WHEN ASSETS OUTLIVE THEIR USEFUL LIVES: LESSONS FROM THE POWER GENERATION SECTOR

Presented at: 17th Conference of ASEAN Federation of Engineering Organisations, 18-20 November 1999, Shangri-La Hotel, Singapore

THEME: REGIONAL ECONOMIC CRISIS: THE CHALLENGES FOR ENGINEERS

Authored by: Ir. Bob Chee

ABSTRACT: With an uncertain economy, lower demand and increased competition, the wisdom of spending within one's means is obvious. On the other hand, infrastructure projects are often identified for implementation during such times to spur economic activities. These can become conflicting objectives, and it is more than just an engineering choice as in the case of aging assets, whether to extend the lives of assets or just replace the assets. Power generating plants often perform at the peak of their capacities even after 30 years, an age generally regarded as well past their economic lives. In the past, such a plant was demolished and replaced with a new plant with more modern equipment or was simply removed to make way for real estate. Increasingly, the lives of old plants are just being extended to serve another 20 years or more. The various issues that determine the actual fate of these assets provide interesting lessons for engineers.

This paper looks at the approaches of three power generating companies in dealing with old assets. The three case studies that are studied are: 1. Refurbish a 30-year old power station to extend its useful life by another 30 years; 2. Re-develop a power station site into prime real estate; and 3. Scrap a 30-year old power station and develop it into a completely new plant.

Case Study No. 1

Case Study 1 looks into the revitalisation of a 30-year old coal-fired power station in Australia. Completed in the 1960's, the large thermal power station was due to be de-commissioned by the end of this millennium. However, prompted by the Government's drive for privatisation of state assets, the plant was sold to private investors in 1996 and its life was to be extended for another 30 years and more. The new owner has put in place an asset management plan to ensure that the assets are maintained and developed to meet the corporate objectives and marketing targets. Particularly, it provides for a programme of replacement and overhaul of the plant on the basis of optimising life cycle costs.

Case Study No. 2

This second case study is about an oil-fired thermal power station in Hong Kong, which was dismantled so that the site could be turned into a housing development. As there was still remaining plant life, plant equipment was dismantled, shipped, cleaned, preserved and stored so that it could be reused.

Case Study No. 3

In Malaysia, four oil-fired thermal generating units, still capable of operating at their nameplate rating, have been de-commissioned and are scheduled to be dismantled to make way for modern gas-fired combined cycle plants. The owner of the assets, namely, Tenaga Nasional, expects to sell the old equipment on an "as-is-where-is" basis.

Through an analysis of these case studies, it is hoped that engineers will look beyond traditional solutions to tackle engineering issues.

Note: If you want a copy of the complete Paper, please e-mail author at hk970701@hotmail.com

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