Chemical, Biological and Environmental Engineering Electrical Grid and Costing Power.

Chemical, Biological and Environmental Engineering

Electrical Gridand

Costing Power

Advanced Materials and Sustainable Energy LabCBEE

Housekeeping Issues• HW2 due today, HW3 posted in Bb (due 2/1)• Talking of 2/1, visit to Energy center on 2/1 at

class time.


Pioneers• Electricity known since ancient times

– But in the form of static electricity, mostly– “capacitor” (Leyden Jar), about 1745– Galvani (1780), Volta(1791) : electrochemical batteries

• Faraday– Electric motor in 1821

(electricity goes from curiosity to possibly useful principle)– Also, Faraday’s law (emf generated by moving conductor

through magnetic field)

• Maxwell & Pixii: DC dynamo in 1832


Pioneers• Batteries

– Grove, Fuel cell in 1839– Plante, Lead-Acid in 1859– Leclanche, Zinc-Manganese battery (“dry cell”) in 1866

(NiCd in 1899, NiMH in 1970s, Li-ion in 1980s)

• Siemens and Wheatstone– Modern generator (using electromagnets) in 1867

• Edison & Swan– Incandescent lamp in 1879

(electricity could be useful to the citizenry in general)


Pioneers• Edison

– Pearl Street DC power station, 1882– Edison Electric Light Company

• Gaulard & Gibbs: Transformer, 1883

• Westinghouse: Westinghouse Electric Company, 1886

• Tesla: Induction motor and polyphase AC systems, 1888

• Parson: steam turbine in 1889(enabled thermal power station)


Pioneers• Portland, Oregon

– First single-phase AC transmission line in 1890• 3.3 kV, 13 miles

• Frankfurt, Germany– First 3-Phase AC transmission line in 1891

• 30 kV, 106 miles

• Integration into a “grid”– US: Holdings companies integrated various generation

and use in 1920s (e.g., Samuel Insull)– UK: Central Electricity Board in 1926

(by 1934 140 power stations integrated)


Regulation in US• Public Utility Holding Company Act (PUHCA), 1935

– Consequence of Samuel Insull highly leveraged utility holding company collapse (ENRON-like)

– Utilities can only serve limited geographic area– Cannot have “vertically integrated monopoly”

(e.g., power companies cannot own electric street car companies)

• Public Utilities Regulator Policies Act (PURPA), 1978– increasing fossil-fuel prices, inflation, calls for conservation and

growing environmental concerns in 1970s– Mandated power purchase by utilities from independent generators

located in their service territory (added renewables)– Introduced some competition, results varied greatly by state


TRANSMISSION GRID• After the first U.S. blackout of 1965, North

American Electric Reliability Council (NERC) formed 10 regions to coordinate efforts that will assure reliability and adequacy of service of the U.S. grid

• Power is transmitted in U.S. in two forms– AC – most three-phase ac– DC


Regulation (cont)• Clean Air Act in 1990

– Mandates emissions controls (in particular SO2)

• National Energy Policy Act of 1992– Mandated that utilities provide “nondiscriminatory” access

to the high voltage transmission– Goal was to set up true competition in generation

• Repealed by Energy Policy Act of 2005


Regulation (cont.)• U.S.A.

– National Energy Policy Act (EPAct) in 1992

• California– Begins restructuring towards a competitive

market in 1998• Restructuring collapses in 2001


Electrical Generation in US


Power Consumption in US

TWh = Billion kWh


Price of Electrical Energy in US


LOADS• Can range in size from less than one watt to

10’s of MW• Loads are usually aggregated for system

analysis • The aggregate load changes with time, with

strong daily, weekly and seasonal cycles– Load variation is very location dependent


INDUSTRY STATISTICS• The electricity equation has two sides

– Supply Side– Demand Side

• The following figure shows the California power demand on a hot summer day– Some areas are summer peaking (U.S.)– Some areas are winter peaking (Canada)


Example: Daily Variation for CA


Example: Weekly Variation


Example: Annual System Load

0

5000

10000

15000

20000

250001

518

1035

1552

2069

2586

3103

3620

4137

4654

5171

5688

6205

6722

7239

7756

8273

Hour of Year

MW

Lo

ad


2001

01

2001

03

2001

05

2001

07

2001

09

2001

11

2002

01

2002

03

2002

05

2002

07

2002

09

2002

11

2003

01

2003

03

2003

05

2003

07

2003

09

2003

11

2004

01

2004

03

2004

05

2004

07

2004

09

2004

11

2005

01

2005

03

2005

05

2005

07

2005

09

2005

11

2006

01

2006

03

2006

05

2006

07

2006

09

2006

11

2007

01

2007

03

2007

05

2007

07

2007

09

2007

11

2008

01

2008

03

2008

05

2008

07

2008

09

2008

11

2009

01

2009

03

2009

05

2009

07

2009

09

2009

11

0

1000

2000

3000

4000

5000

6000

7000

8000

9000

Monthly Average of BPA BALANCING AREA (Control Area) LOAD, Jan-01 thru Dec-09 (9 Years)

Year & Month

Avg

Mon

thly

MW

Linear Growth Rate =~ + 3.2%/Year

~ + 175 MW/Year

This trend chart is updated annually only, based on full years of monthly data

Note that Clark PUD re-entered the BPA Balancing Author-ity area in Dec-07, causing a moderate spike in BPA BA

load.


Baseload, Intermediate and Peaking Supply


Baseload, Intermediate and Peaking Supply• Load demand on utilities fluctuates constantly

– During peak demand most plants are operating– During light demand many plants are idling

• Power plants are categorized as– Baseload

• Large coal, nuclear, and hydroelectric plants• Expensive to build, cheap to operate

– Intermediate• Combined-cycle plants• Cycled up during the day, cycled down during the evening

– Peaking• Simple-cycle gas turbines• Inexpensive to build, expensive to operate


Optimizing Power Generation Mix• How do you find out the optimal mix of

generation?

• What’s the best model?– Economic?– Efficiency?– Other?

• Current answer is “economic”, of course


Abandoned Wind Farm: South Point in Hawaii


Costing PowerCosts in two main categories• Fixed costs

(Money you need to bring in even if plant is never turned on)

– Capital cost– Taxes – Insurance– Fixed operation and maintenance costs

• Variable costs (Cost associated with running the plant)– Fuel– Operation and maintenance (O&M)


Financial concepts• Initial cost

– One time expense incurred at beginning of project – Construction, capital equipment purchase, etc

• Term of Project– Time length over which cash flow of project must be considered.– Usually divided into years (say N years)

• Annuity– Annual increment of cash flow related to the project

• Salvage value– One time positive cash flow at end of project– Sale of assets, systems, etc– Usually very small compared to initial costs


Project Evaluation Without Discounting

Primitive method of project evaluation• Calculates “Net Present Value” (NPV)

– Sum of all cash flows into and out of project– E.g., Initial Costs (-), Annuities (+), Salvage (+)– Since goal of most projects is to make money, NPV>0…

• For such a project, the Annual Capital Cost (ACC) is

• And the Capital Recovery Factor (CRF) is

• In general, it is recommended that CRF≤12%

NPVACC Annuity

N= -

ACCCRF

NPV=


Net Present Value Example

Annuity = $1,900

So on year 1 NPV=-$10,000+$1,900=-$8,100

On year 5 NPV=-$10,000+5x$1,900=-$500

But we have $500 salvage valueso NPV=-$500+$500=$0

Year 5

Initial Cost = $10,000So at start NPV=-$10,000

Beginning of Project“Year 5”


ExampleSay a municipality plans to invest in a renewable energy

system costing $6.5M to install, generate a net annuity of $400k for 25 years and have a salvage value of $1M

What is

a) Term of Project; b) Initial Cost; c) Annuity; d) Salvage?

e) What is NPV of project at end?

f) Does this project appear cost effective?

25 years $6.5M $400k $1M

NPV= -$6.5M + 25x$400k + $1M = $4.5M


DiscountingA factor that builds into the annuity the concept that the value of

money declines over time

Includes:• Interest rate (discount rate)

– Percent charged on initial costs borrowed at the beginning of a time horizon

– Unless otherwise stated, usually compounded at the end of the year

• Minimum attractive rate of return (MARR)– The minimum interest rate required for returns on a project in order

for it to be financially attractive– Set by entity (business, government agency, etc) making decision by

looking at competing projects


Including Effect of Discount Rate on Value

In general, given an interest rate i and a time horizon of N

• The future value of an amount P is

• Given a stream of annuities A, the future value F of the annuities at the end of the Nth year is

• Call these (F/P, i, N) and (F/A, i, N)

( )1N

F P i= +

( )1 1N

iF A

i

+ -=

( )1 1N

iFA i

+ -Û =


Example 2: Project Evaluation With Discount

Given Initial Cost = $6.5M, N=25 years, A=$400k, Salvage Value=$1M, i=5% is the project economically feasible?

Clearly, we must reduce all value to one point. Let’s chose the end of the project (end of annuity 25 and salvage)

1-Calculate future value factor of initial cost (F/P, 5%, 25):

2-Calculate future value factor of annuity

( ) ( )251 1 1 0.05 1 3.39 1

47.70.05 0.05

NiF

A i

+ - + - -= = = =

( ) ( )251 1 0.05 3.39

NF iP = + = + =


Example 2 (cont.)

At end, salvage does not need to be adjusted for time…

Then, 3-Calculate future value of project

What does this mean?

-Simple payback analysis gives a poor answer…

-Even at apparently low MARR projects cost more than they appear to!

F FF IC Annuity SalvageP A= + +

3.39 ( $6.5 ) 47.7 $400 $1x M x k M= - + + $1,955M=-


Necessary Annuity to cover capital costs

Given that the financial return to investors is built into MARR, the final value of the project needs to be ≥ 0

Then

For the previous example,

0 F FIC Annuity SalvageP A= + +

FSalvage ICPAnnuityF

A

+Û - =

$1 3.39 ( $6.5 ) $21$441

47.7 47.7

M x M MAnnuity k

+ - -- = = =-

$441Annuity kÛ =


Costing Power• Other fixed costs

– Regular maintenance (e.g., groundskeeping)– Administration– Insurance

• Variable Costs (primarily fuel) – Cost of fuel

• Coal ~ $2.21/MMBTU ($43.74/ton)• Gas ~ $4.74/MMBTU

– Operations and Maintenance (Repair & Spare parts, etc)

Variable Costs ($/yr) =

[ Fuel($/BTU)xHeat rate(BTU/kWh) + O&M($/kWh)] xkWh/yr


Costing Power - II

Total cost of operating power plant then is the sum:

Then, depending on how many kWh are generated in a typical year,

This levelized cost per unit of energy is useful to compare various projects

Total Annual Cost [$ / ]Levelized Cost [$ / ] $ /

Annual Output [ / ]

yrkWh kW

kW yr= =

Total Annual Cost [$ / ]

Total Fixed Costs [$ / ] Total Variable Costs [$ / ]

yr

yr yr

=

= +


Graphical Version of Costing Power


New Generation Costs SummaryCapital Costs ($/kW)

Fixed O&M ($/kW)

Heat Rate (BTU/kWhr)

Variable O&M(¢/kWh)

Conventional Coal 2,200 28 8,700 2.4

IGCC (Integrated Coal Gasification Combined Cycle)

2,600 40 7,500 2.0

IGCC with CCS 3,800 47 8,300 2.3

Gas Combined Cycle 1,000 12 6,300 3.2

Gas CC w/CCS 2,000 20 7,500 3.9

Gas Turbine 650 11 10,500 5.3

Nuclear 3,800 92 10,500 1.2

Wind 2,000 31 - -

Wind-Offshore 4,000 87 - -

Hydro 2,300 14 - 0.2

Geothermal (US average) 1,750 168 30,000 0.5

Solar PV 6,200 12 - -

Solar Thermal 5,100 58 - -

Adapted from EIA publicationElectricity Market Module of the National Energy Modeling System 2010, DOE/EIA-M068(2010)


Costing Power


Capacity FactorThe capacity factor is defined as

CF = [produced energy per year (kWh/yr)] / [ Rated power (kW) x 8760 h/yr]

Essentially “fraction of plant on-line time at full power averaged over year”

Why would the plant not operate at full rated power for full year?1-Time down for maintenance (try to minimize this…)2-Power it produces is not cost effective (use screening curve to find out how many hours on-line)


Load-Duration Curves


Load-Duration Curve


Screening Curve• Plot costs for different plants on the same graph

Plot as Cost = Fixed Cost ($) + Variable Cost ($/kWh) *kWh

Cost

($)

Energy Produced (kWh) [or rated power (kW) x hours of operation (h)]

Fixed Costs Plant 1 ($)

Variable Costs Plant 1 ($/kWh * kWh)

Fixed Costs Plant 2Variable Costs Plant 2


Using Screening CurvesCombustion turbine is lowest-cost option for up to 1675 h/yr of operationCoal plant is the lowest-cost option for operation beyond 6565 h/yrThe combined cycle plant is the cheapest option if it runs between 1675 and

6565 h/yr


Determining Optimum MixTransfer crossover points onto load duration curve to identify

optimum mix of power plants


Baseload, Intermediate and Peaking Supply


Determining Optimum Mix

Baseload

IntermediatePeaking

+ Reserve


LOAD-DURATION CURVES


Cost of Power• The CF with cost parameters from the

following table allow us to determine the cost of electricity from each type of plant


Costing Power – Final Remarks• Load duration curve needs to be padded with

reserve excess capacity (reserve margin) – To deal with plant outages, sudden peaks in demand, and

other unforeseen events

• Process of selecting which plant to operate first at any given time is called dispatching

• If you have renewables, they will be dispatched first, although they are intermittent (and require extra spinning reserve)– Energy Policy Act 1992/2005


New Generation by Fuel Type(USA 1990 to 2030, GW)

Source: EIA Annual Energy Outlook 2007

Chemical, Biological and Environmental Engineering Electrical Grid and Costing Power.

Documents

Transcript of Chemical, Biological and Environmental Engineering Electrical Grid and Costing Power.