Electricity Cogeneration

Electricity Cogeneration - Co-Generation at a Major...

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Co-Generation at a Major Automotive Steel Supplier On February 1, 1999, disaster struck on the site of Blue Steel Company 1 . An explosion rocked the ancient Blue Complex Powerhouse, which had provided on-site electrical generation for both the steel company and its neighbor and customer, a large auto assembly plant. . Six automotiveemployees were killed and many more injured in the blast, the cause of which is undetermined at this writing. Blue shared ownership of the Powerhouse with the auto maker, which had built it in the 1920s and continued to manage and maintain it. Though the Powerhouse was not cost effective, it was the primary source of power for Blue and it provided a profitable use for the blast furnace gas by-product from Blue's steel melting process. Blue was able to provide blast furnace gas to the Powerhouse as an input for electricity generation and charge the auto maker for a portion of the gas. With their power source suddenly depleted, Blue and the auto maker had to quickly arrange a hook-up to the transmission grid of the area regulated utilityin order to resume operations. The Powerplant disaster, and the string of lawsuits and bad press that resulted from it, culminated a tough 1998 for Blue, a period that featured: 1) a 54-day General Motors strike that greatly affected orders, 2) increased steel production and competition from "mini-mills" and 3) a disastrous Asian economy that caused foreign steel to be dumped on the US market at prices lower than 1 Fictitious company name.
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cost. These factors coalesced to cause spot market steel prices to plummet. "In all my years in the steel business," said Blue's Chairman and CEO, "I've never seen a strong market go soft so fast". Fortuitously, Blue Steel executives had been developing an alternative plan for generating electricity on site prior to the Powerhouse blast. The new plan, involving a joint venture with a large investor-owned utility (IOU) and Blue's powerful automotive company neighbor and customer, is designed to save Blue substantial energy costs over the next 15 years. Blue Steel, which has not recovered after seeing its 1996 net income fall by 75% from the previous year, covets those savings Background Blue Steel began as part of a vertically integrated automotive empire in 1919, with a battery of Coke ovens and two blast furnaces. Through the 1930s, Blue added rolling and finishing mills to upgrade its steel products. An oxygen furnace was added in the 60s, and in 1974 Blue added a hot strip mill, the last full size mill of its kind to be built in the US. Through the 80s, Blue invested $760 million in capital improvements. In 1986, it formed a joint venture that ranks as the world's largest electrogalvanizing facility and makes products such as outer body parts for automobiles. Blue was purchased in 1989 by a consortium led by the current CEO.
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Electricity Cogeneration - Co-Generation at a Major...

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