Scribd
Upload
95 views6 pages

Time Value Concept and Levelized Cost: Anjana Das June 16-27, 2013, Cairo

The document discusses levelized cost analysis for evaluating coal and gas power plant investments. It provides capital costs, operating costs, fuel costs, generation capacities, and lifespans for 500 MW coal and gas plants. The levelized cost of energy is defined as the constant price per unit of energy needed for the investment to break even over its lifetime when discounting future cash flows. Levelized cost analysis discounts future expenditures and revenues using a discount rate and calculates the breakeven price per unit of energy generated over the plant's lifetime. The technology with the lower levelized cost should be chosen for investment.

Uploaded by

vlatko313
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
95 views6 pages

Time Value Concept and Levelized Cost: Anjana Das June 16-27, 2013, Cairo

The document discusses levelized cost analysis for evaluating coal and gas power plant investments. It provides capital costs, operating costs, fuel costs, generation capacities, and lifespans for 500 MW coal and gas plants. The levelized cost of energy is defined as the constant price per unit of energy needed for the investment to break even over its lifetime when discounting future cash flows. Levelized cost analysis discounts future expenditures and revenues using a discount rate and calculates the breakeven price per unit of energy generated over the plant's lifetime. The technology with the lower levelized cost should be chosen for investment.

Uploaded by

vlatko313
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
You are on page 1/ 6

Time value concept and Levelized Cost

Anjana Das
June 16-27, 2013, Cairo

IAEA
International Atomic Energy Agency
Levellised cost

• Coal Power Plant • Gas Power Plant


• Size 500 MW • Size 500 MW
• Capital cost US$1000/kW • Capital cost US$ 800/kW
• Construction : 4 years • Construction : 3 years
• Energy generation: 6570 kWh/kw • Energy generation: 7500 kWh/kW
• Life : 30 years • Life : 30 years
• O&M cost US$ 20/MWh • O&M cost US$ 15/MWh
• Thermal Efficiency 35% • Thermal Efficiency 50%
• Coal price US$ 100/tonne • Gas price US$ 6/MMBTU (US$
(US$3.87/GJ) 5.71/GJ)

Which one should be chosen ?


IAEA
Levelised cost definition

• The levelized cost of energy is defined as the


constant price per unit of energy that causes
the investment to just break even:

Present value of the = Present value of


lifetime revenue the lifetime costs

IAEA
Cash and energy flow of a power plant

Year Investment O&M cost Fuel cost Other cost Energy


($) (Million US$) (Million US$) (Million US$) (GWh)
1 I1
2 I2
3 I3
4 OM1 F1 OC1 E1
5 OM2 F2 OC2 E2
6 OM3 F3 OC3 E3
7 OM4 F4 OC4 E4
8 OM5 F5 OC5 E5
9 I9 OM6 F6 OC6 E6
So on

IAEA
Levelised costs of power generation
𝑛 −1 𝑛− 1
  𝑃𝐸 (𝐼 𝑡 +𝑂𝑀 𝑡 + 𝐹 𝑡 +𝑂𝐶𝑡)
∑ 𝐸𝑡 ∗ ( 𝑡
=∑
(1+𝑟 )𝑡
𝑡=0 1+ 𝑟 ) 𝑡 =0

 
LCOE = =

n Project life
r Discount rate
Et Electricity generation in year t
PE Price of electricity
It Investment cost in year t
OMt O & M cost in year t
Ft Fuel cost in year t
IAEA LCOE Levelized Cost of Electricity
5
Levelised cost criteria

Choose the technology with lower levelised cost

IAEA

You might also like