EE2292 – Laboratory Practice 3

Economic Comparison of Different

Power Systems

Name: J.A.T Jayaweera

Admission No: 090231N

Date of Assignment: 20/10/2010

Date of: Submission 09/11/2010

Answer 01

a)
average load
Load factor= × 100 %
maximum load
averageload
¿ ×100 %=30 %
100 MW
Average load=30 MW
Average load with reserve capacity=30 MW ×1.25
¿ 37.5 MW
Annual energy production=37.5 MW ×1000 ×24 × 365
¿ 328500000 kWh

b)
Maximum demand with reserve capacity =100 MW ×1.25
¿ 125 MW
1. for a steam station in conjunction with hydro station
For steam

Installed max. output=125 MW −40 MW =85 MW

Capital cost=Rs. 2500 ×85 ×1000

¿ Rs. 212.5 m
Interest & depreciation on capital investment =Rs. 212.5 m ×20%
¿ Rs. 42.5 m
Operating cost =Rs. 0.18×228500000 kWh
¿ Rs. 41.13 m
Transmission cost =Rs. 0.00
Total cost for steam part=Rs. 83.63 m
For hydro

Capital cost=Rs. 5000× 40 ×1000

¿ Rs .200 m

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 Interest & depreciation on capital investment =Rs.200 m ×15%
¿ Rs.30 m
Operating cost=Rs.0.09×100000000 kWh
¿ Rs. 9 m
Transmission cost =Rs. 0.4 ×100000000 kWh
¿ Rs. 40 m
Total cost for hydro part=Rs. 79m

Total cost for steam + hydro=Rs. 83.63 m+Rs. 79 m

¿ Rs. 162.63 m
Rs. 162.63 m
Overall cost per kWh generated= =Rs. 0.50
328500000 kWh

2. for steam station

Capital cost=Rs . 2500× 125 ×1000

¿ Rs. 312.5 m
Interest & depreciation on capital investment =Rs. 312.5 m ×20%
¿ Rs. 62.5 m
Operating cost =Rs. 0.18×328500000 kWh
¿ Rs. 59.13 m
Transmission cost =Rs. 0.00
Total cost for steam station =Rs. 101.63 m
Rs. 101.63 m
Overall cost per kWh generated= =Rs. 0.31
328500000 kWh

3. for hydro station

Capital cost=Rs. 5000× 125 ×1000

¿ Rs .625 m
Interest & depreciation on capital investment =Rs.625 m ×15%
¿ Rs.93.75 m

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 Operating cost =Rs.0.09×328500000 kWh
¿ Rs. 29.565 m
Transmission cost =Rs. 0.4 ×328500000 kWh
¿ Rs. 131.4 m
Total cost for hydro station =Rs. 254.715 m
Rs. 254.715 m
Overall cost per kWh generated= =Rs. 0.78
328500000 kWh

4. for coal station

Capital cost=Rs. 3000× 125 ×1000

¿ Rs .375 m
Interest & depreciation on capital investment =Rs.375 m ×22%
¿ Rs.82.5 m
Operating cost =Rs.0.12×328500000 kWh
¿ Rs. 39.42 m
Transmission cost =Rs. 0.4 ×328500000 kWh
¿ Rs. 131.4 m
Total cost for coal station=Rs. 253.32m
Rs. 253.32m
Overall cost per kWh generated= =Rs. 0.77
328500000 kWh

Steam +
Steam Hydro Coal
Hydro
Capital Cost
( Rs. Millions) 412.5 312.5 625.0 375.0
Interest & Dep.
( Rs. Millions) 72.5 62.5 93.75 82.5
Operating Cost
( Rs. Millions) 50.13 59.13 29.565 39.42
Transmission cost
( Rs. Millions) 40.0 0 131.4 131.4
Total cost
( Rs. Millions) 162.63 121.63 254.715 253.32
Overall cost per kWh 0.50 0.37 0.78 0.77

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 generated (Rs.)

0.9
Cost per kWh generated ( Rs.)

0.8
0.7
0.6
0.5
0.4
0.3
0.2
0.1
0
Steam + hydro Steam Hydro Coal
Station

c)
For Load Factor = 10%

Annual Energy production ¿ 0.1 ×100 ×1.25 ×1000 ×24 × 365=109500000 kWh

Steam +
Steam Hydro Coal
Hydro
Capital Cost
( Rs. Millions) 412.5 312.5 625.0 375.0
Interest & Dep.
( Rs. Millions) 72.5 62.5 93.75 82.5
Operating Cost
( Rs. Millions) 10.71 19.71 9.855 13.14
Transmission cost
( Rs. Millions) 40 0 43.8 43.8
Total cost
( Rs. Millions) 123.21 82.21 147.405 139.44
Overall cost per kWh
generated (Rs.) 1.13 0.75 1.35 1.27

For Load Factor =20%

Annual Energy production ¿ 0.2 ×100 ×1.25 ×1000 ×24 × 365=219000000 kWh

Steam +
Steam Hydro Coal
Hydro
Capital Cost
( Rs. Millions) 412.5 312.5 625.0 375.0
Interest & Dep.
( Rs. Millions) 72.5 62.5 93.75 82.5
Operating Cost
( Rs. Millions) 30.42 39.42 19.71 26.28
Transmission cost
( Rs. Millions) 40 0 87.6 87.6

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 Total cost
( Rs. Millions) 142.92 101.92 201.06 196.38
Overall cost per kWh
generated (Rs.) 0.65 0.47 0.92 0.90

For Load Factor = 40%

Annual Energy production ¿ 0.4 × 100× 1.25× 1000× 24 ×365=438000000 kWh

Steam +
Steam Hydro Coal
Hydro
Capital Cost
( Rs. Millions) 412.5 312.5 625.0 375.0
Interest & Dep.
( Rs. Millions) 72.5 62.5 93.75 82.5
Operating Cost
( Rs. Millions) 69.84 78.84 39.42 52.56
Transmission cost
( Rs. Millions) 40.00 0.00 175.20 175.20
Total cost
( Rs. Millions) 182.34 141.34 308.37 310.26
Overall cost per kWh
generated (Rs.) 0.42 0.32 0.70 0.71

For Load Factor = 50%

Annual Energy production ¿ 0.5 ×100 ×1.25 ×1000 × 24 ×365=547500000 kWh

Steam +
Steam Hydro Coal
Hydro
Capital Cost
( Rs. Millions) 412.5 312.5 625.0 375.0
Interest & Dep.
( Rs. Millions) 72.5 62.5 93.75 82.5
Operating Cost
( Rs. Millions) 89.55 98.55 49.275 65.7
Transmission cost
( Rs. Millions) 40.0 0 219.0 219.0
Total cost
( Rs. Millions) 202.05 161.05 362.025 367.2
Overall cost per kWh
generated (Rs.) 0.37 0.29 0.66 0.67

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For Load Factor =60%

Annual Energy production ¿ 0.6 ×100 ×1.25 × 1000× 24 ×365=657000000 kWh

Steam +
Steam Hydro Coal
Hydro
Capital Cost
( Rs. Millions) 412.5 312.5 625.0 375.0
Interest & Dep.
( Rs. Millions) 72.5 62.5 93.75 82.5
Operating Cost
( Rs. Millions) 109.26 118.26 59.13 78.84
Transmission cost
( Rs. Millions) 40.0 0 262.8 262.8
Total cost
( Rs. Millions) 221.76 180.76 415.68 424.14
Overall cost per kWh
generated (Rs.) 0.34 0.28 0.63 0.65

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 Overall cost per kWh generated Vs Load Factor
1.40
1.30
1.20
1.10
Overall cost per kWh genetated (Rs.)

1.00
0.90
0.80 Hydro + Steam
Steam Station
0.70
Hydro Station
0.60 Coal Station
0.50
0.40
0.30
0.20
0.10
0.00
10% 20% 30% 40% 50% 60%
Load Factor

Answer 02
01. Electrification with a small hydropower unit

150
Energy demanded for year = kW ×5 hrs ×365 ×200
1000
¿ 54750 kWh
Since the overall efficiency of the plant is 80%,

100
Energy produced for the year =54750 kWh× =68437.5 kWh
80

1 1
Annuity factor =
r
1−
[(1+r )n ] Where r =discou nt rate , n=no of years

1 1
¿
20 % [
1−
( 1+ 20 % )20 ]
¿ 4.8696

Total cost = Annuity factor × Annual cost

1800000=4.8696 × Annual cost

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 1800000
Annual cost= =Rs .369640.22
4.8696
Annual cost Rs .369640 .22
Unit cost = = =Rs 5.40 per kWh
Energy produced for the year 68437.5 kWh

02. Supply of grid electricity for isolated village

Energy demanded for year=50 kWh ×12 ×150

¿ 90000 kWh
Total construction & installation cost =Rs .600000× 10+ Rs .400000× 2+ Rs .500000
¿ Rs .7300000.00
Annuity factor =4.8696
Total cost = Annuity factor × Annual cost

7300000=4.8696 × Annual cost

7300000
Annual cost= =Rs .1499096.44
4.8696
Annual cost Rs .1499096 .44
Unit cost = = =Rs 16.66 per kWh
Energy demand for the year 90000 kWh

Discussion

Importance of interest and depreciation rate

The total cost incurred for business or project can be separated to two as capital expenditure
and revenue expenditure. Interest and depreciation is very important when recovering the capital
expenditure. The concept and practice of depreciation plays an integral part in a company's cash flow
situation and funding. The two main reasons this occurs are that firstly depreciation is a for self
finance, and secondly because a company does not have to pay taxes on depreciation, hence
excluding taxation from a cash amount which enlarges the cash flow of a company.

As a term, depreciation is defined as a loss in value, a diminishment in market price, always

taking the time factor into account, because the view point of depreciation is always a rate of change
in value in an asset (fixed or current) compared to the present value of that asset.

There are few factors to be considered when calculating the interest and depreciation rate.

 Cost : all necessary and assets life enhancing costs

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  Useful life : estimated period of time that asset is likely to be used
 Residual value : estimated sales value at the end of useful life on an asset

The purpose to use depreciation rate is to spread the capital cost throughout the lifetime and
recover it. In this problem, all the capital cost spread among useful life of 20 yrs. Also considered that
there is no residual value at the end of 5 yrs. We can calculate depreciation by using following
formula.

Annual depreciation expence=Cost of ¿ asset−Residual value ¿

Usefullife (¿ yrs)

Importance of Load Factor

The Load Factor means the ratio between the average load and maximum load demanded. The
load factor has an important influence on the cost of delivering electrical energy to customers. The
extreme inefficiency of present low load factors is a major reason for many current difficulties, most of
which could be overcome by scrapping much equipment and raising the operating load factors on the
remainder to the highest possible degree.

The electrical use pattern for the average residential customer yields a low load factor for the
individual residential customer and holds the total electric utility load factor at a relatively low value.
The relative importance of the residential customer in influencing the total load factor of the electric
utility is not likely to decrease in the future. There are a number of possible means for improving the
residential load factor and so reap the very large savings that accompany a high total load factor for
the electric utility. In addition, this gives the idea about how the demand varies in particular period (i.e.
a day). When load factor is high, it means percentage of power consumption in a period is fairly
distributed. If load factor is low, higher power consumption in only a short period of a day. It is a
disadvantage in financial aspect because in such a case we have to create station with higher
capacity. But it runs with full capacity for a short period.

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