Onsite LNG backup system 01

Onsite LNG backup system: your guarantee against curtailment

The loss of fuel supply at a power plant can have huge negative impacts – potentially resulting in a loss of electricity supply to the plant owner’s customers and, consequently, millions of dollars.

Text: Kenneth Engblom, John Reinlund, Matti Rautkivi Photo: Wärtsilä

For gas-fired plants, the use of liquefied natural gas (LNG) storage can be an effective and economical solution for providing a backup source of fuel in the event of a pipeline gas interruption.

Previously, the only means of doing this was for the gas utility to build LNG peak shaving plants and satellite terminals to increase the reliability of the gas grid.

One development with significant potential is the possibility to equip a gas engine-based power plant with its own onsite LNG terminal, to be refuelled by cryogenic tank trucks. The size of the terminal is a function of the power plant’s capacity, projected length of gas interruptions and setup of the refuelling logistics. Typically, the tanks range from a few hundred to a couple thousand cubic metres.

This was an option adopted by a municipally owned electric utility in the US, when it asked Wärtsilä to build a gas-fired power plant with a backup LNG terminal under an EEQ (engineering and equipment delivery) contract. Wärtsilä also provided engineering for the LNG system.

Fig. 1 - LNG consumption for various plant sizes and timespans.
Fig. 1 - LNG consumption for various plant sizes and timespans.

   

Integrated rationale

The US, with its upsurge of gas-fired power plants resulting from the shale gas revolution, is an ideal market for integrated power with LNG backup installations.

In addition to the rapid rise of gas- fired generation, the growth of the shale gas industry has resulted in increasing availability of LNG.

Wärtsilä is perfectly positioned to take advantage of current US gas market developments. We have been building power plants based on internal combustion engines – capable of running on liquid fuel, gas, or both – for many years. For the last couple of years, we also have developed expertise in providing LNG infrastructure.

With both power and LNG expertise, Wärtsilä is now able to supply and install a complete power and LNG backup solution for plant owners. Although the challenges for gas-fired generation vary from market to market, there are incentives to consider an LNG backup solution in almost all countries.

Integrated LNG – smart power solution

The utility in the US first began looking at building a new power plant a few years ago and focused on gas, as clean, reliable generation was the primary goal.

The use of multiple prime movers not only provides redundancy but also gives the plant excellent load following capability. The ability to run individual units at full load, to provide incremental ‘blocks’ of power, means there is never a need to derate output, thereby avoiding a reduction in efficiency at part load and any corresponding increase in emissions.

Wärtsilä will supply the LNG terminal with a truck unloading station, a 380 m3 cryogenic tank capable of fuelling 20 hours of operation, and regasification systems.

The entire facility will be controlled from a single integrated control system, also supplied by Wärtsilä.

Fig. 2 - A Wärtsilä power plant combined with an LNG backup solution.
Fig. 2 - A Wärtsilä power plant combined with an LNG backup solution.

 

Value proposition

Having a backup gas supply can make sense to a plant owner for a number of reasons. It may be that the gas supply is subject to interruptions or varying pipeline pressure. Depending on the market in which the plant is operating, the owner could also be hit by severe financial penalties for failing to produce electricity during times of peak consumption. It could also provide a means of hedging fuel price since the price of LNG is not as volatile as for pipeline gas during peak periods.

In terms of operation, having an LNG backup can potentially provide savings in several areas.

In the US, the price a power plant owner pays for pipeline gas varies according to the hub price and the price of transporting gas along the pipeline. Further, if the power plant is at the end of the pipeline, gas availability is less reliable, and the plant owner will often have to pay a premium for a reliable supply. A firm gas contract to ensure gas is available 100% of the time could typically cost around USD 8 million/year in the Northwest for a 200 MW power plant.

If the plant is in the Northeast, north Midwest or Northwest of the US, where high gas demand in the winter can cause gas availability issues, a plant operator will either need to have a firm gas contract or a backup fuel.

The cost of failure to supply electricity for a minimum specified time due to lack of gas can be huge. In the PJM (Pennsylvania, New Jersey and Maryland) market, for example, the financial penalty is the loss of capacity payment for an entire year. For a 200 MW power plant operating in this market, this could amount to several millions of dollars for each incident.

With these considerations, a fuel backup solution, whether liquid fuel or LNG, makes good economic sense. The hours of backup needed vary according to market rules but, by way of example, building a fuel backup system for a 200 MW power plant in PJM with 48-hour storage capability will cost in the region of USD 20 million. This would result in a payback of less than three years for the backup option versus a firm gas contract.

As the capital cost of constructing a fuel oil backup versus an LNG backup is lower, the choice between the two is dictated by environmental restrictions.

Although fuel oil may at times be a little cheaper to buy, operators typically are not permitted to burn diesel for more than 200-300 hours/year. In some areas, it is difficult or sometimes impossible to obtain a permit for burning fuel oil.

Another advantage of an LNG backup over fuel oil is that a dual-fuel power plant owner can reduce maintenance costs by running the plant on clean-burning gas only.

An integrated power plant with LNG backup should be a consideration for power plant owners now and in the future.

More information:


http://www.wartsila.com/energy

http://www.wartsila.com/energy/lng-infrastructure

Authors: Kenneth Engblom, Director, Sales & Marketing, LNG Solutions, Wärtsilä Energy Solutions
John Reinlund, Business Analyst, LNG Solutions, Wärtsilä Energy Solutions 
Matti Rautkivi, General Manager, Market Development, Wärtsilä Energy Solutions
mail: kenneth.engblom@wartsila.com, john.reinlund@wartsila.com, matti.rautkivi@wartsila.com

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