LIMA Diesel Power Plants - Munich Re...Multi-fuel (for instance, natural gas + HFO + LFO) Diesel Power Plants - Alexander Schroeder 17 September 2020 11 10 11. Diesel Power Plants

Diesel Power Plants – Alexander Schroeder17 September 2020

© Munich Re – all rights reserved page 1

17 September 2020Alexander Schroeder

Diesel Power Plants

Agenda

1. Introduction

2. Risk Assessment

3. Risk Inspections

4. Summary and Questions & Answers

17 September 2020 5Diesel Power Plants - Alexander Schroeder

why Diesel?

insurance aspects

get a real feel of your risk

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Introduction 1

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IntroductionHistory

Reliable, proven technology (patented by Rudolf Diesel, 1893)

Broad and long-standing experience, worldwide


MAN Energy Solutions production facilitiesin Augsburg, Germany, formerly called „MAN Diesel“

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IntroductionTechnology

Combustion engine with compression ignition

High torque, limited speed

Two-stroke or four-stroke

Wide range of fuel injection principles

Turbocharger

High efficiency of up to 50% (petrol engine (Otto cycle): up to 40%)

Good emission behaviour; high noise emissions

Scalability (size and number of cylinders)

Continuous technical improvements turngood old Diesel engines into high-tech equipment!


IntroductionApplications

Mobile and stationary applications

Commercial capacity range from ~50 kW (vehicles; emergency gensets) up to 80 MW (vessels)


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IntroductionApplications

Very large rotating parts

Compact construction

Complex casing: water jacket, fuel lines

High-end machining


IntroductionFuel

Cost of fuel represents about 75% of total lifetime operating cost!

Gaseous fuel (natural gas, LPG)

Liquid fuel (“diesel fuel”, Heavy Fuel Oil, Light Fuel Oil)

Bio-fuel (vegetable oils; gas from landfills – hydrogen sulfide!)

Multi-fuel (for instance, natural gas + HFO + LFO)


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IntroductionDiesel Power Plants

Typical engine ratings for Diesel Power Plants: 8 MW … 18 MW (large plants may have engines rated up to 50 MW)

Important manufacturers: Wärtsilä, MAN, Mitsubishi Heavy Industries,Hyundai Heavy Industries, Cummins, MTU, Caterpillar, …

& Chinese& Indian & …



Power generation: base load and back-up capability

Relatively low Capex; Opex (staff, maintenance, fuel) rather high (up to 400 USD/MWh)

Quick start and ramp-up to full load

Load change tolerated

Flexibility in plant capacity since engines / blocks can be run independently

Engines / blocks can be added at a later stage

Addition of HRSG & STG possible17 September 2020 13Diesel Power Plants - Alexander Schroeder

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Sturdy technology, “work horse”, tolerates dust, humidity, heat, cold

Suitable for power generation in less developed countries or in remote areas: poor infrastructure (low power capacity, difficult fuel supply), peak load buffer (grid stability issues),rural communities (island mode), remote industrial plants (cement, mining)


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Risk Assessment 2

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Risk Assessment

Engineering Insurance: Machinery Breakdown & Loss of Profit; Construction & DSU

Property Insurance (PAR with or without MB, with or without BI)

Operational Power (covers for large utilities may contain a larger share of Diesel)

Base load Diesel Power Plants

Peak load / peak shaving Diesel Power Plants, also in connection with renewable energy plants

Emergency/Stand-by Diesel Power, e.g. industrial plants, hospitals, data centers, cold stores

Black-start Diesel Power for power plants and industrial plants


Risk AssessmentConstruction

Easy to build, easy to install

Proven engine technology

Low Capex

Suitable for remote locations

Reliable plant technology


► Contractor experienced with DPP?

Keep to original project schedule!

► OEM in charge of Testing&Comm.?

References for particular engine type?

► What drives the principal?

DSU calculation transparent?

► Plant fire standards?

Logistics, manpower, workshops?

► OEM responsible for plant design?

Manufacturers’ warranties?

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Risk AssessmentConstruction

Serial Loss Clause!

No cover for Phased Hand-over / Initial Operation without a clear understanding of the programme and only with appropriate clauses and premium!

Fuel Quality Clause!

Exclude Pollution & Contamination! (for instance, NMA 1685)


Risk AssessmentOperation

Flexible operating regime possible

Sturdy work horse

Maintenance possibly in-house

Explosion of engine unlikely

Fuel flexibility


► Right skill set of staff?

Operation & Maintenance contract?

► Maintenance philosophy?

Condition Monitoring?

► Long-term Service Agreement?

Spare parts, consumables, facilities?

► Fire detection & suppression?

Safe fuel handling?

► Fuel quality?

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Risk AssessmentOperation

Basis of loss settlement! (ideally, New Replacement Value)

Fuel Quality Clause!

Exclude Pollution & Contamination! (for instance, NMA 1685)

Plant Testing & Commissioning Clause! (for instance, LMA 5197)


Risk AssessmentCauses of loss or damage

Wear & tear including corrosion, leading to major breakdowns

Fire, primarily from leakages (engine, lube oil unit) and on transformers

Overload and incorrect operation, particularly start-up/shutdown

Fuel issues, air inlet issues contamination, particles

Generator

Poor maintenance, for instance:shaft train alignment vibrationlube oil deterioration corrosion, abrasionleakages


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Risk AssessmentCauses of loss or damage

IMIA Working Group Paper on Diesel Engines:

50% operational failure (!!)

30% external factors

20% manufacturing failures

source: IMIA WGP 103

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BI: up to 70% of engine value

PD: up to 30% of engine value

Risk AssessmentSum Insured / PML

Rule of thumb, if no TSI available: value of plant in the range of 450,000 to 600,000 USD per Megawatt

PML FLEXA (fire):100% value of the affected unit

+ 50% of any neighbouring unit

and/or damage to other surrounding property

PML Machinery Breakdown:

100% value of the affected engine


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Risk AssessmentLoss example

Oil leak on engine cylinders fire on (1) engine affecting (2) neighbouring units

Insured value of plant (4x 10MW, manufactured 2007): EUR 24m

Insured value of (1) engine: EUR 2m

Unfortunately, “new for old” basis…

Negotiated repair cost : EUR 6m !!


Damage to lube oil unit and to exhaustsource: Munich Re

Risk AssessmentLoss prone elements

Cylinder liners, pistons, connecting rods, crankshafts = “heart” of the engine push for greater power output & higher efficiency

leads to increased load (temperatures, forces) on these parts

Turbocharger: fatigue, poor air quality breakages

Fuel injection system: high pressure leakages fire

Transformer: failure of insulation fire impact on whole plant


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Risk AssessmentRepairs

Critical spares & consumables on site?

Lead time for spare parts? Cost (off-the-shelf or re-engineered)? Shipping?

Workshop nearby? Heavy weight, high-precision machining (shafts, casings)!

Lifting, transport, logistics?

Skilled contracted labour available?

OEM support possible on site?

… time horizon for successful completion…?


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Risk Inspections 3

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Risk Inspections


5x 9 MW Wärtsilä W20V32source: Munich Re

Risk InspectionsAgenda items for DPP surveys Fuel

Auxiliary services: cooling system (incl. coolant), heat exchanger tubes, air handling

Engine Mechanical: turbocharger, coupling, operating parameters, periodic testing (shaft deflection, fuel injector pressure, crankcase inspections)

Lube oil

Engine Electrical / Generator: periodic testing (block/lube oil heater; insulation resistance, winding resistance, field ground, brush inspections)

Air inlet and exhaust: filtration/conditioning, stack inspection

Switchyard: lighting protection, transformer insulating fluid testing

Control Room: protection relay testing (self-testing & bench testing)

Fire Protection

Operation & Maintenance

Learning from Losses and/or Near Misses17 September 2020Diesel Power Plants - Alexander Schroeder 29

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Risk InspectionsFuel and Lube Oil – examples

Testing, delivery, storage of fuel oil

Regularly test fuel to spec

Drain water daily: fuel tank, tank water separator

Filter receipt fuel oil to moderate particle content (20µm)

Micro-biologic growth testing

Testing, delivery, storage of lube oil

Store containers away from weather

Pre-filter lube oil (5µm)

Regularly (400…500 hrs of ops) test lube oil to spec: viscosity, total base number, water content, ICP-AES spectroscopy,Fourier transformer infrared (FTIR) spectroscopy

Viscosity as given by engine manufacturer

Preferred sample point: from lube oil pump, secondary is sump/reservoir17 September 2020Diesel Power Plants - Alexander Schroeder 30

source: Munich Re

Risk InspectionsFire Protection – examples

Automated or manual systems for fire fighting and detection(NFPA 37: Installation & Use of Stationary Combustion Engines)

Challenge: large amounts of combustible fuel right next to electric generator

Control systems, shutdown procedures, alarm procedures

Fire brigade nearby, or trained site personnel? Fire drills?

Availability of sufficient fire water

… and many more questions!


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Risk InspectionsOperation & Maintenance

Operation & Maintenance contract with OEM in place?

Long-term Service Agreement (LTSA) with OEM in place?

Spare part inventory, shared pool of spares?

Significance of maintenance in plant operation: cost vs benefit?

Staffing: inhouse and skilled contractors?

Maintenance regime: predictive, preventive, corrective maintenance?

(Online) Condition Monitoring of temperature (bearings, lube oil, generator, …), pressure (fuel, air, filters), vibration (bearings, shafts, …), electrical readings(batteries), transformer (DGA, thermography, …), etc.– inhouse, or 3rd party vendor, or remotely by OEM?


Risk Inspections“Maintaining diesel engines for reliable operation” by HSB


The Hartford Steam BoilerInspection & Insurance Co. (HSB)

founded in 1866,since 2009 a Munich Re company

Loss Prevention and Preventive Maintenance documentson HSB homepage

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https://www.munichre.com/hsb/en/products/commercial-lines-insurers/equipment-breakdown/commercial-equipment-breakdown/loss-prevention-and-preventive-maintenance.html



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Summary 4

Summary

Well-known and reliable technology, but under constant development

Challenges in operation and maintenance often underestimated

Losses mostly out of incorrect operation, and fire

Losses are comparatively costly

Make the right choices, assess your risk carefully (underwriting & inspections)

Further reading: IMIA Working Group Paper WGP 103 – Diesel Engines HSB – Maintaining diesel engines for reliable operation


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LIMA Diesel Power Plants - Munich Re...Multi-fuel (for instance, natural gas + HFO + LFO) Diesel Power Plants - Alexander Schroeder 17 September 2020 11 10 11. Diesel Power Plants