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Tutorial2PowerSystemEconomics

The document presents a tutorial on Power System Economics, including calculations for net present value, payback periods, return on investment, and loan repayment plans for various projects. It provides specific financial data for different scenarios, such as waste heat recovery systems and power plant investments. Additionally, it evaluates alternative equipment for a fuel cell system and outlines the economic analysis for a coal-based power plant.

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ashoksaini0823
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2 views

Tutorial2PowerSystemEconomics

The document presents a tutorial on Power System Economics, including calculations for net present value, payback periods, return on investment, and loan repayment plans for various projects. It provides specific financial data for different scenarios, such as waste heat recovery systems and power plant investments. Additionally, it evaluates alternative equipment for a fuel cell system and outlines the economic analysis for a coal-based power plant.

Uploaded by

ashoksaini0823
Copyright
© © All Rights Reserved
Available Formats
Download as PDF, TXT or read online on Scribd
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Power Generation and Systems Planning (EN 302/EN 642)

Tutorial 2: Power System Economics

1. Calculate the net present value over a period of 3 years for a project with the following data. The discount rate is
12%.
Year Investment (Rs.) Savings (Rs.)
0 75,000 0
1 0 25,000
2 0 75,000
3 50,000 75,000
4 0 35,000
{Ans: Rs. 24,904}

2. A waste heat recovery system costs Rs. 54 lakhs and Rs. 2 lakhs per year to operate and maintain. If the annual
savings is Rs. 20 lakhs, find the payback period. {Ans: 3 yrs}

3. The cost of replacement of inefficient compressor with an energy efficient compressor in a plant was Rs. 50 lakhs.
The net annual cash flow is Rs. 12.5 lakhs. Find the return on investment. {Ans: 25%}

4. Ms. Anita borrowed Rs. 5,000 with 8% (compound) interest from a bank for 5 years. She has the following loan
repayment plans: (a) No interest or principal is paid until the end of year 5; (b) The accrued interest is paid each year,
and the entire principal is repaid at the end of year 5; (c) The accrued interest and one-fifth of the principal (or
Rs.1,000) are repaid each year; and (d) Equal payments are made each year. Determine the annual cash flow every
year for all the different plans.
{Ans: (a) Rs. 7,346.64 at the end of 5th year (b) Rs. 400 for first 4 years and Rs. 5,400 at the end of 5th year (c) Rs.
1400, Rs. 1320, Rs. 1240, Rs. 1160, Rs. 1080 (d) Rs. 1252.28}

5. (a) Company C is planning to undertake a project requiring initial investment of $105 million. The project is
expected to generate $25 million per year for 7 years. Calculate the payback period of the project. (b) The same
company is planning to undertake another project requiring initial investment of $50 million and is expected to
generate $10 million in Year 1, $13 million in Year 2, $16 million in year 3, $19 million in Year 4 and $22 million in
Year 5. Calculate the payback value of the project.
{Ans: (a) 4.2 years; (b) 3.58 years}

6. Project A has a cost of Rs 100000, annual savings of Rs 50000, and a life of 3 years. Project B has a cost of Rs
120000, annual savings of Rs 40000, and a life of 8 years. Determine the simple payback periods and return on
investments of these projects. Determine the net present value, annual worth, and benefit-to-cost ratio for these two
projects. Assume an annual discount factor of 10%.
{Ans. 2y, 3y; 50%, 33.3%; Rs 24342.6, Rs 93397.1; 9788.5 Rs/y, 17506.7 Rs/y; 1.243, 1.778}

7. An initial investment of $2,324,000 is expected to generate $600,000 per year for 6 years. Calculate the discounted
payback period of the investment if the discount rate is 11%. {Ans: 5.32 years}

1
8. Three alternate equipments are to be evaluated economically for a fuel cell system. Determine NPV of all the
alternatives and determine the best option. The MARR is 10% per year.
Electric-powered Gas-powered Solar-powered
First Cost, $ 4500 3500 6000
Annual operating cost, $/y 900 700 50
Salvage value, $ 200 350 100
Life, y 8 8 8

{Ans: 9208.13, 7071.17, 6220.10, Solar}

9. An investor is planning to set up a 400 MW coal-based power plant. The plant is expected to operate at a capacity
factor of 75% with a life of 30 years. The heat rate of the plant is expected to be 9500 Btu/kWh. The initial
investment is expected at Rs. 75000/kW. The cost of coal, in terms of its energy, is Rs. 100/MBtu. The operating and
maintenance (O&M) cost of the plant has two components: a fixed component that depends only on the size of the
plant and a variable component that depends on the amount of energy generation. The fixed and variable components
of the O&M cost are given as Rs.1000/kW per year and Rs. 250/MWh. Fuel, as well as O&M costs, are expected to
increase by 10% annually. The discount rate for the project is 25%. Calculate: (a) the annual production of electricity
in million units, (b) the initial investment required, (c) the annualized investment, (d) the fuel cost in the first year,
(e) the present worth of the fuel cost, (f) the annual worth of the fuel cost determined in part (e) [note: this is also
called the levelized fuel cost], (g) the levelized fixed O&M cost, (h) the levelized variable O&M cost, (i) the total
levelized cost of the entire plant, and (j) the unit cost of electricity generated.
{Ans. 2628 GWh; 3000 Cr Rs; 750.9 Cr Rs/y; 249.7 Cr Rs; 1628 Cr Rs; 407.6 Cr Rs/y; 65.3 Cr Rs/y; 107.3 Cr Rs/y;
1331 Cr Rs/y; 5.065 Rs/kWh}

***END***

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