This Slides will help you to know the- what is the economics of power generation and how it is generated. The basic terminology used in power generation like demand factor, peak load, load curve, load factor, diversity factor, and at last you will also find out the methods used for calculating the Depreciation of materials.

1. 
ECONOMICS OF POWER GENERATION
School of Energy & Environmental Studies
Devi Ahilya Vishwavidyalaya
Indore
Submitted By: MAHARISHI TIWARI
M. Tech
(2017-19)

3. What is Economics Of Power Generation?
 Definition of Economics of Power Generation: The
art of determining the per unit (i.e. one kWh) cost of
production of Electrical Energy is known as
Economics of Power Generation.
 While designing and building a power station, efforts
should be made to achieve overall economy so that
the per unit cost of production is as low as possible.
 This will enable the electric supply company to sell
electrical energy at a profit and ensure reliable
service.

4. Terms commonly used in system
operation:
 1. Connected Load: The Sum of Continuous rating of
all the equipments (bulbs, tubes, CFLs, Fans,
Electrical Motors, Socket Outlets, and Power Plugs
etc) connected to Electrical Supply System is known
as Connected Load.
 2. Firm Power: It is defined as, the theoretical
(imaginary) value of power which a power plant
(Hydro, Thermal etc) is supposed to produce
throughout a year or at all time is known as firm
power.

5. Example Of Connected Load :

6.  3. Cold Reserve: It is defined as the reserve
generating capacity which is available for service but
is not in operation.
 4. Hot Reserve: It is defined as the reserve
generating capacity which is available in operation but
is not in service.
 5. Spinning Reserve: It is defines as the generating
capacity which is connected to bus and is ready to
take load.

7. 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 killowatts (kW) or other suitable
units.

8. Example:

9. Maximum Demand Or Peak Load And Demand
Factor:

10. Load Curve:
 Definition: The Load Curve is a Graph, which
represents load on the generation station (the load is
in kW/MW) recorded at the interval of half hour or hour
(time) against the time in chronological order.
(Or)
 The Load Curve is defined as the curve which is
drawn between loads versus time in sequential order.
We have to draw the load curve on daily basis data,
weekly, monthly basis data. (Or)
 The curves showing the variation of load on the
power station with respect to time is known as load
Curves.

11. Load Curve Systematic Diagram:

12. The Load Curve gives following Information:
 The daily load curve shows the variation of load
on the power station during different hours of
the day.
 The area under the daily load curve gives the
number of unit generated in the day. Unit
generated/day= Area (in kWh) under daily load
curve.
 The highest point on the daily load curve
represents the maximum demand on the station
on that day.

13. Plant Capacity Factor:
 It is the ration of actual energy produced to the
maximum possible energy that could have been
produced during a given period.
 The plant capacity factor is an indication of the reserve
capacity of the plant.
Reserve Capacity = Plant Capacity Factor –
Maximum Demand

14. Plant Use Factor:
 Definition: It is the ratio of kWh generated to the
product of plant capacity and the number of hours for
which the plant was in operation.
 Plant use factor indicated how much is the plant
capacity utilized, but it does not indicate the time for
which the plant remained idle.
 Average load:

15. Load Factor:
 Definition: The ratio of number of units actually
generated in a given period to number of units
which could have been generated with the same
maximum demands is called as load factor for the
station. (OR)
 The Ratio of Average Load to the Maximum
Demand during a given period is known as load
factor.
 It is always less than Unity Consider

16. Diversity factor:
 Definition: The diversity factor is the ratio of the sum
of the maximum demands of the individual consumers
and maximum demand of the System.
 Diversity Factor = Sum of Individual Maximum
Demands / Maximum Demand of the System.
 Diversity factor is always greater than unity.

19. Cost Of Power Plant:
 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
installed.

20. (ii) Interest:
 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.

21. Depreciation:
 Depreciation accounts for the deterioration of the
equipment and decrease in its value due to corrosion,
weathering, and wear and tear with use.
 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
depreciation amount:
Straight line method
Sinking fund method
Diminishing value method

22. Straight line method:
 In this method, a constant depreciation charge is
made every year on the basis of total depreciation and
the useful life of the property.
 For Example= Annual depreciation charge = Total
depreciation Useful life = 1,00,000-10,000 /20 = Rs
4,500

23. Diminishing value method:
 In this method, depreciation charge is made every year at
a fixed rate on the diminished value of the equipment.
 In other words, depreciation charge is first applied to the
initial cost of equipment and then to its diminished value.
 It is clear from the curve that depreciation charges are
heavy in the early years but decrease to a low value in the
later years.

25. Sinking fund method:

27. Thank You