- Global energy demand is expected to climb 35% by 2030 from 2005 levels, which challenges industrial plant managers and power generators to meet this growth, while balancing operational and financial goals.
- Energy security can be achieved only with supply-side efficiency, reliability and flexibility, as well as adequate demand management systems. Achieving this requires new levels of collaboration and communication between the grid and power plants.
- A smart grid delivers real-time knowledge, empowering smarter choices and significant benefits to both plant operators and consumers.
- According to a recent IEA study, global energy consumption is expected to grow by nearly 150% over current levels.
Karl Fessenden (KF) is vice president of power generation services, energy services, at GE, where he’s responsible for developing and executing a growth strategy to position the division, which was recently created following the merger of contractual services and power services. A 14-year GE employee, Fessenden’s focus is on power-generating plants. He shared his thoughts on supply-side efficiency, the future of power generation and other topics with Plant Services Executive Editor Russ Kratowicz (RK).
RK: What is supply-side efficiency and why is it a key area the electric industry should examine for productivity gains?
KF: Against today’s backdrop of tightening emissions regulations and reduced operating budgets, efficiency is the new normal. However, energy efficiency programs to date have focused largely on driving demand-side action by consumers to reduce their consumption by replacing incandescent light bulbs with compact fluorescents or switching to time-of-use programs, for example. One study found that if the U.S. utilities with peak demand greater than 3,000 MW achieved top quartile performance for demand side management, more than 47 GW of generation and 106 million tons of CO2 per year could be avoided. Similarly, pilot studies have demonstrated that, given proper incentives, consumers can reduce peak demand by more than 15% and total demand by more than 10%.
But, while it’s an important area of efficiency to address, focusing only on the demand side is a missed opportunity. To succeed, those improvements must be made in tandem with supply-side efficiency efforts. However, the dramatic efficiency improvements that can be made on the supply side have received little attention to date.
Considering that the International Energy Agency (IEA) estimates that two-thirds of the energy contained in the fossil fuels we use to produce electricity today is lost during generation, we must address these opportunities on the supply side. By improving the efficiency of energy production, plant operators can both reduce emissions and improve their bottom lines and energy output. In fact, the IEA estimates that for every $1 invested in supply-side efficiency globally, it will require $3 to accomplish the same level of CO2 reduction via demand-side efficiency efforts because of the number of touch points required.
Incremental improvements, when multiplied across the scale of the energy sector, can result in huge gains in energy efficiency and carbon reductions. Clearly, supply-side efficiency represents a huge source of untapped potential to increase both output and profitability.
RK: What is the producer’s vision for power generation in the future?
KF: A host of studies are predicting increased energy demand. In fact, a recent study suggests that global energy demand will climb 35% by 2030 from 2005 levels. Industrial plant managers and power generators are challenged to meet this growing demand, while balancing operational and financial goals. Today’s energy producers face unique challenges. This shift is forcing everyone in the industry to evaluate the status quo. Plants might now be required to operate in different modes from their original design concept. For example, a plant originally designed to operate with its maximum efficiency at full load will now be spending the majority of its operating time below full power.
To meet these challenges, power plant managers must examine their complete plants to achieve maximum reliability and profitability, by viewing the facility as a single system instead of a patchwork of individual operations. Industries and utilities need to explore and support various supply-side pieces of the energy equation. This will allow producers to understand the health of their overall operations and make smarter decisions about when and where to invest limited resources.
RK: What’s the long-term vision for electrical grid?
KF: Energy security as a key priority of any future grid needs to be a primary consideration. Such security can be achieved only with supply-side efficiency, reliability and flexibility, as well as through adequate demand management systems. Achieving these objectives requires new levels of collaboration and communication between the grid and power plants.
Considering that many of the power plants in the United States are aging — the median age of a coal plant in North America is 44 years — the long-term vision is to establish a complete end-to-end grid infrastructure that meets rising energy demands and complies with increasing regulations.
We also want to ensure that the grid is cost-effective and profitable for plant operators long-term as needs evolve to offset the declining generation efficiencies that plants experience as they age. Energy costs are rising, and demand for energy is expected to continue to rise, as well. As demand climbs, utilities will need either to build new power generation plants — something plant owners might not be able to invest in, especially in the current economic climate — or upgrade existing infrastructure. Efficiency improvements are by far the most effective way to save energy, improve competitiveness and reduce emissions. A one-percentage point improvement in efficiency applied to GE’s existing F Class fleet would result in CO2 emissions reductions of 4.4 million tons per year, and billion dollars per year in fuel savings. Most plant manufacturers’ most pressing concerns are in meeting demand and regulation requirements right now, though.
RK: Why should manufacturing plants embrace a smart grid?
KF: The smart grid marries information and automation technologies with our current electrical infrastructure, helping us support our 21st century energy needs all the way from generation to consumption. It delivers real-time information and knowledge, empowering smarter energy choices and delivering significant benefits to both plant operators and consumers.
Smart grid also delivers greater productivity and efficiencies, helping utilities and consumers do more with less, which is especially important considering the limitations of our current grid, and the increased demand greater consumer electronics usage fosters. This results in a cost savings for all parties.
Plus, as the use of electric vehicles begins to grow across America, the smart grid is critical to ensuring that power generation plants and utilities responsible for transmission and distribution can manage the significant load demand increase, regardless of the power sources tapped.
RK: What current and proposed regulatory factors affect manufacturing plants?
KF: In March, the EPA proposed the first-ever national standards that would regulate mercury and other emissions by power plants. This new legislation would require many power plants to install more efficient technology and pollution prevention controls to comply.
In reality, though, the pressure is already on, as President Barack Obama has pledged that the United States will reduce overall U.S. greenhouse gas emissions by about 17% from 2005 levels by 2020. Considering that more than 40% of our current emissions are from electric generation, power plant emission reduction will play a large part in achieving that goal.
RK: What can a plant do to make producing its own electricity feasible?
KF: Supply-side efficiency improvements can make producing electricity more practical and economically viable. Approximately 60% of energy used isn’t converted into power during generation. Just a one percentage point efficiency improvement in the European combined cycle gas turbine (CCGT) fleet, for example, could reduce carbon dioxide emissions by 6 million tons a year, and save 3 billion cubic feet in gas imports per year. This equates to $700 million per year in fuel savings, and an equivalent reduction in electricity consumption of more than 14 million MWh, assuming an average cost of natural gas at around $7/MMBTU.
To achieve a similar difference on the demand side, nearly 6.8 million households would need to be persuaded to adopt the most efficient, commercially available green technologies, regardless of cost. In transportation terms, this would equate to around 1.3 million drivers giving up their cars.
RK: What can plants do to improve efficiency and prepare for increasing energy prices?
KF: Although there’s no silver bullet to address the complicated mix of economic, resource and regulatory constraints, many plant owners and operators are turning to supply-side efficiency solutions to improve output without the high cost of building new generation facilities. By tapping into these plant-side efficiencies, operators will be in a better strategic position to respond to increasing fuel costs in a smart and effective manner.
RK: To what extent do foreign energy resources affect the electrical industry?
KF: According to a recent IEA study, by 2035, global energy consumption is expected to grow by nearly 150% over current levels. Electricity is the world's fastest-growing form of end-use energy consumption, as it has been for the past several decades, and the strongest growth in electricity generation is from non-OECD (Organisation for Economic Co-operation and Development) countries such as China and India. Non-OECD electricity generation increases by an average annual rate, which is expected to rise by 3.3% as rising standards of living increase demand for home appliances and commercial services, such as hospitals, office buildings and shopping malls. In OECD nations, however, where infrastructures are more mature and population growth is relatively slow, growth in generation is much slower. As the battle for the future of clean energy plays out in policy arenas throughout the United States and around the world, establishing the appropriate framework and conditions to accommodate rapid development and strategic distribution of sustainable solutions is more important than ever.
RK: What supply-side efficiency measures do producers use now to support the manufacturer’s energy picture?
KF: In 2009, GE helped the Dubai Aluminum Company Limited (DUBAL), the world’s largest aluminum producer, realize significant efficiency gains through a strategic combination of turbine rejuvenation and increases in output and efficiency. This combination enabled DUBAL to increase plant output by 13% to 14% without massive capital expenditures. In fact, by making the gas turbines run more efficiently, DUBAL reduced its fuel costs by an estimated $4 million per year.
For companies on a budget, supply-side efficiency upgrades offer ways to integrate and upgrade current technology incrementally to more effectively manage emissions and make operations and plant facilities run smarter, cleaner and more efficiently. For example, the formula for DUBAL was simple: The cost of energy makes up 30% to 40% of the cost of producing aluminum. So, increasing the efficiency of the current turbines reduces bottom line costs, ultimately leading to increased top line growth.
RK: What supply-side efficiency improvements are producers developing for future deployment that will help manufacturers?
KF: Innovation has been a key driver in the development of new and improved efficiency solutions. Plant managers need to examine the bigger picture, focusing on the creation of reliable and sustainable profitability for their businesses as they experience different dynamics in the market. To achieve this goal, plant managers need to optimize the operating efficiency, flexibility and reliability, viewing their facility as a single system instead of a patchwork of individual operations. Industries and utilities need to explore and support various supply-side pieces of the energy equation.
Just last year, GE completed a seven-week upgrade to the S.A. Industrias Celulosa Aragonesa (SAICA) paper mill in Spain, which produces corrugated cardboard boxes for global distribution. GE went to work completing the world’s first 6B “flange-to-flange” replacement, which included a major upgrade to SAICA’s Frame 6B gas turbine, including the replacement of the plant’s compressor, combustor and turbine.
Replacing the key components of SAICA’s gas turbine eliminated the need for the mill to invest in a new unit, and the comprehensive upgrade significantly extended the plant’s life cycle. With the installation of advanced design parts, SAICA experienced broader efficiency in providing its megawatt capability to Spain’s national power grid. Additionally, installation of GE’s Dry Low NOx technology reduced the mill’s NOx emissions from approximately 150 ppm to less than 15 ppm without steam injection.