Paul McElhinney, President & CEO, GE’s Power Services business, GE Power [NYSE:GE]
Today’s energy landscape looks drastically different than in years past, and it is certain to continue to evolve to ensure more reliable and available power to more people. As the energy sector transforms however, there will continue to be challenges. How we, as an industry, meet these challenges—such as improving operations and efficiency while also helping our customers remaining competitive and profitable—will ultimately help shape the future of the global power market.
A trend that is gaining momentum as of late is the shift to plant owners putting their trust in qualified service providers to manage full operations and maintenance (O&M) for their assets and facilities. It’s easy to see this O&M trend developing and evolving, but what is driving it? Why are more and more plant owners enlisting service providers to operate and maintain complete power generation facilities on their behalf? There are three main factors propelling this transition:
1. An owner’s desire to operate their plants, can be hampered by limited experience—especially in today’s evolving energy landscape which is seeing a rapid rise in renewable and distributed energy sources.
"O&M service providers draw on their valuable knowledge, deep domain expertise, and years of experience to help deliver outcomes that directly enhance business profitability "
With renewables becoming a larger part of the energy mix in many countries, power producers are starting to see a shift from capacity or base load operation to peaking operation. However, it's not just the rapid rise of renewable energy sources connected to the grid that creates challenges for managers of traditional power-generation assets. Distributed generation is also growing fast and brings new challenges to the table (such as the need for increased flexibility)as consumers increasingly adopt rooftop solar, on-site energy storage, electric vehicles, and energy management systems. With these evolutions, plant owners may prefer to rely on experts to help operate their plants or to help prepare them for future challenges—by having local professionals infuse owners and staff with valuable skills, share their industry knowledge and provide hands-on training.
2. In a consumption environment where growth is slow, owners can face massive cost pressures that require them to manage their variable and fixed costs in a smarter way.
Today’s homes, devices, and electrical infrastructure are more efficient than ever before. This improved efficiency—coupled with slower growth in consumption—has, in some cases, created a vortex where generation capacity is now outpacing demand. This can lead to a reduction in the amount of time a power plant must run to meet typical demand. Running less, of course, results in less fuel being used, resulting in lower fuel-related costs. O&M, however, is a relatively fixed cost (with limited fluctuations depending on operating hours), and, by default, it becomes a larger portion of the total cost of ownership and operation at these power plants as less fuel is used.
3. In some cases, owners are investors who are starting to take more interest in the increasingly more competitive power production industry, but operating a plant is not their core business.
Investors are looking at the power industry as a revenue-generating opportunity, and to help ensure a positive return on investment, they need to make sure that whatever plant they invest in is operated and maintained in a profitable way. While the opportunity might seem right for an investor to get involved, there are many processes that are simply outside their area of expertise—for example, O&M. Enlisting an O&M provider, some of which offer guaranteed performance-based outcomes, can help deliver investors the enhanced stability and predictability they desire in terms of expected costs.
Relying on industry O&M experts to improve competitiveness
By enlisting a company to provide O&M support, plants owners can simply do what they do best—invest—with the peace of mind that day-to-day operation and any required maintenance at the facility is being handled by an industry expert. O&M service providers draw on their valuable knowledge, deep domain expertise, and years of experience to help deliver outcomes that directly enhance business profitability. In addition, if plant owners are interested in operating their plants on their own, but they don’t have the knowledge or experience to do it in a reliable, competitive way, O&M providers can operate the plant for three to five years while simultaneously providing training for employees—equipping the plant staff with the tools they need to eventually operate the plant themselves.
O&M experts look at power stations on a holistic level to determine the best available solutions and approaches to improve plant availability, efficiency, and reliability. In some cases, the O&M service provider is also able to integrate digital solutions to help enhance plant operations and maintenance capabilities. With direct knowledge of the digital solutions, O&M providers can use the tools to turn raw data into actionable insights to help improve plant performance and maintenance practices.
With advanced digital solutions, O&M experts can achieve notable improvements in startup time, reliability, fuel consumption, emissions, and overall efficiency. They can also apply the solutions to help make the leap from standard interval-based service practices to a more beneficial and desirable predictive, condition-based maintenance approach. This, in turn, can lead to reduced unplanned downtime, which results in better plant availability and fewer unexpected maintenance expenses. At GE, we often integrate digital solutions right into our O&M agreements to help make the most of available plant data and to take the burden of analytics and implementation off of the plant owner.
Because O&M professionals are deeply ingrained in the operations of the power plants that they service, they can help identify and set key performance indicators (KPIs) that are most important to the owner. From there, they can tailor their O&M offerings to help owners improve productivity and profitability across the plant with fact-based actions that align to business KPIs. These same KPIs can be adjusted or modified accordingly to reflect shifts in business objectives that either change or evolve over time—providing the flexibility needed to meet both current and future challenges.
Familiarity in plant operations and maintenance processes also enables O&M experts to look at aspects that could be improved and to develop the right new solutions concurrently to make these practices better. In addition, O&M service providers also can factor in regional and global hurdles such as market conditions and regulations to help develop a strategy that best positions plant operations for success.
Clearly, with O&M services providing the support needed to meet the various challenges facing plant owners, it would not be a surprise to see the trend continue to gain traction in the power generation industry in the years to come.
From providing unprecedented expertise and advanced digital solutions to helping to improve O&M processes and supporting plant owners in their efforts to enhance profitability and meet business KPIs, O&M agreements offer the custom-tailored services plant owners and investors around the globe are looking for. GE, for example, uses its combined 50 years of O&M experience (including its acquisition of Alstom’s power business in 2015) and its expanded portfolio of modernization and digital solutions to help deliver guaranteed outcomes and predictable costs when operating and maintaining power plants.
As more and more power plant owners and operators look to improve O&M processes at their facilities, new technologies—including the latest digital solutions—and on-site support from industry-leading experts will help propel and best position both plants themselves and owners/investors for a successful and profitable future.