Engr. Chandraknt Shitole

Economics of Power Generation

MET401 Power Plant Engineering

Ref: Power Plant Engineering 4th edition, P.K. Nag, TATA McGRAW-Hill, June 2007

2

Introduction

Why do we need Economic analysis?

The main purpose of design and operation of a power

plant is to bring the cost of energy produced to

minimum.

Thermal efficiency of a plant is one of the important

factors in determining energy cost.

The most thermally efficient plant is not the most

economics.

3

Types of power plants

Thermal fossil fuels, coal, fuel oil & natural gas.

80% of world electricity.

Nuclear

Geothermal

Hydraulic

Multipurpose plants (generating power, flood control, etc..)

Gas turbine plants

They run for a short time to meet the peak load demand

They are used in the combined steam power plant.

• Similar in cycle • Similar in structure • Use steam as a working

fluid

4

Electricity generation in KSA

5

Production rate

Electricity production, E

Annual fractional increase

rate, i (%)

Eo=electricity production

at year t0

To find time required for

electricity production to be

doubled, we define tD as

doubling time

it

it

E

E

ttt

eEE

ttiE

E

Eidt

dE

D

D

D

ttio

oo

o

693.0

2ln

2

)(ln

1

2

12

)(

6

Planning a new power plant

When planning a new power plant, there are two factors to be considered. Total power output to be installed (kWinst)

First demand (kWmax).

Growth of demand.

Reserve capacity required.

Size of generating units

Load variation during 24hr

Total capacity of units connected to grid

Minimum start up and shut down periods

Maintenance program

Plant efficiency

Price and space per kW vs. unit

500MW plant

Unit 1 Unit 2 Unit 3

7

Power plants location

For thermal power plant Availability of cooling water Availability of fuel Distance from center of load demand Land cost and characteristics Wind direction & water stream Disposal of fuel waste and ashes Staff accommodations Rail and road connections Security

For hydraulic power plant Availability of water and water head

8

Load-duration curves k

W e

lect

rici

ty

Summer Average

Winter Average

Peak loads

9

Electricity supply industry factors used Load factor (m):

Capacity factor / plant factor (n):

Reserve factor (r):

Demand factor (dem):

Diversity factor (div)

8760" 365 * 24year one"

8760x kW

year ain kWh

interval same theduring loadpeak

interval timeaover load average

max

ave

m

8760 x kW

kWhr

365 x 24 x kW

kWhr

plant ofcapacity rated

load average

inst

gen

inst

gen n

factorcapacity

factor load

kW

kW

max

inst n

mr

connectedkW

kWdem max

demand connected total

loadpeak or demand maximum actual

d

cbadiv

system of loadpeak actual

groupsconsumer invidual of sum

10

Plant Use Factor (u)

hours operating x kW

kWh

inst

genu

11

A steam power plant have a peak load of 65 MW. Connected to it are five loads having maximum demands of 20 MW, 15 MW, 10 MW, 10 MW and 5 MW each. Plant capacity is 90MW and annual load factor is 0.60. Determine,

a) the average load on the power plant b) the energy supplied annually c) the demand factor d) the diversity factor e) the use factor if plant only operate 8000 hrs per year f) What do you think about this plant economically?

Example 1

12

Power plant economics

The cost per kWhnet is determined by

Fixed cost (FC) Interest (I)

Depreciation (D)

Taxes and insurance (T)

Operation and Maintenance (O&M) covering Salaries and wages

Overhauling of equipment

Repairs including spare parts, water, lubricants, miscellaneous, etc..

Fuel cost

Depends on amount of electricity generated.

kWhrnet of electricity sent out per year

Depend on capital invest (construction cost)

13

Power plant economics

Total annual cost

Cc – construction cost

W – wages

R – repairs and maintenance

M – miscellaneous.

Cf – fuel cost

Annual amount of electricity sent out

Laux = power consumption by auxiliaries in %

n = plant capacity factor

Reliability of a power plant

fct CMRWCTDI

C

)(100

n x 100

1 x 8760 x kWkWh instnet

auxL

hour outage forcedhour Service

hour outage ForcedyReliabilit

14

Cost reduction

The costs have a continuous upward mainly due to monetary inflation,

rising fuel prices. It can be reduced by applying the following:

Select equipment with longer life and proper capacity

Run at high load factor

Increase power plant efficiency

Proper maintenance to reduce breakdown

Keep a proper supervision

Simple design (less dependent on highly skilled worker)

• Construction cost • Fixed cost and depreciation • Fuel cost • Present worth concept • Incremental heat rate • Economic scheduling principle • Effect of load factor on cost per kWhr

15

Problem 2.

A generating unit of 10MW capacity supplies the following loads:

a. Domestic consumer with maximum demand of 6MW at a load factor of 20%

b. Small industrial load with a maximum demand of 3.6MW at a load factor of 50%

c. Street light with a maximum demand of 400kW at a load factor of 30%.

Find overall cost of energy per kWh for each type of consumer using the following data:

Capital cost of the plant = SR 1000 per kW

Total running cost = SR 360000 per year

Annual rate of interest and depreciation on capital cost = 10%

Problem 3.

A thermal power plant of 210MW capacity has the maximum load of 160MW. Its annual

load factor is 0.6. The fuel consumption is 1.2 kg per kWh of energy generated and the cost

of fuel is SR 30.0 per tonne.

Calculate

(a) the annual capital earned if energy is sold at SR 0.06 per kWh and

(b) the capacity factor of the plant.

16

Problem 4.

Problem 5.

A new housing development is to be added to the lines of a public electrical network There are 2500 apartments each having a connected load of 6 kW, with the commercial load shown. The demand factor of the apartments is 55%. The group diversity factor of the residential load is 2.5, and the peak diversity factor is 1.5, and the commercial – load group diversity factor is 1.6 and the peak diversity factor is 1.1. Find the maximum demand of each group and the system peak demand.

Store or service Connected

load (kW)

Demand

factor (d) %

1- laundry

3-mosques

1-resturant

1-bookstore

2-drugsstores

2-grocery stores

1-shoe store

1-cloting store

1-theater

25

12 each

60

8

10 each

5 each

2

6

95

0.66

0.58

0.50

0.68

0.77

0.75

0.69

0.56

0.45

17

60

14102030

Demand Max.

Demand max. individual of SumFactor Diversity .d

MWLoadAvg

LoadAvg

PeakLoad

LoadAvgLoadfactora

30. 60

.5.0

. .

8760*30*.yearper suppliedEnergy . noofhrsLoadAvgb

14102030

60

Load Connected

demand Max.factor Demand .c

18