Pricing Power Energy and Capacity

Pricing Power, Energy and Capacity
EE 710 Electricity Trading, Electrical and Electronics Eng. Dept., METU, Spring 2007, Prof. Dr. Osman SEVAIOGLU, Page 1
METU
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Basic Principles of
Electricity Markets
METU
Symbols
Generation - Load Supply - Demand
470 MW
Generator
Generator Feeder
Gen (step-up) Transformer
Generator Bus
Generator Circuit Breaker
300 MW
Load Feeder
Load Bus
Load (Step-down) Transf.
Load
Four plants supplying two loads
TEIAS
Turkish
Electricity
Transmission
Company
1600 MW
900 MW
4000 MW
730 MW
770 MW
METU
Electrical Power
Power = Energy / Time
(Watt) (Watt-second) (second)
(Watt) (Watt-hour) (hour)
(kWatt) (kWatt-hour) (hour)
Generator
Electrical Power is the rate of flow of
energy (Watt)
Electrical Power is the energy flowing in a
unit time interval (one hour or one sec)
Electrical Power
Unit time interval is generally one second
or one hour
1 kW = 1000 Watts (kilo = 10
3
)
1 MW = 1000 kWatts (Mega = 10
6
)
1 GW = 1000 Mwatts (Giga = 10
9
)
Power = Energy / Time
+
Load
METU
Electrical Energy
Energy = Power x Time
(Watt-second, Ws) (Watt-sec) (Watt) (second)
Energy
+
Load Generator
Energy is the flow of power within a certain
period of time (Watt-Second, Ws)
Afin Elbistan-A Plant (4x340 MW)
METU
Commercial Units for Electrical Energy
Energy = Power x Time (kWh)
(KiloWatt-hour) (KiloWatt) (hour)
1 Kilo Watt = 1000 Watts
1 Hour = 3600 seconds
Energy
+
Load
Generator
Commercial measure for energy is kiloWatt-hour (kWh) Electrical Energy
Energy = Power x Time (Watt-second, Ws)
(Watt-sec) (Watt) (second)
METU
Price of Energy
Energy
+
Load
Generator
Definition:
Energy is the flow of power over a
certain period of time
Hence, price of energy is expressed in
terms of $ per hour per MW of power
flow, i.e.
Price of energy is measured in terms of
either;
$ / ( MW per hour),
$ / MWh or
Cent / (kW per hour) ,
Cent / kWh
Electrical Energy
METU
Rating of a Plant
Power rating of a plant is
determined by the size of
the plant, i.e. the maximum
power that can be
generated
Power Rating (rated power)
of a generating plant is the
highest electrical power
allowed to generate under
normal operating conditions
Power rating of a plant is
measured in terms of MW
Definition Installation of a Birecik HPP (672 MW) Turbine
METU
Capacity of a Plant
Capacity of a plant is determined by;
Overall lifetime (service duration) of
the plant, in which electrical energy
is produced (years),
Power rating (MW),
Annual Duration of Availability (ADA)
Capacity of a plant is the overall
electrical energy (not power !) that can
be generated during the lifetime of the
plant
Capacity of a Plant Yamula HPP Kayseri, (2 x 50 MW)
METU
Capacity of a plant is a term that
involves a time dimension (years) as
well as power rating
Definition Sugz (Isken) Coal Plant 1210 MW
(Please note that the term; being available
for service is used, instead of being in
service)
In other words, a plant may be available for
service, in a certain period, but may not
actually be in service, i.e. may not be
operated or committed within this period
due to commercial conditions in the
contract
Capacity of a Plant
METU
Definition
ADA = 8760 h x APA / 100
= 8765 x Annual Percentage of Availability / 100
Annual Percentage of Availability (APA) is the
percentage of the duration in which the plant is
available within a year
(i.e. percentage of duration obtained by excluding
the period in which the plant is not available for
one year period)
APA = (8760 h -T
unavailable
) / 8760 x 100 (%)
= 1 T
unavailable
/ 8760 x 100 (%)
Annual Duration of Availability (ADA) is the
duration in which the plant will be available for
service within one year period
Karkey rnak, Silopi - 120 MW
Karadeniz Enerji
METU
Reasons for a Plant being Unavailable
Plant;
may not always have continuously supplied, regular,
sufficient fuel, i.e. water flow or wind, (APA for most
hydroelectric and wind plants in Turkey are 43 %, and
33 %, respectively),
is taken out of service due to some unexpected failures
or scheduled (regular) repair and maintanence
activities, such as plant or line failure etc.
is not allowed to operate beyond a certain duration,
due to conditions in the commercial contracts.
Unexpected outages, machine and/or system failures are
not regarded as terms in calculating the Annual
Percentage of Availability (APA)
METU
Annual Capacity is the total energy that
can be supplied within the period of
Annual Duration of Availability by
considering all the physical and other
real constraints
Annual capacity can be written as;
s = P
rated
x ADA (kWh/year)
where, ADA is the Annual Duration
of Availability (Hours)
Annual Capacity
Annual capacity is measured in terms of
MWy (MW-year) or MWh/year or kWh/year,
Annual capacity has the same units as
energy
Annual Capacity (s)
Afin Elbistan Group-A (4 x 340 MW)
METU
Example
Calculate the Annual Capacity (in kWh) of
Birecik Hydroelectric Power Plant with
670 MW rated power and 41 % Annual
Percentage of Availability
s = P
rated
x ADA
s = P
rated
x ADA
= 670 x 1000 x 3593.6
= 2.407 billion kWh
ADA = 8760 x APA / 100
= 8760 x 0.41 = 3593.6 hours
Annual Capacity (s) - Example
Birecik HPP (672 MW)
Production agreed in ESA
METU
Capacity of a plant is the total electrical
energy that can be supplied within the overall
lifetime of plant, by considering all the
physical and other real constraints
Capacity can be written as;
C = P
rated
x ADA x T
= s x T
Where, C is the capacity of plant in MWh,
P is the power rating of plant (MW),
ADA is Annual Duration of Availability,
s is Annual Capacity,
T is the overall lifetime of the plant (years)
Dimension of capacity is MWh, kWy or kWh
Capacity of a Plant
Capacity of a Plant
METU
Rated power of a plant;
is the ability of generating electrical
energy within unit period of time, such
as hour, under normal operating
conditions, regardless of the time and
duration
is measured in terms of kW or MW,
Difference between Capacity and Rated Power
Rated Power and Capacity
Capacity of a plant, on the other hand,
is the total amount of electrical energy
to be generated in terms of the rating
of the plant, within Annual Duration of
Availability (ADA)
is measured in terms of kWy or MWh
METU
Why the price of a used plant is half of that of
a new plant, although the rated powers of both
plants are the same ?
Difference between Capacity and Rated Power
Rated Power and Capacity
Answer:
Although the rated powers are the same, the
used plant has exhausted a certain period of its
lifetime, hence its capacity, i.e. its life for
supplying energy is reduced by that amount
Price of a used plant is determined by its
remaining capacity, not by its rated power
Bores, Wind Power Plant
Bozcaada, 10.2 MW
METU
Daily Loading Curve
Daily Loading Curve
A basic characteristics of
electrical loads is that the
demand is not constant, but
varies in time. In other words,
demand varies with respect to
hours, days, weeks and
seasonal conditions
As seen from the figure, the
peak level of demand in winter
season is about 40 MW, while
the off-peak level is 26 MW,
which is 0.65 of the peak level
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Time (Hours)
Summer
Winter
Off-Peak level
Peak level
METU
Daily Loading Curve
Daily Loading Curve
This situation creates serious
difficulties in system
operation, as electricity cannot
be stored, hence the total
supply must always be
matching the total demand and
losses in in the system
The system operator therefore,
spends a considarable amount
of care and effort to follow the
balance between the total
supply and demand
Daily Loading Curve of the Spanish System
October 09, 2007
METU
Ref: Electric Power Systems, B.M. Weedy, pp.4
Weekday and Saturday Daily Loading Curves for Domestic and Industrial Loads
Daily Loading Curve
0
10
20
30
40
50
60
70
80
0
:
0
0
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:
0
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0
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0
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:
0
0
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Time (Hours)
Saturday Total
Weekday Industrial Saturday Industrial
Weekday Total
METU
Daily Energy Consumption
Vertical and horizontal axes of the
daily load curve are power and time,
respectively
In case that power demand is regular
(flat) in time, then the rectangular
area under the curve would represent
the total energy consumption of the
load
Then, the daily energy consumption,
Energy consumed = P x t
= 25 MW x 24 h
= 600 MWh
0
5
10
15
20
25
30
35
40
2 4 6 8 10 12 14 16 18 20 22 24 0
Time (Hours)
Energy consumed
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P
(
t
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(
M
W
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Daily Loading Curve (Flat)
Please note that Daily Capacity is the area of the
overall rectangle, i.e.
Daily Capacity = Pmax x Duration = 40 MW x 24 h.
METU
However, the actual daily loading
curve is nonlinear, hence,
the energy consumption is
calculated by evaluating the integral
of the daily loading curve, i.e. the
area under the curve
24
Energy consumed / day = P(t) dt (MWh)
0
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(
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0 2 4 6 8 10 12 14 16 18 20 22 24
Time (Hours)
Energy consumed
0
5
10
15
20
25
30
35
40
Daily Loading Curve (Nonlinear)
METU
Unconsumed Energy
Unconsumed energy is the area
on upper part of the Daily Loading
Curve, which corresponds to the
energy that could have been
generated, but cannot be
consumed by the consumer, due to
the Daily Loading Characteristics
of the Consumption
Unconsumed Energy = Full Capacity - P(t) dt = P
max
x Duration - P(t) dt
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0 2 4 6 8 10 12 14 16 18 20 22 24
Time (Hours)
5
10
15
20
25
30
35
40
Unconsumed Energy
Please note that Full Capacity is the overall
area of the rectangle, i.e. 40 MW x 24 hours
METU
Difference between Demand and Consumption
Demand:
is the electrical power required to
operate customer's facilities.
Demand is power (kW),
Consumption:
is the amount of electrical energy
consumed and is measured in
kilowatt-hours (kWh).
Consumption is energy (kWh)
Demand and Consumption
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0 2 4 6 8 10 12 14 16 18 20 22 24
Time (Hours)
Energy consumed
0
5
10
15
20
25
30
35
40
16
Peak demand
Average demand
METU
Capacity Factor (c)
Capacity Factor (c) Definition
Capacity Factor (c) is the percentage
utilization of the capacity by a load
which is defined as the ratio of the
area under the load duration curve to
the overall area
c = Area under the Curve / Overall Area
= P(t) dt / Overall Area
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P
(
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(
M
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0 2 4 6 8 10 12 14 16 18 20 22 24
Time (Hours)
Energy consumed
Capacity Factor is unitless
0
5
10
15
20
25
30
35
40
Capacity of plant is the area of the
overall rectangle, i.e. 40 MW x 24 h
Energy consumed on the other hand,
is the area under the curve
METU
Capacity Factor for the load shown on the
right hand side may be expressed as;
c = Energy consumed / Capacity allocated
= Energy consumed / Total energy that can be
supplied
= P(t) dt / ( x rated power x duration)
= Area under the curve / overall rectangular area
= Area under the curve / 40 MW x 24 hours
Area under the curve = Average demand x duration
Definition
where, P(t) dt is the energy consumed during the
allocated service period,
Capacity allocated = x rated power x duration
Capacity Factor (c)
Capacity Factor (c)
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(
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0 2 4 6 8 10 12 14 16 18 20 22 24
Time (Hours)
Energy consumed
Average Demand
0
5
10
15
20
25
30
35
40
16
METU
Example
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P
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(
M
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0 2 4 6 8 10 12 14 16 18 20 22 24
Time (Hours)
Capacity Factor = c
c = Energy consumed / Capacity of plant
= P(t) dt / Capacity of plant
= Area under the curve / Overall rectangular area
Please note that;
Area under the curve = Average power x Duration
Capacity Factor (c)
Energy consumed
Calculate the Capacity Factor of the load
with the following figures;
Rated power of the plant supplying load = 40 MW,
Average demand of the load = 16 MW
Capacity Factor (c)
c = 16 x 24 MWh / 40 x 24
= 384 MWh / 960 MWh
= 0.4 (i.e. 40 %)
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1
6

M
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0
5
10
15
20
25
30
35
40
16
Solution
METU
Example
Question
Calculate the Capacity Factor of the
demand shown on the RHS
0
5
10
15
20
25
30
35
40
Duration (100 % = 8765 hours)
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P
(
t
)

(
M
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Duration of Allocation
Allocated
Capacity
P = Allocated
Power
Answer
0.1 0.2 0.3 0.4 0.5 0.6 0 0.7 0.8 0.9 1.0
c = ( 20 / 40 ) x ( 0.60 / 1.0 ) = 30.0 %
c = P(t) dt / Capacity of plant
= ( P / P
r
) x ( t / T ) (unitless)
where, c is the capacity factor,
P is the power allocated to customer,
P
r
is the total rated power of the
plant,
t is the total duration of allocation
(hours),
T is the overall duration of the availability
of plant (hours)
METU
A Note
Please note that the approach which calculates the Capacity Factor by
using the integral of the Loading Curve is more general
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0
5
10
15
20
25
30
35
40
0.1 0.2 0.3 0.4 0.5 0.6 0
Duration of Allocation
Allocated Capacity
P = Allocated
Power
0.7 0.8 0.9
c = ( P / P
r
) x ( t / T )
Time (Hours)
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0 2 4 6 8 10 12 14 16 18 20 22
1.0
24
0
5
10
15
20
25
30
35
40
c = Area under the Curve / Overall Area
Allocated Capacity
METU
Commercial Meaning of Capacity Factor
Supplier simply allocates the ordered and
committed portion of the capacity of the plant,
Supplier is not interested whether this portion is
properly utilized or not by the consumer, i.e.
proper utilization of this portion is merely a
problem of the consumer,
On the other hand, customer is not interested
whether the plant is fully utilized or not, i.e. full
utilization of plant is a problem of supplier
Low capacity factor means;
For plant owner: under-utilization of the plant and
hence slower rate of return,
For customer: Increase in fixed costs and hence
increase in the overall tariff
Capacity Factor is a measure of Utilization Karakaya HEPP (1800 MW)
METU
Load (Diversity) Factor
Definition
Load (Diversity) Factor is defined as
the ratio of Average Demand (P
avg
) to
Peak Demand (P
avg
)
Load Factor = P
avg
/ P
peak
where, P
avg
= Energy consumed /
duration (hours)
= P(t) dt / duration (hours)
Load (Diversity) Factor is a measure of
the effective utilization of the load and
distribution equipment, i.e. higher load
factor means better utilization of the
transformer, line or cable
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P
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(
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0 2 4 6 8 10 12 14 16 18 20 22 24
Peak demand
Average demand
0
5
10
15
20
25
30
35
40
16
Time (Hours)
METU
Capacity and Load Factors are Identical
Proof
Load Factor is defined as;
Load Factor = P
avg
/ P
peak
Multiplying numerator and denominator by
the overall duration of operation,
t = 24 hours
Load Factor = P
avg
t / P
peak
t
= Energy Consumed / Capacity
Allocated
= Capacity Factor
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(
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0 2 4 6 8 10 12 14 16 18 20 22 24
Time (Hours)
0
5
10
15
20
25
30
35
40
16
Peak demand
Average demand
METU
Water Flow Statistics of amlca HPP
stasyon No : 22-79, Suyun Ad : Kapistre Deresi, stasyonun Ad: amlca, Ya Alan: 89.7 Km
2
, Birim: Hm
3
Yl Ocak ubat Mart Nisan Mays Haziran Temm. Agust. Eyll Ekim Kasm Aralk Yllk Top.
1989 6,66 8,05 17,41 23,51 29,83 22,62 10,49 7,18 10,86 14,88 14,66 8,56 174,72
1990 8,23 8,04 14,51 19,87 39,06 23,14 29,54 11,16 19,20 9,97 10,79 12,13 205,63
1991 5,81 7,57 16,89 21,65 25,00 18,45 23,73 17,78 11,53 13,39 6,01 4,79 172,61
1992 3,81 1,45 24,20 41,20 37,50 20,10 22,30 16,40 14,90 18,10 8,24 7,64 215,84
1993 6,70 17,50 26,60 25,70 35,20 24,00 20,90 23,50 31,40 28,40 19,70 10,30 269,90
1994 6,80 6,73 18,30 29,90 14,50 9,21 4,91 2,40 4,09 15,40 20,10 14,80 147,14
1995 12,00 5,85 9,66 14,20 20,00 10,30 9,04 7,92 16,80 17,80 13,30 12,10 148,97
1996 4,18 9,15 6,39 9,08 16,82 17,56 6,79 9,60 13,69 15,63 5,74 6,04 120,66
1997 12,43 7,89 7,39 24,03 29,17 19,79 22,77 13,39 28,05 19,12 8,30 10,57 202,90
1998 7,06 9,82 12,50 25,52 22,62 18,75 11,83 8,16 16,59 14,06 11,01 7,29 165,22
1999 6,15 9,31 9,15 13,41 22,92 10,73 9,64 3,22 10,57 17,14 12,18 9,68 134,09
2000 4,68 6,77 11,79 26,29 19,87 19,41 7,08 5,79 8,48 15,54 22,69 10,33 158,71
2001 6,01 6,46 15,87 14,05 17,85 12,80 6,95 8,86 10,17 17,42 7,77 8,15 132,35
2002 9,28 11,30 17,70 20,20 17,50 25,80 8,73 4,90 10,30 26,20 36,20 21,70 209,81
2003 13,30 4,91 6,03 25,10 12,70 9,51 7,43 10,90 13,60 16,30 7,14 4,64 131,56
2004 5,39 10,40 20,20 25,56 21,50 19,34 7,80 12,77 14,96 20,81 18,78 10,98 188,48
Ortalama 7,83 8,59 14,39 20,35 21,39 15,94 11,80 9,47 12,06 15,99 12,92 9,58 160,27
Example: Capacity Factor of amlca HEPP
Artvin, Arhavi, 85 MW
METU
Annual Flow Curve for amlca HPP
Example: Annual Flow Curve for amlca HEPP
Area under the curve is the total annual energy generated
0,00
4,00
8,00
12,00
16,00
20,00
24,00
Ocak ubat Mart Nisan Mays Hazr. Temm. Agust. Eyll Ekim Kasm Aralk
Area under the Annual Flow Curve
c =
Overall Area
= 37 x 0.1 x 4 / (24 x 1.0) x 100
= 61.67 %
Capacity Factor
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METU
Flow Duration Curve for amlca HPP Capacity Factor
Example: Flow Duration Curve for amlca HEPP
0,00
4,00
8,00
12,00
16,00
20,00
24,00
Ocak ubat Mart Nisan Mays Hazr. Temm. Agust. Eyll Ekim Kasm Aralk
Area under the Annual Flow Curve
c =
Overall Area
= 37 x 0.1 x 4 / (24 x 1.0) x 100
= 61.67 %
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METU
Flow Duration Curve for amlca HPP Scaling of Time Axis
Example: Flow Duration Curve of amlca HEPP
Now, convert months on the
horizontal axis, to 30 days x 24
hours / day, making; 8765 hours
in total, i.e. 30 x 24 + 5 = 8765
hours
Then, divide the resulting hours
by 8765, scaling the horizontal
axis to yield a range varying
between 0 and one.
0,00
4,00
8,00
12,00
16,00
20,00
24,00
0.1 0.2 0.3 0.4 0.5 0.6 0 0.7 0.8 0.9 1.0
Please note that capacity factor
for these parts is quite low, i.e.
These units of plant remain
idle for most of the time
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METU
Height (head) Rated Power
Height (Head) = 402.18 (m)
P = 9.81 x q x h x
= 9.81 x 22 m
3
x 402.18 x 0.90 (kW)
= 78120 kW = 78.12 MW
where, P is the rated power of the plant
expressed in kW
q is flow rate = 35 (m
3
/sec)
h is height = 402.18 m
is efficiency factor = 0.90
0,00
4,00
8,00
12,00
16,00
20,00
24,00
0.1 0.2 0.3 0.4 0.5 0.6 0 0.7 0.8 0.9 1.0
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METU
Flow Duration Curve for amlca HPP Rated Power
Now, assume that only a certain
part of flow, with a rate below a
given limit (16 m
3
/sec) is let to
pass through turbine to generate
electricity and the remaing part is
thrown out on the spillway
P = 9.81 x q x h x
= 9.81 x 16 m
3
/ sec x
402.18 m x 0.90
= 56813 kW
= 56.8 MW
where, q is flow rate (m
3
/sec)
h is height (m),
is efficiency factor
0,00
4,00
8,00
12,00
16,00
20,00
24,00
0.1 0.2 0.3 0.4 0.5 0.6 0 0.7 0.8 0.9 1.0
Energy wasted due to water
Rated Power = 56.8 MW
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(
m
3
/
s
e
c
)
METU
Flow Duration Curve for amlca HPP Capacity Factor
Capacity factor is now
determined in terms of the blue
area under the curve
Capacity factor is now higher,
implying faster rate of return for
plant investment, but with the
expense of wasting some
generation capacity
Blue Area under the Curve
c =
Rectangular Area : (16 - 0) x (1 - 0)
= 34.5 x 0.1 x 4 / (16 x 1.0)
= 86.25 %
0,00
4,00
8,00
12,00
16,00
20,00
24,00
0.1 0.2 0.3 0.4 0.5 0.6 0 0.7 0.8 0.9 1.0
Rated Power = 56.8 MW
Energy wasted due to water
F
l
o
w

R
a
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(
m
3
/
s
e
c
)
METU
Firm and Secondary Energies Definitions
Firm Energy:
is the total energy generated at firm
power, during the overall period of
operation within one year
Secondary Energy:
is the energy other than firm energy
Firm Power:
is the power that the plant can
maintain at a constant level during
the overall period of operation within
one year, i.e.
8765 x 0.95 = 8236 hours
Here, Firm Power = 8 MW
Firm and Secondary Energies of an HEPP
0,00
4,00
8,00
12,00
16,00
20,00
24,00
Firm Power
F
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3
/
s
e
c
)
0.1 0.2 0.3 0.4 0.5 0.6 0 0.7 0.8 0.9 1.0
METU
Firm and Secondary Energies Approximation
Approximate Firm Energy:
Since water flow statistics
involves some uncertainity at
about 5 % level, Firm Energy
may be assumed to be the
energy generated at power
available not during the overall
period of operation, but during
95 % of the overall period of
operation, i.e.
8765 x 0.95 = 8326 hours
Here, Firm Power = 10 MW
Approximation on Firm Energy
Firm Power 95 % of overall duration = 8326 hours
0,00
4,00
8,00
12,00
16,00
20,00
24,00
F
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R
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(
m
3
/
s
e
c
)
0.1 0.2 0.3 0.4 0.5 0.6 0 0.7 0.8 0.9 1.0
METU
Firm and Secondary Energies Definitions
Firm Energy:
is the integral of the energies
generated during 95 % of the
overall duration,
i.e. 8765 x 0.95 = 8236 hours
Firm and Secondary Energies on the Flow Duration Curve
Secondary Energy:
is the remaining energy
generated
Firm Power:
is the power used to generate
firm energy
95 % of overall duration = 8236 hours
Firm Power
0,00
4,00
8,00
12,00
16,00
20,00
24,00
0.1 0.2 0.3 0.4 0.5 0.6 0 0.7 0.8 0.9 1.0
Energy wasted due to
water thrown out on the
spillway
Firm energy
Secondary energy
Secondary
Power
Wasted
Power
Flow Rate (m
3
/sec)
METU
Price of Rated Power
Energy
+
Load Generator
Electrical Power
Since power is measured in terms of MW,
price of rated power is expressed in terms of
USD per MW, i.e. $ / MW
Definition:
Price of rated power is the investment made for
each MW of the plant, usually expressed in
terms of USD
Total investment made for plant
Price of rated Power = ---------------------------------------------
Rated power of plant
METU
Overnight Cost (OC) of a Plant
Overnight Cost of a Plant
Overnight cost of a plant is the present-value
of the investment made for the construction
of the plant
Overnight cost of a plant is the amount that
would have to be invested as lump sum up
front to pay completely for its construction
until it is turned-on into service
Financial Costs are NOT included in the
Overnight Cost
METU
Components of Overnight Cost (OC)
Classification of Overnight Costs
Direct Investments (EPC
(*)
Costs)
Investments made for;
o Engineering;
o Surveying of the site area,
o Project,
o Control
o Equipment,
o Construction,
o Installation,
o Test and Commissioning
o of the plant
---------------------------------------------------
(*)
EPC: Engineering, Procurement, Construction
Direct
Investments
Indirect
Investments
Overnight Costs
METU
Components of Overnight Cost (OC)
Indirect Investments
Indirect investments made for;
o Licensing and expropriation of the site area,
o Licensing of the plant,
o Construction of the service roads / harbour,
o Infrastructure for the transportation of the
cooling and service water,
o Fuel storage and waste disposal facilities,
o Transformer and switching substation(s),
o Cables and transmission lines connecting
plant to grid,
o Site for personnel residence and social
activities
Classification of Overnight Costs
METU
Overnight Cost (OC)
Definition
Overnight Cost includes
Installation Cost,
Tax and Insurance premiums,
All other expenditures spent during the
construction period, except financial
costs
Overnight Cost
is the sum of all fixed costs as lump sum up
front to pay (present value) during the
installation of plant, until it is turned-on
into service
-----------------------------
(*) 2003 Invesment Outlook-IEA, Financial costs are not included
Overnight Costs of Various
Plants ($/MW
)(*)
Plant Overnight Costs
(Million $ / 1000 MW)
Doalgaz Kombine evrim 400 - 600
Konvansiyonel kmr 800 - 1 300
Gelitirilmi (advanced) kmr 1 100 1 300
Kmr gazifikasyon (IGCC) 1 300 1 600
Nkleer 1 700 - 2 150
Gaz trbini - merkezi 350 - 450
Gaz trbini - dank (distributed) 700 - 800
Diesel generatr - dank 400 - 500
Yakt pili (Fuel cell) - dank 3 000 - 4 000
Rzgr - karasal 1 600 - 1 800
Rzgr - denizst 2 200 2 500
Fotovoltaik - dank 6 000 - 7 000
Fotovoltaik - merkezi 4 000 - 5 000
Biyoyakt 1 500 - 2 500
Jeotermal 1 800 - 2 600
Hidroelektrik 1 900 - 2 600
METU
Annual Capacity cost of a plant is the Overnight Cost per MW,
per year
Annual capacity cost of a plant is a quantity, like energy,
measured in terms of $ / MWy
Annual Capacity Cost (A Rough Formula)
Overnight Cost of Plant ($)
Annual Capacity Cost
(*)
= ------------------------------------------------------------------- ($ /MWy)
Rated Power (MW) x Lifetime of the Plant (year)
Overnight Cost of Plant ($)
= ---------------------------------------------------- ($ /MWy)
Overall Capacity of the Plant (MWy)
-------------------------------------
(*)
This is a rough formula, since depreciation is ignored here (Actually it must be considered)
Annual Capacity cost is expressed as $ / MW-year
METU
Conversion factor between $ / MWh and Cent / kWh is 0.1
i.e.
1 $ = 100 Cent,
1 MW = 1000 kW,
Hence,
1 $ / MWh = 100 Cent / 1000 kWh
= 100 / 1000 Cent / kWh = 0.1 Cent / kWh
or
1 Cent / kWh = 10 $ / MWh
Example
12.5 Cent / kWh = 10 x 12.5 $ / MWh = 125 $ / MWh
Alternative Units for Capacity Cost
Conversion
METU
Alternative Units for Capacity Cost
Conversion
Conversion factor between $ / kWy and $ / MWh is
8.76
i.e.
1 MW = 1000 kW
1 Year = 8765 Hours
Hence,
1 $ / MWh = 1 $ / (1000 kW x Year / 8765)
= 8765 $ / 1000 kWy
= 8.765 $ / kWy
Example
125 $ / MWh = 8.765 x 125 $ / kWy = 1095.6 $ / kWy
METU
Definition:
Rental rate (cost) of a plant is the cost of renting the
overall plant for a certain period of time, such as,
one year with all the variable costs are excluded.
Rental Rate of a Plant
Rental Rate (Cost) of a Plant
Dimension of rental rate generally $ / year
The ratio of rental rate to the rated power of the plant
yields capacity cost
i.e. Rental Rate ($/year)
----------------------------- = Capacity Cost ($/MWy)
Rated Power (MW)
= Capacity Cost (Cent/kWh)
METU
Units
Quantity
Measurement
Unit
Price Unit
Energy MWh or kWh $ / MWh or $ /kWy
Power MW or kW $ / MW or $ /kW
Capacity MWh or kWh $ / MWh or $ /kWy
Measurement Units Electrical Energy
METU
Annual Capacity Cost or Annual Revenue
is the cost, corresponding to the annual return of the Overnight
Cost of a plant for each MW
Unit for Annual Capacity Cost is $ / MW-year
Overnight Cost of plant ($)
(*)
= -------------------------------------------------------------------- ($ /MWy)
Rated Power (MW) x Lifetime of the Plant (year)
Overnight Cost of plant ($)
= ---------------------------------------------------- ($ /MWy)
Annual Capacity of the Plant (MWy)
------------------------------------
(*) This is a rough formula, since depreciation is ignored here (Actually it must be considered)
METU
Definition
Fixed Capacity Cost is the cost charged for
each MWh sold in terms of $ / MWh dependent
only on the capacity
Fixed Capacity Cost
Fixed Capacity Cost
of a plant is the cost dependent only on the
capacity, not on the system operating
conditions and percentage of Availability, i.e.
(capacity factor)
METU
Components of Fixed Capacity Cost
Components of Fixed Capacity Cost
Fixed capacity cost includes;
Investment costs concerning all
infrastructure, land and real properties,
Financial costs of credits, loans, etc,
Regular repair and maintenance
expenditures,
Salaries of the permanently employed
personnel
Unit for Fixed Capacity Cost / MWh is
$ / MWh or $ / kWy or Cent / kWh
METU
Meaning of Fixed Capacity Cost
If only variable cost were imposed, it would
be perfectly possible for these customers
without making any consumption, to make
agreement with plants for receving only
operating reserve services with no obligation
of buying electricity and paying no charge
for this service
The Need for Fixed Capacity Cost
Bares (Bandrma) 30 MW
The main reason for imposing fixed capacity
cost is that the customers with zero
consumption would otherwise pay nothing,
although they have allocated the plant, if
only variable cost were imposed
METU
Fixed Capacity Cost
Fixed Capacity Cost / MWh - FCC
Annual Capacity Cost ($)
Fixed Capacity Cost / kWh = ------------------------------------------
Rated Power (MW) * ADA (h)
= --------------------------------------
Annual Capacity (MWh)
= -------------------------------------
s (MWh)
Unit for Fixed Capacity Cost / MWh is
Fixed Capacity Cost / MWh FCC is the capacity
cost for each MWh sold by that plant
Sugz (Isken) 1210 MW
METU
Variable Capacity Cost
(VCC)
Variable Capacity Cost (VCC) is the
component of the capacity cost,
charged in proportion with the
amount of consumption
This component of cost is variable,
and depends on every MWh of
energy consumed in terms of $/ MWh
Unit for Variable Capacity Cost (VCC) is
Variable Capacity Cost (VCC)
Akenerji
Kemalpaa (zmir) Power Plant 127 MW
METU
The Need for Variable Capacity Cost
Meaning of Variable Capacity Cost
Variable Capacity Cost is the component of the
capacity cost, charged in $ / MWh for every
MWh of energy consumed
In other words, if only fixed cost were imposed,
a customer with no consumption would pay the
same annual fixed cost as the customer with
large consumption
The main reason for imposing variable capacity
cost is that all customers regardless of their
consumption would otherwise pay the same
amount of capacity charge, if only fixed cost
were imposed
METU
Variable Capacity Cost
Variable Capacity Cost - VCC
Variable Capacity Cost of a plant is the
component of the capacity cost charged for every
MWh of energy consumed
Another term used for Variable Capacity Cost of a
plant is Operation Cost
Terms in Variable Capacity Cost;
Internal electricity consumption; Electricity
consumptions of the machines and equipment
in the plant,
Consumption of all other consumables, such
as Limestone used for preventing air
pollution,
All other similiar operation dependent
expenditures
Please note that salaries Paid to
Personnel Responsible for Regular
Operation is included in Fixed Costs
not in variable Costs.
METU
Total Variable Cost (VC) of a Plant
Total Variable Cost - VC
Total Variable Cost of a plant - VC includes;
Fuel Cost FUC in $ / MWh,
Variable Capacity Cost VCC in $ / MWh
Hence, Total Variable Cost is the sum of the two
terms;
VC = FUC + VCC
where, VCC is the Variable Capacity Cost,
FUC is the Fuel Cost
Unit for Total Variable Cost (VC) is $ / MWh or $ / kWy
or Cent / kWh
METU
Investment for Plant Installation
Investment for Plant Connection to System
Investment for Air Pollution Preventation System
Total Investment Cost / kWh
Payments for Operational Material Consumed
Expenditures for Regular Repair and Maintanence (R/M) Activities
Payments for Operational Air Pollution Prevetion System Material
Consumed
Payments for Fuel
Expenditures for Regular R/M for Air Pollution Preventation System
Total R/M Cost / kWh
Combined Capacity Cost
(CCC)
Fixed Capacity Cost / kWh
Variable Capacity Cost /
kWh
+
Salaries Paid to Personnel Responsible for Regular Operation
Salaries Paid to Personnel Responsible for Air Pollution
Preventation System
Total Personnel Cost / kWh
Total Cost for Consumables /
kWh
Total Fuel Cost / kWh
Fixed and Variable Costs of Electricity
METU
Fixed and Variable Cost of Thermal Plants
Fixed and Variable Costs
Plant Overnight
Cost-OC
Fixed
Cost-FCC
Variable
Cost-VC
(Million $/MW) ($/MWh) ($/kWy) ($/MWh) ($/kWy)
Gas Turbine
(Simplex)
0,550 4.62 40.48 35.00 306.60
Coal 1,050 12.21 106.96 10.00 87.60
Capacity Factor (c)
0
5
10
15
20
25
30
0 0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8 0.9 1.0
C
o
m
b
i
n
e
d

C
a
p
a
c
i
t
y

C
o
s
t

(
$
/
M
W
h
)
F
i
x
e
d

C
o
s
t
-
F
C
C
T
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t
a
l

V
a
r
i
a
b
l
e

C
o
s
t
-
V
C
METU
Fixed and Variable Cost of Various Plants
Plant
Overnight
Cost-OC
Fixed
Cost -FCC
Variable
Cost VC
Fuel
Cost-FUC
Heat
Rate
(Million$/MW) ($/MWh) ($/MWh) ($/MBtu) (Btu/kWh)
Advanced Nuclear 1.729 23.88 4.16 0.40 10400
Coal 1.021 14.10 11.77 1.25 9419
Wind Turbine 0.919 13.85 5.0 0.0 0.0
Gas Turbine (Comb. Cycle) 0.533 7.36 20.78 3.00 6927
Gas Turbine (Simplex) 0.315 4.75 34.40 3.00 11467
Hydroelectric
METU
Problem
Unit Commitment - Example
Screening Curves
C
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C
a
p
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c
i
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C
o
s
t

(
$
/
M
W
h
)
Capacity Factor (c)
0
5
10
15
20
25
30
35
40
45
0.0 0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8 0.9 1.0
Plant Fixed
Cost -FCC
Variable
Cost VC
($/MWh) ($/MWh)
Hydroelectric 17.0 6.0
Advanced Nuclear 23.88 4.16
Coal 14.10 11.77
Gas Turbine (Comb. Cycle) 7.36 20.78
Gas Turbine (Simplex) 4.75 34.40
Wind Turbine 13.85 5.0
Now, plot the fixed and variable costs of the
plants on the same scale
METU
A possible and fair solution is that each customer
must pay for his electricity consumption with
respect to;
Fixed Capacity Cost ($ / MWh), which is
independent of consumption,
Variable Cost ($ / MWh), depending on the amount
of consumption, i.e. depending on Capacity
Factor
Most customers consume only a small
portion of the overall capacity of plant, hence
their capacity factor is much less than unity
Combining Fixed and Variable Costs
Capacity Factor, C = 0.3
T
o
t
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l

C
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t

(
$
/
M
W
h
)
0
5
10
15
20
25
30
0.0 0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8 0.9 1.0
Capacity Factor (c)
F
i
x
e
d

C
o
s
t

(
$
/
M
W
h
)
T
o
t
a
l

V
a
r
i
a
b
l
e

C
o
s
t

(
$
/
M
W
h
)

Variable Cost ($/MWh)
Fixed Cost ($/MWh)
An ideal and fair solution is to assume neither the
fixed, nor the variable costs alone, but assume a
combination of these costs with a proper linear
combination coefficient
METU
Assuming a combination of fixed and variable capacity costs
0
5
10
15
20
25
30
0.0 0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8 0.9 1.0
Capacity Factor (c)
F
i
x
e
d

C
o
s
t
-
F
C
C
T
o
t
a
l

V
a
r
i
a
b
l
e

C
o
s
t
-
V
C
Slope = Variable Cost-VC
C
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b
i
n
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d

C
a
p
a
c
i
t
y

C
o
s
t

(
$
/
M
W
h
)
Combined Capacity Cost (CCC)
or
y = b + a x x
In other words;
Combined Capacity Cost = (Fixed Capacity Cost) +
c x (Variable Capacity Cost)
where, c is a linear combination coefficient called
Capacity Factor. Thus,
CCC = FCC + VC x c ($/MWh)
where, CCC is the Combined Capacity Cost of the plant
in $ / MWh or in $ / kWy,
FCC is the Fixed Capacity Cost,
VC is the Total Variable Cost,
c is the combination coefficient, called
Capacity Factor
METU
Example
Combined Capacity Cost
CCC = FCC + VC x c
Question:
Calculate the Combined Capacity Cost
a thermal (coal) plant with fixed and
variable cost as shown below at a
capacity factor of 1/3
Fixed
Cost-VC
Variable
Cost-FCC
($/MWh) ($/kWy) ($/MWh) ($/kWy)
12.21 106.96 10.0 87.60
METU
Example
Answer
CCC = FCC + VC x c
Substituting the given parameters in
the formula:
CCC = 12.21 + (1/3) x 10.00
= 15.54 $ / MWh
or
= 15.54 x 8.76 = 136.15 $ / kWy
C
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d

C
a
p
a
c
i
t
y

C
o
s
t

(
$
/
M
W
h
)
Capacity Factor (c)
0
5
10
15
20
25
30
0 0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8 0.9 1.0
F
i
x
e
d

C
o
s
t
-
F
C
C
T
o
t
a
l

V
a
r
i
a
b
l
e

C
o
s
t
-
V
C
Slope = Variable Cost-VC
METU
= FAR + c x VAR ($/year)
where, AR is the is the overall annual income to
be earned from a plant called Annual
Revenue,
FAR = FCC x s is Fixed Annual Revenue
VAR = VC x s is Variable Annual Revenue
s is the Annual Capacity as defined
earlier
Fixed and Variable Annual Revenues
Definition
A
n
n
u
a
l

R
e
v
e
n
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e

(
A
R
)

(
$
/
y
e
a
r
)
0
5
10
15
20
25
30
0.0 0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8 0.9 1.0
Capacity Factor (c)
F
A
R
V
A
R
AR (c = 1)
Combined Capacity Cost (CCC) in the above
equation may be multiplied by the Annual
Capacity s, yielding Annual, Fixed and
Variable Revenues; AR, FAR and VAR
AR = CCC x s = FCC x s + c x VC x s
METU
Annual Revenue (AR)
Please note that;
Dimension of Annual Revenue is $ / year,
Annual Revenue becomes maximum when
the Capacity Factor is unity, i.e. c = 1 (full
capacity)
AR = CCC x s
= FAR + c x VAR
A
n
n
u
a
l

R
e
v
e
n
u
e

(
A
R
)

(
$
/
y
e
a
r
)
0
5
10
15
20
25
30
0.0 0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8 0.9 1.0
Capacity Factor (c)
F
A
R
V
A
R
AR (c = 1)
Fixed and Variable Annual Revenues
METU
Annual Revenue (AR)
Annual Revenue (AR)
In practice, it may not always be
possible to commit a plant at full
capacity factor, i.e. at unity capacity
factor, (c = 1.0)
In this case, the fixed and variable
annual revenues must be combined by
taking into account the actual capacity
factor, which is a number between zero
and unity, ( c = 0.6 )
Capacity Factor c = 0.6
A
n
n
u
a
l

R
e
v
e
n
u
e

(
A
R
)

(
$
/
y
e
a
r
)
0
5
10
15
20
25
30
0.0 0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8 0.9 1.0
Capacity Factor (c)
F
A
R
V
A
R

x

c
AR ( c = 0.6 )
V
A
R
AR = FAR + c x VAR
AR = FAR + 0.6 x VAR
METU
Example
Fixed Annual Revenue (FAR)
FAR = FCC x s
= FCC x P
rated
x ADA
= 12.21 $ / MWh x 70 MW x 0.85 x 8765
= 6,367,728.65 $
Calculate Fixed and Variable Annual
Revenues (FAR) and (VAR) of a coal plant,
with 70 MW power rating, operated at 0.85
Fixed
Cost-FCC
Variable Capacity
Cost-VC
($/MWh) ($/kWy) ($/MWh) ($/kWy)
12.21 106.96 10.0 87.60
A
n
n
u
a
l

R
e
v
e
n
u
e

(
A
R
)

(
$
/
y
e
a
r
)
Example
0
5
10
15
20
25
30
0.0 0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8 0.9 1.0
Capacity Factor (c)
V
a
r
i
a
b
l
e

A
n
n
u
a
l

R
e
v
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n
u
e
Fixed Annual Revenue
Variable Annual Rrevenue
Solution
F
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d

A
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l

R
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n
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e
METU
Example
Variable Annual Revenue (VAR)
VAR = 10.0 $/MWh x 70 MW x 0.85 x 8765
= 5,215,175.00 $
Solution
Please note that Variable
Annual Revenue is
calculated at full Capacity
Factor, i.e. c = 1.0
Example
0
5
10
15
20
25
30
0.0 0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8 0.9 1.0
Capacity Factor (c)
V
a
r
i
a
b
l
e

A
n
n
u
a
l

R
e
v
e
n
u
e
Fixed Annual Revenue
Variable Annual Rrevenue
F
i
x
e
d

A
n
n
u
a
l

R
e
v
e
n
u
e
A
n
n
u
a
l

R
e
v
e
n
u
e

(
A
R
)

(
$
/
y
e
a
r
)
METU
FACC = FAR (unchanged)
VAC = VAR x c
c = 0.238
Hence,
FACC = 6,367,728,65 (unchanged)
VAC = 5,215,175.00 x 0.238
= 1,241,211 $
Calculate the Fixed and Variable Annual
Capacity Costs of a 70 MW coal plant
with a capacity factor of 0.238. The
annual revenues are the same as given in
the previous example
Question
Example
A
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a
l

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v
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e

(
A
R
)

(
$
/
y
e
a
r
)
0
5
10
15
20
25
30
0.0 0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8 0.9 1.0
Capacity Factor (c)
F
A
R
VAR x c
AR ( c = 0.238 )
V
A
R
METU
Fixed and Variable Annual Costs
Fixed and Variable Costs Example
Question
Calculate the fixed and variable
annual costs with 70 MW power
rating, operated at 0.85 Annual
Duration of Availability
Answer
Fixed Annual Capacity Cost (FACC) of the plant
FACC = 12.21 $ / MWh x 70 MW x 8760 hours x 0.85
= 6,367,728.65 $
Variable Annual Capacity Cost (VAC) of the plant
VAC = 10.00 $/MWh x 70 MW x 8760 hours x 0.85
= 5,215,175.00 $
The same as previously calculated
Plant Overnight
Cost-OC
Fixed
Cost-FCC
Variable
Cost-VC
(Million
$/MW)
($/MWh) ($/kWy) ($/MWh) ($/kWy)
Gas Turbine
0,550 7.26 40.48 35.00 306.60
Coal
1,050 12.21 106.96 10.00 87.60
Capacity Factor (c)
0
5
10
15
20
25
30
0 0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8 0.9 1.0
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METU
Example
Cost Components
for a BOT Plant
(*)
----------------------------------
(*) A foreign investment
made in a Middle East
Country
Date
(Year)
Duration
(Years)
Annual
Generation
(kWh)
Cost Gas
Price
(Cent/kWh)
Total
Price
(Cent/kWh)
Fixed Variable
(Cent/kWh) (Cent/kWh)
1999 - 2.596.979.788 4.677 1.128 3.089 8.894
2000 1 3.410.213.896 4.677 1.142 4.392 10.212
2001 2 3.683.816.410 4.677 1.180 4.637 10.494
2002 3 3.368.217.170 4.677 1.199 3.938 9.814
2003 4 3.701.172.090 4.677 1.223 3.938 9.838
2004 5 3.683.816.410 4.677 1.248 3.938 9.863
2005 6 3.368.217.170 3.159 1.273 3.938 8.370
2006 7 3.796.563.120 3.159 1.298 3.938 8.395
2007 8 3.683.816.410 3.159 1.324 3.938 8.421
2008 9 3.368.217.170 3.159 1.350 3.938 8.448
2009 10 3.701.172.090 3.159 1.377 3.938 8.475
2010 11 3.683.816.410 0.045 1.405 3.938 5.389
2011 12 3.368.217.170 0.045 1.433 3.938 5.417
2012 13 3.796.563.120 0.045 1.462 3.938 5.445
2013 14 3.683.816.410 0.267 1.491 3.938 5.696
2014 15 3.368.217.170 0.210 1.521 3.938 5.480
2015 16 3.701.172.090 0.207 1.551 3.938 5.696
2016 17 3.683.816.410 0.207 1.582 3.938 5.727
2017 18 3.368.217.170 0.207 1.614 3.938 5.759
2018 19 3.796.563.120 0.207 1.646 3.938 5.791
2019 20 3.683.816.410 0.207 1.679 3.938 5.824
Total Production 70.899.437.416
20 year
payment plan
Please note that gas price figures in this
column are included in the tariff as Pass
Through Term
METU
r
FCC = ---------------- x OC
1-1/( 1+r )
T
r x ( 1+r )
T
= ---------------- x OC ($ / kWy)
( 1+r )
T
-1
Annual Fixed Capacity Cost Formula
Annual Fixed Capacity Cost - (FCC) of
plant may be written in terms of the
Overnight + Financial Costs (OC) as;
Karkey rnak, Silopi - 120 MW
Karadeniz Enerji
where, r is annual discount or depreciation
rate of the investment (% / 100),
OC is the Overnight Cost (million
$/MW),
T is the lifetime of the plant (years)
METU
Annual Capacity Cost Formula
Please note that, the approximate
exponential formula given in the book is
quite inaccurate particularly for the
cases, where the time period T is shorter
than 10 years, hence it is neither much
applicable, nor useful
r x ( 1+r )
T
-------------
( 1+r )
T
-1
represents the fraction of capital paid
annually in order to return it with
interests, at the end of the project
The ratio
METU
Example Annual Fixed Capacity Cost Formula
Find the Annual Fixed Capacity
Cost of a plant with 300 million
USD overnight cost and 25 years
lifetime
Assume 8 % depreciation rate
r x ( 1+r )
T
FCC = ---------------- x OC
( 1+r )
T
-1
0.08 x (1 + 0.08)
25
= ------------------------ x OC
(1 + 0.08)
25
-1
= (9.365 %) x 300
= 28.095 million USD / year
METU
A Rough Formula for Fixed Capacity Cost
r x ( 1+r )
T
FCC = ---------------- x OC ($ / kWy)
( 1+r )
T
-1
Annual Fixed Capacity Cost Formula
A rough form of the above formula may be
obtained for the case, where, r is set to zero.
The formula then reduces to
FCC = OC / T
which is the same as the Rough Formula given
previously
Homework: Derive the above result (Hint: use
LHopitals Rule).
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$
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Capacity Factor (c)
0
5
10
15
20
25
30
0 0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8 0.9 1.0
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METU
A Rough Formula for Fixed Capacity Cost
r x ( 1+r )
T
FCC = ---------------- x OC ($ / kWy)
( 1+r )
T
-1
Annual Fixed Capacity Cost
Formula
Homework: Derive the above result
(Hint: use LHopitals Rule).
where, r is annual discount or depreciation rate
of the investment (% / 100),
OC is the Overnight Cost (million $/MW),
T is the lifetime of the plant (years)
METU
Fixed Capacity Cost / MWh
Example
Example
Calculate the fixed cost of a natural gas fired thermal
plant with 20 year life and Overnight Cost (OC) of
0.550 million $ / MW by assuming 10 % annual
depreciation rate
r x ( 1+r )
T
FCC = ---------------- x OC ($ / kWy)
( 1+r )
T
-1
0.1 x (1+0.1)
20
= ------------------- 0.550 * 1 000 000 = 63.61 $ / kWy
(1+0.1)
20
1
= 63.61 / 8.76 $ / MWh = 7.26 $ / MWh
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Capacity Factor (c)
0
5
10
15
20
25
30
0 0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8 0.9 1.0
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OC and FCC have the same dimension, i.e. when OC
is given in $/MWh, FCC also comes out to be in $/MWh
METU
Calculation of Fixed Capacity Cost by using Excel
Example
Calculate the annual fixed cost of a
200 MW gas fired plant with 20 year
life and Overnight Cost (OC) of 0.550
million $ / MW by assuming 10 %
annual depreciation rate
Solution
Open Excel in Windows,
Bring cursor on the tab labelled
Sheet1 at the bottom of the
spreadsheet and press (Right Click),
Insert press (Left Click)
Spreadsheet Solutions press (Left
Click)
Loan Amortization press (Left Click)
METU
Solution
Now enter the spaces as follows;
Loan Amount: 200 MW x 0.55 10
6
USD/MW
= 110 000 000 USD
Annual Interest Rate: 10,0 %
Loan Period (in Years): 20
Number of payments/Year: 1
Starting date of the Loan: 1
Optional Extra payments: (Leave blank)
110000000
10,0 %
20
1
1
METU
Result Annual Payment = 12,92 million USD
METU
Nkleer Santral Kurulum Birim Bedelleri
(*)
(Finansman Giderleri hari)
Bilgi Kayna Birim Bedel
/kW
Bedel/
kW
(USD)
Massachusset Institute of Technology (USD) 2000 2000,00
DGEMP (Reference Costs for Power Generation) (Euro) 1280 1520,13
T&L (Tarjanne R & Loustarinen K.) (Euro) 1900 2256,44
RAE (Royal Academy of Engineering) (Pound) 1150 2006,41
Univ. of Chicago (USD) 1500 1500,00
CERI (Canadian Energy Research Institute) (Can $) 2347 2059,02
Diablo Canyon Nuclear Power
Plant
METU
Nkleer Santral letme Birim Bedelleri
Nuclear Power Plant in Bushehr, ran
(Under construction, February 26, 2006)
Yllar letme ve
Bakm
Maliyeti
Yakt
Maliyeti
Toplam
(Cent/kWh) (Cent/kWh) (Cent/kWh)
1981 1,41 1,06 2,47
1985 1,93 1,28 3,21
1990 2,07 1,01 3,08
1005 1,73 0,69 2,42
2000 1,37 0,52 1,89
2003 1,28 0,44 1,72
METU
Nkleer Santral iin Enerji Maliyeti
(*)
Beznau Nuclear Power Plant, Switzerland
Kurulu g 1000
Yl 8760
Emreamadelik Oran 0,9
Yllk alma Sresi 7884
Bakm Onarm Sresi (%) 10
Net alma Sresi (Hour) 7095,6
Amortisman Sresi (Yl) 8
Amortisman sresi iinde alma Sresi (Hour) 63.072.000
1 MW iin Yatrm (Cent) 300.000.000
1 KWh iin amortisman yk (Cent/kWh) 4,76
letme Bakm Onarm Yk (%) 10
Toplam amortisman yk (Cent/kWh) 5,23
Yakt Bedeli (Cent/kWh) 1,72
Toplam Birim Enerji Bedeli (Cent/kWh) 6,95
-------------------------------------------------
(*) Decommissioning cost is ignored
METU
Load Duration Curve is the sorted form of the Daily Loading Curve
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(
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Load Duration Curve
Sorted
wrt power
0 2 4 6 8 10 12 14 16 18 20 22 24
Duration (hours)
0
5
10
15
20
25
30
35
40
0 2 4 6 8 10 12 14 16 18 20 22 24
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(
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(
M
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Time (hours)
0
5
10
15
20
25
30
35
40
Areas (Energy consumptions) are the same
METU
Total Energy Supplied
Total energy supplied to the load is the
vertical integral of the demand curve,
over the vertical interval: P(t) 0, 40 ;
Duration (P) dP = Total energy supplied
Capacity Factor is the same as Duration of the Load Slice
Duration (%)
0
5
10
15
20
25
30
30
40
0 0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8 0.9 1.0
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(
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METU
Justification
Duration of the load slice is the
same as Capacity Factor of that
plant
Total energy that can be supplied
by the plant for a load slice P is
the overall hatched area (blue area
+ red area ) in the rectangular load
slice
Energy actually supplied by the
plant, on the other hand, is only the
blue hatched area
Now, consider a plant supplying a
load slice with thickness P and
duration d
Duration (%)
0
5
10
15
20
25
30
30
40
0 0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8 0.9 1.0
P
Duration =d
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METU
Proof of Claim
Capacity Factor may then be
written as;
Capacity Factor = Actual energy supplied/
overall energy that can be supplied
(Capacity) of the plant;
or
c = Blue area / (Red area + Blue area)
= P x d / P x Overall duration
= P x d / P x 1
= d / 1
= d
Conclusion;
Capacity Factor is the same as duration
of operation i.e.;
d = c
Duration (%)
0
5
10
15
20
25
30
30
40
0 0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8 0.9 1.0
P
Duration =d
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METU
Load Slice
Assume that this load slice; P
slice
represents a particular plant operating
within duration d
Total energy supplied by this load
slice to the load within duration d may
then be written as;
E = P x d
= P x c
where, P is the rated power of plant (MW),
d is the duration of supply,
c is the capacity factor of supply
Energy Supplied in Load Slice
Load Duration Curve
METU
Combined Energy Cost
Combined Capacity Cost (CCC), may be
divided by Capacity Factor (c), resulting
Combined Energy Cost (CEC)
CEC = CCC / c
= FCC / c + VC
where, CEC is known as the Combined
Energy Cost
Capacity Factor (c)
25.0
50.0
75.0
100.0
125.0
150.0
175.0
200.0
225.0
250.0
0.0 0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8 0.9 1.0
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Gas Plant
Coal Plant
Combined Energy Cost Curve
0.0
METU
Hyperbolic characteristics showing
Combined Energy Cost of the Gas
and coal plants given in the previous
examples are shown in the graph on
th RHS
As c is unitless, unit of division:
CEC = CCC / c
comes out again in $ / MWh
Capacity Factor (c)
25.0
50.0
75.0
100.0
125.0
150.0
175.0
200.0
225.0
250.0
0.0 0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8 0.9 1.0
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Gas Plant
Coal Plant
0.0
METU
As expected, Combined Energy Cost
for:
Gas Plant alternative is preferable
for capacity factors within the
range:
0 c 0.3
and
Coal plant alternative is preferable
for capacity factors within the
range:
0.3 c 1.0
Capacity Factor (c)
25.0
50.0
75.0
100.0
125.0
150.0
175.0
200.0
225.0
250.0
0.0 0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8 0.9 1.0
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Gas Plant
Coal Plant
0.0
METU
Combined Energy Cost Curves on
the RHS show that;
Gas Plant alternative is preferable
for capacity factors:
0 c 0.3
and
Coal plant alternative is preferable
for capacity factors:
0.3 c 1.0
Capacity Factor (c)
25.0
50.0
75.0
100.0
125.0
150.0
175.0
200.0
225.0
250.0
0.0 0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8 0.9 1.0
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Gas Plant
Coal Plant
0.0
METU
Example
CEC = FCC / c + VC
Question
Calculate the average energy cost a
thermal (coal) plant with fixed and
variable capacity costs as shown in
the following table at a capacity factor
of 1/3
Fixed
Cost-FCC
Variable
Cost-VC
($/MWh) ($/kWy) ($/MWh) ($/kWy)
12.21 106.96 10.00 87.60
Capacity Factor (c)
25.0
50.0
75.0
100.0
125.0
150.0
175.0
200.0
225.0
250.0
0.0 0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8 0.9 1.0
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Gas Plant
Coal Plant
0.0
METU
Example
CEC = FCC / c + VC
Answer:
Substitute the given parameters in the
formula:
CEC = 12.21 / (1/3) + 10.00
= 46.63 $ / MWh
or
= 46.63 x 8.76 = 408.48 $ / kWy
= 408.48 x 100 Cent / kW x 8760 h
= 4.66 Cent / kWh
Capacity Factor (c)
25.0
50.0
75.0
100.0
125.0
150.0
175.0
200.0
225.0
250.0
0.0 0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8 0.9 1.0
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Gas Plant
Coal Plant
0.0
METU
Total Cost of Supplying Demand
Load Duration Curve
Total cost of supplying the load by this
plant within duration d may then be
written as;
Total cost of energy = E x CEC or
= P x c x CEC
= P x CCC
where, E is the total energy supplied,
CEC is the Combined Energy Cost,
defined as;
CEC = FCC / c + VC,
CCC is the Combined Capacity Cost
Application
METU
Equivalence of Average Capacity and Energy Costs
Load Duration Curve
Therefore, it is shown that the total
cost of energy calculated in both
ways are the same, i.e.
E x CEC= P x CCC
where,
CCC is Combined Capacity Cost defined as;
CCC = FCC + c x VC
CEC is Combined Energy Cost defined as;
CEC = FCC / c + VC
In fact, the two formulations are equivalent
Main disadvantage of the latter formulation
is that the characteristics of CEC are
nonlinear and hence they tend to be
unbounded as c is reaches to zero.
Application

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