1. MET401 Power Plant Engineering
Economics of Power
Generation
DR. TAIB ISKANDAR & DR. AHMED REZK

2. Introduction
2
Why do we need economic analysis?
 The main purpose of design and operation of a power
plant is to bring the cost of energy produced to
minimum.
 Thermal efficiency of a plant is one of the important
factors in determining energy cost.
 The most thermally efficient plant is not the most
economics.

3. Types of power plants
3
 Thermal
 fossil fuels, coal, fuel oil & natural gas.
• Similar in cycle
 80% of world electricity. • Similar in structure
 Nuclear • Use steam as a working fluid
 Geothermal
 Hydraulic
 Multipurpose plants (generating power, flood control, etc..)
 Gas turbine plants
 They run for a short time to meet the peak load demand
 They are used in the combined steam power plant.

4. Electricity generation in SA
4

5. Production rate
5
 Electricity production, E dE
Ei
 Annual fractional dt
E
increase rate, i (%) ln i (t to )
Eo
 Eo=electricity production i(t to )
E Eoe
at year t0
tD t2 t1
E2
2
 To find time required for E1
electricity production to ln 2 it D
be doubled, we define tD 0 . 693
tD
as doubling time i

6. Planning a new power plant
6
 When planning a new power plant there are two
considered factors.
 Total power output to be installed (kWinst)
 First demand (kWmax).
 Growth of demand.
 Reserve capacity required.
500MW plant
 Size of generating units
 Load variation during 24hr
 Total capacity of units connected to grid
 Minimum start up and shut down periods
 Maintenance program Unit 1 Unit 2 Unit 3
 Plant efficiency
 Price and space per kW vs. unit

7. Load-duration curves
7
Peak loads
Winter Average
Summer Average
kW electricity

8. Electricity supply industry factors
8
 Load factor (m)
average load over a time interval
m
peak load during the same interval
kWh ave
m " one year 24 * 365 8760"
kW max x 8760
 Capacity factor / plant factor (n)
average load
n
rated capacity of plant
kWhr gen
kWhr gen
n
kW inst x 24 x 365 kW inst x 8760

9. Electricity supply industry factors
9
 Reserve factor (r)
kW inst m
r
kW max n
load factor
r
capacity factor
 Demand factor (dem)
actual maximum demand
dem
total connected demand
kW max
dem
kW connected

10. Electricity supply industry factors
10
 Diversity factor (div)
sum of invidual consumer groups
div
actual peak load of system
a b c
div
kW peak
 Use factor (u)
kWh gen
u
kW inst x operating hours

11. Example 1
11
 A steam power plant have a peak load of 65 MW.
Connected to it are five loads having maximum
demands of 20 MW, 15 MW, 10 MW, 10 MW and 5
MW each. Plant capacity is 90MW and annual load
factor is 0.60. Determine,
a) the average load on the power plant
b) the energy supplied annually
c) the demand factor
d) the diversity factor
e) the use factor if plant only operate 8000 hrs per year
f) What do you think about this plant economically?

12. Power plants location
12
 For thermal power plant
 Availability of cooling water
 Availability of fuel
 Distance from center of load demand
 Land cost and characteristics
 Wind direction & water stream
 Disposal of fuel waste and ashes
 Staff accommodations
 Rail and road connections
 Security
 For hydraulic power plant
 Availability of water and water head

13. Power plant economics
13
 The cost per kWhnet is determined by
 Fixed cost (FC)
 Interest (I)
Depend on capital invest
 Depreciation (D)
(construction cost)
 Taxes and insurance (T)
 Operation and maintenance (O&M) covering
 Salaries and wages
 Overhauling of equipment
 Repairs including spare parts, lubricants, miscellaneous, etc..
 Fuel cost
 kWhrnet sent out

14. Power plant economics
14
 Total annual cost
I D T
Ct Cc (W R M ) C f
100
 Cc – construction cost
 W – wages
 R – repairs and maintenance
 M – miscellaneous.
 Cf – fuel cost
 Annual amount of electricity sent out
L aux
kWh net
kW inst x 8760 x 1 x n
100
 Laux = power consumption by auxiliaries
 n = plant capacity factor

15. Cost reduction
15
 The costs have a continuous upward mainly due to
monetary inflation, rising fuel prices. It can be reduced
by applying the following:
 Select equipment with longer life and proper capacity
 Run at high load factor
 Increase power plant efficiency
 Proper maintenance to reduce breakdown
 Keep a proper supervision
 Simple design (less dependent on highly skilled worker)

16. Example 2
16
Connected Demand
A new housing development is to be added Store or service
load (kW) factor (d) %
to the lines of a public electrical network 1- laundry 25 0.66
There are 2500 apartments each having a 3-mosques 12 each 0.58
1-resturant 60 0.50
connected load of 6 kW, with the 1-bookstore 8 0.68
commercial load shown. The demand factor 2-drugsstores 10 each 0.77
of the apartments is 55%. The group 2-grocery stores 5 each 0.75
1-shoe store 2 0.69
diversity factor of the residential load is 2.5, 1-cloting store 6 0.56
and the peak diversity factor is 1.5, and the 1-theater 95 0.45
commercial – load group diversity factor is
1.6 and the peak diversity factor is 1.1.
Find the maximum demand of each group and the system peak
demand.