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American Bar Association Forum on the Construction Industry. POWER GENERATION. Presented By: David Crouse Sithe Global Daniel M. Drewry Drewry Simmons Vornehm , LLP. Statistics. U.S GENERATED 4,143 billion kilowatt hours of electricity in 2011 (1.5kW/person)

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American Bar Association

Forum on the Construction Industry


Presented By:

David Crouse

Sithe Global

Daniel M. Drewry

Drewry Simmons Vornehm, LLP


  • U.S GENERATED 4,143 billion kilowatt hours of electricity in 2011 (1.5kW/person)

  • Sources Generating Electricity

    • Coal41.6%

    • Natural Gas25.5%

    • Nuclear19.1%

    • Hydro 7.8%

    • Renewable/Other (Solar/Wind )6.0%







Coal declineEnviro

Nuclear declineEnviro/Regulatory

Gas CC growthPrice/Efficiency

Hydro declineEnviro/Cost

Wind growthRegulatory/subsidy

PV Solar growthRegulatory/Price










SOURCE: GTM Research and SEIAM Research and SEIA


Developing, designing, purchasing, constructing, and starting up a large power generation facility is a complex, risky business that involves the management of thousands of interface points and requires extensive planning and coordination.

Development Considerations

  • Pro Forma comparing cost to revenue for the facility life cycle

    • Life cycle of a plant is about 40 years

    • Revenue Stream from generation will last 40 years (projected demand)

    • Current cost is as much $ 1.7 million per megawatt

What to Build?

  • Considerations

    • Site Location & Space Considerations

    • Fuel Source and projected cost/availability

    • Water Source and projected cost/availability

    • Schedule & Cost

    • Environmental &Regulatory Concerns

    • Public/Social Considerations

Levelized MWh Cost by Type

Energy Information Administration, Annual Energy Outlook 2012. June 2012, DOE/EIA-0383(2012).


  • Regulatory Approval and Permits

  • Design/Purchase of Generating Equipment

  • Design of Fuel Delivery System

  • Electrical Transmission Considerations

  • Design of the Facility

  • Construction

  • Startup, Commissioning & Testing

  • Operation & Maintenance

Regulatory Approval & Permits

  • Vary by State & locality

  • EPA & Regulatory Considerations

    • Air Pollution (Sox, Nox, Particulates, Carbon)

    • Grey water treatment

    • Ground Water

    • Wet lands

    • Other (Noise, aesthetics, social benefits, etc.)_

Design and Pre Purchase of Generating Equipment

  • Major Equipment is Designed & Manufactured by OEM Vendors (Boiler, Steam Turbine, Combustion Turbine, AQCS)

  • Equipment can take years to Design and Manufacture long lead deliverables

  • Equipment is often assigned to EPC Contractor

  • Performance guarantees, delivery lead times, constructability, warranties and long term maintenance agreements are critical purchase considerations

Power Transmission

  • Age (technology of transmission system)

  • Capacity / Constraints of Transmission System

  • If New Transmission is required. How long to Build (Right of Ways)?

  • Other (Interconnect studies, VAR support)

Facility Design

  • Power generating facilities are huge complex projects that demand extensive experience and coordination from the designer, builder and OEM vendors.

  • Previous era plants were constructed as “Design-Build” where all aspects of the design and procurement were completed before construction began.

  • Today contracts are often awarded on an EPC (Engineer, Procure, Construct) basis with a “fast track” schedule where construction often begins before all systems are designed. This reduces cost (IDC) but can add risk.

  • A Reference Plant, a 1,000 MW (2x500) generating plant was estimated to require 898,200 man hours for design.


  • Schedule (CPM)

    • EPC Contractor develops Baseline Schedule

    • EPC Contractor provides Periodic/regular schedule updates identifying problems and projecting final completion

  • Budget (LSTK, Cost Plus, Gmax)

    • EPC Contractor develops Baseline Budget

    • EPC Contractor provides Periodic/Regular Budget revisions identifying contract changes and projecting final project cost.

Construction Risks

  • Differing Site/Design Conditions

  • Labor dispute/Productivity

  • Design/Manufacturing Errors & Omissions

  • Quality Assurance/Quality Control

  • Regulatory Approvals

  • Safety/Injuries

  • Shipping/Storage Damage/Loss

  • Commissioning errors

  • Performance Shortfalls

Construction2x500 Reference Plant

  • Mobilization, General Conditions, Demobilization

  • Project Duration Approximately 4 years

Site Work

Site Work2x500 Reference Plant

  • Site Work includes:

    • Clear and Grub

    • Site and Building Excavation

    • Sewer, Water and Storm Sewer

    • Streets, Sidewalks and Landscape

    • Stormwater Retention

  • Cost can vary by location

Civil Work

Civil Work

  • Civil Work Includes

    • Building & Equipment Foundations

    • Building Structural Concrete

  • 1,000 MW reference plant requires over 130,000 cy.

  • Trades involved : ironworkers, carpenters, cement masons, laborers, operators, electricians.

Structural Steel

Structural Steel2x500 Reference Plant

  • Structural Steel Work Includes

    • All Building Structural Systems

  • Most Work is performed By Iron Workers

  • Major Equipment (cranes etc.) is required

  • Typical 100 MW plant requires about 25,000 tons


  • Then:Design Build, Brick & Mortar, Overbuilt, Cheap Labor, Long Schedules

  • Now:Fast Track, Prefab Steel, Structurally optimized, Critical Path Schedule

Architectural Work2x500 Reference Plant

  • Architectural work includes all interior and exterior architectural elements.

  • Work is performed by carpenters, drywallers, painters, floor installers, plumbers, HVAC installers and electricians

Generating Equipment

  • The most expensive and critical aspect of the plant

    • Long lead

    • Exotic precision design, delicate

    • Basis of plant performance production

Major Equipment

  • Major Generating Equipment

    • May be Pre-purchased by Owner

    • Designed & Manufactured by Vendor (OEM)

    • & Assigned to EPC Contractor

  • Work is performed by pipefitters, steamfitters, millwrights, electricians.

Piping Work2x500 Reference Plant

  • Piping Work Includes

    • Water, Steam, Fuel and Exhaust Piping

  • Work is performed by Pipefitters, Steamfitters and Plumbers

  • Advanced metallurgy requires specialty welding skills and procedures (P91)

  • Typical plant requires about 771,365 linear feet of pipe.

Electrical and Cabling2x500 Reference Plant

  • Over 6 million linear feet or over

    • 1000 miles of cable and wire.

      1,110 miles of cable and wire

      may be used.

      This much wire would stretch from

      Denver to Chicago.

Electrical Work2x500 Reference Plant

  • Electrical and Cabling work includes

    • Internal Plant wiring

    • Internal Power Distribution Cabling & Supports

    • Exterior Transmission interface

    • Control Wiring

  • Work is performed by Electricians and Linemen

  • Typical plant requires over 6 million lineal feet of cable and wire.

Instruments and Controls2x500 Reference Plant

  • Work includes all control system installation for mechanical and electrical systems.

  • Distributed Control Systems (DCS) is the brain and nervious system of the power plant.

  • Work is performed by specialized control technicians, electricians, HVAC and plumbers.

Power Plant Totals

Coal, Nuclear, Gas

  • U.S. Coal plants are aging and though fuel source is plentiful, environmental concerns will hinder future growth of coal plants in the U.S. “Clean coal” technologies are complex, expensive and inefficient.

  • U.S. Nuclear plants are aging and regulatory and complexity will hinder future growth of Nuclear plants in the U.S.

  • Natural gas combined cycle plants are very efficient, flexible and cost effective to build. With the advent of advanced gas recovery techniques (Fracking) the U.S. is poised to have a new resurgence of combined cycle plant construction in the U.S.

Hydro, Wind, Solar

  • Hydro capacity is not likely to increase in U.S. Large dams will not be built in the U.S. in the near future due to environmental, regulatory and cost constraints.

  • Wind technology is well developed but over all costs are still higher than fossil plants and this source is largely subsidized.

  • Solar technology is still developing and is largely subsidized but PV panel costs are falling fast and both utility and distributed (rooftop) scale implementations are promising

  • Storage/availability remains a significant issue for windand to lesser degree solar

Legal Issues Presented by Power Construction Projects

Owner-Furnished Equipment

  • Power plants are primarily equipment plus connections and controls.

  • Equipment costs are the largest single component of construction costs.

  • Owners often prefer to purchase the major equipment directly.

  • Owner-Furnished equipment presents unique problems.

Owner-Furnished Equipment

  • Worst-case scenario for contractor:

    • Owner furnishes equipment.

    • Contractor responsible for delays in delivery.

    • Contractor responsible for inspection of equipment upon arrival.

    • Contractor responsible for storage of equipment.

    • Contractor responsible for defects in equipment not discovered in initial inspection.

Owner-Furnished Equipment

  • More reasonable approach:

    • Owner furnishes equipment.

    • Delays are compensable.

    • Owner and contractor responsible for inspection upon arrival for physical damage.

    • Owner responsible for storage until project is ready to accept equipment.

    • Owner responsible for latent defects in equipment.

Owner-Furnished Equipment

  • Warranties should always be the responsibility of the party furnishing the equipment.

    • May be complications due to equipment connections.

    • Best solution: contractor warrants connections, owner warrants equipment

  • Ditto for manuals, training, spare parts.

Any Questions?

Thank You

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