Power Plant Economics

For any developing country, the energy sector plays very important role in its growth. The progress of the country is indicated by its strong economic position which is highly dependent on its energy policy. The electrical supply company supplying power to consumers is a commercial enterprise which should have strong foundation to stay in competitive business market and to get capital for meeting additional demands.

The electrical supply company is however different from the usual business enterprise in the following aspects.

i) Eventhough the supply company is public utility service they do not have direct competition. Mostly this sector comes under state government and hence limits the earnings that can be made.

ii) There is obligation on the supply company to provide the service to whatsoever applies for it.

iii) The service provided by the supply company can not be withdrawn from the consumers without regulatory approval.

Considering the above aspects, there is big responsibility on utility systems to achieve economy in such a way that the cost per unit is as low as possible and at the same time the supply company gains profit and ensure reliable service while designing and building the power station.

The calculation of cost of electrical energy is a complex task. There are several factors affecting this cost. Few of these factors are land and equipment cost, the interest on the capital investment, depreciation on the equipment etc. Hence while deciding per unit cost a through study of various economic aspects of electrical supply is to be made.

To understand this fact, let us consider an example, Suppose that an electrical supply company has to provide power to particular area. For this purpose correct idea of load requirements must be known for that area. After this the next question is how to get this power. There are various types of generating stations. The important stations are thermal hydral and nuclear stations. Number of factories are to be considered like suitable site, cost of fuel and its availability. nature of load to be supplied, environment cleanliness etc. while selecting the generating station.

The next important factor is the load on the power station is never constant but keeps on changing with time as demands are different. The variations in load are to be predicted initially and based on the maximum demand on the station, that much minimum capacity of the generating station is selected. Only selection is not sufficient but it has no maintain its constant service and reliability. Only one unit can not serve this purpose as it is not practical and economical too.

To solve this problem, an alternative is to select size and number of generating sets in such a way as to fit the load curve or in the load demands as closely as possible. But again the problem is increase in operational problems and maintenance costs with large number of generating units. Similarly the capital cost of the system also increases which will not lead to lower per unit cost of electricity. Hence there must be compromise in selecting the size and number of generating units for a station.

The above example shows the importance of economics of power generating and its study.