For power generators, improving the performance of existing assets by even small margins can have an outsized financial impact. Unlocking just 2-5% better efficiency, reliability and flexibility from your generation portfolio can translate directly to your bottom line.
This article analyzes how incremental asset optimization creates significant value.
The Power of Marginal Gains
Targeting asset performance improvements of just 2-5% may seem minor compared to pursuing game-changing innovations. However, small gains applied across an entire fleet deliver major results.
For example, boosting the average heat rate of a 1 GW coal plant by 2% reduces yearly fuel consumption by over $1 million (assuming $2.50/MMBtu coal). The savings grow exponentially for larger fleets.
Likewise, decreasing forced outage rates by 2-5% avoids millions in replacement power costs and lost revenues. Optimizing maintenance intervals and extending equipment life also generate substantial savings over time.
The key is that modest percentage gains roll up into impactful bottom-line improvements.
Fine-tuning operations to capture the best prices ensure assets produce maximum revenues.
Key optimization levers:
- Enhancing price forecasting to inform bidding strategies.
- Coordinating outage scheduling around peak windows.
- Utilizing energy storage or flexible operations to capitalize on price volatility.
- Tweaking control settings to provide valuable grid services.
- Participating in emerging value streams like capacity or ancillary service markets.
- Managing heat rates, ramp rates, and minimum loads to avoid curtailments.
Together, these incremental enhancements can boost revenues by 2-5%.
There are also significant savings available from minimizing fuel consumption, maintenance expenses and other variable costs. Examples include:
- Improving heat rate efficiency with optimized control setpoints.
- Reducing forced outages through condition monitoring.
- Streamlining maintenance activities using predictive analytics.
- Lowering inventory costs through supply chain optimizations.
- Leveraging data to extend equipment life and run times.
Finding even small percentage savings across all cost categories quickly adds up.
Compliance & Risk Reduction
By boosting compliance, assets operate reliably within constraints and avoid penalties. This is achieved through:
- Enhanced monitoring and diagnostics to identify issues.
- Automating regulatory and compliance reporting.
- Predictive analytics to avoid permit or emission limit exceedances.
- Tools to optimize within operating constraints.
- Increased agility to avoid forced outages.
Staying in compliance minimizes regulatory and reliability risks.
Sustainability & ESG Performance
Optimized assets also align with sustainability goals:
- Improved heat rates and availability reduce emissions intensity.
- Optimized operations lower water consumption.
- Increased reliability limits flaring events.
- Reduced maintenance needs decrease waste.
- Lower forced outages support grid stability.
These gains enhance ESG metrics important to stakeholders.
The Optimization Mindset
To create value from marginal improvements, organizations need an optimization mindset focused on continuously maximizing asset performance. Leaders must give teams the mandate, tools and incentives to constantly pursue small gains.
Supported by data and technology, incremental optimization delivers outsized financial results. Unlocking the power of 2-5% translates into millions in value for generation portfolios.