HomeMy WebLinkAbout08.a. (Handout) Solar Turbines, Inc. Presentation9.a.
Solar Turbines, Inc.
Sole- Source, Long -Term
Services Contract
Board of Directors Meeting
Ann K. Sasaki
Deputy General Manager
May 21, 2015
Central Contra Costa Sanitary District
ISSUE
How to Provide Long -Term
Maintenance Services for the
District's Aging Cogen System
for the Next 5 to 7 Years
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BACKGROUND
• The Cogen System was commissioned in 1995
• The Cogen System produces 80% of electrical
and 30% of steam demand
• The Cogen System saves the District over
$1,000,000 per year in energy costs
Cogen Savings Case Study
(Six -Month Outage 2012)
$960,000
$183,000 $1,641,000
r_ Electricity
• Natural Gas
$1,225,000 $727,000
Cogen On Cogen Off
$1,408,000 $2,368,000
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MAINTENANCE HISTORY
• Long -term Agreement with Solar Turbines, Inc., from 1995 to 2011
• Request for Proposal for a new long -term contract in 2011
• Awarded to Wood Group - June 2011
• Cogen System incident- March 2012
• Solar Turbine called in to re- commission Cogen System - October 2012
• Negotiation with Solar Turbines, Inc., for long -term contract
• Short -term contracts with Solar Turbines, Inc., from 2012 to present
• District implemented fuel and control systems upgrades in April 2014
for $1.3 million
Slide 5
CURRENT RISKS
Operational
• Without a long -term service contract, the probability for
unscheduled outages increases
• Impacts of a Cogen System outage
1. District will incur electrical demand charges
■ Additional $40,000 - $100,000 per event
2. Electrical usage - Additional $7,500 per day
Contractual
• Limit of liability is less than favorable
■ Original proposal - $216,720
■ Revised proposal - $750,000
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RECOMMENDED SOLUTION
Enter into a Sole- Source, Long -Term
Services Contract with Solar Turbines, Inc.,
for a Term of 5 Years
Slide 7 p
BENEFITS
• Responsible and reliable servicing of proprietary
equipment
• Full- coverage minimizes unplanned and extended
outages
• Allows time for alignment with Comprehensive
Wastewater Master Plan in 5 to 7 Years
Slide B BLS!
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SERVICES PROVIDED
• At least two engine overhauls based on run hours
• First overhaul to be completed by November 2015
• Overhauls scheduled on average every 3.5 years
• Routine semi - annual and annual maintenance inspections
• Annual Condition Assessment Report
■ Includes borescope report, vibration survey, vibration
trends, and emissions performance data
• Insight System - remote monitoring and diagnostics
• Trouble call -outs
• Package parts, consumables and repairs
Slide 9
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ALTERNATIVE SOLUTIONS
1. 5 -Year Beneficial Use Contract
2. Short -Term contracts with Solar Turbines, Inc.
• Does not include remote monitoring and diagnostics
• Does not include spare parts or consumables
• Does not include Fleet Manager
■ Limited trouble calls
3. Bid contract and seek another vendor
4. Use PG &E power (shutdown Cogen System)
5. Use portable generators { �1
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CONTRACT COMPARISON
Slide 11 a
SUMMARY
• Cogen System produces 80% electrical and 30% steam
demand
• The Cogen System saves the District money and provides
power redundancy (electrical and steam)
• The Cogen System must be maintained
• Solar Turbines, Inc., has the proprietary knowledge to
maintain the Cogen System
• A long -term services contract provides the best value when
considering the cost and risks associated with other
alternatives
Slide 12
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Long -term
Beneficial Use
PG &E
Contract
$216,720
$145,200
$0
(Yearly for 5 Years)
Overhaul
$521,430
$521,430
$0
(Coverage Gap)
Second Overhaul
$0
$500,000
$0
(3.5 Years)
Cost
$1,650,000
$1,784,000
$5,000,000 -
$7,500,000*
Limit of Liability
$750,000
$145,200
Decreased
Reliability
' Estimate based on 2012
Case Study over 5 -year contract term
Slide 11 a
SUMMARY
• Cogen System produces 80% electrical and 30% steam
demand
• The Cogen System saves the District money and provides
power redundancy (electrical and steam)
• The Cogen System must be maintained
• Solar Turbines, Inc., has the proprietary knowledge to
maintain the Cogen System
• A long -term services contract provides the best value when
considering the cost and risks associated with other
alternatives
Slide 12
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QUESTIONS