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New Study Confirms: Utilization
of Digital Automation Architecture Can Slash Nearly $20 Million from
New Coal Plant Construction Costs

Study shows that digital bus technologies can significantly
reduce costs to build an $840 million greenfield 600-megawatt
pulverized coal-fired supercritical power plant

 
 

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The Economic Impact of Digital Bus
Technology on New Plant Construction, a study conducted by JDI
Contracts Inc., found that the digital bus approach to new
plant construction provided opportunities for reduced costs in
the areas of system selection, engineering, construction,
startup and overheads.


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PITTSBURGH, PA (December 9, 2003) — Integrating digital bus
technology into the design of new coal-fired power plants can result
in total project cost reduction of as much as $20 million for a
600-megawatt coal-fired plant according to a new plant construction
study released today at POWER-GEN International 2003.

Emerson, who commissioned the independent study, explained the
purpose and chosen study methodology. “PlantWeb® , Emerson’s digital
plant architecture, has been installed in other industries around
the world and has proven to save 30 percent or more in installed
automation costs,” said Ann Pauley, president of the Power &
Water Solutions industry center of Emerson Process Management. “We
were confident that the digital approach would deliver superior
automation and major cost reductions for construction of coal-fired
power plants. We determined that contracting a rigorous, quantified
third-party study based on engineering and construction practices
was a viable, unbiased method of demonstrating the
possibilities.”

“The Economic Impact of Digital Bus Technology on New Plant
Construction,” conducted by JDI Contracts Inc., identified and
compared five categories of costs: engineering, construction,
startup, system selection and overheads. These costs were applied to
two different approaches – traditional and digital bus-based – to
instrumentation & control (I&C) system implementation for an
$840 million greenfield 600-megawatt pulverized coal-fired
supercritical power plant.

According to the study, utilization of digital I/O bus technology
can slash up to $20 million – or 2.35 percent – off the entire
project budget. “This study details a methodology that gives
stakeholders in the utility industry the best of both worlds: the
ability to save millions of dollars in construction costs while also
delivering a highly automated plant featuring state-of-the-art
I&C systems,” said Roger Hoyum, author of the study.

The traditional approach used an Engineer-Procure-Construct (EPC)
model and selected an I&C system through an evaluated bid
process. The installation utilized dedicated field cables to
hardwire non-intelligent field devices to I/O cards. The digital bus
approach, which used an alternative selection process – PEpC
(Procure strategic suppliers, Engineer, procure balance of plant and
Construct) – featured an integrated system of high-speed
communications networks, intelligent field devices and bus I/O
technologies. The digital bus approach also used traditional I/O for
certain high-speed and safety-related loops.

Defining the Study
The plant and remote
buildings were physically defined by plan, elevation and several
general arrangement (GA) drawings. Researchers estimated the
engineering time for typical design tasks for both approaches. The
plant was logically defined by an existing plant specification with
roughly 5,200 hard and 4,250 soft I/O partitioned into typical power
plant system designations. Appropriate systems were placed on GA
drawings to complete the physical plant definition.

Next, researchers placed control system cabinets and Motor
Control Centers (MCC) on GA drawings. Design criteria were developed
for both approaches, including construction labor costs, tray
conduit and cable lengths, and material costs. Individual design
parameters were assigned to all I/O points in the study to complete
the construction estimate. Device upgrade costs from smart
transmitters, digital I/O and intelligent motor interfaces were
estimated for the digital installation. Plant checkout and startup
tasks were defined for each I/O type, as well.

A plant
construction schedule and budget was created to estimate a total
spending curve. From this, researchers developed a construction
financing methodology to estimate interest during construction
(IDC), which is the cost to borrow money to build the facility.
Inflationary escalation was estimated based on typical utility
accounting methods.

Fixed overhead costs were assigned to all construction and
startup line items, and included administrative and general support,
construction management, contingency, contractor indirect charges,
freight, project management, spares and sales tax. Variable
overheads included inflation escalation and IDC at a rate of 3
percent and 6 percent, respectively, both compounded calculations.

Digital Bus Technology Adds Value, Cuts
Costs
Researchers determined that the digital bus
approach to new plant construction provided opportunities for
reduced costs in all areas studied. Items considered for
engineering, construction, startup, system selection and overhead
costs for a traditional I&C system totaled approximately $50.1
million, compared with $30.4 million for the digital I/O bus
approach, resulting in a savings of more than $19 million (39.4
percent), or $2,000 per I/O point. Breakouts of these savings appear
below.

Engineering
Early adoption of
digital bus technology simplified the engineering process, resulting
in savings of approximately $3.5 million. For example, the study
indicated that engineering time is reduced with the digital I/O bus
approach due to use of standard templates and objects, the need for
fewer drawing review cycles and less system complexity. Less
complexity, in turn, allows for higher I/O density on drawings,
which then reduces the number of drawings needed.

Construction
The cost of
construction takes into account both the material cost of the
I&C equipment and the cost of the labor required to perform the
installation. The study demonstrated that utilization of digital bus
technology resulted in $3.6 million in savings, primarily a result
of reduced labor and material costs needed to install tray, cable,
conduit, terminations and I/O cards.

Startup
Because of the reduced
complexity of the digital bus installation, the time required for
checkout and startup can be significantly reduced, resulting in
savings of nearly $426,000. “If the checkout process can be
shortened it will save time and money in staffing,” explained
Hoyum.

“But, even more importantly, reducing the time spent on the
critical path to unit synchronization leads to much more significant
savings in IDC,” he continued.

System Selection
Early
standardization on digital I/O bus technology streamlined the
traditional specification and bid process. It also created other
efficiencies, such as reducing the amount of general engineering
support needed for overall plant construction. In total, savings of
approximately $300,000 were achieved.

Overheads
Finally, the study
demonstrated how digital bus technology can have a huge impact on
fixed and variable overhead costs, resulting in savings of roughly
$11.9 million. This is primarily reflected in reduced IDC costs made
possible by significantly reducing checkout and firing time. In this
study, the use of digital I/O bus technology could cut two months or
more off of a six-month checkout and up to one month from a
three-month startup period. “IDC begins at the start of construction
and continues to be charged against construction until commercial
operation begins,” said Hoyum. “So, it’s easy to see how saving
three months of IDC can play a huge role in reducing overhead
costs.”

Implications for the Industry
Findings of the
study come at a time of growth for this industrial sector, with 93
new coal-fired plants representing 61 gigawatts of capacity
currently proposed, according to the Department of Energy’s National
Energy Technology Lab. With the first wave of capacity additions
expected from 2006 to 2008, the study has great implications for
stakeholders involved in the project development phase.

“By making it possible to save millions of dollars while
delivering a state-of-the-art plant, the digital bus-based approach
outlined in this study is setting a new standard for plant
construction,” said Hoyum. “And with so much at stake in projects
such as these, it is an approach utility stakeholders can’t afford
to ignore.”

About JDI Contracts Inc.
JDI Contracts Inc.
(https://jdicontracts.com/)
is a privately owned Minnesota-based consulting firm serving
industrial and commercial customers. Services include project
development and management, multi-disciplined engineering support,
and construction management. JDI Contracts Inc. specializes in
change management, allowing customers to concentrate on core
business operations.

About Emerson
Process Management

Emerson Process Management (http://www.emersonprocess.com/),
an Emerson business, is a leader in helping businesses automate
their production, processing and distribution in the power, water
and wastewater treatment, chemical, oil and gas, refining, pulp and
paper, food and beverage, pharmaceutical, and other industries.

Emerson’s Power & Water Solutions division (http://www.emersonprocess-powerwater.com/),
formerly Westinghouse Process Control, is a global supplier of
advanced distributed process control and information systems. The
Pittsburgh-based company is a recognized leader in developing
plant-wide process control solutions for the power generation, water
treatment and wastewater treatment industries. Power & Water
Solutions plays a key role in the Emerson mission of combining
superior products and technology with industry-specific engineering,
consulting, project management and maintenance services. Emerson
brands include: PlantWeb® ; Ovation® ; SmartProcess® ; Fisher® ;
MicroMotion® ; Rosemount®; DeltaV™; and AMS™ Suite.

About
Emerson
St. Louis-based Emerson (http://www.gotoemerson.com/)
is a global leader in bringing technology and engineering together
to provide innovative solutions to customers in process control;
electronics and telecommunications; industrial automation; heating,
ventilating and air conditioning; and appliance and tools. Sales in
fiscal 2003 were $14 billion.

# # #

Ovation, SureService, SmartProcess, PlantWeb, Fisher, Micro
Motion, Rosemount, AMS™ Suite and DeltaV are marks of Emerson
Process Management. Other marks are the property of their respective
owners.

 
 


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Last Updated 12/8/03


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