Power Plant Analysis

1. Program: Diploma (Mechanical)
Class: TY(ME) Semester: V
Course: Power Plant Engineering
Code: 22566
LECTURE16:
Unit: 6. Economic Analysis of PowerPlants

2. 03
Unit VI:Economic Analysis of Power Plants
TOPICSCOVEREDINPREVIOUSLECTURE
2. NuclearFuelsandNuclearReactor
3. Advantages andDisadvantages
4. Intro. to RegulatingAgencies
TOPICSTOBECOVEREDINTHISLECTURE
1. Estimation of ProductionCostof Electrical Energy
2. Estimation ofPerformance Parameters
3. Factorsaffecting choice of PowerPlant.

3. 04
Unit VI:Economic Analysis of Power Plants
6.1: Economic Analysis of Power Plants: INTRODUCTION
 There are various sources of energy e.g. the energy from conventional fuels, hydro energy, solar energy,
wind energy, atomicenergy etc.
 However, all types of energies are converted into electrical energy since this energy is by far the most
convenient, clean and easiest to handle for various practical applications.
 The economics of generation of electric power is of major concern both to the electric supply company and
as well to the consumer.
 An electric supply company will work out the cost of generation before installing a power generating plant.
It has to assess the following parameters:-
1. Low initial cost and high efficiency of power generation
2. Safety
3. Reliability
4. Ease of maintenance
5. Minimum operating cost
6. Profits

4. 05
Unit VI:Economic Analysis of Power Plants
6.1: Economic Analysis of Power Plants: INTRODUCTION
Whereas, a consumer is required to assess its power requirement, availability of energy to him from a public
supply company or generation of its own power by installing a generator.
 The consumer will work out the comparative cost of power by various alternatives available to him i.e.
whether to buy the power or generate its own power or buy as well generate its own power.
 Therefore, the economics of power generation is of great importance in designing a power plant.

5. 06
Unit VI:Economic Analysis of Power Plants
1. : Estimation of Production Cost of Electrical Energy
The total of electrical energy generated by a power plant can be broadly divided into two parts
as follows :
1. FIXED COST
2. RUNNING OR OPERATIONAL COST

6. 07
Unit VI:Economic Analysis of Power Plants
2
1
2. COSTOFBUILDING
1. COSTNEEDEDFORPURCHASEOF
LANDANDEQUIPMENT
6.2.1: Cost of Electrical Energy: 1. FIXEDCOST
The fixed cost is the initial cost incurred in installing a power plant. This cost includes the following :
3
5
4
4. COSTOFDESIGNINGANDPLANNINGOFPOWERSTATION.
3. COSTOFINSTALLATION
5. TRANSMISSIONAND
DISTRIBUTIONCOST.

7. 08
Unit VI:Economic Analysis of Power Plants
6.2.1: Cost of Electrical Energy: 1. FIXEDCOST
 Thefixedcost depends onthesizeorrating of theplant to beinstalled.
 It further includes the interest on capital borrowed, depreciation, insurance premium, taxes of government and
salaries of fixed management and clerical staff.
 These charges are called AnnualFixedChargeswhich are kept aside every year. These are as follows :
2
1
2. DEPRECIATION
1. INTEREST ON CAPITAL
INVESTM ENT
3
5
4
4. INSURANCE PREMIUM
3. TAXES
5. SALARIES OF MANAGEMENT &
CLERICAL STAFF.

8. 09
Unit VI:Economic Analysis of Power Plants
2
1
2. COST OF OIL, WATER &
GREASE
1. COST OF FUEL & LUBRICANTS
6.2.1: Cost of Electrical Energy: 2. RUNNINGOROPERATIONALCOST
These are the charges which are required to be incurred continuously for running the plant.
3
5
4
4. COST OF GENERAL MAINTENANCE
3. COST OF OPERATING LABOUR
5. COST OF SPARES & REPAIRS

9. 10
Unit VI:Economic Analysis of Power Plants
2. : Unit EnergyCost
Unit energy cost is calculated as follows :
1. Annual fixed charges are calculated based on the kW rating of the plant.
2. Annual running charges are calculated based on the number of hours the power plant is generating
electrical energy.
Unit energy cost = Annual fixed charges + Annual running charges
kW rating of plant Power generated inkWh
Unit energy cost =Rs. A/kW +Rs. B/kWh

10. 11
Unit VI:Economic Analysis of Power Plants
3. : Estimation of Various Performance Parameters
1. Heat Rate (Energy Efficiency)
Overall thermal performance or energy efficiency for a power plant for a period can be defined as ;
φ hr = H /E
Where, φhr = heat rate (Btu/kWh,kJ/kWh)
H = heat supplied to the power plant for a period (Btu, kJ)
E = energy output from the power plant in the period (kWh)
2. Thermal Efficiency
Thermal efficiency can be expressed as ;
μte = (100) (3412.75 Btu/kWh)
φ
Where, μte = Thermal Efficiency (%)
1kWh = 3412.75 Btu

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Unit VI:Economic Analysis of Power Plants
3. : Estimation of Various Performance Parameters
3. Capacity Factor
The capacity factor for a power plant is the ratio between average load and rated load for a period of time
and can be expressed as,
μcf = (100)Pal
Prl
Where, μcf = Capacity Factor(%)
Pal = average load for the power plant for a period (kW)
Prl = rated capacity for the power plant(kW)
4. Load Factor
Load factor for a power plant is the ratio between average load and peak load and can be expressed as
μlf = (100)Pal
Ppl
Where, μlf = Load Factor(%)
Pal = average load for the power plant for a period (kW)
Ppl = Peak capacity for the power plant(kW)

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Unit VI:Economic Analysis of Power Plants
3. : Estimation of Various Performance Parameters
5. Economic Efficiency
Economic efficiency is the ratio between production costs, including fuel, labor, materials and services,
and energy output from the power plant for a period of time. Economic efficiency can be expressed as,
φee = C / E
Where, φee = economic efficiency (cents/kW, euro/kW, ...)
C= production costs for a period (cents, euro, ..)
E = energy output from the power plant in the period (kWh)
6. Operational Efficiency
*Operational efficiency is the ratio of the total electricity produced by the plant during a period of time
compared to the total potential electricity that could have been produced if the plant operated
at 100 percent in the period.
* Operational efficiency can be expressed as, μeo = (100) E
Where
E 100%
E = energy output from the power plant in the period (kWh)
E100% = potential energy output when operated at 100% in the period (kWh)

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Unit VI:Economic Analysis of Power Plants
6.3 : Estimation of Various PerformanceParameters
7. Diversity factor:
Diversity factor = Sum of individual maximum demands
Simultaneous maximum demand
8. Plant capacity factor :
Capacity factor = Average load x t
Plant capacity x t
= Peak load x Load factor
Plant capacity
9. Plant use factor :
It is defined as the ratio of energy produced in given time to maximum possible energy that could have
been produced during the actual number of hours of operation.
Plant use factor = Annual energy produced X No. of hours the plant is in operation during the year
Capacity of plant
10. Utilization factor
It is the ratio of the maximum generator demand to the generator capacity.
Utilization factor = Maximum generator demand / Generator capacity.

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Unit VI:Economic Analysis of Power Plants
4. : Factors Affecting on Choice of Power Plant
1. Type of fuelavailable.
2. Fuel transportation cost.
3. Requirement and cost of land and cost of foundation.
4. Cost of equipment for transmission of energy.
5. Availability of cooling water.
6. Type of load.
7. Site of power plant.
8. Generating unit.
9. Number of generatingunits.
10. Pollution and Noise

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Unit VI:Economic Analysis of Power Plants
6.5 : METHODSTOREDUCEPOWERGENERATIONCOST
1. By using a plant of simple design, which does not need highly skilled personnel/labour.
2. By selecting equipment's of proper capacities.
3. By selecting equipment's having longer life and requiring minimum maintenance cost over the whole life.
4. By carrying out proper maintenance of equipment's to avoid plant breakdowns.
5. By running the power plant/stations at high load factors.
6. By increasing the efficiency of power plant.
7. By supervising the plant operations carefully, which ensures few breakdowns and extended plant life.