In this article we will know about the power plant economics.
Which means we will study about which type resources are required for start a
new power plant.
Power Plant Economics
1. COST OF ELECTRICAL ENERGY
It is most important factor of power plant economics.
The generation cost per kWh of energy depends. On the cost
covering the purpose, installation and erection of equipment, cost of fuel,
labor, repair etc, The generation cost can be divided into fixed cost i.e. the
cost which depends on the extent of plants investment and financial rates and
remain a fixed one irrespective of the amount of energy generated and operating
cost which includes the expenditure for fuel, labor, supervision etc. The
operating costs of a plant are generally variable in magnitude and depend on
the amount of energy produced.
2. CAPITAL COST OF PLANTS
Capital cost of plant is also a main factor to know about
the power plant economics.
The capital cost of a plant includes the preliminary cost,
cost of land and other real estate, cost of design and planning, cost of
building and equipment, cost of transportation, erection and installation of
equipment and overheads etc. the cost of a steam plant located near a river
where adequate supply of cooling water is available would be less than that of
one in which cooling towers or ponds are needed for cooling water.
The capitals costs of plants vary very widely even for
similar types of plants and depend to a large extent on the market conditions.
The range of cost for hydro plants is greater than that for steam plants, the
reason being that in case of steam plants, only about 15 percent of the cost is
influenced by topographical condition. Whereas in the case of hydro-electric plants,
around 75 percent of the cost is affected by these conditions.
In general a large plant costs less per KW of installed
capacity than a small one. A plant having a small number of large sexed units
costs less than a plant of the same total capacity but having a large number of
small sized units. Roughly the capital costs are around Rs. 3000 to 35000 per
KW for diesel, gas and steam plants, Rs 4000 to 60000 per KW for hydro-electric
plants and Rs. 15000 to 60000 per KW for nuclear plants.
3. Annual fixed cost of power plant
In this topic we will know about total fixed cost in one
year of any power plant. We will discuss about the various type fixed cost,
which is essential to know for understand of power plant economics.
Components Of power plant
The annual fixed cost of a plant consists of interest,
taxes, insurance, depreciation, managerial and general maintenance cost and
rate of return.
A. Interest, taxes and insurance.
The capital for setting up the
plant may be provided by the government (or the private owner) or acquired
through loan form financial institution or acquired by the sale of stuck or
bonds or both. The annual interest and dividend gave to be included in the
total cost of service. The utility may have to pay various taxes to town, state
and federal authorities. However, only the taxes which are a function of the
capital investment should be included in the fixed costs and the other taxes
should be included in the operating costs.
Every well managed utility has to
incur expenditure on insurance against accident to equipment and
personnel. The list of risk and
insurance is usually very long. Example, fire, flood, hail, earthquake
explosion public liability, workmen compensation etc. the insurance may be
obtained from insurance companies or if the enterprise is very big. It may be
self-insured. This is done by setting aside a reserve fund, out of earnings,
every year. Such an insurance fund is quite district and separate from the
depreciation fund.
B. depreciation of power plant
Every equipment deteriorates or
depreciates due to wear and tear, corrosion. Weathering etc. in addition, the
equipment may become inadequate due to increase in demand or become absolute
and may need replacement by a modern one.
It is necessary for the financial
stability and safety that the capital of an enterprise must remain intact. When
a plant becomes useless, funds must be available to replace it. The methods for
calculating depreciation are discussed in section 3.7.
C. Managerial and general maintenance costs.
part of total wage bill of a
power plant is constant irrespective of the amount of energy. These costs are
proportional to the size of the plant and the equipment and should be included
in fixed costs.
D. Rate of return of power plant
An undertaking can be successful
only if it earns profit. It is a private limited company and has floated shares
or bonds, it must pay a good dividend so that the value of the shares may be
high and the undertaking may be successful. Therefore, a certain rate of return
on investment should be taken into account in calculating the annual fixed
costs.
4. Operating cost or production cost
The operation of a plant means expenses which vary with the extent of operation or the amount of energy produced. such expenses are included in the annual operating costs, the items which constitute operating costs are: fuel , operating labor, maintenance costs and supplies. in steam, diesel and gas plants,the operating costs form a major portion of total annual cost whereas in hydro, nuclear and solar plants,the fixed costs overshadow the small operating costs.
(a) Fuel.
This is largest item of expense in
thermal, diesel and gas turbine stations. The fuel may be in the form of coal,
oil, natural gas, wood scrap etc. The cost of fuel depends on the type of fuel,
calorific value, availability and freight rates. The annual fuel cost of a
station depends on the amount of energy produced, the efficiency of the plant
and the unit price of fuel. The fuel cost of station can be anticipated if (i)
a realistic load model is known for each future week or month in the planning
period (ii) the units are committed to supply load in a manner that reflects
actual operating procedures and conditions.
(b) Operating labor
The operation of a plant
needs staff and labor. In a steam plant labor is needed for unloading and
storing of fuel, disposal of refuse, operation of boiler, prime mover etc. The
increasing application of automatic equipment and the increase in unit sizes
have reduced the number of men required to operate a plant by a considerable
amount. Hydro plant and diesel plants need less labor than steam plants.
(c) Maintenance cost. of power plant
Every
plant needs preventive maintenance (inspection cleaning repair, overhauling
etc.) to keep it in good condition. The maintenance cost can be further
subdivided into the cost of material required for maintenance and cost of
labor. To estimate the maintenance cost of proposed plant, the information from
a similar plant in an analogous situation can be used.
(d) Supplies.
This item includes the cost of water for makes up, cooling purposes and general use, lubricating oil and other consumable materials.
Hence this is power plant economics study if you have find any incorrect in above article you must comment below in comment box.