81725 ESMAP Technical Paper 122/09 Study of Equipment Prices in the Power Sector Study of Equipment Prices in the Power Sector ESMAP Technical Paper 122/09 Energy Sector Management Assistance Program ESMAP Technical Paper 122/09 Study of Equipment Prices in the Power Sector Dirk Pauschert Energy Sector Management Assistance Program Copyright © 2009 The International Bank for Reconstruction and Development/THE WORLD BANK GROUP 1818 H Street, NW Washington, D.C. 20433, U.S.A. All rights reserved Produced in the United States of America. First Printing December 2009 ESMAP Reports are published to communicate the results of ESMAP’s work to the development community. Some sources cited in this paper may be informal documents that are not readily available. The findings, interpretations, and conclusions expressed in this report are entirely those of the author(s) and should not be attributed in any manner to the World Bank, or its affiliated organizations, or to members of its board of executive directors or the countries they represent. The World Bank does not guarantee the accuracy of the data included in this publication and accepts no responsibility whatsoever for any consequence of their use. The boundaries, colors, denominations, other information shown on any map in this volume do not imply on the part of the World Bank Group any judgment on the legal status of any territory or the endorsement or acceptance of such boundaries. The material in this publication is copyrighted. Requests for permission to reproduce portions of it should be sent to the ESMAP manager at the address shown in the copyright notice. ESMAP encourages dissemination of its work and will normally give permission promptly and, when the reproduction is for noncommercial purposes, without asking a fee. The prices in the report are estimates and may not be an accurate reflection of market prices, which may change depending on the evolving manufacturer supply and market demand conditions for such equipment. Therefore the report should not be used as a basis for bidding or bid evaluation. Papers in the ESMAP Technical Series are discussion documents, not final project reports. They are subject to the same copyright as other ESMAP Publications. Contents Abbreviations and Acronyms vii Units of Measure ix Executive Summary xi Background xi Study Findings—Escalation and Market Pricing xi Study Findings—Plant Cost Estimates xiii Study Findings—Global Marketplace xiv 1. Project Approach Methodology 1 2. Price Escalation, Cost Factors, and Market Pricing 3 Worldwide Growth and Its Influence on Escalation from 2004 to 2007 3 Projections of Escalation in the United States, India, and Romania 6 Cost Increases Not Explained by Escalation Indexes 7 Impacts of the International Marketplace 8 Impact of Plant Size on Technology Cost 9 3. Assessment of Price Trends for Generation Plant Equipment 13 Impacts of Increase in Heavy Construction Projects in the United States and Overseas 13 U.S. Trends in Cost Indexes for Power Plant Equipment and Materials 15 Trends in Escalation for Power Plant-Related Items in India and Romania 16 Other Assessments and Items Related to Escalation 18 Evolution of the International Marketplace—Major Equipment Suppliers 19 4. Impact of Plant Size on Cost 23 Impact of Size on Cost for Simple Cycle Gas Turbines 23 Impact of Size on Cost for Gas Turbine/Combined Cycle 24 Impact of Size on Cost for Wind Farms 27 iii CONTENTS 5. Cost Estimates for Power Plants in the United States, India, and Romania 29 Gas Turbine Simple Cycle 29 Gas Turbine Combined Cycle 35 Coal-Fired Steam Plant 39 Oil-Fired Steam Plant 45 Natural Gas-Fired Steam Plant 47 Diesel-Generator Plant 48 Onshore Wind Farms 51 Photovoltaic Array 56 Solar Thermal Array 60 Annex 1. Design Basis 63 Brief Descriptions of Major Generation Options 64 Generation Plant Cost Estimates 65 Cost Estimate Breakdown for the Generation Technologies 68 Size Classification of Generation Plants 69 Summary of Sizes for Generation Plant Cost Estimates 70 Other Generation-Related Criteria 70 Annex 2. Cost Indexes from U.S. Bureau of Labor Statistics (Graphs of Cost Indexes for Equipment and Materials) 75 Cost Indexes for Power Plant Equipment and Materials in the United States 75 Annex 3. OEMs in Romania 87 Coal-Fired Boilers 87 Steam Turbines 90 Combustion Turbines 92 Stationary Diesel Engine Turbines 92 Annex 4. OEMs in India 95 List of Technical Reports 97 Figures 2.1: Average Price of Crude Oil Worldwide 4 2.2: Effect of Size on Cost of Gas Turbine Combined Cycle Units 10 2.3: Effect of Size on Cost of Pulverized Coal-Fired Plants 11 3.1: Cost Indexes for 316 Stainless Steel, Nickel, and Chrome 19 4.1: Impact of Size on OEM Cost for Simple Cycle Units 23 4.2: Change in OEM Prices for Simple Cycle Aeroderivative Gas Turbine Units 24 4.3: Change in OEM Prices for Simple Cycle Heavy-Frame Gas Turbine Units 25 4.4: Impact of Size on OEM Costs for Combined Cycle Units 25 4.5: Change in OEM Prices for Combined Cycle Units 26 4.6: Installed Cost of Wind Projects as a Function of Project Size: U.S. Projects 2003–2006 27 5.1: Year-to-Year Change in Average Price of Heavy-Frame Simple Cycle Units 34 5.2: Year-to-Year Change in Average Price of Aero and Heavy Simple Cycle Units 34 5.3: Year-to-Year Change in Average Price of Combined Cycle Units 39 5.4: Profile of Worldwide Stationary Reciprocating Engine Sales 49 5.5: Manufacturing Experience and Average Turbine Size 52 5.6: Projections of Long-Term Trends in Wind Turbine Costs in Europe 56 5.7: Reported U.S. Wind Turbine Transaction Prices 57 A2.1: Cost Index for Ready-Mix Concrete 76 A2.2: Cost Index for Large Centrifugal Pumps 76 iv Contents A2.3: Cost Index for Large Centrifugal Fans 77 A2.4: Cost Index for Bulk Material Handling Conveyors 77 A2.5: Cost Index for Pneumatic Conveyors 78 A2.6: Cost Index for Crushing, Pulverizing, and Screening Machines 78 A2.7: Cost Index for Integral Horsepower Motors 79 A2.8: Cost Index for Fabricated Steel Plates 79 A2.9: Cost Index for Structural Steel 80 A2.10: Cost Index for Carbon Steel Pipe and Tubing 80 A2.11: Cost Index for Field Erected Steel Tanks 81 A2.12: Cost Index for Heat Exchangers and Condensers 81 A2.13: Cost Index for Fin-Tube Heat Exchangers 82 A2.14: Cost Index for Industrial Mineral Wool 82 A2.15: Cost Index for Refractories, Non-Clay 83 A2.16: Cost Index for Power and Distribution Transformers 83 A2.17: Cost Index for Electric Wire and Cable 84 A2.18: Cost Index for Copper Wire and Cable 84 A2.19: Cost Index for Industrial Process Control Instrument 85 Tables ES1: Historical Average Annual Compound Escalation xii ES2: Projected Future Average Annual Compound Escalation xiii ES3: Class 5 Pricing Estimates for Selected Generation Technologies xiv 2.1: Historical Average Annual Compound Escalation 5 2.2: Projected Average Annual Compound Escalation for Plant Equipment and Materials, 2008–2012 6 2.3: Estimated Costs of Major Equipment 12 2.4: Class 5 Plant Pricing Estimates for Generation Technologies 12 3.1: Average Annual Compound Escalation for Plant Equipment and Materials—United States 15 3.2: Power Plant Equipment and Materials Included in the India and Romania Escalation Data 17 3.3: India—Average Annual Compound Escalation for Plant Equipment and Materials 17 3.4: Romania—Average Annual Compound Escalation for Plant Equipment and Materials 18 5.1: 5-MW Simple Cycle Plant—Aeroderivative Gas Turbine 31 5.2: 25-MW Simple Cycle Plant—Aeroderivative Gas Turbine 32 5.3: 150-MW Simple Cycle Plant—Heavy-Frame Gas Turbine 33 5.4: 140-MW Combined Cycle Plant—Heavy-Frame Gas Turbine 37 5.5: 580-MW Combined Cycle Plant—Heavy-Frame Gas Turbine 38 5.6: 300-MW Pulverized Coal Power Plant—Costs for 1 ϫ 300 MW Subcritical Pulverized Coal-Fired Plant 41 5.7: 500-MW Pulverized Coal Power Plant—Costs for 1 ϫ 500 MW Subcritical Pulverized Coal-Fired Plant 42 5.8: 800-MW Pulverized Coal Power Plant—Costs for 1 ϫ 800 MW Subcritical Pulverized Coal-Fired Plant 43 5.9: 300-MW Oil-Fired Power Plant—Costs for 1 ϫ 300 MW Subcritical Oil-Fired Plant 46 5.10: 300-MW Natural Gas-Fired Power Plant—Costs for 1 ϫ 300 MW Subcritical Natural Gas-Fired Plant 48 5.11: Diesel Engine Information 50 5.12: Total Plant Prices for Diesel Engine-Generator Plants in India, Romania, and the United States 50 5.13: Wind Farm—Cost Estimate Summary, United States 54 5.14: Cost Estimate Summary per 1-MW Wind Turbine 100-MW Wind Farm in India, Romania, and the United States 55 5.15: Cost Breakdown for a Small PV Grid-Connected System 59 5.16: Cost Estimate for a 5-MW Photovoltaic System in India, Romania, and the United States 59 v CONTENTS A1.1: British to Metric Conversion Factors 63 A1.2: Size Classifications for Cost Estimate 70 A1.3: Emission Standards or Guidelines 71 A1.4: Emission Standards for Large Combustion Plant Directive (LCPD)—Applicable to Romania 71 A1.5: Anticipated Emission Control Processes 72 A1.6: Romanian Coal Analysis—Romanian Lignite 72 A1.7: Indian Coal Analysis—Australian Coal 72 A1.8: U.S. Coal Analysis—Powder River Basin (PRB) Subbituminous Coal 73 A1.9: Cost and Site Criteria Applicable to Cost Estimates 73 A4.1 Partial List of OEMs in India 95 vi Abbreviations and Acronyms AACE American Association of Cost Engineers ABMA American Boiler Manufacturers Association AC alternating current ACAR aluminum conductor with aluminum alloy reinforced strands ACF actual cubic feet ACFM actual cubic feet per minute ACSR aluminum conductor with steel reinforced strands AEP annual energy production ASTM American Society for Testing and Materials (now known as ASTM International) BLS Bureau of Labor Statistics Btu/kWh British thermal units per kilowatt-hour BOP balance of plant ºC degrees Centigrade CF capacity factor CT combustion turbine DC direct current DCSF dry standard cubic foot EPA Environmental Protection Agency ESP electrostatic precipitator EU European Union ºF degrees Fahrenheit FGD flue gas desulfurization FOB at point of production GDP gross domestic product GE General Electric GT gas turbine GTCC gas turbine combined cycle GTW Gas Turbine World GW gigawatt g/kWh grams per kilowatt-hour HHV higher heating value HP horsepower HRSG heat recovery steam generator HZ Hertz I&C instruments and controls ID induced draft in. Hg inches of mercury vii STUDY OF EQUIPMENT PRICES IN THE POWER SECTOR ISCCS integrated solar combined cycle system ISO international Standards Organization J joule Kcmil thousand circular mils Kg kilogram kV kilovolt kW kilowatt kWh kilowatt-hour LHV lower heating value MCR maximum continuous rating Mils (measure) one-thousandth of one inch Mils (monetary) one-thousandth of one dollar Mg/Nm3 milligrams per normal cubic meter MMBtu million British thermal units MPa megapascal MW megawatt MWp peak megawatt output NA not Available NETL National Energy Technology Laboratory ng/J nanograms per joule Nm3 normal cubic meter NOx nitrogen oxides NSPS New Source Performance Standards OEM original equipment manufacturer PC pulverized coal PPI Produce Price Index PRB Powder River Basin Coal Wyoming PTC production tax credit PV photovoltaic R&D research and development ROW right-of-way RS rupees SCR selective catalytic reduction SO2 sulfur dioxide SS stainless steel ST steam turbine STG steam turbine-generator SW southwest TBD to be determined TCR total capital requirement TPC total plant cost (also known as total installed cost) TPY tons per year UK United Kingdom US/USA United States of America w.g. water gauge Wp Watts peak viii Units of Measure F fahrenheit GW gigawatt Kg kilogram kV kilovolt kW kilowatt kWh kilowatt-hour MW megawatt Rs rupees US$ U.S. dollar ix Executive Summary Background Against this backdrop, this report was developed with the following objectives: Global economic growth, particularly from 2004 to 20071, has fueled an expansion in the • Identify the current costs of generation construction of industrial, power plant, and options; manufacturing facilities in the United States • Define the most significant contributors to and a dramatic escalation in the construction price increases; of these types of heavy construction projects • Provide projections of future escalation rates; overseas. In addition, the increase in demand for and oil by rapidly growing countries such as China • Identify the underlying factors “driving” the and India and the falling value of the dollar has significant increase in project prices. resulted in an unprecedented rise in the price of oil. This has significantly accelerated oil Understanding of these factors will allow the exploration and resulted in capacity-expansion Bank to better anticipate the price increases it projects at existing oil refineries. The combination can expect in the near future. of power plant, infrastructure, and oil-related projects has resulted in significant growth in demand for boilers, rotating equipment, piping, Study Findings—Escalation structural steel, concrete, electrical components, and Market Pricing and electric wiring. Table 1 provides a summary of the historical In the past four years, global demand has annual average compound escalation for specific led to substantial increases in equipment and power plant-related equipment and materials material prices in the power sector. This is mainly for the United States, India, and Romania. The due to significant increases in the demand for table shows two periods: raw materials and labor associated with the manufacture and fabrication of equipment. From • January 1996 through December 2003; and 2006 to 2008 alone, energy projects financed • January 2004 through December 2007. by the World Bank experienced 30–50 percent increases above the original cost estimates, These periods roughly reflect the time requiring additional financing, a reduction in before and the time after: (1) the significant scope of the project, or schedule delays. These increase in heavy construction projects; and delays are costly to the Bank’s clients because (2) the accelerated increase in the price of oil. they depend on timely completion of projects A comparison of the two time periods shows to meet growing demands for energy. that the spike in escalation is common to all 1 The work preceding the publishing of this report was completed in 2008. Internal, as well as external reviews were conducted through the end of 2009, prior to final clearance by the author and the publishing unit. It is the intention of the author that you find this material interesting and insightful. xi STUDY OF EQUIPMENT PRICES IN THE POWER SECTOR Table ES1 Historical Average Annual Compound Escalation Jan. 1996–Dec. 2003, Jan. 2004–Dec. 2007, Ranking Plant Equipment and Materials % per year % per year United States Fabricated Steel Plates 0.3 10.1 Steel Pipe and Tubing NA 7.0 Centrifugal Pumps 2.0 4.7 Copper Wire and Cable –0.8 18.7 Power and Distribution Transformers NA 13.8 India Fabricated Metal (Structural Steel/Plate) NA 7 Steel Pipe and Tubing NA 6 Mechanical Equipment NA 6 Electric Wire and Cable NA 20 Electric Equipment NA 7 Romania Fabricated Metal (Structural Steel/Plate) NA 7 Steel Pipe and Tubing NA 5 Mechanical Equipment NA 3 Source: U.S. Bureau of Labor Statistics Producers Price Indexes. NA—Not available. of the power-plant-related equipment and characterized by reduced consumer spending, materials. impacting the import of overseas goods and Using the escalation rates from January 2004 services into the United States. This in turn will through December 2007 and calculating the translate into lower rates of escalation in the cumulative increase, the most important drivers overseas countries that supply the United States. of power plant cost have been: In addition to the escalation in the cost of equipment and materials, increases in the cost • Fabricated steel shapes: steel plates— of craft labor are contributing to the overall price 47 percent of the cost; structural steel— increases for constructing generating facilities in 36 percent; and steel pipe—31 percent; the United States. It should be noted that in the • Centrifugal pumps—20 percent; and last four to five years, labor has been escalating • Electrical items: copper wire—69 percent; at about 5 percent per year, compared to about transformers—68 percent. 3 percent per year prior to 2003. Proportionately, labor does not contribute as much to the plant The tabulation in chapter 3 provides additional cost increases as equipment and materials, since categories and further details on escalation of labor is typically responsible for only 30–40 equipment and materials. percent of the total installed cost of power plants. Table 2 provides the projections of escalation However, the escalation of equipment and from 2008 to 2012. The projected escalation rates materials costs is not the only contributor to the are lower than they were for the past three years significant increases in power plant costs. The due to the slowdown in the U.S. economy. This other aspect responsible for price increases is slowdown is forecast to continue through 2010, market demand pricing. In other words, in the last and during this period the economy will be few years the global market has been in a situation xii Executive Summary Table ES2 Projected Future Average Annual Compound Escalation Projected, 2008–2012, Plant Equipment and Materials % per year United States Fabricated Steel Plates 0 to 2 Structural Steel 2 to 3 Steel Pipe and Tubing 2 to 4 Centrifugal Fans 1 to 3 Electric Wire and Cable –1 to 2 Power and Distribution Transformers 1 to 3 India Fabricated Metal (Structural Steel and Plate) 6 to 8 Steel Pipe and Tubing 8 to 9 Mechanical Equipment 3 to 4 Electric Wire and Cable 1 to 3 Electric Equipment 2 to 4 Romania Fabricated Metal (Structural Steel and Plate) 2 to 3 Mechanical Equipment 2 to 3 Steel Pipe and Tubing 2 to 4 Source: URS Washington Division. Note: Values based on a variety of URS Washington Division in-house sources and analyses. where demand for power plant equipment and The results indicate that owners are purchasing services (and infrastructure in general) has been plants in a sellers’ market, where unprecedented higher than the manufacturing and engineering demand has resulted in market price premiums in firm capacity. Under these conditions, the pricing the range of 15 percentage points above material, of equipment and services is often based on what equipment, and labor escalation. the market will bear rather than on the actual cost of production plus industry profit margins. In response to the unprecedented demand, Study Findings—Plant original equipment manufacturers (OEMs) are pricing equipment above the increase in costs of Cost Estimates raw materials and labor costs, and above their The country-level generation technology cost “typical” profit margins. estimates were based on installations located An important statement that supports this in the United States, India, and Romania. The finding came in March 2008 from a large company United States was included as the benchmark. that produces mining equipment, when a company India was selected as representative of Asia and spokesperson asserted “Favorable mining fundamentals because it is second only to China in addition continue to drive order growth, while stretched lead of new power plants and growth of gross times afford considerable pricing power.” (Joy Global, domestic product (GDP). Romania was selected Bloomberg.com, March 6, 2008) as representative of Eastern Europe. In light of this finding, this study compared the The plant cost estimates are based on budget cost of power plants without market demand to the quotes for major equipment from OEMs and a actual costs incurred in constructing power plants. project cost database of recent projects. Major xiii STUDY OF EQUIPMENT PRICES IN THE POWER SECTOR Table ES3 Class 5 Pricing Estimates for Selected Generation Technologies (2008 US$), US$/kW net Generation Plant—Total Plant Cost U.S. India Romania Gas Turbine Combined Cycle Plant, 140 MW 1,410 1,170 1,140 Gas Turbine Simple Cycle Plant, 580 MW 860 720 710 Coal-Fired Steam Plant (sub), 300 MW net 2,730 1,690 2,920 Coal-Fired Steam Plant (sub), 500 MW net 2,290 1,440 2,530 Coal-Fired Steam Plant (super), 800 MW net 1,960 1,290 2,250 Oil-Fired Steam Plant (sub), 300 MW net 1,540 1,180 1,420 Gas-Fired Steam Plant (sub), 300 MW net 1,360 1,040 1,110 Diesel Engine-Generator Plant, 1 MW 540 470 490 Diesel Engine-Generator Plant, 5 MW 630 590 600 Source: Author’s calculations. equipment costs reflect market pricing conditions Within China power plants are being built as of January 2008. In addition, piping, electrical, for one-third to one-half of the international concrete, and all other items reflect market pricing prices for similar plants. It is not clear whether because they were based on the in-house bid these prices are being subsidized or whether databases for actual recent projects. All plant there are other unique market factors. The fact cost estimates are based on grid-connected that these prices have stayed at the same level configurations. Moreover, the equipment, while international commodity prices have structural steel, piping, concrete, labor, and other experienced substantial increases in the last plant items reflect costs specific to the respective two to four years raises questions regarding countries. Table 3 provides the total plant market- their pricing structure. It is certain that labor based pricing for selected generation technologies costs alone provide China with a competitive in the United States, India, and Romania. advantage, which may be reflected in its 20–40 A summary of total plant pricing for all of percent lower production costs. the study technologies is provided in Chapter 3. The most likely focus of Chinese suppliers in In addition, a complete list of the items included the next two to five years is Asia and Africa. Recent in and excluded from the cost estimates for each projects in these regions suggest that the Chinese generation technology can be found later on in suppliers are bidding lower than international this report. prices, but not as low as their domestic market. In India, their pricing is more aggressive (bidding Study Findings— lower than suppliers from other countries). The Chinese market entry strategy is most likely Global Marketplace influenced by a strong domestic supplier with a Regardless of the country’s location, power plant near monopoly in the market. equipment is now being purchased in the global In general, the potential impact of Chinese marketplace. While regional markets still retain suppliers on global power plant prices is likely to some unique characteristics, regional differences be positive, potentially resulting in moderate-to- are being reduced or eliminated. For example, substantial price reduction in some markets and most large Japanese suppliers have established less in others. Over the long term, the price gap offices in the United States and are getting a between Chinese suppliers and other suppliers significant market share of new power plant is likely to reach pricing equilibrium (below the equipment. Another aspect of the international level without their presence, but at some price power plant market is the entry of new suppliers, level between their prices and the prices of all in particular suppliers from China. other competitors). xiv Project Approach 1 Methodology This study was focused on selected generation collection process, major suppliers around the technologies options located in three countries. world were identified. The amount of data The objectives were to: (1) collect and update obtained from suppliers was subject to the existing price data on equipment in the power degree of their cooperation. Past experience was sector; and (2) analyze and report on the found to prevail on this project—many suppliers underlying reasons and correlations for current did not provide data for this study due to their price fluctuations. These data were assembled current workloads. to provide a better understanding of price The price of equipment depends, in part, fluctuations for energy equipment within on the backlogs of suppliers’ production specific country contexts. facilities. The study considers the impact For this study, data on prices for energy of the respective backlogs of gas turbine, generation technologies were collected according steam turbine, boiler, diesel generator, wind to the cost classification system defined in turbine, solar technology, and major electrical subsequent chapters of this document. In order equipment manufacturers. Assessments of the to collect the necessary data, project documents impact of industry backlogs on escalation and were reviewed, and major equipment suppliers plant pricing were based on market reports (OEMs) in the United States, Eastern Europe, and generalized conclusions. All plant costs and India were contacted. As part of the data reflect market-based pricing. 1 Price Escalation, Cost 2 Factors, and Market Pricing Worldwide Growth and Its all overseas countries, China has seen the most substantial growth. The scale of construction Influence on Escalation of coal-fired electric generating stations is just from 2004 to 2007 one indicator: currently, China is building the equivalent of two 500-MW coal-fired electric In the period from 2004 through 2007, there generating units each week, which is roughly were substantial increases in escalation of the equivalent to building the entire electrical raw materials used to manufacture equipment production capacity of the United Kingdom for power plants. This includes raw materials each year! Another indicator of China’s growth or intermediate products used to manufacture is GDP. China experienced increases in GDP of boilers, gas turbines, steam turbines, wind about 10 percent in 2004, 2005, and 2006, and turbines, and motors and generators. From about 11 percent in 2007. January 2005 to December 2006, some significant From 2004 to 2007, the combination of examples of price increases are the following: significant increases in demand for materials for condensers and heat exchangers, 18 percent; heavy construction and the historic acceleration electric wire and cable, 23 percent; power in demand and resulting high price of oil has transformers, 32 percent; and copper wire and further contributed to dramatic increases in the cable, 84 percent. escalation of costs of major equipment and plant Global economic growth in the past three construction materials. As shown in Figure 2.1, years, particularly in China and India, has the price of oil ranged from US$10/barrel to contributed to a worldwide increase in the US$30/barrel from January 1989 to January construction of industrial, power plant, and 2004 and then began climbing at accelerated and manufacturing facilities and the resulting historic rates to US$106/barrel in March 2008. increase in demand for raw materials and Table 2.1 shows the historical annual average intermediate manufacturing products. This has compound escalation for specific power-plant- led to a significant increase in demand for such related equipment and materials for the United items as industrial equipment, power plant States, India, and Romania. The table shows equipment, piping, structural steel, concrete, two periods: electrical components, and electric wiring. In addition, the economic growth has resulted • January 1996 through December 2003; and in a substantial increase in the demand for • January 2004 through December 2007. oil, significantly accelerating exploration and the expansion of the existing capacity of oil These periods reflect the time before refineries. and after the significant increase in heavy The dramatic scale of overseas activity is construction projects and the accelerated typified by the significant number of heavy escalation in the prices of crude oil and refined construction projects in India and China. Of petroleum products. A comparison of the two 3 STUDY OF EQUIPMENT PRICES IN THE POWER SECTOR Figure 2.1 Average Price of Crude Oil Worldwide 100 Price, US$/barrel (Nominal US$) 90 80 70 60 50 40 30 20 10 0 Jan Jan Jan Jan Jan Jan Jan Jan Jan Jan Jan Jan Jan Jan Jan Jan Jan Jan Jan Jan Jan Jan 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 date Source: U.S. Energy Information Administration. periods shows the striking difference in annual However, even without benefit of these escalation. publications, there is enough evidence that The rightmost column in the table shows the OEMs are pricing their equipment above cumulative percentage increase in the cost of the increase in the costs of raw materials equipment and materials over the period from and labor costs, and above their “typical” January 2004 through December 2007. profit margins. OEMs appear to be increasing The increase in escalation rates from their prices because of the overall increase January 2004 through December 2007 provides in demand and the heavy loading of their quantitative explanation for the 30–50 percent production lines. increase between original project estimates Although not specific to individual to bids actually received. The other driver manufacturers, industry news articles and of price increases is market-demand pricing. publications provide market projections that In other words, in the last few years, the indicate that price increases in commodities and global market has been in a situation where materials will continue. The following are some demand for power plant and infrastructure examples of contributing factors: equipment and services has been higher than the manufacturers’ capability to meet • It is predicted that Chinese and Indian the demand. The situation has resulted in demand for commodities including coal and equipment and engineering service pricing iron ore will continue at an annual rate of based on what the market will bear rather than 5 percent for the next 10 years. on the actual cost of production (which consists • Chinese oil demand in 2007 was about 1.9 times of materials and labor costs). its domestic supply. By 2011, it is projected The project team was not able to locate or that demand will be 2.3 times domestic obtain publicly available information on specific supply. This will put increasing demand manufacturer facility loading because in almost on the world’s oil supply, contributing to all cases this is proprietary information. Research continued high prices for refined petroleum firms sell publications that contain information products. High costs of oil will put upward on overall shop capacity and lead times, but pressures on commodities such as iron ore, this information is copyrighted and cannot be nickel, and so forth, because of increased published in any publicly available reports. mining and transportation costs. 4 Price Escalation, Cost Factors, and Market Pricing Table 2.1 Historical Average Annual Compound Escalation Jan. 2004– Jan. 1996– Jan. 2004– Dec. 2007, Dec. 2003, Dec. 2007, % Increase Ranking Plant Equipment and Materials % per year % per year for Period United States 4 Ready-Mix Concrete 1.9 7.9 36 Centrifugal Pumps 2.0 4.7 20 Centrifugal Fans 1.7 4.2 18 Material Handling Conveyors 1.7 4.7 20 Pneumatic Conveyors 1.7 3.8 16 Crushers and Pulverizers 2.9 4.4 19 Integral Horsepower Motors 0.4 6.4 28 Fabricated Steel Plates 0.3 10.1 47 2 Structural Steel 0.9 8.0 36 Steel Pipe and Tubing NA 7.0 31 Field Erected Steel Tanks 1.5 5.8 25 3 Heat Exchangers and Condensers 0.8 7.8 35 Fin Tube Heat Exchangers 1.3 8.4 38 Industrial Mineral Wool 0.4 3.7 16 Refractory, Non-Clay 0.4 3.7 16 1 Electric Wire and Cable 1.1 9.1 42 Power and Distribution Transformers NA 13.8 68 Copper Wire and Cable –0.8 18.7 98 Industrial Process Control Instruments NA 3.0 12 India Fabricated Metal (Structural Steel and Plate) NA 7 31 Steel Pipe and Tubing NA 6 26 Mechanical Equipment NA 6 26 Electric Wire and Cable NA 20 107 Electric Equipment NA 7 31 Romania Fabricated Metal (Structural Steel and Plate) NA 7 31 Steel Pipe and Tubing NA 5 33 Mechanical Equipment NA 3 13 Source: U.S. Bureau of Labor Statistics Producers Price Indexes. NA—Not available. • Specialty steel product mills are at capacity to 24-month lead times until new capacity and still not able to meet demand. This becomes operational. situation will not change until new • In 2008, Japan was unsuccessful in renewing production facilities come on line in 2010. its iron ore contract with Australian iron Some specialty steel products will have 18- ore producing companies, which has 5 STUDY OF EQUIPMENT PRICES IN THE POWER SECTOR usually been for about five years. Iron ore services into the United States. This in turn producers only offered one-year contracts, should result in some slowing in the overseas with a 30 percent escalation clause. Japan economies of countries that supply the United has suspended negotiations. Unless there States. is some significant change in this situation, In the United States, the slowdown is Japanese steel prices are bound to take a projected to result in the average annual sizable jump. compound escalation rate for mechanical • In March 2008, a major Taiwanese steel equipment and concrete declining around 2 company indicated it had experienced a percentage points and 4 percentage points, 40 percent increase in raw material costs. respectively. Fabricated steel shapes will be As a result, the company raised its prices about 5 to 9 percentage points lower in the 2008 for steel plates, electrical coils, rebar, and to 2012 period than in the 2004 to 2007 period. galvanized wire by about 20 percent for Items containing or made up of aluminum or deliveries in the second quarter of 2008. copper are projected to see the largest decline, • GDP in India is expected to grow at 9 percent in the range of 7 to 10 percentage points. This is in 2008. due to the projected increase in production and the decline in demand for both raw materials. On the other hand, even though the rate of Projections of Escalation expansion of the economies of India and China in the United States, will slow, both will have growth above the rates experienced in the past. The high price of oil and India, and Romania the continued expansion in China and India are The impact of the sub-prime mortgage crisis in likely to maintain upward pressure on the rate the United States has translated into significant of escalation, especially in these countries. financial losses for the largest home lenders and GDP in India will increase at a greater prominent banking institutions and a significant rate than in the United States. Consequently, drop in the U.S. stock market. In addition, projected escalation will slow, but not nearly housing starts dropped 25 percent during 2007, as much as in the United States. As shown in with the depressed market forecast to continue Table 2.2, during the 2008 to 2012 period, the through 2010. Economists indicate that this annual escalation rates for various items will period will see reduced consumer consumption, range from about 1 to 5 percentage points higher impacting the import of overseas goods and in India than in the United States. In Romania, Table 2.2 Projected Average Annual Compound Escalation for Plant Equipment and Materials, 2008–2012, %/year Romania, India, U.S., Category, India and Romania %/year %/year Category, United States %/year Structural Steel and Plate 2 to 3 6 to 8 Structural Steel 2 to 3 Structural Steel and Plate 2 to 3 6 to 8 Fabricated Steel Plates 0 to 2 Steel Pipe and Tubing 2 to 4 8 to 9 Steel Pipe and Tubing 2 to 4 a Mechanical Equipment 2 to 3 3 to 4 Centrifugal Pumps 2 to 3 a Mechanical Equipment 2 to 3 3 to 4 Centrifugal Fans 1 to 3 a Mechanical Equipment 2 to 3 3 to 4 Material Handling Conveyors 1 to 2 Source: URS Washington Division. a Mechanical equipment is a composite that contains many more items than centrifugal pumps, centrifugal fans, and material handling conveyors. Therefore, this should be considered a partial comparison of the only U.S. equipment projections available. 6 Price Escalation, Cost Factors, and Market Pricing the projected rates for comparable items will be labor wage increases are expected to continue only slightly higher than for those in the United in Romania for many years, nevertheless, it is States. The rate of growth of the Romanian GDP expected that labor costs will only represent is projected to decline from around 6 percent in one-fourth to one-third of the installed costs of 2007 to 5 percent in 2010 and 3 percent in 2012. plants in Romania. Proportionally, labor has not contributed as much to the plant cost increases as have equipment and materials since labor is typically Cost Increases Not Explained responsible for only 30–40 percent of the total installed cost of plants. Even so, labor needs to by Escalation Indexes be considered in relation to the increased cost of This subsection provides an illustration of building plants. the difference between power plant costs and In the United States, prior to 2003, labor market prices. Using the EPRI PCCost program, escalated at a rate of about 3 percent per year. the 2005 cost for the pulverized coal (PC) However, in the last five years, craft construction reference plant was compared to the plant cost labor has escalated at rates closer to 5 percent per in 2008 dollars. For this analysis the program year. This is related to the number of large capital was run in the total plant cost mode with no projects, the massive rebuilding of the Gulf Coast accounting for the market driving forces that areas damaged by hurricanes Katrina and Rita, have occurred over the past few years. The and the aging of the U.S. workforce. Many craft 2005 total plant cost was escalated to 2008 using workers will be retiring over the next 10 years, the 25 different historical escalation rates that and the growth in the number of apprentices include equipment, material, and labor. This joining the construction craft ranks each year is resulted in a total three-year plant cost increase currently not sufficient to replace the workers of 11 percent. that are projected to retire. This will continue Another source of power plant cost increases to put upward pressure on the annual rate of is the Marshall and Swift (M&S) index. This escalation for labor costs in the United States. index indicates an increase of 16 percent in the In India, labor rates are also escalating, composite equipment costs of steam power and at a faster pace than those in the United plants from 2005 to 2008. States. However, wage rates started at a level The PCCost and M&S indexes were that is equivalent to one-sixth or one-eighth compared to the IHS/CERA Power Plant Cost of the current U.S. labor wage rate. However, Index (PCCI), which reflects the market price of labor in India is estimated to have one-third of actually building power plants in North America. the productivity achieved on U.S. construction The PCCI for non-nuclear power plants from projects. Therefore, the total effective cost for 2005 to 2008 indicates an increase of about labor is still less than half of the labor cost in 27 percent. Consequently, the PCCI indicates the United States. This means that the labor that the price of building power plants is 11 contribution to escalating plant costs in India is percentage points above the M&S composite also overshadowed by equipment and material index. In addition, the PCCI indicates that the cost escalation. price of power plants is 16 percentage points Romania joined the European Union in 2007. above the cost increase estimated by PCCost. This has resulted in significant increases in labor This comparison indicates that PCCost results wage rates due to competition for Romanian and the M&S index are under-predicting the labor throughout Europe. Romanians are moving prices owners are paying to build power plants to other European countries seeking higher by 11 to 16 percentage points. wages, sometimes two to three times or even The North American market is being higher than their previous wage rate. Workers influenced by the global power sector, including remaining in Romania are seeking a minimum expansive construction in the Middle East and 50 percent increase in wages. Although these Asia, many infrastructure projects worldwide, 7 STUDY OF EQUIPMENT PRICES IN THE POWER SECTOR and concurrent expansion of power plant assess its current or potential future global construction in the United States. As a result impacts. of all of this activity, lead times for engineered At present, China has an installed coal- equipment have increased by up to 50 percent fired capacity of approximately 400 gigawatts in the last 6–12 months, impacting prices for (GW) that is growing by 50–120 GW per some “big ticket” items in a way that is not year. Before the late 1990s, the Chinese power being captured by escalation alone. Worldwide sector consisted exclusively of subcritical coal- sourcing of many components adds to cost fired plants ranging from a few megawatts pressures because both raw materials and (1–10 megawatts [MW]) to standardized shipping have increased, further compounding 200-MW, 300-MW, and 600-MW units. All of increases in cost. these power plants were manufactured within The latest increases reflect the worldwide China under licensing agreements with foreign market demand and the corresponding prices suppliers. These power plants were and are being currently charged by manufacturers and built for 33 to 50 percent of the international suppliers. In this sense, the difference can be costs for similar plants. Nevertheless, it is not termed a “market demand charge.” The cost clear whether these prices reflect subsidies or estimates in this report take this demand charge into manufacturing costs based on international account and as such are market prices. commodity prices. Approximately one-half of the costs are estimated to be material costs. While international commodity prices have Impacts of the International experienced the substantial increases described in this paper, China’s power plant prices have Marketplace remained unchanged. This raises questions Power plant owners all over the world are regarding China’s pricing structure. Aside from now purchasing equipment on a global basis. these questions, it is certain that labor costs For instance, owners are purchasing from provide China with a competitive advantage U.S. suppliers with a growing number of (which may be reflected in 20–40 percent lower overseas shops. Over the past few years, production costs). This is likely to give Chinese U.S. manufacturers have been more likely to suppliers a competitive advantage in the manufacture pressure parts in South Korea global marketplace (even when international or Eastern Europe than in the United States. commodity prices are used). There are still some unique characteristics to Within the next five years, the most likely regional or country markets (especially China), entry of the Chinese manufacturers into the but regional differences are being reduced or global marketplace will be in Asia and Africa. eliminated. For example, most large Japanese Recent projects in these regions suggest that suppliers have established offices in the United the Chinese suppliers are bidding lower than States and are getting a significant share of international prices, but not as low as their market for new power plant equipment. domestic market. In India, their pricing is Currently, Chinese suppliers are starting to more aggressive (bidding lower than in other make market inroads into selected countries such countries). This market entry strategy is most as Botswana, India, Indonesia, Nigeria, Pakistan, likely due to the fact that they are facing a strong the Philippines, and Vietnam. The presence of domestic supplier with a near monopoly in the Chinese manufacturers is related to the growth market. In other markets, their pricing (e.g., on of the Chinese economy. If this economy slows circulating fluidized bed plants) is slightly below from its decade-long annual GDP growth of international prices. 10–12 percent, then its manufacturing capacity In general, the impact of Chinese suppliers on will be available to compete in the international global power plant prices is likely to be positive, marketplace. For this reason, it is important to potentially resulting in moderate-to-substantial briefly examine the Chinese market and then price reductions in some markets and less in 8 Price Escalation, Cost Factors, and Market Pricing others. Over the long term, the price gap between • Gas turbine combined cycle: 140 MW and Chinese suppliers and other suppliers is likely to 300 MW reach price equilibrium (that is, below the level • Pulverized coal-fired steam plant: 300- it would be without their presence, but at some MW and 500-MW subcritical and 800-MW price level between their prices and the prices of supercritical all other competitors). More detailed discussion • Oil-fired steam plant: 300 MW of this topic is provided later in the report. • Gas-fired steam plant: 300 MW • Diesel generator plant: 1 MW and 5 MW • Wind farm: 12 MW, 50 MW, and 100 MW Impact of Plant Size • Photovoltaic array: 5 MW • Solar thermal: on hold on Technology Cost This part of the assessment investigated the The total plant prices are basically for impact of plant size on technology costs in two the same sizes as the respective technologies ways: included in the World Bank’s Electrification Study1 (see the grid-connected sizes shown in 1. Impact of plant size on cost for a broad range Table 2 of the Electrification Study). of unit sizes; and 2. Cost estimates for discrete plant sizes in the United States, India, and Romania. Examples of Cost Comparisons for a Broad Size Range The objective of the broad-range cost This section provides cost curves for the evaluation was to provide an overall perspective gas turbine combined cycle and pulverized on the impact of size on cost. The broad- coal-fired plant technologies. Cost curves for spectrum cost evaluations were based on the aeroderivative simple cycle units, heavy-frame following technologies: simple cycle units, and wind farms are presented • Aeroderivative simple cycle gas turbine later in the report. units, Figure 2.2 provides the impact of size on • Heavy-frame simple cycle gas turbine units, the price of OEM-provided combined cycle • Gas turbine combined cycle units, units based on data from the Gas Turbine • Pulverized coal-fired plants, and World (GTW) Handbook. The data points • Wind farms. represent nine different manufacturers and 69 different configurations of gas turbine The objective of the discrete plant analysis combined cycle units. The combined cycle was to provide country-specific and size-specific units are all 50 Hz and range in size from conceptual market-price plant cost estimates 7 MW to 1,000 MW. The graph includes the based on: (1) recent detailed project cost pricing OEM scope as noted within the box on the and OEM bid prices; and (2) budget quotes for graph. The price data reflected in this curve major equipment to the extent provided by OEMs include both aeroderivative-based and heavy- (tempered with bid prices from the in-house frame-based combined cycle units. The results database). All of the cost estimates were based indicate that the OEM prices range from about on grid-connected configurations. The generation US$950/kW to US$450/kW as the unit outputs technologies and sizes were as follows: increase from 7 MW to 1,000 MW. Figure 2.2 reflects the prices as purchased • Gas turbine simple cycle: 5 MW, 25 MW, and and supplied by the OEMs. The OEM prices 150 MW do not include earthwork, foundations, structural 1 Technical and Economic Assessment of Off-Grid and Grid Electrification Technologies, Summary Report, The World Bank Group, Energy Unit, Energy Transport & Water Department, September 2006. 9 STUDY OF EQUIPMENT PRICES IN THE POWER SECTOR Figure 2.2 Effect of Size on Cost of Gas Turbine Combined Cycle Units Gas-fired combined cycle gas turbine (OEM scope) (50 Hz units—data from Gas Turbine World Handbook) 1,200 Scope of costs: Basic Generator-Set: single-fuel gas turbine generator, inlet and outlet exhaust ducts and silencer, fuel OEM price for GTCC units, US$/kW (2008) 1,000 system (including filters, but excluding natural gas compressor), air filter, standard control and starting systems, and dry low NOx emission system (as applicable). 800 600 400 y = 1763.1x0.2009 200 R2 = 0.904 OEM combined cycle curve fit 0 0 200 400 600 800 1,000 net plant output, MW Source: 2007–08 GTW Handbook, Volume 26, Gas Turbine World, Pequot Publishing, ISBN 0747-7988, 2008. steel, water treatment, gas compressor, buildings, plants and growth of GDP. Romania was selected and all other items necessary for a fully operational as representative of Eastern Europe. and functionally complete plant. The costs for The plant cost estimates were “calibrated” earthwork, foundations, structural steel, and with budget quotes for major equipment. Budget so forth, are added to the OEM price to get the quotes were requested from one to three OEMs total plant price; total plant prices are provided for the respective major equipment items. Despite later in this report. diligent efforts and numerous follow-ups, there The cost curve for the pulverized coal-fired was very limited response. OEMs were forthright plant is presented in Figure 2.3. The costs were in advising the project team that their workload estimated by the PCCost program run with the did not permit them to support study work at marketplace factors included. This cost-scale this time. (Note: Annex 3 and Annex 4 provide curve shows that total plant costs range from a complete list of OEMs for various types of about US$2,700/kW for a 300-MW PC plant to equipment for Romania and India, respectively). about US$2,000/kW for an 800-MW plant. The quotes obtained consisted of diesel engine, gas turbine, and steam turbine, and one cursory quote for 300-MW coal-fired and Cost Estimates at the 300-MW gas-fired boilers. Fortunately, the Country Level project team had the in-house project-based The cost estimates at the country level were major equipment library consisting of multiple based on installations located in the United OEM bids received within the last 18 months States, India, and Romania. The United States (reflecting market prices). To the extent necessary, was included as the benchmark. India was major equipment bid prices were escalated with selected as representative of Asia and because it accepted corporate escalation rates specific to is second only to China in addition of new power each major piece of equipment, allowing the 10 Price Escalation, Cost Factors, and Market Pricing Figure 2.3 Effect of Size on Cost of Pulverized Coal-Fired Plants Estimated subcritical PC plant cost (U.S. location) Total plant cost, US$/kWnet (Jan, 2008 US$) (estimated using EPRI PCCost Program) 3,000 2,500 2,000 1,500 1,000 500 0 0 100 200 300 400 500 600 700 800 900 net plant output, MW Source: URS Washington Division Internal Cost Estimation Database. prices to reflect market conditions as of January • Structural steel 2008. In addition, piping, electrical, concrete, and • Plant equipment all other items reflected market pricing because • Piping they were based on the respective in-house bid • Electrical databases for actual projects. • Instruments and controls A summary of major equipment prices is • Painting provided in Table 2.3. This table contains the • Insulation adjusted pricing from the in-house library of • Buildings and architectural bids, as well as quotes obtained for this study Complete descriptions of the scope of (budget quotes were tempered with actual the cost estimates specific to each generation bids to reflect market pricing). The scope of technology are provided later in this report. the equipment cost estimates is defined in the The general list of items excluded from the Design Basis (located in Annex 1). generation plant costs estimates is: The plant cost estimates are based on OEM pricing and a project cost database of • Switchyard recent projects. Major equipment, piping, • Connection to the grid electrical, concrete, and all other plant items • Pipelines outside the plant fence (as incorporate recent project data and market applicable) pricing conditions as of January 2008. Moreover, • Access roads outside the plant fence the equipment, structural steel, piping, concrete, • Raw water acquisition labor, and other plant items reflect costs specific • Bonds, taxes, and insurance to the respective countries. Table 2.4 provides • Project financing a summary of the total plant pricing for the • Customs or import duties generation technologies in the three countries. • Owner’s costs A description of the common scope included • Land in all cost estimates is as follows: Complete descriptions of the exclusions • Earthwork specific to each generation technology are • Concrete provided later in this report. 11 STUDY OF EQUIPMENT PRICES IN THE POWER SECTOR Table 2.3 Estimated Costs of Major Equipment (2008 US$) Equipment Item Estimated Cost, US$/kW net Pulverized Coal Boiler, subcritical, 325-MW gross 300 Pulverized Coal Boiler, subcritical, 540-MW gross 270 Pulverized Coal Boiler, supercritical, 860-MW gross 250 Steam Turbine, subcritical, 325-MW gross 130 Steam Turbine, subcritical, 540-MW gross 120 Steam Turbine, supercritical, 860-MW gross 110 Oil-Fired Boiler, subcritical, nominal 300 MW (cursory bid) 200 Gas Turbine (from large simple cycle case), 144 MW 240 Gas Turbine (from large combined cycle case), 191 MW 220 Diesel Engine-Generator, 1.4 MW 290 Diesel Engine-Generator, 4.8 MW 450 Source: URS Washington Division Internal Cost Estimation Database. Table 2.4 Class 5 Plant Pricing Estimates for Generation Technologies (2008 US$), US$/kW net Generation Plant-Total Plant Cost U.S. India Romania Simple Cycle Plant, 5 MW 1,380 1,190 1,240 Gas Turbine Simple Cycle Plant, 25 MW 970 830 870 Gas Turbine Simple Cycle Plant, 150 MW 530 440 480 Gas Turbine Combined Cycle Plant, 140 MW 1,410 1,170 1,140 Gas Turbine Simple Cycle Plant, 580 MW 860 720 710 Coal-Fired Steam Plant (sub), 300-MW net 2,730 1,690 2,920 Coal-Fired Steam Plant (sub), 500-MW net 2,290 1,440 2,530 Coal-Fired Steam Plant (super), 800-MW net 1,960 1,290 2,250 Oil-Fired Steam Plant (sub), 300-MW net 1,540 1,180 1,420 Gas-Fired Steam Plant (sub), 300-MW net 1,360 1,040 1,110 Diesel Engine-Generator, 1 MW 540 470 490 Diesel Engine-Generator, 5 MW 630 590 600 Wind Farm, 1 MW x 100 = 100 MW 1,630 1,760 1,660 Photovoltaic Array, ground mounted, US$/kW (AC) 8,930 7,840 8,200 Source: Author’s calculations. 12 Assessment of Price 3 Trends for Generation Plant Equipment Impacts of Increase in Heavy Coal Technology—Science, Technology, and Innovation, United States Senate Committee Construction Projects in the on Commerce, Science, and Transportation, United States and Overseas April 27, 2007). This level of power plant construction represents an enormous demand The growth in the economies of countries around for steel, rotating equipment, electric wiring, the world has led to a worldwide increase in other electrical components, and concrete. It the demand for residential, commercial, and also results in fierce competition for shop space industrial products. Of the overseas countries, at steel fabricators and equipment suppliers. China and India have experienced the most Further, it translates into significant demand substantial growth in demand for items such as: for the raw materials needed by steel mills, • Equipment, steel, concrete, and other equipment manufacturers, and ready-mix bulk materials for a resurgence in the concrete companies. growth of large industrial, power plant, and Another indicator of the magnitude of environmental equipment retrofit projects in China’s growth is its GDP. China experienced the United States; year-to-year increases in GDP in the range of • Equipment, steel, concrete, and other bulk 10 percent from 2004 through 2006. In 2007, the materials for a very significant growth in GDP increased 11.4 percent. Forecasts indicate large industrial and power plant projects a slowing of GDP growth due to the slowing of overseas, particularly in China and India; the U.S. economy. However, the year-to-year • Building materials and concrete for increase in China’s GDP will still remain high commercial buildings and manufacturing compared to the rest of the world, with forecasts facilities overseas; and of 10 percent in 2008 and 9 percent in 2009. In • Building materials, concrete, and heavy contrast, the composite increases in year-to- construction equipment for infrastructure year GDP of all countries in the world were 2 to projects worldwide. 4 percent from 2004 through 2007 and forecast increases in GDP of 2 to 3 percent in 2008 and The scale of construction of coal-fired 2009. This indicates that economic growth and electric generating stations is just one indicator increases in demand outside the United States of China’s growth. Currently, China is building have fueled significant increases in the escalation the equivalent of two 500-MW coal-fired of consumer and industrial products in the last electric generating units per week, which is three to four years. Because of world sourcing comparable to building the capacity of the and the growth in the global economy in the entire U.K. power grid each year (McRae, last three to four years, the United States has Gregory, testimony at hearing before Clean also experienced significant increases in the 13 STUDY OF EQUIPMENT PRICES IN THE POWER SECTOR escalation of costs for products used in heavy chapter. On the other hand, by the end of 2007, construction projects. 10 of the units were already in operation, with Aside from the increase in overseas 25 others under construction. Although this construction, the substantial jump in oil and number of new coal-fired power plants is small other fuel prices in the last year has contributed in comparison to the numbers being built in to increases in the costs to produce steel, China and India, it still represents competition manufacture heavy equipment, and process for the shop space of manufacturers of power the raw materials needed to make ready-mix plant equipment and materials. concrete. The high price of oil has also led to a The new overseas and U.S. coal-based and/ dramatic jump in exploration for new U.S. oil or coal-fired plants will require significant fields. In addition, many large oil companies quantities of concrete, large fans, large pumps, have or will embark on major expansion projects material handling systems, structural steel and at their existing U.S. refineries. A number of steel plate, piping, electrical wiring and electrical these projects have estimated costs in the range components, material handling systems, turbine of US$1 to 2 billion, resulting in additional generators, emission control systems, and other demands for piping, vessels, concrete, and major equipment. These materials, systems, and construction labor. Increases in the price of oil equipment will be installed at all new coal-fired have also led to massive plans for expansion plants throughout the world. of the tar sands processing plants in northern With regard to environmental control Alberta, with some estimates putting the total retrofits in the United States, each Flue Gas expenditures exceeding US$50 billion over the Desulfurization (FGD) system will require next five years. significant quantities of structural steel and Additionally, the 2005 Gulf Coast hurricanes steel plate, piping, electrical wiring and contributed to some of the increases in the electrical components, large fans, large absorber escalation of certain labor and materials. The circulation pumps, large motors, and other major conditions contributing to escalation occurred equipment. Each Selective Catalytic Reduction primarily in 2005 and 2006 and were a result (SCR) system will require significant quantities of the significant demand for labor, equipment, of structural steel and steel plate, large amounts and materials to rebuild the infrastructure, of catalyst, large fan upgrades or replacements, industrial facilities, commercial structures, and and reagent handling and injection systems. residential dwellings damaged or destroyed by The growth in demand for industrial-scale the hurricanes. The rebuilding effort continues equipment and materials in the U.S. power into 2008. sector is and will continue to be dwarfed by the Added to all of the above is the resurgence growth in the number of projects in the global in the U.S. construction of new coal-fired industrial and power sectors (primarily due to units (announced between 2000 and 2006) the expansive growth in China and India). In and retrofits of emissions control systems on addition, from the early part of the twenty-first existing coal-fired plants (starting in about century through 2007 the global increase in the 2004). As of May 2007, the National Energy number of heavy construction projects played a Technology Laboratory (NETL) was tracking major role in the growing upward pressure on a total of about 150 new coal-based units in all the costs of most industrial-scale equipment and phases of planning and development, or under commodities. The dramatic increase in the price construction. However, by the end of 2007, of oil has also contributed to upward pressure 59 of the proposed plants had been cancelled, on the costs of items used in heavy construction abandoned, or put on hold, due in part to projects. However, with the downturn of the concerns over global warming or because of housing market, the U.S. economy is slowing the significant cost increases described in this down. The significant cost escalation evident 14 Assessment of Price Trends for Generation Plant Equipment in the last few years is projected to moderate Table 3.1 provides a side-by-side summary worldwide in the near future. of the escalation of the 19 items determined from the graphs of Annex 2. As shown in the legend boxes on the graphs, the historical U.S. Trends in Cost period is divided into two parts: (1) January Indexes for Power Plant 1996 through December 2003; and (2) January 2004 through December 2007. These two periods Equipment and Materials roughly correspond to the times before and The U.S. Producer Price Indices (PPIs) provide after the rapid worldwide expansion in the the historical escalation trends for 19 equipment construction of large industrial, utility, and and material items associated with utility manufacturing projects. The table also contains generation plants and electricity distribution a third column that provides projected average systems. The historical PPIs cover the period annual compound escalation rates from 2008 from the beginning of 1996 through the end of through 2012. 2007. These escalation trends are provided in the Table 3.1 shows a significant increase in form of graphs in Annex 2. average annual compound escalation for the Table 3.1 Average Annual Compound Escalation for Plant Equipment and Materials—United States Jan. 1996– Jan. 2004– Projected, Figure Dec. 2003, Dec. 2007, 2008–2012, Number Equipment or Material Item %/year %/year %/year 1 Ready-Mix Concrete 1.9 7.9 2 to 4 2 Centrifugal Pumps 2.0 4.7 2 to 3 3 Centrifugal Fans 1.7 4.2 1 to 3 4 Material Handling Conveyors 1.7 4.7 1 to 2 5 Pneumatic Conveyors 1.7 3.8 NA 6 Crushers and Pulverizers 2.9 4.4 NA 7 Integral Horsepower Motors 0.4 6.4 NA 8 Fabricated Steel Plates 0.3 10.1 0 to 2 9 Structural Steel 0.9 8.0 1 to 3 10 Steel Pipe and Tubing NA 7.0 2 to 4 11 Field Erected Steel Tanks 1.5 5.8 NA 12 Heat Exchangers and Condensers 0.8 7.8 NA 13 Fin Tube Heat Exchangers 1.3 8.4 NA 14 Industrial Mineral Wool 0.4 3.7 NA 15 Refractory, Non-Clay 0.4 3.7 NA 16 Power and Distribution Transformers NA 13.8 1 to 3 17 Electric Wire and Cable 1.1 9.1 –1 to 2 18 Copper Wire and Cable –0.8 18.7 NA 19 Industrial Process Control Instruments NA 3.0 NA Source: U.S. Bureau of Labor Statistics Producers Price Indexes and URS Washington Division Internal Cost Estimation Database. NA—Not available. 15 STUDY OF EQUIPMENT PRICES IN THE POWER SECTOR period from January 2004 to the end of 2007 to the 2004-through-2007 time period. The compared to the period from January 1996 projections of much lower escalation rates reflect through December 2003. The significant jump the impact of the sub-prime mortgage crisis, in escalation common to this diverse group of which has resulted in a 100 percent increase in power plant equipment and commodities is a home foreclosures in the United States. This is strong indication of the impact of the global reflected in significant financial losses for the building boom that has occurred in the last three largest home lenders and prominent banking to five years. This boom transformed the cost of institutions and a significant drop in the U.S. power-sector construction from nominal annual stock market indexes. The slowdown in the U.S. cost increases prior to 2004 to significant annual economy is also reflected in a 25 percent drop cost increases after 2004. These historical data in housing starts over the last 12 months. The are directly applicable to this study because the projections of much lower U.S. escalation rates items are included in many of the generation reflect the economic slowdown in the United plant or electrical distribution options and are States This slowdown is forecast to continue reflected in the cost estimates. through 2010, and during this period will reduce For the period from January 2004 through consumption and impact the import of overseas December 2007, the items most responsible for goods and services into the United States. This power plant cost increases were as follows: in turn will result in some slowing of the rate of escalation in the overseas countries that • Electrical items: transformers, 68 percent; supply the U.S. market. The impact on overseas electric wire, 42 percent; and copper wire, countries will be discussed in the next chapter. 69 percent; The housing slump and overall condition • Fabricated steel shapes: steel plates, of the U.S. economy will also reduce near-term 47 percent; structural steel, 36 percent; and growth of U.S. electrical consumption. All of steel pipe, 31 percent; these factors taken together are projected to • Heat exchangers and condensers, 35 percent; reduce the rate of escalation of power plant • Fin tube heat exchangers, 38 percent; and equipment and commodities from the dramatic • Concrete, 36 percent. increases seen in the last four years to levels similar to or slightly above those experienced in Composite cost trends from Marshall & the 1996 to 2003 timeframe. Swift that include the above 19 items (as well as additional items) exhibit trends similar to those reflected for the equipment and commodities Trends in Escalation for in Table 3.1. The composite index for all steam Power Plant-Related Items power equipment and commodities indicates in India and Romania that steam power plants had an average compound escalation rate of about 1 percent per Escalation Trends in India year for the period 1997 to 2003. Then, similar Table 3.2 defines the items for which historical to the general trends previously shown, the and projected escalation are available. The average compound escalation for the composite number of items in the dataset is not as extensive of all steam power plant equipment increased as it is for the United States, but it still provides significantly at about 6.5 percent per year for an understanding of the historical escalation and the four-year period from January 2004 through potential future growth of generation plant costs. the end of 2007. The historical and projected escalation rates The third column in Table 3.1 also shows the from 2004–2012 are shown in Table 3.3. Starting in projected annual average compound escalation 2008, except for steel pipe and steel plate, annual in the United States from 2008 through 2012. escalation in India is predicted to moderate The rate of escalation from 2008 through 2012 is in a manner similar to the trend in the United projected to moderate and/or flatten compared States. The most significant change in escalation 16 Assessment of Price Trends for Generation Plant Equipment Table 3.2 Power Plant Equipment and Materials Included in the India and Romania Escalation Data Category Representative Items Included Pipes and Wires Ferrous Pipe Ferrous Wire Steel Sheet Fabricated Steel Plates Mechanical Equipment Steam Turbines Combustion Turbines Industrial Pumps Industrial Fans Industrial Material-Handling Equipment Electric Equipment Power and Distribution Transformers Switchgear Motors Relay and Industrial Controls Electric Wires and Cables Power Wire and Cable Building Wire and Cable Source: Pauschert 2008. Table 3.3 India—Average Annual Compound Escalation for Plant Equipment and Materials Jan. 2004– Projected, 2008– Category Dec. 2007, %/yr 2012, %/yr Fabricated Metal (Structural Steel and Plate) 7 6 to 8 Steel Pipe and Tubing 6 8 to 9 Mechanical Equipment 6 3 to 4 Electric Equipment 7 1 to 3 Electric Wire and Cable 20 2 to 4 Source: URS Washington Division. will be the dramatic flattening of escalation for were during 2004–2007, pipe, steel sheet, and electrical equipment, wire, and cable. Electrical mechanical equipment are still predicted to equipment, wire, and cable are all related to the have a higher escalation rate than they will in forecast flattening in the price of copper. Although the United States The average annual escalation there will be some slowing in the near term, the rates for steel pipe, steel sheet, and mechanical Indian economy is expected to continue to grow equipment in India are predicted to be about 3, 5, at a rapid pace compared to the United States. and 1 to 2 percentage points higher, respectively, India will be impacted by the slowing of the U.S. than in the United States. economy, but not nearly as much as China. This is reflected by the real GDP, which in 2006 and 2007 was over 9 percent. The GDP in India is expected Escalation Trends in Romania to slow modestly to an annual average of 7 to 8 For Romania, the historical and projected percent during the period from 2008 to 2012. escalation rates from 2004 to 2012 are shown in Although the respective escalation rates in Table 3.4. Starting in 2008, except for mechanical India will be lower during 2008–2012 than they equipment, annual escalation in Romania is 17 STUDY OF EQUIPMENT PRICES IN THE POWER SECTOR Table 3.4 Romania—Average Annual Compound Escalation for Plant Equipment and Materials Jan. 2004-Dec. Projected, 2008– Category 2007, %/year 2012, %/year Fabricated Metal (Structural Steel and Plate) 7 2 to 3 Steel Pipe and Tubing 5 2 to 4 Mechanical Equipment 3 2 to 3 Source: URS Washington Division. predicted to drop in a manner similar to the due to unexpected delays in production from trend in the United States. The escalation in new mines, according to a mining analyst cost of mechanical equipment in the 2008– from the United Kingdom. 2012 timeframe is expected to slow, but only • The price of 316 stainless steel stayed moderately compared to 2004–2007. In fact, relatively flat from January 2005 through during the 2008–2012 timeframe, escalation for May 2006, increased by 160 percent from the three items in Table 3.4 is projected to be in June 2006 through July 2007, decreased by the same general range as the respective items 40 percent from August 2007 through October in the United States. 2007, and increased 11 percent through December 2007. Overall, 316 stainless steel escalated at an average annual escalation Other Assessments and rate of 43 percent over the two-year period. Items Related to Escalation The price trends from January 2005 through January 2007 for 316 stainless steel, nickel, In the United States, the graphs for fabricated and chrome are shown in Figure 3.1. ferrous materials (steel plates, structural steel, • Forecasts indicate that the price increases and carbon steel pipe and tubing) show that after of seamless carbon steel pipe will be 3 to 5 steep price increases from late 2003 to mid-2004, percent in the first quarter of 2008. However, the price escalation subsided to modest levels the cost increases of steel pipe are expected through the end of 2005. In early 2006, fabricated to moderate through the rest of 2008. metal prices resumed their cost increases, but not • Over the five-year period from January 2003 to the extent that had occurred during the first through December 2007, the price of copper half of 2004. The increases generally continued increased from about US$2,100/ton to about through 2007. Additional information related to US$6,600/ton. metals is important because: (1) they are used • One very large French investment bank has directly to make pipe, plate, and structural steel; forecast a worldwide surplus of aluminum of and (2) they are used to make boilers, pumps, 1 percent in 2008. There is excess production fans, motors, and electrical wiring, and/or are capacity available and producers continue to a significant part of many other power plant deliver aluminum to the market. This will components. Information related to assessments lead to some ups and downs, but aluminum or forecasts of metals is as follows: prices will change little in 2008. • The price of nickel peaked at about US$53,000/ • For November 2007, shipments by North ton in May of 2007, dropped to about American steel producers were down about US$26,000/ton in August 2007, increased to 8 percent compared to the same month in 2006. about US$33,000/ton in October 2007, and • The availability of skilled workers in ended 2007 at about US$26,000/ton. Romania is a very significant issue affecting • At the end of January 2007, the price of nickel large construction projects. After Romania was US$26,000/ton and was projected to rise became a member of the European Union to US$40,000/ton over the next three years (EU) in 2007, skilled workers could go to 18 Assessment of Price Trends for Generation Plant Equipment Figure 3.1 Cost Indexes for 316 Stainless Steel, Nickel, and Chrome 400 316 stainless steel 316 SS and selected constitutents 350 contains 10–14% nickel and 16–18% chrome 300 (Jan-2005 = 100) 250 200 150 100 316 SS nickel 50 chrome 0 Nov Feb May Aug Nov Feb May Aug Oct Jan Apr Jul Oct Jan Apr 04 05 05 05 05 06 06 06 06 07 07 07 07 08 08 month-year Source: Modified after Stainless Steel News. Western European countries and make many • Crude steel consumption in India in 2008 is times the hourly wage that they could make expected to be about 10 percent higher than in Romania. it was in 2007. • The demand for cement in Eastern Europe • World refined copper production is expected is so high that a large plant is being built to be about 6 percent higher in 2008 than it in Bulgaria and one is being considered for was in 2007, but global consumption will Romania. The supply of cement in Eastern only slightly exceed production. Europe is further restricted by Eastern • The world refined copper price is expected European import restrictions. to be about 2 percent lower in 2008 than it • Construction in the Romanian commercial was in 2007. sector is booming, but construction in the manufacturing sector is languishing. The weak U.S. dollar is making the Manufacturing facilities are old, outdated, international export market more economically and surrounded by the cities’ populations. attractive to buyers of U.S. industrial equipment. Owners are selling their properties to The United States has seen substantial increases c o m m e rc i a l d e v e l o p e r s i n s t e a d o f in the export of fabricated steel, heavy refurbishing or rebuilding these facilities. mobile construction equipment (bulldozers, • The demand for Portland cement in the United earthmovers, and so forth), transformers, and States is expected to decrease about 2 percent generators. in 2008 and increase about 3 percent in 2009. • World crude steel consumption is projected to be 6 percent higher in 2008 than in 2007. Evolution of the China’s consumption has the largest impact International Marketplace— on global steel consumption and is expected to represent about 60 percent of global Major Equipment Suppliers growth in 2008. Regardless of the country or the location of the • Crude steel consumption in the EU in 2008 power plants, equipment and materials are now is expected to be about the same as it was in being purchased in the global marketplace. 2007. Regional or country markets still retain some 19 STUDY OF EQUIPMENT PRICES IN THE POWER SECTOR unique characteristics (especially in China), manufacturers such as Beijing Boiler Works and but regional differences are being reduced. For Wuhan Boiler Co.). example, most large Japanese suppliers have China started using supercritical technology established offices in the United States and in the 1990s, first with 10 units (4x320MW; are getting a significant share of the recently 4x500MW; and 2x800MW) procured from Russia. constructed or contracted power plants. In The first plant utilizing Western technology addition, Chinese suppliers are bidding on was the Shi Dong Kou plant, commissioned power plants especially in Africa, South Asia, in 1992. It consisted of 2x600-MW units with and Southeast Asia. 25.4 MPa/538ºC/565ºC steam conditions. The Among the key developments, the potential second plant utilizing Western technology participation of industrial or heavy equipment was the Waigaoqiao plant in Shanghai (next suppliers from China may have the most to the Shi Dong Kou), which consists of two dramatic impact on the global market, including 900-MW units with steam conditions of 24.7 power plant equipment prices. Chinese suppliers MPa/538ºC/565ºC. The project was financed are starting to make inroads into selected with a World Bank loan in the mid-1990s. Since countries such as Botswana, India, Indonesia, then, many more supercritical units have been Nigeria, Pakistan, the Philippines, and Vietnam. built. Another factor affecting the level of their As of the end of 2006, China had 46 presence is likely to be related to the Chinese supercritical plants in operation representing economy. If the growth of the Chinese economy 30 GW of installed capacity; most of them have (which has experienced consistent increases in been designed for 24.7 MPa/565ºC/565–593ºC, GDP of 10–12 percent annually for more than a but two have ultra-supercritical (USC) steam decade) slows down, its manufacturing capacity conditions of 24.7 MPa/600ºC/600ºC. The first will be available to compete in the international USC plants (Huadian’s Zouxian and Huaneng’s marketplace. For this reason, it is important Yuhuan power plants) started operating in to briefly examine the Chinese market and its November–December 2006. By the end of 2007, potential global impacts. approximately 120 GW of installed capacity Currently, China has an installed coal- was expected to utilize supercritical steam fired capacity of approximately 400 GW. Its conditions.2 Sixty percent of the future plants capacity is growing by 50–120 GW per year. are expected to utilize supercritical and USC Before the late 1990s, the Chinese power sector steam conditions. consisted exclusively of subcritical coal-fired An interesting development is that each of plants ranging from a few megawatts (1–10 the Chinese manufacturers has developed a MW) to standardized 200-MW, 300-MW, and joint venture or licensing agreements with one 600-MW units. All of these power plants were of the international suppliers. This is a departure manufactured domestically under licensing from the past, when all the Chinese suppliers agreements with foreign suppliers. Units above obtained “blanket licensing agreements.” More 200–300 MW utilized technology obtained specifically, Shanghai Boiler Works has teamed through licensing agreements with Western up with Alstom and Siemens; Harbin Boiler suppliers. One such agreement for boiler Group works with Mitsubishi; and Dongfang technology was with Combustion Engineering Boiler Industrial Group has a joint venture Inc., which was later acquired by Alstom. The with Hitachi. Additionally, the fifth-largest technology was made available to all of the manufacturer (Wuhan) was recently acquired leading local manufacturers (Harbin Boiler by Alstom, which reportedly plans to expand Group, Shanghai Boiler Group, and Dongfang its capability to produce both subcritical and Boiler Industrial Group, as well as smaller supercritical plants. 2 Prof. Mao, Jianxiong, “Electrical Power Sector and Supercritical Units in China,” presented at the Workshop on Design of Efficient Coal Power Plants, Vietnam, October 15–16, 2007. 20 Assessment of Price Trends for Generation Plant Equipment The manufacturing capacity of China is competitive advantage that may be reflected in estimated in the range of 100–120 GW per year. its 20–40 percent lower production costs. This While no specific estimates are available, 30–50 (even when international commodity prices percent of this comes from second- and third-tier are used) is likely to give Chinese suppliers an manufacturers (the first tier being Harbin Boiler advantage to compete in the global marketplace. Group, Shanghai Boiler Group, and Dongfang The nature of Chinese entry into the external Boiler Industrial Group), each of which is capable market is not completely clear. In the near term of manufacturing subcritical units up to 300 MW. (two to five years), the most likely scenario is for Reportedly, the first-tier manufacturers are Chinese suppliers to focus on Asia and Africa. booked for the next two to three years (2008–2010) Recent large PC power plant projects in these with domestic orders for supercritical and USC regions suggest that the Chinese suppliers are plants. However, even these manufacturers have underbidding international prices, but not as expressed interest or have already participated low as their domestic market. In other markets, in recent commercial projects outside China. The Chinese pricing (e.g., on circulating fluidized second- and third-tier Chinese manufacturers bed plants) is slightly below international prices. are facing a shrinking domestic market and are In India, their pricing for large power plant under pressure either to upgrade to supercritical equipment is more aggressive (they bid lower or to seek markets outside China. As a result, than other countries). Part of a market entry the potential for exports of both subcritical and strategy may be a result of the Chinese boiler supercritical plants by Chinese manufacturers is manufacturers facing Bharat Heavy Electricals real. Export of subcritical plants is possible and Limited (BHEL), the dominant Indian supplier is already taking place; supercritical plants are with a near monopoly (BHEL equipment likely to follow in the coming years, especially generates 73 percent of the total power produced if China’s rate of economic growth slows down. in India). In this context, it is important to review the In general, the impact of the potential entry of prices of power plants manufactured by Chinese Chinese suppliers on global power plant prices suppliers. The following prices are quotes from is likely to be positive, potentially resulting in within China during the last two to three years: moderate-to-substantial price reduction in some markets and less in others. Over the long term, • US$600–650/kW for 300-MW subcritical units; the price gap between Chinese suppliers and • US$540/kW for 600-MW supercritical units; other suppliers is likely to reach an equilibrium and point (below the level without their presence, but • US$540/kW for 1,000-MW ultra-supercritical at some price level between their prices and the units. prices of all other competitors). The magnitude of the price reduction and how long it will last These units do not include the emission will depend on a number of factors. In general, controls systems required on U.S. plants. the following should be taken into account: Even so, these prices are one-half to one-third of the international prices for similar plants. • Large markets such as India and South Nevertheless, it is not clear whether these Africa may experience very low bid prices prices reflect actual manufacturing costs and in the short term, until the Chinese suppliers international commodity prices. Approximately establish a substantial position in these 50 percent of the costs is estimated to be material markets. Longer term, they are likely to bring costs. The fact that these prices have stayed at their prices closer to international levels. the same level while international commodity • The Chinese suppliers are expected to be prices have experienced a substantial increase more aggressive in their pricing of subcritical in the last two to four years raises questions plants because there is plenty of excess regarding their pricing structure. It is certain manufacturing capacity for such plants in that labor costs alone provide China with a China. 21 STUDY OF EQUIPMENT PRICES IN THE POWER SECTOR • The India Brand Equity Foundation predicts requirements. India, a major exporter of iron that Chinese companies could supply as ore to China, has announced an export tax. much as 30 percent of the power equipment This will increase the price of steel in China. market from 2007 through 2012. In the long run, China’s significant percentage • The domestic demand for new power of imported iron ore will make it vulnerable plants will certainly impact the ability of the to world market price increases and in turn Chinese suppliers to become international make Chinese steel more expensive. market players. Continuing high economic • As an example, the price of iron ore from growth is likely to delay their entry into the India rose from US$100/ton in January 2007 global market or make them less aggressive to US$220/ton in January 2008. Over the in pricing. same period, the price of medium steel plate • Whether the Chinese suppliers will elect to exported from China went from US$500/ton enter the international market by themselves to US$740/ton. Further, from January 2008 to or through joint ventures with international mid-April 2008 the price increased to about suppliers will impact their pricing strategy. US$900/ton. Commercial agreements that they have • Finally, it is important to mention that signed with international suppliers may inflation in China is increasing and expected constrain them in terms of what markets to continue its upward trend both in they can serve and when. materials and labor costs, as was indicated • China has had an increasing reliance on ore above by the price of steel. So the competitive imports for a number of years. As of mid-2007, advantage of Chinese suppliers is likely to China imported 55 percent of its total iron ore close in the future. 22 Impact of Plant 4 Size on Cost Impact of Size on Cost for of size on the cost for simple cycle gas-fired combustion turbine units. These data are from Simple Cycle Gas Turbines the 2008 GTW Handbook and reflect current Cost data were compiled for aeroderivative and marketplace pricing. heavy-frame-type gas turbines from 11 different The graph shows two regression curves: manufacturers and 90 different models. The one for the aeroderivative gas turbines and simple cycle gas turbine units range in size one for the heavy-frame gas turbines. These from about 1 MW to 334 MW. All of the curves indicate that in the 10- to 50-MW range, models evaluated in this report are available aeroderivative units average US$40 to US$60/ either as a 50- or 60-Hz option—this analysis kW more than comparably sized heavy-frame only examined the 50-Hz configuration. units. Aeroderivative machines weigh less (kg/ Figure 4.1 provides a picture of the impact MW of output) than heavy-frame machines, but Figure 4.1 Impact of Size on OEM Cost for Simple Cycle Units 1,200 OEM price for gas turbine simple cycle, US$/kW (2008 US$) Scope of costs: Basic natural gas-fired generator-set: single-fuel gas turbine generator, starting and lube oil systems, inlet and outlet exhaust 1,000 ducts and silencer, fuel system (including filters, but excluding natural gas compressor), air filter, standard control and starting systems, and dry low NOx emission system (as/if applicable). 800 heavy y = 877.58x –0.2305 aero 600 R2 = 0.8442 power curve fit (heavy) power (aero) 400 200 y = 763.6x –0.223 R2 = 0.9014 0 0 50 100 150 200 250 300 350 net plant output, MW Source: 2007–08 GTW Handbook, Volume 26, Gas Turbine World, Pequot Publishing ISBN 0747-7988, 2008. 23 STUDY OF EQUIPMENT PRICES IN THE POWER SECTOR are more costly due to materials of construction annual compound escalation for the five years and technology development costs. Economic from 2003 to 2008 for all 11 of these heavy-frame evaluations of the two classes contrast the higher turbines was also about 2.5 percent. capital cost and superior heat rate (efficiency) of aeroderivative models against the lower capital cost and lower efficiency of heavy-frame models. Impact of Size on Cost for Figures 4.2 and 4.3 compare the cost of gas turbines in constant 2008 dollars for aeroderivative Gas Turbine/Combined Cycle and heavy-frame machines, respectively. The Cost data were compiled from nine different costs are for corresponding machines that were manufacturers and 69 different configurations available from manufacturers/suppliers in both of gas turbine combined cycle plants. The 2003 and 2008. combined cycle plants range in size from about The aeroderivative gas turbines are from six 7 MW to 1,000 MW. The combined cycle models different manufacturers/suppliers. This graph included in this study are either available as a shows that for six of the eight gas turbines, the 50-Hz option or are manufactured in the 50-Hz prices increased (total difference from 2003 to configuration. 2008 ranging from 6 to 23 percent). The real Figure 4.4 provides the cost in US$/kW average annual compound escalation for the versus MW output. As for the simple cycle, five years from 2003 to 2008 for all eight of these these data are from the 2008 GTW Handbook. aeroderivative turbines was about 2.5 percent The graph includes a box that contains a (escalating at an average annual compound rate description of the items included in the of about 2.5 percent above U.S. inflation). OEM costs. The graph also shows the power The heavy-frame gas turbines are from six law regression curve with no differentiation different manufacturers/suppliers. This graph between combined cycle plants utilizing shows that for 9 of the 11 turbines, the prices aeroderivative or heavy-frame gas turbines. increased (total difference from 2003 to 2008 The data indicate that the OEM costs range from ranging from 1 to 26 percent). The real average about US$950/kW to US$450/kW as the plant Figure 4.2 Change in OEM Prices for Simple Cycle Aeroderivative Gas Turbine Units (Constant 2008 US$) MW Diff, % 2 20 900 3 23 2003 data 4 19 800 10 21 US$/kW (constant 2008 US$) 2008 data 14 –7 700 22 –6 51 6 600 500 400 300 200 100 0 2 3 4 10 14 22 51 net plant output, MW Source: 2007–08 GTW Handbook, Volume 26, Gas Turbine World, Pequot Publishing ISBN 0747-7988, 2008. 24 Impact of Plant Size on Cost Figure 4.3 Change in OEM Prices for Simple Cycle Heavy-Frame Gas Turbine Units (Constant 2008 US$) MW Diff, %* 6 12 8 18 2003 data 550 9 0 2008 data 11 2 500 15 –1 26 12 450 57 1 US$/kW (constant 2008 US$) 400 77 4 144 26 350 256 20 334 22 300 250 200 150 100 50 0 6 8 9 11 15 26 57 77 144 256 334 net plant output, MW Source: 2007–08 GTW Handbook, Volume 26, Gas Turbine World, Pequot Publishing ISBN 0747-7988, 2008. *Total % difference from 2003 to 2008. Figure 4.4 Impact of Size on OEM Costs for Combined Cycle Units Gas-fired combined cycle units (OEM scope) (50-Hz units—data from Gas Turbine World Handbook) OEM price for gas turbine combined cycle units, US$/kW (2008) 1,200 Scope of costs: Basic natural gas-fired generator-set: single-fuel gas turbine, unfired multi-pressure heat recovery steam generator (HRSG), multi-pressure 1,000 condensing steam turbine, electric generators, main set-up transformer, inlet and outlet exhaust ducts and silencer, fuel system (including filters, but excluding natural gas compressor), air filter, standard control and starting 800 systems, and dry low nitrogen oxides (NOx) emission system (as/if applicable). 600 400 y = 1763.1x0.2009 R2 = 0.9014 OEM combined cycle 200 curve fit 0 0 200 400 600 800 1,000 net plant output (ISO), MW Source: 2007–08 GTW Handbook, Volume 26, Gas Turbine World, Pequot Publishing ISBN 0747-7988, 2008. 25 STUDY OF EQUIPMENT PRICES IN THE POWER SECTOR output increases from 7 MW to 1,000 MW. It is constant dollars. The data are for 12 combined of interest to note that the cost-scale exponents cycle plant “models” from five different for simple cycle and combined cycle are about manufacturers/suppliers. The graph shows the same (–0.22/–0.23 vs. –0.20, respectively). that the increases for the combined cycle plant This indicates that the cost-scale factor for prices range from 9 percent to 55 percent—11 steam turbines is also about –0.2 (on a US$/ of the 12 have five-year increases of 20 percent kW basis). or greater. The composite increase for these 12 Figure 4.5 compares the OEM price of combined cycle plants is 31 percent and the combined cycle plants in 2003 (2003 US$) to the composite annual compound escalation rate corresponding price in 2008 (2008 US$). This for this five-year period is 5.5 percent (nominal graph differs from the previous two graphs in basis). that it compares nominal dollars rather than Figure 4.5 Change in OEM Prices for Combined Cycle Units (Nominal 2008 US$) MW Diff, %* 35 20 65 36 80 31 115 9 2003 costs 130 20 195 33 2008 costs 290 47 900 345 26 390 43 800 580 46 790 55 700 830 49 US$/kW (mixed year US$) Composite Diff. 31 600 500 400 300 200 100 0 35 65 80 115 130 195 290 345 390 580 790 830 net plant output (ISO), MW Source: 2007–08 GTW Handbook, Volume 26, Gas Turbine World, Pequot Publishing ISBN 0747-7988, 2008. *Total % difference from 2003 to 2008. 26 Impact of Plant Size on Cost The significant increase in the cost of gas factor and its influence are explained in the turbines and combined cycle plants is just one summary section of this report. striking illustration of the impact of the U.S. economy, which was very strong for the five- Impact of Size on Cost year period prior to the sub-prime mortgage crisis. The extended period of U.S. economic for Wind Farms growth was accompanied by strong demand Although larger-size individual wind for consumer goods, increasingly manufactured turbines generally offer an economy of scale, overseas. This in turn resulted in very strong Figure 4.6 shows that there is very little statistically growth in the construction of manufacturing significant difference in installed cost per kW for and industrial facilities in India, EU countries, wind farms between 30 MW and 200 MW. This and China. The expansive growth in these is likely due to the fact that larger wind farms are countries fueled an increasing worldwide simple integer multiples of each wind turbine. demand for equipment, steel, concrete, and Manufacturers may offer discounts for large orders other commodities, particularly in China. This of wind turbines, but in general, this does not offer demand was at or above the capability of supply, exponential economy of scale associated with leading to worldwide escalation in the cost of fossil plants. Variations in cost of wind projects are the materials needed to construct manufacturing more likely due to previously discussed regional and industrial plants. This resulted in market differences, including variations in developments demand costs that added to the cost increases of costs, site and permitting requirements, and materials and equipment. The market demand construction expenses. Figure 4.6 Installed Cost of Wind Projects as a Function of Project Size: U.S. Projects 2003–2006 installed project cost (2006 US$/kW) 2,500 individual project data (85 projects totaling 5,132 MW) Polynomial trend line 2,000 1,500 1,000 500 0 0 30 60 90 120 150 180 210 project size (MW) Source: Berkeley Lab Database. 27 Cost Estimates for Power 5 Plants in the United States, India, and Romania The capital costs for the generation plants The plant size for most of the generation in this chapter are Class 5 as defined by The technologies covered in this report are the same American Association of Cost Engineers (AACE) as those for the corresponding grid-connected International standard practice 18-R97, 2/2/2005. generation technologies shown in Table 2 of the The costs are based on budget quotes (to the September 2006 “Electrification” report.3 Plant extent available), equipment factoring, and/or sizes in this study were selected be consistent parametric models. Class 5 is defined as a study with the Electrification study. or feasibility-level cost estimate. The overall accuracy of the plant cost estimates herein is within the Class 5 standard practice guidelines Gas Turbine Simple Cycle and for this study it is –20 percent/+25 percent. Simple Cycle Market Trends and All costs are in January 2008 U.S. dollars. Technology Description The basis or items included in the cost estimates are specific to each technology and are Market Trends. According to available data (from defined in subsequent chapters of this report. a database that starts in 1978), worldwide sales The following items are common to all of the of all gas turbines peaked at an all-time high cost estimates: in 2001. In 2002, sales plummeted 45 percent, followed the next year by an additional drop • Concrete, structural steel, and piping of 30 percent. Subsequent year-to-year results are obtained from suppliers within the were as follows: respective countries. • 2004—Sales increased by 15 percent. • Basis of foundations is spread footings. • 2005—Sales were flat. • Sites are assumed flat with minimal balanced • 2006—Sales increased 16 percent. cut and fill earthwork. • 2007—Sales increased 10 percent. • Generic site locations within the United States, India, and Romania. In the future, it is expected that sales will • Financing costs are not included. continue to increase, with the majority coming • Costs for bonds, taxes, and insurance are not from outside the United States, primarily China included. and India. China, India, Thailand, Vietnam, and • Customs costs or import duties are not the Middle East are experiencing rapid growth included. in manufacturing and other power-consuming • Owners costs are not included. sources and will need to expand the respective • Costs for spare parts are not included. capacities of their power infrastructure to serve • Land is not included. this growth. 3 Technical and Economic Assessment of Off-Grid and Grid Electrification Technologies, Summary Report, The World Bank Group, Energy Unit, Energy Transport and Water Department, September 2006. 29 STUDY OF EQUIPMENT PRICES IN THE POWER SECTOR Between 2008 and 2012, the sales of gas month for a major overhaul. Heavy-frame units turbine units are projected to grow at an average generally start more slowly than aeroderivatives. annual compound rate of 5 to 7 percent. Gas- Inspection and overhaul intervals on heavy- turbine-based power will be a significant frame units are typically based on “equivalent contributor to increased gas consumption hours,” which are affected by many factors, because these plants emit less CO2 per kWh than such as actual operating hours, number of starts, do conventional fossil steam plants. In addition, number of trips, number of fast ramp rates, and energy demand is expected to more than double so forth. within the next 7 to 10 years, especially in Asia, The simple cycle gas turbines evaluated with China being the most expansive consumer in this study are based on natural gas. The of oil, gas, and coal. Other leading users will advantages of simple cycle units compared with be India, Mongolia, and Vietnam. As a result, other power generation options are low cost, consumption of natural gas is projected to compact footprint, and quick start-up times. The exceed that of coal within the next two to three major disadvantage of simple cycle gas turbines years (on an energy content basis). is the high operating cost due to high fuel costs. Lead Times. Lead time for gas turbines in Both types of gas turbines are sensitive to the 2004–2005 timeframe was about 12 months, ambient temperature and suffer significant but by 2007, the lead time for gas turbines had derating on hot days. The high temperature extended to 16–18 months. derating can be reduced by employing Technology Description . As previously evaporative cooling or mechanical chilling on the noted, gas turbines are grouped into two compressor inlet air. Evaporative cooling works classes, aeroderivatives and heavy-frame. best for low-humidity operation. Mechanical Aeroderivative turbines are available with chilling can be employed for either high- or ratings up to about 50 MW. They generally have low-humidity applications, but the chilling better efficiency, quicker start-ups, and lower equipment is more costly than evaporative fuel costs than heavy-frame units. Consequently, cooling. aeroderivative machines are well suited to the simple cycle configuration. They also have an Simple Cycle Plant Costs advantage as peaking units because overhaul The simple cycle cases include 5-MW, 25-MW, intervals are typically based on fired hours, and 150-MW sizes. The 5-MW and 25-MW gas not on the number of starts. Overhauls of turbines are based on the aeroderivative class turbine cores are typically performed off-site and the 150-MW is based on the heavy-frame at a specialized repair facility, and lease units class. The estimates are based on completely can be used to maintain operation while the constructed and operable units. The total plant original unit is being overhauled. The overhaul costs (prices) are shown in Table 5.1, Table 5.2, and repair cycle is well structured in the United and Table 5.3, respectively. States due to the number and proximity of The costs for the gas turbine are from the specialized repair facilities. On the other hand, 2008 GTW Handbook (2008 US$), and are the repair facility “infrastructure” is lacking in adjusted as described in the narrative following many cases, and this should be considered as in this subsection. part of any evaluation to locate aeroderivative Basis of Estimates. The simple cycle plant cost units in developing countries. estimates are based on the following: Heavy-frame units are available up to 300 MW for 50-hertz (Hz) ratings. Maintenance • OEM Gas Turbine Package with Standard costs are lower, but overhauls are performed Components: Single-fuel gas turbine (natural on-site, which requires significant outage times. gas), generator, starting and lube oil systems, These outage durations can range from a few gas turbine controls, air filter, silencer, days for a combustor inspection to about a exhaust stack with silencer, vibration 30 Cost Estimates for Power Plants in the United States, India, and Romania Table 5.1 5-MW Simple Cycle Plant—Aeroderivative Gas Turbine Each Item Costs for Equipment, Material, and Labor (January 2008 US$) U.S. India Romania Cost Estimate Summary (thousands $) (thousands $) (thousands $) Civil/Structural 400 310 300 Mechanical Gas Turbine (OEM Price)1 2,920 2,920 2,920 SCR 300 0 290 Gas Compressor 640 630 620 Electrical 550 490 460 Piping 140 100 130 Instruments and Controls 90 80 80 Balance of Plant/General Facilities 340 310 310 Total Direct Costs 5,380 4,840 5,110 Indirect Costs 280 110 90 Engineering and Home Office Costs 630 260 220 Process Contingency 0 0 0 Project Contingency 940 1,040 1,080 Total Plant Cost 7,230 6,250 6,500 Gas Turbine Cost (FOB-OEM), $/kW 560 560 560 Total Plant Cost, $kW 1,380 1,190 1,240 Source: 2007–08 GTW Handbook, Volume 26, Gas Turbine World Pequot Publishing ISBN 0747-7988, 2008, and URS Washington Division Internal Cost Estimation Database. 1 OEM Price, Excluding Installation Labor. monitoring, and plant control system. This • No combustion air cooling or chilling. Gas simple cycle package is based on the GTW turbine performance and output based on Handbook adjusted with factors based on International Standards Organization (ISO) OEM bid prices contained in the in-house conditions (see Annex 1 for definition of ISO database of major equipment and auxiliary conditions for gas turbine). equipment prices. • Selective catalytic reduction (SCR) NO x control system for the United States and The simple cycle plant price is based on Romania (no SCR for India). the price as defined above plus the prices for • Gas compressor. the following additional items resulting from • Spread footings, no pile foundations. the design by the engineering firm: separate • Control building for 5-MW unit; combination purchases of all necessary auxiliary equipment office/control/warehouse building for and purchases of bulk materials such as piping, 25-MW and 150-MW units. concrete, electrical, and so forth (purchases • Fire water system. based on bid packages). The auxiliary equipment • Instruments and controls. and bulk material items that are included in the • Foundations. plant and added to the simple cycle price are • Piping. as follows: • Structural steel. 31 STUDY OF EQUIPMENT PRICES IN THE POWER SECTOR Table 5.2 25-MW Simple Cycle Plant—Aeroderivative Gas Turbine Each Item Costs for Equipment, Material, and Labor (January 2008 US$) U.S. India Romania Cost Estimate Summary (thousands $) (thousands $) (thousands $) Civil/Structural 1,260 930 900 Mechanical Gas Turbine (OEM Price)1 9,770 9,770 9,770 SCR 970 0 930 Gas Compressor 1,000 970 970 Electrical 1,790 1,560 1,500 Piping 470 330 420 Instruments and Controls 240 210 200 Balance of Plant/General Facilities 890 800 790 Total Direct Costs 16,390 14,570 15,480 Indirect Costs 750 270 230 Engineering and Home Office Costs 1,680 660 580 Process Contingency 0 0 0 Project Contingency 2,820 3,100 3,260 Total Plant Cost 21,640 18,600 19,550 Gas Turbine Cost (FOB-OEM), $/kW 440 440 440 Total Plant Cost, $kW 970 830 870 Source: URS Washington Division Internal Cost Estimation Database. 1 OEM Price, Excluding Installation Labor. • Electric wiring. If specific site conditions were used within each • Switchgear. country, then performance would influence the • Motor controls. cost estimate. By using ISO conditions, the cost estimates reflect the differences in construction Scope/Terminal Points of Estimate: labor wages, construction labor productivity, • Fuel—natural gas piping from plant fence. engineering wages, concrete costs, structural • Water—drinking water piping from plant steel costs, and piping costs and are not masked fence. by the differences in site ambient conditions. • Electricity—high side of transformer. The tables show that that costs for all of the • Natural gas and drinking water pipelines simple cycle cases are less in India and Romania outside the plant fence are not included. than in the United States. This is primarily due • Access roads outside the plant fence are not to the lower labor wage rates. The tables also included. show that the cost in India is lower than the cost • Freight is not included. in Romania. This results from the lower cost for structural steel, piping, and concrete in India. The simple cycle plant performance at each Cost Considerations and Comparison to Other of the three locations is based on ISO conditions. Cost Estimates. Figure 5.1 shows the timeline This puts the comparison on a common footing. of average OEM price per kW of capacity for 32 Cost Estimates for Power Plants in the United States, India, and Romania Table 5.3 150-MW Simple Cycle Plant—Heavy-Frame Gas Turbine Each Item Costs for Equipment, Material, and Labor (January 2008 US$) U.S. India Romania Cost Estimate Summary (thousands $) (thousands $) (thousands $) Civil/Structural 4,650 3,380 3,320 Mechanical Gas Turbine (OEM Price)1 34,030 34,030 34,030 SCR 4,250 0 4,100 Gas Compressor 1,380 1,350 1,340 Electrical 7,590 6,760 6,520 Piping 1,920 1,370 1,790 Instruments and Controls 820 710 680 Balance of Plant/General Facilities 3,000 2,660 2,610 Total Direct Costs 57,640 50,260 54,390 Indirect Costs 2,660 920 810 Engineering and Home Office Costs 6,010 2,210 2,080 Process Contingency 0 0 0 Project Contingency 9,940 10,680 11,460 Total Plant Cost 76,250 64,070 68,740 Gas Turbine Cost (FOB), $/kW 240 240 240 Total Plant Cost, $kW 530 440 480 Source: URS Washington Division Internal Cost Estimation Database. 1 OEM Price, Excluding Installation Labor. heavy-frame simple cycle units each year from overall increase of 32 percent in just four years. 1994 to 2008. The average prices are for all of However, this increase had followed the 28 the heavy-frame units in the GTW Handbook percent decline from 2001 to 2004. The overall list that are greater than 50 MW. The trends increase in the average OEM prices of simple displayed in the curve correlate in a general cycle units from 2001 to 2008 was 13 percent. way with the previously discussed changes in Figure 5.2 shows the timeline of average year-to-year sales trends of gas turbine units. OEM prices for smaller aeroderivative (aero) The average costs in this curve show one peak and heavy-frame (heavy) simple cycle units in 2001, which is the same year that gas turbine for the same period as the larger heavy-frame sales reached an all-time record. The average units. The average prices are for all of the aero price of about 30 units ranging in size from 50 and heavy units in the GTW Handbook list that to 330 MW was about US$230/kW. Then in are less than or equal to 50 MW. The trends in 2004, right after sales reached their lowest point the cost curves of the two types of smaller gas since 1990, the average price had dropped to turbines are similar, but are different than the about US$180/kW, a price decline of about 28 larger heavy-frame units. Neither curve shows percent. By 2006, the price had rebounded by 9 the peak in 2001, the overall record sales year. percent, followed by an additional 21 percent The curves show the following cost profiles for by 2008. Therefore, the industry had seen an units less than or equal to 50 MW: 33 STUDY OF EQUIPMENT PRICES IN THE POWER SECTOR Figure 5.1 Year-to-Year Change in Average Price of Heavy-Frame Simple Cycle Units (>50 MW) 300 Gas turbine simple cycle (nominal US$/kW) average compound esc. from 2004 to 2008 = 10.1% 250 200 150 average compound esc. from 1996 to 2003 = –1.71% Scope of costs—basic natural gas–fired generator set: single-fuel gas turbine, generator, inlet and outlet 100 exhaust ducts and silencer, fuel system (including filters, but excl. natural gas compressor), air filter, standard control and starting systems, and dry low NOx emission 50 system (as/if applicable). 0 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 Month–Year Source: Modified from 1994–2007 GTW Handbook, Gas Turbine World, Pequot Publishing. Figure 5.2 Year-to-Year Change in Average Price of Aero and Heavy Simple Cycle Units (< or = 50 MW) average aero < or = 50 MW average heavy < or = 50 MW 600 Small aero and heavy units (US$/kW) aero—average compound esc. from 2004 to 2008 = 8.9% 550 heavy—average compound esc. from 2004 to 2008 = 5.7% 500 450 400 aero—average compound esc. from 1996 to 2003 = –1.8% 350 heavy—average compound esc. from 1996 to 2003 = –1.7% 300 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 Month–Year Source: Gas Turbine World Handbook. • In 2001, the average price of aero units was • In 2008, the average price of aero units about US$403/kW. was about US$535/kW—an increase of 41 • In 2001, the average price of heavy units was percent from 2004. about US$402/kW. • In 2008, the average price of heavy units • In 2004, the average price of aero units was was about US$495/kW—an increase of 25 about US$380/kW—a drop of 6 percent from percent from 2004. 2001. • In 2004, the average price of heavy units was One comparison to costs from other sources about US$395/kW—a drop of 2 percent from is a generic statement from the 2007–2008 issue 2001. of the GTW Handbook. The GTW Handbook 34 Cost Estimates for Power Plants in the United States, India, and Romania has many years of experience and, in addition Thailand, Vietnam, and the Middle East) and to obtaining prices directly from OEMs, has the statements regarding the growth and use analyzed the total installed costs of numerous of natural gas generally apply to the combined U.S. projects after construction was completed. cycle. In addition, the combined cycle portion The GTW Handbook source indicates that “project of the gas turbine is expected to grow in the managers conservatively estimate that installation future—in the last five years of the twentieth and complete plant costs can easily add 60 to 100 century, combined cycle plants represented percent on top of the equipment-only (OEM) about 26 percent of all gas turbine plants built. prices of simple cycle units.”4 The 25-MW and It is projected that over the next 8 to 10 years the 150-MW U.S. simple cycle plant costs estimated combined cycle plants will approach one-half of for the World Bank are compared to this statement. all gas turbine plants built. The 5-MW simple cycle plant cost is not included Lead Times. Lead time for gas turbines in the because its small size skews the percentages. The 2004–2005 timeframe was about 12 months. comparison for the United States is as follows: • In 2007, the lead time for gas turbines had • 25-MW simple cycle—OEM cost ϩ 121 extended to 16–18 months. percent with contingency. • In the United States, plant construction time • 150-MW simple cycle—OEM cost ϩ 124 for combined cycle plants in the 2004–2005 percent with contingency. timeframe was in the range of 16 to 18 months. Thus, the simple cycle cost estimates in this • In 2007, plant construction time for combined report are in the realm of the GTW statement, cycle plants located in the United States had especially when using the word “conservatively.” extended to 22 to 26 months. The lead times Another comparison is from Libya—it was for gas turbines and the shortage of skilled announced on February 18, 2008, that BHEL craft labor are both contributing to the longer (India) had awarded US$163.4 million for construction period in the United States. engineering, procurement, and construction of 2 ϫ 150-MW simple cycle plants (size based on In regard to the worldwide sales of gas Siemens V94.2 gas turbine, also known as SGT5– turbines: 2000E). Per the GTW Handbook, the 2008 OEM price for the V94.2 model is US$37.8 million. The • The worldwide purchase of gas turbines is cost for two would be US$75.6 million. Labor much more dispersed than it is for steam and material data are not available for Libya, boilers or steam turbines (see subsequent but using the factors from this study for India, discussion under coal-fired plants). the total plant cost would be US$75.6 million ϫ • In the first three quarters of 2007, China 1.88 ϭ US$142 million. placed about 2 percent of the worldwide combustion turbine orders on a capacity basis. This compares to 2 percent for India Gas Turbine Combined Cycle and about 9 percent for the United States. The Middle East region placed the largest Combined Cycle Market Trends proportion of orders, at 25 percent. and Technology Description Market Trends. The statements in the simple Technology Description. Combined cycle gas cycle market trends section with regard to turbines are commonly used for generating the growth of overseas areas (China, India, electrical power from natural gas. The primary 4 2007–2008 GTW Handbook, Volume 26, Gas Turbine World, Pequot Publishing, ISSN 0747-7988, 2008. 35 STUDY OF EQUIPMENT PRICES IN THE POWER SECTOR advantage of combined cycle units compared One feature commonly implemented on with other power-generation options is high combined cycle plants is the provision of efficiency; overall efficiencies of large combined supplemental firing in the HRSG to generate cycle units approach 60 percent on a lower additional steam cycle power. This provides a heating-value basis. peaking power increment of about 10 percent Combined cycle units can be based on both of the plant’s nominal unfired rating. The aeroderivatives and heavy-frame gas turbine incremental efficiency of supplemental firing technology. Several aeroderivative gas turbines is about 40 percent, lower than the efficiency are suitable as the prime mover for plants with of an unfired combined cycle plant, but higher ratings of up to about 100 MW. Larger plants will than the efficiency of most simple cycle gas generally be based on heavy-frame gas turbines turbines. because of their lower cost and, unlike simple Combined cycle units are sensitive to cycle gas turbines, heavy-frame units generally ambient temperature and suffer derating on hot provide combined cycle overall plant efficiency days, but they are less sensitive than simple cycle that is higher than the efficiency of a simple gas turbines. The high temperature derating can cycle-based combined cycle plant. be reduced by employing evaporative cooling A combined cycle power block consists of or mechanical chilling on the compressor inlet three basic units: the gas turbine, a heat recovery air. Evaporative cooling works best for low- steam generator (HRSG) that produces steam humidity operation. Mechanical chilling can from the turbine exhaust heat, and a condensing be employed for either high- or low-humidity steam turbine that generates electricity from applications, but the chilling equipment is more that steam. Combined cycles based on “old” costly than it is for evaporative cooling. gas turbine technology typically use a non- reheat steam cycle and provide steam at two pressures, about 100 bar for the main steam Gas Turbine Combined Cycle Plant and 5 bar for a low-pressure admission to the Costs steam turbine. Large combined cycles based The combined cycle cases include 140-MW on “F-Class” gas turbines typically employ a and 580-MW sizes. The gas turbines used in reheat steam cycle and provide steam at three both plants are heavy-frame. The estimates are pressure levels: 140 bar for main steam, 30 bar for based on completely constructed and operable intermediate pressure steam that supplements units. The costs for the 140-MW and 580-MW reheat steam flow, and 5 bar for low-pressure combined cycle plants are provided for the admission. Several gas turbine/HRSG trains United States, India, and Romania in Tables 5.4 can be attached via manifold to a single steam and 5.5, respectively. turbine-generator (STG), or a multi-unit plant Basis of Estimates. The combined cycle plant can comprise independent gas turbine/HRSG/ cost estimates are based on the following: STG trains. The manifold configuration will have a lower cost and smaller footprint, while the • OEM Gas Turbine—Combined Cycle independent trains will have better operating Package with Standard Components: Single- flexibility since an STG outage will not bring fuel gas turbine (natural gas), generator, down the entire plant. steam turbine-generator, heat recovery steam Start-up times for combined cycle plants are generator, starting and lube oil systems, gas highly dependent on steam turbine size and on turbine controls, air filter, silencer, exhaust whether the plant is going through a cold start stack with silencer, vibration monitoring, or a hot start. Start times can range from 30 and plant control system. This combined minutes for a small unit undergoing a hot start cycle package is based on OEM bid prices to six hours for the cold start on a large, multi- obtained from the in-house database of major unit plant. equipment prices and auxiliary equipment 36 Cost Estimates for Power Plants in the United States, India, and Romania Table 5.4 140-MW Combined Cycle Plant—Heavy-Frame Gas Turbine Each Item Includes Costs for Equipment, Material, and Labor (January 2008 US$) U.S. India Romania Cost Estimate Summary (thousands $) (thousands $) (thousands $) Civil/Structural 7,240 5,130 5,280 Mechanical Gas Turbine (OEM Price)1 99,740 99,740 99,740 SCR 1,260 630 450 Gas Compressor 2,840 2,790 2,780 Electrical 9,720 8,070 7,590 Piping 9,480 6,680 8,680 Instruments and Controls 1,660 1,510 1,470 Balance of Plant/General Facilities 21,640 14,810 12,830 Total Direct Costs 153,580 139,360 138,820 Indirect Costs 13,490 4,960 3,470 Engineering and Home Office Costs 13,040 5,180 3,840 Process Contingency 0 0 0 Project Contingency 12,060 9,950 9,280 Total Plant Cost 192,170 159,450 155,410 Gas Turbine Cost (FOB-OEM), US$/kW 730 730 730 Total Plant Cost, US$/kW 1,410 1,170 1,140 Source: Author’s calculations. 1 OEM Price, Excluding Installation Labor. prices. The combined cycle package bid price • No combustion air cooling or chilling is based on detailed technical specifications system. Combined cycle plant performance and represents market pricing for both the and output based on ISO conditions.5 140-MW and 580-MW plant cases. • SCR NOx control system for the United States and Romania (no SCR for India). The combined cycle plant price is based • Natural gas compressor. on the OEM bid price as defined above plus • Wet mechanical draft cooling tower. the prices for the following additional items • Raw water treatment and boiler feedwater resulting from the design by the engineering treatment systems. firm: separate purchases of all necessary • Combination office/control/warehouse auxiliary equipment and purchases of bulk building. materials such as piping, concrete, electrical, and • Water treatment building. so forth (purchases based on bid packages). The • Fire water system. auxiliary equipment and bulk material items • Instruments and controls. that are included in the plant and added to the • Foundations. simple cycle price are as follows: • Piping. 5 ISO conditions—15ºC sea level, and 60 percent relative humidity. 37 STUDY OF EQUIPMENT PRICES IN THE POWER SECTOR Table 5.5 580-MW Combined Cycle Plant—Heavy-Frame Gas Turbine Each Item Includes Costs for Equipment, Material, and Labor (January 2008 US$) U.S. India Romania Cost Estimate Summary (thousands $) (thousands $) (thousands $) Civil/Structural 20,120 14,100 14,620 Mechanical Gas Turbine (OEM Price)1 262,930 262,930 262,930 SCR 3,460 1,730 1,230 Gas Compressor 3,480 3,410 3,390 Electrical 28,990 24,500 23,180 Piping 28,190 20,250 26,880 Instruments and Controls 4,300 3,890 3,760 Balance of Plant/General Facilities 46,700 34,380 30,810 Total Direct Costs 398,170 365,190 366,800 Indirect Costs 33,870 12,810 9,210 Engineering and Home Office Costs 32,750 13,380 10,210 Process Contingency 0 0 0 Project Contingency 30,280 25,690 24,660 Total Plant Cost 495,070 417,070 410,880 Gas Turbine Cost (FOB-OEM), $/kW 460 460 460 Total Plant Cost, $/kW 860 720 710 Source: Author’s calculations. 1 EM Price, Excluding Installation Labor. • Structural steel. The cost estimates are not based on specific • Electric wiring. sites within the respective countries. The • Switchgear. combined cycle plant performance at each of • Motor controls. the three locations is based on ISO conditions. This puts the comparison on a common Scope/Terminal Points of Estimate: footing. If specific site conditions were used within each country, then performance would • Fuel: natural gas piping from plant fence. influence the cost estimate. Common ambient • Make-up water: raw water piping from plant conditions were used so that the cost differences fence. would reflect the differences in construction • Water effluent: effluent piping to plant fence labor wages, construction labor productivity, • Electricity: high side of transformer. engineering wages, concrete costs, structural • Natural gas, make-up water, and effluent steel costs, and piping costs in the three water pipelines outside the plant fence are countries. The tables show that costs for all not included. of the simple cycle cases are less in India and • Access roads outside the plant fence are not Romania than they are in the United States. This included. is primarily due to the lower labor wage rates. • Freight is not included. The tables also show that the cost in India is 38 Cost Estimates for Power Plants in the United States, India, and Romania Figure 5.3 Year-to-Year Change in Average Price of Combined Cycle Units (> 130 MW) Scope of costs—basic natural gas-fired generator-set: single-fuel gas turbine, unfired multi-pressure HRSG, Gas turbine combined cycle (nominal US$/kW) 600 multi-pressure condensing steam turbine, electric generators, main set-up transformer, inlet and outlet exhaust ducts and average compound esc. from silencer, fuel system (including filters, but excluding natural 2004 to 2008 = 9.6% 550 gas compressor), air filter, standard control and starting systems, and dry low NOx emission system (as/if applicable). 500 450 400 350 average compound esc. from 1996 to 2003 = –1.8% 300 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 Month-Year Source: Gas Turbine World Handbook. lower than the cost in Romania. This is a result Coal-Fired Steam Plant of the lower cost in India for structural steel, piping, and concrete. Technology Development, Plant Comparison to Other Cost Estimates. Figure 5.3 Descriptions, and Scope shows the timeline of average OEM prices for Market Trends. In the United States, between combined cycle units for the same time period 2000 and 2006, over 150 utility coal plants were as the simple cycle units. The average prices are under construction or in the planning stages. for about 50 combined cycle units in the GTW By the end of 2007, 10 of those proposed plants Handbook list ranging from 130 MW to over had been constructed and 25 plants were under 700 MW. The trends displayed in the combined construction. However, during the same year, cycle curve are more varied, but the period 59 of the proposed plants were cancelled, from 2001 correlates in a general way with the abandoned, or put on hold. The reasons for previously discussed changes in year-to-year cancellation were reported as follows: sales trends of gas turbine units. The average prices from 1996 through 2008 show a second • Climate concerns had begun to play a peak in 2001, which is the same year that gas major role in plants being abandoned and turbine sales reached the all-time record. The cancelled. Concerns about global warming combined cycle curve shows the following cost played a major role in 15 cases. profiles for units larger than 130 MW: • Increasingly, coal plants were being cancelled very early in the process due to increasing • In 2001, the average price of combined cycle regulatory scrutiny of long-range integrated units was about US$465/kW. resource plans and dramatic escalation in the • In 2004, the average price of the units was estimated installed costs. about US$369/kW—a drop of 26 percent • Regulators in a number of states had begun from 2001. favoring utility-scale renewable energy over • In 2008, the average price of units was about coal. In addition, citizens in some states US$533/kW—an increase of 44 percent from voted in favor of referendums that require 2004. utilities to have 10 to 20 percent of their 39 STUDY OF EQUIPMENT PRICES IN THE POWER SECTOR generation portfolio consist of renewable • Large high-pressure valves—6 to 8 months. energy. • Pneumatic ash handling system—11 to 13 months. Aside from the above and the U.S. economy, • Extra-heavy structural steel—10 to 14 the American Boiler Manufacturers Association’s months two years ago; now 17 to 23 months. (ABMA) 2008 Annual Report by its President indicated that the economic slowdown would Technology Description . The subcritical not appreciably affect the boiler industry. It pulverized coal (PC) plant is based on the was indicated that the boiler market would following cycle conditions: continue to benefit from sales and inquiry volumes not seen in years. Although the U.S. • Main steam temperature—538ºC. coal-fired plant market slowed considerably, the • Main steam temperature—16.6 MPa. overseas market, particularly from China, was • Reheat steam temperature—538ºC. contributing to the ABMA assessment (and to a • Feedwater temperature—257ºC. lesser, but important, extent from India). With regard to the worldwide major The steam generator for the subcritical PC equipment market, some additional data are plant is a drum-type, wall-fired, balanced draft, available. These data incorporate the sales from natural circulation, enclosed dry bottom furnace, all manufacturers in the world (of boilers and with superheater, reheater, economizer, and steam turbines): ljungstrom air heater. The steam generator for the supercritical PC • In the first three quarters of 2007, China plant is a once-through, spiral wound, Benson- placed 60 percent of the worldwide steam boiler, wall-fired, balanced draft, enclosed dry boiler orders on a capacity basis. This bottom furnace, with superheater, reheater, compares to 20 percent for India and economizer, and ljungstrom air heater. 4 percent for the United States. India had the The supercritical PC plant is based on the second-highest number of boiler orders of all following cycle conditions: countries in the world. • In the first three quarters of 2007, China • Main steam temperature—566ºC. placed about 49 percent of the worldwide • Main steam temperature—24.1 MPa. steam turbine orders on a capacity basis. This • Reheat steam temperature—593ºC. compares to 18 percent for India and about • Feedwater temperature—305ºC. 4 percent for the United States. India had the second highest number of steam turbine orders of all countries in the world. Pulverized Coal-Fired Plant Costs The conceptual cost estimates for the 300-MW, Lead Times: 500-MW, and 800-MW PC power plants are provided for the United States, India, and • Steam turbines > 300 MW—22 to 26 months. Romania in Table 5.6, Table 5.7, and Table 5.8, • Large boiler feed pumps—14 to 18 months. respectively. The fuels burned in the respective • Steam turbines > 300 MW—22 to 26 months. cases are Powder River Basin (PRB) coal, • Large boiler feed pumps—14 to 18 months. Australian coal, and Romanian lignite. The • Large motors > 5000 kW—11 to 14 months. estimates reflect the differences in construction • Centrifugal fans, 300 to 400 m3/sec or labor wages, construction labor productivity, larger—12–15 months. engineering wages, concrete costs, structural • Main steam piping or other heavy wall steel costs, and piping costs in the three piping for units larger than 300 M—14 to 18 countries. The criteria used to develop the cost months (the alloy fitting shortage is a partial estimates are in the Design Basis that is located contributor to the long lead time). in Annex 1. 40 Cost Estimates for Power Plants in the United States, India, and Romania Table 5.6 300-MW Pulverized Coal Power Plant—Costs for 1 x 300 MW Subcritical Pulverized Coal-Fired Plant Each Cost Item Includes Equipment, Material, and Labor (January 2008 US$) India Mt. Romania Conceptual Cost Estimate Summary U.S. PRB Author–AU Rom–Lignite Coal —> (thousands $) (thousands $) (thousands $) Earthwork/Civil 52,600 19,300 36,500 Structural Steel 29,400 10,500 28,600 Mechanical Equipment Boiler 113,400 87,100 141,500 Steam Turbine 40,200 37,800 38,800 Coal Handling 38,200 17,000 31,600 Ash Handling 13,400 9, 600 34,900 Particulate Removal System 17,800 9,609 22,000 Wet Flue Gas Desulfurization (FGD) System 61,800 0 67,800 Selective Catalytic Reduction 26,400 0 32,500 Total Mechanical Equipment 311,200 163,800 369,100 Electrical 47,200 26,500 25,400 Piping 32,000 15,000 13,700 BOP/General Facilities 130,400 140,000 183,200 Direct Field Cost 602,800 375,100 656,500 Indirect Costs1 46,000 20,100 25,300 2 Engineering and Home Office Costs 62,600 27,100 47,100 Process Contingency 0 0 0 Project Contingency 106,700 84,500 145,800 Total Plant Cost 818,100 506,800 874,700 Total Plant Cost, US$/kWnet 2,730 1,690 2,920 Project Contingency, % 15 20 20 Plant Output, MWnet 300 300 300 Boiler Efficiency, % 84.4 89.2 72.6 Fuel Heating Value Higher Heating Value (HHV), MJ/kg 18.4 27.5 8.8 Ratio of Flows to U.S. Coal Coal 1.0 0.6 2.5 Ash 1.0 1.4 9.5 Air 1.0 0.9 1.2 Flue Gas 1.0 0.9 1.3 Limestone for FGD 1.0 NA 6.6 FGD Solids 1.0 NA 6.6 Source: Author’s calculations. 1 Field office nonmanual labor, craft support labor, and temporary facilities. 2 Engineering, start-up, and general and administrative costs. 41 STUDY OF EQUIPMENT PRICES IN THE POWER SECTOR Table 5.7 500-MW Pulverized Coal Power Plant—Costs for 1 x 500 MW Subcritical Pulverized Coal-Fired Plant Each Cost Item Includes Equipment, Material and Labor (January 2008 US$) India Mt. Romania Conceptual Cost Estimate Summary U.S. PRB Author–AU Rom–Lignite Coal —> (thousands $) (thousands $) (thousands $) Earthwork/Civil 75,500 28,100 67,000 Structural Steel 40,400 14,600 49,800 Mechanical Equipment Boiler 151,700 118,900 209,400 Steam Turbine 60,400 56,900 58,400 Coal Handling 55,600 24,400 57,900 Ash Handling 16,800 11,900 67,600 Particulate Removal System 26,800 18,800 33,500 Wet FGD System 78,000 0 87,400 Selective Catalytic Reduction 40,900 0 50,400 Total Mechanical Equipment 430,200 230,900 564,600 Electrical 66,600 37,700 45,100 Piping 47,200 22,300 25,400 BOP/General Facilities 186,000 200,800 200,200 Direct Field Cost 845,900 534,400 952,100 Indirect Costs1 62,900 27,600 35,700 2 Engineering and Home Office Costs 87,700 38,500 68,200 Process Contingency 0 0 0 Project Contingency 149,500 120,100 211,200 Total Plant Cost 1,146,000 720,600 1,267,200 Total Plant Cost, US$/kWnet 2,290 1,440 2,530 Project Contingency, % 15 20 20 Plant Output, MWnet 500 500 500 Boiler Efficiency, % 84.4 89.3 72.6 Fuel Heating Value (HHV), MJ/kg 18.4 27.5 8.8 Ratio of Flows to U.S. Coal Coal 1.0 0.6 2.5 Ash 1.0 1.4 9.5 Air 1.0 0.9 1.2 Flue Gas 1.0 0.9 1.3 Limestone for FGD 1.0 NA 6.6 FGD Solids 1.0 NA 6.6 Source: Author’s calculations. 1 Field office nonmanual labor, craft support labor, and temporary facilities. 2 Engineering, start-up, and general and administrative costs. 42 Cost Estimates for Power Plants in the United States, India, and Romania Table 5.8 800-MW Pulverized Coal Power Plant—Costs for 1 x 800 MW Subcritical Pulverized Coal-Fired Plant Each Cost Item Includes Equipment, Material and Labor (January 2008 US$) India Mt. Romania Conceptual Cost Estimate Summary U.S. PRB Author–AU Rom–Lignite Coal —> (thousands $) (thousands $) (thousands $) Earthwork/Civil 102,800 40,600 104,000 Structural Steel 53,900 21,700 76,000 Mechanical Equipment Boiler 212,900 180,600 337,400 Steam Turbine 89,600 84,500 86,500 Coal Handling 74,600 33,300 87,200 Ash Handling 20,000 18,200 105,700 Particulate Removal System 36,500 25,600 46,000 Wet FGD System 95,300 25,600 113,200 Selective Catalytic Reduction 57,100 0 70,000 Total Mechanical Equipment 57,100 0 846,000 Electrical 586,000 54,200 70,000 Piping 70,300 35,500 43,300 BOP/General Facilities 253,900 275,300 217,200 Direct Field Cost 1,158,300 769,500 1,356,500 Indirect Costs1 83,000 37,500 47,900 Engineering and Home Office Costs2 120,000 55,400 97,100 Process Contingency 0 0 0 Project Contingency 204,200 172,500 300,300 Total Plant Cost 1,565,500 1,034,900 1,801,800 Total Plant Cost, US$/kWnet 1,960 1,290 2,250 Project Contingency, % 15 20 20 Plant Output, MWnet 800 800 800 Boiler Efficiency, % 84.5 89.3 72.6 Fuel Heating Value (HHV), MJ/kg 18.4 27.5 8.8 Ratio of Flows to U.S. Coal Coal 1.0 0.6 2.5 Ash 1.0 1.4 9.5 Air 1.0 0.9 1.2 Flue Gas 1.0 0.9 1.3 Limestone for FGD 1.0 NA 6.6 FGD Solids 1.0 NA 6.6 Source: Author’s calculations. 1 Field office nonmanual labor, craft support labor, and temporary facilities. 2 Engineering, start-up, and general and administrative costs. 43 STUDY OF EQUIPMENT PRICES IN THE POWER SECTOR Basis of Estimate. The PC plant cases include Scope/Terminal Points of Estimate: 300-MW subcritical, 500-MW subcritical, and 800-MW supercritical units. The PCCost • Coal: coal bunker underneath railroad tracks. program was used to develop the total plant • Ash: outlet of ash silo. cost for each case. For these estimates the • FGD solids: discharge of vacuum filter. program included market demand factors. The • Make-up water: raw water piping from plant PC plant cost estimates are based on completely fence. constructed and operable units that include the • Water effluent: effluent piping to plant fence. following equipment and systems: • Electricity: high side of transformer. • Railroad track outside the plant fence is not • Steam generator and accessories. included. • Steam turbine and accessories. • Make-up water and effluent water pipelines • Main steam and reheat steam systems. outside the plant fence are not included. • Condensate and feedwater heating system. • Access roads outside the plant fence are not • Turbine and steam line drains. included. • Heater vents and drains. • Ash/FGD solids disposal area is not • Auxiliary steam and condensate return included. systems. • Evaporation ponds are not included. • Condenser and circulating water system. • Freight is not included. • Wet mechanical cooling tower. • Condensate storage and transfer. The tables show that the costs for all three • Plant make-up water system and service plant sizes in India are much less than they are water system. in the United States. This is due to the lower • Demineralized water system. labor wage rates and lower prices of concrete • Closed cooling water system. and the substantially lower prices for structural • Compressed air system. steel and piping. The tables also show that the • Boiler chemical feed system. cost in Romania is higher than it is in either • Combustion air and flue gas system. India or the United States. Although Romania • Auxiliary boiler system. has much lower labor wage rates and slightly • Particulate control system (fabric filter for the lower concrete prices, these are offset by the United States and electrostatic preciptator higher price of structural steel and piping. More [ESPs] for India and Romania). important is the impact of the Romanian lignite • FGD system (not required for India). compared to the coals burned in the other two • Selective catalytic reduction system (not cases. The lignite has a heating value of 8.8 MJ/ required for India). kg compared to the heating values of 26.4 for • Coal handling system. India and 18.4 for the U.S. PRB. In addition, the • Fly ash handling system and bottom ash Romanian lignite has very high in moisture and handling system. ash content. • Wastewater treatment system. As shown at the bottom of the cost estimate • Fire protection system. tables, the high moisture content and other • Instruments and controls. characteristics of the Romanian lignite result in • Foundations. a boiler efficiency that is about 15 percentage • Piping. points lower than the coal burned in India and • Structural steel. 11 percentage points lower than the coal burned • Electric wiring. in the United States. In addition, there are even • Switchgear. more striking differences in the Romanian fuel • Motor controls. compared to the United States and Indian coals. • Buildings. The differences and impacts are exemplified 44 Cost Estimates for Power Plants in the United States, India, and Romania by the ratio of respective flows of coal, ash, air, • South Carolina—1 ϫ 600-MW supercritical and flue gas. For purposes of this comparison, plant, 2006, US$1,640/kW. the United States is used as the base case (see • Colorado—1 ϫ 750-MW supercritical plant, ratios of the Indian coal to the U.S. coal and the 2006, US$1,800/kW. Romanian lignite to the U.S. coal at the bottom • India—The Maharashtra State Mining of each cost estimate table). The items below Corporation announced plans to build delineate the relative impacts of the Romanian 1 ϫ 540-MW coal-fired power plant in lignite compared to the U.S. coal: Chandrapur (tender already issued), 2/16/2008, Rs 3,000 crore, which is • The lower efficiency of the Romanian boiler approximately US$750 million or about results in a much larger furnace, boiler US$1,400/kW. This compares to the study backpass, and air heater. Overall, the boiler estimate for the 500-MW unit of US$1,440/ in Romania burning the lignite is 2.1 times kW in January 2008 US$. the size of the boiler in the United States • India—The Aravali Super Thermal Power burning PRB coal. Project 3 ϫ 500-MW coal-fired power plant • The lignite burn rate is 2.5 times the U.S. coal in Jhajjar district of Haryana, 6/1/2007, burn rate, resulting in a much larger coal Rs 82.94 billion, which is approximately storage and coal handling system. US$2.07 billion or about US$1,380/kW. This • Ash flow is 9.5 times the U.S. flow, resulting compares to the study estimate for the 500- in an exceedingly large ash handling system MW unit of US$1,440/kW in January 2008 and much larger ESP hoppers. US$. • Air flow is 1.2 times the U.S. flow, translating into larger combustion air fans and combustion air ductwork. Oil-Fired Steam Plant • Flue gas flow is 1.3 times the U.S. flow, Technology Basis translating into larger ductwork, ESP, FGD The oil-fired plant case is for a 300-MW absorber cross-sectional area, induced draft subcritical unit. The unit burns No. 2 fuel oil. (ID) fans, and diameter of the stack flue. The cost estimates are based on completely • The limestone flow for FGD is 5.6 times constructed and operable units. the U.S. flow, resulting in a much larger limestone storage and handling system. • The flow of FGD waste solids is 6.6 times the Oil-Fired Plant Costs U.S. flow, resulting in a much larger FGD The conceptual cost estimates for the 300- waste handling system. MW oil-fired power plants are provided for the United States, India, and Romania in As a comparison to the costs estimated for Table 5.9. The estimates reflect the differences this study, the list below provides the locations in construction labor wages, construction labor and reported costs for pulverized coal-fired productivity, engineering wages, concrete costs, plants: structural steel costs, and piping costs in the three countries. Similar to the coal-fired plant, • Illinois—2 ϫ 800-MW supercritical mine- these data are in Annex 1. mouth plant, mid-2007, US$1,810/kW. The table shows that total plant costs for • Texas—1 ϫ 900-MW supercritical plant, PRB India and Romania are less than they are in the coal, 2007, US$1,830/kW. United States due to the lower labor rates in both • Oklahoma—1 ϫ 950-MW ultra-supercritical countries and the lower prices of concrete and plant, PRB coal, 2007, US$1,900/kW. steel in India. The cost of the plant in India is • Iowa—1 ϫ 830-MW supercritical plant, mid- less than it is in the United States and Romania 2005, US$1,450/kW. because the plant in India does not require a 45 STUDY OF EQUIPMENT PRICES IN THE POWER SECTOR Table 5.9 300-MW Oil-Fired Power Plant—Costs for 1 x 300 MW Subcritical Oil-Fired Plant Each Item Costs for Equipment, Material, and Labor (January 2008 US$) Conceptual Cost Estimate Summary U.S. (thousands $) India (thousands $) Romania (thousands $) Earthwork/Civil 34,400 22,900 21,200 Structural Steel 17,800 11,400 19,600 Mechanical Equipment Boiler 86,600 74,300 70,000 Steam Turbine 40,200 37,800 38,800 Coal Handling Ash Handling Particulate Removal System Wet FGD System Selective Catalytic Reduction 17,600 0 16,800 Total Mechanical Equipment 144,400 112,100 125,600 Electrical 33,300 23,000 26,100 Piping 26,900 12,800 15,100 Balance of Plant/General 70,900 68,500 99,600 Facilities Direct Field Cost 327,700 250,700 307,200 1 Indirect Costs 24,000 14,200 11,600 Engineering and Home Office 34,000 18,100 22,000 Costs2 Process Contingency 0 0 0 Project Contingency 77,100 70,700 85,200 Total Plant Cost 462,800 353,700 426,000 Total Plant Cost, US$/kW 1,540 1,180 1,420 Source: Author’s calculations. 1 Field office nonmanual labor, craft support labor, and temporary facilities. 2 Engineering, start-up, and general and administrative costs. selective catalytic reduction (SCR). The cost • Condensate and feedwater heating system. of the plant in India is also less than it is in • Turbine and steam line drains. Romania because the price of concrete is lower • Heater vents and drains. and the prices of structural steel and piping are • Auxiliary steam and condensate return substantially lower than they are in Romania. systems. Basis of Estimate. The oil-fired plant cost • Condenser and circulating water system. estimates include market demand factors and • Wet mechanical cooling tower. are based on the following equipment and • Condensate storage and transfer. systems: • Plant make-up water system and service water system. • Steam generator and accessories. • Demineralized water system. • Steam turbine and accessories. • Closed cooling water system. • Main steam and reheat steam systems. • Compressed air system. 46 Cost Estimates for Power Plants in the United States, India, and Romania • Boiler chemical feed system. costs, structural steel costs, and piping costs • Combustion air and flue gas system. in the three countries. Similar to the coal-fired • Auxiliary boiler system. plant, these data are in Annex 1. • Selective catalytic reduction system (not Basis of Estimate. The oil-fired plant cost required for India). estimates include market demand factors and • Wastewater treatment system. are based on the following equipment and • No. 2 fuel storage tanks. systems: • Fire protection system. • Instruments and controls. • Steam generator and accessories. • Foundations. • Steam turbine and accessories. • Piping. • Main steam and reheat steam systems. • Structural steel. • Condensate and feedwater heating system. • Electric wiring. • Turbine and steam line drains. • Switchgear. • Heater vents and drains. • Motor controls. • Auxiliary steam and condensate return • Buildings. systems. • Condenser and circulating water system. Scope/Terminal Points of Estimate: • Wet mechanical cooling tower. • Condensate storage and transfer. • Make-up water: raw water piping from plant • Plant make-up water system and service fence. water system. • Water effluent: effluent piping to plant fence. • Demineralized water system. • Electricity: high side of transformer. • Closed cooling water system. • Make-up water and effluent water pipelines • Compressed air system. outside the plant fence are not included. • Boiler chemical feed system. • Access roads outside the plant fence are not • Combustion air and flue gas system. included. • Auxiliary boiler system. • Freight is not included. • Selective catalytic reduction system (not required for India). Natural Gas-Fired • Wastewater treatment system. Steam Plant • Fire protection system. • Instruments and controls. Technology Development, Plant • Foundations. Descriptions, and Scope • Piping. The gas-fired plant case is for a 300-MW • Structural steel. subcritical unit. The unit burns natural gas • Electric wiring. and is based on the fact that the natural gas is • Switchgear. delivered to the plant at the pressure required by • Motor controls. the boiler burners. The cost estimates are based • Buildings. on completely constructed and operable units. Scope/Terminal Points of Estimate: Natural Gas-Fired Plant Costs • Make-up water: raw water piping from plant The conceptual cost estimates for the 300-MW fence. natural gas-fired power plants are provided • Water effluent: effluent piping to plant fence. for the United States, India, and Romania in • Electricity: high side of transformer. Table 5.10. The estimates reflect the differences • Switchyard is not included. in construction craft labor wages, construction • Natural gas is delivered to the plant fence at labor productivity, engineering wages, concrete the pressure required by the boiler burners. 47 STUDY OF EQUIPMENT PRICES IN THE POWER SECTOR Table 5.10 300-MW Natural Gas-Fired Power Plant—Costs for 1 x 300 MW Subcritical Natural Gas-Fired Plant Each Item Costs for Equipment, Material, and Labor (January 2008 US$) U.S. India Romania Conceptual Estimate Summary (thousands $) (thousands $) (thousands $) Earthwork/Civil 32,100 20,700 19,100 Structural Steel 16,700 10,800 18,300 Mechanical Equipment Boiler 73,200 62,800 58,900 Steam Turbine 40,200 37,800 38,800 Coal Handling 0 0 0 Ash Handling 0 0 0 Particulate Removal System 0 0 0 Wet FGD System 0 0 0 Selective Catalytic Reduction 14,000 0 13,400 Total Mechanical Equipment 127,400 100,600 111,100 Electrical 24,800 17,200 19,000 Piping 26,800 12,900 15,100 Balance of Plant/General Facilities 61,300 59,400 55,500 Direct Field Cost 289,100 221,600 238,100 1 Indirect Costs 21,500 12,400 8,400 2 Engineering and Home Office Costs 30,000 16,000 17,100 Process Contingency 0 0 0 Project Contingency 68,100 62,500 65,900 Total Plant Cost 408,700 312,500 329,500 Total Plant Cost, US$/kW 1,360 1,040 1,100 Source: Author’s calculations. 1 Field office nomanual labor, craft support labor, and temporary facilities. 2 Engineering, start-up, and general and administrative cost. • Make-up water and effluent water pipelines because the plant in India does not require an outside the plant fence are not included. SCR. The cost of the plant in India is less than it is • Natural gas pipeline outside the plant fence in Romania because the price of concrete is lower is not included. and the prices of structural steel and piping are • Access roads outside the plant fence are not substantially lower than they are in Romania. included. • Freight is not included. Diesel-Generator Plant The table shows that costs for India and Romania are less than they are in the United Technology Development, Plant States due to the lower labor rates in both Descriptions, and Scope countries and the lower prices of concrete and Market Trends. According to available data (from steel in India. The cost of the plant in India is a database starting in 1978), worldwide sales less than it is in the United States and Romania of diesel engine-generators from 1 to 30 MW 48 Cost Estimates for Power Plants in the United States, India, and Romania Figure 5.4 Profile of Worldwide Stationary Reciprocating Engine Sales 400 Sales Index, Units > 1.0 MW (1996 = 100) 350 300 250 200 150 100 50 0 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 Year Source: Author’s calculations. roughly followed the trend of gas turbines by and Eastern Europe and Russia. In North peaking in 2001. Then in 2002, sales plummeted. America, the sales of units in the 1.01- to 5.0- After 2002, sales roughly followed the trend MW range increased 12 percent and in Eastern of gas turbines, except that in 2005 and after Europe and Russia, sales in the 1.01- to 5.0-MW sales grew more rapidly. The trend is shown in range doubled. In 2007, North America had the Figure 5.4. largest portion of worldwide sales in the 1.01- to Starting in 2000, the year-to-year-before 5.0-MW range, at 29 percent. change for diesel engines greater than 1 MW Diesel-Generator Plant Description. Diesel was as follows: engines differ from the previously discussed technologies in that they are of a size amenable to • 2001—Sales increased by 68 percent. distributed generation. This analysis is for 1-MW • 2002—Sales decreased by 38 percent. and 5-MW units. Even at 5 MW, the engine is • 2003—Sales decreased by 2 percent. prefabricated and requires minimal engineering • 2004—Sales increased 8 percent. to be installed and begin operation. Over the • 2005—Sales increased 41 percent. past 20 years, efficiencies have improved and • 2006—Sales increased 34 percent. emissions have been reduced with refined • 2007—Sales increased 20 percent. combustion control. The reciprocating engine in this study is a compression ignition engine fired In 2007 worldwide sales based on the with No. 2 fuel oil. number of units, the 1.01- to 2.0-MW range Historically, reciprocating engines have been represented 84 percent of the market and the used in standby and emergency applications, 2.01- to 5.0-MW range represented 12.5 percent for peaking power service on intermediate of the market. From 2006 to 2007, the areas of to base-loaded facilities and cogeneration the world that experienced the largest increases applications. Larger oil-fired engines are more in number-of-unit sales were North America frequently used outside the United States for 49 STUDY OF EQUIPMENT PRICES IN THE POWER SECTOR stationary utility and base-load applications, engine represents such a large part of the cost and this is the basis of the engines being and because budget quotes were provided included in this study. specifically for this study, the project contingency is reduced from 15 percent to 10 percent in the Diesel Engine-Generator Plant United States and 20 percent to 15 percent in India and Romania. Costs Basis of Estimate. The diesel engine package The engine manufacturer in the United States typically provided by the OEMs consists of: that provided the budget quotes for this project indicated that its engines were being • Engine. sold in India, and, as such, worldwide market • Generator. pricing is assumed. On this basis, the price • Lube oil system. of the engine package is the same for each • Radiator for cooling. country. The additional items in Table 5.11 • Electric start system. apply to the 1-MW and 5-MW diesel engine- • Air intake filter. generator units. • Stack. The costs in Table 5.12 are based on budget quotes for units delivered in 2008. The build-up In addition, the plant scope includes: of costs from the engine price to the “bottom- line” price is based on the relationship of balance • Fuel oil storage tank. of plant (BOP) equipment prices, installation • Concrete. labor, market demand factors, etcetera. • Piping. The BOP costs have the most effect on the • Electrical. variations between the countries. Because the • Instruments and controls. Table 5.11 Diesel Engine Information Engine Rating (ISO) 1.36 MW 4.84 MW Engine Speed, rpm 1800 900 Engine Configuration V-12, 4-stroke V-16, 4-stroke Lead Time, order to delivery, months 12 24 Source: Author’s calculations. Table 5.12 Total Plant Prices for Diesel Engine-Generator Plants in India, Romania, and the United States Plant Cost (US$/kW)—January 2008 US$ India Romania U.S. 1 MW 5 MW 1 MW 5 MW 1 MW 5 MW Generation Module Equipment Cost 287 444 287 444 287 444 BOP Equipment 63 29 95 44 81 38 Installation 41 21 29 15 81 42 * General Facilities and Engineering 19 25 13 18 38 50 Subtotal Cost 410 519 424 521 487 574 Process Contingency 0 0 0 0 0 0 Project Contingency 61 78 64 78 49 57 Total Plant Cost (Rounded) 470 590 490 600 540 630 Source: Author’s calculations. *Includes home office and indirect costs. 50 Cost Estimates for Power Plants in the United States, India, and Romania Scope/Terminal Points of Estimate: • Kansas—76-MW reciprocating engine- generator plant with 8 Wartsila engines (same • Electricity: no grid interconnection costs. engines as Texas), announced 2/19/2008 and • Fuel oil unloading facilities. scheduled to begin operation in September • Access roads outside the plant fence are not 2008. The contract is with Wartsila for US$30 included. million (for the engine-generators supply • Freight is not included. only). This translates to an engine-only cost As evidenced by the costs in the table, of about US$390/kW. reciprocating engines demonstrate a reverse • Northern California—116-MW reciprocating economy of scale. Costs per kW actually engine-generator plant with 14 Wartsila increase with larger engines because of the engines (same engines as Texas, but designed reduction in crank-shaft speed (the decrease in for very low emissions), announced April power per unit of cylinder displacement) and 2007 and scheduled to begin operation in increased engine mass. Additionally, smaller May 2009. The contract is with Wartsila for engines have a fairly large production base, US$50 million (for the engine-generators whereas larger units are usually built only supply only). This translates to an engine- upon order and so do not benefit from mass only cost of about US$430/kW. production economies. The table shows that project costs in the overseas countries range from US$50/kW to Onshore Wind Farms US$70/kW lower than in the United States for Technology Development, Plant the 1-MW diesel engine-based plant and US$30/ kW to US$40/kW less for the 5-MW plant. The Descriptions, and Scope cost differences, as previously indicated, are due Wind Turbine Description. Wind turbine to the cost of labor and the cost of materials in components include the rotor blades, generator the balance of plant support equipment. (asynchronous/induction or synchronous), One way to reduce the capital costs of a power regulation, aerodynamic (Yaw) diesel engine plant is to purchase reconditioned mechanisms, and the tower. Wind turbine engines. Diesel engines lend well to the second- component technology continues to improve, hand engine market, as relatively inexpensive including the blades (through increasing use components may be replaced, while the costly of carbon epoxy and other composite materials engine block can be reused. Prices of used or to improve the weight/swept area ratio); reconditioned engines are generally one-half the generators (doubly-fed induction generators and cost of a comparable new engine. This could be direct-drive synchronous machines providing a favorable choice for some users in India and improved efficiency over broader wind speed Romania and an even more desirable option for ranges); power regulation (through active stall third-world countries. pitch controls); and towers (tubular towers Comparison to Published Costs: minimize vibration, allow for larger machines to be constructed, and reduce maintenance costs • Texas—203-MW reciprocating engine- by providing easier access to the nacelle). generator plant with 24 Wartsila engines Wind Turbine Development and Market. Wind (nominal 8 MW), announced 2/19/2008 generation technology is growing faster than and scheduled to begin operation in two any other renewable energy source in the world, phases in 2009 and 2010. Wartsila’s scope as evidenced by the 20 GW of new generation includes all related mechanical and electrical capacity installed in 2007. This brings the auxiliaries, SCRs, installation, and start- total generation capacity to more than 94 GW up. The reported cost is US$120 million or worldwide at the end of 2007, according to US$590/kW. (This is the same scope as the the Global Wind Energy Council. In 2007, the cost estimates listed above.) United States was the leader in new generating 51 STUDY OF EQUIPMENT PRICES IN THE POWER SECTOR capacity installations, increasing its generating and 1,670 kW in the United States. Additionally, capacity by 45 percent by adding 5.2 GW. Spain smaller turbines can be very useful in markets and China were second in installations, adding with limited infrastructure for construction or 3.5 GW and 3.4 GW, respectively. Europe has challenging topography. consistently been the leading market for wind The world market for wind generation in the past few years, with Germany and Spain has seen consistent growth in the past several being the main players, while other regions years, and is likely to continue the boom with are catching up. China more than doubled its rising environmental concerns for fossil-fueled wind power capacity, and has been encouraging power plants. Wind has established itself as the domestic production, with more than 40 largest and most experienced renewable power Chinese companies involved in manufacturing producer and as such is likely to hold a market in 2007. share of renewable power as CO2 emissions and Just a few years ago, 1–2-MW turbines water supply concerns grow. were considered the large industrial scale. Wind Market in the United States. From 1999 Today, however, many major manufacturers to 2004, the U.S. wind market was plagued with are advancing to 3–5-MW turbines. Figure 5.5 highs and lows in annual growth, correlating from BTM’s Wind Energy Development World to the short-term extensions of the federal Market Update shows the relationship between a production tax credit (PTC). This cycle appears country’s turbine manufacturing experience and to have been broken, however, with consistent the average turbine size installed. These graphs implementation of the PTC and corresponding indicate that longer manufacturing experience steady growth in the wind market for the correlates to larger average turbine installations. past three years. This sustained growth is As such, smaller turbines are generally preferred attributed to federal tax incentives, state- in the developing Asian markets. In 2006, the imposed renewable portfolio standards, possible average turbine size delivered to India was 930 future environmental restrictions, and uncertain kW, versus 1,950 kW to the United Kingdom fuel costs for fossil plants. Figure 5.5 Manufacturing Experience and Average Turbine Size 2,500 2,500 Denmark Denmark Average size turbine installed each year (kW) Average size turbine installed in 2004 (kW) Germany USA 2,000 2,000 Spain Germany China UK India 1,500 1,500 USA Spain 1,000 1,000 China India 500 500 0 0 2000 2001 2002 2003 2004 1975 1980 1985 1990 2000 Start of local manufacturing (year) Source: Author’s calculations. 52 Cost Estimates for Power Plants in the United States, India, and Romania General Electric (GE) has been the dominant the main growth potential in Poland, Turkey, wind turbine manufacturer in the United States, the Czech Republic, and Hungary. Targets set providing 60 percent of new wind generation by the European Commission call for 20 percent in the United States in 2005 and 47 percent in of power generation from renewable sources by 2006. Manufacturing competition continues 2020. In order to achieve this goal, it is likely that to increase with increasing demand for wind, Eastern European countries will need to employ evidenced by GE’s decreased market share the use of more wind power, particularly because from 2005 to 2006. As wind demand increases, wind is the most advanced large-scale renewable overseas manufacturers have begun to establish generation technology. This motivation for plants in the United States. Vestas began building growth in the wind market is counteracted by a blade manufacturing plant in Colorado in these countries’ traditional dependency on fossil summer 2007; Siemens is building a plant in power plants. Also, Eastern European countries Iowa; and Clipper Windpower maintains its tend to lack the mature regulatory framework manufacturing of 2.5-MW wind turbines in and established subsidies and tax incentives Cedar Rapids, Iowa. Other companies active that Western counterparts may have in place. in the U.S. market include Mitsubishi Heavy Nonetheless, Eastern European governments Industries, Suzlon Wind Energy Company, and do seem to be moving toward support of such Gamesa. programs and some of the major market players Wind Market in India/Asia. According to the are positioning themselves in this emerging Global Wind Energy Council (GWEC), India marketplace. Iberdrola, Acciona, EuroTrust, had over 8 GW of wind capacity installed at the and Good Energies are all starting to position end of 2007, up from 6.2 GW at the end of 2006. themselves, often in partnership with local firms, Growth in China has more than doubled in the for the Eastern European development of wind past year, adding over 3.4 GW of capacity in power. 2007. Emerging Energy Research (EER) predicts that, alongside North America, Asia will have the largest growth in wind power through 2015, Wind Farm Costs estimating over 4.6 GW of additional wind Advancements in wind turbine technology, power within the next 10 years. Governments increased operating experience, and mass in this sector are showing increasing support for production of components have driven the costs renewable energy, evidenced in India by new of wind power down more than 80 percent over policies aiming to increase energy independence the past 20 years. A compilation of data from and improve environmental image. the Lawrence Berkeley National Lab shows the Suzlon, an Indian-owned company, has been cost of U.S. wind projects as between US$3,000– the dominant market player in India, holding 52 4,000/kW in the early 1980s, while the current percent of total installed capacity in 2006. Enercon cost of projects is between US$1,000–2,500/ and Vestas were the next largest players, with kW. The bulk of an installed cost is accounted GE and Gamesa holding smaller shares in India. for by the turbine itself, which generally makes In China, Goldwind (Jinfeng) and Vestas have up about 65–80 percent of the total installed been major market players, each holding nearly cost. Civil work, including the foundation and 30 percent of the wind market in 2006. Other roads, is the second biggest piece, typically companies in the Indian market include Gamesa, making up 5–15 percent of the installed cost, GE, Acciona, Nordex, REPower, and Suzlon. followed by project financing/overhead, grid Wind Market—Romania/Eastern Europe . connection, and electrical installation, each of While Western Europe has traditionally led in which generally accounts for 1–10 percent of the worldwide wind generation capacity, Eastern total installed cost. Last, land accounts for 1–3 Europe has significant potential for growth. EER percent of the total installed cost of a wind farm. estimates that this market will grow from about Table 5.13 provides estimated capital and 550 MW to greater than 7.5 GW by 2015, with operating costs of three wind farms of varying 53 STUDY OF EQUIPMENT PRICES IN THE POWER SECTOR Table 5.13 Wind Farm—Cost Estimate Summary, United States (Prorated per Individual Turbine, Except as Noted) 12-MW 50-MW 100-MW Cost Component (2008 US$) Units Farm Farm Farm Turbine Size 750 kW 1 MW 2.5 MW Number of Turbines 16 50 40 Rotor Diameter meters 50 65 85 Hub Height meters 55 55 100 Rotor 1000 US$ 160 180 430 Drive Train, Nacelle 1000 US$ 480 660 1,520 Control, Safety System, and Condition Monitoring 1000 US$ 50 50 50 Tower 1000 US$ 120 140 430 Turbine Capital Cost, per Turbine 1000 US$ 810 1,030 2,430 Balance of Plant Foundations 1000 US$ 50 60 90 Roads and Civil Work (Other Than Foundations) 1000 US$ 67 86 176 Turbine Installation 1000 US$ 30 41 114 Electrical Interface and Connections 1000 US$ 120 150 310 Direct Field Cost per Turbine (Rounded) 1000 US$ 1,080 1,370 3,120 Engineering and Home Office 1000 US$ 30 40 65 Project Contingency 1000 US$ 170 280 640 Total Plant Cost per Turbine (Rounded) 1000 US$ 1,310 1,690 3,830 Total Plant Cost for Farm (Rounded) 1000 US$ 21,000 84,500 153,200 Total Plant Cost (US$/kW) $/kW 1,750 1,690 1,530 Annual Energy Production (AEP) GWh/yr 32 132 263 Source: Wind Turbine Cost and Scaling Model, NREL/TP-500-40566, December 2006. sizes installed in the United States. These costs Scope/Terminal Points of Estimate: are based on a class 4 location, assuming a 98 percent availability of the turbine, and a 30 • Electricity: no grid interconnection costs. percent capacity factor. Installed turbine costs • Access roads outside the farm boundary are were derived from the wind turbine design cost not included. model described in Fingersh et al. • Freight is not included. Basis of Estimate. The wind farm cost estimates are based on the following: For each of the estimates in Table 5.14, the turbine accounts for about 70 percent of the direct • Wind turbine. field cost, indicating that only about 30 percent • Tower. of project costs are site-specific, including civil • Control systems. and road work, transportation costs, assembly, • Electrical interconnection within the farm. and electrical work. • Foundations. The wind turbine market is now world • Roads and civil work within the farm. sourced so that the same wind turbine costs 54 Cost Estimates for Power Plants in the United States, India, and Romania Table 5.14 Cost Estimate Summary per 1-MW Wind Turbine 100-MW Wind Farm in India, Romania, and the United States Cost Component (2008 US$) Units India Romania U.S. Project Contingency % 20% 20% 15% Turbine Size MW 1 1 1 Number of Turbines 100 100 100 Turbine Capital Cost (1000 US$) 1000 1,030 1,030 1,030 Balance of Plant Foundations 1000 39 54 57 Roads and Civil Work (Other Than Foundations) 1000 82 59 86 Turbine Installation 1000 21 14 41 Electrical Interface and Connections 1000 270 210 150 Total Direct Field Cost per Turbine 1000 1,450 1,360 1,370 Engineering and Home Office 1000 20 20 40 Project Contingency 1000 290 280 220 Total Plant Cost per Turbine (Rounded) 1000 1,760 1,660 1,630 Total Plant Cost for Farm (Rounded) 1000 176,000 166,000 163,000 Total Plant Cost (Rounded) $/kW 1,760 1,660 1,630 Annual Energy Production (AEP) GWh/yr 100 120 132 Source: Author’s calculations. apply to all three countries. The variation in was available in the United States, class 3 wind cost is for the balance of plant material, which in India, and somewhere between class 3 and 4 would be obtained in the respective countries. was available in Romania. With the above in mind, Table 5.14 provides costs As a comparison, publications and industry for 100-MW wind farms located in each of the news articles indicate the following wind farm three countries. The wind farms are made up of projects planned or about to be built. The list 1-MW wind turbines. below provides the locations and reported costs Site variations in the cost of wind projects for wind farm projects: are likely due to the extent of the electrical work needed, which may be inflated in areas where • Texas—80 miles SW of Dallas: 60 MW (24 ϫ connection to the grid may be difficult and 2.5-MW turbines), project cost: US$1,670/ could be the case in India and Romania. The kW. By BP and Clipper. Project broke ground availability of local turbine manufacturers will September 2007. cut down on transportation costs. Foundations • Texas panhandle—Four-phase 4,000-MW and road work will be site-specific and may facility to break ground in 2009, eight years add significantly to the costs, although for all expected to complete. Cost estimated: three locations in this analysis, it is reasonable US$1,700–1,850/kW. By Mesa Power. to assume average soil and site conditions. To • Poland and Bulgaria—In 2008, Gamesa reiterate, a majority of the project costs can be signed contracts for wind farm projects, attributed to the wind turbine costs themselves. which total 180 MW; cost: 201 MM euros, Annual energy production for each site was which equals US$1,640/kW. based on the average wind resource available in • European clients—Gamesa reported total each country. It was assumed that class 4 wind multi-annual contracts for a total of 777 MW; 55 STUDY OF EQUIPMENT PRICES IN THE POWER SECTOR cost: 700 MM euros, which equals US$1,300/ operating experience, in the United States, the kW contracted. cost of wind power in the past few years has • Canada—50 MW (1.5-MW turbines), shown a general upward trend. Increasing Acciona Energy; cost: CAN$103.5, which project costs have been attributed mainly to equals US$2,030/kW United States, awarded the increase in wind turbine demand, a tighter January 2008. market, rising materials costs, and a move toward manufacturing profitability. Increasing The costs cited in the tables above compare materials costs are the predominant driver of to the published costs as follows: increasing turbine costs. The significant increases in material costs, particularly from 2004 to 2008, • The published wind farm costs range are shown in the graphs in Chapter 4. from US$1,300 to US$2,030/kW, with the Figure 5.7 from the Berkeley Lab database published mid-range project costs being illustrates this trend. This graph shows that wind between US$1,640 and US$1,850/kW. turbine prices in the United States did decline • The estimated costs in the table shown above from 1997 until 2001. During 2001, however, prices for the 100-MW and 50-MW U.S. wind farms began to rise and in fact increased by more than range from US$1,530 to US$1,690/kW. US$400/kW between 2002 and 2007. Offsetting • The estimated costs in Table 5.14 for the 100- this trend has been a decline in the cost of financing MW wind farms in the three countries range a project. Financing costs have decreased in from US$1,630 to US$1,760/kW. response to the higher demand for wind projects and associated investor interest. This factor has Market Trends in Wind Turbine Costs. Some reduced the overall escalation, with project costs references have predicted that over the long increasing about US$200/kW in the past few years. term, wind turbine costs will decline. This is related to advancements in the technology and increases in individual turbine size. In 2003, the Photovoltaic Array European Wind Energy Association predicted that wind energy costs would decline according Technology Development, Plant to the graph shown in Figure 5.6. This graph Descriptions, and Scope portrays the decline in costs for Europe. Description of Photovoltaic Technology. This study Despite predictions of decreasing costs focuses on the most common installation for from technology advancement and increased direct electricity generation, a fixed-angle Figure 5.6 Projections of Long-Term Trends in Wind Turbine Costs in Europe 900 Project Cost (Euro/kW) 800 700 600 500 400 300 2000 2005 2010 2015 2020 2025 Year Source: European Wind Energy Association. 56 Cost Estimates for Power Plants in the United States, India, and Romania Figure 5.7 Reported U.S. Wind Turbine Transaction Prices Turbine Transaction Price (2006 US$/kW) 1,600 1,400 1,200 1,000 800 600 orders < 100 MW 400 orders from 100–300 MW orders > 300 MW 200 polynomial trend line 0 Jan Jan Jan Jan Jan Jan Jan Jan Jan Jan Jan 97 98 99 00 01 02 03 04 05 06 07 announcement date Source: Berkeley Lab Database. mounted, flat panel array, including necessary Photovoltaic Power Development and Market/ system components such as an inverter, support PV System Installations Worldwide. Photovoltaic structures, wiring, and land. installations have increased more than tenfold Photovoltaic (PV) cells have traditionally over the last 10 years, while costs have dropped been made with crystalline silicon, putting PV by about 20 percent for each doubling of manufacturers in competition with electronics installed PV capacity. The overall growth rate manufacturers for highly purified silicon wafers. for PV systems had maintained a fairly steady More recent technology has been moving 30 percent per year from 1995–2003. However, in toward thin films for PV cells that require just a 2004 the growth jumped to 60 percent, bringing fraction of the material needed for silicon crystal worldwide installed capacity to more than 4 GW. PV cells. Thin film cells can be made using Market growth has been very much influenced amorphous silicon, copper indium diselenide by government incentives and rooftop programs (CIS), or cadmium telluride (CdTe). Although mainly offered in Germany, Japan, and the United more efficient materials exist for PV, amorphous States. Market installations in 2006 reached a silicon is most commonly used for thin film PV record high of 1,744 MW, totaling more than cells because of its low cost and functionality. 9 GW of installed capacity worldwide. Germany Sunlight intensity and the operating held the largest market share, accounting for temperature of the PV cell will determine 55 percent of grid-connected PV installations power output. PV arrays are rated by the in 2006, while Japan and the United States watts produced under peak sunlight, denoted had 17 percent and 8 percent, respectively. All as Peak Megawatt Output (MWp). Solar cell three of these countries have implemented efficiency is defined as the amount of light that financial incentives for solar systems, including hits the cell that is converted to electricity. Of rooftop programs encouraging residential and the electricity produced by the cell, 20 percent commercial installations. is typically lost en route to the busbar electricity Over the past few years, utility-scale due to wiring losses, Direct Current (DC)-to- installations have increased noticeably. A Alternating Current (AC) conversion, and 154-MW concentrating solar PV system was power conditioning. Overall cell efficiencies recently commissioned for start-up in 2013 for crystalline silicon are in the 15–20 percent in Australia, while a 40-MW station is to be range, with thin film technologies at around 10 installed in Toronto, Canada, in response to a percent or less. strong government subsidy. North America’s 57 STUDY OF EQUIPMENT PRICES IN THE POWER SECTOR largest PV installation, rated at 15 MW, was production capacity up to 38 MW. Other Indian completed at the Nellis Air Force Base in Nevada manufacturers include Central Electronics, in December 2007. Commercial installations Bharat Heavy Electrical, and WEBEL SL Solar. continue to be explored, as corporations such Heliodomi S.A. is a thin film manufacturer in as Macy’s, Wal-Mart, and Google plan rooftop Greece, representing the small Eastern European installations in the United States. Residential market share. customers also make up a small segment of the market, as builders such as McStain, in the state Solar Array Plant Costs of Colorado, offer solar panels as a standard Photovoltaic energy costs have decreased feature of their homes, allowing buyers to approximately 5 percent per year over the finance the cost in their mortgage. Residential past 15 years, driven by increased conversion systems are further encouraged by individual efficiencies and increased manufacturing tax incentives as well as utility-based incentive capacity. The PV module itself generally makes programs. up over half of the installed cost of the system, PV Cell and Module Manufacturing. PV cells and as a result, mass manufacturing has manufactured worldwide reached more than significantly decreased installed system costs. 2,200 MW in 2006, with Japan overtaking the The inverter, mounting equipment, electrical United States for the largest net exporter of PV wiring work, and site engineering design and cells and modules. Nearly 40 percent of total installation also contribute significantly to the global cell production in 2006 can be attributed to cost of the system. Inverter costs for large-scale Japan. While PV production rose approximately (greater than 100 kW) systems are expected to 33 percent from 2005 to 2006, production of decrease as inverters become more efficient crystalline silicon increased by only 16 percent. and reliable. Table 5.15 shows a typical cost Costs of PV cells are widely being driven by breakdown for the components of an installed supply, demand, and availability of materials PV system. for the cells. Thus, while the supply of PV cells Table 5.16 shows estimated costs for a is increasing, silicon prices are rising due to utility-size crystalline PV system in the United competition with computer chip manufacturers. States, Romania, and India. Costs are based on As such, manufacturing activity in the thin film a plant net rating 5 MWp (DC) connected to the world is booming, where cells can be produced grid with a capacity factor of 20 percent and with a fraction of the material as that needed efficiency of 15 percent. Land use is based on for conventional crystalline cells. The thin film the land area required, including a 50 percent market is projected to grow from US$1 billion packing factor (50 percent is a typical ratio in 2007 to nearly US$7.2 billion in 2015, with of array area to actual land area required for over half of the projected growth destined for the system). Costs in Table 5.15 exclude any industrial and commercial building applications. available rebates or tax incentives. As stated Japan has four of the top 10 solar cell above, the PV cell and module account for about manufacturing companies: Sharp, Kyocera, half the installed cost of the system, depending Mitsubishi Electric, and Sanyo. U.S. on site-specific installation costs. Module cost manufacturing companies include BP Solar, variations according to location are expected Shell Solar, GE Energy, United Solar Ovonics, to be small, with the installed cost differential Evergreen Solar, First Solar LLC, and SunPower between locations attributed mainly to materials Corp. Emerging thin film manufacturers include and labor expenses. Miasole, Nanosolar, and HelioVolt behind Basis of Estimate. The PV array cost estimates some of the major thin film manufacturers are based on the following: such as Kaneka, United Solar, Mitsubishi, First Solar, and Antec. India’s primary solar • PV panels. producer is Tata BP solar, which as of 2004 had • Panel supports. 58 Cost Estimates for Power Plants in the United States, India, and Romania Table 5.15 Cost Breakdown for a Small PV Europe, including Romania, could be an issue. Grid-Connected System Land costs in India as well as Romania are significantly lower than they are in the United Component Percent of Total Cost States (assuming rural location of the solar plant), PV Cell 40% with the other major ongoing operation and PV Cell and PV Module 20% maintenance (O&M) costs attributed to labor Balance of System 25% rates for system maintenance. As with other Design and Installation 15% renewable technologies, the major cost for a PV system is capital expense. In this regard, country- Total 100% specific tax incentives, low-interest financing, and Source: Author’s calculations. offered production credits can go far in enticing growth in PV generation. Monthly data collected • Foundations. from Solarbuzz indicates the average retail price • Electric wiring and DC-to-AC inverter. of a module at US$4.81/watts peak [Wp] in the • Roads within the immediate area of the array. United States and 4.74/Wp (US$6.87/Wp) in Europe (based on a single module, excluding sales Scope/Terminal Points of Estimate: tax). Module prices in Table 5.16 demonstrate an economy of scale discount based on prices quoted • Electricity: no grid interconnection costs. on Solarbuzz. SU SolarTech in India advertises • Access roads outside the immediate array unloaded module prices of US$6,500–$7,500/kW. vicinity are not included. The following published costs provide a • Freight is not included. comparison to the costs estimated for the PV systems: Costs for the installed system are lowest in India primarily because of the price of steel • An 11-MW system that started up in Portugal (support structures). It should be noted that most in 2007 was reported to cost US$78.5 million manufacturing activities are slated for Asia, the (US$7,100/kW). United States, and Western Europe, with little • A 410-kW plant in India was estimated at activity in Eastern Europe. With rising demand approximately US$2.5 million (US$8,800/ in those areas, availability of systems in Eastern kW) in 2005. Table 5.16 Cost Estimate for a 5-MW Photovoltaic System in India, Romania, and the United Statesa Cost Component (US$/kW, AC)—2008 US$ India Romania U.S. Direct Module Production Cost 3,610 3,510 3,945 b Power-related BOP 1,020 940 1,100 Structures (Including Foundations) 1,350 2,000 1,640 Installation/Engineering 550 390 1,090 Total Installed Capital Cost 6,530 6,840 7,770 Project Contingency 1,310 1,360 1,160 Total Plant Cost 7,840 8,200 8,930 2 Average Solar Insolation (kWh/m -yr) 1,900 1,200 1,800 c Net Annual Energy Delivery (GWh/yr) 8–10 8–10 8–10 Source: Author’s calculations. a Costs adapted from utility-scale data in the EPRI/DOE Report, Renewable Energy Technology Characterizations. b Power-related BOP includes wiring and DC-to-AC inverter. c Annual energy delivery will depend on solar insolation for each location, among other things. 59 STUDY OF EQUIPMENT PRICES IN THE POWER SECTOR • A 5-MW plant in Australia is estimated to relative inexperience as well as the added cost cost some US$60 million (US$10,700/kW, of storage systems. including tracking systems). The main components for a parabolic • A 425-kW system in New England completed trough collector system are the reflector and in October 2006 cost US$3.1 million the receiver tube. Individual concentrator (US$7,300/kW). modules are parabolic-shaped glass mirrors with aluminum or silver coating for maximum reflectance, and a clear protective coating over Solar Thermal Array the metal. Concentrator modules are mounted on steel support structures designed for single Technology Development, Plant axis tracking from east to west. Cleaning of the Descriptions, and Scope mirrors is imperative to maintain maximum Solar Thermal Description. There are three system efficiency, as buildup will impact the types of solar thermal technologies, each at reflectance of light. The receiver tube is a coated a different stage of development: parabolic steel tube enclosed in a glass tube. The glass tube trough, dish/engine, and power tower. Dish/ and corresponding annular vacuum space are engine technology has been demonstrated at designed to minimize conductive and convective the kW scale, and power tower demonstrated heat losses from the receiver. The coating, a at the MW scale, while parabolic trough is composite of a heat-resistant compound such as the only technology truly at the commercial titanium carbide and a metal, such as nickel, is stage. Therefore, the solar thermal technology designed to improve absorption of solar energy. evaluated in this report is the parabolic Economic viability of solar thermal trough. technology depends on the availability of Parabolic trough technology uses a series direct normal solar radiation, land availability, of parabolic mirrors to track the sun from east topography, and access to transmission lines. to west, reflecting and concentrating the sun 30 Locations generally well suited to solar thermal to 100 times its normal intensity onto a receiver include Australia, India, the Mediterranean tube. A heat transfer liquid contained in the countries (the Middle East, North Africa, and receiver, typically an oil, is heated as high as South Europe), northern Mexico, South America, 450°C (700°F) and pumped through a series and western United States. of heat exchangers to produce steam to run a Solar Thermal Power Development and Market. turbine/generator producing electricity. As such, Large-scale plant development of parabolic the steam side of these plants looks and operates trough solar thermal technology began in the much like a traditional fossil-fueled plant. 1970s. The first notable commercial installations Parabolic trough plants have traditionally been were the Solar Energy Generating Systems supplemented with fossil-fueled generation, (SEGS) built in the Mojave Desert in southern either a natural gas-fired oil heater, gas/steam California from 1985–1991. The first plant boiler/reheater operating in parallel with the capacity, SEGS I, was 13.8 MW. By the last solar heat exchangers or integrating the system installation, SEGS IX, the plants had reached 80 with a natural gas combined cycle or coal-fired MW in size, for total generation capacity of 354 plant. As an alternative to fossil hybridization, MW. The plants were designed with 25 percent solar thermal plants may include energy storage natural gas generation backup for times of low through the use of molten salt technology to solar insolation. Activity on the solar thermal ensure generation when sunlight is unavailable. generation front between the 1990s and 2005 Currently, most systems include some portion of was limited to research and development work. fossil generation in lieu of energy storage due to Restored interest in renewable energy and the 60 Cost Estimates for Power Plants in the United States, India, and Romania corresponding public policies have spurred (North Carolina), Industrial Solar Technology commercial activity for solar thermal plants once Company (trough technology, Colorado), Solel again at the start of the twenty-first century. (receiver manufacturer, Israel), Microsol (India), S i n c e t h e S E G S p l a n t s w e re b u i l t , Usha India Ltd., Tata/BP Solar (India), Solilem improvements in tracking systems and receivers (Germany), Solar Millennium (Germany), Ausra have improved plant efficiency. Additionally, (California), Schott (receivers, Germany), and at least one project has taken an energy storage Flabeg (troughs, Germany). Many of these option to commercial scale, although many ventures are small scale or part of larger, broader of the planned projects are integrated solar companies. combined cycle systems (ISCCS), in order to In the United States, 2006 realized a 76 provide reliable generation. The following is a percent increase in the shipping of solar thermal list of current or recent solar thermal, parabolic collectors, mainly resulting from the 64-MW trough projects: installation in Nevada. Forty-four domestic companies were actively involved in shipping • A 1-MW plant in Arizona, United States, collectors, with about 20 percent of the collectors employs Solargenix solar collectors, with imported. A majority of the imports were the possibility for adding energy storage to received from Israel. The residential sector increase the capacity factor from 23 percent is the major market for solar collectors over to 40 percent. electric generation, but this trend could easily • A 64-MW plant in Nevada, United States, be flip-flopped if other large solar concentrating started up June 2007 as the third-largest solar generation systems come on-line. plant in the world. This plant requires only Operating experience at existing plants 2 percent fossil fuel backup. has resulted in design improvements in the • A 50-MW plant in Granada, Spain, start-up receiver, mirrors, and hoses connecting the solar in 2008, demonstrates six to seven hours of collectors. Solargenix (previously Duke Solar) energy storage using a two-tank molten salt has developed an all-aluminum frame for the system. collectors in lieu of the more costly traditional • A 25-MW parabolic trough solar thermal alternative, steel. This aluminum frame design generation in Algeria is to be integrated with is used in the 64-MW Nevada Solar One plant. a 150-MW combined cycle plant. Further research and development (R&D) aims • A 20-MW parabolic trough solar thermal to reduce the costs of the collector structure as generation was incorporated into a 140-MW well as increase the accuracy of focusing sunlight, ISCCS in Egypt. as the collector assembly is the most costly item • A 35-MW parabolic trough solar thermal of the system. Direct steam generation, which was integrated into a 135-MW ISCCS firing aims to generate steam at the receiver point, as naphtha instead of natural gas. well as thermal storage are other concepts being • A 30-MW solar trough was integrated into a investigated. Although this technology is at the 220-MW ISCCS in Morocco. commercial stage, there is definite potential for • 177-MW and 400-MW solar plant plans further cost savings and efficiency improvements have gone through the application process as the number of installations increases. in California. Companies involved in these solar projects Solar Thermal Plant Costs or that manufacture components include: Acurex Per the conference call with World Bank (tracking devices, California), M.A.N (Czech personnel on February 13, 2008, it was decided to Republic, France, Germany, others), Solargenix put the cost estimates for solar thermal on hold. 61 Annex Design Basis 1 Table A1.1 British to Metric Conversion Factors To Convert British Multiply By To Obtain Metric (SI = Systems Intern) ac acre 0.405 ha hectare 3 acfm actual cubic feet per minute 0.02832 am /min actual cubic meters/min. Btu British thermal unit 0.252 kcal kilocalories Btu British thermal unit 1055.1 J joule Btu/lb Btu/pound 2.236 kJ/kg kilojoules/kilogram Btu/kWh Btu/kilowatt-hour 1.0551 kJ/kWh kilojoules/kilowatt-hour ºF Deg. Fahrenheit—32 0.5556 ºC degree Centigrade ft feet 0.3048 m meters ft2 square feet 0.0929 m2 square meters 3 ft cubic feet 0.02832 m3 cubic meters ft/m feet per minute 0.00508 m/s meters per second ft3/m cubic feet per minute 0.000472 m3/s cubic meters/second gal gallons (U.S.) 3.785 L liters gpm gallons per minute 0.06308 L/s liters per second gpm/Kacfm gallons per minute thousand 133.65 liters/Am3 liters per actual cubic actual cubic feet/min meter gr grains 0.0648 g grams 3 3 gr/ft grains per cubic foot 2.2881 g/m grams per cubic meter hp horsepower 0.746 kW kilowatts in. inches 0.0254 m meters in. w.g. inches water pressure (gage) 249.089 Pa pascals (newton/m2) lb pounds 0.4536 kg kilograms lb/ft3 pounds per cubic foot 16.02 kg/m3 kilograms/cubic meter lb/hr pounds per hour 0.126 g/s grams per second lb/hr pounds per hour 0.4536 kg/hr kilograms per hour lb/MMBtu pounds per million Btu *Depends mg/Nm3 milligrams per normal cubic on Fuel Type meter mi miles 1609 m meters MMBtu/hr million Btu per hour 1,055 Mjoule/hr million joules per hour oz ounces 28.3495 g grams psi pounds per square inch 6895 Pa pascals (newton/m2) rpm revolutions per minute 0.1047 rad/s radians per second scfm std. (60ºF) cubic feet/minute 1.6077 nm3/hr normal cubic meters/hr ton short tons 0.9072 ton metric tons t/hr short tons per hour 0.252 kg/s kilograms per second $/ton dollars per short ton 1.1023 $/ton dollars per metric ton 63 STUDY OF EQUIPMENT PRICES IN THE POWER SECTOR Brief Descriptions of Major of the combustion turbine. The HRSG generates steam that is then used to generate additional Generation Options power via a steam turbine-generator. In addition The costs of the items or systems listed below to the equipment listed for the simple cycle gas are provided as part of the total plant cost (TPC) turbine, the combined cycle plant includes the estimates. The scope of the plant cost estimates is HRSG, steam turbine, condenser, cooling tower, described in a subsequent Annex. The following and water treatment. provides brief and basic descriptions of the generation plants, equipment, or system options. Coal-Fired Steam Plant The purpose is to provide a basic definition of The coal-fired steam boiler in this plant will the technologies. utilize pulverized coal to generate steam. The This Annex also includes a list of major or boiler will be the reheat type, which generates typical equipment. The list of equipment for the main steam and reheat steam. The steam is options is not exhaustive, but rather provides the piped to a steam turbine-generator to generate highlights of equipment or components typically electricity. The cost of the boiler will include included with each technology. The brief the furnace, backpass, pulverizers, primary generation option descriptions are as follows. and secondary fans, low NOx burners, coal day silos, ljungstrom air heater, and structural Gas Turbine Simple Cycle support steel. The plant will also include the The gas turbine (also known as combustion condenser, cooling tower, coal handling system, turbine) features a compressor, combustor, and ash handling system, stack, piping, electrical, turbine on a single shaft coupled to the generator and control systems. In the United States, the either directly or through a gearbox. The gas plant includes selective catalytic reduction (SCR) turbine in this study is based on natural gas for post-combustion NOx removal and flue gas firing. The scope as typically provided by OEMs desulfurization for SO2 removal. includes single-fuel gas turbine, starting and lube oil systems, generator, air intake filter and Oil-Fired Steam Plant silencer, exhaust stack, vibration monitoring, The oil-fired steam boiler in this plant will gas compressor, gas turbine controls, and plant generate steam using No. 2 fuel oil. The boiler control systems. and scope are similar to the coal-fired boiler, There are two types of gas turbines: except that they do not include the pulverizer, heavy-frame and aeroderivative. Heavy- coal day silos, coal handling system, ash frame machines are built with heavy casings handling system, or flue gas desulfurization. and rotors and are the dominant type in use today. Aeroderivative gas turbines use engines adapted from aircraft turbofan technology. The Gas-Fired Steam Plant aeroderivative machines are characterized by The gas-fired steam boiler in this plant will lighter construction and have higher pressure utilize natural gas to generate steam. The boiler ratios than do heavy-frame machines. The and scope are similar to the coal-fired boiler, higher pressure ratios result in lower exhaust except that they do not include the pulverizer, gas temperatures and higher efficiency. coal day silos, coal handling system, ash handling system, or flue gas desulfurization. Gas Turbine Combined Cycle This generation technology includes the Diesel Engine-Generator combustion turbine and associated equipment The diesel engine power plant is based on a outlined for the simple cycle, as well as a heat reciprocating engine that will utilize No. 2 fuel recovery steam generator (HRSG) downstream oil to generate electricity. The two basic types of 64 Design Basis reciprocating engines are compression ignition Solar Thermal (CI) and spark-ignition (SI), distinguished by the There are three types of solar thermal method of combustion ignition. Historically, and technologies: on a worldwide basis, oil-fueled CI diesel cycle reciprocating engines have been the most utilized • Parabolic trough; type for both small and large power generation • Dish/engine; and applications. The technology as provided by the • Power tower. OEMs typically consists of engine, generator, lube oil system, radiator for cooling, electric start Each of these solar thermal technologies is at system, air intake filter, and stack. a different stage of development. Currently, the most mature technology is the parabolic trough, which is commercial. Therefore, the costs in this Wind Turbine study are based on the parabolic trough. A wind turbine converts the kinetic energy Parabolic trough power plants consist of the in the wind into mechanical power that turns following main components: mirrors, receivers, a generator, producing electricity. The wind heat exchangers, and a steam turbine. Solar turbines will be the three-bladed, pitch-controlled, energy is focused on a receiver tube containing variable-speed machines located in an onshore a heat transfer fluid using a series of parabolic- wind farm. The data in this report are based on curved, trough-shaped mirrors. The receiver 10-MW, 50-MW, and 100-MW wind farms. tube is located at the focus of the parabola or centerline of the trough. The heat transfer fluid Photovoltaic Solar (typically oil) is heated and pumped through A photovoltaic (PV) or solar cell is made a series of heat exchangers that produce steam of semiconducting material. The two main to run a conventional steam turbine/generator. categories of technology are defined by the The basis of this study is a stand-alone choice of the semiconductor, either: (1) crystalline parabolic trough using a secondary heating fluid. silicon (c-Si) in a wafer form or: (2) thin films of It is a hybrid, and as such includes a gas turbine other materials. Typically, each c-Si cell generates combined cycle plant burning natural gas. about 0.5 V, so 36 cells are usually soldered together in a series to produce a module with an Generation Plant output of 12 V. The cells are hermetically sealed under toughened, high-transmission glass. Cost Estimates The electricity produced by a PV cell is Generation Plant Options direct current (DC) and an inverter is used to Installed capital cost estimates are developed for convert the electricity to alternating current the following generation options: (AC). Other than the PV module, additional system components include support structures, • Gas turbine simple cycle plant. inverters, and wiring. • Gas turbine combined cycle plant. The PV cost estimate in this study is based • Coal-fired steam plant. on a ground-mounted crystalline installation. • Oil-fired steam plant. Currently, the crystalline technology makes up • Gas-fired steam plant. the bulk of the market sales compared to thin • Diesel generator plant (oil-fired). film. However, thin film is less expensive than • Wind-power turbine farm (onshore). crystalline and the thin film market is growing. • Photovoltaic solar array. Because thin film’s part of the market share is • Solar thermal array. estimated to be around 35 percent by 2015, the study also contains a technical assessment and The generation technology plant cost market discussion of the thin film technology. estimates for the nine generation plant options 65 STUDY OF EQUIPMENT PRICES IN THE POWER SECTOR include equipment, materials, and labor. The 1. Single fuel gas turbine. items listed in each subsection are not meant 2. Steam turbine. to be a complete definition of scope, but rather 3. Dry low NOx control. are intended to describe the highlights of the 4. Starting and lube oil systems. items included. The cost estimates included 5. Fuel forwarding system. in the report are based on fully constructed, 6. Gas turbine controls. functionally complete, and operational plants 7. Air-cooled generator. that generate electricity. 8. Air intake filter and silencer. 9. Exhaust stack. 10. Plant control system. Gas Turbine Simple Cycle Plant 11. SCR (if required). The cost for a gas turbine simple cycle plant is 12. Water treatment. based on the following scope: 13. Earthwork. 14. Foundations. 1. Single fuel gas turbine. 15. Structural steel. 2. Dry low NOx control. 16. Piping. 3. Starting and lube oil systems. 17. Electrical. 4. Fuel forwarding system. 18. Construction labor. 5. Gas turbine controls. 19. Engineering and home office expenses. 6. Air-cooled generator. 20. Indirect costs. 7. Air intake filter and silencer. 8. Exhaust stack. The combined cycle performance is based on 9. Plant control system. ISO conditions. The output will be as published 10. Selective catalytic reduction (SCR) for in the 2007–2008 Gas Turbine World Handbook. post-combustion NOx control (if needed or The supplier (OEM) price for the gas turbine required: the requirement varies according combined cycle plant typically includes items to country). 1–10. 11. Earthwork. 12. Foundations. 13. Structural steel. Coal-Fired Steam Plant 14. Piping. The cost for a coal-fired steam plant is based on 15. Electrical. the following scope: 16. Construction labor. 1. Steam generator (boiler). 17. Engineering and home office expenses. 2. Steam turbine. 18. Indirect costs. 3. Cooling tower. The gas turbine output is based on ISO 4. FGD/SO2 control (if required). conditions, the standard measure of output 5. Particulate Control (ESP for India and for all gas turbines (15º C, sea level, and 60 Romania and fabric filter for the United percent relative humidity). The output will States). be as published in the 2007–2008 Gas Turbine 6. Coal handling (rail delivery, bottom-dump World Handbook. The supplier (OEM) price for cars). the simple cycle gas turbine typically includes 7. Ash handling. items 1–9. 8. Water treatment. 9. Auxiliaries. 10. SCR (if applicable: the requirement is Gas Turbine Combined Cycle Plant country dependent). The costs for a gas turbine combined cycle plant 11. Earthwork. are based on the following scope: 12. Concrete. 66 Design Basis 13. Structural steel. Gas-Fired-Steam Plant 14. Piping. The cost for a natural gas-fired steam plant is 15. Electrical. based on the following scope: 16. Instruments and controls. 17. Painting and insulation. 1. Steam generator (boiler). 18. Buildings and architectural. 2. Steam turbine. 19. Construction labor. 3. Cooling tower. 20. Engineering and home office expenses. 4. Water treatment. 21. Indirect costs. 5. Auxiliaries. 6. SCR (if required). Additionally, the coal-fired plant is based on 7. Earthwork. the following: 8. Concrete. 9. Structural steel. • One coal analysis per country. 10. Piping. • Boilers will be equipped with low NO x 11. Electrical. burners. 12. Instruments and controls. • The cooling tower will be wet mechanical 13. Painting and insulation. draft. 14. Buildings and architectural. • Coal will be delivered by rail with bottom- 15. Construction labor. dump rail cars. 16. Engineering and home office expenses. • The FGD process will be wet limestone 17. Indirect costs. forced oxidation (if required). • Particulate control: ESP for India and Romania and pulse jet fabric filter for the Diesel Engine-Generator Plant United States. The cost for a diesel engine-generator plant is based on the following scope: Oil-Fired Steam Plant 1. Diesel engine. The cost for an oil-fired steam plant is based on 2. Engine lubrication and cooling system the following scope: (radiator). 3. Combustion air intake filter. 1. Steam generator (boiler). 4. Synchronous generator. 2. Steam turbine. 5. Electric start system. 3. Cooling tower. 6. Stack. 4. Water treatment. 7. Earthwork. 5. Auxiliaries. 8. SCR (if required). 6. Earthwork. 9. Concrete. 7. Concrete. 10. Structural steel. 8. Structural steel. 11. Piping. 9. Piping. 12. Electrical. 10. Electrical. 13. Instruments and controls. 11. Instruments and controls. 14. Construction labor. 12. Painting and insulation. 15. Engineering and home office expenses. 13. Buildings and architectural. 16. Indirect costs. 14. Construction labor. 15. Engineering and home office expenses. Additionally, the diesel engine-generator 16. Indirect costs. plant cost is based on the following criteria: 67 STUDY OF EQUIPMENT PRICES IN THE POWER SECTOR • Fuel will be No. 2 fuel oil. Photovoltaic Solar Array • The engine rating (output) is based on the The cost for a ground-based photovoltaic solar manufacturers’ specifications. array is based on the following scope: • The engine rating is based on ISO standard conditions for reciprocating engines (77º F 1. PV modules. and 29.61 in. Hg; 25º C and 100 kPa). 2. Module support structure. • The supplier (OEM) price for the diesel 3. Power-related balance of system. engine-generator typically includes items 4. Earthwork. 1–5. 5. Concrete. 6. Miscellaneous. Wind Farm 7. Construction labor. The cost for wind turbines for a wind farm is 8. Engineering and home office expenses. based on the following scope: 9. Indirect costs. 1. Rotor assembly (including hub). The earthwork, concrete, and miscellaneous 2. Tower. costs for the photovoltaic solar technology 3. Generator. may be combined into one category in the cost 4. Electrical/power electronics and instruments estimates. and controls (I&C). 5. Transmission, shaft brakes, nacelle, and yaw Solar Thermal Array system. The cost for a hybrid solar thermal power plant 6. Earthwork. is based on the following scope: 7. Concrete. 8. Miscellaneous. 1. Structures and improvements. 9. Construction labor. 2. Collector system. 10. Engineering and home office expenses. 3. Heat exchange system. 11. Indirect costs. 4. Steam turbine. 5. Gas turbine. The rotor assembly; tower, generator; 6. Auxiliary heater/boiler. electrical/power electronics and I&C; and 7. Balance of plant. transmission, shaft brakes, nacelle, and yaw 8. Construction labor. system will constitute the wind turbine as 9. Engineering and home office expenses. typically quoted by OEMs. The breakdown 10. Indirect costs. shown here is necessary for assessing the forecasts of future escalation since each item will escalate at a different rate (the combination of forecast Cost Estimate Breakdown for escalation for these items is the composite forecast escalation for the wind turbine). In addition, the the Generation Technologies earthwork and miscellaneous may be combined The cost estimate breakdown for the nine into one category in the cost estimates. The technologies discussed above differs to fit the foundation cost is presented with a number of nature of each of the technologies. All of the caveats because it can vary so much for different generation plants include civil/structural, wind turbine models/manufacturers and varying mechanical, electrical, I&C, and general facilities. soil conditions. The craft labor costs are based on the different 68 Design Basis wage rates and productivity in each of the three • 5 MW. countries. In some cases, the cost elements may • 25 MW. include labor. The thermal power and engine • 150 MW. technologies have more cost line items than • Graph of costs for simple cycle gas turbines do the wind, photovoltaic, and solar thermal as supplied by OEMs (based on costs from technologies. Gas Turbine World [GTW]—see Figure 5.4 An example of a cost estimate breakdown in Chapter 5). The graph shows one curve for a coal-fired plant is as follows: for aeroderivative and one curve for heavy- frame units. The curves on the graph reflect • Civil/structural. around 100 different combustion turbines, • Mechanical ranging in size from 2 MW to 330 MW. The – Boiler graph of the OEM costs for all of the simple – Steam turbine cycle combustion turbines is only being – Coal handling developed for the United States. – Ash handling – Particulate removal system Gas turbine combined cycle plants: – FGD system (if applicable). • Electrical. • 140 MW. • General facilities. • 580 MW. • Indirect costs (construction equipment, small tools, and field support labor). Coal-fired steam plant (pulverized coal [PC]): • Professional services costs (engineering, • 300 MW (subcritical). start-up, and field office). • 500 MW (subcritical). • Process contingency (if applicable). • 800 MW (supercritical). • Project contingency. Oil-fired steam plant: The generation technology assessments also include indicative percentages for owners’ costs • 300 MW (subcritical). See Table A1.1. and spare parts. Gas-fired steam plant: Size Classification of • 300 MW (subcritical). See Table A1.1. Generation Plants Diesel engine plant (oil-fired): Most of the generating plant cost estimates are • 1 MW. developed for several different sizes. • 5 MW. Note: Cost estimates are developed for each of the three countries (India, Romania, and the Wind farm: United States). The following nominal sizes are proposed to reflect the respective characteristics • 0.75 ϫ 16 ϭ 12-MW wind farm. Done for of the particular countries and are generally United States only. consistent with the electrification report. The • 50 ϫ 1 MW ϭ 50-MW wind farm. Done for study includes the following sizes: United States only. Gas turbine simple cycle plants (nominal • 40 ϫ 2.5 MW ϭ 100-MW wind farm. Done sizes): for United States only. 69 STUDY OF EQUIPMENT PRICES IN THE POWER SECTOR • Curve of capital costs for wind farms ranging Other Generation- from 2 to 200 MW. U.S. cost basis only. • 100 ϫ 1 MW ϭ 100-MW wind farm. Done Related Criteria for India, Romania, and United States. Environmental Emissions Solar-photovoltaic (PV) array: Table A1.3 provides the emission standards • 5 MW (same size as grid-connected case in for the three countries included in this study. Table 2 of the Electrification study) Emissions for India are subject to World Bank Guidelines for New Thermal Power Plants, Solar-thermal array: July 1998. Emissions for Romania and the • On hold United States are subject to the standards of the European Union and the Environmental Protection Agency (EPA), respectively. Summary of Sizes The generating plants’ environmental for Generation Plant control systems in the respective countries Cost Estimates are based on these emission guidelines and standards. Table A1.2 summarizes the size classifications for the generation plants as outlined above. The same sizes are proposed for all three countries. Anticipated Emission Control The sizes are generally consistent with the ones Technologies used in the World Bank Electrification study (for Table A1.5 indicates the anticipated emission the grid-connected configuration). The study control technologies for the three plant locations develops installed generating plant costs for based on the emission guidelines/emission each size summarized in Table A1.2. limits shown in the previous tables. Table A1.2 Size Classifications for Cost Estimate Generating Technology Plant Size/Configuration Gas Turbine Simple Cycle 5 MW, 25 MW, and 150 MW Gas Turbine Combined Cycle 140 MW: 2 CTs and 1 ST; 580 MW: 2 CTs and 1 ST Coal-Fired Steam Boiler 300 MW, 500 MW, and 800 MW Oil-Fired Steam Boiler 300 MW1 Natural Gas-Fired Steam Boiler 300 MW2 Diesel Generator (Oil-Fired) 1 MW and 5 MW Wind Turbine 12-MW wind farm (16 x 0.75 MW) 50-MW wind farm (50 x 1-MW wind turbines) 100-MW wind farm (40 x 2.5-MW wind turbines) 100-MW wind farm (100 x 1-MW wind turbines) Photovoltaic Solar 5 MW Thermal Solar On hold Source: Author’s calculations. 1 The economy of scale of a 500-MW coal-fired boiler relative to a 300-MW coal-fired boiler is indicative of the relative economy of scale between a 500-MW oil-fired and a 300-MW oil-fired boiler. 2 The economy of scale of a 500-MW coal-fired boiler relative to a 300-MW coal-fired boiler is indicative of the relative economy of scale between a 500-MW gas-fired and a 300-MW gas-fired boiler. 70 Design Basis Table A1.3 Emission Standards or Guidelines Emission Source India Romania United States Steam Power Plants (WB Guidelines) (EU Standards) (NSPS Standards) Sulfur Dioxide (SO2) 0.20 metric tons/ See Table A1.4 1.4 lb/MWh (0.52 kg/MWh) day per MWea or 5% of potential combustion concentration (95% reduction) Nitrogen Oxides (NOx) Coal-Fired 260 ng/J See Table A1.4 1.0 lb/MWh (0.37 kg/MWh) Oil-Fired 130 ng/J See Table A1.4 1.0 lb/MWh (0.37 kg/MWh) Gas-Fired 86 ng/J See Table A1.4 1.0 lb/MWh (0.37 kg/MWh) 3 Particulate Matter 150 mg/Nm / See Table A1.4 0.14 lb/MWh (0.052 kg/MWh) 50 mg/Nm3 (large plants) Gas Turbine NOx Limitsb Oil 165 mg/Nm3 See Table A1.4 74 ppmv or 460 ng/J c (80 ppmv) Gas 125 mg/Nm3 See Table A1.4 25 ppmv or 150 ng/J d (60 ppmv) Engine-Driven Units NOx 2,000 mg/Nm3 or See Table A1.4 Later Limits (No. 2 oil) 13 g/kWhe Source: Author’s calculations. a And 0.10 metric tons/day per megawatt electrical for each additional MWe over 500 MWe. b Emission limits for both gas and oil are on a dry basis at 15 percent oxygen. c 74 parts per million by volume on dry basis at 15 percent oxygen for units > 50 MMBtu/hr and less than 850 MMBtu/hr. 42 ppmv on dry basis at 15 percent oxygen for units > 850 MMBtu/hr (50 MMBtu/hr ~ 3.5 MW and 850 MMBtu/hr ~ 110 MW). d 25 ppmv on dry basis at 15 percent oxygen for units > 50 MMBtu/hr and less than 850 MMBtu/hr. 15 ppmv on dry basis at 15 percent oxygen for units > 850 MMBtu/hr. e World Bank emission guidelines are on dry basis at 15 percent oxygen. NOx emission of 2,000 mg/Nm3 ~ 970 ppmv. Table A1.4 Emission Standards for Large Combustion Plant Directive (LDPD)—Applicable to Romania Pollutant Coal-Fired Plants Oil-Fired Plants Gas-Fired Plants SO2 New plants: New plants: New and existing plants: 50–100 MWt: < 850 mg/Nm3 50–100 MWt: < 850 mg/Nm3 Natural gas: < 35 mg/Nm3 > 100 MWt:< 200 mg/Nm3 100–300 MWt: < 400 to 200 LNG: < 5 mg/Nm3 mg/Nm3 (linear decrease) > 300 MWt: 200 mg/Nm3 NO2 New plants: New plants: New gas-fired plants: 50–100 MWt: < 400 mg/Nm3 50–100 MWt: < 400 mg/Nm3 50–300 MWt: 150 mg/Nm3 > 100 MWt:< 200 mg/Nm3 > 100 MWt: 200 mg/Nm3 > 300 MW: <100 mg/Nm3 New plants/gas turbines: Natural gas: 50 mg/Nm3 Gaseous other than natural gas: 120 mg/Nm3 Particulate New plants: New plants: New and existing plants: Matter 50–100 MWt: 50 mg/Nm3 50–100 MWt: 50 mg/Nm3 All sizes: < 5 mg/Nm3 > 100 MWt: 30 mg/Nm3 > 100 MWt: 30 mg/Nm3 Source: Author’s calculations. 71 STUDY OF EQUIPMENT PRICES IN THE POWER SECTOR Table A1.5 Anticipated Emission Control Processes Emission Source India Romania United States Steam Power Plants (Based on WB (Based on EU Limits in (Based on NSPS limits) Guidelines) Table A1.4) Sulfur Dioxide (SO2) None Wet FGD (coal only) Wet FGD (coal only) Nitrogen Oxides (NOx) Coal-Fired Low NOx burners (LNB) LNB/SCR LNB/SCR Oil-Fired LNB LNB/SCR LNB/SCR Gas-Fired LNB LNB/SCR LNB/SCR Particulate Matter ESP (coal only) ESP (coal only) Fabric filter (coal only) Gas Turbine NOx Limits Oil DLN or H2O injection DLN/SCR DLN/SCR Gas DLN or H2O injection DLN/SCR DLN/SCR Engine-Driven Units Combustion controls Combustion controls Combustion controls NOx Limits (No. 2 oil) and SCR Source: Author’s calculations. Coal Analyses Table A1.6 Romanian Coal Analysis— Table A1.7 Indian Coal Analysis— Romanian Lignite Australian Coal Coal Ultimate Analysis Coal Ultimate Analysis (ASTM as received) Lignite Weight % (ASTM, as received) Australian Weight % Moisture 43.00 Moisture 3.50 Carbon 22.57 Carbon 69.29 Hydrogen 2.05 Hydrogen 4.63 Nitrogen 0.70 Nitrogen 1.69 Chlorine 0.01 Chlorine 0.01 Sulfur 1.00 Sulfur 0.70 Ash 21.00 Ash 11.99 Oxygen 9.68 Oxygen 8.20 Total 100.00 Total 100.00 HHV, Btu/lb 3,930.00 HHV, Btu/lb 11,830 HHV, MJ/kg 8.79 HHV, MJ/kg 26.46 Source: Author’s calculations. Source: Author’s calculations. 72 Design Basis Table A1.8 U.S. Coal Analysis—Powder River Basin (PRB) Subbituminous Coal Coal Ultimate Analysis (ASTM, as received) PRB Weight % Moisture 30.24 Carbon 48.18 Hydrogen 3.31 Nitrogen 0.70 Chlorine 0.01 Sulfur 0.37 Ash 5.32 Oxygen 11.87 Total 100.00 HHV, Btu/lb 8,230 HHV, MJ/kg 18.40 Source: Author’s calculations. Cost/Site Criteria Table A1.9 shows the cost and site criteria used for the generation technologies. Table A1.9 Cost and Site Criteria Applicable to Cost Estimates Cost/Site Criteria India Romania United States Construction Craft Labor, US$/hr (fully loaded) $10 $8.50 $60 Productivity Factor (referenced to United States) 3.0 2.5 1.0 Structural Steel, US$/ton $970 $1,550 $1,110 Concrete, US$/ton $75 $105 $110 Date of Costs Jan 2008 Jan 2008 Jan 2008 Contingency 20% 20% 15% Foundation Type 1 1 Spread footings Spread footings Spread footings1 Rail Access (applicable technologies) Yes Yes Yes Indoor/Outdoor Construction (applicable Indoor Indoor Indoor technologies) Site Elevation, ft (m) Generic Generic Generic Fresh Water Available Nearby Yes Yes Yes Plant Life, yrs. 30 30 30 Gas Turbine Rating Conditions (output and heat rate) See note 2 See note 2 See note 2 Boiler Efficiency (coal-, oil-, and gas-fired boilers) See note 3 See note 3 See note 3 Diesel Engine Rating Conditions (output and heat rate) See note 4 See note 4 See note 4 Plant Site (with regard to earthwork and clearing) See note 5 See note 5 See note 5 Source: Author’s calculations. 1 Spread footings apply primarily to major equipment within thermal plants. 2 Basis for gas turbine-generator output and heat rate: 15ºC, sea level, and 60 percent relative humidity. 3 Basis for boiler efficiency: 27ºC, sea level, and 60 percent relative humidity. 4 Basis for diesel engine-generator output and heat rate: 25ºC and atmospheric pressure of 100 kPa. 5 Plant site topography: Site is basically level without need for: (1) significant fill or removing hills; (2) removing major wooded areas; or (3) blasting and removal of above-ground or below-ground rock formations. 73 Annex Cost Indexes from U.S. 2 Bureau of Labor Statistics (Graphs of Cost Indexes for Equipment and Materials) Cost Indexes for Power Plant A2.4 Cost index for bulk material handling conveyors. Equipment and Materials A2.5 Cost index for pneumatic conveyors. in the United States A2.6 Cost index for crushing, pulverizing, and screening machines. The U.S. Producer Price Indices (PPI) provided A2.7 Cost index for integral horsepower in Figures A2.1 through A2.19 document motors. the historical escalation trends for selected A2.8 Cost index for fabricated steel plates. equipment and materials associated with utility- A2.9 Cost index for structural steel. generation plant systems. The historical PPIs A2.10 Cost index for carbon steel pipe and cover the period from the beginning of 1996 tubing. through the end of 2007. A2.11 Cost index for field erected steel tanks. As shown in the legend boxes on the graphs, A2.12 Cost index for heat exchangers and the historical period is divided into two parts: condensers. (1) January 1996 through December 2003 and A2.13 Cost index for fin-tube heat exchangers. (2) January 2004 through December 2007. These A2.14 Cost index for industrial mineral wool. two periods roughly correspond to the times A2.15 Cost index for refractories, non-clay. before and after the rapid worldwide expansion A2.16 Cost index for power and distribution in construction of large industrial, utility, and transformers. manufacturing projects. A2.17 Cost index for electric wire and cable. Cost indexes are illustrated as follows: A2.18 Cost index for copper wire and cable. A2.1 Cost index for ready-mix concrete. A2.19 Cost index for industrial process control A2.2 Cost index for centrifugal pumps. instrument. A2.3 Cost index for large centrifugal fans. 75 STUDY OF EQUIPMENT PRICES IN THE POWER SECTOR Figure A2.1 Cost Index for Ready-Mix Concrete 220 Ready mix concrete (1/1982 = 100) compound annual esc. from 2004 through 2007 = 7.9% 200 180 160 140 compound annual esc. from 1996 through 2003 = 1.9% 120 100 May Dec Jun Jan Aug Feb Sep Mar Oct Apr Nov Jun 02 02 03 04 04 05 05 06 06 07 07 08 month-year Source: Producer Price Index, Bureau of Labor Statistics. Curve from January 1996 to January 2003, not shown. Figure A2.2 Cost Index for Large Centrifugal Pumps 220 Pump index (Jan 1982 = 100) 200 180 compound annual esc. from 2004 through 2007 = 4.7% 160 140 compound annual esc. from 1996 through 2003 = 2.0% 120 100 May Dec Jun Jan Aug Feb Sep Mar Oct Apr Nov Jun 02 02 03 04 04 05 05 06 06 07 07 08 month-year Source: Producer Price Index, Bureau of Labor Statistics. Curve from January 1996 to January 2003, not shown. 76 Cost Indexes from U.S. Bureau of Labor Statistics Figure A2.3 Cost Index for Large Centrifugal Fans 220 compound annual esc. from 2004 through 2007 = 4.2% Fan index (Dec 1983 = 100) 200 180 160 140 compound annual esc. from 1996 through 2003 = 1.7% 120 100 May Dec Jun Jan Aug Feb Sep Mar Oct Apr Nov Jun 02 02 03 04 04 05 05 06 06 07 07 08 month-year Source: Producer Price Index, Bureau of Labor Statistics. Curve from January 1996 to January 2003, not shown. Figure A2.4 Cost Index for Bulk Material Handling Conveyors 220 compound annual esc. from 2004 through 2007 = 4.7% Conveyors (July 1984 = 100) 200 180 160 140 compound annual esc. from 1996 through 2003 = 1.7% 120 100 May Dec Jun Jan Aug Feb Sep Mar Oct Apr Nov Jun 02 02 03 04 04 05 05 06 06 07 07 08 month-year Source: Producer Price Index, Bureau of Labor Statistics. Curve from January 1996 to January 2003, not shown. 77 STUDY OF EQUIPMENT PRICES IN THE POWER SECTOR Figure A2.5 Cost Index for Pneumatic Conveyors Pneumatic conveyor (Dec 1995 = 100) 220 200 180 160 compound annual esc. from 2004 through 2007 = 3.8% 140 120 compound annual esc. from 1996 through 2003 = 1.7% 100 May Dec Jun Jan Aug Feb Sep Mar Oct Apr Nov Jun 02 02 03 04 04 05 05 06 06 07 07 08 month-year Source: Producer Price Index, Bureau of Labor Statistics. Curve from January 1996 to January 2003, not shown. Figure A2.6 Cost Index for Crushing, Pulverizing, and Screening Machines 260 Crushing/pulverizing (Jan 1982 = 100) compound annual esc. from 2004 through 2007 = 4.4% 240 220 200 180 compound annual esc. from 1996 through 2003 = 2.9% 160 140 120 100 May Dec Jun Jan Aug Feb Sep Mar Oct Apr Nov Jun 02 02 03 04 04 05 05 06 06 07 07 08 month-year Source: Producer Price Index, Bureau of Labor Statistics. Curve from January 1996 to January 2003, not shown. 78 Cost Indexes from U.S. Bureau of Labor Statistics Figure A2.7 Cost Index for Integral Horsepower Motors 220 compound annual esc. from 2004 through 2007 = 6.4% 200 Integral horsepower motors interal horsepower motors = 180 industrial and commercial motors (Jun 1983 = 100) ranging from 1 to 400 HP 160 140 120 compound annual esc. from 1996 through 2003 = 0.4% 100 May Dec Jun Jan Aug Feb Sep Mar Oct Apr Nov Jun 02 02 03 04 04 05 05 06 06 07 07 08 month-year Source: Producer Price Index, Bureau of Labor Statistics. Curve from January 1996 to January 2003, not shown. Figure A2.8 Cost Index for Fabricated Steel Plates 220 compound annual esc. from 2004 through 2007 = 10.1% Steel plates (Jun 1982 = 100) 200 180 160 140 120 compound annual esc. from 1996 through 2003 = 0.3% 100 May Dec Jun Jan Aug Feb Sep Mar Oct Apr Nov Jun 02 02 03 04 04 05 05 06 06 07 07 08 month-year Source: Producer Price Index, Bureau of Labor Statistics. Curve from January 1996 to January 2003, not shown. 79 STUDY OF EQUIPMENT PRICES IN THE POWER SECTOR Figure A2.9 Cost Index for Structural Steel 220 Structural steel (Jan 1982 = 100) compound annual esc. from 2004 through 2007 = 8.0% 200 180 160 140 120 compound annual esc. from 1996 through 2003 = 0.9% 100 May Dec Jun Jan Aug Feb Sep Mar Oct Apr Nov Jun 02 02 03 04 04 05 05 06 06 07 07 08 month-year Source: Producer Price Index, Bureau of Labor Statistics. Curve from January 1996 to January 2003, not shown. Figure A2.10 Cost Index for Carbon Steel Pipe and Tubing 220 Steel pipe and tubing (Dec 2002 = 100) 200 compound annual esc. from 2004 through 2007 = 7.0% 180 160 140 120 compound annual esc. from 1996 through 2003 is not available 100 May Dec Jun Jan Aug Feb Sep Mar Oct Apr Nov Jun 02 02 03 04 04 05 05 06 06 07 07 08 month-year Source: Producer Price Index, Bureau of Labor Statistics. Curve from January 1996 to January 2003, not shown. 80 Cost Indexes from U.S. Bureau of Labor Statistics Figure A2.11 Cost Index for Field Erected Steel Tanks 220 Field tanks (Jun 1982 = 100) 200 180 compound annual esc. from 2004 through 2007 = 5.8% 160 140 120 compound annual esc. from 1996 through 2003 = 1.5% 100 May Dec Jun Jan Aug Feb Sep Mar Oct Apr Nov Jun 02 02 03 04 04 05 05 06 06 07 07 08 month-year Source: Producer Price Index, Bureau of Labor Statistics. Curve from January 1996 to January 2003, not shown. Figure A2.12 Cost Index for Heat Exchangers and Condensers 280 compound annual esc. from 2004 through 2007 = 7.8% Heat exch angers and condensers 260 240 (Jan 1982 = 100) 220 200 180 160 compound annual esc. from 1996 through 2003 = 0.8% 140 120 100 May Dec Jun Jan Aug Feb Sep Mar Oct Apr Nov Jun 02 02 03 04 04 05 05 06 06 07 07 08 month-year Source: Producer Price Index, Bureau of Labor Statistics. Curve from January 1996 to January 2003, not shown. 81 STUDY OF EQUIPMENT PRICES IN THE POWER SECTOR Figure A2.13 Cost Index for Fin-Tube Heat Exchangers 260 Fin tube ht exchanger (Jan 1982 = 100) compound annual esc. from 2004 through 2007 = 8.4% 240 220 200 180 160 compound annual esc. from 1996 through 2003 = 1.3% 140 120 100 May Dec Jun Jan Aug Feb Sep Mar Oct Apr Nov Jun 02 02 03 04 04 05 05 06 06 07 07 08 month-year Source: Producer Price Index, Bureau of Labor Statistics. Curve from January 1996 to January 2003, not shown. Figure A2.14 Cost Index for Industrial Mineral Wool Industrial mineral wool (Jan 1982 = 100) 220 200 180 compound annual esc. from 2004 through 2007 = 3.7% 160 140 120 compound annual esc. from 1996 through 2003 = 0.4% 100 May Dec Jun Jan Aug Feb Sep Mar Oct Apr Nov Jun 02 02 03 04 04 05 05 06 06 07 07 08 month-year Source: Producer Price Index, Bureau of Labor Statistics. Curve from January 1996 to January 2003, not shown. 82 Cost Indexes from U.S. Bureau of Labor Statistics Figure A2.15 Cost Index for Refractories, Non-Clay 220 Refractories, non-clay (Jan 1982 = 100) 200 compound annual esc. from 2004 through 2007 = 3.9% 180 160 140 120 compound annual esc. from 1996 through 2003 = 1.5% 100 May Dec Jun Jan Aug Feb Sep Mar Oct Apr Nov Jun 02 02 03 04 04 05 05 06 06 07 07 08 month-year Source: Producer Price Index, Bureau of Labor Statistics. Curve from January 1996 to January 2003, not shown. Figure A2.16 Cost Index for Power and Distribution Transformers 220 Power and distrib transformers 200 compound annual esc. from 2004 through 2007 = 13.8% 180 (Dec 1999 = 100) 160 140 120 compound annual esc. from 1996 through 2003 is not available 100 80 May Dec Jun Jan Aug Feb Sep Mar Oct Apr Nov Jun 02 02 03 04 04 05 05 06 06 07 07 08 month-year Source: Producer Price Index, Bureau of Labor Statistics. Curve from January 1996 to January 2003, not shown. 83 STUDY OF EQUIPMENT PRICES IN THE POWER SECTOR Figure A2.17 Cost Index for Electric Wire and Cable Electric wire and cable (Dec 1982 = 100) 240 compound annual esc. from 2004 through 2007 = 9.1% 220 200 180 160 140 compound annual esc. from 1996 through 2003 = 1.1% 120 100 May Dec Jun Jan Aug Feb Sep Mar Oct Apr Nov Jun 02 02 03 04 04 05 05 06 06 07 07 08 month-year Source: Producer Price Index, Bureau of Labor Statistics. Curve from January 1996 to January 2003, not shown. Figure A2.18 Cost Index for Copper Wire and Cable Copper wire and cable (Dec 1986 = 100) 400 compound annual esc. from 2004 through 2007 = 18.7% 350 300 250 200 150 compound annual esc. from 1996 through 2003 = –0.8% 100 May Dec Jun Jan Aug Feb Sep Mar Oct Apr Nov Jun 02 02 03 04 04 05 05 06 06 07 07 08 month-year Source: Producer Price Index, Bureau of Labor Statistics. Curve from January 1996 to January 2003, not shown. 84 Cost Indexes from U.S. Bureau of Labor Statistics Figure A2.19 Cost Index for Industrial Process Control Instrument 160 Industrial process control instruments compound annual esc. from 2004 through 2007 = 3.0% 140 (Dec 2003 = 100) compound annual esc. from 1996 through 2003 is not available 120 100 80 May Dec Jun Jan Aug Feb Sep Mar Oct Apr Nov Jun 02 02 03 04 04 05 05 06 06 07 07 08 month-year Source: Producer Price Index, Bureau of Labor Statistics. Curve from January 1996 to January 2003, not shown. 85 Annex OEMs in Romania 3 Coal-Fired Boilers ALSTOM POWER ROMANIA Bulevardul Energeticienilor 13–15 UTON Bucures˛ ti 032091 Sector 3 16 Uzinei St. România Ones˛ti 601123 Telefon: +40 21 346.54.08 România Telefon: +40 21 346.54.38 Telefon: +40 234 31.12.13 Telefon: +40 21 346.54.39 Telefon: +40 234 32.43.13 Telefon: +40 21 346.54.40 Telefon: +40 234 32.42.22 Telefon: +40 21 346.54.41 Fax: +40 234 31.50.20 Fax: +40 21 346.54.27 Fax: +40 234 32.59.01 Fax: +40 21 346.54.35 http://www.uton.ro http://www.alstom.com UTON has the expertise and equipment required Activities (EN): for the engineering, manufacturing, transport, on-site assembly, and maintenance of welded • Power units rehabilitation and upgrading. and machined assemblies and units intended • Know-how for design and total/partial for industrial chemicals, petrochemicals, iron replacement of mechanical, electric, and and steel industry, energy generation, cement automation equipment. manufacturing, and food processing. • Spare parts for steam turbines, generators, Product range: boilers. • Current repairs and overhauls, maintenance, • Pressure vessels. and service. • Shell and tube heat exchangers, air coolers. • Turnkey design for electric and thermal • Skid-mounted process units, per customer power production, including financing. design, including structure, vessels, pumps, filters, heat exchangers, and interconnecting Export: Parts and auxiliaries of steam valves and fittings, as required by the boilers to Germany, United States. application. Blades for steam turbines to France, • Industrial boilers. Germany, Hungary, Italy, and Poland. • Pump casings. Export: Polonia, Statele Unite ale Americii, • Fired heaters. Ungaria Europa Centrala ˘/de Est, Europa de Vest Import: Europa Centrala ˘/de Est, Europa Export: America de Nord, Orientul Mijlociu, de Vest Africa, European Union Import: European Union 87 STUDY OF EQUIPMENT PRICES IN THE POWER SECTOR GRIRO columns, boilers, towers), metallic expansion compensators, metallic structures, roller Octavian Nicoleanu bearings (medium size), turnings, and support Quotation Department bearings. Sales and Marketing Division Export: Statele Unite ale Americii, Italia, GRIRO S.A. Germania, Olanda, Marea Britanie, Frant˛a Fax: +40 21 224.05.27 Import: Italia, Germania, Marea Britanie, Phone: +40 21 224.48.70 Frant˛a Asia-Pacific, Europa de Vest, America website: www.griro.ro de Nord ¸ TI TECNOSERVICE BUCURES IMUC Bulevardul Timis ˛ oara 5C Bulevardul Petrochimis ˛tilor Km 5–7 Bucures˛ti 061301 Sector 6 ˛ti 110490 Pites România România Telefon: +40 21 318.50.23 Telefon: +40 248 61.55.99 Telefon: +40 21 318.50.29 Telefon: +40 248 61.56.00 Fax: +40 21 318.50.28 Fax: +40 248 61.55.99 Fax: +40 21 318.50.19 Fax: +40 248 61.56.00 http://www.tsb.ro http://www.geostar.ro/imuc http://www.tecnoservice.ro Activities (EN): Activities (EN): Manufacturer of: General Supplier of: • Tube or pipe fittings (e.g., couplings, elbows, • Power plant parts, industrial boilers, and sleeves), of iron or steel. related equipment. • Tanks, casks, drums, cans, boxes, and similar • Equipment for chemical, petrochemical, and containers, for any material (other than building materials industries. compressed or liquefied gas), of iron or steel. • Metal tanks, chemical, and petrochemical Design of: use boilers. • Parts of central heating boilers. • Energetic and industrial boilers. • Prefabricated buildings. • Auxiliary thermo-mechanical equipment. Manufacture: • Power plant equipment. UZUC • Pressure equipment according to PED Strada Depoului 16 97/23/EC, ASME (S, U, NB), AD-Merkblatt ˛ti 100335 Ploies HP0/TRD 201 and ISCIR requirements. România • Pipelines for energetic use and for natural Telefon: +40 244 40.11.19 gas transport and distribution. Telefon: +40 244 51.09.82 Fax: +40 244 51.03.29 Activities: Fax: +40 244 51.77.25 http://www.uzuc.ro • Building and service works. • Technical consultancy. Activities (EN): • Authorized provider of ESAB for welding Design, execution, and repair work for and oxi-gas cutting equipment and pressure equipment (heat exchangers, vessels, consumables. 88 OEMs in Romania BETA company GENOYER S.A. Vitrolles, France, its main shareholder. Strada S˛antierului 39 • GENOYER S.A. has industrial and commercial Buza˘ u 120226 subsidiaries almost all over the globe, which România provide relational, financial, and logistical Telefon: +40 238 72.55.00 support in the promotion of VILMAR Telefon: +40 238 71.05.55 products in all the world’s marketplaces. Fax: +40 238 71.07.79 • VILMAR is based on a 24.94-hectare site, http://betabuzau.ro of which 10.42 hectares are covered by Activities (EN): buildings, in the southern industrial zone Manufacturer of products and equipment of Râmnicu-Vâlcea town, at 180 kilometers for chemical, petrochemical industry, refineries: northwest of Bucharest. • VILMAR manufactures and trades a • Industrial furnaces for refineries. diversified range of technological equipment • Pressure vessels, storage tanks. and components destined for several • Tubular heat exchangers. industries: chemical, petrochemical, • Butt-welded fittings: caps, tees, reducers, petroleum and natural gas, energy, steel elbows, bends. milling, mechanical constructions, metal • Lens-type expansion joints. processing, etcetera. • Bag filters. • The products are manufactured in a wide • Metallic constructions. variety of shapes and sizes, standard or • LPG and water distribution micro-stations. customized, in compliance with European, American, or specific standards, in all steel Export: Frant˛ a, Belgia, Italia, Spania, Marea grades: carbon steels, alloy steels, low-alloy Britanie, Danemarca, Austria, Federat ˘, ˛ ia Rusa steels, high-alloy steels (including monel, Ucraina, Republica Araba ˘ Siriana ˘ , Iran, Iraq, incoloy, hastelloy, inconel), stainless steels Iordania, Pakistan, Kazakhstan, Statele Unite ale (including duplex and super-duplex), Americii, Canada, Mexic, Columbia, Venezuela, corrosion-resistant steels, cladded steels, Algeria, Egipt etcetera. Europa Centrala ˘ /de Est, Europa de Vest, • VILMAR’s production is made up of four Asia-Pacific, Asia Centrala ˘ , America de Nord, divisions: FORGING (drop-forged pieces, America Centrala ˘ , America de Sud, Africa including flanges and ball valve components; Import: Bulgaria, Italia, Frant ˛ a, Germania, hammer-forged pieces; hot-rolled flanges Marea Britanie, Ucraina and rings, with rectangular or profiled Europa de Vest, Europa Centrala ˘ /de Est cross-section); MACHINING (flanges; rings; ball valve components; vitjoints; various VILMAR machined pieces); FITTINGS (hot-formed fittings: welded elbows, caps, heads; cold- ˘1 Strada Platforma Industriala formed and welded fittings: concentric and Râmnicu Vâlcea 240050 eccentric reducers (conical shapes), miter România bends, tees); and PRESSURE VESSELS Telefon: +40 250 70.38.00 (a large range of pressure vessels; heat Fax: +40 250 70.38.06 exchangers; columns; storage tanks; SKIDS- http://www.vilmar.ro modulated equipment for the separation Activities (EN): and drying of the natural drilled gas, sea water desalting; structural steel with varied • VILMAR S.A. is a privately owned company utilizations; static or dynamic mechanic- with 100 percent French authorized share welded assemblies made according to the capital, being the prime plant held by the client’s technical documentation). 89 STUDY OF EQUIPMENT PRICES IN THE POWER SECTOR Export: Frant ˛ a, Statele Unite ale Americii, • Food industry: truck-mounted food tanks, Germania, Marea Britanie, Belgia, Peru, Italia, stainless steel tanks, 200-liter drums made Spania, Brazilia, Republica Araba ˘ Siriana˘, of zinc-coated sheet. Emiratele Arabe Unite, Japonia, Norvegia, • Various equipment, metallic structures: Olanda, Austria, Turcia, Elvet ˛ ia, Egipt, Tunisia, distributors, excavator counter-weights, auto Algeria, Iran, Qatar, Azerbaidjan, Arabia subassemblies, pelletizers, flintab electronic Saudita ˘ , India, Malaezia, Singapore, Filipine, systems for auto and railway weighing. Australia • After any delivery, provides warranty and Import: Frant ˛ a, Republica Ceha ˘ , Germania, post-warranty service, spare parts, repairs, Italia, Marea Britanie, Suedia, Elvet ˛ ia, Austria, and general repairs for all the equipment Ungaria, Olanda, Ucraina, Federat ˛ ia Rusa ˘, manufactured. Europa Centrala ˘ /de Est, Europa de Vest Export: Belgia, Germania, Olanda, Austria, ˛ a, Marea Britanie, Spania, Danemarca Italia, Frant 24 JANUARY Strada G-ral Dragalina 18 Ploies ˛ ti 100157 Steam Turbines România Telefon: +40 244 52.63.50 [mai multe] GENERAL TURBO Telefon: +40 244 52.19.50 ˛ oseaua Berceni 104 S Telefon: +40 344 40.11.44 Bucures˛ ti 041919 Sector 4 Fax: +40 244 51.03.25 România http://www.24january.ro Telefon: +40 21 319.39.83 Telefon: +40 21 319.39.97 Activities (EN): Telefon: +40 21 319.39.87 Being widely experienced in the machine Telefon: +40 21 319.43.19 construction field, “24 IANUARIE” manufactures Fax: +40 21 300.20.23 a wide range of equipment and plants for Fax: +40 21 319.43.11 various fields of activity: http://www.generalturbo.ro • Metallurgical and siderurgical industries: Manufacturer of: fixed-hearth furnaces, roller-hearth furnances, multiple-hearth furnances, coke • Steam turbines for power generation and ovens, economizers, transfer tables and industrial turbines, 1–1,000-MW rating power. conveyors, sand mixers, continuous casting • Boiler water feed pumps. equipment. • Turbo-compressors for the chemical industry: • Chemical and petrochemical industries: heat air, hydrogen, ammonia, pit gas. exchangers, tanks with fixed or mobile cover, • Dynamic balancing of heavy rotors weighing PECO type tanks of 5 to 60 cu.m. and two or 0.5–80,000 kg, at 300–40,000 rpm. three compartments, SKID-type monitoring • Dynamic balancing and overspeeding systems for oil products, metallic drums of 40 of rotors with weights between 30,000– to 220 liters, with plugs or removable covers. 220,000 Kg on rotations up to 4,320 rpm for • Painting and plating plants: painting cabins, rotors with weights less than 120 t and 2,160 drying ovens, evaporating and drying rpm for rotors with weights ranging between tunnels, hot-air generators, bath lines for 120 t and 220 t. plating operation, etcetera. • Cargo and ballast turbine-driven pumps • E n v i ro n m e n t a l m e d i u m p ro t e c t i n g aboard very large crude oil supertankers. equipment: hydraulic dusters, cyclones, tubs • Machining of large parts that require high and containers for storage and transport. accuracy. 90 OEMs in Romania • Upgrade and retrofit power generation FORTPRES CUG units. Bulevardul Muncii 18 • Large generators rating 1–1,000 MW, in joint Cluj-Napoca 400641 venture with ALSTOM GENERAL TURBO. România • Spare parts for GENERAL TURBO’s own Telefon: +40 264 41.51.14 products and also for other machines and Telefon: +40 264 41.52.50 equipment. Telefon: +40 264 41.56.07 Export: Fax: +40 264 41.52.21 http://www.fortpres.ro • Complete turbo-generators to China, Egypt, Syria, and Turkey. Activities (EN): • Steam turbines to Austria. Manufacturer of: metallurgical equipment: • Steam turbine carcasses to Germany. • Rolling lines, continuous casting lines, • Diaphragms and palettes for steam turbines forging lines, dry casting moulds. to India. • Dried-sand fluidized beds. • Parts for steam turbines to the Austria, • Forge manipulators. France, and United States. • Metal-sheets transportation equipment. • Parts for hydraulic turbines and water • Roller conveyors. wheels, including regulators (subassemblies • Sand-blasting machines. for hydroelectric plants) to Austria. • Shot-blasting tunnels. • Generator casings, burners, base plates, • Shot-blasting cleaning and priming lines. bearings for gas turbines to the United States. • Heat treatment furnaces. • Subassemblies for compressors to Italy. Power equipment and turbines: Services: • Steam boilers. • Technical assistance for installation/ • Generating turbines. assembly works in technological upgrading • Power units over 150 MW. of power assemblies. • Coal pneumatic crushers. • Technical assistance for installation/assembly works for power pumps and compressors for Plastic deformation equipment: the chemical and petrochemical industries. • Balancing of turbine and generator rotors • Mechanical drawing presses. within 3–700 MW and 3,000 rpm speed and • Mechanical joint presses. overspeeding; balancing of driving turbine • Maxi-presses. rotor and compressors within the speed • Electro hydraulic gasket presses. range of up to 40,000 rpm. • Friction screw presses. • Heavy parts machining according to • Forge hammers. customer’s documentation. • Automated power welding. • Spare parts manufacturing according to • Heavy metal structures. customer’s documentation or according to reverse engineering. Export: Italia, Germania, Austria, Olanda, ˛ a, Ungaria European Union Frant Export: Republica Araba ˘ Siriana˘ , Turcia, Import: Israel, Italia, Germania, India, Egipt, Austria, Germania, Statele Unite ale European Union Americii, India, China, Italia, Republica Ceha ˘, Ungaria, Bulgaria Import: Germania, Frant ˛ a, Italia 91 STUDY OF EQUIPMENT PRICES IN THE POWER SECTOR Combustion Turbines Stationary Diesel TURBOMECANICA Engine Turbines Bulevardul Iuliu Maniu 244 TIMPURI NOI Bucures˛ti 061126 Sector 6 Splaiul Unirii 165 România Bucures ˛ti 030133 Sector 3 Telefon: +40 21 434.32.06 România Telefon: +40 21 434.07.41 Telefon: +40 21 318.83.00 Telefon: +40 21 434.07.50 Telefon: +40 21 318.83.04 Telefon: +40 21 434.07.53 Telefon: +40 788304860 Fax: +40 21 434.31.65 Fax: +40 21 318.83.12 Fax: +40 21 434.07.93 Fax: +40 21 318.83.14 http://www.turbomecanica.ro Telex: 10846 http://www.timpurinoi.ro Activities (EN): TURBOMECANICA was established in 1975 Manufactures and trades: in Bucharest under the name of “Engine Plants”; its production facilities became operational in • Screw and piston, motor and electric, air 1977. At that time, the company’s main activity compressor units. was the production of aircraft engines for the • Gases or oil-free electric compressors. Romanian Ministry of Defense. Licenses from • Electric compressors for ships. Rolls-Royce (UK), Turbomeca (France), and • Centrifugal and diaphragm motor pumps. Aerospatiale (France) were bought from the • Generating sets driven by diesel engines. beginning. Until the mid-1980s state-of-the-art • Spare parts. Western equipment was purchased to keep pace • Precision machining. with world-class aircraft engine manufacturers. After 1993, the company was reorganized, Agent: Companies represented: ROTORCOMP according to new requirements of the market, Germania based on a restructuring program. ˛a Export: Germania, Grecia, Ungaria, Frant Since July 2000 TURBOMECANICA has Asia Centrala ˘ , Orientul Mijlociu, Europa been a private company. ˘ /de Est, Europa de Vest Centrala TURBOMECANICA manufactures parts, Import: Germania, Olanda, Suedia, Italia subassemblies, and accessories and repairs Europa Centrala˘ /de Est, Europa de Vest aeronautical engines, helicopter gearboxes, spark-ignition and rotorheads, airframe components, hydraulic and gas turbines and waterwheels, high-tech equipment for industrial power generating systems, medical and military application, and transport equipment. Export: Statele Unite ale Americii, Marea ˛a Britanie, Italia, Canada, Israel, Frant 92 OEMs in Romania FAUR ELECTRO EXIM SRL Bulevardul Basarabia 256 21, IALOMICIOAREI St. sect.1 Bucures˛ti 030352 Sector 3 Bucharest—ROMANIA România Code:011277 Telefon: +40 21 255.02.75 Phone: 40-21-2231347; 40-21-5691080; Telefon: +40 21 255.15.13 Fax: 40-21-2231201 Fax: +40 21 255.00.70 E-mail: office@electroexim.com Fax: +40 21 255.00.71 http://www.faur.ro ELECTRO EXIM S.R.L. is a private company performing a variety of export-import activities Production and trade of: in the fields of electric power production, transmission, and distribution. Electro Exim • Diesel electric locomotives. was one of the first Romanian companies to be • Diesel hydraulic locomotives. privatized, is well regarded abroad, and has • Motor railers. successfully established strong relationships • Machines for railway maintenance and with more than 300 Romanian and international repairs. companies. Works with speed and flexibility to • V3A Trams. deliver products on time to exact specifications. • Spare parts for rolling stock. On the Romanian market, focused on • Diesel engines (175–1.250 PH; 1.000–2.300 distributing electric generators between rpm); spare parts, power sets (130–800 KVA); 10–2264 KVA and uninterruptible power and generating sets. supply units (UPS) between 1–1000 kVA. For • Equipment for: machinery, metallurgy these products, ELECTRO offers full service, industries, building materials industry from consulting for the best option to servicing (cement factories), and chemical and the generators after the purchase. petrochemical industry. • Cast parts: steel, non-ferrous alloys, cast iron (grey and nodular black-leaded). • Forged parts. ˛ a, Export: Germania, Egipt, Italia, Frant Belgia Africa, Europa de Vest 93 Annex OEMs in India 4 Table A4.1 Partial List of OEMs in India S1 No. Description Manufacturer Name Manufacturer Address 1. Coal-Fired Boiler BHARA T HEAVY 1. 18–20, Kasturba Gandhi ELECTRICALS LTD (BHEL) Marg, New Delhi–110001. ISGEC JOHN THOMPSON 2. 33A,Jawaharlal Nehru Road, Kolkata-700071. THERMAX LTD 3. D–1 Block, Plot no. 7/2 R.D.Aga Road, M.I.D.C, Chinchwad, Pune-411019. THYSSEN KRUUP 4. Pimpri, Pune-411018 INDUSTRIES INDIA Tel No. - +91-20-7474461 2. Steam Turbine BHEL 1. 18–20, Kasturba Gandhi Marg, New Delhi-110001 GEC ALSTHOM TRIVENI LTD 2. P.B. No. 5848,12A, 1st Phase Peenya Industrial Area, Bangalore-560058 3. Combustion Turbine BHEL 1. 18–20, Kasturba Gandhi Marg, New Delhi-110001 4. Stationary Diesel KRILOSKAR CUMMINS LTD 1. Kothrud, Pune-411029 Engine-Generator 2. Banaras House Ltd, Wartsila WARTSILA INDIA Diesel Division, 11th Floor, New Delhi House, 27, Barakhamba Road, New Delhi-110001 Source: Author’s calculations. Note: OEMs in italicized letters have been contacted, but did not provide requested budget quotes. 95 List of Technical Reports Region/Country Activity/Report Title Date Number SUB-SAHARAN AFRICA (AFR) Africa Region Power Trade in Nile Basin Initiative Phase II (CD Only) 04/05 067/05 Part I: Minutes of the High-level Power Experts Meeting; and Part II: Minutes of the First Meeting of the Nile Basin Ministers Responsible for Electricity 10/06 104/06 Introducing Low-cost Methods in Electricity Distribution Networks Second Steering Committee: The Road Ahead. Clean Air Initiative In Sub-Saharan African Cities, Paris, March 13-14, 2003 12/03 045/03 Lead Elimination from Gasoline in Sub-Saharan Africa. Sub-regional Conference of the West-Africa group. Dakar, Senegal March 26-27, 2002 (Deuxième comité directeur: La route à suivre - L’initiative sur l’assainissement de l’air. Paris, le 13-14 mars 2003) 12/03 046/03 1998-2002 Progress Report. The World Bank Clean Air Initiative in Sub-Saharan African Cities. Working Paper #10 (Clean Air Initiative/ESMAP) 02/02 048/04 Landfill Gas Capture Opportunity in Sub-Saharan Africa 06/05 074/05 The Evolution of Enterprise Reform in Africa: From State-owned Enterprises to Private Participation in Infrastructure-and Back? 11/05 084/05 Market Development 12/01 017/01 Cameroon Decentralized Rural Electrification Project in Cameroon 01/05 087/05 Chad Revenue Management Seminar, Oslo, June 25-26, 2003. (CD Only) 06/05 075/05 Côte d’Ivoire Workshop on Rural Energy and Sustainable Development, January 30-31, 2002. (Atelier sur l’Energie en régions rurales et le Développement durable 30-31, janvier 2002) 04/05 068/05 East Africa Sub-Regional Conference on the Phase-out Leaded Gasoline in East Africa. June 5-7, 2002 11/03 044/03 97 STUDY OF EQUIPMENT PRICES IN THE POWER SECTOR Ethiopia Phase-Out of Leaded Gasoline in Oil Importing Countries of Sub-Saharan Africa: The Case of Ethiopia - Action Plan 12/03 038/03 Sub-Saharan Petroleum Products Transportation Corridor: Analysis and Case Studies 03/03 033/03 Phase-Out of Leaded Gasoline in Sub-Saharan Africa 04/02 028/02 Energy and Poverty: How can Modern Energy Services Contribute to Poverty Reduction 03/03 032/03 Ghana Poverty and Social Impact Analysis of Electricity Tariffs 12/05 088/05 Women Enterprise Study: Developing a Model for Mainstreaming Gender into Modern Energy Service Delivery 03/06 096/06 Sector Reform and the Poor: Energy Use and Supply in Ghana 03/06 097/06 Kenya Field Performance Evaluation of Amorphous Silicon (a-Si) Photovoltaic Systems in Kenya: Methods and Measurement in Support of a Sustainable Commercial Solar Energy Industry 08/00 005/00 The Kenya Portable Battery Pack Experience: Test Marketing an Alternative for Low-Income Rural Household Electrification 05/01 012/01 Malawi Rural Energy and Institutional Development 04/05 069/05 Mali Phase-Out of Leaded Gasoline in Oil Importing Countries of Sub-Saharan Africa: The Case of Mali - Action Plan (Elimination progressive de l’essence au plomb dans les pays importateurs de pétrole en Afrique subsaharienne Le cas du Mali — Mali Plan d’action) 12/03 041/03 Mauritania Phase-Out of Leaded Gasoline in Oil Importing Countries of Sub-Saharan Africa: The Case of Mauritania - Action Plan (Elimination progressive de l’essence au plomb dans les pays importateurs de pétrole en Afrique subsaharienne Le cas de la Mauritanie – Plan d’action) 12/03 040/03 Nigeria Phase-Out of Leaded Gasoline in Nigeria 11/02 029/02 Nigerian LP Gas Sector Improvement Study 03/04 056/04 Taxation and State Participation in Nigeria’s Oil and Gas Sector 08/04 057/04 Senegal Regional Conference on the Phase-Out of Leaded Gasoline in Sub-Saharan Africa (Elimination du plomb dans I’essence en Afrique subsaharienne Conference sous regionales du Groupe Afrique de I’Ouest Dakar, Sénégal, 03/02 022/02 March 26-27, 2002) 12/03 046/03 Alleviating Fuel Adulteration Practices in the Downstream Oil Sector in Senegal 09/05 079/05 Maximisation des Retombées de l’Electricité en Zones Rurales, Application au Cas du Sénégal 05/07 109/07 98 List of Technical Reports South Africa South Africa Workshop: People’s Power Workshop. 12/04 064/04 Swaziland Solar Electrification Program 2001 2010: Phase 1: 2001 2002 (Solar Energy in the Pilot Area) 12/01 019/01 Tanzania Mini Hydropower Development Case Studies on the Malagarasi, Muhuwesi, and Kikuletwa Rivers Volumes I, II, and III 04/02 024/02 Phase-Out of Leaded Gasoline in Oil Importing Countries of Sub-Saharan Africa: The Case of Tanzania - Action Plan 12/03 039/03 Uganda Report on the Uganda Power Sector Reform and Regulation Strategy Workshop 08/00 004/00 EAST ASIA AND PACIFIC (EAP) Cambodia Efficiency Improvement for Commercialization of the Power Sector 10/02 031/02 TA For Capacity Building of the Electricity Authority 09/05 076/05 China Assessing Markets for Renewable Energy in Rural Areas of Northwestern China 08/00 003/00 Technology Assessment of Clean Coal Technologies for China Volume I-Electric Power Production 05/01 011/01 Technology Assessment of Clean Coal Technologies for China Volume II-Environmental and Energy Efficiency Improvements for Non-power Uses of Coal 05/01 011/01 Technology Assessment of Clean Coal Technologies for China Volume III-Environmental Compliance in the Energy Sector: Methodological Approach and Least-Cost Strategies 12/01 011/01 Policy Advice on Implementation of Clean Coal Technology 09/06 104/06 Scoping Study for Voluntary Green Electricity Schemes in Beijing and Shanghai 09/06 105/06 Papua New Energy Sector and Rural Electrification Background Note 03/06 102/06 Guinea Philippines Rural Electrification Regulation Framework (CD Only) 10/05 080/05 Thailand DSM in Thailand: A Case Study 10/00 008/00 Development of a Regional Power Market in the Greater Mekong Sub-Region (GMS) 12/01 015/01 Greater Mekong Sub-region Options for the Structure of the GMS Power Trade Market A First Overview of Issues and Possible Options 12/06 108/06 Vietnam Options for Renewable Energy in Vietnam 07/00 001/00 Renewable Energy Action Plan 03/02 021/02 Vietnam’s Petroleum Sector: Technical Assistance for the Revision of the Existing Legal and Regulatory Framework 03/04 053/04 Vietnam Policy Dialogue Seminar and New Mining Code 03/06 098/06 99 STUDY OF EQUIPMENT PRICES IN THE POWER SECTOR SOUTH ASIA (SAS) Bangladesh Workshop on Bangladesh Power Sector Reform 12/01 018/01 Integrating Gender in Energy Provision: The Case of Bangladesh 04/04 054/04 Opportunities for Women in Renewable Energy Technology Use In Bangladesh, Phase I 04/04 055/04 Bhutan Hydropower Sector Study: Opportunities and Strategic Options 12/07 119/07 EUROPE AND CENTRAL ASIA (ECA) Azerbaijan Natural Gas Sector Re-structuring and Regulatory Reform 03/06 099/06 Macedonia Elements of Energy and Environment Strategy in Macedonia 03/06 100/06 Poland Poland (URE): Assistance for the Implementation of the New Tariff Regulatory System: Volume I, Economic Report, Volume II, Legal Report 03/06 101/06 Russia Russia Pipeline Oil Spill Study 03/03 034/03 Uzbekistan Energy Efficiency in Urban Water Utilities in Central Asia 10/05 082/05 MIDDLE EAST AND NORTH AFRICA (MENA) Morocco Amélioration de l´Efficacité Energie: Environnement de la Zone Industrielle de Sidi Bernoussi, Casablanca 12/05 085/05 Regional Roundtable on Opportunities and Challenges in the Water, Sanitation And Power Sectors in the Middle East and North Africa Region. Summary Proceedings, May 26-28, 2003, Beit Mary, Lebanon (CD) 02/04 049/04 Turkey Gas Sector Strategy 05/07 114/07 LATIN AMERICA AND THE CARIBBEAN (LCR) Regional Regional Electricity Markets Interconnections - Phase I Identification of Issues for the Development of Regional Power Markets in South America 12/01 016/01 Regional Electricity Markets Interconnections - Phase II Proposals to Facilitate Increased Energy Exchanges in South America Population, Energy and Environment Program (PEA) 04/02 016/01 Comparative Analysis on the Distribution of Oil Rents (English and Spanish) 02/02 020/02 Estudio Comparativo sobre la Distribución de la Renta Petrolera Estudio de Casos: Bolivia, Colombia, Ecuador y Perú 03/02 023/02 Latin American and Caribbean Refinery Sector Development Report - Volumes I and II 08/02 026/02 100 List of Technical Reports Regional The Population, Energy and Environmental Program (EAP) (English and Spanish) 08/02 027/02 Bank Experience in Non-energy Projects with Rural Electrification Components: A Review of Integration Issues in LCR 02/04 052/04 Supporting Gender and Sustainable Energy Initiatives in Central America 12/04 061/04 Energy from Landfill Gas for the LCR Region: Best Practice and Social Issues (CD Only) 01/05 065/05 Study on Investment and Private Sector Participation in Power 12/05 089/05 Distribution in Latin America and the Caribbean Region Strengthening Energy Security in Uruguay 05/07 116/07 Bolivia Country Program Phase II: Rural Energy and Energy Efficiency Report on Operational Activities 05/05 072/05 Bolivia: National Biomass Program. Report on Operational Activities 05/07 115/07 Brazil Background Study for a National Rural Electrification Strategy: Aiming for Universal Access 03/05 066/05 How do Peri-Urban Poor Meet their Energy Needs: A Case Study of Caju Shantytown, Rio de Janeiro 02/06 094/06 Integration Strategy for the Southern Cone Gas Networks 05/07 113/07 Estrategia de integración de la red de gasoductos del Cono Sur 12/07 113/07 Chile Desafíos de la Electrificación Rural 10/05 082/05 Colombia Desarrollo Económico Reciente en Infraestructura: Balanceando las necesidades sociales y productivas de la infraestructura 03/07 325/05 Ecuador Programa de Entrenamiento a Representantes de Nacionalidades Amazónicas en Temas Hidrocarburíferos 08/02 025/02 Stimulating the Picohydropower Market for Low-Income Households in Ecuador 12/05 090/05 Guatemala Evaluation of Improved Stove Programs: Final Report of Project Case Studies 12/04 060/04 Haiti Strategy to Alleviate the Pressure of Fuel Demand on National Woodfuel Resources (English) (Stratégie pour l’allègement de la Pression sur les Ressources Ligneuses Nationales par la Demande en Combustibles) 04/07 112/07 Honduras Remote Energy Systems and Rural Connectivity: Technical Assistance to the Aldeas Solares Program of Honduras 12/05 092/05 Mexico Energy Policies and the Mexican Economy 01/04 047/04 Technical Assistance for Long-Term Program for Renewable Energy Development 02/06 093/06 101 STUDY OF EQUIPMENT PRICES IN THE POWER SECTOR Nicaragua Aid-Memoir from the Rural Electrification Workshop (Spanish only) 03/03 030/04 Sustainable Charcoal Production in the Chinandega Region 04/05 071/05 Peru Extending the Use of Natural Gas to Inland Perú (Spanish/English) 04/06 103/06 Solar-diesel Hybrid Options for the Peruvian Amazon Lessons Learned from Padre Cocha 04/07 111/07 GLOBAL Impact of Power Sector Reform on the Poor: A Review of Issues and the Literature 07/00 002/00 Best Practices for Sustainable Development of Micro Hydro Power in Developing Countries 08/00 006/00 Mini-Grid Design Manual 09/00 007/00 Photovoltaic Applications in Rural Areas of the Developing World 11/00 009/00 Subsidies and Sustainable Rural Energy Services: Can We Create Incentives Without Distorting Markets? 12/00 010/00 Sustainable Woodfuel Supplies from the Dry Tropical Woodlands 06/01 013/01 Key Factors for Private Sector Investment in Power Distribution 08/01 014/01 Cross-Border Oil and Gas Pipelines: Problems and Prospects 06/03 035/03 Monitoring and Evaluation in Rural Electrification Projects: A Demand-Oriented Approach 07/03 037/03 Household Energy Use in Developing Countries: A Multicountry Study 10/03 042/03 Knowledge Exchange: Online Consultation and Project Profile from South Asia Practitioners Workshop, Colombo, Sri Lanka, June 2-4, 2003 12/03 043/03 Energy & Environmental Health: A Literature Review and Recommendations 03/04 050/04 Petroleum Revenue Management Workshop 03/04 051/04 Operating Utility DSM Programs in a Restructuring Electricity Sector 12/05 058/04 Evaluation of ESMAP Regional Power Trade Portfolio (TAG Report) 12/04 059/04 Gender in Sustainable Energy Regional Workshop Series: Mesoamerican Network on Gender in Sustainable Energy (GENES) Winrock and ESMAP 12/04 062/04 Women in Mining Voices for a Change Conference (CD Only) 12/04 063/04 102 List of Technical Reports Renewable Energy Potential in Selected Countries: Volume I: North Africa, Central Europe, and the Former Soviet Union, Volume II: Latin America 04/05 070/05 Renewable Energy Toolkit Needs Assessment 08/05 077/05 Portable Solar Photovoltaic Lanterns: Performance and Certification Specification and Type Approval 08/05 078/05 Crude Oil Prices Differentials and Differences in Oil Qualities: A Statistical Analysis 10/05 081/05 Operating Utility DSM Programs in a Restructuring Electricity Sector 12/05 086/05 Sector Reform and the Poor: Energy Use and Supply in Four Countries: Botswana, Ghana, Honduras, and Senegal 03/06 095/06 Cameroun: Plan d’Action National Energie pour la Réduction de la Pauvreté 06/07 117/07 Meeting the Energy Needs of the Urban Poor: Lessons from Electrification Practitioners 06/07 118/07 Technical and Economic Assessment of Off-Grid, Mini-Grid and Grid Electrification Technologies 12/07 121/07 Study of Equipment Prices in the Power Sector 12/09 122/09 103 Energy Sector Management Assistance Program (ESMAP) Purpose The Energy Sector Management Assistance Program is a global knowledge and technical assistance program administered by the World Bank and assists low-income, emerging and transition economies to acquire know-how and increase institutional capability to secure clean, reliable, and affordable energy services for sustainable economic development. ESMAP’s work focuses on three global thematic energy challenges: • Energy Security • Poverty Reduction • Climate Change Governance And Operations ESMAP is governed by a Consultative Group (CG) composed of representatives of the Australia, Austria, Canada, Denmark, Finland, France, Germany, Iceland, Norway, Sweden, The Netherlands, United Kingdom, and The World Bank Group. The ESMAP CG is chaired by a World Bank Vice President, and ad- vised by a Technical Advisory Group of independent, international energy experts who provide informed opinions to the CG about the purpose, strategic direction, and priorities of ESMAP. The TAG also provides advice and suggestions to the CG on current and emerging global issues in the energy sector likely to im- pact ESMAP’s client countries. ESMAP relies on a cadre of engineers, energy planners, and economists from the World Bank, and from the energy and development at large to conduct its activities. Further Information For further information or copies of project reports, please visit www.esmap.org. ESMAP can also be reached by email at esmap@worldbank.org or by mail at: ESMAP c/o Energy, Transport, and Water Department The World Bank Group 1818 H Street, NW Washington, D.C. 20433, U.S.A. Tel.: 202-473-4594; Fax: 202-522-3018 Energy Sector Management Assistance Program 1818 H Street, NW Washington, DC 20433 USA Tel: 1.202.458.2321 Fax: 1.202.522.3018 Internet: www.esmap.org E-mail: esmap@worldbank.org