underwriting & loss control
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UNDERWRITING & LOSS CONTROLIN COMBINED CYCLE POWER PLANTS
PRESENTED BY Sudhindra B. KodagaliSenior UnderwriterProperty & Engineering
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Objectives
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● Combined Cycle Power Plants
● Introduction – Trends, Advantages, Working cycles
● Underwriting considerations
● Loss Control
● Insurance covers
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Increased Deployment of Gas Turbine Technology in Power Plants
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● More private operators due to liberalization● Increase in gas production world wide and development
of Gas Turbine technologies● Increasing need to find environmentally friendly
methods of power generation● IT development allowed better control and accounting
record of complicated power flows● Development of new techniques in transmission and
distribution of Electric power by creating national and International networks
● Drop in prices of GTs due to strong competition
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Preference for Gas Turbine Power Plants
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● Low initial costs compared to other types of power plants● Less space requirements● Less time required for installation● Increased unit capacity due to technological
developments● Increased efficiency● Low maintenance costs, though operational costs are
higher● Higher reliability● Low NOx emissions● Increased fuel spectrum
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Section of Gas Turbine
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Types of Gas Turbine Plants - Simple Cycle
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Types of Gas Turbine Plants - Combined Cycle
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Main Manufacturers ofLarge Combustion Turbines
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Europe : Siemens and Alstom
North America: GE and Siemens
Japan : Mitsubishi
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Underwriting Considerations
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● Continuous Product Development: Lead to increased power plant risk exposures. Firing temp and compression ratios are being increased to achieve higher efficiency
● Firing temp levels directly affect operating metal temp. Latest models of ‘F’ and ‘G’ class turbines operate at 300 to 400 degrees firing temp more than previous ‘E’ class turbines,
● Prototype Models: Regular upgrade developments of Gas Turbines made it difficult to distinguish a prototype model from a proven model. A GT to be judged as prototype as long as the first model of the series has not reached 8000 hours of trouble free operation. Higher deductibles to be applied for covering manufacturer’s risk
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Underwriting Considerations
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● Operating Conditions: To check whether GTs are operated under standard conditions like use of special fuels, new elements leading to increased efficiency
● Quality of fuel● CAT exposures● Operating Cycles: Base load and peak load. Peak load
station with frequent starts and stops is subject to extensive thermal fatigue
● Risk management practices: Fire fighting systems to be operational before commencement of testing
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Underwriting Considerations
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● Completion Date Monitoring (ALOP): Periodical monitoring of work progress program and assessment of actual date of commissioning in case of ALOP cover
● Parts of Limited Life: Items like turbine vanes and blades to be subject to depreciation (Mre 333)
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Loss Analysis and Control - Causes
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Losses are classified in to three categories of causes by International Machinery Association:
● Design faults: About 35% of all loss repair costs are in respect of Prototypes of new models or components. Design cover has to be selectively given. LEG 3 to be given for proven models.
● Human Errors: This depends on quality of staff, management and implementation of quality and process regulations. These failures are estimated to produce 50% of losses.
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Loss Analysis and Control - Causes
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● Operational losses: Losses caused by faulty operation, natural disasters, fire, wear and tear. Approx 15% of losses are attributed to this category and this could be improved by good plant design, automatic diagnosis program routines and good fire fighting system installation before commencement of Testing phase.
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Loss Analysis and Control - Prevention
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1. Use of risk based maintenance and inspection programs● Combustion inspection,● Hot gas path inspection,● Major overhaul,
2. Use of proactive maintenance schedules
3. Diagnostic monitoring● Vibration analysis,● Thermography,● Endoscopy
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Conclusion
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● The demand for insurance protection would increase in the coming years
● The level of rating to be set at adequate levels to at least cover the burning costs, CAT loss reserve and admin costs
● Careful approach is required to cover manufacturer’s risk specifically for models not satisfactorily proven. For wider covers we adopt very high deductibles for testing and commissioning risks,
● Higher preventive maintenance standards to be applied.