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Power Plants: Ch 6 Economics of Power Plants

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Conventional Power Plants Mechanical Engineering Dep.
4th Stage University of Anbar, 2017-2018

Chapter Six: Economics of Power Plants

1. Introduction
A power station is required to deliver power to a large number of consumers to
meet their requirements. While designing and building a power station, efforts
should be made to achieve the 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. Therefore, a careful
study has to be made to calculate the cost of production.

2. Terms and Definitions (Economics Factors)

1. Connected load: Connected load of a system is the sum of the continuous
ratings of the load consuming apparatus connected to the system.

2. Demand: it the load that is drawn from the source of supply at the
receiving terminals averaged over a suitable & specified interval of time.
It is expressed in (kW), (kVA) or (A).

3. Maximum load (Peak load): it is the greatest of all the demands that have
occurred during a given period. It is determined by measurement
according to specifications over a prescribed interval of time.

4. Demand Factor: is the ratio of maximum demand to the total connected

load of the system or the part of the system.

𝐦𝐚𝐱𝐢𝐦𝐮𝐦 𝐝𝐞𝐦𝐚𝐧𝐝
𝐝𝐞𝐦𝐞𝐚𝐧𝐝 𝐟𝐚𝐜𝐭𝐨𝐫 = ,< 𝟏
𝐭𝐡𝐞 𝐭𝐨𝐭𝐚𝐥 𝐜𝐨𝐧𝐧𝐞𝐜𝐭𝐞𝐝 𝐥𝐨𝐚𝐝

5. Load Factor: is the ratio of the average power to the maximum demand.
𝐚𝐯𝐫𝐞𝐫𝐚𝐠𝐞 𝐥𝐨𝐚𝐝
𝐋𝐨𝐚𝐝 𝐟𝐚𝐜𝐭𝐨𝐫 =
𝐦𝐚𝐱𝐢𝐦𝐮𝐦 𝐝𝐞𝐦𝐚𝐧𝐝

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6. Diversity factor: it is the ratio of the maximum power demands of the

subsystem of the system or part of a system to the maximum demand of
the whole system or part of a system.
𝐬𝐮𝐦 𝐨𝐟 𝐢𝐧𝐝𝐢𝐯𝐞𝐝𝐮𝐚𝐥 𝐦𝐚𝐱𝐢𝐦𝐮𝐦 𝐥𝐨𝐚𝐝𝐬
𝐃𝐢𝐯𝐞𝐫𝐬𝐢𝐭𝐲 𝐟𝐚𝐜𝐭𝐨𝐫 =
𝐦𝐚𝐱𝐢𝐦𝐮𝐦 𝐝𝐞𝐦𝐚𝐧𝐝 𝐨𝐟 𝐞𝐧𝐭𝐢𝐫𝐞 𝐠𝐫𝐨𝐮𝐩

7. Utilization factor: the ratio of maximum generator demand to the

generator capacity.
𝐦𝐚𝐱𝐢𝐦𝐮𝐦 𝐝𝐞𝐦𝐚𝐧𝐝
𝐃𝐢𝐯𝐞𝐫𝐬𝐢𝐭𝐲 𝐟𝐚𝐜𝐭𝐨𝐫 =
𝐜𝐚𝐩𝐚𝐜𝐢𝐭𝐲 𝐨𝐟 𝐩𝐥𝐚𝐧𝐭

8. Plant capacity factor: the ratio of the actual energy produced in kW to

the maximum possible energy that could have been produced during the
same period.
𝐄
𝐩𝐥𝐚𝐧𝐭 𝐜𝐚𝐩𝐚𝐜𝐢𝐭𝐲 𝐟𝐚𝐜𝐭𝐨𝐫 =
𝐂 ×𝐭

where E= the actual energy produced in kW,

C= capacity of the plant in kW,

t= total number of hours in the given period.

9. Plant use factor: it is defined as the ratio of energy produced in a given

time to the maximum possible energy that could have been produced
during the actual number of hours the plant in operation.
𝐄
𝐩𝐥𝐚𝐧𝐭 𝐜𝐚𝐩𝐚𝐜𝐢𝐭𝐲 𝐟𝐚𝐜𝐭𝐨𝐫 =
𝐂 × 𝒕̅

where 𝒕̅ = the actual number of hours the plant in operation.

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Conventional Power Plants Mechanical Engineering Dep.
4th Stage University of Anbar, 2017-2018

10. Types of loads:

a. Residential load: this includes domestic lights, the power needed for
domestic appliance such as TV, radio, heaters, refrigerators, cookers,
small motors for pumping water, etc.
b. Commercial load: in includes lighting for shops, advertisements &
electrical appliances used in shops & restaurants, etc.
c. Industrial load: it consists of the load demand of various industries.
d. Municipal load: it includes the lighting of streets, the power required for
water supply & drainage purposes.
e. Irrigation load: it includes electrical power required for pumps driven by
electric motors to supply water to the field.

11. Load curve (Graph load): it is a graphic record showing the power
demands for energy instant during a certain time interval. Such record may
occur 1 hour or 24 hours (daily load curve), monthly load curve or yearly
load curve.

The following notes should be considered:

 The area under the curve represents the energy generated in the period
considered
 The area under the curve divided by the total number of hours gives the
average load on the power station.
 The peak load indicated by the load curve represents the maximum demand
of the power station.

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Significant of Load Curve

 The load curve gives full information about the incoming load & help
to decide the installed capacity of the power station & to decide the
economical sizes of various generating units.
 These curves also help to estimate the generating cost & to decide the
operating schedule of the power station.

12. Load duration curve: a load duration curve represents rearrangement of

all the load elements of chronological (‫ )التسلسل الزمني‬load curve in order of
descending magnitude. This curve is derived from the chronological load
curve.

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Conventional Power Plants Mechanical Engineering Dep.
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Note:

1. Figure (1) below shows a typical load curve for a power station. It may be
observed that the maximum load on the power station is 35MW from 8:00
AM to 2:00 PM.
2. Figure (1) can be replotted in Figure (2) from peak load to the base load, in
descending order. Figure (2) is called “Load Duration Curve”.

Figure (1) Figure (2): Load Duration Curve

The benefits of the load duration curve are:

 The area under the load duration curve & the corresponding chronological
load curve is equal & represents the total energy delivered by the generating
station.
 The load duration curve of generating power economically. The selection
of the base load plants & peak load plants become easier.

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Conventional Power Plants Mechanical Engineering Dep.
4th Stage University of Anbar, 2017-2018

Ex. The maximum demand of a power plant station is 96000 kW of daily load
curve is described as follows:
Time (hr) 0-6 6-8 8-12 12-14 14-18 18-22 22-24
Load
48 60 72 60 84 96 48
(MW)
1. Determine the load factor of the power station.
2. What is the load factor of standby equipment rated at 30 MW? What takes
up all load in excess of 72MW?
3. Calculate its use factor.

Sol.

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Conventional Power Plants Mechanical Engineering Dep.
4th Stage University of Anbar, 2017-2018

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Conventional Power Plants Mechanical Engineering Dep.
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3. The Principles of Power Plant Design

The following factors should 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

4. Cost Analysis
The cost of a power system depends upon whether:

1. An entirely new power system has to be set up, or

2. An existing system has to be replaced, or
3. An extension has to be provided to the existing system.

The cost includes:

I. Capital cost or fixed cost which includes the following:

1. Initial cost 2. Interest
3. Depreciation cost 4. Taxes
5. Insurance
II. Operational cost includes the following:
1. Fuel cost 2. Operating labour cost
3. Maintenance cost 4. Supplies
5. Supervision 6. Operating taxes
5. How to Minimize Power Generation Cost
The cost of power generation can be reduced by:

1. Using a simple plant design that does not need highly skilled personal.
2. Selecting equipment of longer life & proper capacities.
3. Carrying out proper maintenance of power plant equipment to avoid plant
breakdowns.
4. Running the power stations at high load factors.
5. Increasing the efficiency of the power plant.
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The depreciation cost is estimated using many methods & the most used method
is called the “sinking fund method”

𝒊
𝑨=[ ] (𝑷 − 𝑺)
(𝟏 + 𝒊)𝒏 − 𝟏

where A: Annual payment to the sinking fund.

i: Annual rate of compound interest on the invested capital.

n: the life of the plant in years.

P: initial investment to install the amount.

S: salvage value at the end of plant life.

Ex. Determine the annual cost of a feed water softener for the following data:

Cost =100000 $ Salvage value = 5%

Life = 10 years Annual repair & maintenance cost = 312$
Annual cost of chemical = 6250$ Labour cost per month = 37.5 $
Interest on sinking fund = 5%

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Conventional Power Plants Mechanical Engineering Dep.
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Ex. A daily load curve that exhibited a 15 min peak of 6520 kW is drawn to a
scale of 1cm = 2 hr3 = 500 kW. The area under the curve is 48.72 cm2. Find the
load factor.

Sol.

Ex. A power station has to supply load as follows:

Time (hr) 0-6 6-12 12-14 14-18 18-24

Load
48 60 72 60 84
(MW)
Draw the load curve. Draw the load duration curve. Choose suitable generating
units to supply the load. Calculate the load factor & the plant capacity factor.

Sol.

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Ex. A daily load factor curve of a power station follow the equation
[N=56+25t-t2], where N is the load (MW) and t is the time (hr). the plant supplies
three substations A, B and C whose load factors are 0.625, 0.5 and 0.8
respectively. The total load distribution ratios between the substations as 1: 1.3:
1.5.

Find 1. Average & peak load of each substation. 2. Diversity factor between them
& the plant.

Sol.

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Conventional Power Plants Mechanical Engineering Dep.
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Ex. A power station has the following loads:

1. The residual lighting load: Max. demand = 1200kW
Load factor = 0.21
The diversity between consumers = 1.32
2. Commercial load: Max. demand = 2400kW
Load factor = 0.31
The diversity between consumers = 1.2
3. Industrial load: Max. demand = 6000kW
Load factor = 0.82
The diversity between consumers = 1.22
The overall diversity factor may be taken as 1.42. Determine
1. Max. demand on the system
2. Daily energy consumption (total)
3. Overall load factor
4. Total connected load assuming that demand factor for each load is unity.

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Ex. The yearly load duration curve of a certain plant can be considered as a
straight line from 300MW to 8MW. Power is supplied by one generating unit of
200MW and two units of 100MW each. Determine 1. Installed capacity 2. Load
factor 3. Plant factor 4. Maximum demand 5. Utilization factor.

Sol.

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