Economics of Rewer Generation. _ The art of determining the per Umit cast Of producto eleetical energy is known! ae ecommies F power generation . ‘TO important pasts & power gemeration - G) Seterestith The cost of use of money is known as interes: A power station Is. eonghucted be investing a. huge capital - This mo is generally borrowed “from “the bank por Other irtancial imstiftcons and the Suppl ete Yo pay the amnual interest onthis ,ammumb.. Th epre while “ caleulating the cost of production ' sf electri ca/ energy » the interest Pane onthe Capital investn must be meluded- The wie of jntevest depend, upon! market position. amd othey Lidl 5 & may Vary -from 4, to By pee ANNUM . li) Depreciation: the decree mhe value $ the power plamt equipment & building due +o Constamt use ia | known a dameciation 7 Brent power Statin haa a. usefsi, dive: ramiging. fp fifty qo $8 eons: From the +ime she paver Si installed, its)" e4udpment Steadily deteriorates - Weer. amd Pct 50 an there ig a odual the volus the plont- this y Hi of plamt everg year. is Kenoian, che Lae ey Due to deprecition, the plant han tp be ¥e new one after its useful Life. must be get aside Shel plant ‘elves » the Collec’ ton equals the Cost & 8€placoment x iy depreciohon i511we en Ch ech 6 Blechieal, Energy vee jp A SENSE cect cms oa. dle In D fited S03 43s she cost hich is independant 6 simon demomd aot & Units qemeated . 38 | she -fired costis due Cian cae aes of erhol iation, intevest On Copital Cost lanad & cates Ue ih officials: dymual’ costo’ cemtsal Orgamigation g salaries af Righ Offreials are fined Sinec i+“ han +o be met whether the plant har- high oy We maximum demand or it generates less Oy more unit. firther the Copital investment is fixed & heneg the ameunt Ff intevest is also fixeq’, ; i) Semi-Sired Coote Stis +he cost which depend, upon eee comand. but is inclependent of © Units erated » The bemi-fiyed Cost is cinee ty proportional to the maximum demand on, power Statin < ia Oh. aecoun or. (annual Interest & depreciation on Capital investmenté i bed 0 Saavpments taxes, Salaries of mam Is Ni] + WE Vallbbe uy Eg eas Stis the. cosh whi Onl Upon the number fmee, these changes depend Upon the energy , outpu H Neal cde as ¥ livectly proportional “to dhe nop | a f[emesatted b ~the stein - Sn Other worda » ! the | power” tection. emerate move mils, it will e | Be Mi atumriing coef & view -Versa ~ Nethoda ef Rewrite Deprecicdion D Shmight tine ether: te. | or this method a constam}-|| deprcidtion charge is. made! ever Year On the basis i } tal depreciation amd the Loa life the popes | Oliv, anual depreciation chavige, will be e | tocthe. telal. depreciation divided “yr she uo} lige. f he prpecty . ie ’ Armia depreciation, change. = Ree $6. it) 4 ps Where, = Snitiol cost g equipment ae: Lf = Useful \ife. g equipment m years 6S = Salvoge volur. : Drowbacko i> Ge, amumption ¢ conshm} a 2 081 | ie | nage oteny eee is MIRE iccemunieleis “ts: riepeat whieh ao drowni» ee iar Value melhpd? ov. method » ae honbee’ nodee olen yeu at Dee Hinghl ws of ihe. equip rms get: word » depre ciection is Rak onplied 44 vidi cat fequipmeny i ik diminighed felag tel> p= capil cut opupnene. Ya m= Useful life oe f gi Salvoge. |W { LOGS y Suppose, the anmital unit ag Nalua. € eens after’ one “ta * vera Valued equipment fle u Aut nsRAReeks ) Low -dejnecicchon charge. at die mada in the tant Yea i @mainrromee 2 Sepair charge AM quite it » The emecicetion change is independent OF the rede gf Mereat which, if at Ayaka oe acewumulation , if Ww ND) Sinking fond Helos ; foe Heel Jn his method » a Sned leprecictiny Chonge is made ever are & interest Dap on jf annua the constant — depieciaction choage ig @uch thal toll df annua instalments plus the intevect accumulations equal +o the co Of Seylacement. Sf equipment — aSter its useful “tise . ‘eh p- Switjal valu & eqeclpment n= Useful life feanpment — S= Saly MI : v= I role F intense . eot—sf Seplacemon - ps: 1 Sa) J \ 1) = depreciation! change. ¢ i pt Ate emel dist e@ grout» if 4 facons (ie yo9 wou " avin Uy boll eee“fetal fund. affer yet = V(t) 4 aii) ‘Lea Gay’ Gay bd iv Ie peat ed = 10" Sein en fund muet be equal to the e0g} of plier. | pes - . Tolal fund, P-S= LY gr ay ~. dink tu d 2 c " ‘Loma baal dinkirg 40 fe ; TTS al Bre 42 Wehleys “The. equ in a power Sebel cogts Re Be one Es a a Salvage a oe. spits e | She ond 28 fears. D ‘ “the Silber ‘ot th na oa eon Hlowwir methoda 3 - 0) diva aft dung, Mathod qo en wi) vat dud) nelerPe Ce : Snirtial cog? of equipmon} , Ps Rs 15, 60-000 Wye faluage value , oi Ke 603000 ‘ mis 2h —® re ND bp Perrselation mee, POS” g6,000 a depreciated vase, of bea ho Weare . >, 18:60;000 > 8OX 66,960 oi 360,000 5 if fal a \ dapseciation/ente -x = 4 = G2) = 0.14 value of eqsipmnt fos 20 yerrn = P(A ay Phd 4 2/1 154615". ti) or apy. ; Amual aa in “he ieChey 2&9. Cope} Smeotatent? ae jek P= inveatment Og amour} ‘gf loan be toming sf peaiod « eu q é ac cwmuleittid dim oct ‘tnd & Pert = Annual inteteot rote | a = length Sf pewiod (yeorr) n “he end 4s fist yes.» Sa = PEP Hygena So = 8)+5,% a = Cele) 4 DY ve EY Cte ane ae =P C1ep ta tid Weal 6ST Pa " noah ow Sh = pC Sf.m in the no a tay oe thm | ite ‘ply oe ith RAD 29, Chita, “9h tac. ns ie aie abaatin nd scecrgid fo00 » (EXCROGT] hed tay te wpaid al he ond of He pet s pevsm wha fonda g1go at 47- imteoeot i. 53 POW 9s, a bY. inten 1 ; eo ae = goo 4 * 4 renl9 "Coy 1th3 76. 89 { wT) Sy “G10 fee 2 (eno e_ 320-F14 | oa | - 4) 2.LD He uP (tte) eB wo RP = BR6-8- oe = eC) PR wGirr ) "areBoilon @ Capacity » Station bien rate Plam A = 11+ Lopes Kwhy x 40,000 KD f ea = 118,000 a2 4,20,000 $b pey hewn. 15,000 Ao 1, 10,000 Jb peshy. Plam B = 108410600 = gS,000 = 90,000 Lo peo hy. Plan @ = 85 x 10,000 = SkeD2 Gnslied oilen erst = Bello opacity x Unit copay ax} Plan = 4,20,000 x 4-08 saflt,9g00e Plane = 4)10,0004 44 aw $90,000 Planc = 90,000 x 6-45 ~ ¢ 580.000 Step:3 Total tnveshnent ; - Anvestmem} Plan. A Boiler equipment 4 ,g0,000 Tnbine equipm ; ent Capacity x vhifeast)} 80/00 Hectrical enucipmemt} *y 2,00 000 Stuctuses 2 miscellangours) |! 2200000 ]) lal estimated Hems. Contingemein ad of, ost inerenaer) nd Wal inve:nied Gheape yote = Inoreo} + tates + Ingrramen!+ Depreciali | +006 + O04 + 0:00%+4 0.048 = OWE pe 145%, fact dog) & @ s0x104 t=} GESO x10 4 yA \ Abyaean ado a ep = 229 cents pex million blu) Arnaal oot cogt dam A ingm Cusp A | 154,000 anyedtment> Poaeeiaae 161 23 Ratio, A/P ANP OBS. | Rate f yelusn, | oan AAR Addidionas Cop: inves: AP | Rotio = AA/AP | Rates reluan. on. incvoment ‘i A ait o iad + Plan, ® is the oF &ee fi hs Re pee b, -e DP Ty scion bldterson ti drvedena R = i | F MBLs ; ‘ Pp iu) 1. [Plan A] Pama] Plane | BANE Armual Operating Gost, Co [8.02000] 2:74:004 2.6 8,08 Sasing Sinvert Charge: &- Co | a,2900] 253400] 2142008) 530,000. Smesment. —-P 15,2600] 4 6,10,t0y 194,200 Ratio of Seairg (4) | 146 [ABH | 15a | Shevement Snvecmen} . 2uh0o 10000 Snesement- Basing S21,000 1,000 incre ment invegtm. Ratio imevement be eas 96.6 sare _| 4 i bopk