Example 50.27. The capital cost of a hydro-power station of 50.000 kW capacity is Rs. 1.

200
per kW. The annual charge on investment including depreciation etc. is 10%. A royality of Rs. 1
per kW per year and Rs. 0,01 per kWh generated is to be paid for using the river water for
generation of power. The maximum demand is 40.000 kW and the yearly load factor is 80%.
Salaries, maintenance charges and supplies etc. total Rs. 6.50.000. If 20% of this expense is also
chargeable as fixed charges, determine the generation cost in the form of A per kW plus B per
kWh.

Solution. Capital cost of station = Rs. 1200 x 50.000 = Rs. 6 x 107

Annual charge on investment including depreciation
= 10% of Rs. 6 x 107 = Rs. 6 x 106
Total running charges = 80% of Rs. 6.50.000 = Rs. 5.20.000
Fixed charges = 20% of Rs. 6.50.000 = Rs. 1.30.000
Total annual fixed charges = Rs. 6 x 106 + Rs. 0,13 x 106 = Rs. 6,13 x 106
Cost per M.D. Kw due to fixed charges = Rs. 6,13 x 106 / 40.000 = Rs. 153,25
Cost per M.D. kW due to royalty = Rs. 1
Total cost per M.D. kW = Rs. 154,25
Total No. of units generated per annum = 40.000 x 0,8 x 8760 = 28 x 107 kWh
Total per unit due to running charges = Rs. 5.20.000 / 28 x 107 = 0,18 p
Royalty cost/unit =1p
 Total cost/unit = 1,18 p
 Generation cost = Rs. 154,25 kWh + 1,18 p kWh
= Rs. (154,25 kW + 1,18 x 10-2 kWh)

Example 50.29. In a particular area, both steam and hydro-stations are equally possible. It has
been estimated that capital cost and the running costs of these two types will be as follows:
Capital cost/kWh Running cost/kWh Interest
Hydro : Rs. 2.200 1 palse 5%
Steam : Rs. 1.200 5 palse 5%

If expected average load factor is only 10%, which is economical to operate : steam or hydro?
If the load factor is 50%, would there be any change in the choice ? If so, indicate with
calculation.

Solution. Let x be capacity of power station in kW.

Case load factor = 10%
Total units generated/annum = x x 0,1 x 876 x kWh
a) Hydro station
Capital cost = Rs. 2200 x
Annual fixed charges = 5% of Rs. 2200 x = Rs. 110 x
Annual running charges = Rs. 876x x 1/100 = Rs. 87,6 x
Total annual charges = Rs.(110 + 8,76)x
Total cost/unit = Rs. (110 + 8,76) x / 876 x = 13,5 p
b) Steam station
Capital cost = Rs. 1200x
 Annual fixed charges = 5% of Rs. 2200 x = Rs. 60 x
Annual running charges = Rs. 876 x x 5/100 = Rs. 43,8 x
Total annual charges = Rs. (60 + 43,8)x
Overall cost/unit = Rs. 103,8 x/8,76 x = 11,85 p

Obviously, steam station is more economical to operate.

Case II. Load factor = 50%
a) Hydro station
If we proceed as above, we find that total cost/unit = 3,5 p
b) Steam station
Total cost/unit = 6,35 p
Obviously, in this case, hydro-station is more economical.