The growth rate of newly industrialized countries in many regions of the world, including Asia, South America, Eastern Europe and the Middle East, has contributed to the solidity and expansion of the used equipment sector.

But recycling a power plant is a daunting project by any standard. It requires a great deal of knowledge, experience, logistical expertise and engineering excellence to steer the dismantling and displacement of an entire power-generating entity from one location to another.

Turnkey Solutions
Lohrmann International was founded in 1953 by Gunther Lohrmann, the father of the present managing director, Michael Lohrmann, as a distributor of secondhand equipment and used timber-processing plants throughout Europe. It has since shifted its focus to secondhand power plant equipment as a result of the boom in the energy sector in the 1990s.  “With the leap forward in technology during the '90s, modern power stations in industrialized nations become obsolete very quickly,” says Michael Lohrmann.  “Plant operators in Europe abandon perfectly serviceable power plants that do not meet the very high demands of the current European market and replace them with the very latest models.  These outdated installations can be safely and efficiently recycled and installed in growing industrial nations in other parts of the world.”

The company works out of its headquarters near Germany's economic center of Frankfurt, employing a core team of nine highly skilled engineers working with a network of over 200 business associates all over the world in accordance with the requirements of each project. “The engineering is done in Germany, but we don't maintain our own repair and manufacturing facilities—rather we subcontract that work. We try, insofar as is possible, to use local companies,” says Lohrmann.

The company provides complete turnkey solutions to its customers, including implementation of gas turbine and coal-fired power plants as well as purchase and resale of used steam turbine generators, condensing, extraction and backpressure turbines, and complete thermal power plants. Lohrmann's service portfolio is comprehensive and ranges from dismantling and identification of the original plant, packaging and transportation of the equipment to final assembly, and deployment.

A Unique Project in Indonesia
A recent project in Indonesia underscores the level of technical and logistical know-how for which Lohrmann is recognized. It involved the relocation of a coal-fired power plant complete with boiler from Europe to a remote location in Indonesia. “Generally, it is considered too costly, too complicated to relocate boilers. But, this simply is not true,” says Lohrmann. In this case the boiler was constructed of welded sections, so it was feasible to disassemble it in Sweden, where it had been used at a sugar refining factory, and to ship the pieces.

What's more, the turbine for the finished power plant in Indonesia was sourced from a car manufacturer in Germany. “Our engineering team here drew up all the plans to combine the boiler from Sweden with the turbine from Germany. Everything was totally refurbished with state-of-the-art electrical controls and components. The actual repair work to the equipment will be done onsite in Indonesia under the surveillance of our own engineers,” says Lohrmann.

When the final repair and assembly is completed, this small power plant (20 MW) will provide energy and process steam to a wood-processing plant in eastern Indonesia as well as providing the domestic energy needs for the firm's employees. “It is a coal-fired installation, and they have extensive coal resources in that region,” Lohrmann says. “It is, of course, typical in developing countries to use local fuel resources—coal, wood chips, solid waste, etc. We often have to retool equipment depending on the fuel source used.”

How to Pack a Power Plant
And, too, every project reserves its own surprises. For this project, Michael Lohrmann points out that they underestimated the cost of packing. “I know it sounds complicated to have to cut up a boiler and put it back together again, but we didn't have a hitch there. The packing was something else, though. Everything had to be fixed on flat palettes or packed in custom-built boxes. Everything, of course, had to be protected from the elements as well. We put as much as we could in containers, but there were pieces that wouldn't fit, so we had to find purpose-built solutions.”

Full Support is Integral to Most Projects
One important aspect of this project, and others, is that Lohrmann not only sources the equipment, provides the re-conversion plans, and takes care of the logistics, but also provides extensive supervision. When construction begins in Indonesia, Lohrmann will have three or four of its own engineers onsite. “We will provide them with full support for one year. The customer is not a power plant specialist, and there are no utilities in this region, so we literally have to teach them everything from A to Z,” says Lohrmann.

Another challenge in successfully recycling power plants is the handover of technical information about the plant. “Owners of the equipment typically just want to get rid of the equipment while realizing asset value recuperation. Owners simply do not have the knowledge required to actually sell the equipment,” Lohrmann says. “They give us what they can find, but that may just be a few files or they may tell us to hunt down the information somewhere in their offices. We put all the technical information together for the buyer. We identify all components and systematically catalog it so they can put the equipment back together again.” Working closely with OEMs, Lohrmann generates the documentation and the plans—not a small task by any means.

The company has provided comprehensive support for a project in Turkey where a small terminal plant was shipped and reassembled in the region of Izmit—where the infrastructure had been severely damaged by the 1999 earthquake. “But in a country like India, it is typical that we just supply the equipment,” says Lohrmann. “They have the local engineering expertise there as well as good electrical components manufacturing. Of course, that brings the cost down significantly as well.”

Financial considerations are at the heart of the matter
As far as costs go, price is certainly a key factor in the success of the recycled equipment business. “It's the nature of used equipment recycling itself that we do not put the most expensive components with old equipment, because that would smash the economics of the project. Once the value of a complete recycled plant exceeds 45% of the cost of a new plant, it's no longer attractive to the client,” says Lohrmann. Typically the price of a terminal plant after relocation is about 400 Euros per kilowatt installed, or around 400,000 Euros per MW installed.

And ensuring safe financial transactions for both vendors and sellers is another minefield that Lohrmann seems to be navigating well. “Normally we purchase and pay for the equipment we are buying before we even dismantle it. It can be a risky proposition, but we have a lot of experience.”  The company has its own sales staff present in India, Turkey and Cuba as well as in South East Asia and Latin America in order to facilitate often complex business transactions.

Last year, Lohrmann sent three gas turbines from Germany to Iraq. Of course, it couldn't be done directly—the situation was way too volatile to do that. Ultimately, it was a Jordan-based group of German, Indian and Jordanian engineers who headed up the project. The equipment was finally shipped through Syria. “We sent the equipment, not the people,” says Lohrmann. “In fact, we taught the Jordan-based group everything there was to know about the plant. We also put two of our engineers in an ongoing and daily support function to the team in Iraq.” The three turbines will generate about 50 MW and power a cement plant in southern Iraq. Cement production is a high-energy consuming process, and in a region such as southern Iraq, where rebuilding is so essential, cement is something that is vital. “This project required new control systems, new transformers and other components as well as a new and simplified building to house the turbines. We provided the equipment as well as the design of the turbine housing sufficient to meet the client's requirements.”

All is Not Quiet on the Eastern Front
As far as market evolution is concerned, Lohrmann points out that the Eastern European markets are opening up in a big way. “Most of our business is currently is southern countries, so there has been little demand for heat-generating facilities up until now. Most heating plants are simply scrapped in Europe. But there is great potential in Eastern Europe because of the decentralization of power supplies—in other words, cogeneration. This is exactly what we saw happening in Germany 20 years ago. And now, a lot of cogeneration plants in Germany are being shut down because utilities are capable of providing power at a cheaper cost now. We see this as a promising opportunity for us because the very equipment we are looking to sell to Eastern Europe is, in fact, right in our own backyard.”

In addition to their core business of purchase and resale of power plants and equipment, the company is pursuing new opportunities in the “green” sector through buying and selling high-quality, first- or second-generation wind turbines and biomass-based power plants. Lohrmann International also buys and resells medical equipment and complete production facilities that are then introduced to a new profitable cycle of operating life.

A resident of Brussels, Belgium, KATE GOFF covers European issues for Distributed Energy.

DE - March/April 2006