A REPORT TO THE BOARD OF COMMISSIONERS OF PUBLIC UTILITIES Electrical Mechanical Civil Protection & Control S1GNATLJL 2oü 4 "DAT Transmission & Distribution Telecontrol - System Planning OVERHAUL DIESEL ENGINES July 2011 rewfoundiand labrador () hydro a nakor energy company
Table of Contents 1 INTRODUCTION... 1 2 PROJECT DESCRIPTION... 2 3 EXISTING SYSTEM... 3 3.1 Age of Equipment or System... 3 3.2 Major Work and/or Upgrades... 3 3.3 Anticipated Useful life... 5 3.4 Maintenance History... 5 3.5 Outage Statistics... 6 3.6 Industry Experience... 9 3.7 Maintenance or Support Arrangements... 9 3.8 Vendor Recommendations... 9 3.9 Availability of Replacement Parts... 9 3.10 Safety Performance... 10 3.11 Environmental Performance... 10 3.12 Operating Regime... 10 4 JUSTIFICATION... 11 4.1 Net Present Value... 11 4.2 Levelized Cost of Energy... 11 4.3 Cost Benefit Analysis... 11 4.4 Legislative or Regulatory Requirements... 11 4.5 Historical Information... 12 4.6 Forecast Customer Growth... 12 4.7 Energy Efficiency Benefits... 12 4.8 Losses during Construction... 12 4.9 Status Quo... 13 4.10 Alternatives... 13 5 CONCLUSION... 14 5.1 Budget Estimate... 14 5.2 Project Schedule... 14 APPENDIX A... A1 Newfoundland and Labrador Hydro i
1 INTRODUCTION Newfoundland and Labrador Hydro s (Hydro) Diesel Engine Overhaul Project has been developed to ensure the reliability of diesel engines at isolated diesel generating stations. Hydro has a total of 69 prime power diesel engines (including mobile units) at 21 isolated diesel generating stations serving approximately 4000 customers. With the exception of one system (Ramea), these generating stations are the sole source of electricity for their communities. The failure of a unit at any of these stations could result in a load reduction and/or customer outage in that community. This highlights the importance of the reliability of these diesel engines. The prime power diesel engines are the primary power source for these communities and require major overhauls to achieve their expected service lives. Figure 1 below is a photo of Ramea Unit 2077 prior to its installation in the Ramea Diesel Plant. Figure 1 Ramea Unit 2077 Newfoundland and Labrador Hydro Page 1
2 PROJECT DESCRIPTION This project is required to overhaul the diesel engines at diesel generating stations. The project consists of overhauling 53 engines over the next five years (2012 to 2016). The overhaul schedule, which can be found in Appendix A, is based on the engines being overhauled every 20,000 hours of operation. This is the criteria currently being used for diesel engine overhauls. The overhaul schedule is a projection based on the estimate of when each engine will reach 20,000 operating hours since its last overhaul. 20,000 operating hours accumulates on average in 7.5 years but depends on the usage of the engine. As such, this schedule is subject to change and the year for which an engine is projected to become due for an overhaul can vary depending on plant conditions and the actual hours accumulated. An overhaul consists of either a rebuild or a long block replacement. A rebuild consists of the replacement of pistons, liners, main bearings, connecting rod bearings, fuel injectors, oil cooler, turbo charger, water pump, oil pump, cylinder heads and all necessary gaskets. Also included in a rebuild is a bench overhaul of the fuel pump and an overhaul of the alternator typically at 40,000 hours or when the maintenance staff identifies this through their maintenance checks. A long block replacement consists of replacement of the block of the engine minus the auxiliary parts such as cooler, actuator, turbo chargers, manifolds, fuel lines etc. The main difference in the long block involves the replacement of the crank shaft and the block. The long block replacement program is relatively new to Hydro and comes with the advantage of warranty and a manufacturer overhauled engine that can be delivered to site. Hydro is in the process of evaluating the effectiveness of this approach and has targeted specific engines in the Labrador Region to have long block replacement. Newfoundland and Labrador Hydro Page 2
3 EXISTING SYSTEM The existing system of isolated diesel generating stations consists of a total of 69 prime power diesel engines at 21 diesel generating stations. The number of units at a generating station ranges from three to five and the rated output of the units range from 30kW to 1375kW. 3.1 Age of Equipment or System The diesel engines range in age from less than one year to 31 years and currently range in operating hours from less than 1,000 hours to over 119,000 hours (as of the end of 2010). 3.2 Major Work and/or Upgrades Please refer to Table 1 below for details concerning the major work and upgrades to each diesel engine during the previous five years. Table 1: Major Work or Upgrades Year Major Work/Upgrade 2011* Rebuild of Grey River Unit# 2062 2011* Rebuild of McCallum Unit# 2063 2011* Rebuild of Ramea Unit# 2077 2011* Rebuild of St. Brendan s Unit# 2056 2011* Rebuild of St. Lewis Unit# 2039 2011* Rebuild of William s Harbour Unit# 2057 2011* Rebuild of Port Hope Simpson Unit# 2043 2011* Rebuild of Natuashish Unit# 2069 2011* Rebuild of Cartwright Unit# 2052 2011* Rebuild of Rigolet Unit# 2081 2011* Rebuild of Rigolet Unit# 2051 2011* Rebuild of Postville Unit# 577 2011* Rebuild of Hopedale Unit# 2053 2010 Rebuild of St. Brendan s Unit# 578 2010 Rebuild of Ramea Unit# 2045 Newfoundland and Labrador Hydro Page 3
Year Major Work/Upgrade 2010 Rebuild of Spare Unit# 2072 2010 Rebuild of Charlottetown Unit# 2079 2010 Rebuild of Mary s Harbour Unit# 2038 2010 Rebuild of Cartwright Unit# 2045 2010 Rebuild of Nain Unit# 574 2010 Rebuild of Cartwright Unit# 2036 2009 Rebuild of St. Brendan s Unit# 2055 2009 Rebuild of Port Hope Simpson Unit# 2073 2009 Rebuild of Paradise River Unit# 254 2009 Rebuild of Rigolet Unit# 2065 2009 Long block replacement of Postville Unit# 573 2009 Rebuild of Makkovik Unit# 2059 2009 Long block replacement of Makkovik Unit# 2029 2009 Rebuild of Hopedale Unit# 2054 2009 Rebuild of Hopedale Unit# 2074 2009 Rebuild of Nain Unit# 576 2009 Rebuild of Natuashish Unit# 2068 2009 Rebuild of Natuashish Unit# 2070 2009 Rebuild of Natuashish Unit# 2076 2009 Replacement of Cartwright Unit# 567 with Unit# 2086 2008 Rebuild of Grey River Unit# 2067 2008 Rebuild of Ramea Unit# 2045 2008 Long block replacement of Mary s Harbour Unit# 2037 2008 Rebuild of Norman Bay Unit# 561 2008 Installation of Norman Bay Unit# 562 2008 Long block replacement of Port Hope Simpson Unit# 2042 2008 Rebuild of Cartwright Unit# 2052 2008 Rebuild of Black Tickle Unit# 2066 2008 Rebuild of Paradise River Unit# 324 2008 Rebuild of Postville Unit# 577 2008 Long block replacement of Makkovik Unit# 3033 2007 Rebuild of Francois Unit# 570 2007 Rebuild of Little Bay Islands Unit# 2058 Newfoundland and Labrador Hydro Page 4
Year Major Work/Upgrade 2007 Rebuild of St. Brendan s Unit# 2056 2007 Long block replacement of Charlottetown Unit# 2034 2007 Rebuild of Charlottetown Unit# 2061 2007 Rebuild of Black Tickle Unit# 287 2007 Rebuild of Nain Unit# 575 2007 Rebuild of Natuashish Unit# 2069 2006 Rebuild of Norman Bay Unit# 563 2006 Rebuild of Port Hope Simpson Unit# 2043 2006 Rebuild of St. Lewis Unit# 2015 2006 Long block replacement of Cartwright Unit# 2036 2006 Rebuild of Postville Unit# 573 2006 Replacement of Rigolet Unit# 2049 with Davis Inlet Unit# 2027 2006 Long block replacement of Makkovik Unit# 2029 2006 Long block replacement of Hopedale Unit# 2053 2006 Rebuild of Nain Unit# 574 2006 Rebuild of Nain Unit# 576 2006 Long block replacement of Mary s Harbour Unit# 2038 * = planned 3.3 Anticipated Useful life The diesel engines have an estimated service life of 30 years. Actual life depends primarily on the operating hours of the unit. 3.4 Maintenance History The five-year maintenance history for the diesel engines is shown in Table 2 below. Newfoundland and Labrador Hydro Page 5
Table 2: Five-Year Maintenance History Year Preventive Maintenance ($000) Corrective Maintenance ($000) Total Maintenance ($ 000) 2006 23.0 1,281.0 1,304.0 2007 24.2 983.6 1,007.8 2008 27.4 872.4 899.8 2009 39.9 1,371.8 1,411.7 2010 77.5 1,290.0 1,367.5 3.5 Outage Statistics Newfoundland and Labrador Hydro tracks all distribution system outages using industry standard indexes, SAIDI and SAIFI which are explained as follows: SAIDI- indicates the System Average Interruption Duration Index for customers served per year, or the average length of time a customer is without power in the respective distribution system per year. SAIFI - (System Average Interruption Frequency Index) indicates the average of sustained interruptions per customer served per year or the average number of power outages a customer has experienced in the respective distribution system per year. Loss of Supply is defined by the CEA as: Customer interruptions due to problems in the bulk electricity supply system such as underfrequency load shedding, transmission system transients, or system frequency excursions. During a rotating load shedding cycle, the duration is the total outage time until normal operating conditions resume, while the number of customers affected is the average number of customers interrupted per rotating cycle. In this case it applies to the loss of the diesel plant. Newfoundland and Labrador Hydro Page 6
Table 3 below lists the SAIDI Loss of Supply outage statistics for the diesel generating stations for the previous five years. Table 4 below lists the SAIFI Loss of Supply outage statistics for the diesel generating stations for the previous five years. Table 3 2005 to 2009 Outage Statistics (SAIDI Loss of Supply) SAIDI (Loss of Supply) System 2005 2006 2007 2008 2009 TRO Central Francois (FRS) 0.900 0.117 0.550 2.583 0.481 Grey River (GYR) 0.167 0.086 0.083 0.000 0.000 Little Bay Islands (LBI) 1.217 1.633 0.167 3.333 1.084 McCallum (MCC) 1.000 0.083 0.000 0.000 1.500 Ramea (RAM) 0.415 2.158 2.183 1.518 0.167 St. Brendan's (SBN) 0.683 0.083 0.000 0.083 0.000 TRO Northern Charlottetown (CHT) 2.102 3.350 0.682 2.233 3.667 L'Anse au Loup 2.573 0.867 0.000 1.655 0.576 Mary's Harbour (MSH) 1.915 3.883 3.925 1.205 7.284 Norman Bay (NOB) 3.017 1.450 3.553 4.129 1.250 Port Hope Simpson (PHS) 2.516 6.000 6.282 0.783 0.000 St. Lewis (SLE) 1.500 1.634 0.450 0.455 0.566 William's Harbour (WHR) 0.333 1.404 1.000 1.083 0.450 TRO Labrador Black Tickle (BKT) 1.599 2.233 0.483 18.900 2.078 Cartwright (CTW) 1.179 1.233 1.433 6.400 0.417 Hopedale (HPD) 5.005 2.391 8.241 5.100 3.302 Makkovik (MAK) 0.967 3.745 0.500 2.717 2.933 Nain (NAN) 3.657 6.778 0.533 11.265 4.651 Paradise River (PDR) 0.717 0.383 0.267 0.269 0.383 Postville (POV) 1.250 13.068 0.617 4.400 4.500 Rigolet (RIG) 1.861 3.683 0.850 1.967 4.312 Newfoundland and Labrador Hydro Page 7
Table 4 2005 to 2009 Outage Statistics (SAIFI Loss of Supply) SAIFI (Loss of Supply) System 2005 2006 2007 2008 2009 TRO Central Francois (FRS) 4.000 1.000 5.000 2.000 5.961 Grey River (GYR) 1.000 1.029 1.000 0.000 0.000 Little Bay Islands (LBI) 8.000 11.000 1.000 5.993 6.000 McCallum (MCC) 2.000 1.000 0.000 0.000 1.000 Ramea (RAM) 4.362 6.283 2.000 5.266 1.000 St. Brendan's (SBN) 3.000 1.000 0.000 1.000 0.000 TRO Northern Charlottetown (CHT) 9.010 10.000 5.990 5.000 6.000 L'Anse au Loup 5.999 3.001 0.000 0.999 1.394 Mary's Harbour (MSH) 17.008 9.996 15.032 9.762 12.004 Norman Bay (NOB) 12.000 6.000 17.003 17.158 6.000 Port Hope Simpson (PHS) 12.000 8.000 13.987 4.000 0.000 St. Lewis (SLE) 8.000 8.000 5.000 2.015 2.992 William's Harbour (WHR) 1.000 11.026 5.000 13.000 6.000 TRO Labrador Black Tickle (BKT) 7.990 8.000 4.000 17.000 10.981 Cartwright (CTW) 4.988 5.003 7.000 10.000 6.000 Hopedale (HPD) 5.918 2.992 9.009 7.000 11.000 Makkovik (MAK) 6.000 5.978 1.000 7.000 4.000 Nain (NAN) 7.018 10.002 1.000 17.998 10.951 Paradise River (PDR) 8.000 6.000 3.000 5.000 4.000 Postville (POV) 6.000 11.000 2.000 17.000 8.000 Rigolet (RIG) 3.947 10.000 7.000 4.000 8.975 Newfoundland and Labrador Hydro Page 8
3.6 Industry Experience Manufacturers of diesel engines will provide recommended overhaul frequencies which typically are in the 15,000 hour range. Hydro completed a review of its maintenance tactics in 2003 and extended the overhaul period to 20,000 hours. 3.7 Maintenance or Support Arrangements For the most part, routine maintenance is performed by internal resources. Routine maintenance consists of an annual inspection. The inspection checks the fuel, coolant, and exhaust systems as well as the engine structure. Problems identified during the inspection are typically corrected during the inspection. If an engine fails prematurely, the manufacturer is typically consulted to help with a failure analysis. Also to help manage the service of the parts for diesel engine, blanket orders have been set up for Caterpillar and Detroit Diesel engines. Such arrangements are necessary to ensure lead times on parts are acceptable and Hydro does not have to incur the cost of stocking diesel parts in inventory. 3.8 Vendor Recommendations The diesel engine manufacturers generally recommend an overhaul interval of 15,000 hours but as a result of a review of maintenance tactics and failure history it was decided to extend Hydro s overhauls to 20,000 hours. 3.9 Availability of Replacement Parts Hydro history has shown that parts are readily available for Toromont and Detroit Diesel engines, while the Mitsubishi engine parts have larger lead times and can present operational Newfoundland and Labrador Hydro Page 9
problems at times. 3.10 Safety Performance This is a reliability-based project. However, if this project is not executed, there is a higher risk of diesel engine failure and diesel engine failure can result in extended customer outages which can negatively impact public safety. As well diesel engines can fail catastrophically with pieces of the engine becoming projectiles presenting possible flying object hazards for the employees in the vicinity. The risk of this occurring increases if overhauls are not completed. 3.11 Environmental Performance This project is being justified from a reliability perspective but if overhauls are not completed, failures could result in oil and glycol being released into the environment. 3.12 Operating Regime Isolated diesel generation operates continuously since it provides the primary source of electricity to communities isolated from the province s electrical grid. A given unit is not in service continually since the number of units in service varies based on the demand. In automated plants the engine mix is automatically controlled by a control system to maximize fuel efficiency, while in a manual plant this control is completed by the operator. In any of the plants the operator has the flexibility to shut down engines for maintenance provided there is another engine available to take the load for that time. As a result outages to engines can occur without outages to customers. Newfoundland and Labrador Hydro Page 10
4 JUSTIFICATION Hydro s current maintenance philosophy is to complete an engine overhaul on all diesel engines every 20,000 hrs. This philosophy was established as a result of a review of the maintenance tactics and failure history in 2003. Performing overhauls too frequently results in additional expenditure for negligible improvement in reliability. An overhaul interval of 20,000 hours is considered to be the optimum interval for providing least-cost, reliable electrical service. 4.1 Net Present Value A net present value calculation was not performed for this project as the justification is reliability-based and there is no option but to overhaul the engines. 4.2 Levelized Cost of Energy The capital expenditures for this project will not affect the levelized cost of energy for the system. 4.3 Cost Benefit Analysis A cost benefit analysis is not required for this project proposal, as the project is required for reliability reasons and there is no option but to overhaul the engines. 4.4 Legislative or Regulatory Requirements This project does not involve any legislative or regulatory requirements. Newfoundland and Labrador Hydro Page 11
4.5 Historical Information Currently, diesel engine overhauls are being performed at 20,000 hour intervals under operating projects. Between 2006 and 2010, an average of 10.8 engines (54 over 5 years) have been overhauled annually. Up to the present, these overhauls have been done as operating projects. However, in 2012, Nalcor Energy is adopting International Financial Reporting Standards (IFRS). Under the IFRS, major overhauls are capitalized. As a result, beginning in 2012, diesel engine overhauls are required to be performed under capital projects. 4.6 Forecast Customer Growth This project is not required due to forecasted customer growth but required to maintain reliability. 4.7 Energy Efficiency Benefits There are no energy efficiency benefits (or losses) associated with this project. 4.8 Losses during Construction The overhaul of each diesel unit will be performed during a scheduled outage. These outages are designed around the system load requirements and do not require any customer outages. Therefore, there are no production or revenue losses resulting from this project. Newfoundland and Labrador Hydro Page 12
4.9 Status Quo The consequence of not completing this project is an increase in the frequency and duration of customer outages as a result of an increase in diesel unit failures. Unlike with the province s interconnected system (in which the loss of a generating unit can be compensated for with another generating unit elsewhere on the system), an isolated diesel plant has no other generation on which to rely which means there is a higher probability that the loss of a diesel unit will result in a load reduction and/or customer outage. 4.10 Alternatives There are no alternatives to overhauling the engine as it is a requirement to attain the service life of the unit. However for overhauls Hydro is using two approaches, rebuild the engine with internal resources or purchase a rebuilt long block from the manufacturer as is stated earlier in this report. Newfoundland and Labrador Hydro Page 13
5 CONCLUSION This project is necessary in order to provide least-cost, reliable electrical service to the customers served by isolated diesel generation. Overhauling diesel engines is a necessity in operating this type of equipment. 5.1 Budget Estimate Table 5 Budget Estimate Project Cost:($ x1,000) 2012 2013 Beyond Total Material Supply 585.4 585.4 1,756.2 2,927.0 Labour 132.0 132.0 396.0 660.0 Consultant 0.0 0.0 0.0 0.0 Contract Work 16.6 16.6 49.8 83.0 Other Direct Costs 73.4 73.3 219.8 366.3 Interest and Escalation 88.8 109.4 474.7 672.9 Contingency 77.9 77.9 233.7 389.5 TOTAL 974.1 994.6 3,130.2 5,098.7 5.2 Project Schedule Table 6 Annual Project Schedule Activity Milestone Initial Planning and Equipment Ordering Tendering February July Equipment Delivery March August Equipment Installations and Commissioning March October Project In Service March October Project Completion and Close Out December Newfoundland and Labrador Hydro Page 14
Appendix A APPENDIX A Newfoundland and Labrador Hydro A1
Appendix A Overhaul Schedule Unit Projected Year of Overhaul LBI 2058 2012 RAM 2047 2012 CHT 2079 2012 PHS 2042 2012 PHS 2073 2012 SLE 2080 2012 BKT 579 2012 HPD 2054 2012 MAK 2059 2012 NAT 2076 2012 POV 573 2012 FRS 570 2013 GYR 2067 2013 CHT 2034 2013 WHR 2075 2013 HPD 2074 2013 NAN 576 2013 NAN 2085 2013 NAT 2068 2013 PDR 324 2013 POV 2084 2013 MCC 2064 2014 SBN 2055 2014 CHT 2061 2014 MSH 2038 2014 BKT 582 2014 CTW 2052 2014 MAK 2029 2014 NAN 574 2014 NAT 2070 2014 POV 577 2014 Newfoundland and Labrador Hydro A2
Appendix A Overhaul Schedule Unit Projected Year of Overhaul RIG 2081 2014 FRS 566 2015 GYR 2062 2015 NOB 581 2015 Mobile 2044 2015 CTW 2036 2015 CTW 2086 2015 HPD 2054 2015 HPD 2053 2015 HPD 2074 2015 PDR 585 2015 POV 2084 2015 RAM 2045 2016 SBN 2056 2016 MSH 2037 2016 WHR 580 2016 BKT 579 2016 MAK 3033 2016 NAN 576 2016 NAN 2085 2016 NAT 2069 2016 RIG 2065 2016 Newfoundland and Labrador Hydro A3