SPECIAL ARTICLES

Comparative Costs of Electricity Conservation

Centralised and Decentralised Electricity Generation
Amulya Kumar N Reddy
Gladys D Sumithra
P Balachandra
Antonette d'Sa
Energy planning, and the associated decision-making, requires choices between energy technologies. Thus far,
these have been restricted to choices between supply options in particular, centralised energy technologies. But,
this restriction to centralised sources is running into two major difficulties: (a) shortages of capital, and (b) popular
opposition to the resulting local and global environmental degradation. Furthermore, what matte,rsto a consumer
of energy is not energy per se, but the services that energy provides. Hence, the true indicator of development
is not the magnitude of energy used, but the level of energy services provided. It has, therefore, become essential
to extend the list of options for energy decision-making so as to include both decentralised sources of supply,
and energy efficiency improvements and other conservation options.
This paper, therefore, attempts a comparative costing of electricity generating and saving technologies. The
treatment covers the centralised technologies of nuclear power plants (CANDU type), coal-based thermal power
plants, hydroelectric plants and natural-gas-based thermal power plants, the decentralised technologies of small
hydroelectric plants, biogas-driven gensets, producer gas-driven gensets, diesel gensets and windfarms, and con-
servation technologies involving solar water heaters, improved irrigationpumpsets, replacement of standard motors
with efficient motors, replacementof incandescent bulbs with compact fluorescent lamps, solar ponds, and cogenera-
tion in sugar factories.
I sector, the indicators are the amount of light Option 2: Increasingthe magnitude of the
in the home, the quantity of heat received energy inputs through increased supplies
Introduction by the food being cooked, etc. In the from non-conventionaldecentralisedsources
ENERGY planning involves decision- agricultural sector, the indicators are the (mini-and micro-hydroelectric,biogas and
making which in turn implies, in the con- volume of water taken up by the crops, the producerpowerplants, etc) and keepingthe
text of technologies, a choice of techno- area of land that is ploughed, etc. And in efficienciesof the end-usedevicesat present
logies. Hence, energy planning requires
the industrial sector, the indicators are the levels.
rotation of shafts, the movement of con-
choices between energy technologies. Option 3: Increasingthe efficiencies of the
veyors, the running of machines, the heating
Thus far, these choices have been end-use devices and keepingthe magnitude
of materials in furnaces, etc. For, it is the
restrictedto choices betweenvariousoptions of energy inputs constant.
level of services provided by energy that
for the supplyof energy,i e, choices between
determines the quality of life and the extent Option4: Increasingboth the efficienciesof
supply options. Furthermore,these supply
to which basic needs (such as employment) the end-usedevicesas well as the magnitude
options have been confined in the past to
are being satisfied. These energy services, in of the energy inputs through improvement
centralised energy technologies-hydro-
turn, depend upon end-use-devices (stoves, of present supplies, development of
electric, coal-based thermal, nuclear, and
recently, natural-gas-based power plants. lamps, furnaces, motors, engines, etc) to renewablesources and increase of conven-
But, this restrictionto centralisedsourcesis convert energy inputs into the useful energy tional supplies.
running increasingly into two major dif- required to provide energy services. Useful The conventional approach to energy
energy is simply given by the product of the restrictsitself to option 1 with its exclusive
fictAties:(a) shortagesof capital,and (b) op-
efficiency of the end-use device and the emphasis on centralised supplies of
position arising from local and global en-
energy input: hydroelectric,coal-based and nuclear elec-
vironmental degradation. It has therefore
tricity. However,the centralisedsupply op-
become essential to extend the list of alter- Useful Energy = Efficiency of end-use
natives for energy decision-making and to tions are becoming increasingly unaffor-
device x Energy input
includein the list both decentralisedsources dable because their marginalcosts are con-
For example, tinuouslyincreasing-it is moreexpensiveto
of supply, and energy efficiency improve- Lumens of light = Efficiency of lamp x producethe next kilowattthan the previous
ments and other conservation options. Energy input to lamp one. Their environmentalimpacts are also
The rationalefor this extensionof the list
The goal of development requires a sus- escalating.
of alternativesfor energy decision-making
tainable increase in the level of energy ser- To avoid the environmentaldegradation
lies in the new paradigm for energy that is
vices and the amount of useful energy. And, of the centralisedsupplies, option 2 has an
growing in influence. A brief statement of
this new paradigm is in order. there are four options for achieving such exclusive emphasis on renewable sources.
What mattersto a consumer of energyis increases: But, this option is only an environmentally
benign version of option 1-it is just as
not energy per se, but the services that Option 1: Increasing the magnitude of the
supply-biased.
energyprovides-cooking, lighting,heating, energy inputs through increased supplies
stationaryand motive power,etc. Hence,the from conventional centralised sources Option 3 has an exclusive emphasis on
true indicator of development is not the (hydroelectric, coal and nuclear power conservation, but it implies that efficiency
magnitude of energy used, but the level of plants) and keeping the efficiencies of the improvementsalone will do the trick.
energy services provided. In the domestic end-use devices at present levels. Option 4 is the new paradigmfor energy

Economic and Political Weekly June 2, 1990 1201

 TABLE1: DATAUSEDFORTHECALCULATION OFTHECOSrsOFGENERATING/SAVING ELECTRICITY
(Prices were inflated/deflated by the discount factor to obtain the 1986 price level)

Power Plant Capital Overnight Working Construc- Life of Capacity Auxiliary Fuel Con- Fuel Cost Fuel Con- Fuel
or Saving Cost Sum Construction Capital tion Time Plant/ Factor Consump- sumption/ sumption/
Option (Annual Cost Sum (Years) Appliance (PerCent) tion Saving Norm Saving Norm
Expenditure) (PV of (Per Cent)
(Rs) Annual
Expenditure
at 12
Per Cent)
Nuclear 724 cr/ 4.345 per 25 years 62.8 10 0.024gm/kwh Rs 2110/kg
power plant 470 mw cent of (uranium) (1983) infl @
(1992) capital 10 per cent
15,404/kw Rs 12,941/kw 8

Coal-based 621 cr/ 4.831 per 25 years 62.8 10 0.532kg/kwh Rs 233.21/ 12 ml/kwh Rs 30
Thermal 420 mw cent of (coal) tonne (1984) (oil) (1984
power plant (1992) capital infl @ 12 @ 3 pe
14,786/kw Rs 11,174/kw 6 per cent
Aydroelectric 210 cr/ 5 per cent 25 years 65.0 2 na
power plant 230 mw of capital
(1989)
9,130/kw Rs 10,366/kw 12
Natural-gas 569 cr/ 5 per cent of 25 years 62.8 10 0.2066 scm/ Rs 1400/1000
power plant 760 mw capital kwh (gas) scm (1986)
(1986) iinfl t 3
7,487/kw Rs 6,527/kw 4 per cent
Mini-hydel 10.57 cr/ 5 per cent 25 years 64.4 2 na
0 power plant 9 kw (1982) of capital
o 15,395/kw Rs 15,395/kw 3
3 Biogas-diesel 66131/5 kw 5 per cent 37525 hours 62.8 1 70kg/hour Rs 0.02/kP 0.056 ltr/kwh Rs 4.4
'n gen plant (1986) 13,226/kw of capital 0.5 BG-25 years (dung) (1986) (diesel) (1986) i
Engine- 3 per
20,000 hours
o
,: Producer-gas- 57033/5kw 5 per cent Gasifier- 62.8 1 1.5 kg/kwh Rs 0.30/kg 0.056 ltr/kwh Rs 4.4
. diesel (1986) Rs 11,407/kw of capital 0.5 1,00,000 (wood) (1986) (diesel) (1986)
gen plant hours @ 3 pe
Diesel gen 34533/5kw 5 per cent 25 years 62.8 1 0.2 ltr/HP/hr Rs 4.45/ltr
plant (1986) Rs 6,907/kw of capital 0.5 (diesel) (1986) infl
i? 3 per cent

t-
 TABLE 1 (Contd)

'PbwerPlant capital Overnight Working Construc- Life of Capacity Auxiliary Fuel Con- Fuel Cost Fuel Con- Fuel C
or Saving Cost Sum Construction Capital tion Time Plant! Factor Consump- sumption! sumnption/
~: Option (Annusk Cost.Sum (Years) Appliance (PerCent) tion SavingNorm SavingNorm
a (PVof
~~~~~~Expenditure) (PerCent)
(Rs) Annual
Expenditure
atl12
Per Cent)
Wind farm 85.704 20 years 19.78 1 na na na na
gen plant lakhs per
550kw(1986)Rs 17,8991kw 0.29
- Solar water 5000/unit -0.5 10 years na na 577 kwh/year
heater (1986). (saving)

Improved HDPEP =-o:s5 HDPEP: na na HDPEP: FFV:(saving)

IP set 1000 7.5 years (saving) 215 kwh/year
FFV=Rs 100 FFV:.5 years .495kwh!
year
Standard 5 hp motors -20 years na na 784kwh/year
motorsto standard- /motor
efficient 3500
motors iproved
4550
Compact 1061kw -0.0 6000 hours na na 82kwh/year
fluorescnt (accessories- (acc 10 years) (saving)
bulb 116)

Solar ponds 120000 0.5 25 years 90.41 na 50OO0kwh/ye

for a250sqm
solar pond
Co-generation 13500/kw Rs 13,500/kw5per cent of 1.0 25 years 31.7 0 11.1kg/kwh Rs 447.36 0.53kg/kwh
in sugar capital (bagg) (bagasse) per tonne (coal)
industry 52.17 (coal)
(bagg
+ coal)

Note: The costs of transmissionand distributionlines includecapitalcosts of Rs. 7828/kw (at 1987prices:inflationreckonedat 7 per cent per year
(also at 1987prices).
planning. It involves a rejection of all the In other words, the question must be ask- availableon the economics,in particular,the
three extremepositions representedby op- ed, and an answer obtained, regarding relativecosts, of the variousalternativesand
tions 1, 2 and 3. The new approach insists whetherit is cheaper,more environmental-, what little informationis availableis either
on an assessment of -whether supply in- ly benign and more conducive to self- not publicor too opaquefor verificationand
creasesor efficiencyimprovementsaremore reliance to save a kilowatt or generate a assessment. But, this information is par-
effective from the point of view of kilowatt. ticularlyimportantin the case of energycon-
economics, environment,self-reliance,etc. However, not enough information is servationand decentralisedenergy sources

TABLE: 2 NUCLEAR POWER STATIONS (2 x 235 MWe) OVERNIGHT CONSTRUCrION COSTs

(All expenditures except where otherwise stated in Rs crore)

Year Expenditure 1986 PV of Expenditure at Following Discount Rates (Per Cent)

1.00 2.50 5.00 7.00 10.00 12.00 15.00 20.00 25.00

1983 1.00 5.00 5.15 5.38 5.79 6.13 6.66 7.02 7.60 8.64 9.77
1984 2.00 22.00 22.44 23.11 24.26 25.19 26.62 27.60 29.10 31.68 34.38
1985 3.00 61.00 61.61 62.53 64.05 65.27 67.10 68.32 70.15 73.20 76.25
1986 4.00 98.00 98.00 98.00 98.00 98.00 98.00 98.00 98.00 98.00 98.00
1987 5.00 139.00 137.62 135.61 132.38 129.91 126.36 124.11 120.87 115.83 111.20
1988 6.00 149.00 146.06 141.82 135.15 130.14 123.14 118.78 112.67 103.47 95.36
1989 7.00 120.00 116.47 111.43 103.66 97.96 90.16 85.41 78.90 69.44 61.44
1990 8.00 85.00 81.68 77.01 69.93 64.85 58.06 54.02 48.60 40.99 34.82
1991 9.00 36.00 34.25 31.82 28.21 25.67 22.35 20.43 17.90 14.47 11.80
1992 10.00 9.00 8.48 7.76 6.72 6.00 5.08 4.56 3.89 3.01 2.36
724.00
OCC 712 694 668 649 624 608 588 559 535
OCC (1986 Rs/kw) 15144 14776 14216 13811 13267 12941 12504 1'1888 11391
Nominal discount
rate (per cent) 1.00 2.50 5.00 7.00 10.00 12.00 15.00 20.00 25.00

TABLE 3: THERMAL POWER STATIONS (2 x 210 MWe) OVERNIGHT CONSTRUCTION COSTS

(All expenditures except where otherwise stated in Rs crore)

Year Expenditure 1986 PV of Expenditure at Following Discound Rates (Per Cent)

1.00 2.50 5.00 7.00 10.00 12.00 15.00 20.00 25.00

1983 1.00 .00 .00 .00 .00 .00 .00 .00 .00 .00 .00
1984 2.00 .00 .00 .00 .00 .00 .00 .00 .00 .00 .00
1985 3.00 .00 .00 .00 .00 .00 .00 .00 .00 .00 .00
1986 4.00 52.00 52.00 52.00 52.00 52.00 52.00 52.00 52.00 52.00 52.00
1987 5.00 56.00 55.45 54.63 53.33 52.34 50.91 50.00 48.70 46.67 44.80
1988 6.00 180.00 176.45 171.33 163.27 157.22 148.76 143.49 136.11 125.00 115.20
1989 7.00 193.00 187.32 179.22 166.72 157.55 145.00 137.37 126.90 111.69 98.82
1990 8.00 103.00 98.98 93.31 84.74 78.58 70.35 65.46 58.89 49.67 42.19
1991 9.00 37.00 35.20 32.70 28.99 26.38 22.97 20.99 18.40 14.87 12.12
621.00
OCC 605 583 549 524 490 469 441 400 365
OCC (1986 Rs/kw) 14414 13886 13073 12478 11667 11174 10500 9521 8694
Nominal discount rate (per cent) 1.00 2.50 5.00 7.00 10.00 12.00 15.00 20.00 25.00

TABLE 4: HYDEL POWER STATIONS (2 x 115 MWe) OVERNIGHT CONSTRUCTION COSTS

(All expenditures except where otherwise stated in Rs lakh)

Year Year Expenditure 1986 PV of Expenditure at Following Discount Rates (Per Cent)

1.00 2.50 5.00 7.00 10.00 12.00 15.00 20 25.00

1976-77 1.00 38.00 41.56 47.46 58.95 69.86145 89.60 105.38 133.68 196.07 283.1221
1977-78 2.00 118.00 127.78 143.77 174.34 202.7460 252.94 292.16 360.96 507.38 703.3348
1978-79 3.00 665.00 712.97 790.48 935.72 1067.845 1295.90 1470.10 1768.91 2382.82 3170.967
1979-80 4.00 668.00 709.10 774.68 895.18 1002.488 1183.40 1318.51 1545.12 1994.64 2548.218
1980-81 5.00 951.00 999.51 1075.97 1213.74 1333.827 1531.60 1675.99 1912.80 2366.39 2902.222
1981-82 6.00 965.00 1004.18 1065.18 1f72.96 1264.918 1412.86 1518.45 1687.79 2001.02 2355.957
1982-83 7.00 1571.00 1618.60 1691.80 1818.63 1924.543 2091.00 2207.14 2389.29 2714.69 3068.359
1983-84 8.00 2062.00 2103.45 2166.39 2273.36 2360.784 2495.02 2586.57 2727.00 2969.28 3221.875
1984-85 9.00 3313.00 3346.13 3395.83 3478.65 3544.91 3644.30 3710.56 3809.95 3975.60 4141.2S
1985-86 10.00 2228.00 2228.00 2228.00 2228.00 2228 2228.00 2228.00 2228.00 2228.00 2228
1986-87 11.00 2847.00 2818.81 2777.56 2711.43 2660.748 2588.18 2541.96 2475.65 2372.50 2277.6
1987-88 12.00 2701.00 2647.78 2570.85 2449.89 2359.158 2232.23 2153.22 2042.34 1875.69 1728.64
1988-89 13.00 1964.00 1906.24 1823.77 1696.58 1603.209 1475.58 1397.94 1291.36 1136.57 1005.568
1989-90 14.00 1000.00 960.98 905.95 822.70 762.8952 683.01 635.52 571.75 482.25 409.6
21091.00
OCC 21225 21458 21930 22386 23204 23842 24945 27203 30045
OCC (1986Rs/kw) 9228 9329 9535 9733 10089 10366 10845 11827 13063
Nominal discount rate (per cent) 1.00 2.50 5.00 7.00 10.00 12.00 15.00 20.00 25.00

1204 Economic and Political Weekly June 2, 1990

 FIGURE 1: NUCLEAR VS COAL FIGURE 2: COAL VS VARIOUS NUCLEAR
(1986 Rs/kW) (1986 Rs/kW)
190000 250000

200000 CAG

140000 3.1~~~~~~.
50000 7A~~~~~~~EC
lxAE
0' _ _ EC*(1A
OD
100000 -AEC.-
90000 X
COAL
(800km)

COAL (PH)
40000 -
0 5 10 15 20 25 5 10 15 20 25
INTEREST RATE ( %) INTEREST RATE i %)

Variation with discount rate of the unit cost of power (1986 Rs/kW) Variation with discount rate of the unit cost of power (1986 Rs/kW)
from nuclear power plants [AEC] and from coal-based thermal power from coal-based thermal power plants at the pit-head [coal (PH)] and
plants at the pit-head [coal (PH)] and 800 km from the pit-head [coal 800 km from the pit-head [coal (800)] and five costing approaches for
(800)] using the parameters given in the Report of the Committee for nuclear power plants (1) AEC-using parameters given in the Report
the Pricing of Power (cf Reference 1). of the Committee for the Pricing of Power (cf Reference 1), (2) AEC
(WD)-in which waste disposal costs are added to the AEC case, (3) AEC
(10)-in which a 10-yearconstruction time is used instead of the 8 years
FIGURE 3: CENTRALISEDGENERATION in the AEC case, (4) AEC (WD + 10)-in which both a 10-year con-
(1986 Rs/kW) struction time and waste disposal costs are used in the AEC case, and
250000 (5) CAG-in which the AEC heavy water costs are replaced by those
suggested by the Comptroller and Auditor-General (cf Reference 4).
FIGURE 4: DECENTRALISEDGENERATION
AEC
(1986 Rs/kW)
200000 ( I0 CW
200000

150000 - A
150000

ADv
010OOO 0 COAL (800 k m)

100000
5000 X
- <-

Ol NG COAL (PH)I N
HYDE (SOURCE)(0kS 50000 BIOGAS . A

0 1- _F_SSUGAR
I- COGE
5 10 IS 20 25
INTEREST RATE (%)
I I ~SMALL HYDELI
Variation with discount rate of the unit cost of power (1986 Rs/kW) 0
5 10 15 20 25
from centralised sources: (1) coal-based thermal power plants at the pit-
head [coal (PH)] and (2) coal-based thermal power plants 800 km from INTEREST RATE (%)
the pit-head [coal (800)], (3) nuclear power plants [AEC (WD + 10)] Variation with discount rate of the unit cost of power (1986 Rs/kW)
in which both a 10-yearconstruction time and waste disposal costs are from decentralisedsources:(1) mini- and micro-hydroelectricplants [small
used in the AEC case of the Department of Atomic Energy, (4) natural- hydel], (2) cogeneration of electricity from bagasse in sugar factories
gas-based thermal power plants located at the gas source [NG (source)], [sugar cogen], (3) biogas-based engine-cum-gensets [biogas], (4)
(5) natural-gas-based thermal power plants located 800 km from the producer-gas-basedengine-cum-gensets [PG] and (5) diesel engine-cum-
gas source [NG (800 km)] and hydroelectric plants [hydel]. gensets [DG].

becauseof the superficialand sometimesir- comparativecosting of the following elec- (3) hydroelectricplants,
responsiblestatementsmade even from the tricity generatingand saving technologies: (4) natural-gas-basedthermalpowerplanits.
energyestablishmentto the effect that these CentralisedElectricity Generation Decentralised Electricity Generation
technologiesdo not evenmeritconsideration Technologies Technologies
because they are too expensive. (1)'nuclear power plants (CANDU type), (5) imall hydroelectricplants,
This paper thereforeattempts to make a (2) coal-based thermal power plants, (6) biogas-drivengensets,

Economic and Political Weekly June 2, 1990 1205

(7) producergas-driven gensets, FIGURE 5: CENTRALISED VS DECENTRALISEDGENERATION
(8) diesel gensets, (1986 Rs/kW)
(9) wind farms.
Electricity Conservation Technologies
(10) solar water heaters, 1500000?-,-

(11) improvedirrigation pumpsets,

(12)replacementof standardmotorswith ef-
ficient inotors,
-(13)replacementof incandescentbulbs with
compact fluorescent lamps, 10000 - ?

(14) solar ponds, OOX ~~~~~~I

(15) cogeneration in sugar factories.
In order to carry out this comparative
costing, technologiesmust be comparedon
the same terms. It has been necessary
UJW 00 00 0.
thereforeto adopt a standardapproachthat .-J UZ z ( oo' -J
avoids biases against any categories of 00
technologies. ~o~O n~
I_u U
,fl. ZZ < U
II
Methodology
ACCOUNTING APPROACH

The conventional ascounting approach Comparison of the unit cost of power(1986Rs/kW)at a 12percentdiscountrate-of various
for the computation of the unit energy centralisedand decentralisedsources:(1) small hydel-mini- and micro-hydroelectric plants,
costs-also referred to in Indian energy (2) CO-GENwith BAG + C-cogeneration of electricityfrombagassein sugarfactorieswith
studies[lj as the return-on-investment(ROI) coal combustionin the off-season,(3) CO-GENwithBagasse-cogeneration-during the season
method-is based on calculatingthe follow- of electricityfrombagassein sugarfactories,(4) windfarm-wind-turbines,(5) NATGAS (at
ing tour components: source)-natural-gas-based thermalpowerplantslocatedat thsegas source,(6) biogas-biogas-
(1) -the annual costs of fuel and other basedengine-cum-gensets [biogas],(7) NATGAS(800kms)-natural-gas-based thermalpower
materials, plantslocated800 km from the gas source,(8) PG-producer-gas-basedengine-cum-gensets,
(2) operation and maintenance costs, (9) hydel-large hydroelectricplants,(10)coal (PH)-coal-based thermalpowerplantsat the
(3) depreciation-the amount set aside pit-head,(1l) coal-basedthermalpoxwer thepit-head,(12)DG-diesel engine-
plants800km froma
everyyear for the depreciationof the assets cum-gensets,(13)AECT and D-using AECparameters plusT andD costs,(13)AEC(WD)-
AEC pluswastedisposalcosts, (14)AEC(10)-a 10-yearconstructiontime plusthe AECcase,
consistingof the capitaland the interestdur- (15) AEC (WD + 10)-AEC case plus a 10-yearconstructiontime and wastedisposalcosts,
ing construction less the salvage value, (16) GAG-with CAG heavywatercosts.
(4) the returnon capital employedwhich
is the interestrate multipliedby the sum of (3) The gestationperiodof the technology, structionand thereforedoes not separatethe
the capitalcost, the interestduringconstruc- i e, the period of construction betweenthe financing decision from the investment
tion and the working capital. commencementdate and the commission- decision.
Though it is widely used in the Indian ing date,is ignoredso that projectsthatyield (6) The interestduringany partlar year
energyestablishment,this conventionalap- physicaloutputs (for example,energy)after is calculated on the basis of the opening
proach has the following shortcomings: many yearsare treatedon equal terms with balance of the book value and the average
(1) It ignores the time value of money- projects that yield outputs immediately. capital expenditurefor that year.
for instance,it adds the currentexpenditures Thus, no heed is paid to when the returns (7) If actuals deviate from estimates the
on capital for various years to get the total are obtained, i e, to the timing of the losses/gains 4re not carried forward.
capital cost of the project. benefits.
DISCOUNTEDCASH FLOWTECHNIQUES
(2) It mixes items consisting of real cash (4) The calculation involves historical
flows (e g, annualcosts) with non-cashflow costs which are like 'spilt milk'. lb overcomethe shortcomingsof the ac-
items (e g, depreciation). (5) It considers the interest during con- counting approach, it is customary
TABLE 5: NATURALGAS POWERSTATIONS(760 MWe)OVERNIGHT CosrS
CONsrRUcrION
(All expendituresexcept whereotherwiselstatedin Rs crore)
Year Year Expenditure 1986 PV of Expenditure at Following Discount Rates (Per Cent)

1.00 2.50 5.00 7.00 10.00 12.00 15.00 20.00 25.00

1983 1.00 .00 .00 .00 .00 .00 .00 .00 .00 .00 .00
1984 2.00 .00 .00 .00 .00 .00 .00 .00 .00 .00 .00
1985 3.00 .00 .00 .00 .00 .00 .00 .00 .00 .00 .00
1986 4.00 113.80 113.80 113.80 113.80 113.80 113.80 113.80 113.80 113.80 113.80
1987 5.00 227.60 225.35 222.05 216.76 212.71 206.91 203.21 197.91 189.67 182.08
1988 6.00 199.15 195.23 189.55 180.63 173.95 164.59 158.76 150.59 138.30 127.46
1989 7.00 28.45 27.61 26.42 24.58 23.22 21.37 20.25 18.71 16.46 14.57
1990 8.00 .00 .00 .00 .00 .00 .00 .00 .00 .00 .00
1991 9.00 .00 .00 .00 .00 .00 .00 .00 .00 .00 .00
1992 10.00 .00 .00 .00 .00 .00 .00 .00 .00 .00 .00
569.00
OCC 562 552 536 524 507 496 481 458 438
OCC (1986 Rs/kW) 7395 7261 7050 6891 6667 6527 6329 6029 5762
Nominal discount rate (per cent) 1.00 2.50 5.00 7.00 10.00 '12.00 15.00 20.00 25.00

1206 Economic and Political Weekly June 2, 1990

nowadaysto resort to discountedcash flow FIGURE 6: CONSERVATION
techniques in which emphasis is given to (1986 Rs/kW SAVED)
(1) the time value of money, 25000
(2) the cash flows along with their
magnitude and timing,
(3) the separation of investment decisions
from financing decisions,
20000 0
(4) the exclusionof interestduringconstruc-
tion fromconsiderationbecauseit is already BL SOLAR POND
takeninto accountthroughthe discountrate
and would thereforeimply double counting
if it is-included.
TWo important discounted cash flow
methods will be discussed here.
Life Cycle Costing
The monetary benefits from energy 1500000
generationtechnologies are in the form ofr A PLCASOLAR POND
sales of the kWhoutput at a particularprice c'
(Rs/kWh), and from energy conservation 3:
technologies in the form of the conrsumer's
savings of energy expenditures. But, this
priceis often not only arbitrarybut also sub- A..xjj~-.A.~/-- IMPROVED MOTO S
ject to political factors. In other words,the
price of energyis usuallynot a reflectionof
actual costs. Hence, the benefits from the I - IP SETS
sale of energy are often excluded from the
analysis by considering only the life-cycle 5 10 15 20 25
costs (LCCs), i e, the sum of the present
INTEREST RATE ( )
valuesof all the costs throughoutthe life of
the project. These'life-cyclecosts are quite Variation with discount rate of the unit cost of power (1986 Rs/kW) saved by various conser-
often chosen as the basis for comparisonof vation measures.:(1) IP SETS with frictionless foot-valves and HDPE piping, (2) ImprovedMotors
energytechnologies because they get round with efficient motors replacing inefficient motors, (3) SWH-solar water heaters replacing elec-
the problem of the benefits based on tric water heaters, (4) lB/CF with compact fluorescent lamps replacing incandescent bulbs, (5)
PL solar pond with heating from solar ponds replacing peak-load electric water heating and
arbitraryprices of energy. (6) BL solar pond with heating from solar ponds replacing base-load electric water heating.
Thereare howeversome importantissues
to be consideredand precautionsto be taken fortunately, life-cycle costs only reckon with the basis of a 10 per cent discount rate) to
in making comparisons on the basis of the costs; they do not take into account benefits. 0.386 kWh produced today. And, it is this
life-cycle costs of different technologies. The difference in the timing of the out- discountedkWh that must be used in com-
If the capital costs of different puts from the energy technologies can be in- puting the unit cost of energy (LCC/kWh)
technologiesreferto differentyears,it is im- troduced into the analysis by comparing a of a technologythat has a constructiontime
portantto referall capital costs to the saKme feature of the technologies that depends, not of 10 years.The implication is that the real
year. But, this can create a problem. If all only on the costs but also on the benefits. unit cost of energy of such a technology is
alternativeprojects are considered to com- That is, what ought to be compared iF - '594(= 1/0.386) timesthe cost if the gesta-
mence at the same time, and costs are refer- cost/benefit ratio such as the unit cost or tion time is ignored.
red to this common commencement year energy (Rs/kWh) or unit cost of power (in- The FVPCC methodconsists of referring
(say 1986), then the simple comparison of stalled capacity) (Rs/kW). There are two all costs to the commissioning dates by
the LCCs of different projects gives the methods of making this comparison: future-valuifigthe capital cost of the long-
following absurd result[2]-if all other (1) discounting physical benefits (power gestationtime technologiesto theircommis-
featuresof the projectsare the same except or energy) to the project commencement (the sioning dates. In this case, the cost/benefit
the gestationtime, the longer gestationtime DPBPC method) ratios must be computed without discoun-
project works out to have a significantly (2) future-valuing' pre-commissioning ting the physical outputs.
smaller LCC than a quicker project, and costs to the project commissioning (the Though both methods, viz., discounting
must thereforebe preferredover the faster FVPCC method). physical outputs to the same project com-
project.Clearly,such an irrationaldecision- The DPBPC method requires the discoun- mencementdate and future-valuingcapital
rule is biased in favour of long-gestation ting of the physical outputs of energy costs to the different commissioningdates,
projects-in fact, the commencementdate technologies-either the power or installed yield exactly the same numerical results,
LCCs rewardtechnologies with long gesta- capacity (kW) or the energy (kWh)-to the both the methods leave a sense of dis-
tion times (e g, technologiesthat requiresay same reference year as the costs, i e, the com- satisfaction howeverjustified they may be.
6-10yearsof constructiontime) and punish mencement date of the project. In the case The discounting of outputs appears
technologies that start producing energy of the unit cost of power (LCC/kW), it cai strangebecauseit is not customaryto attach
quickly (say within a year). be argued that because a kilowatt of rated a time value to physical outputs in the use
The origin of this absurdresultlies in the capacity is realised and becomes available of resourcesthough such a time value may
fact that the real difference between the only after the construction period of say 10 be necessary in the context of depleting
short- and long-gestation energy techno- years, the installed capacity corresponds (on resources.But, this discountingis numerical-
logies is the differencein the times when the the basis of a 10 per cent discount rate) to ly equivalent to attaching a unit value
physicaloutputs are realised-in the short- only 0.386 kW at the commencement date (Rs.1/kWh)to the kilowattnours produced
gestation technologies, the energy is saved as the reference. In the case of the unit cost by the technology and discounting the
or generated very soon in contrast to the of energy, the DPBPC method implies that monetaryvalue of the outputs-a perfectly
long-gestation technologies where the first a kWh produced from a long-gestatiori valid procedure.
outputappearsaftersay 6-10years.And, un- technology after 10 years is equivalent (on Thus, discounting the kWh outputs is a

Economic and Political Weekly June 2. 1990 1207

proxy for discounting the sales of the energy of the price for which the technology case of CANDU nuclear reactors) are com-
outputs. becomes economically viable. This puted in the same way as life-cycle costs of
On the other hand, the commissioning minknum price determinesthe unit cost of fuel(s) and 0 and M.
date LCCs refer to different years (in par- energy(Rs/kWh). It has been shownthat the (6) Total Life-cycle Cost: The total life-
ticular, they refer to a later year in the case unit cost of energyfound by determiningthe cycle cost of the technology is given by the
of technologies with long gestation times)- NPV and setting it equal to zero is identical sum of the capital cost and the life-cycle
and this comparison of present values cor- to the unit cost of ene-rgydetermined by costs of fuel(s), 0 and M and other annual
responding to different years is distasteful either the DPBPC method of discounting expenses.
to financial management experts. physical outputs to the same project com- (7) Unit cost of power (installed capaci-
Fortunately, it is possible to avoid life- mencementdate or the FVPCC method of ty) (Rs/kW) : The unit cost of power
cycle costing and resort to the net present future-valuingcapital costs to the different (installed capacity) (Rs/kW) can be com-
value method which does not require either commissioning dates. puted either by the DPBPC method (i e, by
the discounting of physical outputs to the In view of the aboveanalysis,the unit cost dividing the total life-cycle costs by a factor
same project commencement date or the of energy for the various technologies has that discounts a kilowatt from the commis-
future-valuing capital costs to the different been determinedby all the threemethodsas sioning date to the commencement date), or
commissioning dates. a consistency check. by the FVPCC method (i e, by future valu-
ing the overnight construction costs and
Net Present ValueMethod
COMPUTATIONAL PROCEDURE other costs incurred during construction to
the commissioning date and then dividing
Net present value (NPV) computations Centralised and Decentralised Electricity by a kilowatt).
must take as their reference time the com- Generation Technologies (8) Unit cost of energy (Rs/kWh): Once
mencement date of the project because that
The unit cost of energy(Rs/kWh) and the the unit cost of power (installed capacity)
is from when cash flows begin. But, it is im-
unit cost of power (installed capacity) (Rs/kW) is known, it can be annuitised using
perative in NPV analysis to consider not on-
(Rs/kW) from centralisedand decentralis- the discount rate and the life of the plant.
ly the costs but also the benefits. In fact, the
ed electricity generation technologies have The unit cost of energy (Rs/kWh) is given
NPV is sum of the present values of the an-
been calculatedfor a particulardiscountrate by dividing the annuitised life-cycle cost per
nual benefits minus the sum of the present
with the following steps. kW by the net energy produced per unit in-
values of the annual costs minus the initial
(1) Capital Cost: The presentvalues (cor- stalled capacity (kWh/kW). The unit cost of
cost K, where the present values are
responding to the commencement date of energy (Rs/kWh) can also be obtained by the
calculated with reference to the date of com-
the projectas the referenceyear)of the year- NPV method by dividing the total life- cy-
mencement of the project.
wise expendituresduring the construction cle costs from Step (6) by the present value
In the case of energy technologies, the
period are summedand dividedby the rated (at the commencement date) of the kWh an-
benefits are the saleable physical outputs
capacity of the technology (in kW) to give nual output.
which means that they must be taken into
account after being assigned a monetary K, the overnight construction cost. The TABLE 6: CAPITALCOST DETAIl S OF
value. This monetary value can be obtained working capital per kW and any other BIOGAS PLANT
through the price P (in Rs/kWh) that is capital costs (such as the purchase of the (In Rs)
associated with the energy. Thus, the annual heavy water pool in the case of CANDU
nuclearreactors)are added to this K to give Biogas plant cost (1986) 28794
benefit in the nth year after the project has
the total capital cost per kW. Piping, etc (1987 prices) 2000
commenced is [kWh(n) * P(n)]. Further, in 1869
Piping, etc (1986 prices)
NPV computations, the timing of all cash (2) Matching the Life of the Plant with 1000
Sand filters (1987 prices)
flows is of central importance. Thus, it is the Longest Life: Since the purpose here is Sand filters (1986 prices) 935
only rational to discount to the reference to comparethe costs of all technologies on Engine-genset cost (1989 prices) 32000
year the cash inflows corresponding to the the same terms, it is essential that the Engine-genset cost (1986 prices) 26122
monetary value of kWh outputs. Thus, lifetime of all the projectsbe the same. This 7 HP, Diesel engine 8500
is achievedby taking the life of the project 5 KVA 3-phase genset (+ panel) 17622
NPVj = E {kWhj(n)*P(n)/ (l+d)n} - with the longest life as the standard, and Accessories, tools, etc (1987 prices) 5000
I {Cj(n)/(l + d)n) - K making repeatedinstallations of a plant or Accessories, tools, etc, (1986 prices) 4673
device with a shorter life until the standard Engine room (1987 prices) 4000
life is attained. Thus, if the standard is a Engine room (1986 prices) 3738
where j is the energy technology, n, the
number of years after the date of commence- 25-yearnuclearplant,then theremustbe five Note: Inflation rate of 7 per cent has been used
ment of the project (taken as the reference investmentson a teehnologywith a five year for arriving at 1986 prices.
date), P(n), the unit energy price in the nth life, i e, at 0 years, 5'years,10years, 15years
year, d, the discount rate and K, the over- and 20 years. TABLE 7: CAPITALCOSr DETAILS OF PRODUCER
night construction cost given by the sum of (3) Fuel Expenses: From the annual ex- GAS PLANT
the present values of the year-wise expen- penses on fuel(s) and the life of the plant, (In Rs)
ditures during the construction period divid- the present value of these expenses at the
ed by the rated capacity in kW. commissioningdate arecomputed,and then Producer gas plant cost (gasifier) 16500
discounted to the referenceyear (the com- Voltage stabiliser 1500
If P(n) varies in the same way for all
mencement date) to give the life-cycle cost Water pump 1500
technologies, then it is obvious that the rank 3000
of fuel(s). Cutter
comparisons of the NPVs of different 32000
Engine-genset cost (1989 prices)
technologies is unaffected by the value of (4) Operation and Maintenance (O and 26122
Engine-genset cost (1986 prices)
P(n). In fact, the P(n) functions like a scal- M) Expenses: The present value (at the 7 HP, diesel engine 8500
ing factor for the kWh-a large price referenceyear) of the annual 0 and M ex- 5 KVA 3-phase genset (+ panel) 17622
magnifies the value of the kWh output. penses are computed in the same way as the Accessories, tools, etc (1987 prices) 5000
A single value, P, of the price-the levelis- fuel expensesto give the life-cycle0 and M Accessories, tools, etc (1986 prices) 4673
ed price-can also be computed so that it costs. Engine room (1987 prices) 4000
gives the same NPVj result as the above ex- (5) Other Annual Expenses:The present Engine room (1986 prices) 3738
pression. Setting the value of NPV. = 0 value (at the referenceyear) of all other an-
enables a calculation of this levelised price, nual expenses (for example, heavy water Note: Inflation rate of 7 per cent has been
P, which then becomes the minimum value make-upand waste disposal expensesin the used for arriving at 1986 prices.

Economic and Political Weekly June 2, 1990 1209

 FIGURE 7: CONSERVATIONVS GENERATION
The above calculation can be repeated (Rs/kW GENERATED SAVED)
with various values of the discount factor
in order to obtain the unit cost of power (in- 50000
stalled capacity) (Rs/kW) and the unit cost
of energy (Rs/kWh) as a function of the dis-
count rate. 0-
An analytical expression for the unit cost
of power and of energy is given in the PG4
Appendix.
Electricity Conservation Technologies 3100000
Replacing Electricity with other Energy
Carriers: In the case of electricity conser- AEC
vation technologies involving the (total or
partial) replacement of electricity with other
energy sources (for example, replacement of
electric with solar water heating), the unit
cost of energy (Rs/kWh) and the unit cost
of power (installed capacity) (Rs/kW) have
50000
been calculated for a particular discount rate
with the following steps.
(1) Total Annual Capital and 0 and M
Costs: The number of devices required to
HYDEL
span the life of the standard technology (25
year nuclear plant) are computed, and the IB-Cf SWH I P SETS
sum of the present values of the investments
on these devices is computed for the
reference year. This life-cycle cost is then an-
nuitised for the life of the standard 5 10v 15 20
technology to give the annual capital costs.
INTEREST RATE (%)
To this are added the annual 0 and M costs
Variationwith discount rate of the unit cost of power (1986 Rs/kW) generated fromcentralised
to obtain the total annual capital and 0 and
and decentralised sources and saved by various conservatio.n measures. (NB The symbols are
M costs. (N.B. The costs of administering
the same as in Figures 1, 4 and 6.)
the replacement programme have not been
included.) cost of energy (Rs/kWh) and tne unit costo saved(kW)can be calculated.The generated
(2) Generated Electricity Saved: From the of power (installed capacity) (Rs/kW) have powersavedis obtainedby correcting.for the
energy saved per conservation device and the been calculated for a particular discount rate T and D losses and the capacity factor of
transmission and distribution losses, the with the following steps: the standardtechnology. The differencein
energy saved at the generation end is (1) PV of Capital and 0 and M Costs and life-cycle costs must then be divided by the
computed. Energy Consumption of Standard Device: generatedpowersavedto obtainthe unitcost
(3) Unit Cost of Energy Saved: Dividing The number of standard devices necessary of savedpower(or avoidedinstalledcapaci-
the total annual capital and 0 and M costs to match the life of the standard technology ty) (Rs/kW).
by the generated energy saved yields the unit (25-year nuclear reactor)- is calculated tak-
cost of energy saved (Rs/kWh). ing into account the life of these devices. The III
(4) Unit Cost of Saved Power (Avoided In- life-cycle costs (i e, the present values of the
stalled Capacity): From the delivered energy capital and 0 and M costs) of this number
Detailed Costing of Electricity
saved (kWh/year) and the usage of the con- of devices are computed taking into account Technologies
servation device (hours/year), the delivered the timing of the replacements. (N B In this
power saved (kW) can be calculated. The case too, the costs of administering the The discounted cash flow techniques
generated power saved is obtained by cor- replacement programm have not been in- describedabove havebeen used to calculate
recting for the T and D losses and the cluded.) In addition,- the energy consump- the unit cost of generated/savedpower (in-
capacity factor of the standard technology tion of the standard device is noted. stalled/avoidedcapacity) (Rs/kW) and the
(e.g., the nuclear plant). Next, the present (2) PV of Capital and 0 and M Costs and -unit cost of generated/saved energy
value (at the reference year) of the total an- Energy Consumption of Improved Device: (Rs/kWh) as a functionof the discountrate
nual capital and the 0 and M costs is com- The above calculation is repeated for the im- for the various centralisedand decentralis-
puted. This present value must then be divid- proved devices. ed electricitygenerationtechnologiesand the
ed by the generated power saved to obtain (3) Delivered/Generated Energy Saved: electricity conservation technologies con-
the unit cost of saved power (or avoided in- The difference in electricity consumption of sidered in this paper.
stalled capacity) (Rs/kW). the statndardand improved devices yields the A summaryof the basic data used for the
The above calculation can be repeated delivered energy saved from which the -costingof all the technologieshas beengiven
with various values of the discount factor generated energy saved can be calculated by in Table1. The referenceyear that has been
in order to obtain the unit cost of power (in- correcting for the T and D losses. used for all the calculations is 1986. The
stalled capacity) (Rs/kW) and the unit cost (4) Unit Cost of Energy Saved: When the capital costs for the long-gestationprojects
of energy (Rs/kWh) as a function of the dis- difference in the life-cycle costs of the stan- are usually given in the data sources as the
count rate. dard and improved devices is divided by the sum of undiscountedyear-wiseexpenditures;
SavingElectricityby using moreEfficient generated energy saved, the result is unit cost hence, the overmnght construction cost has
Devices:. In the case of electricity conserv- of generated energy saved (Rs./kWh) been computed as the sum of the.1986 pre-
ing technologies involving the replacement (5) Unit Cost of Saved Power (Avoided In sent values of these year-wiseconstruction
of inefficient electric devices with more ef- stalled Capacity): From the delivered energy costs using a discount rate d. Since the
ficient devices(for example,the replacement saved (kWh/year) and the usage, of the costing calculations have been done as a
of standardwith efficient motors), the unit devices (hours/year), the delivered power function of d, it follows that the overnight

1210 Economic and Political Weekly June 2, 1990

construction is a function of d. The single Committeefor the Pricing of Power. The based plants have not been included.)
value of overnight construction cost basic parametersused for the costing are TWocases of the costing of coal-based
presented in Table 1 is the value for a 12 per given in Table 1. The Rs 621 crore which is thermal power plants has been workedout
cent discount factor. Other input prices have the total ofthe year-wiseexpendituresfor dependingupon whetherthe plantsarecon-
been inflated/deflated using either a flat rate two plants (each of 210 MW) to be commis- sideredto be located at: (1) the pit-head, or
of 7 per cent or the particular inflation rate sioned in 1992has been converted(Table3) (2) 800 kms from the pit-head.
mentioned in the Table 1. into overnightconstructioncosts by taking Hydroelectric Plants
Apart from the data given in Table 1, rele- the sum of the presentvalues(referenceyear
vant additional information regarding each = 1986) at various discount factors. The The capital cost data for the analysis of
technology is given below. environmentalcosts associated with coal- hydroelectricpower plants has been based
Nuclear Power Plants (CANDU type) TABLE 8: UNIT COSr OF POWER-DISCOUNTED CASH FLOWMETHOD
The basic data for the costing of CANDU (Rs/kW)
type nuclear power plants has been obtain-
Interest Rate 1 2.5 5 10 12 15 20 25
ed from the papers of Srinivasan[3] and the
(Per Cent)
"Report of the Committee for the Pricing
of Power" [1]. The basic parameters used for Excluding T and D Cost
the costing are given in Table 1. The Rs 724 CAG 46618 51548 59638 78778 88296 105136 141329 190041
AEC 33582 35139 38513 48487 53784 63284 83798 111341
crore which is the total of the year-wise ex-
AEC (WD) 39034 39699 42002 50734 55725 64884 85023 112328
penditures for two reactors (each of 235 AEC (10) 34066 36486 41731 57603 66323 82470 119364 172613
MW) to be commissioned in 4992 has been AEC (10+WD) 39517 41047 45220 59850 68265 84Q70 120588 173599
converted (Table 2) into overnight construc- Coal (800 km) 56726 50700 43977 37875 37039 36833 38399 41616
tion costs by taking the sum of the present Coal (PH) 46734 42341 37583 33757 33480 33900 36154 39808
values (reference year = 1986) at various Hydel 12735 14258 17652 28392 34618 46769 77476 128262
discount factors. Nat Gas (at
Five cases of the costing of CANDU type source) 45566 39776 32987 25699 24134 22626 21548 21553
nuclear power plants have been worked out: Nat Gas (800
(1) the AEC case with all the parameters kms) 62586 54015 43879 32714 30195 27621 25372 24633
identical to those used by Department of Windfarm 34021 30019 25513 21034 20141 19298 18631 18404
Atomic Energy, Biogas 114901 97859 77358 53657 47855 41399 34371 29987
(2) the CAG case in which the DAE price PG 130194 108775 85367 58285 51646 44251 36179 31122
of heavy water (viz, 1986 Rs 4,747/kg) is DG 159666 134496 104199 69103 60481 50857 40309 33653
replaced by the price suggested by the Com- Small Hydel 13949 14088 14532 15945 16644 17801 19968 22397
ptroller and Auditor-General[4] (viz, SWH 5966 5165 4203 3100 2834 2544 2237 2055
Rs 16,906/kg), IP sets 1811 1558 1258 921 840 753 660 606
IB- CF 9268 8038 6548 4818 4395 3927 3425 3118
(3) the AEC+WD case in which waste
Solar pond (BL) 21829 20041 17924 15574 15033 14464 13918 13653
disposal expenses per kWh are added on the
Solar pond (PL) 10475 9617 8602 7474 7214 6941 6679 6552
lines of the Swedish practice,
Improved motors 3603 3188 2726 2274 2185 2101 2032 2003
(4) the AEC + 10 case in which the reac- Cogen with
tors are constructed in 10 years instead of bagasse 3419 32628 30765 28649 28138 27573 26960 26577
the 8 years hoped for in the AEC case, and Cogen with
(5) the AEC+WD + 10 case in which waste bag + coal 32614 29583 25980 21888 20899 19806 18620 17S80
disposal expenses are included and the reac- 1986 RS /KW
tors are built in 10 years. for T and D 10850 11477 12969 17509 19920 24240 33597 46242
Though the department of atomic energy
Including T and D Cost
treats the heavy water pool as being leased CAG 57468 63025 72607 96287 108216 129376 174926 236283
at 8 per cent, this conversion of a capital cost AEC + T and D 44431 46616 51482 65996 73704 87524 117395 157583
into an operating cost is not followed here. AEC (WD) 49883 51176 54971 68243 75645 89125 118620 158570
The heavy water pool is considered here as AEC (10) 44915 47963 54700 75112 86243 106710 152960 218854
being purchased; it is, therefore, viewed as AEC (10+WD) 50367 52524 58189 77359 88185 108310 154185 219841
a capital cost prior to commissioning. Coal (800 km) 67575 62177 56946 55384 56959 61073 71995 87858
In November 1989, the British Govern- Coal (PH) 57583 53818 50552 51266 53400 58141 69750 86050
ment took a decision to abandon its plans Hydel 23585 25735 30621 45901 54538 71009 111073 174504
of building three new nuclear reactors. This Nat gas (at
decision was forced as a result of the refusal source) 56415 51253 45956 43208 44054 46866 55145 67795
of the banks and institutions to carry the Nat Gas (800
financial risk of decommissioning plants (at kms) 73435 65492 56848 50223 50115 51861 58968 70875
the end of their useful life) because the Windfarm 44870 39251 38482 38542 40061 43539 52227 64645
decommissioning costs were at least equal Biogas 114901 97859 77358 53657 47855 41399 34371 29987
to the initial plant cost. Despite this new in- PG 130194 108775 85367 58285 51646 44251 36179 31122
DG 159666 134496 104199 69103 60481 50857 40309 33653
formation, the costing here has been done
Small Hydel 13949 14088 14532 15945 16644 17801 19968 22397
on the basis of the department of atomic
SWH 5966 5165 4203 3100 2834 2544 2237 2055
energy's decommissioning cost of 1983 IP sets 1811 1558 1258 921 840 753 660 606
Rs 1000/kW which is less than one-tenth of IB- CF 9268 8038 6548 4818 4395 3927 3425 3118
the capital cost of the nuclear plant. Solar Pond (BL) 21829 20041 17924 15574 15033 14464 13918 13653
Coal-based ThermalPower Plants Solar Pond (PL) 10475 9617 8602 7474 7214 6941 6679 6552
The basic data for the. costing of coal- Improved motors 3603 3188 2726 2274 2185 2101 2032 2003
based thermal power plants has been obtain- Cogen with
ed from the same sources as the data on the Bagasse 34195 32628 30765 28649 28138 27573 26960 26577
CANDU type nuclear power plants, viz, the Cogen with
papersof Srinivasanand the Reportof the Bag+Coal 32614 29583 25980 21888 20899 19806 18620 17880

Economic and Political Weekly June 2, 1990 1211

on the Varahihydroelectricprojectdescrib- FIGURE 8: BIOGAS, NUCLEAR AND SOLAR POND
ed in the Annual Report[5]of the Karnataka (Rs/kW GENERATED/SAVED)
PowerCorporation.The Rs 210 crorewhich 200000 -_..
is the total of the year-wiseexpendituresfor
the 230 MW power plant commissioned in
1989has been converted(lIble 4) into over-
night construction costg by taking the sum
of the presentvalues(referenceyear = 1986)
at variousdiscount factors.It must be men- 1 50000 _
tioned that, in the past, the costs of com-
pensatoryafforestationand of rehabilitation
of persons displaced by the dam have been
largely ignored. Hence, the capital costs of
hydroelectricpowerplan,tshas been increas-
ed perhaps by about 1d per cent.
In 100000
Natural-gas-based ThermalPower Plants
Typicaldata[6] for the costing of natuMil- ~
gas-basedpower plants has been used. The
o} i Q ~~~~~~
ECII10+WDI |
Rs 569 crore which is the total of the year-
wise expenditurefor a plant of 760 MW to
be commissioned in 1989, has been con- 5 0000 X-XR
verted(TIble5) into an overnightconstruc-
tion cost oy taKing tne present value
(reference year = 1986) of the year-wise BL SOLAR POND
figures.
Small HydroelectricPlants
The data used for this analysis is based
on the project report[7] for the Mallapur 5 10 15 20
mini-hydelscheme (on the left bank of the
Mlngabhadra in Karnataka).As the year-wise INTERESTRATE %
expenditurefor the three-yearconstruction Variation with discount rate of the unit cost of power (1986 Rs/kW) generated from centralis-
period was not available,the entire capital ed nuclear power plants [AEC (10 + WD)], decentralised biogas engine-cum-gensets [biogas]
cost of Rs 10.57 crore for 9 MW in 1982, and saved by substituting heating from solar ponds for base-load electric water heating [BL solar
has been reckoned at the 1986 level-this pond].
would lead to a higher figurethan if the ex-
pendituresare spread out. has beenbasedon the operationalexperience Solar WaterHeaters
Biogas-driven Gensets of the Hosahalli producergas system[9].In The data used for solar waterheatershas-
The data on biogas-driven gensets has Hosahalli, a wood gasifier is used to pro- been obtained from experience with the
been based on the operationalexperienceof duce producer gas which drives the same SURJA units[31]propagatedby the KSCST
the Puracommunitybiogas plant system[8]. Kirloskar7 HP dual-fuel(80 per cent biogas except that the capital cost which was
In Pura, two biogas plants (with a 40 cubic and 20 per cent diesel) engine. This engine Rs 3,000 per unit in 1988has been enhanc-
metre capacity) are producing biogas could be coupled to a 5 KVA 3-phase ed to Rs 5,000 per unit to allow for system
through the anaerobic fermentationof the generatoras in the biogas plant system. improvement.The electricity conservation
dung from the village cattle. This biogas In this case too, the life of the enginewith has been estimatedby consideringthe par-
drives a Kirloskar 7 HP dual-fuel (80 per 3 overhaulingshas been taken to be 20,000 tial replacement of a conventional boiler
cent biogas and 20 per cent diesel) engine hburs, after which the engine has to be which is used for 365 hours/year.3
which in turn runs a 5 KVA 3-phase replaced with a new engine.
The capital costs of the engine, engine ImprovedIrrigation Pumpsets4
generator. The improvementsthat have been con-
Since the life of the engine without overhaulin& generator, accessories and
engine room are the same as in Table , but sideredfor irrigationpumpsets(IPS) are (a)
ovrhauling is 5000 hoursand an enginecan frictionlessfoot-valvescosting about Rs 100
be overhauledabout 3 times, the life of the instead of the bi6gas plant, there s the
capital cost of the'gasifier and wo-chip each and saving about 215 kWh1IPS/year,
engine with three overhaulings has been and (b) HDPE piping instead of galvanised
taken to be 20,000 hours, after which the cutter (Bable7).
The umt cost of energy and power have iron piping costing about Rs 1000/IPS and
engine has to be replaced with a new saving about 495 kWh/IPS/year.
been workedout on the basis of an opera-
engine.2 tion of 15.071hours per day (corresponding
The capitalcosts of the biogas plant, pip- Replacementof StandardMotors with Ef-
to a capacity factor of 62.8 per cent).
ing, sand filtersfor the sludge,engine,engine ficient Motors5
overbauling, generator, accessories and Diesel Gensets The capital costs of the standardand im-
engine room-are given in mhble 6 The diesel genset computation is similar proved5 H.P. motors havebeen takenas Rs
Theunitcost of energyandpowervaries to the costing of the biogas- and producer- 3,500 and 4,550 respectively,and their effi-
withthe numberof hoursthat the engine gas-driven gensets except that neither a ciencies as 82 per cent and 87 per cent
is workedper day.0n the basisof a study biogas plant nor a wood gasifier are re- respetvely. The usage is consideredto be
of theeffectof thenumberof hoursperday quired. The engine also is the same except 3000 hours/year and the life of the motors
on the costs,an operationof 15.071hours that it has a single-fuel intake. has been taken as 20 years.
perday(cormsponding to a capacityfactor Wind Farms Replacement of Acandescent Bulbs with
of 62.8percent)hasbeenchosenforwork- The capital cost data for the analysis of Compact FluorescentLamps-
ing out the costs of the system. windfarm electrncitygeneration has been The capital costs of 60 W 695 lumens in-
Producer-gas-driven Gensets based on the installation at Okha, candescet bulbs and 9 W 700 lumenscom-
Thedataon producer-gas-driven gensets Gujarat[l0.] pact fluorescentlamps have been taken as

1212 Economic and Political.WeeKly June 2, 1990

Rs 5.60 and Rs 106.00respectively.The com- But, the regime that is advantageousto (Incidentally, and contrary to the view
pact fluorescentlamps need a transformer nuclearpowershifts to lower values of dis- prealent in some circles,the cost of nuclear
and holder togethercosting Rs 116.00.The count rate (Figure 2)- power does not increasesignificantly even
lives of the incandescent bulbs, compact if the constructiontime of a nuclearplant if the costs of interimwastedisposal are in-
fluorescent lamps and transformer and is assumed to be 10 years to reflect AEC's corporatedinto the costing as is stanrdard
holderhavebeen takenas 1,000hours,6,000 past performance(15 years) instead of its practice in many OECD countries.)
hours and 10 years respectively,and the presentintention (8 years),i c, the unit cost On the other hand, the advantageshifts
usage of the illumination devices, as 1,825 of powershoot up with delays in construc- towards nuclear power if environmental
hours/year.The powerratingof the system tion time, costs are added to the cost of coal-based
consistingof the compact fluorescentlamp if the Comptrollerand AuditorGeneral's power.On balance,however,it appearsthat
plus transformeris consideredto be 15 W. estimate of the 1983 price of Rs 13,800/kg the departmentof atomic energy'sconclu-
Solar Ponds[12] is used for heavy watercosts instead of the sion that nuclearpoweris cheaperthancoal-
In this analysis, solar ponds have been AEC's 1983 price of Rs 3,875/kg. based electricity is the result of choosing
consideredas a sourceof conservationrather TABLE 9: UNIT COSr OF ENERGY-DISCOUNTED CASH FLow METHOD
than generationof electricity.A capitalcost (Rs/kW)
of Rs 1.20 lakh for a pond of 250 m2 and
Interestrate 1 2.5 5 10 12 15 20 25
a maintenancecost of 5 per cent has been (per cent)
assumed.
Cogenerationin Sugar Factories Excluding T and D (:ost
The data for the costing of cogeneration CAG .43 .57 .85 1.75 2.27 3.29 5.77 9.63
from bagasse combustion has been taken AEC .31 .39 .55 1.08 1.39 1.98 3.42 5.64
from the work of PrabhakaraRao[13]. AEC (WD) .36 .44 .60 1.13 1.44 2.03 3.47 5.69
AEC (10) .31 .40 .60 1.28 1.71 2.58 4.87 8.75
IV AEC (10+WD) .36 .45 .65 1.33 1.76 2.63 4.92 8.80
Coal (800 km) .52 .56 .63 .84 .95 1.15 1.57 2.11
Comparative Costs of Electricity Coal (PH) .43 .46 .54 .75 .86 1.06 1.48 2.02
Technologies Hydel .10 .14 .22 .56 .79 1.30 2.81 5.77
TIbles8 and 9 showthe variationwith dis- NG (source) .42 .44 .47 .57 .62 .71 .88 1.09
NG (800 kms) .57 .59 .63 .73 .78 .86 1.04 1.25
count rateof the unitcost of power(installed Windfarm .90 .95 1.06 1.35 1.50 1.74 2.19 2.69
capacity)and the unit cost of energyfor the Biogas 1.05 1.07 1.11 1.19 1.23 1.29 1.40 1.52
various electricity generating and saving PG 1.19 1.19 1.22 1.30 1.33 1.38 1.48 1.58
technologies. DG 1.46 1.47 1.49 1.54 1.56 1.59 1.65 1.71
It should be stressedhereis that since the Small Hydel .13 .15 .21 .35 .43 .56 .82 1.14
discountrateis usedhereas a variable,it can SWH 1.18 1.22 1.30 1.49 1.58 1.72 1.97 2.25
be interpretedeither as a nominal discount IP Sets .21 .21 .22 .26 .27 .29 .34 .38
rate dn or as a real (i e, inflation-corrected) IB- CF .37 .38 .41 .46 .49 .53 .60 .68
discount rate dr with the two options being Solar Pond .18 .20 .23 .31 .35 .41 .51 .62
related thus: Eff Motors .09 .09 .10 .13 .15 .17 .22 .27
dr = (dn - i)/(l + i)or dn = d (l+i) -i Cogen with
or approximately Bagasse .25 .29 .36 .55 .64 .78 1.04 1.32
Cogen with
dr = dn - i subject to an error of 11(1 + i). bag + coal .24 .26 .31 .42 .47 .56 .72 .89
Of course, if inflation has already been 1986 RS/KWH
takeninto account(for example,whenprices for T and D .09 .11 .17 .35 .46 .68 1.23 2.11
given for one year are adjusted for another Including T and D Cost
yearusing inflation rates),then the discount CAG .52 .68 1.02 2.10 2.74 3.97 7.00 11.74
rate has to be a a real discount rate. AEC + T and D .40 .50 .72 1.43 1.85 2.66 4.66 7.75
The following are some of the interesting AEC (WD) .45 .55 .77 1.48 1.90 2.71 4.71 7.80
conclusions that can be drawn from these AEC (10) .40 .51 .77 1.63 2.17 3.26 6.11 10.86
tables. AEC (10+WD) .45 .56 .82 1.68 2.22 3.31 6.16 10.91
(1) Nuclearvs Coal: A comparisoncan be COAL (800 km) .61 .67 .80 1.19 1.42 1.83 2.80 4.22
made7 of the unit cost of power from Coal (PH) .52 .58 .71 1.10 1.32 1.74 2.71 4.13
nuclear and coal-based pit-head thermal Hydel .19 .25 .39 .91 1.25 1.98 4.04 7.88
NAT. gas (at
power plants using exactly the same values
source) .51 .55 .64 .92 1.08 1.39 2.11 3.20
as the Department of Atomic Energy of NAT. gas (800
parameterssuch as capitalcost, yearsof con- kms) .66 .71 .80 1.08 1.24 1.54 2.27 3.36
struction, capacity factor (i e, kWh/kW in- Windfarm .99 1.06 1.22 1.70 1.96 2.42 3.43 4.80
stalled), auxiliarypowerconsumption,unit Biogas 1.05 1.07 1.11 1.19 1.23 1.29 1.40 1.52
cost of power of the plant, operation and PG 1.19 1.19 1.22 1.30 1.33 1.38 1.48 1.58
maintenance expenses, fuel consumption DG 1.46 1.47 1.49 1.54 1.56 1.59 1.65 1.71
and in the case of the nuclearplants, the in- Small Hydel .13 .15 .21 .35 .43 .56 .82 1.14
ventoryand annualmake-upof heavywater. SWH 1.18 1.22 1.30 1.49 1.58 1.72 1.97 2.28
The plots of the unit cost of power from IP Sets .21 .21 .22 .26 .27 .29 .34 .38
nuclear and coal-based thermal electricity IB- CF .37 .38 .41 .46 .49 .53 .60 .68
show that thereare two regimesof discount Solar Pond .18 .20 .23 .31 .35 .41 .51 .62
rate (Figure 1)-above an discount rate of Eff Motors .09 .09 .10 .13 .15 .17 .22 .27
about 5-7.5per cent, coal is a cheapersource Cogen with
thati nuclear power, and below 5-7.5 per Bagasse .25 .29 .36 .55 .64 .78 1.04 1.32
cent, nuclear power is cheaper than coal- Cogen with
based electricity. bag+coal .24 .26 .31 .42 .47 .56 .72 .89

rconomic and Political Weekly June 2, 1990

1213
specific values for several parameterspar- FIGURE9: UNIT COST OF POWER(INSTALLEDCAPACITY)
ticularlyplant constructiontime and heavy (1986 Rs/kW INCL T AND D FORCENTRALISEDGENERATION)
water cost.
(2) Centralised Electricity Generation:
Whenthe unit cost of powerfrom hydroelec- w?
tric powerplants is also plotted against the
discountrate,it turnsout that hydelis always ,100000
cheaper than nuclear power plants and w
cheaper than coal below a discount rate of
about 12 per cent (Figure 3). But, natural- wr 50000 --- -
gas-basedplants are the cheapestcentralis- z
ed source primarilybecause of the rapidity w
with which they can be constructed(Figure
3). Among the variouscentralisedsupplyop-
tions, it appearsthat nuclearpowerhas the
s F 3~i
= u (, o o4 n u. oE
largestunit cost of power-this resulttoo is a,oY 7_
in accordancewith the recentfindingsin UK (r. w 0E a.
Z-Zco C
'0 3 c 0 +000
and the US. O 6
(3) Centralisedvs DecentralisedGenera- a: 0H -
tion: What havebeen consideredthus far are < 4(n < 0D
-
z
nuclear,coal-based thermaland hydroelec-
tric powerplants. If the searchis not mere- 0
ly for least cost centralisedplants, but for W 0 z
least cost supplies, then the decentralised
supply options (small hydroelectric,biogas Comparison of the unit cost of power (1986 Rs/kW) at a 12 per cent discount rate of electrici-
and producergas plants, etc.) must also be ty generated from various centralised and decentralised sources and saved by various conserva-
conAsidered (Figure 4). Comparison shows tion measures.(NB The symbols for the various generationtechnologies are the same as in Figure 5
that decentralisecdelectricity generation and the symbols for the conservation measures are from Figure 6.)
plantsarecheaperthan centralisedplantsex-
cept for natural-gas-basedthermal power
plants (Figure 5). FIGURE 10: UNIT COST OF ENERGY
(1986 Rs/kWh INCL T AND D FORCENTRALISEDSOURCES)
(4) ConservaLlonvs Generation of Elec-
tricity:Sinceit is necessaryto go beyondthe
generationoptions to allow for the fact that
a given increment of energy services and (,
useful energy can be achieved either by
generatinga kilowattor by savinga kilowatt,
the unit cost of power saving from several
conservationmeasureshas to be examined.
The savings for all these measures takes
place at the consumption end of the elec- ouJ
tricity system, and therefore must be ad-
justedfor the T and D losses and the capaci-
ty factor to make comparisonson the same
footing as the generation options. In Kar-
nataka, saving a kilowatt on the consump-
tion side is equivalentto producing2.03 kW z~ -

at the sites of centralisedgeneration. U. 0 0 0 < o WQ

The unit cost of powersavedthroughcon- Wd L(fl 0 0
servation technologies (efficient motors,
compact fluorescent lamps, solar water sevto measres (NBTh sybl fo th vaiu gnrtin teholge ar <h aea
heaters, solar ponds, and frictionless foot- ~ 5cn
in Fiur ~ ~ hesmol
0 0I?fo th cosrvto U.sue Ur rmFgr .
0
valvesand HDPE pipingin irrigationpump- U 0
sets) has been plotted in Figure 6. Com- 0
parison of the unit cost of power saved by Comparison of the unit cost of energy (1986 Rs/kWh) at a 12 per cent discount rate of elec-
conservationmeasureswith the unit cost of tricity generated from various centralised and decentralised sources and saved by various con-
power generated from nuclear, coal-based servation measures. (NB The symbols for the various generation technologies are the same as
and hydroelectricity (Figure 7) leads to in Figure 5 and the symbols for the conservation measures are from Figure 6.)
severalimportant conclusions:
(a) The curves for centralisedgeneration of decentralised generation, biogas, pro- capital, the more should conservation be
risewith discountratebecausethe higherthe ducer gas and diesel gensets (with higher preferred,and therefore,in capital-starved
discount rate, the greaterthe impact of the running costs relative to capital costs) fajl developing countries, there should be a
largerfront-endcapital costs of generation with discountrate,but small hydelshows an greater and not lesser-emphasis on
projects.In contrast,the conservationcurves increase. conservation.
fall with discount rate. This difference is (b) The difference between centralised (c) Saving is associated with much lower
because the smaller doses of capital in- generation and conservation unit cost of unit cost of power than generation-this
vestments for conservation are spread out power-cyclecosts increaseswith discountrate resultis in agreementwith the experienceac-
over time and thereforethe fartherinto the (Figure8). Since scarcityof capital must be cumulating in many countries (both in-
future these investments are made, the reflected in the use of high discount rates, dustrialisedand developing)that conserva-
smallerare their p'resentvalues. In the case it means that the less the availability of tion alternativesare one-third to one-half

1214 Economic and political Weekly June 2, 1990

cheaper than the centralised options. (In- TABLE 10: RETURNON INVESTMENT
METHOD-EXCLUDING T AND D COsT
cidentally,conservationis also quickerand (Rs/kW)
more environmentallybenign.)
The comparison between conservation, Interest Rate 1 2.5 5 10 12 15 20 25
decentrlised and centralisedsuppliescan be (per cent)
seen more dearly by considering the unit Excluding T and D
cost of power generated or saved at some Coal (800 km) .78 .84 .95 1.20 1.32 1.52 1.89 2.34
singlevalueof discountrate,e g, 12per cent Coal pit .60 .66 .77 1.02 1.14 1.34 1.71 2.15
(Figure9) which correspondsto an inflation Nuclear (AEC) .36 .45 .62 1.05 1.25 1.59 2.26 3.09
rate of i = 6 per cent and a real discount Hydel .16 .22 .34 .64 .79 1.05 1.58 2.24
rate dr of 6 per cent used by electricity Nat gas source .43 .46 .52 .64k .69 .77 .93 1.09
utilities in the US. Nat gas (800km) .59 .62 .67 .79 .85 .93 1.08 1.25
It is also possible to comparethe unit cost Biogas 1.14 1.20 1.29 1.42 1.47 1.54 1.66 1.78
(in paise/kWh) of saving or generating Producet gas 1.14 1.20 1.28 1.40 1.44 1.50 1.60 1.70
energy (Figure 10). The comparison shows Diesel set 1.36 1.41 1.47 1.56 1.58 1.62 1.68 1.75
that evenif the projectionsand scenariosin- Minihydel .15 .20 .28 .46 .54 .67 .90 1.16
dicate large demand-supply gaps in the T and D system .15 .19 .28 .51 .62 .80 1.16 1.60
future,the most expensiveway of bridging Including T and D Cost
thesegaps is through nuclearpowerplants. Coal 800 km .93 1.04 1.23 1.71 1.94 2.32 3.06 3.93
Hence, if we adopt the principle of least cost Coal pit .75 .85 1.05 1.53 1.76 2.14 2.88 3.75
planning, then we must take up the various Nuclear (AEC) .51 .64 .90 1.56 1.87 2.39 3.42 4.69
options for bridgingthe demand-supplygap Hydel .31 .41 .62 1.15 1.41 1.85 2.74 3.83
in the order of increasingcosts, i e, conser- Nat gas source .58 .66 .80 1.15 1.31 1.57 2.09 2.69
vation first, decentralisedrenewablesources Nat gas (800km) .73 .81 .96 1.30 1.46 1.73 2.24 2.85
next (along with natural-gas-basedplants), Biogas 1.14 1.20 1.29 1.42 1.47 1.54 1.66 1.78
then coal-basedpowerplantsand hydroelec- Producer gas 1.14 1.20 1.28 1.40 1.44 1.50 1.60 1.70
tric plants, and finally nuclear plants. Diesel set 1.36 1.41 1.47 1.56 1.58 1.62 1.68 1.75
Strictly speaking, the costs of improving Minihydel .15 .20 .28 .46 .54 .67 .90 1.16
the efficiency of currentsupplies, i e, effi-
ciency improvement(conservation) on the APPENDIX Le = life of equipment item E
generation and transmission and distribu- deff= effectiveinterestrate(for a period Le
tion side should also be included in the se- The unit cost of power (installed capaci-
= one year)
quence.It is likelythat these costs will come ty) from centralisedor decentralisedgenera-
between conservation and decentralised tion facilities is given by Le = f(l+d) - 1} x 100
renewablesources, but this is a matter that UCOP = [{K(n=0) + WC(n=0) L = life of plant
has to be explored. u NR = absolute value of L/Le
A comparativecosting of electricitycon- + Yz Ku} (1 + d)9] V = total numberof annualrecurringcosts
servation technologies and centralisedand U=I
RV = annual recurring cost of item v = 1,
decentralised electricity generation 2, 3,...,V
technologies has been presented.No claim + PV(KR Ann., deffINR)
UCOE = UCOP / [PV(1Ann.,d,L) x CF
is made for originality with regardto the x 8760 (1- Aux/100)]
methodologyof costing, but perhapsfor the + PV(l Ann., d, L) X RX CF = capacity factor = fraction of hours
first time in India, a large number of in a year for which the plant
technologies for savingand generatingelec- UCOP = Unit cost of power (installed generates
tricity have been compared on the same capacity) in Rs/kW CF x 24 x 365 = number of hours in the
tesms-all monetaryvalvesexpressedin cur- K(n = 0) = Overnight construction cost
year for which the plant
rency units of the same year; the same
referce date used for discountingand-cm- g-I generates
mencing the projects; either the same dis- I
E PV(FV=K d, n) Aux = per cent of generatedelectricityused
count rateis used for all the technologiesor n=O within the plant
the results are given as a function of the dis- g-1 Notes
count rate;and the same measuresare used - Kn/(I + d)n
for all- the technologies (the unit cost of rJ=0 rrhis paper was intended for discussion at the
energy or the unit cost of power). An at- 12th Annual International Conference'of the
tempt has also been made to make all the PV(X, d, n) = PV of Rs X inflow/outflow InternationalAssociation of EnergyEconomics
after n years at d per cent on Energy-Environment-Development, New
costingtransparentso that it can be criticised
d = discount rate Delhi, January 4-6, 1990, organised by the Tata
of modified. Energy Research Institute. A preliminary ver-
Needlessto add, the comparisonsare sen- PV(PMT,d, n) = PV of Rs X annuity (i e,
inflow/outflow at the end sion of this paper was presented at the seminar
sitive to the data inputs that has been used on 'Power Generation through Renewable
for the costing. It is hoped that this initial of everyyear) for n years
Sources of Energy' organised by the Karnataka
effort will provoke careful scrutiny of the at d per cent State Council for Science and Technology and
data inputs and methodology. Such a the Cell for Renewable Energy Dissemination
scrutinyshould resultin the use of distribu- = PMT (l/d) 1 - (l+d)-n Activities at the Indian Institute-of Science,
tions for the values of the data inputs and n Bangalore, on November 27-28, 1989.
thereforein the assignmentof error ranges = PMT I I/(I+d)n The authors would like to thank the Swedish
n=l
for the costs. Through these revisions and InternationalDevelopment Agency for funding
modifications, a long-overdue accepted W = working capital computed at n=0 a project on Energy Planning under which this
ranking of the costs should gradually U = total number of other capital costs work was carried out. They are also grateful
emerge. Such a ranking is crucial to work Ku= capital cost u to a number of colleagues at the Indian
out a raional sequecing of the various g = number of years for construction Institute of Science and the Karnataka State
technologicloptionsanda supplystrategy KR = cost of replacement of equipment Council for Science and Technology who have
based onleast-cost electriity planning. item E been generous with data on costs and perfor-

Economic and Political Weekly June 2, 1990 1215

mance of decentralised technologies. Thanks CN-48/26, International Conference on Agency and Gujarat Electricity Board.
are also due to Peter Miller for comments on Nuclear Power Performance and Safety, [ll] 'Experiences of the dissemination of low-
the final draft.] Vienna, Austria, September28 to October cost solar. water heater systems for
I T B Johansson, Personal Communication. 2, 1987. domestic use, KarnatakaState Council for
The Swedish practice is to set aside for waste [4] Report of the Comptroller and Auditor Science and Technology, 1988.
disposal expenses a fund consisting of an- General of India for the year ended [12] (a) J Srinivasan, 'Construction and Per-
nual contributions according to the amount March 31, 1987, Number 7 of 1988, Union formance of an ExperimentalSolar Pond',
of electrical energy produced by the nuclear Government (Scientific Departments), Report to the KarnatakaState Council for
power plant. In the present paper, the pre- Chapter. III, Department of Atomic Science and Technology, March 1985.
Energy. (b) J Srinivasan, 'Small Solar Ponds for
sent value of the stream of annual contribu-
tions (computed at a rate which works out [5] Karnataka Power Corporation, Annual the Tropics'
at Rs 0.05;/kWh) to the waste disposal fund Report, 1985-86. (c) J Srinivasan, 'Small Solar Ponds for
[6] (a) Kaul, S N 'Energy Sector in India' Process Heat'
has been calculated for various discount
Institute of Management Development, [13] (a) K V Prabhakara Rao, 'The Potential
rates.
Dehra Dun, 1988. for Cogeneration of Electricity in the
2 Thanks are due to Sukumar Loganadan,
formerly deputy general manager (sales), (b) Discussions with the Tata Energy Sugar Industry of Karnataka",M Tech
Motor Industries Company, who went to Research Institute. (Management Studies) Dissertation Pro-
considerable trouble to help us in getting in- [71 Project report of the Mallapur Mini-hydel ject, January 1989.
formation from industry sources on the life scheme, Karnataka Power Corporation, (b) K V Prabhakara Rao and A K N
1982. Reddy, 'A Technoeconomic Study of
of engines (before and after overhauling)and
[8] Annual Reports of the Karnataka State. Cogenerationwith specific referenceto the
the associated costs.
Council for Science and Technology. Sugar Industry".Paper presented to the
3 The energy savings are computed with the
following formula: [9] N H Ravindranath,'Village Electrification Symposium on 'Power Generation
using a small wood gasifier', ASTRA, through Renewable Sources of Energy'
Energy savings/household/year = (Annual
Indian Institute of Science, 1989. organised by KSCST and CREDA at the
electricity consumption/household/year x
[10] 'Wind Farm at Okha-Completion Indian Institute of Science, Bangalore,
Fraction for electric water-heating x
Number of days per year for which solar Report', Gujarat Energy Development November 27-28 1989.
water can be used /365)
The average electricity consumption per
NOTICE
All Electric Home (AEH) connection was
It is hereby notified for the informationof the public that Straw Products Limited proposes to make
2,221 kWh/year in 1985-86 of which it has an application to the Central Government in the Department of Company Affairs, New Delhi, under
been shown (B SudhakarReddy,PhD Thesis, Sub-Section (2) of Section 22 of the Monopolies and Restrictive Trade Practices Act, 1969, for
1990) that 28.75 per cent was used for water approval to the establishment of a new Undertaking.Briefparticulars of the proposal are as under:-
heating. It has also been estimated that solar 1) Name and address of the Straw Products Limited, Nehru House, 3rd Floor,
applicant 4, Bahadur Shah Zafar Marg, New Delhi- 110 002.
water heaters can be used for 330 days in the
year. 2) Capital structure of the Preference Capital Equity Capital
applicant organisation (Rs./ Lacs) (Rs./Lacs)
4 The average consumption of electricity per
Authorised 250.00 1750.00
irrigationpumpset was 2,366 kWh/IPS/ year 55.00 1013.59
Subscribed
in 1985-86. Each frictionless foot-valve has Paid up 55.00 1013.59
been reported to bring about a saving of
3) Management structure of the applicant organisation indicating the names of the directors,
nearly 10 per cent, while the replacement of including the ManagingNWhole-timeDirectors and Manager, if any.
galvanised iron piping by HDPE piping has 1) Sri HariShankar Singhania 7). Sri Krishna-Presad Khaitan
been estimated to save at least 20 per cent. Chairman & Managing Director 8) Sri M. Ramaswamy
5 Ashok Gadgil, Personal Communication. 2) Sri Pratap Sinh Navlakha 9) Sri M.V.Aruri'ictalar -
Whole-time Director 10) Sri PF-avinchardraiV.Gandhi
6 Data based on OSRAM DULWX S 9 W/41 Sri Ajaypat Singhania 11) Sri Raghu Raj Bhalla
3)
lamp. 4) Sri Dinanath Khemka 12) Smt. Veena Singhania
7 It has been argued that discounted cash flow 5) Sri Gajanan Khaitan 13) Smt. VinitaSinghania
6) Sri Govind HariSinghania Whole-lime Director
techniques may well be appropriate for pro-
jects in which both the benefits and the costs 4) Indicate whether the proposal relates to the establishment of New Undertaking (NU)
a new undertaking or a new unit/division
-bythe samegeneration.But,
areexperienced
these techniques have been criticised as in- 5) Location of the new undertaking : The unit is proposed to be installed at our existing
appropriate for nuclear power because it is unit/division industr,allan&atBhopal7,atJK Batteries Premises,
the present generation that derives the 1-4, lndustrial-Area,.Govindpura. Bhopal.
6) Capital structure of the To be implemented as a division of
benefits whereas future generations have to proposed undertaking Straw Products Limited.
bear the costs of guarding the wastes and
7) In case the proposal relates to the Itis proposed to manufacture 2,000 Tonnes per
decommissioning the plants. production, storage, supply, distri- annurnof METALLIZED PAPER
bution, marketing or control of any
References goods/articles, indicate
11 Report of the Committee for Pricing of 8) Incase the proposal relates to the provision of any service, Not applicable
Nuclear Power, Department of Atomic state the volume of activity in terms of usual measures such
Energy, Government of India. February, as value, income, turnover etc.
1985. 9) Cost of Project Rs 850.00 Lacs
[21 A K; N Reddy, 'The Economic Com- 10) Scheme of finance, indicating the amoujntsto be raised
from each source-
parison of Energy Projects with different
Gestation Times-a Theoirtical Treat- i) Promoters contributioni InternalAccrual Rs. 170.OOLacs
ii) Debentures Rs. 375.00 Lacs
ment' (in preparation). iii) Foreign currency loans/commercial borrowingsi
suppliers credit Rs 305.00 Lacs
[31 (a) M R Srinivasan, 'Economic Case for
Small and Medium Reactors in India', Rs. 850.00 Lacs
Presentation at the Scientific Afternoon, Any person interested in the matter may make a representation in quadruplicate to the Secretary,
International Atomic Energy Agency, Department of Company Affairs, Government of India, Shastri Bhavan, New Delhi within 14 days
from the date of pubjication of this notice intimating his views on the proposal and indicating the
1985. nature of his interest therein.
(b) M.R-Srinivasan and K V Mahadeva For STRAWPRODUCTS LIMITED
Rao. 'The ComparativeInvestmentand New Delhi, (SITABCHAND JAIN)
for Nuclearand
FinancingRequiirements Dated: 24'5*90 Secretary.
Coal-basedEnerg Systems',PaperLAEA-
1216 Economic and Political Weekly June 2, 1990