Be cool, be flexible20 August 1999
Industries which generate heat and require subsequent cooling face the challenge of excessive temperatures and the loss of profits from a shortage of sufficient cooling water. Outsourcing offers a potential solution to this challenge.
When peak electricity demand combines with hot climatic conditions, power plant operators can face problems. Utilities fight brown outs, lack of generating capacity and lost profits under these circumstances. In particular, power plant operators can struggle during the summer to maintain high production. Operators which generate heat and require subsequent cooling face the annual challenge of excessive temperatures and the loss of profits that result from the inability to cool water sufficiently in order to effectively operate during these elevated temperatures on a consistent basis.
Cooling towers are used to control various industrial processes and eliminate excessive heat and related problems. Most larger cooling systems use recirculating water that includes a mechanical draft or natural draft cooling tower to dissipate the heat. Some systems use lake or river water for cooling. Most of these are once-through systems, and a cooling tower may not be required. Where greater and more reliable heat removal is required, cooling towers are installed.
Whether mechanical or natural draft, cooling towers present owners with many challenges. Foremost is the need for sufficient capital to design, build or upgrade a tower. In the current competitive market, companies may find it difficult to raise the capital to build a new tower or upgrade an existing one. A higher priority project with shorter payback period may win the company's limited capital. Often perceived as a non-essential or non-profitable budget item, the cooling tower project is often postponed or left out.
Another challenge is maintenance and repair. Too often, budgets do not allow for the short- and long-term work to operate the cooling tower optimally. Additionally, with the number of personnel cutbacks in the power industry, there is often not enough manpower available with the necessary knowledge to perform the proper maintenance. Without these preventative measures, tower efficiency will drop off dramatically. Towers that are over 5 years old may be operating at an efficiency of less than 80 per cent. Scheduled maintenance must be performed consistently if towers are to remain efficient.
Finally, operaors are participating in a global market where competition is fierce. To succeed, a constant focus on the true core activities of the business is mandatory. Cooling towers, while important in the operation of any plant, are at times a distraction to some managers when viewed against the needs of more critical system components. Ideally, industry needs uninterrupted cold cooling water with a minimum of risk, maintenance responsibilities, and capital outlay.
This objective is now achievable through a suitable outsourcing programme. It provides many advantages to those who own cooling towers or to those who need new towers. Of key importance is the fact that by using this programme, cold water is guaranteed at all times to the customer without the obligations of tower ownership and care.
Global Water Technologies uses its cooling water expertise and cooling tower knowledge of its subsidiary Psychrometric Systems Inc (PSI) to provide this cold water with a minimum of project investment from the customer, with no up-front capital commitment through its "Performance Plus' outsourcing programme.
The programme starts with the new tower installation or tower upgrade completed by GWT using its capital, not the customer's. When complete, the tower provides water of the desired temperature for the contract term, usually 7 years. During this period, the customer pays a monthly operating fee or gallonage fee for the amount of water circulated. At the end of the term, the customer can renew the agreement or purchase the tower.
For new systems, all aspects of the cooling tower are included in the scope of work. Although not normally part of tower installation, the tower basin is engineered and constructed by GWT. Project teams are required to complete projects rapidly. In a Midwestern USA utility plant, GWT had 3 months to finish a green field 24 cell tower, to enable the utility to comply with government regulations.
Such regulations impact numerous facilities that use adjacent ground water from lakes or rivers for cooling. While unlimited water may be available for cooling, a limit frequently exists on the temperature of the water returned to the receiving stream. If the plant cannot meet the regulated temperature limit, it may have to de-rate its facility and purchase power from an outside source. The above mentioned facility faced this problem, and adopted the described procedure for a swift solution. The new tower enabled the customer to continue generating without interruption and without the serious financial impact of lost revenues and spot purchases of power.
Ground water sources occasionally have no return temperature limit or other environmental obstacle, but because of their location and the season of the year, are not capable of delivering cool enough water. De-rating becomes the only option to management, resulting in a similar financial catastrophe. Power plants may be forced to spend millions of dollars daily to make up for this lost output.
System monitoring is also included in the programme. Instrumentation is designed into the system that is linked to the company's headquarters in Colorado. Parameters are selected which relate to tower thermal efficiency and operating characteristics.
Performance plus options
The most comprehensive form of the programme includes installation of a new tower or a tower upgrade accompanied by complete financing, as well as system monitoring, full maintenance and even operation if desired. Utilities or IPPs which are building new facilities and wish to keep capital expenditure to a minimum would be candidates for this option. Stations with cooling facilities in poor condition and operating at a low level of efficiency could also benefit from this option.
Another alternative is applicable for companies which wish to use its own capital for a new or upgraded tower. GWT will install or upgrade the tower on a traditional turnkey basis, and then provide all other services mentioned earlier using a long-term contract approach. The customer continues to realize many important benefits of the programme while maintaining ownership of the system.
A recent GWT customer chose a system upgrade to restore efficiency to an existing tower in their plant. With the tower operating at 80 per cent, the plant was losing millions of dollars per year in output. GWT's upgrade resulted in an efficiency improvement of 22 per cent, bringing the tower up to 102 per cent of design capability. The plant increased production by 7-11 MWe, and earned an additional $600 000/MWe as a result.
Cooling tower outsourcing has numerous benefits. With a new tower purchase, a guarantee is usually provided only for the first 12 months of the tower's life. Even then, not all aspects of the tower may be covered. The Performance Plus guarantee is for 7 years, and ensures that sufficient water of the agreed temperature will be available when required. This kind of warranty has not previously existed in the cooling tower business. Failure to meet these requirements results in a reduction of the customer's payment until the water requirements are met.
The key for many customers is the benefit of not investing capital, enabling them to spend money more profitably. On core business investments, such as power production, a 20 per cent rate of return may be realized from that investment. That rate would be hard to match if the plant had to spend a similar sum to upgrade its cooling towers.
All tower services are bundled and performed by GWT allowing for better personnel deployment by the customer, and the reduction of overall operating costs.With the tower operating at peak performance and water of consistently good quality being produced, chemical treatment and utility costs will be optimized. Additional flexibility is built into the programme for contract termination. If the business climate changes, and a long-term programme is no longer beneficial for the customer, the customer can end the contract and take on all tower responsibility.
In the growing world of industrial outsourcing, GWT has taken the concept a step further. With Preformance Plus, the risk of cooling tower ownership and long term care and maintenance remains with the supplier. The customer accrues numerous benefits that should enable them to be more competitive and more profitable.