new vision of engineering economy course (vision) module 3 lecture 7 cairo, 17 july 2005

NEW VISION OF ENGINEERING ECONOMY

COURSE (VISION)

MODULE 3

LECTURE 7 Cairo, 17 July 2005

JULY 2005 TEI OF PIRAEUS 2

Case Studies - 2

Objective: • Application of the NPV and IRR method• Evaluation of a hydro-power station• Effect of environmental parameters on

an energy investment implementation• Comparative assessment of a nuclear

and a RES-based power station


Problem Statement

(1)What?

Where?

Why?

How big?

in Greece

a small hydro power

plant

(scale economy,funding)

for a private investment


Problem Statement (2)


Initial CostREDUCED COST OF SMALL HYDRO POWER STATIONS

0

500

1000

1500

2000

2500

3000

3500

4000

4500

0 25 50 75 100 125 150

HYDRO-TURBINE HEAD (m)

Red

uced

Cos

t (E

uro/

kW)

50kW500kW1000kW5000kW10000kWLocal Market MiniLocal Market MicroLocal Market Small


Annual RevenuesAnnual Energy Yield Tsimovo Station

0

10000

20000

30000

40000

50000

60000

70000

80000

1962 1963 1964 1965 1966 1967 1968 1969 1970 1971 1972 1973 1974 1975 1976 1977 1978 1979 1980

Year

Ene

rgy

(MW

h)


Viability Analysis-IRR Prediction(1)

Small Hydro Power Station Viability Analysis (IRR=10.0%)

-1

-0,5

0

0,5

1

1,5

2

0 2 4 6 8 10 12 14 16 18 20

Years of Operation

NP

V

Initial Capital

Fixed M&O Cost

Variable M&O Cost

Tax Impact

Investment Revenues

Residual Value

Net Present Value


Viability Analysis-IRR Prediction(2)

Small Hydro Power Station Viability Analysis (IRR=21.12%)

-0,8

-0,6

-0,4

-0,2

0,0

0,2

0,4

0,6

0,8

1,0

0 2 4 6 8 10 12 14 16 18 20

Years of Operation

NP

V

Initial Capital

Fixed M&O Cost

Variable M&O Cost

Tax Impact

Investment Revenues

Residual Value

Net Present Value


Initial Cost Impact on IRRTsimovo Small Hydro Power Station

(υ=50%, γ=40%, No=10MW,Tax Incl.)

0%

5%

10%

15%

20%

25%

30%

35%

1000 1250 1500 1750 2000

Specific Initial Cost (Euro/kW)

IRR

n=10 years

n=15 years


State Subsidization Impact on IRR

Tsimovo Small Hydro Power Station (υ=50%, No=10MW,Tax Incl.)

0%

5%

10%

15%

20%

25%

0 5 10 15 20 25

Years of Operation

IRR

γ=40%

γ=20%

γ=0%

γ=0%

γ=0%, No Tax-10


Effect of Environmental Parameters

on the Possibility of an Energy Investment

Implementation


Session Objective

• to Demonstrate the Environmental Impact of the Operation of Power Plants

• to Present the Social and Environmental Cost of Energy


Are New Power Plants Necessary ?

• The worldwide Rate of Energy Demand Increases by 4% per annum.

• The Increase is Driven by the Developing Countries and the USA.

• The Central/Northern European Countries have Almost Stabilized their Demand.

• In the Mediterranean Region this Rate Ranges Between 3-10%.


We Need New Power Plants in order to:

• Cover the Increased Energy Consumption

• Meet the Increased Peak Demand• Replace Old Power Plants• Exploit New Sources of Energy


Why do we care about Environmental Impact Assessment ?

• The Energy Plants have Major Environmental Impacts

• Public Reaction to an Investment can Cancel its Realization

• Strict / Complicated Environmental Legislation

• Pollution Control Leads to Savings in Energy and Materials through better Management

• Environmentally Friendly Projects are a Potential Subsidization Source


Environmental Indicators

Sectors of theEnvironmental Impact Assessment:

• Natural Resources Exploitation

• Pollution

• Environmental Hazards or Disturbance


Natural Resources ExploitationRenewable Energy SourcesPrecipitationsSolar RadiationWindBiomass Waves

Non Renewable Energy SourcesOilCoalNatural GasNuclear Fuels


Pollution

Air Pollutants Emissions that cause:

• Global Warming• Ozone Layer Depletion• Aquatic and Soil Acidification• Aquatic and Soil Eutrofication• Hazards to Humans and Ecosystems

Health


Environmental Hazards / Disturbance

• Land usage for Buildings or Roads• Noise• Smell• Radiation


External Cost of Energy• Social Cost

Public Health

• Environmental CostRestoration of Natural Ecosystems

Exploitation of Natural Resources

• State SubsidiesFuel Subsidies

Auditing & Control of Environmental Parameters


NIMBY Syndrome in Energy Plants

Not In My Back Yard

People • Want the Comforts of Electricity• Don’t Want the Power Plants

Disturbance

Strong Public Opposition May Cause

The Cancellation of Power Plants


Quantitative Approach

Basic Figures Presenting Mean Values for Comparison Purposes

• Carbon Dioxide CO2

• Sulfur Dioxide SO2

• Nitrogen Oxides NOX

• Land Use


CO2 Emissions

9 13 15 15

118

443

778 778

960

0

100

200

300

400

500

600

700

800

900

1000

ENERGY SOURCE

kt C

O2 e

q/T

Wh


SO2 Emissions

3 7 24 26 69 3141285

5274

8013

0100020003000400050006000700080009000

ENERGY SOURCE

t SO

2/TW

h


ΝΟx Emissions

6 10 30 55

1748 21142897

5543

12371

0

2000

4000

6000

8000

10000

12000

14000

ENERGY SOURCES

t NO

x/T

Wh


Land Use

0,5 445

72

152

533

0

100

200

300

400

500

600

Nuclear Coal PV Wind Hydro Biomass

ENERGY SOURCE

Lan

d U

se k

m2 /T

Wh


Comparative Assessment of a Nuclear and a RES-based

Power Station

Case Study : Wind vs Nuclear Power Station

in the Aegean Sea Region


Problem Description

• Greece and Turkey are Both Fast Developing, Mediterranean countries.

• Annual Electricity Demand Growth is 4% and 10% respectively for Greece and Turkey.

• Both Countries Have to Control their Air Emissions in order to Comply to the EU Directives.

• Nuclear and RES are the possible solutions


Energy Consumption per Capita Time Evolution

0

0,5

1

1,5

2

2,5

3

3,5

1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000Year

Toe

per C

apita

Greece

Turkey


Why RES in the Aegean Region?

• Reliable Solar Potential even in Winter• Excellent Wind Potential• High Enthalpy Geothermal fields• Decentralized Energy Generation• Independence of Imported Fuels• Significant EU Subsidization


Factors Against RES

• Low Energy Density (W/m2) Leads to Extended Land Use

• Seasonal and Diurnal Variation of Energy Availability Makes Imperative the Use of Large-Scaled Energy Storage Systems

• High Initial Investment Cost


Why Nuclear Energy ?

• Reliable Electricity Supply without Time Variation

• Relatively Low Operational Cost• High Energy Density Leads to

Limited Land Use (fuel mines excluded)


Factors Against Nuclear Energy

• High Initial Investment Cost (financing constraints)

• No Safe Method of Nuclear Waste Disposal• Enormous Heat Waste to the Nearby

Environment• Technology Dependence for Developing

Countries• Wide Range of Negative Consequences in

Case of Major Accidents


Economic Cost Comparison

11

1

11

1

1

1

)(

i

e

i

e

i

eE

FCIICc

n

o

noo

1i1

g1

1i1

g1

i1

g1ICmFC

n

on

)/( yearkWh8760NCFE oo


Wind Energy vs Nuclear Power Production Cost

0

0,02

0,04

0,06

0,08

0,1

0,12

0,14

4 5 6 7 8 9 10Wind Speed (m/s)

Ener

gy C

ost (

Euro

/kW

h)

Max Value

Average Value

Min Value

Nuclear Min Cost

Nuclear Max Cost


Social Cost Comparison

NUCLEAR ENERGY• Accident Risk Cost

Possibility ranges Between

1 / 2000 – 20000 operational years

Total distraction of the Natural Environment in a very wide Distance

• Normal Operation CostMinor Radiation Releases

Not Safe Final Disposition of Nuclear Waste


Social Cost Comparison

WIND ENERGY• Noise Emissions• Long Distance Visual Impact• Extensive Land Use• Bird Mortality


Energy Production Cost (Social-Environmental Cost Included)

0

20

40

60

80

100

120

140

160

Fossil Fuel Nuclear Power Wind Energy Solar Energy

Energy Source

Euro

/Mw

h

max Value

Min Value


ConclusionsRES and NUCLEAR are Potential Solutions to: •meet Energy Demands •Control Greenhouse Gas Emissions

The Analysis made Clear that Wind Energy is Preferable:

•Environmental-Wise •Economically-Wise (under Conditions)

new vision of engineering economy course (vision) module 3 lecture 7 cairo, 17 july 2005

Documents

irr slide

disturbance slide

tei of piraeus13

tei of piraeus14

tei of piraeus15

new sources of energy

private investment slide

ecosystems health slide