stakeholder management

Case Study4 – Operation of CSP

1. Commissioning (governmental and technical approval, testing) The construction phase of a CSP plant last about for 18 month and follows a detailed project plan with numerous sub-projects. The main ones are civil works, solar field, heat tranfer fluid system, gas-heater, heat exchanger, power block (turbine, generator, transmission), support systems (water cooling, water processing), and control center. All sub-projects are individually tested once every single is completed. About two weeks before commissioning the entire plants runs for 14 days on a test protocol. When the test are satisfactory the plants gets comissioned. Comissioning is completed when the plant is synchronized with the grid or in other words it supplies power for the first time. During the tests technical experts from the authorities are involved to sign off on the test with the intension provide the license for opertations. Although a plants follows a convoy of plants which are all similar, every plant is unique and must be individually assessed for its proper operations. With commissioning legal title of the construction company passes to the buyer of the plant who operates it. This implies a handover from the construction people that operated the plant during construction and test phase to the ones that operate the plant for the rest of its operational life-time. The transfer requires extensive training in all work-flow processes. Special attention need to be given to health and safety matters as the risk of injuries during the early month of opertation is extremely high. As semi-skilled labor is cheap and employees need to be specially trained it is worth having an excess of required employees on the payroll. During the boom times of 2011 to get all the 50 planed CSP plants in Spain into operation and the period of high profits per MWh such an approach of redundant staffing is suitable.

2. Tarif cuts

The credit crisis after the collaps of Lehman Brothers in the US, hit Spain hard in the year 2012. The Spanish government had to restructure the budgets and cut promissed tarifs for power generation significantly. An LCOE of 300€/MWh translated into a return of investment of about 7% for the investors and/or operators. However, the government proposed a tarif below 280€/MWh implying a return of investment close to zero or even negative. Operators need to find a solution to cut cost and/or renegotiate with the government the terms of the tarif cuts. On the latter government, industry specialist and operators/investors looked at the attributes of a CSP plant and how it best fit into the overall Spanish power generation portfolio.

The pre-crisis tarif scheme called for profit maximization by MWh generated. The credit crisis resulted in an economic contraction with abundant energy supply. As such there is a shift towards capacity of generation rather than energy generation. Half of the operating costs are labor costs. At the beginning of operation a plant is staffed with 125 people and industry benchmark is between 50 and 75 people depending on the level of external sub-contractors for maintenance, security, and facility management. The lower profitability of the plant result in less financial stability. Therefore, the banks may have a right to call on their loans or demand credit support putting a higher financial burden on the operator.

3. Work force reduction The constraints due to the credit crisis is Spain forced the operator to reduce costs. The first step was to reduce the workforce by 40% in a region with an unemployment rate of 50%. The CSP plant construction brought wealth to the city of Ecija (province of Seville) and put many households in a difficult position during the economic contraction. The mayor of Ecija started a campaign against the operator (E.on and Abengoa) with demonstrations and sit-ins at the plants gate from November 2013 til May 2014. TV and news coverage put the operator in a poor public relation not considering the people’s circumstances.

1. List the stakeholders during the phase of commissioning and operations? 2. Analyse the stakeholders according the power grid? 3. Add to the stakeholder analysis their interest? 4. List possible alternatives to align the different interest to ensure the projects

objective.