Next steps for GE services: Cross-Fleet and AGP expansion

For us, Cross-Fleet is not about servicing someone else’s machines. That’s boring. It’s about taking those machines and making them our own, adopting those machines and serving our technology, our coatings, our alloys, our engineering data. That allows us to do things with the machines with our technology that customers need, which we don’t necessarily think our competitors can do.” So said Scott Strazik, president and CEO of GE’s Power Services business, at the mid May media launch in Baden of GE’s new services initiative aimed at providing upgrades for other OEM’s gas turbine fleets. The initial focus is on Siemens and Mitsubishi 501F machines, with an installed base of about 300 units, mainly located in the Americas and Asia (Japan specifically), and on Siemens SGT-800 units, installed base around 350, sited principally in Europe/Russia, but also with a sizeable population (around 86) in Thailand. The plan is to extend the offering to “adjacent platforms” in due course. 

Scott Strazik was brought into his new role in October 2017 to address what was seen by GE's senior management as commercial under-performance in the services side of the power business. However, GE has been working quietly away on the Cross-Fleet concept for well over two years, and Scott gives full credit to the previous services management team for taking the initiative. “It wouldn’t have been an easy decision but it’s one we are going to benefit from.”

Among the key technologies GE is offering (to be detailed further in a future article) are improved/thicker ceramic thermal barrier coatings, in particular using DVC (dense vertically cracked) technology, and improved cooling schemes (allowing increased firing temperatures and/or increased component life for a given firing temperature), more robust alloys, advanced computer modelling (enabling, for example, aerodynamic “tweaks” and improved blade geometry), improved combustors, better control systems, and remote monitoring with data analytics.

GE says it can bring “significant value to the table” in terms of, for example, output, heat rate, intervals between overhauls, turn down capabilities, and operational flexibility, while keeping within the required emissions envelopes. The Cross-Fleet offering builds on experience with GE's own fleet (which includes 50 million hours of F class operating experience) and with advanced technologies developed for new machines such as the HA, but also marries that to intellectual property arising from the Alstom power business acquisition in November 2015, including “extensive steam turbine, generator and HRSG other-OEM capabilities.”

For the 501F machines GE is saying it can increase output by as much as 8% and improve heat rate by up to around 2.5%, with overhaul intervals increased to 32000 hours/1250 starts. For the SGT-800, output can be increased by up to 6% (for the 43 MW ‘A’ version) and heat rate improved by 1.5%, with significant extension in overhaul intervals, up to 40000 hours/900 starts.

For both SGT-800 and 501F there is a “significant value gap” to be addressed, believes Martin O’Neill, GE’s general manager of Cross-Fleet solutions. This is the gap in commercial performance between what is currently being achieved and what could be achieved. It stems from several factors, including the age of the engines, under-investment and, particularly in the case of the SGT-800, lack of competition in the provision of services, with many of them under long term service contracts with the OEM.

For Martin O’Neill, the increase in overhaul interval (from the 24000 EOH recommended by the OEM, Siemens) is the “Number 1 punchline as to why Cross-Fleet is attractive to an SGT-800 industrial operator”, for example reducing the impact of gas turbine planned outages on production and allowing better sequencing with balance of plant maintenance.

Development of the SGT-800 (formerly Alstom GTX100) – initially rated at 43 MW, but upgraded to as much as 57 MWe in its latest (2017) version – dates back to the early to mid 90s, with commercial introduction in 1998, and much of the development around the hot gas path and combustor was originally done in Baden, said O’Neill, “so we have some heritage on this machine”, said O’Neill.

The 501F design (initially a Westinghouse /Mitsubishi joint effort) goes back to the 80s. As well as “giving the 501 owner a significantly improved machine”, thanks to increased power, longer overhaul intervals, and improved turndown and operational flexibility characteristics, the Cross-Fleet offering also provides an opportunity to address some “sticky reliability issues.”

Martin O’Neill notes that over the years there “has not been a heavy investment in 501 machines” and it is a “space that has been overlooked”, with competitor offerings “somewhat like for like.” But “operators deserve to have the latest technology, and we can offer this to non-GE customers.” He also thinks “the Cross-Fleet offering will stimulate some investment in long standing pain points and reliability issues with these machines.”

Over the past 20 months or so GE has been steadily building up the capabilities, staffing, infrastructure, supply chain and execution platform required to deliver its Cross-Fleet services and reports that it has already booked $200 million worth of orders and is finding that many operators are “actively seeking competition.” (And there are signs competition is indeed hotting up, with Siemens, for example, recently announcing a new performance enhancement offering for older SGT-800 gas turbines, see MPS, July 2018, page 18, 'Siemens launches performance enhancement offering for SGT-800'.)

GE has already successfully completed some 11 Cross-Fleet outages in seven countries across six engine variations (W501 FD1, W501 D5A, W501 FD3, SGT5-4000F, M501 F3, SGT-800), with scopes ranging from small inspections to control system and hot gas path upgrades (see table entitled 'GE Cross-Fleet projects, the first twenty months'). Having built up this order book, it made sense “to unveil our capabilities externally”, said Scott Strazik.

“We can bring real value to the market place,” added Martin O’Neill, “and we are going after this with commercial intensity.”

The concept has gone beyond the “first adopters” stage and the goal now is to achieve scale.

“We are in our third year,” Strazik points out, “and the concept has credibility and momentum commercially not only for the GE power business, but also for the market.”

AGP prospects

As well as the focus on other-OEM fleets via Cross-Fleet, Strazik also sees further significant business opportunities in providing services to the GE gas turbine installed base, which amounts to some 7500 engines.

Over the past eight years or so, Advanced Gas Path (AGP) upgrades have been installed on 435 of these engines, “so there is a lot more opportunity to go back to machines that were sold three, five ten, fifteen years ago and upgrade them.”

“We are still not yet at half time of the game”, says Strazik. “There is still a lot of installed base to go and support. And that’s exactly what we’re going to do.”

AGP has been implemented so far on 6F, 7F, 9F and 9E gas turbines in 39 countries. A recent order from Saudi Cement for upgrades of three gas turbines (at its Hofuf facility) is the first 6B application, the first installation in the cement industry, and represents a significant step into industrial applications for the AGP upgrade offering.

Other recent milestones for AGP technology recently announced by GE were:

• A $52 million agreement with Dubai Electricity and Water Authority (DEWA) to install AGP on three 9E gas turbines at the Jebel Ali Power & Desalination Station.
• The first 9F application in Japan, at the Ohgishima power plant, Kanagawa, under a service agreement with Ohgishma Power (a subsidiary of Tokyo Gas) and Showa Shell Sekiyu that also includes installation of DLN2.6+ and OpFlex*, helping to increase efficiency by 2.5% and reducing emissions to 15 ppm NOx.
• AGP upgrade of a 9F.03 gas turbine at Edison’s Candela combined cycle plant in Puglia, Italy. This can be seen in part as a response to Italy’s introduction of a capacity market.
• AGP installation on four GE 9E gas turbines at the Iraqi Ministry of Electricity’s Najibiya power plant, one of eight sites where GE is installing a total of 36 AGP upgrades as part of the Iraq Power Up Plan II. AGP will help each turbine run for up to an additional three months a year when powered by HFO.
• Installation of AGP technology on ten 9F gas turbines at ENKA power plants in Turkey, the first 9F applications.

Nevertheless, GE market projections for AGP installations have been scaled back to about 50 per year from the heights of a few years ago when there was talk of around 150 per year. Many of these were in the USA, but “that market is lighter today, no doubt about it”, says Scott Strazik, “our North American AGP boom is more humble.” This is due to lower gas turbine utilisation rates there (down from about 5200 h/y to nearer 4800 h/y), the growth of renewables and the availability of cheap gas, which makes power plant efficiency enhancement less of a concern than it used to be.

On the “flip side” while the demand for AGP hardware upgrades in the USA has lessened, Strazik sees big opportunities in the that market for software upgrades and GE’s digital offerings. “It used to be a simple equation: customers made more money the more they ran. It’s not necessarily the same equation today. It’s as much about when you run and how quickly you can serve a market need and how quickly you can harvest a pricing opportunity. They massively need to make sure that when pricing in the merchant market is at its peak, they grab every megawatt of opportunity available. And that’s a real opportunity for us to make more money.”

But it’s not just about Advanced Gas Path and digital upgrades, he also sees massive opportunities in the core parts and services business worldwide, noting that this recorded a 30% revenue rise in the first quarter of 2018, the first rise for some years. This reflects a new “back to basics” approach to serving the operating fleet, both GE’s and those of other OEMs, via Cross-Fleet.

One recent milestone for these “transactional” services was the $300 million deal signed with Petrobras to provide parts, repairs, service inspections and outages for 43 gas turbines (6FA, 7FA, GT11N2, and LM6000), three steam turbines and 13 generators at eleven power plants in Brazil that provide around 13% of country’s fossil-fuelled generation.

“There’s more than ample opportunity to grow the services business,” says Scott Strazik, “and I’m confident of much better days ahead.”