Rolls-Royce 1004227 User Manual
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Design Evolution, Reliability and Durability of
Rolls-Royce Aero-Derivative Combustion Turbines
Pedigree Matrices, Volume 6
1004227
Design Evolution, Reliability and
Durability of Rolls-Royce
Aero-Derivative Combustion
Turbines
Pedigree Matrices, Volume 6
1004227
Technical Update, March 2006
EPRI Project Manager
D. Grace
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800.313.3774 ▪ 650.855.2121 ▪ askepri@epri.com ▪ www.epri.com
ELECTRIC POWER RESEARCH INSTITUTE
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CITATIONS
This report was prepared by
Electric Power Research Institute
3420 Hillview Avenue
Palo Alto, CA 94304
Principal Investigator
D. Grace
This report describes research sponsored by the Electric Power Research Institute (EPRI).
The report is a corporate document that should be cited in the literature in the following manner:
Design Evolution, Reliability and Durability of Rolls-Royce Aero-Derivative Combustion
Turbines: Pedigree Matrices, Volume 6, EPRI, Palo Alto, CA: 2006. 1004227.
iii
PRODUCT DESCRIPTION
Competitive pressures are driving power generators to exploit aviation combustion turbine
technology to create more efficient and powerful generation plants at lower cost. However, the
use of aero-derivative combustion turbines (third generation or "next generation") carry a degree
of technical risk because technologies incorporated into their design push them to the edge of the
envelope. This report reviews the design evolution and experience base of advanced Rolls-Royce
aero-derivative combustion turbines in a comprehensive format, which facilitates an assessment
of the technical risks involved in operating these high-technology combustion turbines. In
addition, a quantitative analysis-or reliability, availability, and maintainability (RAM)
assessment-is made for Rolls-Royce’s Avon, RB211 and Trent aeroderivative engines.
Results & Findings
Elements of aero-derivative technology developed in the 1970s form the basic design foundation
of the aero-derivative type machines of today. These designs have been refined over time to
provide proven, reliable, and maintainable designs while allowing the users the maximum degree
of flexibility in plant designs or configurations. The aero-derivative's greatest asset is its
modularity. With complete interchangeability of like modules and line-replaceable components,
it relies on a maintenance philosophy called "repair by replacement.” High performance, high
efficiency aero-derivatives are also fast starting and tolerant to cycling, characteristics that make
them suitable for peaking power and distributed generation applications. There are some generic
long-term problems associated with aero-derivatives, however, including bearings and seals that
require monitoring and conditioning equipment, Dry Low Emissions (DLE) combustion systems
that need refinement, and compressors sensitive to stall or surge.
The ultimate result of this report is a concise presentation of the design evolution of Rolls-Royce
combustion turbines in the form of a pedigree matrix that allows risk to be assessed. The
pedigree matrices identify design trends across all of a manufacturer's products that can be
categorized as low, medium, or high risk. Some of the trends identified as high risk include (1)
single crystal alloys and complex cooling schemes, (2) DLE combustion systems, and (3)
proprietary Thermal Barrier Coatings (TBCs) and bond coatings exclusive to industrial turbine
applications. Experience information includes site listings, O&M issues, and RAM-Durability
fleet data to provide a comprehensive assessment of model maturity.
Challenges & Objectives
Adapting aviation combustion turbine technology to power generation allows power companies
to benefit from development efforts and costs already absorbed by commercial and military
development programs. Computer-aided engineering and design programs and computer-aided
manufacturing programs make it possible to rapidly develop and produce new turbines.
However, this increased rate of change has increased the potential risk of new product
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introductions as design changes go from the ‘drawing boards’ into production testing at a
customer’s site early in the learning curve. The absence of long-term experience with the
technology raises issues of reliability and durability. For specific models and components,
chronic durability problems could result in insurability issues potentially undermining a project’s
financial structure.
Applications, Values & Use
This report, along with EPRI’s previously published design evaluations for GE aero-derivative
combustion turbines (EPRI report 1004220) and Pratt and Whitney aero-derivative combustion
turbines (EPRI report 1004222), provide a context for the risk assessment of currently available
aero-derived combustion turbine designs for power generation. This information is essential
background to generation planning and equipment procurement decisions. Aero-derivative
machines have been of particular interest due to their inherently short construction schedules,
fast startup times, and ease of maintenance, particularly in simple cycle configuration for
peaking and distributed generation service.
EPRI Perspective
To help project developers, owners and operators manage the risks of new combustion turbine
technologies, the durability surveillance report series supported by the EPRI New CT/Combined
Cycle Design and Risk Mitigation Program provides a structured context for understanding
design changes that drive these risks and related life cycle O&M costs. This information fully
complements a machine selection process heavily based on first cost, efficiency, and delivery
schedule. The multi-volume report series, along with regular updates, covers heavy-frame and
aero-derivative turbine product lines manufactured by ALSTOM, General Electric, Pratt &
Whitney, Rolls-Royce, Siemens Power Generation, and Mitsubishi Power Systems.
Approach
The project team reviewed the design characteristics of the Rolls-Royce aero-derivative
combustion turbine product lines (RB211, RB211 Uprate, and the Trent) to assess the technical
risk associated with these advanced technology combustion turbine designs. Information was
drawn from operations data and directly from the owners of machine fleet leaders operating in
peaking, cycling or baseload service. The resulting pedigree matrix supplemented with reported
experience consolidates information for each combustion turbine model into a format that allows
the reliability status of the machines to be reviewed and major design changes or areas of
potential risk to be evaluated. In addition, the team determined RAM statistics from the fleet of
engines reporting to the Operational Reliability Analysis Program (ORAP) database.
Keywords
Combustion Turbines
Aero-Derivative Gas Turbines
Reliability
Durability
Risk Assessment
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ACKNOWLEDGMENTS
Thanks to Ted Gaudette (formerly of Strategic Power Systems, Inc.) and to Ian Langham of Ian
Langham & Associates Inc. for preparing the original report in 2002. Thanks to Rolls-Royce for
welcoming EPRI attendance at the Turbine Operator’s Conference in Houston in 2005. Thanks
to Dale Paul and Bob Steele at Strategic Power Systems, Inc. for providing current reliability
statistics for the Rolls-Royce engines reporting to the ORAP database.
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CONTENTS
1 INTRODUCTION ....................................................................................................................1-1
Risk Trends ...........................................................................................................................1-3
Current Technology Trends Related to Industrial Combustion Turbines: Low Risk ........1-3
Applied Aero Technology Trends Directly Transferred to Industrial Combustion
Turbines: Low to Medium Risk ........................................................................................1-3
Advanced Aero Technology Trends Transferred to Industrial Combustion Turbines:
Medium to High Risk ........................................................................................................1-4
Independently Developed Technology Applied to Industrial Combustion Turbines:
Medium to High Risk ........................................................................................................1-5
Other Risk Factors............................................................................................................1-6
The Use of Advanced Technology for Peaking Duty.............................................................1-7
Insurers and Lenders Perspective.........................................................................................1-8
2 ROLLS-ROYCE AERO-DERIVATIVE COMBUSTION TURBINE BACKGROUND..............2-1
Summary...............................................................................................................................2-1
RB211 Background Information ............................................................................................2-1
RB211 Horsepower Ratings.............................................................................................2-3
RB 211 Maintenance Approach........................................................................................2-4
Turnaround Time and Costs ........................................................................................2-5
Parts Life Upgrades .....................................................................................................2-5
Trent Background Information...............................................................................................2-7
Trent Maintenance Approach ...........................................................................................2-9
Avon Background Information...............................................................................................2-9
Pedigree Matrix for the RB211 and Trent 60 Engines.........................................................2-10
3 RELIABILITY, AVAILABILITY AND MAINTAINABILITY......................................................3-1
Data Analysis: Rolls-Royce Aero-derivative Engines...........................................................3-1
RAM Statistics: Avon, RB211 and Trent - All Duties .......................................................3-2
Additional RB 211 Operating Statistics.............................................................................3-4
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RAM Assessment..................................................................................................................3-4
Conclusion ............................................................................................................................3-4
4 BIBLIOGRAPHY ....................................................................................................................4-1
Literature Citations ................................................................................................................4-1
A KNOWN ISSUES .................................................................................................................. A-1
B RB 211 MAINTENANCE SCOPE ......................................................................................... B-1
RB 211 - 2,000 Hour Inspection........................................................................................... B-1
RB 211 - 8,000 Hour Inspection........................................................................................... B-1
RB 211 - Midlife Workscope................................................................................................. B-3
On Removal..................................................................................................................... B-3
Rebuild ............................................................................................................................ B-6
RB 211 - Overhaul Workscope............................................................................................. B-7
On Receipt of Engine ...................................................................................................... B-7
C RAM TERMS AND DEFINITIONS ........................................................................................ C-1
D INSTALLATION LISTS......................................................................................................... D-1
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LIST OF FIGURES
Figure 2-1 Industrial RB211: Gas Generator and Free Power Turbine......................................2-2
Figure 2-2 Industrial Trent..........................................................................................................2-8
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LIST OF TABLES
Table 2-1 Pedigree Matrix: Rolls-Royce RB211-6562, RB211-6761, Trent 60 (DLE and
WLE) Engine Design Characteristics ...............................................................................2-11
Table 3-1 RAM Statistics: Fleet Characteristics for Avon, RB211, and Trent............................3-2
Table 3-2 RAM Statistics for Roll-Royce Avon, RB211 and Trent Engines – All Duties............3-3
Table 3-3 Additional RB 211 Operating Statistics......................................................................3-4
Table A-1 Listing of Known Issues for Rolls-Royce Units......................................................... A-1
Table D-1 RB211 Sites ............................................................................................................. D-2
Table D-2 Trent Sites................................................................................................................ D-4
Table D-3 Avon Sites................................................................................................................ D-5
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1
INTRODUCTION
The power generation market place and the combustion turbine market in particular are evolving
at an ever-increasing pace. Market forces are driving the introduction of new technologies and
advanced combustion turbines designs. The introduction of these technologies inherently
involves risk. The economic pressure of a market moving towards deregulation intensifies this
risk of new technologies. Whereas in the past new products were gradually introduced into the
market, the demands of competing in an open market have driven the pace of incorporating new
technologies to improve profitability on a $/kW basis. The intent of this report is to allow a
qualitative assessment of the risks involved in the use of these new technologies to be made.
In reviewing the available information on the designs of the heavy-duty combustion turbines,
several immediate observations can be drawn on the progression and evolution of the
combustion turbine over the last several decades. The economic pressures in the market place
have driven the pace of incorporation of military and commercial aviation combustion turbine
technology (e.g. single crystal turbine blades) into the power generation market. This increased
rate of design changes has also increased the potential risk of the new product introductions.
This increased risk is incurred for several reasons but is primarily attributed to going from the
‘drawing boards’ into production testing at a customer’s site early in the learning curve before
the design changes have been fully tested and proven over time.
In the past, the rate of incorporation of military and commercial aviation combustion turbine
technology into industrial combustion turbines was slow due to limited production schedules
(compared to military or commercial aviation) and largely limited to the under 50 MW class of
industrial aeroderivative combustion turbines. In recent years, this technology is being
incorporated into the new generation frame machines to create more efficient and powerful
plants at lower costs by:
• Taking advantage of the development efforts and costs initially absorbed by the commercial
and military development programs
• Availability of computer-aided engineering and design programs (CAE/CAD)
• Computer-aided manufacturing programs (CAM), and the current worldwide manufacturing
capability
The advanced frame machines being produced today and the future Advanced Turbine System
(ATS) machines sponsored by the U.S. Department of Energy are blending these technologies
more quickly and producing hybrid combustion turbines with frame technologies, aero designed
flow paths, aero designed cooling technologies, and industrial designed low NOx combustion
systems. The advanced industrial machines have even surpassed the military and commercial
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turbines in combustion technology with dry low NOx and CO levels that are several orders of
magnitude lower and meet land based pollution requirements in many geographic areas.
The enabling technology of today’s advanced frame machines lies with the computer codes and
manufacturing processes developed by the aviation combustion turbine industry. The application
of these processes is inevitable under the pressure of the power generation industry to produce
power at low cost with maximum efficiency, reliability, and availability.
The power generation combustion turbines have different operating demands than the aviation
combustion turbines and the designers and developers have programs in place to advance the
technology beyond the aviation programs. Manufacturers have extended the technology to more
advanced industrial thermal barrier coatings (TBCs), oxidation resistant coatings, bond coat
technologies, large size single crystal blade and vane manufacturing processes, single digit dry
low NOx combustion systems, and integrated electronic digital control systems handling more
than 4800 I/Os.
The trends by all the major manufacturers are similar with the adoption of the aviation
technology into the flow paths, with corresponding advances in materials, cooling schemes,
coatings, and clearance control. The basic approach, inherent in each manufacturer’s design
philosophy, is evident in their general combustion turbine designs (rotors, combustion systems,
and proprietary technology) but the general trend to higher firing temperatures, pressure ratios,
efficiency, low emissions, reliability (99%), and availability (96%) goals is similar. The overall
approach to compete worldwide is based on cost per MW. Supporting the supplied equipment
with long term maintenance contracts is the internal corporate incentive to provide reliable
equipment and designs. With the merging of companies and aviation and industrial technologies
to maintain competitiveness, the large frame combustion turbines are ‘hybrids’ absorbing
technology that previously lagged by a decade before incorporation into industrial turbines. The
industrial aero-derivative and some advanced frame combustion turbines are to the point of being
the leading edge of technology in the overall combustion turbine environment in terms of
efficiency, emissions, and advanced technology.
This strategy by the manufacturers is propelled in large part by advanced combustion turbines
becoming the “only game in town” due to the current worldwide disfavor with nuclear and fossil
boiler plants. The requirement to provide sited power quickly and cost effectively, with
guarantees, is pushing these technologies forward at a rapid pace.
In order to understand the risk associated with new product introductions, the changes in the new
products must first be understood. The design evolution of these machines have been reviewed
and incorporated in a Pedigree Matrix. The pedigree matrix consolidates information for
selected combustion turbine models into a format that allows the design evolution of the
advanced machines to be reviewed and major design changes or areas of potential risk to be
evaluated.
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Risk Trends
Based upon the review of the designs from all of the manufacturers, several trends are readily
apparent. These trends in the development of advanced designs involve incorporation of current
industrial combustion turbine technology, transfer of aircraft engine technology to industrial
combustion turbines, and new technologies developed specifically for industrial combustion
turbines. The subsections below discuss these trends in general terms and categorize the trends
in terms of relative risk (Low Medium, or High).
Current Technology Trends Related to Industrial Combustion Turbines: Low Risk
Elements of aero-derivative class technology developed in the 1970s form the basic design
foundation of the aero-derivative type machines of today. These designs have been refined over
time to provide proven, reliable, and maintainable designs while allowing the users the
maximum degree of flexibility in plant designs or configurations. These design trends, which
can be considered relatively low risk with respect to product reliability, include:
• High Degree of Modularity and Interchangeability
• Flight engine heritage provides for modular construction with separate sections completely
interchangeable with other like modules.
• Compact size allows for ease of maintenance and allows for easy removal in sections or in its
entirety with relatively common tools.
• Bolted on accessories and on-engine instrumentation that is accessible and designed for ease
of removal and replacement.
• High degree of commonality with the flight engine to retain durability gains of proven
hardware and retain lower costs due to higher production rates.
• Pre-tested packaged power units with small foot print for multiple units per site
• Fast starting and loading with tolerances to cycling duty.
• Easily adapted to cogeneration and combined cycle configurations.
Applied Aero Technology Trends Directly Transferred to Industrial Combustion
Turbines: Low to Medium Risk
Technology transfer with minimum risk to industrial aero-derivative and frame type combustion
turbines based on proven designs from the military/commercial combustion turbine have been
accomplished with CAE/CAD/CAM programs and analyses. The result is dramatic efficiency
and airflow performance improvements (e.g. air and gas flow paths) without impacting the
reliability or availability of the combustion turbine. Variable position compressor vanes have
contributed to improved part load performance and are desirable for DLE combustion.
Aerodynamic 2D and 3D designs have improved surge margins, compressor efficiency, and
general operability ranges. The aero-derivative compressors are sensitive to the occurrence of
surge and usually require a borescope inspection after a surge occurs to inspect for any
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abnormality in the flow path. Adoption of proven aviation technology has minimized leakage
paths and has improved clearance control. These aviation to industrial transfer technology
trends, which can be considered low to medium risk with respect to product reliability include:
• Advanced compressor designed flow paths
− Controlled diffusion airfoils
− Multiple circular arc airfoils
− Double circular arc airfoils
− 2D and 3D aerodynamics
− Variable vanes
− Shrouded stators with improved labyrinth seals
− Increased surge margins
− Exit (outlet) guide vanes
• Active and Passive Clearance and leakage control
Advanced Aero Technology Trends Transferred to Industrial Combustion
Turbines: Medium to High Risk
Hot end technology transferred to industrial turbines with firing temperatures in the
2300 o - 2600oF (1260o – 1427oC) range has been a challenge because of the duty cycle imposed
on the land-based turbine. The advanced materials (e.g. single crystal [SC] castings), exotic
cooling schemes, advanced coatings, and clearance control all had to be scaled to the sizes
utilized in the larger frame sized combustion turbine. Designing the 3D aerodynamic flow path
and providing adequate cooling for all the required blade and vane rows without exceeding base
metal temperature was required while maintaining durability, acceptable stress levels, and
vibratory characteristics.
The manufacturing of turbine blades and vanes with single crystal technology and the
development of appropriate coatings and bond coatings for these materials is a challenge for the
designers and manufacturers and currently should be classified as medium to high risk due to the
current level of experience in the field. These advanced aviation to industrial transfer technology
trends, which can be considered medium to high risk with respect to product reliability include:
• Turbine flow path
• 2D and 3D aerodynamics
• Advanced cooling technology*
− Convection cooling schemes
− Impingement cooling schemes
− Film cooling schemes
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− Multi-pass serpentine cooling schemes
− “Shower-head” cooling schemes
• Advanced materials
− Directionally solidified alloys
− Single crystal alloys*
− Low sulfur alloys*
• Advanced coatings
− TBCs*
− Oxidation coatings*
• Clearance and leakage control
− Passive
− Active*
Introduction
− Abradable shrouds/labyrinth seals
− Brush seals
* Higher risk technologies
Independently Developed Technology Applied to Industrial Combustion Turbines:
Medium to High Risk
Some technological advances require independent design and development for the conditions
and environment the land based combustion turbines experience. The exhaust emission
requirement is a prime example where current regulations require NOx emissions below 25
ppmv, with an increasing number of locations requiring single digits. The aviation industry has
not yet addressed this challenge. The duty cycle of the aviation combustion turbine requires
take-off temperature for 150 to 300 hours total during its overhaul cycle (operational time to
depot repair) whereas the industrial land based turbine with DLE control, turndown
requirements, inlet heating, and ambient temperature could conceivably operate at continuous
rated power and rated firing temperature for the majority of its overhaul cycle. Since the time at
temperature constraint is greater for the industrial combustion turbine, the TBCs, oxidation
coatings, bond coatings, and materials must survive in a much harsher environment long-term
than the commercial aviation equivalent combustion turbine. Reliability and durability of this
technology is considered medium to high risk because much of the enabling technology has to be
developed and proven. Existing advanced systems are complex and have yet to be proven for
long term durability. Blades that have exotic coatings, in some cases, cannot be stripped and
recoated, thus are non-repairable and may not achieve full design life for the combustion turbine
design. This results in increased life cycle costs. Steam cooling for the combustion transition
pieces, vanes, and/or blades is being developed by manufacturer, university and DOE/ATS
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development programs and is entering commercial use. Advanced industrial technology trends
which are considered medium to high risk with respect to product reliability include:
• Dry low NOx Combustion systems*
• Cannular and annular designs with multiple fuel injection nozzles
• Exclusive industrial TBCs and bond coatings*
• Exclusive oxidation coatings*
• Closed loop steam cooling systems*
• External cooling air cooling systems
• Closed loop air cooling systems
• Staged combustion for high turndown capability
*Highest risk technologies
Rolls-Royce advanced aero technology is being applied to ALSTOM engines under a long-term
technology transfer agreement (ref. Diesel & Gas Turbine Worldwide April 2002, p. 4). Very
high temperature technologies, advanced aerodynamics, very high strength/high temperature
materials and protective coatings will be applied to improve efficiency, power output and
durability of ALSTOM’s heavy duty combustion turbines. Note that a technology transfer
agreement was in place with Westinghouse in the early 1990’s to apply advanced technology to
the frame 501F and G machines. Considering that Westinghouse and Mitsubishi Heavy
Industries developed the 501F/G machines jointly, the same technology may have been
incorporated into the 50 Hz 701F/G machines by MHI. Furthermore, Siemens subsequently
acquired Westinghouse, presumably gaining access to that previous technology as well.
Other Risk Factors
The transfer, development, and introduction of new hardware into the industrial power
generation environment are part of the scope of a system that contributes to the life cycle cost
picture. Hardware, first cost, and new advanced technology is misused if the integration of the
whole system from “cradle to grave” is not addressed, because hardware is only a portion of the
risk. Some elements of these “other risk elements” are summarized below. This is not intended
to be a complete list of items. These items may have as significant an impact on the successful
lifetime operation of the plant as the “advanced hardware” if not addressed adequately.
Users
• Experience/skill level
• Degree of training
• Cost reduction in O&M programs
• Heavy reliance on OEM’s
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• Single, large capacity units
• Minimum resources applied to Monitoring, Diagnostic, and Prognostic Programs
Original Equipment Manufacturers
• Integration of systems
• Competitive economics
• Corporate downsizing
• Sourcing compromises (country of sale or worldwide)
• Long term maintenance contracts (burden on OEMs) and extent shared with the suppliers
The Use of Advanced Technology for Peaking Duty
The attraction of the new technology combustion turbines, as compared to what can be called
“mature” technology combustion turbines, lies primarily in the increased thermal efficiency.
Current “Advanced Class” combustion turbines (those with firing temperatures of 2300oF
(1260oC) or greater) have simple cycle efficiencies that are approximately 2% better than their
“mature” technology or earlier counterparts. This efficiency increase makes an enormous
difference in operating costs over the life of the plant. Obviously, the more the plant operates,
the bigger the advantage would be.
The aero-derivative combustion turbines also offer more flexibility of power when multiple units
are at a single site. Fast starting and loading times means that multiple blocks of capacity can be
quickly dispatched in cycling duty with added flexibility for the User.
For many, new technology would be the clear choice, all other things being equal. However, all
other things are seldom equal. The other differences that must be evaluated are several. During
system peaks, when power can be sold at steep premiums, having the ability to produce some
fraction of plant total capacity (i.e. 4 of 6 RB211’s operating) can have a very favorable impact
on profitability versus one large frame unit down for an extended period of time.
New technology also pertains, separately, to environmental compliance and emissions
performance. Indeed, the mature classes of combustion turbines may be forced to utilize new
technology combustion systems to meet stricter emissions standards. Generally, higher NO
x
emissions would be produced at the higher firing temperatures and the turbines with the highest
firing temperatures require the most sophisticated emission control technology. To control NOx,
and CO, manufacturers use complex combustion systems designed to precisely control the
fuel/air mixture and the combustion process in general. There is clear evidence that these
complex systems are not as robust as their simpler, low-tech counterparts. However, it is the site
emissions requirements that dictate the selection of combustion systems.
Consequently, the advantages of new technology combustion turbines must be evaluated against
the disadvantages. The cost of fuel will be a very important factor in the determination, as will
the expected service time of the unit. If service time is low, and the cost of fuel is low, then the
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efficiency advantage of the new technology combustion turbine might not offset the increased
maintenance costs. It is a difficult equation to solve, especially when trying to predict changes
over the 20 to 30 year life of a typical plant.
Insurers and Lenders Perspective
Technology risk is of interest not only to owners and operators but also to insurance companies
and project lenders. Insurers protect owners and lenders from major financial loss due to costly
but infrequent accidental events. In some cases, unproven technology and changes in design can
lead to catastrophic failures and/or extended durations of unavailability. Insurers are therefore
keenly aware of the introduction of new models and designs. Insurance for newly introduced
“prototype” designs typically require very high financial responsibility on the part of the
manufacturer until they have demonstrated several thousand hours of operation. At that point,
the new model enters the category of “unproven” until typically one to three units leading the
fleet have operated successfully for over 8,000 hours at rated conditions. During this period,
some components may be excluded from coverage, as well as design and manufacturing defects.
Depending on the results of this operating period, the insurer would then classify the model as
“proven”, although they may take exception to insurance coverage for certain high-risk
components until problems are resolved. In going from “prototype” to “unproven” to “proven”,
deductible and premium amounts are reduced as the insurer perceives less risk. Extensive testing
of the engines for reliability in a controlled environment such as a manufacturer facility is judged
as being far superior to field testing to demonstrate performance and reliability.
Advanced technologies are perceived as having more risk mainly because they are being used in
new applications and are being scaled up to larger capacities. Overall, insurers consider the
following factors as significantly extending the risk of accident:
• New designs (typically highlighted by a change in model name)
• Higher firing temperature
• Higher capacity/output
• Higher compressor pressure ratio
Major insurance companies closely monitor and track performance of the combustion turbine
suppliers and their specific models individually, and track their claim history for each model.
Some insurers retain more in-house engineering expertise than others, but all have become more
dependent upon OEM technical and marketing materials for information. Interestingly, some
combustion turbine models are rated differently by different insurers; manufacturers are
generally eager to get their models moved from “unproven” to “proven”, signaling more
acceptance by insurers and therefore easing the sale of their model to the project developer. It
appears that an insurer’s recent claim history and/or anecdotal evidence plays a major role in the
models risk rating.
Insurers expect to profit from their activities by the receipt of premiums and their investments.
However, their experience in the 1990’s was that insuring combustion turbines was a losing
business. In 2001 and 2002, premiums were increased and deductibles were increased to try to
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Introduction
compensate for their losses. Some companies concluded they would no longer participate due to
the perceived risks, while others entered the market due to improving margins. In 2004 and
2005, the market again became “softer” and premiums decreased on a relative basis. The
insurance market appears to be fundamentally based on supply and demand of its “product”, with
volatility somewhat decoupled from quantified technical risk.
Project lenders are highly risk-averse to a multitude of risks, and require the project owner/
operator to carry insurance so that the cash flow to service the debt is secure. Typically, the
owner/operator obtains their insurance coverage through a broker, who deals with a number of
primary insurers to find the best financial arrangement for the insured. Although the primary
insurers actually underwrite the risk, issue the policies, and settle claims, they in turn pass along
much of their risk along to one of several reinsurance companies. In essence, the primary
insurers themselves are risk-averse and the primary insurance risks are aggregated by the reinsurers.
The main type of insurance that is impacted by technical risk is Boiler and Machinery Insurance
(or Machinery Breakdown Insurance). This insurance covers direct damage from sudden and
accidental breakdown of mechanical, electrical or pressure vessel equipment, such as turbines,
boilers, generators, motors, pumps, transformers and switchgear. Deductible amounts are
typically set to be higher than the maximum loss that could be typically expected over the course
of the normal life, i.e. an amount that would be typically budgeted as an allowance for unplanned
maintenance, and that the project could sustain without jeopardizing its financial health.
Deductible amounts of $500,000 to $3,000,000, depending on project size, would not be
uncommon.
Business Interruption Insurance is sometimes also required, depending on the project. This
insurance covers the revenue lost due to the lack of generation i.e. unavailability, over an
extended period of time caused by an event covered under the Boiler and Machinery Insurance.
In this case, the deductible is typically expressed as a number of days, i.e. the maximum normal
number of days to obtain parts and install them if required to return the unit to service, typically
45-60 days, although longer periods result in lower premiums.
When insurers are quoting coverage level for a particular project and the annual premiums and
deductibles, many factors are considered. Besides the many aspects of uncertainty and costs
related to potential risks, insurers also consider the general marketplace for their products, the
degree of competition, and their ability to gain additional business associated with the power
project. Technology risk is one part of the equation
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