Polar Works-Inlet Cooling Technology Overview-Economics and Financing-Economics

Economics and Financing

Economics

Most inlet cooling projects are conceived as back-fits to existing plants for three reasons:

1. Most gas turbine OEMs are not in the business of providing inlet cooling systems, so they have no incentive to promote the technology.

2. Most developers and bankers don't have experience with the technology. Being rather conservative to new technology risk, they tend to put off the decision for a later date, after startup, taking a wait-and-see attitude.

3. Most older Power Purchase Agreements did not recognize a financial incentive to provide additional power during periods of tight summer reserve margins.

So once a plant is up and running, most operators quickly become disappointed with their gas turbine's summer output. Only then do they start looking seriously at inlet cooling technology. Unfortunately, it is sometimes too late to add cooling for several technical reasons:

Not enough room for refrigeration equipment
No space left for cooling coils in the inlet filter house
Transformer cooling would be undersized
Cooling tower and condenser undersized (for combined cycle plants)

However, there is more often a financial reason for not adding inlet cooling:

Uncertainty in predicting future performance
Too long a payback period
Restrictive covenants in original finance agreements
Power Purchase Agreement (PPA) doesn't allow major upgrades

While Polar Works can't fix all of the above problems, you'd be surprise just how many we can effectively handle.

In general, we see that a properly designed inlet cooling system can have as much positive financial impact as building a new peaking station just for the summer load. The manageability of the augmented power capabilities will be improved as compared to a new peaker. The inlet cooling system can be built and financed with much less regulatory and schedule risk than adding new capacity. Further, the cost of adding inlet cooling to an existing site will be much less than adding a new plant that can make up for that lost summer output. Our outlook is that if adding inlet cooling is much less than the cost of building a new plant, then the cooling project should be undertaken. Unfortunately, so many projects never get past the feasibility study stage, because of some constraints that occur at the project finance level. Here's the explanation...