pb power presentation
TRANSCRIPT
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The Cost of Generating Electricity
PB POWER
The Cost of
Generating ElectricityA study carried out by PB Power for
The Royal Academy of Engineering
Presentation20th April 2004
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The Cost of Generating Electricity
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Overview of presentation
• Terms of reference
• Principal assumptions
• Intermittency
• Results
• The cost of generating electricity
• PB Power
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The Cost of Generating Electricity
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Terms of reference
• Simple, soundly based, indicators of cost performancefor a range of different technologies and fuels
• Focus on ‘bankable’ projects over next 15 to 20-years
• Compliant with existing and future environmentallegislation
• Taking account of the costs of intermittency andcarbon dioxide emissions.
• Cost of the plant itself (EPC cost) net of soft-costs, e.g.developer costs, financing charges etc.
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The Cost of Generating Electricity
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Principal assumptions
• Generation costs notelectricity prices
• Cost as delivered to the boundary of the power stationsite
• Included cost of fuel and O&M: with allowances forlabour, business rates and insurance
• Excluded costs associated with transmission/distribution and other system costs
• Real discount rate = 7.5% p.a.
• Levellised cost calculated over economic life of asset
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The Cost of Generating Electricity
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…capital costs
• Capital cost of the generating plant itself (EPC cost)net of soft-costs, e.g. developer costs, financingcharges etc. (soft-costs can account for an additional15 to 25% on top of the EPC cost)
• Costs mostly taken from recent contracts
• Allowances made for envisaged cost reductions inwind turbine technology (15%)
• Wave/marine highly speculative costs owing toimmaturity of technology
• Nuclear based on reported TVO contract price
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The Cost of Generating Electricity
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…fuel prices
• Long-term view of coal and natural gas prices
• Heavy fuel-oil excluded because of high excise duty
(£ per GJ)
Natural gas (p /therm) 23.0 2.18
Coal (£ /tonne) 30.3 1.16
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The Cost of Generating Electricity
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…technologies considered
BiomassBFB plant
Coal-firedPF plant
Coal-firedCFB plant
Coal-firedIGCC plant
Nuclear
Gas-firedCCGT
OnshoreWind
OffshoreWind
Wave &
Marine
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The Cost of Generating Electricity
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Results (excluding standby costs)
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The Cost of Generating Electricity
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Cost of intermittency
• All generation technologies exhibit some degree of ‘intermittency’ or ‘unpredictability’
• Fluctuations in the supply of primary energy to windturbines means that they require special treatment
• Lack of long-term historical generation data makes itdifficult to quantify the affect of wind intermittency
• Assumed ‘firm capacity’ equal to 35% of installedcapacity (Milborrow) – upper limit
• Planned and forced outage rates not available forimmature technology, offshore wind in particular
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The Cost of Generating Electricity
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…approach
• Use of a proxy for standby capacity to make the outputfrom wind turbines ‘firm’ (or dependable)
• OCGT (aero-derivative) provides cheapest, quickresponse, standby capacity – assumed to be
unmanned installation
• Assume infinite diversity of output from individual windturbines. Therefore, generation contribution is
assumed to be equivalent to a CCGT plant with 35%capacity of installed wind turbine capacity
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The Cost of Generating Electricity
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…principle
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The Cost of Generating Electricity
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…discussion
• Assume that costs of standby capacity due to fuel
intermittency are 100% attributed to the wind turbinesthemselves
• Indicate principle of costs which might exist if the
installed capacity of a wind farm were sized with adiscrete load of similar magnitude
• Results do not attempt to emulate the actual costs of
increasing levels of wind turbine penetration in the UK
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The Cost of Generating Electricity
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Results (including standby costs)
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The Cost of Generating Electricity
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Cost of CO2
• Conservative view of free allocation of carbon credits
to new entrant plant – cost applied to 100% of output
• Market price assumed to range from zero to £30 pertonne
• Increasing cost of CO2 will penalise hydrocarbon fuelbased generation – coal more so than natural gas
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The Cost of Generating Electricity
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The Cost of Generating Electricity
PB POWER
Ian Burdon & Tom Foley
Website: www.pbpower.netEmail: [email protected]
PB Power is part of the Parsons Brinckerhoff group, the international engineering, constructionand programme management firm whose expertise spans power, transportation, buildingsand telecommunications. FromPB’s headquarters in New York and over 200 officesworldwide more than 9,000 staff deliver a multidisciplinary service, 24 hours a day, seven daysof the week.
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PB Power
• Internationally renowned firm of consulting engineers
• PB Power ~ 650 professionals worldwide
• UK business comprises three core practice areas:
• Generation;
• Power Networks; and
• Energy & Utilities Consulting
Power
Networks
Generation
Energy &
Utilities
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Energy & Utilities Consulting
• EUCon~ 50 professionals providing: investment
appraisal; market analysis; system studies; regulatoryadvice; and policy formulation services
• Advising private and public sector clients including:
lending agencies; merchant banks; IPP developers;private investors; governments and regulatory bodies