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Back to the future: Targeting the 1.3 billion without power

Fri, 11/16/2012 - 17:36 -- Ruth Williams

Critical Power (CP): Why have you launched PowerXpand now?


3-14aBrian Boutte(BB): The energy industry is changing. Some traditional power utilities are just not well suited to get power to remote locations. The costs of power transmission make it impractical to build grid-connected power plants everywhere, so distributed generation is a great business to be in.

We have some technology that makes sense and we have a great opportunity and rationale for launching our new portfolio.

CP: What is the new portfolio?

BB: In addition to our existing 25 MW TM2500 aeroderivative gas turbine genset, we have introduced a 1 MW genset based on our V250 diesel engine. This can be expanded to 2.5 MW if necessary. 

3-15aWe have also introduced the 1 MW Jenbacher J320 gas engine to the range. Furthermore, we are now offering a two-trailer, 31 MW TM2500 in addition to the four-trailer, 25 MW solution.

CP: Which regions are you targeting for Power Xpand?

BB: We are targeting developing countries on the African continent as a key market. We are targeting Africa for a number of reasons. The electrification rate of several African countries is far below 50%. Of the 1.2 billion people without electricity around the world, about 500 million live in Africa. 

My belief is that because diesel is so widely available, Africa will be a nice market for our 1 MW diesel genset. We are looking closely at pursuing opportunities in Nigeria and Ivory Coast, as well as Indonesia and the Philippines in Asia, where natural gas is not so prevalent.

CP: Diesel theft and doctoring is rife in Nigeria. Will you be aiming for a bigger share of the gas genset market?

BB: You’re right, the delivery of fuel in Nigeria is not without problems. The challenge with diesel is with the fuel supply, whether it’s on a milk truck one day or a fish truck the next you can’t always be certain of the quality. Sometimes you have to conduct some fuel processing with diesel that you would do differently from gas.

But there are some places in terms of geography where it’s just not possible to supply natural gas. We would like to sell both diesel and gas engines to Africa. The diesel engines occupy a great deal of the market but as the availability of gas increases and its cost decreases it makes more sense to use it.

CP: Are you targeting prime power applications?

BB: Not necessarily. It could be a baseload bridge to permanent power, or for generating back-up power to support natural disaster relief, plant shutdowns or equipment maintenance, or for overcoming generation constraints such as hydropower shortages.

We look at places where traditional utilities can’t meet power demand quickly enough. Many countries recognise that in order to meet this need it doesn’t make sense to own their own gensets but lease them. We fill a need that allows countries to catch up with their transmission and distribution systems.

CP: Are you targeting building mini-power plants with diesel gensets in Africa?

BB: We may end up starting with 6 to 8 MW applications. This is mainly because these countries tend to be bureaucratic. But within weeks of installing a smaller site, they may well give us a new order to double or triple it. We are targeting industrial facilities and sites where our customers have not had access to reliable grid-connected power.

CP: Are you trying to emulate Aggreko and APR Energy by being a supplier of power in an emergency? A kind of Ghostbusters for power supplies?

BB: We have been in that space for a while but perhaps with not as much publicity as the other guys you mention. 

The idea is to provide power in a pinch. If a company or a utility needs temporary or permanent power we have a 25 MW or 31 MW package on wheels, or a 1 MW package whether it’s natural gas or diesel. We can deliver power anywhere in the world and have it installed in less than five days.

CP: Is the creation of PowerXpand recognition that you might have made a mistake by selling GE Energy Rentals to Aggreko in 2006?

BB: Not at all. Aggreko bought the part of our business supplying small diesel and non-aeroderivative gas engine gensets, but we continue to maintain the aeroderivative fleet. 

We were supplying things like concerts, festivals and circuses. We got into that business by acquiring smaller companies like Show Power, which was run by John Campion who is now CEO of APR Energy (see Critical Power, Issue 2). 

3-15bThis part of the business we sold didn’t fit with our long?term strategy. It wasn’t a large enough segment for it to make sense for us, as it didn’t give us much opportunity to leverage our technology. A 31 MW TM2500 is not a good fit for the local flower festival.

Most of our business requests are for large 100 MW-plus applications, for which the TM2500 is most suited. As we started to see demand growth for the TM2500, it made more sense to focus on larger size applications.

CP: So what has changed?

BB: Our previous energy rentals business dealt mostly with festivals and other public events. Today, our solutions make sense for many power utilities around the world. It’s about targeting distributed power generation on a global basis.

Our customers tend to be state owned utilities which need power in a hurry. They can’t afford to wait for the construction of a permanent power plant solution. Oftentimes, these temporary solutions become permanent.

CP: What has changed internally since GE launched PowerXpand?

BB: Historically we were just renting trailers, but as we’ve expanded our portfolio to include Jenbacher gas engines and diesel engines, we’ve also changed the nature of the business. We supplied many in the past with our old rentals business, but our 1 MW diesel business is brand new.

In the summer we opened a new office in Jebel Ali near Dubai in the United Arab Emirates and we will be opening another in Singapore by the end of the year. We will no longer be shipping gensets from the USA to the Middle East, so our ability to respond to demand will improve drastically.

CP: Where are the gensets currently packaged?

BB: The gensets are packaged in Houston, Texas and near Budapest in Hungary. We are looking to expand our capacity, my biggest challenge is getting together as many engines as I possibly can. We’ll probably manufacture 35 this year and another 35 next year.

CP: Where is the V250 manufactured?

BB: The V250 is manufactured in Erie, Pennsylvania and has been part of our fleet for a long time in our GE Transportation business. They mostly build locomotive engines, but they also build diesel engines for stationary power applications. 

They’ve been doing exactly what Aggreko has been doing, targeting customers who need a dedicated source of prime power, typically at industrial sites. We have found that this technology will work in a great deal of smaller applications for PowerXpand. It’s an easy fit.

CP: Do you have any plans to develop a new range of diesel engines?

BB: We are developing a new diesel engine right now. In a few years we will have a high-efficiency diesel engine manufactured specifically for the power market.

We are also looking at a number of our aeroderivative engines with which to expand our range. We are actively exploring 5 MW and 10 MW units. 

CP: Have you signed any recent deals for PowerXpand?

BB: We have just signed a deal for Basra in Iraq. We have two current projects in South America, one in Bolivia and one in Venezuela. We are installing six units each in Algeria and Angola, and we have just wrapped up a project in Oman. 

3-16aThere are also projects in Argentina, and the island of St Thomas in the Virgin Islands, as well as a project in the Northern Territory of Canada coming soon.

These projects are primarily to install TM 2500 aeroderivative gas turbine gensets, some of them running on liquid fuel some on natural gas. The Basra project is for 120 MW although due to temperature will probably turn out closer to 115 MW. This represents five TM2500 gensets. Most of our recent deals have been in this power range.