO + i'l ci-l ri-l e* * * * * .. . . . () where: ClN and mN are the values of system capacity and the system characteristic to be used in the calculation of the effective capacity for the Nth unit added Cl0 and mo are the original values of system capacity and the system characteristic Ci and ri are the values of capacity and forced outage rate for the ith unit added 158 The total effective capacity added is simply the sum- mation of the individual effective capacities N TOT i .............C.. (10) where C*TOT is the combined effective capacity of N successive or simultaneous additions C*i is the effective capacity of the ith unit added See figure A--2 for an algorithm to calculate the effective capacities of plant additions to any system. 159 Waft to Cetpr affetive Capacities of Potentlal Puant ad4tions accurate values of a a" effectlve capalctes for "*a case.* aN0 avalabl from a recent planning YES U -10.0 B2 a 0.11 33 - 1.80 an I terae i 4 5 to eaculate U. & B3 Calculate Bffeotive Capacity olda a and < to ust" Oriinal Values VW - c-ala . Ant1t tion in Vaeut Anoher Figure A-2 s Flow Chart for COWparing Effective Capacities 161 APPENDIX B OUTLINE OF DIESEL PLANT MAINTENANCE CONTRACT 162 APPENDIX B: OUTLINE OF DIESEL PLAHT MAINTENANCE CONTRACT 1. Definition of Parties Involved. 2. Duration of Agreement. 3. Definition of Plant Service Requirements. 4. Scope of Equipment Covered Under the Agreement. 5. Definition of Responsibility. 6. Definition of Authority. 7. Limitation of Contractor's Liability. 8. Major Breakdown Insurance. 9. Price and Conditions of Payment. 10. Procedure for Contract Modification. 11. Procedure for Settlement of Disputes. 12. Conditions for Termination of Contract. 13. Glossary and Summary of Applicable Standards. B.1 Definition of Parties Involved This section should define (using the proper legal titles) those parties bound by the contract or by any part of it. B.2 Duration of Agreement The starting date of the agreement should be specified either as a calendar date, or as date on which a specified event occurs. The completion date should be specified either as a calendar date, or as the last date of a period of specified length that begins on the starting date. B.3 Definition of Plant Service Requirements The intended service of the plant (baseload, peaking, 163 etc.) should be specified as well as the estimated annual generation and the estimated annual number of service hours under the following conditions: Load 2 50% MCR 75% MCR 100% MCR 110% MCR TOTAL The minimum requirement for plant availability should be specified in this section. B. Scope of Equipment Covered Under the Agreement This section should define exactly which pieces of equipment are included under the terms of the agreement. Typical- ly, this is limited to the engine and engine-mounted auxiliaries. B.5 Definition of Responsibility The agreement should state the extent to which each of the contracting parties is responsible fpr the following items: * Maintenance supervision * Maintenance labour * Supply and control of spare parts for - initial stock - wear and tear replacement * Government liason and compliance with government require- ments * Establishment of standards for maintenance (procedures and schedules) 164 * Adherance to standards * System monitoring and report preparation (specifics on data, format and frequency) * Supply and maintenance of tools, oil filters, etc. * Specifics and timing of inter-organization communication B.6 Definition of Authority This section should intensify an individual within one of the contracting organizations who has the authority to shut down the engine for preventative maintenance if he thinks that failure to do so will result in a catastrophic breakdown. It should also delineate the authority of each organization to assign and remove maintenance labour and supervisory personnel. B.7 Limitation of Contractor' Liability The nature and cause of breakdown incidents for which the contractor does not bear cost responsibility should be out- lined. B.8 Major Breakdown Insurance For protection of the owner, major breakdown insurance must be carried to cover the cost of major failures not other- wise provided for. Three alternative arrangements are detailed below: B.8.1 Owner Carries Insurance/Pays Premium/Pays Deductibles Under this arrangement, there is limited incentive for the contractor to assist in avoiding major breakdowns, par- 165 ticularly if the maintenance contract limits his liability to repair of the initial failure. Since the repair of secondary damage often costs significantly more than repair of the initial failure, the owner may incur unnecessary costs in insurance claim deductibles and increased premiums. B.8.2 Contractor Carries Insurance/Pays Premium/Pays Deductibles Since under this alternative, the contractor is responsible to the owner for all breakdowns (contract wording is very important), there is great incentive for him to minimize their occurrence. Furthermore, the owner is protected during the maintenance agreement from variations in the cost of insurance. One drawback of this arrangement is that the owner must, at the beginning of the contract, pay the insurance costs as a lump sum incremented by the Contractor's markup. B.8.3 Owner Carries Insurance/Pays Premium/Contractor Pays Deductibles The owner is fully protected under this scheme with payment of deductibles serving as incentive for the con- tractor to co-operate fully. It differs from Alternative #2 in that the owner trades off initial cost for the risk of high- er premiums. B.8.4 A Note on Additional Protection The most reliable way of protecting the owner's interests in the maintenance agreement is to require the posting of a performance bond. This insures against occurrences which are outside of the contractor's control such as bankruptcy of the 166 contracting firm. A performance bond should be required no matter what arrangement is made for major breakdown insurance. B.9 Price and Conditions of Payment Details of the financial arrangement should be outlined in this section. B.10 Procedure for Contract Modification The general procedure for implementing changes which are mutually agreeable to the contracting parties should be out- lined in this section. Details should also be included for a procedure to modify the contract price to reflect discrepancies between the actual and estimated (subsection B.3) values of unit service hours and load factor. 3.11 Procedure for Settlement of Disputes A procedure should be detailed to permit either party to enforce the terms of the agreement in the event that the second party is not meeting these terms. The law under which arbitration and litigation will take place should also be specified here. B.12 Conditions for Termination of Contract The conditions under which the agreement may be pre- maturely terminated by either party should be included here along with the procedure for calculation of the financial settlement. 167. B.13 Glossary_and Summary of Applicable Standards The agreement should include a glossary to define any special terms used in the conditions of contract. Also included should be a summary of the standards used in the definitions, performance tests and all other matters relating to the agree- ment. 169 APPENDIX C COMPARISON OF PROJECCTID LIFE CYCLE COSTS 170 APPENDIX Cs COMPARISON OF PROJECTED LIFE CYCLE COSTS It is important that bid evaluations be based on total life cycle cost, rather than capital cost, if the purchaser is to achieve the maximum benefit from a plant investment. Two standard evaluation methods are presented below with the aid of an example comparison. C.1 Cumulative Present Worth In this method, the present worth of costs incurred throughout the life of a unit are summed for comparison with those of other alternatives. The example shows three contri- buting cost streams. They are: a) Capital; b) Adjustment; c) 0 & M (summation of all annual expenses). C.1.1 Capital The capital cost used is the value quoted by the supplier. C.1.2 Adjustment The adjustment is a lump sum added to or sub- tracted from the capital cost of sach alternative to ensure that all bids conform to the pre-determined requirement for quality of service. It accounts for small variations in effective capacity as well as the reliability of auxiliary systems (equipment redundancy, spares, etc.). 171 C.1.3 Annual Expenses This category accounts for all annual expenses associated with owning, operating and maintaining each alter- native. The example uses relative values, each referenced to the pro-determined standard value. This simplified the calculation without affecting the relative ranking of the alternatives considered. Table C-l summarizes the comparison. C.2 Levelized Annual Cost This method compares plant alternatives on the basis of the combined annual capital and operations cost of each plant, levelized over its economic life. The two alternatives used in this example have different economic life spans. This difference is reflected in the fixed charge rates for the cap- ital portion of the levelized annual cost. The Levelized Annual Operating Costs, Adjusted Capital Costs and Economic Lives used in Table C-2 are the same as in the previous example. It can be seen that with either comparison method, Alternative B is Plightly more attractive than Alternative A, despite its shorter economic life. 172 Table C-1: Comparison of Projected Life Cycle Costs for Two Plant Alternativesl AN2NUAL UX?PEN01TU RE PiR SE NS W0XSH2 (1982 8 x 103) CaP?AL PJwUss 0 & n )IWU3L CmUWTAs A a a S A 8 A a A S 1962 6000 5200 200 300 310 350 277 312 4477 S612 1983 310 350 247 279 6724 6091 1964 310 350 221 249 6945 6340 t198 310 350 197 222 7142 6562 1966 310 3S0 176 199 7310 6761 196? 310 3S0 15? 177 7475 6938 1998 310 350 140 156 7615 7096 1969 310 350 125 141 7740 7237 1990 310 4= 112 126 76S2 7363 1991 310 350 100 113 7952 7476 1992 310 350 89 101 6041 7577 1993 310 350 s0 90 6121 766? 1994 310 350 71 60 6192 7747 1995 310 350 63 72 6255 7819 1996 310 350 57 64 6312 76*3 197 310 350 S1 57 6363 7940 1996 310 350 45 51 6406 7991 1999 310 350 40 46 6446 6037 2000 310 350 36 41 6484 8076 2001 310 350 32 36 6S16 8114 usw .UAL VaX 3 (129) (0 SCS6L 8387 8114 'MSE 1) te sweated economie service lives of alternatives A ard 3 are 25 and 20 years respectively. 2) th prosent worth values are referenced to the begianitg of 1982 using a disount rate of 12%. 3) 5te residual value of Alterative A Is the present wortb of the non-deprec$ated portion of the eapttal cost after 20 year of Its 25 year life. 173 Table C-2: Plant Comparison Using Levelized Annual Cost Levelized Levelized Levelized Annual Annual Annual Economic Fixed Chargel Ca&ital2 operating3 Total Alternative Life (Yrs.) Rate (%_ Cost4(1982$) Cost4(1982$) Cost4(lS!32$) A 25 16 992 310 1,302 3 20 17 935 350 1,285 1) Because this is an economic analysis, taxes are ignored. Therefore, the fixed charge rate - Cost of Capital plus rate of depreciatiom. 2) Levelized Annual Capital Cost - fixed charge rate X Installed cost. 3) Levelized Annual Operating Cost includes aU annual expenses such as fuel, operation and maintence. 4) All costs X 103. 175 APPENDIX D EVALUATION OF ALTERNATIVE FINANCIAL OFFERS 176 APPENDIX D: EVALUATION OF ALTERNATIVE FINANCIAL OFFERS D.1 Overall Scheme In order to evaluate the alternative financial schemes offered by the various suppliers, it is necessary to separate financial costs from capital costs. Once calculated, the finan- cing costs may be recombined with the capital cost after the economic evaluation is completed. The cost of financing is determined by establishing a cost stream of financing components. The present value of this cost stream is then determined. Two additional factors possibly affecting the corporate financial structure must then be considered; these are the rela- tive magnitude of the capital expenditure and the effect on corporate income taxes of the capital and interest payments. If these items are considered to have a significant effect, then the financial cost stream data must be entered into a corporate model forecast to facilitate a more thorough analysis. D.2 Elements of Financial Schemes D.2.1 Supplier Credit The supplier credit is generally expressed as either equal payment or equal principal repayment. The cost streams of payments are determined by month for both principal and interest. In addition, the disbursement schedule of these funds is obtained from the supplier based on his expected construc- tion schedule. Lump sum payments are entered into the appro- priate month in the overall cost stream. 177 Balloon payments if quoted as part of the financing scheme are also taken into account. D.2.2 Buyer Credits For that portion of the capital not financed by the supplier, the buyer has the option of arranging his own financing or alternatively the supplier may attempt to negotiate a loan for the buyer. As with the supplier credit, the actual principal and interest paid are entered in the appropriate months. D.2.3 Loan and Management Charges The fees associated with the management and establishment of the buyer and supplier credits must be taken into account in the cost stream. Three of the more common forms of these fees are: * Fees expressed as a percent of undisbursed principal. The expected disbursemeht schedule is established based on supplier's information. The undisbursed principal is calculated for each month. The percentage is applied to the undisbursed figure usually on a monthly basis with the actual payments made according to the condition of the agreement. * Fees expressed as a fixed amount. In this case the fees are expressed as either a fixed dollar amount or as a final percentage of contract price. The payments are made in specifically stated periods or over a range of periods. * Percent of Balance of Principal Outstanding Based on the repayment of principal a percentage is applied to the balance of unpaid principal the frequency of which is specified in the conditions of the loan. 178 D.2.4 Interest During Construction Interest During Construction is related to the disbursement schedule and even if paid in one lump sum at the conclusion of construction, is generally compounded over the construction period. D.3 Financial Scheme Cash Flow D.3.1 The cash flow of the financial scheme for each month is determined by adding the elements of section D.2. D.3.2 While it is possible to prepare the cash flow manually it is more expedient to use a computer. The repetitive nature of the calculation lends itself favourable to computer programming. The ideal program is one that can assign to the appropriate periods, the various payments of principal and interest during construction. Either the program must be general enough to handle the various types of financing offered, or the buyer must, in his specification, restrict the types of financing to ba considered. D.3.3 Having determined the cash flow by month, the results may be used in either of two ways: * As part of the utility corporate model forecast. O Bid comparison. 179 D.4 Bid Comparison D.4.1 By applying appropriate discount factors to the cash flow of financial payments, the present value of the capital cost and financing scheme may be determined. D.4.2 Subtracting the capital cost from this amount leaves a present value of the financing scheme. This amount may then be considered as part of the overall cost of the plant. D.4.3 Alternatively the present value of the capital and financing cost could be expressed as a level- ized annual cost by dividing the total present value by the present worth of an annuity factor for a predetermined number of periods and interest rate. D.5 Corporate Model Forecast If the magnitude of the investment is sufficiently large to significantly affect the overall corporate cash flow, a corporate model forecast is used to determine the effect of various financing schemes. The model will take into account such items as tax implications, including investment tax credit, cash flows, rate base and revenue requirements. Once again, this analysis should be computerized in order to facilitate sensi- tivity analysis. The corporate model forecast will produce estimates of income statements, cast reports and balance sheets for future years for each of the financial schemes offered. It will show the effect of the scheme on short term required capital invest- ment and on earnings. 181 APPENDIX E DEFINITION OF TERMS 182 APPENDIX E: DEFINITION OF TERMS Effective Capacity - the amount by which a new generating unit added to an existing system increases the peak load carrying capability of that systam at its target reliability level. Service Hours (SH) - the total number of hours in a specified period (usually a year) during which a generating unit is synchro- nized with the grid and generating power. Forced Outage Hours (FOH) - the total number of hours in a specified period (usually a year) during which a generating unit is unavailable for generation because of forced outages. Forced Outage Rate (FOR) - the probability of the existence of a forced outage at a random point in time. This probability can with reasonable accuracy be approximated for base load units with the following expression: FOR _ OH FOH + SH The components of this equation are defined above. This approx- imation must be modified to achieve acceptable accuracy wihen dealing with units in intermediate or peaking service. Loss of Load Expectation (LOLE) - the estimated time (usually expressed as days per year) during which the generating capacity in a given system will be inadequate to supply the projected demand. Loss of Load Probability (LOLP) - the estimated probability that within a given time period the generating capacity in a given system will be inadequate to supply the projected demand. 183 System Characteristic Constant (m) - the amount (in megawatts) by which the peak demand of a given system at its target relia- bility level must change to cause the system risk level to change by a factor of e, the base of the natural logarithm. Maximum Continuous Rating (MCR) - the maximum load that an en- gine can carry on a continuous basis under site conditions. Peaking Capacity - the maximum short term load (generally for 1 hour in 12) that can be carried by an engine under site con- ditions. It is normally 110% of MCR. Planned Outage Hours (POH) - the total number of hours in a speci- fied period during which a unit is unavailable for generation because of planned maintenance. Planned Outage Rate (POR) - the amount of time, stated as a per- centage, during which a unit is unavailable for power generation because of planned maintenance. 185 APPENDIX F TERMS OF REFERENCE 0 186 CIPOMER MTL WORLDRANK USH WASHINGTON ZDC. maY 28. £981 C I POWER -SERVICES NONTREALs CANRDR ATTN HOUGHTON REFERENCE OUR MAY 2S TELEPHONE DISCUSSION AS FOLLORUP YOUR DIESEL PLANT OERFORMANCE STUDY COMPLETED 1990 FOR UORLD RANK PLERSE PROVIDE LUMP SUM PROPOSAL F6R PREPARING GUIDELINE SPECIFICAT.IONS AND BID EVALUATION PROCEDURE APPLICARLE TO SID INVITATIONS PERMITTING ZOTH "EDIUM AND LOR SPEED-DIESELS. OBJECTIVE-.IS TO PROVIDE.RANK.ENGIHEERS AND/ OR CONSULTANTS GUIDANCE-ON DESIRABLE SPECIFICATION COVERAGE INCLUDtNG DESCRIPTIONs TEC*HNICAL CHARACTERISTICSs RANGE -OF ACCEPTAiLE VALUESS TYPICOL GUARANTEE EXPECTATIONSS MAINTENANCE CONTRACT POSSIRILITIESa ALLOCATION OF RELATIVE ORNER/SUPPLIER/CONSULTANT RESPONSIBILITIES DURING INSTALLATIONs TEST.PROCEDURESP OPERATINGH.COSTSs TRAINING ARRANGEMENTS AND OTHER F.ACTORS AFFECTING ECONOMIC COMPARISON OF-BIDS FOR MEDIUM AND LOR SPEED DIESELS TOGET.JER RITH RECOMMENDED CRITERIA FOR QUANTIFYING THESE CHARACTERISTICS AND EVALUATION FORMULA/PROCEDURE VASES ON ODJECTIVE OF MINIMUM SYSTEM £LECTRICITY COST.-.GUIDELINES WOULD SERVE AS MODEL OR CHECKLIST-ON RANK PROJECTS.NHERE BORROURRS WISH TO CONSIDER BOTH DIESEL TYPES-AND EQUITABLE 2ID COMPARISION 1S DIFFICULT'BECAUSE OF-CAPZTALZOPERATING COST 'TRADE-OFF. DETAILED TERMS OF REFERENCE HOT,PRACTlCAL GIVEN SPECI"LIZED SUBJECT THEREFORE SUGGEST YOU OUTLINE PROPOSED PLAN. ME ENVISAGE.IMP*LEHENTATION MOULD'INVOLVE WASHINGTON TRIPS FOR C1 STUDY DISCUSStONS C2) REVAEN OF EXISTING DlESEL-SPECI- FICATIONS AND RID-fEALUATION ON TYPICAL PST. BANK -DIESEL PROJZCTSs C3.DISCUSSION OF DRAFT REPORT. NO-FIELD-TRIPS FOR UPDATING'DIESEL.OPERATIONAL ZATA ANTICIPATED.- REPORT UOULD CONSIST OF STATEMENT OF ISSUES AND CRITERIA WITH SUPPORTING CALCULATIONS WHERE NECESSARY PLUS OUTLINE SPECI- FICATIONS AND SUGGESTED.DRAFT PARAGRAPHS COVERING EVALUATION CRITERIA AND PROCEDURES -PR IfNE REPORTS TO NUMBER TEN DRAFT AND FIFTY FINAL FOR CIP ACCOUNT.. STUDY TO COMMENCE IMMEDIATELY.AFTER PROPOSAL ACCEPTANCE, PAYMENT BASED ON 40 0#0 AT PCCEPTANCE, 40 0/0 ON RECEIPT DRAFT REPORT.9 20- 0/0 ON ACCEPTANCE OF FINAL REPORT. APPRECIATE.DETAILED PROPOSAL AShP INCLUDING INTENDED STAFF AND EXPECTED MRNDAYS. REGRRDS MOORE WORLD BRANK CIPOWER MTL UORLDBRANK uS 187 APPENDIX G EXAMPLE OF TYPICAL BID EVALUATION . 188 APPENDIX G: EXAMPLE OF TYPICAL BID EVALUATION G.1 Introduction The following is a simplified example which shows the major steps in a bid evaluation. Although we have attempted to use realistic values, they should not be assumed to be applicable to a specific project. A prospective purchaser should use values for the various input parameters which are relevent to his particu- lar situation. In the evaluation below, the low speed diesel plant would have been chosen as the least cost option. Table G-1 sum- marizes the various steps in the evaluation process. We assume for the purposes of this exadple that both bids being considered have satisfied the mandatory requirements (items 1 to 8 in table G1). G.2 Information Given to Suppliers Along with the standard information about the existing plant, scope of supply and local conditions, etc. the following would have been given to the prospective suppliers: * Installed capacity of existing system 94 MW * Load carrying capability of existing system at a loss of load expectation of one day/year 44 MW * 'a' for existing system 6.2 MW * Effective capacity required 20. t 1 MM * Maximum number of units 5 * F6rced outage rate for low speed two stroke engine 0.05 per unit * Forced outage rate for medium speed four stroke engine 0.18 per unit 189 Table G-ls Sample Evaluation of Two Bids EVALUATING ITEM BIDS NUMBER DESCRIPTION A 1 Engine operating experience. OK OK 2 Effective capacity requiremerst. OK OR 3 Basic warranty. Ox Ox 4 Minimum spare parts requirement. Ox OX 5 Experience by supplier on similar projects. Ox Ox 6 Financial stability of engine OK ox manufacturer. 7 Service facilities of supplier. OK Ox 8 Commercial terms. Ox OK 9 Tendered price of plant. 26160000 17920000 10 Equipment equalization. 100000 _ 11 Base price (adjusted for equipment equalization). 26260000 17920000 12 Price after adjustment for life expectancy. 25650206 17920000 13 Specific fuel consumption. 1317162 2356074 14 Generator losses. '_ 15 Main power transformer losses. _ 16 Auxiliary power consumption. 17 Lubricating oil consumption. 553803 1600099 18 Maintenance cost. (2511579) 6089932 19 Mechanical design features. (787800) ---- 20 Engines similar to existing engines in plant. (358400) 21 Arrangements for training of staff. ---- 22 Engine manufacturer as prime contractor. (89600) 23 Suppliar's past performance. (105040) (107520) 24 Miscellaneous TOTAL EVALUATED COST 24116752 27410585 190 * Life of plant for low speed two stroke engine 25 years * Life of plant for medium speed four stroke engine 20 years * Discount rate 12% * Method of evaluating various features of the plant and the amount by which each evaluating item will affect the base price. The evaluation methodology is outlined in Section 6. For this example, the evaluating items affect the base price as follows: - Mechanical design features 3% of base price - Engines similar to those existing 2% of base price - Arrangements for training of staff 0.5% of base price - Engine manufacturer as prime contractor 0.5% of base price - Supplier's past performance 1% of base price - Miscellaneous 0.5% of base price G.3 Bid A Let us assume that supplier 'A' is providing low speed two stroke units. He would have performed the calculation shown in section 6.2 page 6-12 and would offer the following: * Number of units 2. * Maximum continuous rating 10.9 MN * Short time peaking rating 12.0 MW * Cost per kilowatt (based on NCR) $1200.00 G.4 Bid B Supplier 'B'who offers medium speed diesels would have performed the calculations shown on page 6-15 and may have selected 191 the following from his inventory: * Number of units 4 * Maximum continuous rating 6.4 MW * Short time peaking rating 7.0 MW * Cost per kilowatt (based on MCR) $700.00 G.< Base Price We first obtain tha tendered prices from the suppliers' quotaxions. In this case we have: - For Bid 'A' Tendered price . 2 x 10 900 x 1 200 = $ 26 160 000.00 - For Bid 'B' Tendered price = 4 x 6 400 x 700 = $ 17 920 000.00 G.6 Equipment Equalization The 'equipment equalization' process is designed to compensate for differences in the scope of supply offered by various suppliers. For example, let us assume that the purchaser requires workshop equipment as part of the scope of supply and that it is included in Bid 'B' but not in Bid 'A'. If the value of the equipment is $100 100.00 we may equate the bids on the basis of scope of supply by adding $100 000.00 to the tendered price of Bid 'A' increasing it to a base price of $26 260 000.00.. This Is shown in item 10 in table G-1. 192 G.7 Adjustment for Life Expectancy of Plant Let us assume that the life expectancy of the plant in Bid 'A' is 25 years Lad that of the plant in Bid 'B' is 20 years. We must accourt for the entire 5 years of life expectancy of the plant in Bid 'A'. For Bid 'A': Base price (adjusted for equipment equalization) = $ 26 260 000.00 Assuming that the plant is depr,.ciated uniformly (straight line depreciation), the residual value of the plant after 20 years is: 26 260 000.00 x 5 + 25 = $ 5 252 000.00 The present worth of this residual value assuming a discount rate of 12% is: 5 252 000.00 x 0.116107 = $ 609 794.00 To equate the two bids, we must subtract the present worth of the residual value from the base price, which gives an adjusted base price of $ 25 650 206.00 (see item 12 of table G-1). G.8 Specific Fuel Consumption To determine the differential cost attributable to fuel consumption for the two alternatives we use the method described in Section 6.3.2. For the purpose of this example, we assume the fuel consumption figures to include generator losses, trans- former losses and auxiliary power consumption. Assume the reference SFOC (Specific fuel oil consumption) of the two alternative plants to be as follows: 193 For Bid 'A': SFOC at 50% MCR 224 grams/kWh SFOC at 75% MCR 214 grams/kWh SFOC at 100% MCR 214 grams/kWh For Bid 'B': SFOC at 50% MCR 226 grams/kWh SFOC at 75% MCR 217 grams/kWh SFOC at 100% MCR 220 grams/kWh Let us furf%er assume that the weighting formula is as given in equation ii I 3 50% + 4B75% + 4E100% 9 This formula accounts for the various load levels at which the plant is likely to be run (i.e. it does not run at full load whenever it is on line). Then for Bid 'A', the weighted average SYIOC is: E. = 1 x 224 + 4 x 214 + 4 x 214 9 = 215.1 grams/kWh For Bid 'B': I - x 226 + 4 x 217 + 4 x 220 9 3 219.3 grams/kWh Now we use equation 6-4 to calculate the annual differential cost for each bid: c a (Ei - E0) x U x F ......................... (6-4) where c is the annual differential fuel cost Ei is the weighted average SFOC Eo is the reference SPOC )94 U is the energy generated in kWh/year F is the cost of fuel in $/gram Assume that for the first 15 years of the life of the plant we expect to generate 150 000 000 kWh per year and for the remainder 100 000 000 kWh per year. For this example let us assume that the engines in Bid A require 3% of the annual fuel used to be distillate for starting and stopping, and the engines in Bid B require 5%. If the cost of residual fuel is $0.20/kg and the cost of distillate fuel is $0.35/kg, then for Bid A the cost of fuel in equation 6-4 is given by PA = 0.97 x 0.20 + 0.03 x 0.35 = $0.205/kg For Bid B, the cost of fuel is given by FS 0.95 x 0.20 + 0.05 x 0.35 = $0.208/kg If we take the reference specific fuel oil consumption to be 210 grams/kwh, the differential fuel costs are: Bid 'A': For first 15 years: C - (215.1 - 210) x 150 000 000 x 0.205 + 1000 = $156 825 For the remaining 10 years of its life the differential fuel cost is: c - (215.1 - 210) x 100 000 000 x 0.205 + 1000 _ $104 550 Bid 'B': For first 15 years: c - (219.3 - 210) x 150 000 000 x 0.208 + 1000 - $290 160 For the retaining 5 years of its life the differential fuel cost is: c = (219.3 - 210) x 100 000 000 x 0.208 + 1000 - $193 440 .195 The present worth (at 12% discount rate) of "he cost streams represented by these two alternatives are determined in table G-2 and G-3 respectively to be $ 1 317 162 for Bid 'A' and S 2 356 074 for Bid 'B'. 196 Table G-2: Present Worth of Fuel Differential Cost For Did 'A' Annual Differential Present Worth of Year Cost Annual Differential Cost 1 156 825 156 825 2 156 825 140 022 3 156 825 125 020 4 156 825 111 625 5 156 825 99 665 6 156 825 88 987 7 156 825 79 452 8 156 825 70 940 9 156 825 63 339 10 156 825 56 553 11 156 825 50 493 12 156 825 45 083 13 156 825 40 253 14 156 825 35 940 15 156 825 32 090 16 104 550 19 101 17 104 550 17 054 18 104 550 15 227 19 104 550 13 596 20 104 550 12 139 21 104 550 10 838 22 104 550 9 677 23 104 550 8 640 24 104 550 7 715 25 104 550 6 888 Cumulative Present Worth 1 317 162 Notet Discount rate - 12%. 197 Table G-3: Present Worth of Fuel Differential Cost For Bid 'B' Annual Differential Present Worth of Year Cost Annual Differential Cost 1 290 160 290 160 2 290 160 259 071 3 290 160 231 314 4 290 160 206 530 5 290 160 184 402 6 290 160 164 645 7 290 160 147 004 8 290 160 131 254 9 290 160 117 191 10 290 160 104 635 11 290 160 93 424 12 290 160 83 414 13 290 160 74 477 14 290 160 66 497 15 290 160 59 373 16 193 440 35 341 17 193 440 31 554 18 193 440 28 173 19 193 440 25 155 20 193 440 22 460 Cumulatlve Present Worth 2 356 074 Note: Discount rate - 12%. 198 G.9 Maintenance Cost Let us assume a reference maintenance cost of $0.01/kWh. For Bid 'A': maintenance cost - $0.008/kWh For Bid 'B': maintenance cost = $0.015/kWh The above values for maintenance cost would usually be assigned by the consultant evaluating the bids based on past experience and available statistics. If we assume the same production figures shown in G-7, the annual differential maintenance cost for the two bids is as follows: Bid 'A': For the first 15 years, differential cost: *150 000 000 ao (0.008 - 0.01) - $300 000 For the next 10 years, differential cost: 100 000 000 x (0.008 - 0.01) - - $200 000 Bid 'B': For the first 15 years, differential cost = 150 000 000 x (0.015 - 0.01) = $750 000 For the remaining 5 years, differential cost: = 100 000 000.x (0.015 - 0.01) - $500 000 The cumulative present worth of the differential in maintenance cost is shown in tables G-4 and G-5. Note that in this case the cumulative present worth of the differential in fuel cost is negative for Bid 'A'. 199 Table G-4: Present Worth of Differential in Maintenance Cost for Bid 'A' Annual Differential Present Worth of Year Cost Annual Differential Cost 1 00 000 - 300 000 2 - 300 000 - 267 857 3 - 300 000 - 239 158 4 _ 300 000 - 213 534 5 _ 300 000 - 190 655 6 - 300 000 - 170 228 7 - 300 000 - 151 989 8 - 300 000 - 127 605 9 - 300 000 - 121 165 10 - 300 000 - 108 183 11 - 300 000 - 96 592 12 - 300 000 - 86 243 13 - 300 000 - 77 003 14 - 300 000 - 68 752 15 - 300 000 - 61 386 16 - 200 000 - 36 539 17 - 200 000 - 32 624 18 - 200 000 - 29 129 19 - 200 000 - 26 008 20 - 200 000 - 23 221 21 - 200 000 - 20 733 22 - 200 000 - 18 512 23 - 200 000 - 16 529 24 - 200 000 - 14 758 25 - 200 000 - 13 176 Cumulative Present Worth - 2 511 579 200 Table G-5: Present Worth of Differential in Maintenance Cost for Bid 'B' Annual Differential Present Worth of Year Cost Annual Differential Cost 1 750 000 750 00' 2 750 000 669 643 3 750 000 597 896 4 750 000 533 835 5 750 000 476 639 6 750 000 425 570 7 750 000 379 973 8 750 000 339 262 9 750 000 302 912 10 750 000 270 458 11 750 000 241 480 12 750 000 215 607 13 750 000 192 607 14 750 000 171 881 15 750 000 153 465 16 500 000 91 348 17 500 000 81 561 18 500 000 72 822 19 500 000 65 020 20 500 000 58 054 Cumulative Present Worth 6 089 932 201 G.10 Lubricating Oil Consumption As is mentioned in Section 6.4, we will emphasize the inclusion of the lube oil requirement for complete oil changes. We will take the reference cost of lubricating oil changes to be $25 000.00. Let us assume that in Bid 'A', the low speed diesel plant requires 40 000 litres of lube oil for a complete change and in Bid 'B', the medium speed plant requires 34 000 litres of lube oil for a complete -hange. In addition, let us assume: No. of oil changes/year for low speed diesel 0.233 (Bid 'A') No. of oil changes/year tor medium speed diesel 1.08 (Bid 'B') Cost of oil for low speed diesel (Bid 'A') - system oil $1.07/litre - cylinder oil $1.38/litre Cost of oil for medium speed diesel (Bid 'B') - $1.26/litre Then annual cost of oil (for oil changes only) for Bid 'A' is: $9. 972.00 Difference between actual cost and reference cost is: (9972-25000) = - $15 028.00 Present worth of differential cost of oil over life of 25 years using a discount rate of 12% is: (15 028 x 7.784) + 15 028 - - $132 000 The annual cost of oil (for oil changes only) for Bid 'S' is: $46 267.00 Difference between actual cost and reference cost is: $21 267 Present worth of differential cost of oil over life of 20 years using a discount rate of 12% is: (21 267 x 7.366) + 21 267 ' $177 919 202 G.11 Mechanical Design Features The methodology for assigning costs or benefits for mechanical design features is detailed in Section 6.7. Lot us assume that we have been supplied the following data with the two bids under consideration: Bid 'A' Bid 'B' Exhaust valve seat temperature 400°C 4500C Brake mean effective pressure 13 bar 20 bar Excess brake h'irsepower over uwt brake horsepower required to main- tain continuous power at generator terminals -- - Fuel injection pump pressure -- -- Cylinder Arrangement in-line vee The evaluation factors and method are as follows: Evaluation Evaluation Enginti Data Factor Method Exhaust valve seat or valve port metal temperature 0 to 70 A Brake mean effective pressure 0 to 60 A Mean piston speed 0 to 50 A Excess (continuous) brake horse- power over net brake horsepower required to m 1ntain maximum continuous power at generator terminals 0 to 40 A Fuel injection pump pressure 0 to 30 A Cylinder arrangement (in-line or Vee) 0 to 20 B 203 For the oil burned in the cylinder we will assign a differential cost based on a consumption of 1.3 g/kWh for medium speed engines and 0.8 g/kWh for low speed engines. Let us further assume a production level of 150 000 000 kWh per year and an evaluation period of 20 years and an assumed base cost of $100 000.00. The cost of lubrication is as follows: For Bid 'A: 0.8 x 150 000 000 x 1.38 910 - $181 978.00 (910 is conversinn from grams to litres) Thus annual differential cost is: $81 978.00 The present worth of this over 20 years is: $685 803.00 For Bid 'B': 1.3 x 150 000 000 x 1.26 910 = $270 000.00 The annual differential cost is: $170 000.00 The present worth of this over 20 years is: $1 422 180.U0 ThIese costs along with the cost of oil changes are included in table G-1 as item 17. 204 The evaluation proceeds as follows: Bid 'A' Bid 'B' Exhaust valve seat temperature 70 0 Brake mean effective pressure 60 0 Cylinder arrangement 20 0 TOTAL 150 0 Per unit of possible points 1.0 0.0 3% of the base price is affected by this evaluation, thus, the modification to the base price is: For Bid 'A': the benefit (negative cost) is $ 26 260 000 x 0.03 x 1.0 = $ 787 800.00 For Bid 'B': the adjustment is zero This is shown as item 10 in table G-1. G.12 Engines Similar to Existing Engines in Plant We may assume a benefit of 2% of the base price for engines which are similar to those in the existing system. This benefit is based on the value of having common spare parts and the advantage of the operating and maintenance staff being already familiar with the engine type. If we assume that the engines in Bid 'B' are similar to those existing, we add a benefit (or negative cost) of: 17 920 000 x 0.02 * $ 358 400 205 G.13 Arrangements for Training of Staff We assume for the purpose of this example that the facilities and arrangements for staff training are similar for both side. Thus, there is no need to assign a benefit or cost to - _. If this were necessary it would be assessed based on p-ofessional judgement and calculated as a percentage of the base price as in G.ll above. G.14 Rngine Manufacturer as Prime Contractor We assume a benefit (negative cost) of 0.5% of the base price if the engine manufacturer is the prime contractor. This arrangement usually is more secure for the purchaser and the 0.5% represents "insurance" against future difficulties with resolving any equipment problems that may occur. The amount assigned is subject to the purchaser's perception of the impor- tance of dealing with the engine manufacturer as prime contractor. If we assume that in Bid 'A', the prime contractor is not the engine manufacturer, and in Bid 'B' he is, then we assign a benefit to Bid 'B'. The value of the benefit (negative cost) is: 17 920 000 x 0.005 = $ 89 600 This benefit is entered as item 22 in table G-1. G.15 Supplier's Past Performance A procedure for recording performance and assigning weights is detailed in the paper "The Supplier's Evalu,ations - by Charles Hendrickson - Transmis3ion and Distribution, March 1980. 206 Suppliers are awarded points for their past performance on deli- very and response. Let us assume for this example that the supplier of Bid 'A' has a multiplier of 4 and the supplier of Bid 'B' has a multiplier of 6 on a scale where 1 represents poor performance and 10 represents excellent performance. Then since this evaluation affects 1% of the base price, benefits (negative costs) are assigned as follows: Bid 'Al: 26 260 000 x 0.01 x 4 + 10 - $ 105 040.00 Bid 'B': 17 920 000 x 0.01 x 6 + 10 - $ 107 520.00 This evaluation should only be used if there is a reliable record of the past performance of the suppliers involved. 207 No. 1 Energy Issues in dte Developing Word, Febary 1988. No. 2 Review of World Bank Lendig for Electric Power, March 1988. No. 3 Some Consideons m Collectig Data on Household Energy Consumpdtn, March 1988. No. 4 hnproving Power System Efficiency in the Developing Countries thrugh Performance Contracdng, May 1988. No. 5 Impact of Lower Oil Prices on Renewable Eergy Teclogies, May 1988. No. 6 A Compaison of Lamps for Domestic Lighfting in Developing Counties, June 1988. No. 7 Recent Worid Bank Acties in Eney (Revisd Octber 1989). No. 8 A Visual Overview of the World Oil Makets July 1988. No. 9 Current ntemational Gas Trades and Pie, November 1988. No. 10 Prmotng Investment foir Naturl Gas Exploron and Producton in Developing Counties, January 1988. No. 11 Technology Survey Report on Electric Power Systems, February 1989. No. 12 Recent Devlopments in the U.S. Power Sector and Their Relevance for the Devdoping Countries, Febry 1989. No. 13 Domestic Enrg Pricing Policies, April 1989. No. 14 nancing of the Energy Sctor in Developing Coumties, April 1989. No. 15 le Future Role of Hydropower in Developing Countries, April 1989. No. 16 Pnelwood Stumpage: for Developing Coutry Energy Planni June 1989. No. 17 Inc ing Risk andcUcaiy in Power System Planning, June 1989. No. 18 Reviewm ad Evaluatio of Bsoo Elcridc Frmeastng Expmew% (1960- 1985), June 1989. No. 19 Woodfel Supply and ,July 1989. No. 20 Them Mlawi Chb Poject - Ebpeience and Lsss, January 1990. No. 21 1 l r sforElctric PowerintheDeveopingCountisinte February 1 990. 208 No. 23 Swnmary Data Sheets of 1987 Power and Cmmercial Ene Statisics for 100 Developing Countries, March 1990. No. 24 A Review of the Treatment of Enviromental Aspects of Bank Energy Projects, March 1990. No. 25 Ibe Sus of Liquified Natual Gas Worldwide, March 1990. No. 26 Populaton Growth, Wood Fuels, and Resource Problems in Sub-Saharan Africa, March 1990. No. 27 The Status of Nuclear Power Technology - An Upde, April 1990. No. 28 Decomissioning of Nuclear Power Facilities, April 1990. No. 29 Interfuel Substitution and Changes in the Way Households Use Energy: The Case of Cooking and LUghting Behavior in Urban Java, October 1990. No. 30 Reguation, Deregulaion, or Reregulation-What is Needed in LDCs Power Sector? July 1990. No. 31 Understanding the Costs and Schedules of World Bank Supported Hydroelectric Projects, July 1990. No. 32 Review of Electity Taiffs in Developing Counries During the 1980s, November 1990. No. 33 Private Sector Paticipation in Pnwer tbrough BOOT Schemes, December 1990. No. 34 Identifying the Basic Conditions for Economic Genration of Public Electicity from Surplus Bagasse in Sugar Mills, April 1991. No. 35 spects for Gas-Fueled Combined-ycle Power Generation in the Developing Countries, May 1991. No. 36 Radioactive Waste Managment - A Background Study, June 1991. No. 37 A Study of the Tnsfer of Petdreum Fuels Pollution, Jy 1991. No. 38 Impving Chaoaling Efficiency in the Taditional Rural Sector, July 1991. No. 39 Decision Makig Under Unceraty - An Opdon Valuadon Approach to Power Planning, August 1991. No. 40 Summary 1988 Power Data Sheets for 100 Developing Countries, August 1991. No. 41 HealthandSafetyAspectsofNucIarPowerPlants,August 1991. No. 42 . Review of naonal Power Sales Agreements, August 1991. No.43 GuidelineforDieselGenangPlantSpecifi- ionandBidEvaluation, September 1991. For extra copies, please call 33616. 209 INDUSTRY SERTIES PAPERS No. 1 Japanese Direct Foreign Investment: Patterns and Implications for Developing Countries, February 1989. No. 2 Emerging Patterns of International Competition in Selected Industrial Product Groups, February 1989. No. 3 Changing Firm Boundaries: Analysis of Technology-Sharing Alliances, February 1989. No. 4 Technological Advance and Organizational Innovation in the Engineering Industry, March 1989. No. 5 Export Catalyst in Low-Income Countries, November 1989. No. 6 Overview of Japanese Industrial Technology Development, March 1989. No. 7 Reform of Owniership and Control Mechanisms in Hungary and China, April 1989. No. 8 The Computer Industry in Industrialized Economies: Lessons for the Newly Industrializing, February 1989. No. 9 Institutions and Dynamic Comparative Advantage Electronics Industry in South Korea and Taiwan, June 1989. No. 10 New Enviroments for Intellectual Property, June 1989. No. 11 Managing Entry Into International Markets: Lessons From the East Asian Experience, June 1989. No. 12 Impact of Technological Change on Industrial Prospects for the LDCs, June 1989. No. 13 The Protection of Intellectual Property Rights and industrial Technology Development in Brazil, September 1989. No. 14 Regional Integration and Economic Development, November 1989. No. 15 Specialization, Technical Change and Competitiveness in the Brazilian Electronics Industry, November 1989. 210 INDUSTRY SERIES PAPERS cozt'd No. 16 Small Trading Companies and a Successfu Export Response: Lessons From Hong Kong, December 1989. No. 17 Flowers: Global Subsector Study, December 1989. No. 18 The Shrimp Industry Global Subsector Study, December 1989. No. 19 Garments: Global Subsector Study, December 1989. No. 20 World Bank Lending for Small and Medium Enterprises: Fifteen Years of Experience, December 1989. No. 21 Reputation in Manufactured Goods Trade, December 1989. No. 22 Foreig Direct Investment From the Newly Industrialied Economies, December 1989. No. 23 Buyer-Seller Links for Export Development, March 1990. No. 24 Technology Strategy & Policy for Industrial Competitiveness: A Cae Study of Thailand, Februa"r 1990. No. 25 Ivestment, Productivity and Comparative Advantage, April 1990. No. 26 Cost Reduction, Product Development and the Real Exchange Rate, April 1990. No. 27 Overcoming Policy Endogeneity: Strategic Role for Domestic Competition in Industrial Policy Reform, April 1990. No. 28 Conditionality in Adjustment Lending FY80-89: The ALCID Database, May 1990. No. 29 . Iternational Competitiveness: Determinants and indicators, Marh 1990. No. 30 FY89 Sector Review Industry, Trade and Fiance, November 1989. No. 31 The Design of Adjustment Lending for Industry Review of Current Practice, June 1990. 211 INDISTRY SERdES PAPERS cont'd No. 32 National Systems Supporting Technical Advance in Industy: The Brailian Experience, June 26, 1990. No. 33 Ghanaes Sma1l Enterprise Sectr: Survey of Adjustment Response and Constraints, June 1990. No. 34 Footwear: Global Subsector Study, June 1990. No. 35 Tightening the Soft Budget Constraint in Reforming Socialist Economies, May 1990. No. 36 Free Trade Zones in Export Strategies, December 1990. No. 37 Electroics Development Strategyp The Role of Government, June 1990 No. 38 Export Fmance in the Philippines: Opportunities and Constraints for Developing Country Suppliers, June 1990. No. 39 The US. Automotive Aftermarket: Opportunities and Constraints for Developing Country Suppliers, June 1990 No. 40 Inestment As ADeterminant of Industrial Competitiveness and Comparative Advantage: Evidence from Six Countries, August 1990 (not yet published) No. 41 Adjustment and Constrained Response: Malawi at the Threshold of Sustained GTowth, October 1990. No. 42 Export Finance - Issues and Directions Case Study of the Philippines, December 1990 No. 43 The Basics of Antitrust Poliyr A Review of Ten Nations and the EEC, Februay 1991. No. 44 Technology Strategy in the Economy of Taiwan: Exploiting Foregin Linkages and Investing in Local Capability, January 1991 No. 45 The Impact of Adjustment Lending on Industry in Afiican Countries, June 1991. E:Dk For extra copies of these papers please contact Miss Wendy Young on extenion 33618, Room S-4101