Page 227 - Advanced Gas Turbine Cycles

Appendix B

ECONOMICS OF GAS TURBINE PLANTS

B.l. Introduction

The simplest way of assessing the economics of a new power plant is to calculate the
unit price of electricity produced by the plant (e.g. $/kWh) and compare it with that of a
conventional plant. This is the method adopted by many authors [1,2]. Other methods
involving net present values may also be used [3,4].

B.2. Electricity pricing

The method is based on relating electricity price to both the capital related cost and the
recurrent cost of production (fuel and maintenance of plant):

PE = Pco + M + (OM), 03.1)
where PE is the annual cost of the electricity produced (e.g. $ p.a.), Co is the capital cost of
plant (e.g. $), P(i,N) is a capital charge factor which is related to the discount rate (i) on
capital and the life of the plant (N years) (see Section B.3 below), M is the annual cost of
fuel supplied (e.g. $ p.a.), and (OM) is the annual cost of operation and maintenance (e.g. $
p.a.).
The ‘unitised’ production cost (say $kWh) for the plant is

M
pE
YE=-=- PCO +-+- (OM)
WH WH WH WH
where is the rating of the plant (kW) and H is the plant utilisation (hours per annum).
The cost of the fuel per annum, M, may be written as the product of the unit cost of fuel
&$/kWh), the rate of supply of energy in the fuel &kW) and the utilisation, H, i.e.

M = lFH. 03.3)
Thus the unitised production cost is

where (v0) = W/F is the overall efficiency of the plant. Alternatively, the unit cost of fuel
4‘may be written as the cost per unit mass S (say $/kg) divided by the calorific value [CV],

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