POWER PLANT ECONOMICS AND ENVIRONMENTAL CONSIDERATIONS - SNIST
SNIST (JNTUH) – B.TECH (MECH)
POWER PLANT ECONOMICS AND
Dr. S. VIJAYA BHASKAR
Professor in Mechanical Engineering
Sreenidhi Inst. of Science &
POWER PLANT ECONOMY
The main purpose of design and operation of the
plant is to bring the cost of energy produced to
Effective utilization of resources, minimize the
losses in order to increase the profit of the power
FIXED COST / CAPITAL COST
The cost analysis of power plant includes fixed cost
and running cost.
1. Fixed cost:
(i) Land, building and equipment cost:
Cost of land and building will depend upon the
location of the plant. If the plant is situated near the
cities, the land will be costlier than the case if it is
located away from the cities.
The cost of equipment or the plant investment cost
is usually expressed on the basis of kW capacity
All the enterprises need investment of money and
this money may be obtained as loan, through bonds
and shares, or from owners of personal funds.
The interest on the capital investment must be
considered because otherwise if the same amount
was not invested in power plant, it would have
earned an annual interest.
A suitable rate of interest must be considered on
the capital invested.
(iii) Depreciation cost:
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 obsolescence. It is required to replace the
generating plant machinery after its expiry of useful
Therefore, a certain amount is kept aside every
year from the income of the plant to enable the
replacement of plant at the end of its useful life.
This amount is called depreciation amount.
The following methods are used to calculate the
Straight line method
Sinking fund method
Diminishing value method
Let P = Initial cost of plant
S = Salvage value at the end of the plant life,
n = Plant life in years,
r = Annual rate of interest on the invested
A = The amount to be kept aside per year as
(a) Straight line method:
According to this method, annual amount to be set aside is
calculated by using following formula:
In this method, the amount set aside per year as depreciation
fund does not depend on the interest it may draw. The interest
earned by the depreciation amount is taken as income.
This method is commonly used because of its simplicity.
P - S
(b) Sinking Fund Method:
In this method, the amount set aside per year consists
of annual installations and the interest earned on all
(C) DIMINISHING VALUE METHOD:
In this method the deterioration in value of equipment
from year to year is taken into account and the
amount of depreciation calculated upon actual residual
value for each year. It thus, reduces for successive years.
The costly equipment and the buildings must
be insured for the fire risks, riots etc. A fixed sum is
set aside per year as insurance charges. The
insurance charge depends upon the initial cost of the
plant and the insurance coverage.
(v) Management cost:
This includes the salaries of management,
security and administrative staff, etc. working in the
plant. This must be paid whether the plant is working
or not. Therefore, this is included in fixed charges of
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.
In the hydro plants the absence of fuel factor in cost is
responsible for lowering the operating cost.
Plant heat rate can be improved by the use of better
quality of fuel or by employing better thermodynamic
conditions in the plant design.
The cost of fuel varies with the following:
(1) Unit price of the fuel.
(2) Amount of energy produced.
(3) Efficiency of the plant.
For plant operation labour cost is another item
of operating cost. Maximum labour is needed
in a thermal power plant using. Coal as a fuel.
A hydraulic power plant or a diesel power plant
of equal capacity requires a lesser number of
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
COST OF MAINTENANCE AND REPAIRS
In order to avoid plant breakdowns maintenance
is necessary. Maintenance includes periodic
cleaning, greasing, adjustments and overhauling
The material used for maintenance is also
charged under this head. Sometimes an arbitrary
percentage is assumed as maintenance cost.
A good plan of maintenance would keep the sets
in dependable condition and avoid the necessity
of too many stand-by plants. 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 and are charged to the depreciation
fund of the equipment.
This item of cost is higher for thermal plants
than for hydro-plants due to complex nature of
principal equipment and auxiliaries in the former.
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.
In this head the salary of supervising staff is included. A good
supervision is reflected in lesser breakdowns and extended
The supervising staff includes the station superintendent,
chief engineer, chemist, engineers, supervisors, stores
incharges, purchase officer and other establishment.
Again, thermal stations, particularly coal fed, have a greater
incidence of this cost than the hydro-electric power stations.
The taxes under operating head includes the
(i) Income tax
(ii) Sales tax
(iii) Social security and employee’s security etc.
(iv) Recently added goods and service tax(GST)
Types of Loads
(i) Residential load: This type of load includes domestic lights, power
needed for domestic appliances such as radios, TV, water heaters,
refrigerators, electric cookers and small motors for pumping water.
(ii) Commercial load: It includes lighting for shops, advertisements
and electrical appliances used in shops and restaurants etc.
(iii) Industrial load: It consists of load demand of various industries.
(iv ) Municipal load: It consists of street lighting, power required for
water supply and drainage purposes.
(v) Irrigation load: This type of load includes electrical power needed
for pumps driven by electric motors to supply water to fields.
(vi) Traction load: It includes trams, cars, trolley, buses and railways.
The load on power plants will always be changing with
time and will not be constant because consumer of
electric power will use the power as and when required.
Load curve is graphical representation between load in
It shows variation of load on the power station.
If the time is in hours then the load curve is known as
daily load curve.
If the times is in days, the load curve is known as
monthly load curve and if the time is in months, the
load curve is known as yearly or annual load curve.
The daily load curve will be different for different type
of consumers and different localities. These load curves
may show different pattern during summer, winter and
The combined daily load curve for all types of
consumers is shown in figure (a) and the
approximated curve for simplicity is shown in figure
TERMS AND FACTORS
Connected load: Connected load is the sum of
ratings in kilowatts (kW) of equipment installed in the
The connected loads in the premises of a consumer are
shown in figure. Total load connected in the consumer’s
= 40 + 1000 + 60 + 40 + 20 + 500 + 25 + 60 = 1745W
Demand: The demand of an installation or system is the
load that drawn from the source of supply at the
receiving terminals averaged over a suitable and
specified interval of time. Demand is expressed in
kilowatts (kW) or other suitable units.
Maximum demand or Peak load: It is the maximum
load which a consumer uses at any time. It can be less
than or equal to connected load.
If all the equipment fitted in consumer’s premises run
to their fullest extent simultaneously then the
maximum demand will be equal to connected load.
But generally the actual maximum demand is less than
the connected load because all the devices never run
at full load at the same time.
TERMS AND FACTORS
It is defined as the ratio of the average load to the peak load
during a certain prescribed period of time.
The load factor of a power plant should be high so that the
total capacity of the plant is utilized for the maximum period
that will result in lower cost of the electricity being generated. It
is always less than unity.
High load factor is a desirable quality. Higher load factor
means greater average load, resulting in greater number of
power units generated for a given maximum demand. Thus,
the fixed cost, which is proportional to the maximum demand,
can be distributed over a greater number of units (kWh)
This will lower the overall cost of the supply of electric energy.
TERMS AND FACTORS
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) =
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.
Since the load and diversity factors are not involved with ‘reserve capacity’ of
the power plant, a factor is needed which will measure the reserve, likewise
the degree of utilization of the installed equipment.
For this, the factor “Plant factor, Capacity factor or Plant Capacity factor” is
Plant Capacity Factor = (Actual kWh Produced)/(Maximum Possible Energy
that might have produced during the same period)
Thus the annual plant capacity factor will be,
= (Annual kWh produced)/[Plant capacity (kW) × hours of the year]
The difference between load and capacity factors is an indication of reserve
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. Diversity Factor
Supposing there is a group of consumers. It is known from experience that
the maximum demands of the individual consumers will not occur at one
The ratio of the sum of the individual maximum demands to the maximum
demand of the total group is known as diversity factor. It is always greater
High diversity factor (which is always greater than unity) is also a desirable
quality. With a given number of consumers, higher the value of diversity
factor, lower will be the maximum demand on the plant, since,
Diversity factor = Sum of the individual maximum Demands/Maximum demand of the total group
The capacity of the plant will be smaller, resulting in fixed charges.
7. 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.
8. Load Duration Curve
It is the curve for a plant showing the total time within a specified
period, during which the load equaled or exceeded the values
9. Dump Power
This term is used in hydro plants and it shows the power in excess of
the load requirements and it is made available by surplus water.
10. Firm Power
It is the power, which should always be available even under
11. Prime Power
It is power, may be mechanical, hydraulic or thermal that is always
available for conversion into electric power.
12. Cold Reserve
It is that reserve generating capacity which is not in operation but can
be made available for service.
13. Hot Reserve
It is that reserve generating capacity which is in operation
but not in service.
14. Spinning Reserve
It is that reserve generating capacity which is connected
to the bus and is ready to take the load.
15. Plant Use Factor
This is a modification of Plant Capacity factor in that only
the actual number of hours that the plant was in
operation is used.
Thus Annual Plant Use factor is,
= (Annual kWh produced) / [Plant capacity (kW) × number of
hours of plant operation]
FACTOR EFFECTING POWER
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
The power plant pollutants of major concern
A. From fossil power
(i) Sulphur oxide
(ii) Nitrogen oxides
(iii) Carbon oxide
B. From nuclear power
(i) Radioactivity release
(ii) Radioactive wastes
(iii) Thermal pollution.
Besides this, pollutants such as lead and
hydrocarbons are contributed by automobiles.
The air pollution in a large measure is caused by
the thermal power plants burning conventional
fuels (coal, oil or gas).
The combustible elements of the fuel are
converted to gaseous products and non-
combustible elements to ash.
Thus the emission can be classified as follow:
1. Gaseous emission
2. Particulate emission
3. Solid waste emission
4. Thermal pollution (or waste heat)
1. Gaseous Emission and Its Control:
The various gaseous pollutants are:
(i) Sulphur dioxide
(ii) Hydrogen sulphide
(iii) Oxides of nitrogen
(iv) Carbon monoxide etc.
2.Particulate Emission and Its Control:
• The particulate emission, in power plants using fossil fuels, is easiest
• Particulate matter can be either dust (particles having a diameter of 1
micron) which do not settle down or particles with a diameter of
more than 10 microns which settle down to the ground.
• The particulate emission can be classified as follows:
• Smoke: It composes of stable suspension of particles that have a
diameter of less than 10 microns and are visible only in the aggregate.
• Fumes: These are very small particles resulting from chemical
reactions and are normally composed of metals and metallic oxides.
• Fly-ash: These are ash particles of diameters of 100 microns or less.
3. Solid Waste Disposal
• From the fossil fuel fired power plants
considerable amount of solids in the form of ash
is discharged. This ash is removed as bottom ash
or slug from the furnace.
• The fossil fuel fired system also discharges solid
wastes such as calcium and magnesium salts
generated by absorption of SO2 and SO3 by
reactant like lime stone.
4. Thermal Pollution
• Discharge of thermal energy into waters is
commonly called Thermal pollution.
• Thermal power stations invariably will have to
discharge enormous amounts of energy into water
since water is one medium largely used to condense
• If this heated water from condensers is discharged
into lakes or rivers, the water temperature goes up.
The ability of water to hold dissolved gases goes
down when the temperature increases.
• At about 35°C, the dissolved oxygen will be so low
that the aquatic life will dies
• One of the Govt. Regulation states that ‘the max.
temp of outlet water should not be more than 10C
above atmospheric temperature
How to reduce Thermal Pollution
• While considering the efficiency of the thermal
plant, it is desirable that the water from a river or
lake is pumped through the condenser and fed back
to the source.
• The rise of temperature will be about 10°C which is
highly objectionable from the pollution point of
• Hence, this waste heat which is removed from the
condenser will have to be thrown into the
atmosphere and not into the water source, in this
direction following methods can be adopted :
1. Construction of a separate lake
2. Cooling pond
3. Cooling towers.
The various types of pollution from nuclear power plants are:
(i) Radioactive pollution
(ii) Waste from reactor (solid, liquid, gases)
(iii) Thermal pollution.
i).Radioactive pollution: This is the most dangerous and serious
type of pollution.This is due to radioactive elements and
fissionable products in reactor.The best way to abate is the
radioactive shield around the reactor.
ii) Waste from reactor: Due to nuclear reactor reaction nuclear
wastes (mixtures of various Beta and Gamma emitting
radioactive isotopes with various half lives) are produced
which cannot be neutralised by any chemical method.
If the waste is discharged in the atmosphere, air and water will
be contaminated beyond the tolerable limits
Some methods of storage or disposal of radioactive waste
materials are discussed below :
1. Storage tanks.The radioactive wastes can be buried
underground (very deep below the surface) in corrosion
resistance tanks located in isolated areas.With the passage of
time these will become stable isotopes.
2. Dilution. After storing for a short time, low energy wastes are
diluted either in liquid or gaseous materials. After dilution, they
are disposed off in sewer without causing hazard.
3. Sea disposal. This dilution can be used by adequately diluting
the wastes and this method is being used by the British.
4. Atmospheric dilution. This method can be used for gaseous
radioactive wastes. But solid particles from the gaseous wastes
must be filtered out thoroughly since they are the most
dangerous with higher half lives.
5. Absorption by the soil. Fission products are disposed off by this
method.The radioactive particles are absorbed by the soil
particles. But this is expensive.
6. Burying is sea. Solid nuclear wastes can be stored is concrete
blocks which are hurried in the sea.This method is expensive but
no further care is needed.
Hydro-electric and Solar Power Generation plants have no
polluting effect on the environment.
The hydro-electric project does not pollute the atmosphere
at all, but it can be argued that the solar power stations in
the long run may upset the balance in nature.To extend the
argument to the logical end, imagine a very vast area of land
is covered by solar collectors of different forms.Then the
minimum required sun's rays may not reach the earth's
This will certainly kill the vegetation on the earth and also
the bacteria which are destroyed by sun's rays may survive
giving rise to new types of health problems.
Further, the evaporation of water and
consequent rains may change their cycles.
Added to these, the average temperatures of
the earth and ocean may change.
This may result in new balances among the
living creatures which cannot be easily
predicted. Since we do not envisage such a large
scale coverage of earth's surface in the near
future, we can safely state that the solar energy
power plants do not pollute the atmosphere.