Recently the Turbocharging business segment of
ABB Ltd. (
procured an order to upgrade 30 turbochargers in a series of
power plants in Brazil. The plants are currently being operated
by Wärtsilä under operations and maintenance agreement. The
company has been operating in association with Wärtsilä since
last one year to build and manage this service wing. The current
order is the first with two more to follow, which will help
achieve considerable fuel saving for the power plants and thus
has a very short payback period.
Management believes that an upgradation will be more
beneficial than a product exchange. This is because an
upgradation improves engine performance with a more fuel
efficient engine that saves 1% to 3% fuel annually. The new and
modified engine will also reduce the exhaust gas temperature of
the engine by 20
C to 30
C. This will in turn improve the life of the turbochargers by
reducing thermal load and minimizing the maintenance cost.
The new turbochargers are expected to run for about eight
years. In general, given the right conditions and technical
specifications, the cost of the upgrade pays back in a period of
less than two years. But with the current order in Brazil, it is
anticipated that the upgrades will pay back on the fuel savings
alone in less than three years. Savings from reduced maintenance
cost and others are additional benefits.
Based in Zurich, Switzerland, ABB Ltd. is a power and
automation technology company and currently has a Zacks Rank #3
(Hold). Some other players in the same industry, which can be
considered at present are
Chicago Bridge & Iron
Orion Marine Group Inc.
) all having a Zacks Rank #2 (Buy).
ABB LTD-ADR (ABB): Free Stock Analysis Report
CHICAGO BRIDGE (CBI): Free Stock Analysis
HONEYWELL INTL (HON): Free Stock Analysis
ORION MARINE GP (ORN): Free Stock Analysis
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