KEMA - Power generation fleet management

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	Consulting Services > Power generation > Asset management > Fleet management


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	Power generation fleet management Dispatch of generators, costs of generation, electricity sale and purchase

Operate your assets and trade There is a strong relationship between the operation of your assets and trading. In practice the trading department might make decisions about the operation of assets based on detailed cost information from the generation department. The generation department makes decisions about generator dispatch based on information or instructions from the trading department. The trading department requests improved performance to gain a stronger competitive edge. However, the generation department must consider the consequences of performance on plant condition and operational costs. To effectively manage your generation assets you must continually evaluate up-selling or purchasing of electricity against decisions on performance versus condition based on: dispatch of generators costs of generation electricity sale and purchase.

Optimize the dispatch of your generation portfolio The dispatch of generators involves complex relations. Software models must be used to quantify the marginal costs of the separate generating units and to optimize the dispatch of the generation portfolio under different circumstances. The same software models are also needed for long-term decision calculations that ensure a suitable timeframe to address contracts, maintenance and investment issues. These long-term calculations can be used to examine the effect of generation scenarios on maintenance costs. This allows the dispatch model to provide direct information on how to dispatch each generator. Each decision on generation dispatch must be made based on the following information: costs of generation value of electricity for electricity sales and purchase.

Each of these costs plays a key role There are four primary costs associated with generation: capital costs, operations and maintenance, fuels costs and generating capacity. Each of these costs plays a key role in the effective management of your power generation assets. Capital costs Capital costs are related primarily to long-term decisions about investments, rehabilitation, upgrading and life extension. Decisions about the dispatch of existing generators need to be based on the consideration of marginal costs only in relation to improved competitiveness. You need to be able to perform so-called "what if" analyses to determine the effects on trading. Operation & Maintenance You should consider operation and maintenance as integral parts of your whole business strategy. O&M decisions are critical for your generation costs and therefore for your competitiveness. Your dispatch decisions are the key to the O&M aspect of power generation asset management. Effective asset management requires obtaining the correct data and data streams to produce the following costs on a per unit basis: inspection and monitoring costs maintenance costs in relation to the operation regime depreciation and life time consumption in relation to the operation regime expressed in costs expected availability and non-availability in relation to the operation regime. Fuel costs Fuel costs are a primary factor in the overall cost of generation. The optimum dispatch of generating units at times can be very sensitive to the gas-coal price difference. The specific tariff structure of gas makes choices about dispatch, purchase, and sales very complicated. An integrated risk assessment of fuel prices and electricity prices is necessary to quantify the effect of market developments. Decisions to use a certain fuel quality may cause environmental and technical restrictions, affect maintenance costs and the remaining lifetime of the unit, and affect future fuel costs due to changes in availability. Generating capacity The generation capacity of a plant also depends on a number of external influences such as ambient conditions, cooling water temperature, availability and emission restrictions. To optimize your generation capacity, KEMA provides plant performance models based on our own Spence software tool. The tool provides trading forecasts relative to available power and fuel consumption in relation to above-mentioned external conditions.

Generating electricity depends on the market value

Decisions on buying, selling or generating electricity also depends on the market value of electricity. For selling or buying the following markets exist:

electricity sales or purchase via OTC
trading on the power exchange
regulating power and reserve market.

The price uncertainty of these markets makes it necessary to perform scenario analyses and risk assessments.

In the short-term, the short-term balance of supply and demand influences electricity prices. This balance may be distorted by outages of generating units or by unexpected changes in demand. In the long term, the supply and demand balance changes due to increased demand and replacement of generators.
Prices are also determined by strategic behavior of market participants. You can determine the influence on the equilibrium prices with simulation tools such as our strategic bidding model SYMBAD. This model calculates equilibrium prices based on information like electricity demand, available generating capacity, variable costs and generation portfolios.
For more information please contact us.