Replacing Retirees and Improving Reliability High on To-Do Lists
Credit to Author: POWER| Date: Mon, 01 Apr 2019 00:00:00 +0000
What keeps you up at night? The question has become cliché as panel moderators now routinely ask it as a “thought-provoking” final query to close out executive roundtable sessions at industry conferences. The answers given at such events are rarely the off-the-cuff responses that are truly desired. Yet, when the question is asked as part of an anonymous survey in which a guarded response is unnecessary, the results can be enlightening.
Siemens recently commissioned Longitude, a Financial Times company that provides thought leadership and research services to corporate and institutional clients, to conduct a study on challenges facing the power industry. Researchers quizzed more than 100 U.S. power plant executives and directors, and one of the questions they asked the leaders was: “What keeps you up at night?”
Aging Workforce a Big Concern
Heading the list was “attracting and retaining a talented workforce.” When a person considers workforce trends, it’s easy to see why the chore leaves power executives restless. The average age of utility sector employees has steadily increased to 50, according to Siemens’ report. It says 25% of the workforce will retire in the next five years, and up to half of the workforce could retire within the next 10 years. That’s pretty alarming.
Replenishing such a high percentage of staff members with prime applicants will undoubtedly be difficult, but technology could help bridge the gap. The report says advanced digital technologies such as augmented and virtual reality could enable more-effective training of new workers in simulated environments. However, that leads to the next-highest fear cited in the survey, which is “adopting new digital technologies.” To overcome the difficulty, the report suggests replacing retirees with “digital-savvy workers or those with specific digital expertise.” Yet, it falls short in providing techniques for identifying and enticing such candidates into the workforce.
Are Renewables a Threat or Opportunity?
Another threat that could cause lost sleep for traditional power generators is the growth in renewables. The February-released BP Energy Outlook: 2019 edition says, “Renewable energy is the fastest growing source of energy, contributing half of the growth in global energy supplies and becoming the largest source of power by 2040.” Yet, the Siemens study found that surprisingly few power executives are worried about it. In fact, only 26% of respondents said the rise of renewables is a major challenge, which put it in seventh place on the list of worries.
The researchers, however, believe the threat is understated, specifically as it relates to coal and gas-fired plants. The report says, “32% of surveyed generators have renewables assets in their portfolio, which means these generators also see renewables as an opportunity. Nonetheless, the rise of renewables directly threatens the profitability of existing fossil fuel plants because it lowers wholesale prices, increases the number of low-pricing hours, reduces the number of high-pricing hours, and makes the timing of these periods harder to predict.”
“We are seeing the utilization rates for some customers’ combined cycle power plants fall from between 60% and 70%, to less than 20% due to a number of factors, including the aggressive integration of renewables into the grid,” Connie Klimko, head of Marketing at Siemens Power Generation Services, Controls & Digitalization, said in the report. “If the [independent system operator] can purchase renewable energy at an equal or lesser cost to coal or gas, they will do that. The rise of renewables poses unique challenges to the profitability and even the existence of some plants in certain states,” she added.
Planning Ahead for Reliability Improvements
When questions turned to capital investments, many respondents said they plan to focus on improving plant reliability over the next two years. The report says, “Reliability has become so important because the growth in renewables generation has caused a reduction in the number of high-price hours and an increase in the magnitude of pricing during these hours. Generators therefore need to ensure that their assets can operate during these short periods of ultra-high prices.”
“In the current market, plants have very narrow windows for making money—maybe just a few hundred hours per year. So, plants need to be operating when there are opportunities to make money,” said Galen George, director of Business Development and Marketing at Siemens Energy.
And gas turbines are where U.S. power generators are putting their money. More than nine out of 10 respondents said they have already invested in gas turbines or plan to do so in the next two years. Furthermore, many of the executives (45%) plan to invest in heat recovery steam generators (HRSGs) during the period. Upgrades to HRSGs can improve flexibility, reliability, and efficiency of combined cycle power plants, enabling them to operate at higher temperatures and pressures, and for longer periods of time.
Investments, however, don’t always lead to successful outcomes. Fewer than 50% of respondents reported that recent projects—those undertaken in the past three years—delivered the planned operational objectives. Fewer than one in four said projects were a “complete success.” The reason? “Planning too late in the schedule” was at the top of the list. The most-effective way to ensure investment success is to plan early and involve all stakeholders right from the outset.
The study also found that having access to the right data can improve results. Yet, less than half of the executives surveyed reported having full access to information on the performance of similar plants. The report says investing in this type of data is an important way to avoid failure. To obtain a copy of the Siemens study, visit: www.siemens.com/redefine-performance-ebook. ■
—Aaron Larson is POWER’s executive editor.
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