DR. TAIB ISKANDAR & DR. AHMED REZK

Economics of Power Generation

MET401 Power Plant Engineering

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.

NuclearGeothermal

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 SA

5

Production rate

Electricity production, EAnnual 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 timei

t

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 considered factors. 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

Load-duration curveskW

ele

ctri

city

Summer Average

Winter Average

Peak loads

8

Electricity supply industry factors

Load factor (m)

Capacity factor / plant factor (n)

8760" 365 * 24year one" 8760x kW

kWh

interval same theduring loadpeak

interval timeaover load average

max

ave

m

m

8760 x kW

kWhr

365 x 24 x kW

kWhr

plant ofcapacity rated

load average

inst

gen

inst

gen

n

n

9

Electricity supply industry factors

Reserve factor (r)

Demand factor (dem)factorcapacity

factor load

kW

kW

max

inst

r

n

mr

connectedkW

kWdem

dem

max

demand connected total

demand maximum actual

10

Electricity supply industry factors

Diversity factor (div)

Use factor (u)peakkW

cbadiv

div

system of loadpeak actual

groupsconsumer invidual of sum

hours operating x kW

kWh

inst

genu

11

Example 1

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 plantb) the energy supplied annuallyc) the demand factord) the diversity factore) the use factor if plant only operate 8000 hrs per yearf) What do you think about this plant economically?

12

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

13

Power plant economics

The cost per kWhnet is determined byFixed 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, lubricants, miscellaneous,

etc..Fuel costkWhrnet sent out

Depend on capital invest (construction cost)

14

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 n = plant capacity factor

fct CMRWCTDI

C

)(100

n x 100

1 x 8760 x kWkWh instnet

auxL

15

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)

16

Example 2

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.

Store or serviceConnected load (kW)

Demand factor (d) %

1- laundry3-mosques1-resturant1-bookstore2-drugsstores2-grocery stores1-shoe store1-cloting store1-theater

2512 each

608

10 each5 each

2695

0.660.580.500.680.770.750.690.560.45

Find the maximum demand of each group and the system peak demand.