ECONOMICS OF POWER GENERATION

Factors to be considered while designing a power plant

1. Simplicity of design
2. Low capital cost
3. Low cost of energy generated
4. High efficiency
5. Low maintenance cost
6. Low operating cost
7. Reliability of supplying power
8. Reserve capacity to meet future demand
Types of loads
• Residential load
• Commercial load
• Industrial load
• Municipal load
• Irrigation load
• Traction load
• Main purpose of design and operation of plant is to bring cost of energy to
minimum
• Connected Load : Sum of continuous rating of all electrical appliances on
consumer’s premises connected to supply system.
• Maximum demand or Peak Load: The greatest of all demands (load) on the
power station during a given period.
• Maximum demand<connected load
• Determines the installed capacity of plant
• Demand Factor : (𝑀𝑎𝑥𝑖𝑚𝑢𝑚 𝑑𝑒𝑚𝑎𝑛𝑑)/(𝐶𝑜𝑛𝑛𝑒𝑐𝑡𝑒𝑑 𝑙𝑜𝑎𝑑) <1
• Average Load : Average of loads occurring on power station in a given
period (Day/Month/Year)
 𝑁𝑜,𝑜𝑓 𝑢𝑛𝑖𝑡𝑠 𝑘𝑊ℎ 𝑔𝑒𝑛𝑒𝑟𝑎𝑡𝑒𝑑 𝑖𝑛 𝑎 𝑑𝑎𝑦
 Daily average load =
24 ℎ𝑟𝑠
𝑁𝑜 𝑜𝑓 𝑢𝑛𝑖𝑡𝑠 𝑘𝑊ℎ 𝑔𝑒𝑛𝑒𝑟𝑎𝑡𝑒𝑑 𝑖𝑛 𝑎 𝑚𝑜𝑛𝑡ℎ
 Monthly Average Load =
𝑁𝑜.𝑜𝑓 ℎ𝑜𝑢𝑟𝑠 𝑖𝑛 𝑎 𝑚𝑜𝑛𝑡ℎ
𝑁𝑜 𝑜𝑓 𝑢𝑛𝑖𝑡𝑠 𝑘𝑊ℎ 𝑔𝑒𝑛𝑒𝑟𝑎𝑡𝑒𝑑 𝑖𝑛 𝑎 𝑦𝑒𝑎𝑟
 Yearly average load = 𝑁𝑜 𝑜𝑓 ℎ𝑜𝑢𝑟𝑠 𝑖𝑛 𝑎 𝑦𝑒𝑎𝑟

Load Factor : Ratio of average load during a period to maximum load during the same period

𝐴𝑣𝑒𝑟𝑎𝑔𝑒 𝑙𝑜𝑎𝑑 (𝑘𝑊, 𝑀𝑊)

Load factor= For a specified period
𝑀𝑎𝑥𝑖𝑚𝑢𝑚 𝑙𝑜𝑎𝑑 (𝑘𝑤,𝑀𝑊)

𝐴𝑣𝑒𝑟𝑎𝑔𝑒 𝑙𝑜𝑎𝑑 ∗24

Daily load factor =
𝑀𝑎𝑥𝑖𝑚𝑢𝑚 𝑙𝑜𝑎𝑑 ∗24

𝐸𝑛𝑒𝑟𝑔𝑦 𝑈𝑛𝑖𝑡𝑠,𝑘𝑊ℎ𝑟 𝑔𝑒𝑛𝑒𝑟𝑎𝑡𝑒𝑑𝑖𝑛 24 ℎ𝑟𝑠

=
𝑀𝑎𝑥𝑖𝑚𝑢𝑚 𝑙𝑜𝑎𝑑∗24
Monthly load factor ,Annual load factor
 Load factor is always less than 1
 Desirable range is 0.55-0.70
 Load factor determines the overall cost per unit generated
 Higher the load factor ,lesser will be cost per unit generated; more economical
 𝑆𝑢𝑚 𝑜𝑓 𝑖𝑛𝑑𝑖𝑣𝑖𝑑𝑢𝑎𝑙 𝑚𝑎𝑥𝑖𝑚𝑢𝑚 𝑑𝑒𝑚𝑎𝑛𝑑
Diversity factor = 𝑀𝑎𝑥𝑖𝑚𝑢𝑚 𝑑𝑒𝑚𝑎𝑛𝑑 𝑜𝑛 𝑝𝑜𝑤𝑒𝑟 𝑠𝑡𝑎𝑡𝑖𝑜𝑛

 Maximum demand of various consumers do not occur at the same time- ensures time diversification of load
 Diversity factor > 1
 Greater the diversity factor, lesser is the cost of generation

𝐸𝑛𝑒𝑟𝑔𝑦 𝑝𝑟𝑜𝑑𝑢𝑐𝑒𝑑 𝑖𝑛 𝑎𝑔𝑖𝑣𝑒𝑛 𝑝𝑒𝑟𝑖𝑜𝑑

Plant Capacity factor = 𝑚𝑎𝑥𝑖𝑚𝑢𝑚 𝑒𝑛𝑒𝑟𝑔𝑦 𝑡ℎ𝑎𝑡 𝑐𝑜𝑢𝑙𝑑 ℎ𝑎𝑣𝑒 𝑏𝑒𝑒𝑛 𝑝𝑟𝑜𝑑𝑢𝑐𝑒𝑑
𝐴𝑣𝑒𝑟𝑎𝑔𝑒 𝑑𝑒𝑚𝑎𝑛𝑑∗𝑇 𝐴𝑣𝑒𝑟𝑎𝑔𝑒 𝑑𝑒𝑚𝑎𝑛𝑑
= =
𝑃𝑙𝑎𝑛𝑡 𝑐𝑎𝑝𝑎𝑐𝑖𝑡𝑦 ∗𝑇 𝑃𝑙𝑎𝑛𝑡 𝑐𝑎𝑝𝑎𝑐𝑖𝑡𝑦

Plant Use Factor=

𝐸𝑛𝑒𝑟𝑔𝑦 𝑝𝑟𝑜𝑑𝑢𝑐𝑒𝑑 𝑖𝑛 𝑎𝑔𝑖𝑣𝑒𝑛 𝑝𝑒𝑟𝑖𝑜𝑑

𝑚𝑎𝑥𝑖𝑚𝑢𝑚 𝑒𝑛𝑒𝑟𝑔𝑦 𝑡ℎ𝑎𝑡 𝑐𝑜𝑢𝑙𝑑 ℎ𝑎𝑣𝑒 𝑏𝑒𝑒𝑛 𝑝𝑟𝑜𝑑𝑢𝑐𝑒𝑑 𝑑𝑢𝑟𝑖𝑛𝑔 𝑡ℎ𝑒 𝑎𝑐𝑡𝑢𝑎𝑙 𝑛𝑜. 𝑜𝑓 ℎ𝑜𝑢𝑟𝑠 𝑡ℎ𝑒 𝑝𝑙𝑎𝑛𝑡 𝑤𝑎𝑠 𝑖𝑛 𝑜𝑝𝑒𝑟𝑎𝑡𝑖𝑜𝑛

Reserve capacity= Plant capacity-Maximum demand

Load factor-capacity factor Reserve capacity
Load curves: Plot of power demand for every instant during a certain time interval.
Daily load curve: load variation during the whole (24 Hrs)recorded half hourly or hourly

Monthly load curves: obtained from daily load curves of the month. Average value of power over
a month at different times of the day.
Yearly load curves : obtained from monthly load curves of the year
.
Area under the curve gives the energy (kWhr,Whr) generated during
the period

𝐴𝑟𝑒𝑎 𝑖𝑛 𝑘𝑊ℎ𝑟 𝑢𝑛𝑑𝑒𝑟 𝑑𝑎𝑖𝑙𝑦 𝑙𝑜𝑎𝑑 𝑐𝑢𝑟𝑣𝑒

Average load =
24 ℎ𝑟𝑠

Peak load indicates the maximum demand on power station.

Helps to decide installed capacity of the plant and economical sizes of

various generating units

To estimate the generation cost

To decide operation schedule of power station

Significance of high load factor:
1. Reduces cost per unit generated:
 For a given maximum demand, no. of units generated is more
 For hydro-electric stations, cost per unit generated at 100% load factor would be half the
cost per unit at 50% load factor
2. Reduces variable loads:
Avoids frequent use of regulating devices.
Maximum economical benefit of large sets occurs only when these units are run
continuously at near full load.
Load duration curve: rearrangement of all load elements of load curve in the order of
decreasing magnitude.
Enables easier selection of base load power plants and peak load power plants
Minimum generating capacity of a plant must be > predicted maximum demand
Select the number and size of units to fit suitably in the load curve so that most generators
when in use can be operated at nearly full load

𝐸𝑛𝑒𝑟𝑔𝑦 𝑔𝑒𝑛𝑒𝑟𝑎𝑡𝑒𝑑 𝑖𝑛 𝑘𝑊ℎ

Plant use factor:
𝑃𝑙𝑎𝑛𝑡 𝑐𝑎𝑝𝑎𝑐𝑖𝑡𝑦 ∗ℎ𝑜𝑢𝑟𝑠 𝑜𝑓 𝑢𝑠𝑒
Eg:
Installed capacity = 20 MW
Annual output =7.35x106 units
Time in use =2190 hrs

7.95∗106
Plant use factor= = 0.167 = 16.7%
20∗103 ∗2190
A high diversity factor could be obtained by
 Giving incentives to farmers and/or some industries to use electricity in the night
or light load period
 Using day light saving as in many countries
 Staggering office timing
 Having different time zones in the country like USA , Australia etc.
 Having two part tariff, an amount dependent on the maximum demand and a
charge for each unit of energy consumed
 Time Of Day (T.O.D) metering
Reserve Capacity:
Cold reserve : not in operation ,but can be made available

Hot reserve : which is in operation but not in service

Spinning reserve : which is connected to the bus and is ready to take the load
Cost of Generation of Electrical Energy
 The investment in power plant, transmission and distribution system
 Cost of operation and maintenance
(i) Fixed cost (ii) Running cost
Fixed cost : Independent of plant operation
 Capital cost of power plant
 Cost of land ,building ,equipment ,installation of equipment, designing and
planning the plant
 Depends on type and location of plant
 Interest on capital, taxes and insurance :
 Salaries of management and clerical staff:
 Depreciation
Wear and tear of the equipment with use
Corrosion and aging of metals
Deterioration of insulation with time
Running cost : Proportional to the electrical energy produced in kWh
Cost of fuel
Operation cost
Cost of labour and salaries of technical staff
Cost of consumables like water, lubricating oil, spare parts etc.
Maintenance and repair cost
Expansion and upgrading
Recovery of capital investment, cost of generation, transmission and distribution
system, cost of operation and maintenance
Proper return
Simplicity
Attractive
Fairness
Reasonable profit