Problem 1

A power plant of 210 MW installed capacity has the following particulars:

Capital cost = Rs. 18,000/kW installed
Interest and depreciation = 12%
Annual load factor = 60%
Annual capacity factor = 54%
Annual running charges = 200 x106
Energy consumed by power plant auxiliaries = 6%
Calculate the cost of power generation per kWh.
Solution to Problem 1

Load Factor Average load Capacity of the plant

= x
Capacity Factor Maximum demand Average Load

0.60 210 𝑀𝑊
=
0.54 Maximum 𝑑𝑒𝑚𝑎𝑛𝑑

Maximum Demand = 210 x 0.54/0.6 = 189 MW

Reserve capacity = 210 – 189 = 21 MW

Average load = Load factor x Maximum demand

= 0.6 x 189 = 113.4 MW (365 days x 24 hrs)

Energy produced per year = 113.4 x 103 x 8760 = 993.384 x 106 kWh

Net energy delivered = (1 - energy consumed by auxiliaries) x (energy produced per year)
= (1 - 0.06) x 993.384 x 106 = 933.781 x 106
 (Must be substituted in kW)
Annual interest and depreciation (fixed cost) = 0.12 x 18000 x 210 x 103

= Rs. 453.6 106

Total Annual cost = Fixed cost + Running cost (Annual running charges given in the problem)

= 453.6x106 + 200x106

= Rs. 653.6 x 106

𝑅𝑠.653.6 x 106
Cost of power generation =
933.781 x 106

cost of power generation = Rs. 0.70 or 70 paise

Problem 2

Two possible routes for laying a power line are under study. Data on the routes are as follows:

Around the lake Under the lake

Length 15 km 5 km
First cost (Rs.) 1,50,000/km 7,50,000/km
Useful life (years) 15 15
Maintenance cost (Rs.) 6000/km/yr 12,000/km/yr
Salvage value (Rs.) 90,000/km 1,50,000/km
Yearly power loss (Rs.) 15,000/km 15,000/km

If 15% interest is used, should the power line be routed around the lake or under the lake?
Solution to Problem 2

In this problem, a comparison to be made for the routing the power line between two cases:

1. Around the lake and

2. Under the lake

Around the lake:

First cost = 1,50,000 x 15 = Rs. 22,50,000

Maintenance cost /year = 6,000 x 15 = Rs. 90,000 (A)

Power loss / year = 15,000 x 15 = Rs. 2,25,000 (B)

(A) + (B) = Rs. 3,15,000

Salvage Value = 90,000 x 15 = Rs. 13,15,000

The annual equivalent cost expression is given by

AE(i%) = First cost (A/P,i%,n) + (Maintenance cost +Power cost) – Salvage Value(A/F,i%,n)
The annual equivalent cost expression of the above cash flow diagram is:
AE1(15%) = 22,50,000(A/P,15%,15) + 3,15,000 – 13,50,000(A/F,15%,15)

AE1(15%) = 22,50,000(0.1710) + 3,15,000 – 13,50,000(0.0210)

AE1(15%) = Rs. 6,71,400

Under the lake

First cost = 7,50,000 x 5 = Rs. 37,50,000

Maintenance cost /year = 12,000 x 5 = Rs. 60,000 (C)

Power loss / year = 15,000 x 5 = Rs. 75,000 (D)

(C) + (D) = Rs. 1,35,000

Salvage Value = 1,50,000 x 5= Rs. 7,50,000

The annual equivalent cost expression of the above cash flow diagram is:

AE2(15%) = 37,50,000(A/P,15%,15) + 1,35,000 – 7,50,000(A/F,15%,15)

AE2(15%) = 37,50,000(0.1710) + 1,35,000 – 7,50,000(0.0210)

AE2(15%) = Rs. 7,60,500

By comparing the values of AE1 and AE2, we select the route around the lake for laying the power line.
(Note: for compound interest tables, please click the following link
https://global.oup.com/us/companion.websites/9780199778126/pdf/Appendix_C_CITables.pdf )

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