12 July, 2018Background
We were asked by an independent adjusting firm and Insurers to assess the economic damages claimed in relation to a loss at a combined cycle gas turbine (CCGT) power station in Turkey, as a result of a turbine trip caused by the turbine exceeding the specified value of compressor inlet temperature. This resulted in a loss of generation and associated revenue.
Situation
The turbine is one of the most efficient CCGT power generating units and is sold into the Turkish energy market on a merchant basis. The Turkish market operates on a pool basis, where generators bid in capacity and price on a day ahead basis and the market operator award successful bids on the basis of the most economic dispatch. We were required to analyse the loss of revenue suffered by the Insured, which involved an in-depth analysis of the unit and the Turkish electricity market.
MDD’s Involvement
Our analysis identified that the unit efficiency impacted external ambient temperatures and due to the interruption period being during the summer this meant that hotter temperatures resulted in a lower generation production which needed to be accounted for. This had to be examined with the market strategy of the turbine and actual market prices to project the revenue that would have been earned had it not been for the loss. Due to the turbine being one of the most efficient in Turkey, we identified that due to the outage, the actual market prices were inflated thus overstating the revenue that would have been earned.
Results
Our analysis included a correction for the higher actual prices for the affected turbine and as the Insured had a portfolio policy in place we made an adjustment to the Insured’s portfolio of power stations that benefited from the higher prices.
The statements or comments contained within this article are based on the author’s own knowledge and experience and do not necessarily represent those of the firm, other partners, our clients, or other business partners.
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01 August, 2015
