Electrical Engineering ⇒ Topic : Cost Analysis
The cost of a power system depends upon whether :
(1) Capital Cost or Fixed Cost:-It includes the following :
(2)Operation Cost:-It includes the following :
(a) Initial Cost
Some of the several factors on which cost of a generating station or a power plant depends are :
The initial cost of a power station includes the following :-
(1) Land cost
(2) Building cost
(3) Equipment cost
(4) Installation cost
(5) Overhead charges which will include the transportation cost, stores and store keeping charges, interest during construction etc.
Depreciation accounts for the deterioration of the equipment and decreasae in its value due to corrosion, weathering and wear and tear with use. It also covers the decrease in value of equipment due to obsolescence. With rapid improvements in design anci construction of plants, obsolescence factor is of enormous importance. Availability of better models with lesser overall cost of generation makes it imperative to replace the old equipment earlier than its useful life is spent. The actual Life span of the plant, has, therefore to be taken as shorter, what would be normally expected out of it.The following methods are used to calculate the depreciation cost :
Straight Line Method:- It is the simplest and commonly used method. The life of the equipment or the enterprise is first assessed as also the residual or salvage value of the same after the estimated life span. This salvage value is deducted from the 'initial capital cost and the balance is divided by the life as assessed in years. Thus, the annual value of decrease in cost of equipment is found and is set aside as depreciation annually from the income. Thus, the rate of depreciation is uniform throughout the life of the equipment. By the time the equipment has lived out its useful life,an amount equivalent to its net cost is accumulated which can be utilised for replacement of the plant.
Percentage Method:- In this method the deterioration in value of equipment from year to year is taken into account and the amount of depreciation calculated upon actual residual value for each year. It thus, reduces for successive years.
Sinking Fund Method:- This method is based on the conception that the annual uniform deduction from income for depreciation will accumulate to the capital value of the plant at the end of life of the plan,t or equipment. In this method, the amount set aside per year consists of annual instalments and the interest earned on all the instalments.
Unit Method:- In this method some factor is taken as a standard one and depreciation in measured by that standard. In place of years an equipment will last, the number of hours that an equipment will last is calculated. This total number of hours is then divided by the capital value of the equipment. This constant is then multiplied by the number of actual working hours each year to get the value of depreciation for that year. In place of number of hours, the number of units of production is taken as the measuring standard
The elements that make up the operating expenditure of a power plant include the following costs :
Cost of fuels:- In a thermal station fuel is the heaviest itèm of operating cost. The selection of the fuel and the maximum economy in its use are, therefore, very important considerations in thermal plant design. It is desirable to,achieve the highest thermal efficiency for the plant so that fuel charges are reduced. The cost of fuel includes not only its price at the site of purchase but its transportation and handling costs also. In the hydroplants the absence of fuel factor in cost is responsible for lowering the operating cost. Plant heat rate can be improved by the use of better quality of fuel or by empolying better thermodynamic conditions in the plant design.
The cost of fuel varies with the following :
Labour Cost:- For plant operation labour cost is another item of operating cost. Maximum labour is needed in a thermal power plant using coal as a fuel. A hydraulic power plant or a diespower plant of equal capacity require a lesser number of persons: In case of automatic power station the cost of labour is reduced to a great extent. However labour cost cannot be completely eliminated even with fully automatic station as they will still require some man power for periodic inspection
Cost of maintenance and repairs. In order to avoid plant breakdowns maintenance is necessary. Maintenance includes periodic cleaning, greasing, adjustments and overhauling of equipment.The materials used for maintenance is also charged under this head. Sometimes an arbitrary percentage is assumed as maintenance cost. A good plan of maintenance would keep the sets in dependable condition and avoid the necessity of too many stand-by plants.Repairs are necessitated when the plant breaks down or stops due to faults developing in the mechanism. The repairs may be minor, major or periodic overhauls and are charged to the depreciation fund of the equipment. This item of cost is higher for thermal plants than for hydro-plants due to complex nature of principal equipraent and auxiliaries in the former.
Cost of stores. (other than fuel). The items ofconsumable stores other than fuel include such articles as lubricating oil and g-reases, cotton waste, small tools, chemicals, paints and such other things. The incidence of this cost is also higher in thermal stations than in hydro-electric power stations.
Supervision. In this head the salary of supervising staff is included. A good supervision is reflected in lesser breakdowns and extended plant life. The supervising staff includes the station superintendent, chief eng-ineer, chemist, engineers, supervisors, stores incharges, purchase officer and other establishment. Again, thermal stations particulary coal fed, have a greater incidence of this cost than the hydro-electric power stations
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