Tuesday, October 25, 2016

Some Insights on Lifecycle Costs Related to Power Generation Systems

One cannot overstate the importance of electricity in people’s lives today. We all rely on electricity for a wide range of reasons, and we expect nothing but an uninterrupted supply of electricity that meets our power requirements. Thus, power utility providers strive to produce electricity not only consistently, but also efficiently in order to provide the most cost-effective solutions to their customers.

Even as power plants, temporary or permanent, differ according to several factors, they all need to be designed, operated and maintained properly, because even a minute irregularity in their operation will result in a dramatic change in their overall output. Poor power output, then, leads to lower efficiency, which in turn, brings higher lifecycle costs.

A close look at lifecycle costs

Any costs related to the operation and maintenance of the power plant during its lifetime are included in the lifecycle costs. Part of this are expenses related to fuel, scheduled and unscheduled maintenance, labor, and lubricant oil, among others. It is advisable to have a thorough upfront planning for the aforementioned costs in order to effectively mitigate the risk of the occurrence of any unplanned costs.

Several factors contribute to the lifecycle costs of a power generation system. Costs, like operation- and maintenance-related expenses, can be anticipated and, thus, must be taken into consideration at the nascent stages of the project. On the other hand, unanticipated costs are harder to predict, so proper planning is required to minimize their impact. Having a proper preventive maintenance program, conducting regular emergency training and setting solid contingency plans are vital to preparing for both anticipated and unanticipated costs of power generation systems.

Fuel Costs

Experts agree that even as fuel constitutes the highest lifecycle cost, it is the easiest to foresee and calculate. Fuel costs are related to the specific fuel oil consumption (SFOC) at different loads, the operating profile of the plant and the fuel price. Other factors that affect fuel costs include efficiency degradation and the wearing of engine components.

Maintenance Costs

Another important lifecycle cost is maintenance. It is helpful to note that some engine and auxiliary equipment parts, like fuel injection nozzles, piston rings, and bearings, are designed to be wear components. Thus, they need to be replaced based on the standard component life or, in some cases, if wear limits have already been exceeded. Therefore, close monitoring of such components is vital, because when a component’s useful life has been reached, the risk of system failure notably increases.

Equipment operators and maintenance specialists have to be aware of notorious contributors to premature component wear, which include dirty lubricant oil or fuel of inferior quality. In this light, it is important to have a proper predictive maintenance program to early detect problems.


Labor is another lifecycle cost to be considered. Labor costs vary according to local labor rates and regulations, operation profile, plant availability requirements and required skill level. Whoever is in-charge of plant staffing should take these factors in consideration in preparing a manpower strategy. Experts suggest that the planning team should keep abreast of current local standards and practices to correctly forecast labor costs.

While some costs are inevitable over the course of a power generation system’s lifecycle, an efficient predictive and preventive maintenance program is key to reducing unnecessary costs. But lower costs is not the only benefit of properly planned and implemented maintenance programs: They can also reduce the risk of a major system failure while increasing system efficiency. As the experts say, the goal of a power plant operator is simple: Operate effectively for as long as possible while reducing costs and maximizing profit over the duration of the power generation system’s lifecycle.


Steffens, David. “Lifecycle Cost Considerations when Choosing a Power Generation System”. Caterpillar Power Generation Systems. February 2013.

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