Survival Skills of Gas-fired Power Plants

There are mainly three types of gas-fired generation units in Shanghai. The first is combined heat and power unit represented by Shanghai Caojing Cogeneration Co., Ltd. (Caojing Cogeneration), which runs continuously throughout the year except for maintenance; the second is peak load unit which starts up at day and shuts down at night, represented by the 9F class unit at Shanghai Shenergy Lingang CCGT Power Generation Co., Ltd.; the third is peak load unit under extreme conditions, represented by the E class unit at Luojing Gas-fired Power Plant affiliated to SEP, with annual utilization hours of just over 300.


Caojing Cogeneration has two sets of 300 MW class 9F gas-steam combined cycle units made by GE, which were put into commercial operation on August 18, 2005 and December 4, 2005 respectively, also among the earliest F class gas turbines in Shanghai.


Due to the positioning of "power determined by heat", the power plant has no need to participate in the peaking operation, with annual utilization hours of around 6,000 and annual power generation of over 4.2 TWh, accounting for more than 40 percent of total gas-fired power generation in Shanghai. Compared with those peak load units which starts up in the morning and shuts down at night, Caojing Cogeneration enjoys its unique status, and it has become the guarantee of the power plant's profit.


"Gas-steam combined cycle is the most profitable gas-fired power generation model. Because of high price for natural gas, natural gas power generation units make loss for every kilowatt hour they produce. Nevertheless, gas-steam combined cycle has economic benefit ensured by heat supply. In general, it is suitable for the industry park in need of thermal power or heat to construct combined cycle power plant," said Shi Peigang, general manager of Caojing Cogeneration.


For Caojing Cogeneration, the profit arising from heat supply accounts for 70 percent of total profit, power generation accounts for 20 percent, and the rest accounts for 10 percent. In 2016, the total profit of the power plant reached RMB 570 million, which ranked first among domestic gas-fired power plants.  


Although cogeneration provides guarantee for the operation of Caojing Cogeneration, it is not the only reason for securing such good economic returns. In fact, the key factor is the power plant's innovation and refinement made in operation management.


"Featured with high fuel efficiency, gas-steam combined cycle units have an obvious advantage in terms of gross thermal efficiency, net coal consumption rate and relevant indicators. Considering the current gas supply amount, our units are running with the efficiency maintained around 70 percent and net coal consumption rate of 208.3 g/KWh, while 300 MW class coal-fired power plants have the efficiency between 36 and 38 percent along with the net coal consumption rate between 325 and 335 g/KWh. Therefore, our gas-steam combined cycle units have better profitability and social influence than coal-fired power plants," said Shi.


According to the initial goal, the profit rate of Caojing Cogeneration was set at 8 percent. But over the past years, the actual profits have been well above that goal. The power plant managed to boost profits through increasing unit efficiency and lowering cost. In general, the unit efficiency will go down with the increase of operation years. Nevertheless, the unit efficiency of Caojing Cogeneration has hardly decreased, with the heat rate of the two units under rated condition as high as 81 percent, far more than the heat rate of ordinary gas-steam combined cycle units. The gas consumption for each kilowatt hour of electricity generated by the unit of Caojing Cogeneration is 0.17 cubic meters, far below the average level of domestic gas-fired units. In addition, the power plant recovers the remaining heat and condensate water from its customers, with annual recovery amount of 1 million GJ and 1.4 million tons respectively, which lowers the cost of customers and increases the power plant's income while realizing efficient and cyclic utilization of resources.


Caojing Cogeneration's good returns also benefit from the market-oriented linkage mechanism between coal and natural gas prices based on which the price of steam goes up with the increase of natural gas price and vice versa.


"We have been a market-oriented enterprise since our founding. The steam price is determined through our negotiations with customers, and it is contract price rather than government pricing. The price is composed of fixed charge, which is mainly investment cost plus reasonable profit and will be adjusted once a year, and variable charge, which mainly consists of prices of fuel, chemical agent and water, and will be adjusted once a month. Under such circumstances, we almost take no risk and could make reasonable and fairly stable profit," Shi introduced.


During the global financial crisis in 2008, the profit of chemical industry tumbled, and thus the daily steam supply amount of Caojing Cogeneration fell to around 100 tons from more than 200 tons. However, under take-or-pay clause signed between the power plant and customers, those chemical enterprises had to pay fixed charges even without steam consumption, and therefore the power plant's earnings had not been affected greatly.


Compared with Caojing Cogeneration, those peak load units in Shanghai such as Lingang CCGT Power Generation and Luojing Gas-fired Power Plant are confronted with fewer annual utilization hours. In 2016, the annual utilization hours of Lingang CCGT Power Generation were 1567, with annual power generation of 2.5 TWh.


In comparison, the annual utilization hours of Luojing Power Plant are even lower, with just about 320 in 2016. Since power generation of peak load unit cannot make ends meet, Luojing Power Plant is unwilling to produce much electricity actually.


"Our units consume 0.234 cubic meters of natural gas for each kilowatt hour of power generation, that is, a cubic meter of natural gas could generate 4.37 KWh of electricity. Considering that the price of natural gas is RMB 2.5 per cubic meter plus other costs, the cost price of power generation is RMB 0.86/KWh for our power plant. Thus, we could barely make a small profit with annual utilization hours of within 500 plus revenue from capacity payment, while we will definitely be loss-making with annual utilization hours of more than 500. Therefore, we try not to exceed annual utilization hours of 500 every year, only generating power at times of power shortage or power grid strains," said Qu Hao, general manager and Party secretary of Luojing Power Plant.


Although natural gas power generation units cannot have such high returns as combined heat and power units, they can still make profits with adequate utilization hours, which is the consensus of peak load gas-fired power plant leaders in Shanghai.


On March 31, Luojing Power Plant made an experiment during which its unit ran for 37 consecutive hours and earned profit of RMB 70,000. Under the same circumstance of connecting to the grid at 8 am and shutting down at 10 pm, the unit ran for 12 hours in a row after a hot startup on June 1 with a loss of over RMB 40,000 while it ran for 12 straight hours after a cold startup on May 31 with a loss of more than RMB 110,000.


"We will make certain profit if we run the unit for 24 hours continuously. During the start-up time, the warming-up process of turbine and the process of generator starting from the speed of zero to 3,000 revolutions per minute both consume energy, and thus the related gas consumption should be included in the cost. The total cost for a single start-stop process is fixed, which is about RMB 100,000 for our unit. Therefore, the longer the running time is, the fewer the cost per kilowatt hour of electricity is," said Qu.


According to his introduction, the gas consumption for the unit of Luojing Power Plant to start up in the morning and shut down at night is equal to net coal consumption rate of 272 g/KWh. In the case of continuous operation for a week, the gas consumption will be converted to net coal consumption rate of just 210 g/KWh.


Taking into account that the positioning of units will remain unchanged for the time being, most peak load gas-fired units have been attempting to lower operation costs through optimizing operation mode.


Luojing Power Plant has developed a set of strategies through operation mode optimization as follows: generating electricity at the beginning and the end of a year, running the same unit continuously for one week, and ensuring that the unit runs at full capacity for more than 12 consecutive hours during a day.


"The outside temperature is low in the first quarter and fourth quarter, with a relatively small impact on the efficiency of gas turbine. In winter, the unit efficiency could reach 200 MW at full load, while it could only get to 165 MW at full capacity in June. In the first quarter of this year, our units start up and shut down 20 times altogether, with accumulated power generation of 70 GWh and a profit of RMB 110,000," said Qu.

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