The Virtual Developer
Computer software products offer new tools to maximize cost-effectiveness and long-term profitability. By analyzing the benefits of various alternatives in plant design, finance and energy marketing, the systems allow users to increase the sophistication of the decision-making process.
By Scott M. Gawlicki, Contributing Editor
The site-specific nature of today's independent power projects-along with a multitude of business and technology scenarios-makes it difficult to balance unit performance, capital cost, competitive positioning and return on investment. At the same time, bidders are under pressure to reduce proposal development costs.
With that in mind, the Electric Power Research Institute (EPRI) and architect/engineering firm Sargent & Lundy sponsored in the early 1990s the development of a software package combining plant conceptual design, performance criteria, cost and financial analysis to support technical and economic decision-making. The result is SEPRIL, LLC, a joint venture between the two organizations. SEPRIL took over development, sales and servicing of SOAPP (State-of-the-Art Power Plant), a collection of software products that supports development of new plants and repowering existing facilities.
By integrating technical and financial analysis with advanced automation, users can unite the process of making business and technical decisions. Using design, performance and cost models built from equipment data provided by major suppliers, as well as data received from completed projects, SOAPP products compare and assess potential performance, costs, and installation schedules of both existing and emerging plant technologies.
Each workstation is divided into four data groups-unit, economic, site and fuel data. Using SOAPP to develop a conceptual plant design, users input changes, such as fuel or financial alternatives, and use the system's "what-if" capability to ultimately determine optimum plant design.
Since the software's release, SEPRIL says it has been purchased primarily by U.S.-based power project developers, and is being used by managers involved in project engineering, proposal development and project structure. While the software can save proposal development costs, SEPRIL says the real savings kick in after the project is up and running.
"This is not about saving money, it's about making money," says Dale Sopocy, SEPRIL principal. "We give you the ability to tailor your plant design to a specific site-more so than in the past. Then, beyond that, you can mitigate your risks through technical choices."
For example, SOAPP allows the user to select equipment and basic design criteria, using the system's built in engineering logic to configure the plant and size all the equipment, right down to the piping requirements. Once the basic inputs are made, the user can perform what-if analyses, changing, for example, the inlet cooler outlet temperature to improve the performance of a combustion turbine and, subsequently, reduce the net plant heat rate.
The software will perform a redesign in minutes, quantifying the impact of a single change on balance-of-plant costs, performance, and project return. It can also be brought via a laptop to regulatory meetings for permitting discussions, as well as financial meetings with potential project lenders.
"It gives you the ability to see how different choices in equipment design criteria will affect the investment requirements and returns. During an evaluation, it gives you the most profitable approach to the project. As the project evolves, the uncertainties associated with long-term fuel and energy prices are invariably reduced. An you can continually re-evaluate and refine your project strategy," Sopocy says.
To illustrate, Sopocy points to the fast-growing market for merchant plants. Every merchant project is viewed on a case-by-case basis with respect to debt coverage. If the developer can lower the project's marginal costs, it can support a greater level of debt.
"You want to minimize risk and maximize return. It's not just about determining the lowest fixed capital or marginal costs. Often what's best for a project is somewhere in-between, so the goal is to maximize the overall return. As markets get more and more competitive, developers will have to make the wisest tradeoffs in the context of a forward looking analysis. It still boils down to what is the optimum trade-off," he says.
The company's most widely used product is the SOAPP-CT WorkStation, which creates and evaluates combustion turbine-based simple-, combined-cycle and cogeneration applications. With increasing plant acquisition activity, interest is also growing in the SOAPP-REPO Workstation, which covers repowering with gas turbine combined-cycle packages.
The software draws on data provided and regularly updated by industry equipment suppliers and developed projects. For instance, the latest version includes nine new combustion turbine models and updates on 54 others as manufacturers make minor and not-so-minor improvements.
To ensure users always work with the latest possible information, the software is licensed on an annual basis with updates provided at least once a year. Users that allow the license to lapse lose access to the system, a move that protects them from inadvertently making decisions based on outdated information. "This safeguards the integrity of the software," Sopocy says.
Sopocy says users' suggested changes have been incorporated as well, including added flexibility in the financial analyses, more control over cost models, and increasing control over the plant designs. "The approach to project development is a moving target. Every year we put in additional inputs, adding flexibility or precision in some area," he says.