Now the economics are totally different for used equipment. Used equipment, even slightly used equipment, is discounted severely. This is not that it is not extremely serviceable and valuable, but because the specific equipment may not be available for a particular time frame and the “remanufactured equipment” will very rarely be approved by all those, consultants, bureaucrats, engineers, lawyers and the many lenders. Some organizations prohibit the purchase of used and remanufactured equipment.
In addition much of this equipment has already been “paid for” by someone else and for a myriad of reasons is being dumped on the market. Major mining operations close down when commodity prices fall, military bases are closed for political reasons or merchant power plants go broke when fuel prices move unexpectedly in the wrong direction. When this happens, which is often enough, power plants/units enter the market at huge savings. The first problem is finding knowledgeable purchasers willing to look at these alternatives. In addition these purchasers must be matched with smart, honest and knowledgeable contractors to acquire this equipment, have it rebuilt/remanufactured and then match all the appropriate components and build a total package on the customer’s site. (At times complete plants can be purchased, remanufactured and relocated in their entirety). Both issues must be addressed, but the single most important consideration in this process is that these knowledgeable customers must have their own or alternative financing and be able to move with relative alacrity.
It should be noted that most rebuilt/remanufactured equipment in this area comes with a “zero hour warranty” (one year or 8,000 hours of operation) just like brand new equipment. Project savings, of 35% to 40% plus, are not unusual. Remanufactured equipment/plants sometimes come with large inventories of spare parts, complete plant designs and knowledgeable personnel. In addition the project quality may very likely be equal to or better than newly-built plants. Many times, used stainless components like tanks are used as substitutions for mild steel because they are available. Other components may generally be “oversized” because the larger size(s) were available and maybe at lower cost. All new electrical wiring and control cabling will be used throughout. Many other items like on site housing and or extra-large foundations may be added to overcome unforeseen site or labor problems. (It is often infinitely easier to use common sense and over-build to solve a problem than spend days, weeks or months fighting with design engineers etc. over change orders/cost items). Because the contractor is working directly with the owner, he wants to quickly build a great product and earn his trust. In addition, because of the huge savings achieved in buying the major components, and the reduced consulting, engineering and finance costs; putting the money onto the construction/project is easy and monetarily rewarding for all parties. Projects can be completed and online in about one third the time needed for all “new” facilities. These earlier start-up dates can also garner hundreds of millions of dollars per year in owner revenues.
As with all projects, the construction specifications will be more or less standard and controlled by international construction and electrical codes. Draw schedules, site inspections and payments can and will all be agreed to before a project is initiated.
Regarding reliability issues of “rebuilt/remanufactured” equipment vs “new” equipment, it is important to remember that remanufactured equipment delivered from qualified rebuild shops carry a “zero hour warranty” which is identical to a warranty on a brand new piece of equipment. These rebuild shops are owned and operated by companies like GE, Siemens etc. These warranties normally cover the first year of operation i.e. 12 months or 8000 operational hours, parts and service.
In addition there are many well qualified international companies that will enter into operations and maintenance service contracts to operate the equipment and keep qualified personnel on site at all times. This provides a second level of protection and these O&M contracts are relatively low cost in the great scheme of things.
Insurance can also be purchased for lost revenues, bad fuel, bad water quality, catastrophic failures etc. Like all insurance this is just a cost benefit peace of mind item, but available for both new and remanufactured plants.
Rebuilt plants have a few drawbacks. As mentioned earlier, the basic main hardware (turbines, generators etc. can last 40 to 50 plus years) so a remanufactured plant in theory will have a slightly lower life span say 30 -40 years vs 45-50 years for a new plant. In addition older plants/turbines may be slightly less efficient. As a frame of reference the latest and greatest gas turbines in combined cycle have a burn rate of approximately 6500 BTU per KWH. Older equipment will most likely be slightly less efficient, even after a rebuild and control upgrades; say 6700 to 7000 BTU per KWH. (This is still a very efficient burn rate).