Economic of Power Generation

• Economics of Power Generation
•
Dr. Eng. Ramzi R .Barwari
• Assist .Professor /Thermal Power/Refrigeration &Air-conditioning
• Consultant Engineer
• Salahaddin University/College of Engineering
• Mechanical Engineering Department
•
1. LOAD FACTOR
It is defined as the ratio of the average load to the peak load during a certain prescribed period of
time.
2. UTILITY FACTOR
 It is the ratio of the units of electricity generated per year to the capacity of the plant installed in the
station.
 It can also be defined as the ratio of maximum demand of a plant to the rated capacity of the plant.
 Supposing the rated capacity of a plant is 200 Mw. The maximum load on the plant is 100 Mw at load
factor of 80 per cent, then the utility will be = (100 × 0.8)/(200) = 40%
3. PLANT OPERATING FACTOR

It is the ratio of the duration during which the plant is in actual service, to the total duration of the
period of time considered.
4. PLANT CAPACITY FACTOR
 It is the ratio of the average loads on a machine or equipment to the rating of
the machine or equipment, for a certain period of time considered.
5. DEMAND FACTOR
The actual maximum demand of a consumer is always less than his connected
load since all the appliances in his residence will not be in operation at the
same time or to their fullest extent. This ratio of' the maximum demand of a
system to its connected load is termed as demand factor. It is always less than
unity.
6. LOAD CURVE
It is a curve showing the variation of power with time. It shows the value of a
specific load for each unit of the period covered. The unit of time considered
may be hour, days, weeks, months or years.
FACTOR EFFECTING POWER PLANT DESIGN
Following are the factor effecting while designing a power plant.
(1) Location of power plant
(2) Availability of water in power plant
(3) Availability of labour nearer to power plant
(4) Land cost of power plant
(5) Low operating cost
(6) Low maintenance cost
(7) Low cost of energy generation
(8) Low capital cost

EFFECT OF POWER PLANT TYPE ON COSTS
The cost of a power plant depends upon, when a new power plant is to
set up or an existing plant is to be replaced or plant to be extended. The
cost analysis includes
1. FIXED COST
It includes Initial cost of the plant, Rate of interest, Depreciation cost,
Taxes, and Insurance.
2. OPERATIONAL COST
It includes Fuel cost, Operating labour cost, Maintenance cost, Supplies,
Supervision, Operating taxes.
INITIAL COST
The initial cost of a power station includes
the following:
1. Land cost
2. Building cost
3. Equipment cost
4. Installation cost
5. Overhead charges, which will include the transportation

cost, storekeeping charges, interest during construction etc.
RATE OF INTEREST
 All enterprises need investment of money and this money may

be obtained as loan, through bonds and shares or from owners
of personal funds.
 Interest is the difference between money borrowed and money

returned. It may be charged at a simple rate expressed as %
per annum or may be compounded.
DEPRECIATION
 Depreciation accounts for the deterioration of the equipment and
decrease in its value due to corrosion, weathering and wear and
tear with use. It also covers the decrease in value of equipment
due to damages.
 The following methods are used to calculate the depreciation cost:

(1) Straight line method
(2) Percentage method
(3) Sinking fund method
(4) Unit method.
OPERATIONAL COSTS
The elements that make up the operating
expenditure of a power plant include the
following
(1) Cost of fuels.
(2) Labour cost.
(3) Cost of maintenance and repairs.
(4) Cost of stores (other than fuel).
(5) Supervision.
(6) Taxes.
COST OF FUELS
 In a thermal station fuel is the heaviest item of operating cost. The
selection of the fuel and the maximum economy in its use are, therefore,
very important considerations in thermal plant design.
 It is desirable to achieve the highest thermal efficiency for the plant so that
fuel charges are reduced.
 The cost of fuel includes not only its price at the site of purchase but its
transportation and handling costs also.
 The cost of fuel varies with the following:

(1) Unit price of the fuel.
(2) Amount of energy produced.
(3) Efficiency of the plant.
LABOUR COST
 For plant operation labour cost is another item of
operating cost.
 In case of automatic power station the cost of labour is

reduced to a great extent. However labour cost cannot
be completely eliminated even with fully automatic
station, as they will still require some manpower for
periodic inspection etc.
COST OF MAINTENANCE AND REPAIRS
In order to avoid plant breakdowns maintenance is
necessary.
 Repairs are necessitated when the plant breaks down or

stops due to faults developing in the mechanism. The
repairs may be minor, major or periodic overhauls
 Maintenance includes periodic cleaning, greasing,

adjustments and overhauling of equipment. The material
used for maintenance is also charged under this head.
COST OF STORES
The items of consumable stores other than fuel include such articles as
lubricating oil and greases, cotton waste, small tools, chemicals, paints and such
other things. The incidence of this cost is also higher in thermal stations than in
hydro-electric power stations.
SUPERVISION
In this head the salary of supervising staff is included. A good supervision is
reflected in lesser breakdowns and extended plant life. The supervising staff
includes the station superintendent, chief engineer, chemist, engineers,
supervisors, stores incharges, purchase officer and other establishment.
TAXES
The taxes under operating head includes the following:
(i) Income tax
(ii) Sales tax
(iii) Social security and employee’s security etc.
ECONOMIC OF POWER GENERATION
The cost of power generation can be reduced by,
(i) Selecting equipment of longer life and proper capacities.

(ii) Running the power station at high load factor.
(iii) Increasing the efficiency of the power plant.
(iv) Carrying out proper maintenance of power plant
equipment to avoid plant breakdowns.
(v) Keeping proper supervision as a good supervision is reflected
in lesser breakdowns and extended plant life.
(vi) Using a plant of simple design that does not need highly
skilled personnel.
LOAD CURVES
 The load demand on a power system is governed by the consumers and
for a system supplying industrial and domestic consumers, it varies
within wide limits. This variation of load can be considered as daily,
weekly, monthly or yearly.
 These curves are for a day and for a year and these show the load
demanded by the consumers at any particular time. Such load curves are
termed as “Chronological load Curves”.
Numerical Problems
1. Determine the thermal efficiency of a steam power plant and its coal bill per annum using the following data.
Maximum demand = 24000 kW
Load factor = 40%
Boiler efficiency = 90%`
Turbine efficiency = 92%
Coal consumption = 0.87 kg/Unit
Price of coal = Rs. 280 per tonne
Solution
η (Thermal efficiency) = Boiler efficiency × Turbing efficiency
= 0.9 × 0.92 = 0.83
Load factor = Average Load/Maximum Demand
Average Load = 0.4 × 24000 = 9600 kW
E = Energy generated in a year = 9600 × 8760 = 841 × 105 kWh
Cost of coal per year = (E × 0.87 × 280)/1000
= (841 × 105 × 0.87 × 280)/1000
= Rs. 205 × 105.
2. The maximum (peak) load on a thermal power plant of 60 Mw
capacity is 50 Mw at an annual load factor of 50%. The loads
having maximum demands of 25 Mw, 20 Mw, 8 Mw and, 5 Mw
are connected to the power station.
Determine: (a) Average load on power station (b) Energy
generated per year (c) Demand factor (d) Diversity factor.
Solution.
(a) Load factor = Average load/Maximum demand
Average load = 0.5 × 50 = 25 Mw
(b) E = Energy generated per year = Average load × 8760

= 219 × 106 kWh.
(c) Demand factor = Maximum demand/Connected load

= 50/(25 + 20 + 8 + 5) = 0.86
(d) Diversity factor = (Sum of individual maximum demands)/(Simultaneous maximum demand)

= (25 + 20 + 8 + 5)/(50) = 1.16

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• Economics of Power Generation

3. PLANT OPERATING FACTOR

(1) Location of power plant

(2) Availability of water in power plant

(3) Availability of labour nearer to power plant

(4) Land cost of power plant

(5) Low operating cost

(6) Low maintenance cost

(7) Low cost of energy generation

(8) Low capital cost

5. Overhead charges, which will include the transportation

 All enterprises need investment of money and this money may

 Interest is the difference between money borrowed and money

 The following methods are used to calculate the depreciation cost:

 The cost of fuel varies with the following:

 In case of automatic power station the cost of labour is

 Repairs are necessitated when the plant breaks down or

 Maintenance includes periodic cleaning, greasing,

The cost of power generation can be reduced by,

(i) Selecting equipment of longer life and proper capacities.

(b) E = Energy generated per year = Average load × 8760

(c) Demand factor = Maximum demand/Connected load

(d) Diversity factor = (Sum of individual maximum demands)/(Simultaneous maximum demand)

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