ECONOMICS OF

POWER GENERATION

Sadullah Chandio
Assistant Professor Deptt Of Electrical Engg, QUEST Nawabshah
INTRODUCTION

Books Recommended
INTRODUCTION

Books Recommended
POWER ECONOMICS / INTRODUCTION

ECONOMICAL
ECONOMICAL
PROTECTION &
GENERATION
SERVICES

ECONOMICAL ECONOMICAL
DISTRIBUTION TRANSMISSION
 POWER ECONOMICS / ECONOMICS OF
POWER GENERATION

The art of determining the per unit (i.e. one kWh)

cost of production of Electrical Energy is known as
Economics of Power Generation. The art can be
possible, if an electrical engineer carefully
considered the following factors while selecting
economics choice of power plants in particular area
and country.

.
 POWER ECONOMICS

 SELECTION OF ECONOMICAL POWER PLANT

 Fuel or Raw material availability ( it may fossil or renewable)
 Location or availability of cheap land it must be nearer to load centers so that
transmission losses can be minimized
 Availability of Transport. ( Road network , rail network & nearby port or airports).
 Availability of utilities ( electricity, gas )
 Availability of labor.
 Availability sea or canal water in case of thermal, combined cycle , gas operated plant
& Nuclear power plant.
 Except above listed requirements, there are additional factors that play very
important role choice of economics of power plant.
 Generating plants should be environmental friendly
 Long span of life.
 Scrap must be valuable in future.

.
POWER ECONOMICS

According to fuel power plants are divided into main two

streams

CONVENTIONAL & NON CONVENTIONAL

 POWER ECONOMICS

 Conventional Power Plants.

 The fossil fuel ( oil, gas , coal or combined ) operated power plants . The major draws
back of these power plants are……
 Fuel is conventional
 They are not environmental friendly, the output disposal of these power plants
introduced much complicated human health, environmental, & even for cultivated
land reduction. Due this developed countries, America, china & European are try to get
rid from these pollutants plants.
 These power plants required huge capital investment for infrastructure & buildings
 The running charges are also very high, that can not be minimized.
 According to kelvin law the annual capital investment for installation of power plants
& running plus maintenance cost must be equal than plant is said to be economical
practically it is very difficult.
 But still these plants are producing more than 70% energy requirements in developing
countries subject availability of fossil fuel in the region. Pakistan is also one of
developing country whose GW energy is dependent also fossil fuel power plants.
POWER ECONOMICS

 For reliable and economical operation of conventional power plants Reserves

play very important role
RESERVES OF PLANTS
There are three types of reserves :
A. Cold Reserves : It is reserve generating capacity ( oil, gas or coal ) which is
available for service in emergency but not present in operation.

B. HOT RESERVES : The boiler is ready consuming fuel but not coupled with
generator . In case of failure or short fall generator is required to coupled the
boiler due to maintain continuity of supply.
C. SPINNING RESERVES : It is generating capacity , boiler , turbine &
generator is mechanically coupled but generator is operating on no load.
Specially diesel generators are used as stand by generator because in case of
peak load demand it can be easily switched on.
 POWER ECONOMICS

 SELECTION OF SIZE OF GENERATING UNITS.

Selection of size of generators in power plants also plays very important role in
economical and reliable supply of energy.
While selecting economical choice of generating units following points must be
considered
 .The generating unit must meet present load and future max demand.
 The unit must have better efficiency with reserves capacity.
 The installed capacity should be greater than 15-20% of the max demand.
 The best choice of selecting generating unit that fits the load curve & load
duration curve.
 The selected unit either large unit or number of small units if selected large uint
than reserve unit must be equal to that in case of failure so that reliability of
supply can restored.
 The load of the day or month is variable if the load factor is not improved energy
generated will be wasted.
 POWER ECONOMICS

 SELECTION OF SIZE OF GENERATING UNITS

COMPARISON BETWEEN LARGE UNIT & SMALL UNITS :
Large generating unit Small generating units

Less flooring area is required Separate flooring area is

required for each unit
Less labor More labor because of more
no of units
Less maintenance More maintenance because of
quantity.
Less protection Each unit require separate
protection
Better efficiency Each unit will be operating
with its load losses.
Each unit required separate
synchronization with bus bars.
 POWER ECONOMICS

 SELECTION OF SIZE OF GENERATING UNITS.

DISADVANTAGE OF SELECTING LARGE UNIT
During the day sometimes the load on the system is much less than the peak load,
so the unit running at that time does not give the max. efficiency and generation
cost per unit should increase.
In case of complete failure or supply due to breakdown on maintenance
 FACTORS AFFECTING THE SIZE NO. OF UNITS IN A GENERATING
STATION
 Demand of power
 Max. efficiency
 Growth of demand in near future
 Capacity of plant should be 15 or 21% more than the expected maximum
demand.
1.Plant Capacity:
Capacity is the maximum amount units generation that can be produced per unit of
time with existing plant and equipment's
2.Plant Capacity Factor : It is defined as : It is also known as plant factor or use
factor: It is the ratio of total actual energy produced over a specified period of
time to that energy that would have been produced if the plant or generating units
operated had continuously at it maximum rating.
IMPORTANCE OF PCF : PCF is less than one of all power plants it is
expressed in percentage
 It gives an indication of reserve capacity of plant and used in generation
studies.
 Practically it is less than one because, actual energy generated or average
energy generated by plant over a time is not equal to installed capacity. If the
ratio of average energy generated to the installed capacity nearer to one than
plant has better efficiency.
 while calculating PCF, installed capacity also includes reserves capacity
 PCF of power plant can be of day , month or year it can be calculated over a
period of time energy supplied by power plant
 3. PLANT USE FACTOR (PUF) :
It is defined as “the ratio of actual energy produced (in kWh) in a given time period
to the product of plant capacity and the number of hours the plant was in operation.

PUF is less than one of all power plants it is expressed in percentage

If the generating units can be operated according load demand
Whatever energy is generated must be utilized than PUF can be achieved to
one. If the value of PUF is nearer to one or equal to one it means energy
generated is not wasted.
4.INSTALED CAPACITY OF THE PLANT:
It is the total sum of power rating of all installed generating units including
reserve capacity. It is not necessary while in operation all generating units are in
operation.
5.UNITS GENERATED/ANNUM:

6.FIRM FACTOR: It is an imaginary value of power which power plant will

produce thought year or all the times practically it can not be possible.
7. RESERVE CAPACITY OF THE PLANT:

Reserve Capacity of the plant should be equal to largest generating unit of the
plant & greater than Present Maximum demand to meet the load demand in
future
PB # 01: A Power station has a maximum demand of 14000 kW. The annual load
factor is 60% and the plant capacity is 18750 kW. Determine the following
 Plant capacity factor,
 Reserve capacity, and
 Plant use factor.
 ECONOMICS OF POWER GENERATION

 LOAD : Electric current ( A OR k A ) consumed by electrical apparatus or

machinery is known as load. The load can be individually of each equipment ,
house , factory or if taken as collectively connected to feeder than is called
feeder load.
 CONNECTED LOAD :
It is defined as the sum of continuous ratings of all electrical equipment's that are
connected at the supply point or consumer premises. Let suppose a house
connected to distribution system having following equipment's
Apparatus QUANTITY RATINGS (Watts)
1. ELECTRIC FANS 05 60
2. AC 1.5 TON 01 1500
3. FREEZER 01 100
4. FLOURESENT TUBES 05 60
5. ELECTRIC MOTOR 01 746
ECONOMICS OF POWER GENERATION

 Now if we calculate the connected load :

 Connected load will be = (5*60)+( 1*1500)+(1*100)+(5*60)+(1*746)
 Connected load of house will be =2946watts
 It is not necessary only to count those apparatus of customer which are
consuming electrical energy but instead whatever number of apparatus of
factory, building, Restaurant , shop & house connected to a supply their
continuous sum of power rating is called connected load.
 ECONOMICS OF POWER GENERATION

 Maximum Demand:
The maximum demand of an installation, system or house is the maximum rate of
consumption expressed in amperes, watts, kW or kVA occurred during specified
period of time.
Lets see the connected load of house quoted from pervious slide was =2946watts.
If this customer switched on all apparatus at specified time for 2 hours in a day, than
its max demand can be said 2946 watts over that interval of time of the day
But in practical load is variable according to our living standard . In the night we
switched off all lights if we are sleeping in AC ROOM only AC may be working,
whereas freezer is also working all times but pumping motor is also switched off
So we can say the Max Demand of this customer in the night only AC & freezer that
will be 1600 watts only. Max Demand is variable of all customers , it depend upon
directly to our living standard
 ECONOMICS OF POWER GENERATION

 DEMAND FACTOR:

Demand factor is always less than one or equal to one if all apparatus of system are
switched on
 From above QUOTED example , the connected load of house was 2946 watts but at
night his max demand was 1600 watts , lets calculate his demand factor

 DEMAND FACTOR = CONNECTED LOAD/ MAX: DEMAND=1600/2946

 54% ONLY.
 The lower the demand factor, the less system capacity required to serve
the
 connected load.
ECONOMICS OF POWER GENERATION

 LOAD FACTOR:

 It can be calculated for a single day, for a month or for a year.

 Its value is always less than one. Because maximum demand is always more
than avg. demand.
 It is used for determining the overall cost per unit generated. Higher the load
factor, lesser will be the cost per unit.
 ECONOMICS OF POWER GENERATION

 LOAD FACTOR:

 The load factor can be daily load factor, monthly load factor or
annual load factor if the time period (T) considered is a day or a
month or a year respectively. The load factor of a power station is
always less than 1. It is because the average load on the power
station is smaller than the maximum demand. The load factor is
very important because it is used to determine the overall cost per
unit generated, i.e., if the load factor of the power station is
higher, then the cost per unit generated will be lesser.
ECONOMICS OF POWER GENERATION

 DIVERSITY FACTOR:

 The diversity factor of a power station is always greater than

 The diversity factor plays a vital role in the determination of
cost of generation of power. The greater is the diversity factor,
the lesser is the cost of generation of power.
 ECONOMICS OF POWER GENERATION

 DIVERSITY FACTOR:
 Example-: A sub-station has three outgoing feeders:
 feeder 1 has maximum demand 10 MW at 10:00 am,
 feeder 2 has maximum demand 12 MW at 7:00 pm and
 feeder 3 has maximum demand 15 MW at 9:00 pm,
 While the maximum demand of all three feeders is 33 MW at
8:00 pm.
 Here, the sum of the maximum demand of the individual sub-
systems (feeders) is 10 + 12 + 15 = 37 MW, while the system
maximum demand is 33 MW. The diversity factor is 37/33 = 1.12.
The diversity factor is usually greater than 1.
 ECONOMICS OF POWER GENERATION

 DIVERSITY FACTOR:
 Example-:
 A Nawabshah Substation has supplies the following loads to various consumers
1. Domestic light = 500 kW
2. Domestic power = 100 kW
3. University consumers = 2000 kW
4. Airport establishments = 700 kW
5. If the maximum demand on the power station is 3000 kW. Determine the
diversity factor of the Substation
 Solution
 ECONOMICS OF POWER GENERATION

 DIVERSITY FACTOR:
In real individual customers do not have peak demand same because according
to job, trade business , living standard & load demand they will consume
electricity so the load will be diversified. Due to diversified load on feeders
caused diversification of substations & transmission lines.
If the value of the diversity factor is greater than 1, then it is a good diversity
factor, and 1.0 represents a poor diversity factor. A high diversity factor has
the effect of reducing the maximum demand. It is obtained by using electrical
energy at night load or light load periods.
The maximum demands of the individual consumers of a group do not occur
simultaneously. Thus, there is a diversity in the occurrence of the load. Due to
this diverse nature of the load, full load power supply to all the consumers at the
same time is not required.
Greater the diversity factor, lesser is the cost of generation of power.
 ECONOMICS OF POWER GENERATION

 LOSS FACTOR LSF:

 Loss Factor (LSF) = Average loss /Peak loss
 ‘The loss factor is the ratio of the average power loss to the peak load loss, during a
specified period of time.’
 Since power losses are proportional to the square of the load current:
 Loss factor; = Square of all actual demands /Square of peak demand
 Loss Equivalent Hours
 ‘Loss equivalent hours are the number of hours of peak loads which will produce the
same total losses as is produced by the actual loads over a specified period of time.’
 Both the actual and peak demand values must be chosen from the associated load
duration:
 OR
 Loss equivalent hours
Square of all actual demands/ Square of peak demand
 ECONOMICS OF POWER GENERATION

Utilization Factor (UF) :

 UF = Maximum demand of the system / Rated capacity of the system
 UF: = Max units generated by system or plant / installed capacity
 of plant or system
 Both the maximum demand and the system rated capacity should both be
expressed in the same units to make the utilization factor expression
dimensionless. Again the demand interval and the period over which the
maximum demand applies should be stated. The utilization factor indicates the
degree to which the system is being loaded during peak load periods with respect
to its capacity.
 It is also less than one normally because system generation always greater than
peak demand. It tells how effectively generated units are utilized.
 ECONOMICS OF POWER GENERATION

LOAD DIVERSITY
 Load diversity is the difference between the sum of the peaks of two or more
individual loads and the peak of the combined load.’
 Since load diversity is the difference between two quantities of similar units
(rather than a ratio), it is expressed in the units of the two demands being
compare
1. Feeder kW
2. 1 10
3. 2 9
4. 3 10
5. 4 14
load diversity = 10+9+10+14-14=29kW
 ECONOMICS OF POWER GENERATION
 CO INCIDENT FACTOR (CF)
• Engineers prefer to have a factor which describes the characteristics of loads
that have a value equal to or less than unity. The reciprocal of the diversity
factor is known as the coincident factor: CF helps in planning new substations
and extension of power industry.

 COINCIDENT FACTOR = 1/ DIVERITY FACTOR

 The coincident factor is dependent upon the type of loads connected to the
system. Typically,

Loads CF
 Distribution transformers 0.74—0.83
 Primary feeders 0.83—0.92
 Substations 0.80—0.96
 ECONOMICS OF POWER GENERATION

 Peak Responsibility Factor (PRF):

(PRF) = Component load at time of referred component peak load /Component

peak load
 It is also less than one but it helps to determine system or power industry losses
due to system component peak loading. PRF of all system component is
different due to variable loads.
 Load Characteristics & Types

The load characteristic plays an important role in determining

 the total power and energy requirements of the system
planning the installed capacity of a power plant
 selection of suitable generating capacity for each unit of the plant
LOAD : Electric current ( A OR k A ) consumed by electrical
apparatus or machinery is known as load. The load can be
individually of each equipment , house , factory or if taken as
collectively connected to feeder than is called feeder load.
According to load supplied by station or characteristics, The total
load supplied by a generating station is normally divided into
three parts:
 Base load
Intermediate load
 Peak load
 Load Characteristics & Types

 BASE LOAD :
The base load is the load below which the demand never falls and is
supplied 100% of the time. It is constant load throughout day, month or
year that power stations has to supply without rest.
PEAK LOAD:
The peak load occurs for about 15% of the time. It is variable load and
followed by our living standard . In Pakistan peak load may occur from
3 p.m to 9 .pm, because all shops, factories, hotels, & domestic
apparatus are consuming electrical energy.
INTERMEDIATE LOAD:
The intermediate load represents the remaining load region in the load
curve. These types of loads are shown in the next figure.
 Load Characteristics & Types

.
 Load Characteristics & Types

.
 Load Characteristics & Types

.
Load characteristics & Types

Peak load PEAK LOAD

Intermediate load
BASE LOAD

BASE LOAD
 TYPES OF LOADS

 According to consumption point of view types of loads are listed below :

a. Residential load:
Residential load uses electrical energy for doing residential works like home
appliances, lighting load. Residential load are uncertain, they vary with time of day.
At morning and evening, residential. load are at peak values.
These loads are mainly light fan, domestic appliances like computer, fridge, heater,
micro oven, irons, dryer, air conditioning equipment. Residential loads are about
10% to 14% of the total power supplied by the power system.
The main reasons for variation in residential load are city population, per capita
income, development, urbanization, living style of people, environment condition.
Residential loads also affected by weather condition, like in winter season less
electrical energy consumed for the cooling system but in summer consumption is
more. Residential loads face fluctuations during hours of days.
 TYPES OF LOADS

b. Commercial Loads:
Commercial loads occur for longer period compare to residential loads. This types of loads
are mainly electrical energy utilize for commercial shops, school, colleges, advertising,
hoardings, malls, elevator, cinema halls etc. Commercial load fluctuations are mainly due
to switching of air-conditioning equipment. These loads vary more depending upon the
season.
c. Industrial Loads:
Industrial loads have constant demand and consider as base loads. Commercial loads are
little affected by seasonal variations and weather conditions. This loads mainly include
industrial appliances like motor, furnaces, cranes, industrial lighting, computers, elevators,
pumps. Industrial loads utilize more electrical energy supplied by the utility. This load
does not vary with seasonal change having constant demand throughout the day. Industry
loads further divided into section according to power required.
 Small scale industries
 Medium scale industries
 Large scale industries
 Heavy industries
 TYPES OF LOADS

 Small scale industries :

This industry may required power up to 25kW. This may include flour mill vertical type, Rice
huller ,Saw mill, Cinema ,Ice factory, Small work shop, Foundry, Ice candy & cottage
industry which will not required power more than 5kW.
 Medium scale industries:
The connected load may be of range 25 to 100kW. This may include oil pressing, medium
flour mills.
 Large scale industries:
The connected load falls category of 100kW to 500kW.Typically are large flour mills, oil
mills, sugar mills ,steel rolling mills & large rice mills etc.
 Heavy industries:
The load taken above 500kW factories such as chemical industry ,textile mills, cement
factories, mining & large scale processing & manufacturing industries .etc.
TYPES OF LOADS

d. Agricultural loads :
Agricultural types of loads use electrical energy for doing agriculture activities.
Agricultural loads mainly include irrigation pumps, lights, water pumps.
e. Municipal Loads :
Municipal loads consist of street lights, electricity required for water supply
pumps and drainage system. for water supply water is pumped to the overhead
tank using electric pump, overhead water tank pumping is carried out during off-
peak time. like during night time. its improve load factor of power system.
f. Traction Loads :
This types of loads mainly include trains ,Metros, suburban railways & main
railway system.
g. Government load:
This may includes public sector offices, This types of loads mainly include
trains, ,colleges, schools ,all courts , defense factories & public sector
understandings.
 TYPES OF LOADS

VARIABLE LOAD AND ITS EFFECT:

The load on a power station varies from time to time due to uncertain demands of the
consumers and is known as the variable load on the station.
A power station is designed to meet the load requirements of the consumers. An ideal load
on the station, from standpoint of equipment needed and operating routine, would be one of
constant magnitude and steady duration.
However, such a steady load on the station is never realized in actual practice. The
consumers require their small or large block of power in accordance with the demands of
their activities.
Thus the load demand of one consumer at any time may be different from that of the other
consumer. The result is that load on the power station varies from time to time.
Effects of variable load on Power Station
The variable load may cause many problems in the operation of a power station. Some of the
important effects of variable load on a power station are :
The need for additional equipment
The variable load on a power station necessitates having additional equipment. By way of
illustration, consider a steam power station. Air, coal, and water are the raw materials for this
plant.
 TYPES OF LOADS

VARIABLE LOAD AND ITS EFFECT:

In order to produce variable power, the supply of these materials will be required to be varied
correspondingly.
For instance, if the power demand on the plant increases, it must be followed by the increased
flow of coal, air, and water to the boiler in order to meet the increased demand.
Therefore, additional equipment has to be installed to accomplish this job.
As a matter of fact, in a modern power plant, there is much equipment devoted entirely to adjust
the rates of supply of raw materials in accordance with the power demand made on the plant.
Increase in production cost
The variable load on the plant increases the cost of the production of electrical energy. An
alternator operates at maximum efficiency near its rated capacity.
If a single alternator is used, it will have poor efficiency during periods of light loads on the
plant.
Therefore, in actual practice, a number of alternators of different capacities are installed so that
most of the alternators can be operated at nearly full load capacity.
However, the use of a number of generating units increases the initial cost per kW of the plant
capacity as well as the floor area required. This leads to an increase in the production cost of
energy.
 TYPES OF LOADS

ENERGY STRATEGY TO ACCOMMODATE BASE & PEAK LOAD

It is very necessary to bring down cost of per kWh , economical operations of power
plants must be planned to meet base & peak demands of day, month or year. The
suitable choice is given below specially in Pakistan
BASE LOAD as we already discussed that is constant, it can be said it is minimum load
that will remain throughout year on power stations, to accommodate this constant load
economical & reliable power plant service is required, in addition to this following
points are necessary.
 Selected plant must be in continuous operation throughout year to accommodate
base load. So it must
 ECONOMICAL IN FUEL
 ENVIROMENTAL FRIENDLY IF NECESSARY
 DIFFICULT TO SWITCH ON/OR BRING INTO OPERATION
 BETTER EFFICIENCY
 RUNNING CHARGES ARE VERY LESS
 RELIABLE IN OPERATION
 TYPES OF LOADS

Considering above points the best choice in Pakistan to accommodate base load
listed as below.
 ALL TYPES OF RENEWABLE POWER PLANTS
 HYDEL POWER PLANT
 COAL POWER PLANT
 GAS POWER PLANT
 COMBINED CYCLE POWER PLANT
 NUCLEAR POWER PLANT
Similary for peak load that occurred for specified interval of time, if possible
above power plants can accommodate otherwise
 Reserve capacity need to start
 Stand by diesel generator need to start
 Hence the cost of per kWh for base load & peak load is charged
accordingly.
 LOAD CURVES

There are two types of load curves used to study , analyze & prediction of base &
peak demand from distribution system on power generating stations.
 LOAD CURVE ( LC) &

 LOAD DURATION CURVE (LDC)

 LOAD CURVE: A Curve showing variable load demand of consumers

against time in hours

OR

The curve which shows the variation of load on the electrical power station with
respect to time is known as load variation curve or simply load curve.
 It represents the load in its time sequence. As typical curve is obtained by
plotting the station load (KW or MW ) along Y-axis and the time( hours) when it
occurs along X-axis.
 If plotted variable load supplied by generating stations for 24 hours of single
day, it is known as daily load curve. If it is drawn time against hours of month, it
is known as monthly load curve. Similarly if plotted variable load demand of
consumers against 8760 hours, than it is call annual load curve.
 Daily load curves gives an idea of load demand of the day, whereas monthly
load curve followed by daily load curve used to fix cost of per kWh.
 Annual load curves helps in annual energy requirements & and are use to
determine annual load factor.
 Load characteristics & Types

Peak load PEAK LOAD

Intermediate load
BASE LOAD

BASE LOAD

12/04/2024 50
 Importance of load curve :

 The daily load curve shows the variations of load on the power station
during different hours of the day
 The area under the daily load curve gives the number of units generated in the
day. Units generated/day = Area (in kWh) under daily load curve.
 The highest point on the daily load curve represents the maximum demand on
the station on that day.
 The area under the daily load curve divided by the total number of hours gives
the average load on the station in the day.
 Importance of load curve :
 The size and the number of generating units can be determined from the load
curve
 This Load Curve helps to determine the operation schedule of the station. In
that case when all the units or the less units needs to running is found
 The size and the number of generating units can be determined from the load
curve
 This Load Curve helps to determine the operation schedule of the
station. In that case when all the units or the less units needs to running
is found
 LOAD CURVE DECIDES THE INSTALLED CAPACITY OF
GENERATING STATION.
 LOAD DURATION CURVE (LDC) :

 Procedure for Plotting the Load Duration Curve

 From the data available from the load curve determines the maximum load and the

duration for which it occurs.

 Now take the next load and the total time during which this and the previous load occurs.

 Plots the loads against the time during which it occurs.

 The load duration curves can be drawn for any duration of time, for example, a day or a

month or a year. The whole duration is taken as 100%.

 LOAD DURATION CURVE (LDC) :

 Procedure for Plotting the Load Duration Curve

Example: Consider the daily load curve data of the power system.

Time Load in MW
6.00 am to 8.00am 8
8.00 am to 1.00 noon 20

1.00 noon to 2.00 noon 5

2 noon to 6.00 pm 30
6.00 pm to 6.00 am 8
 LOAD DURATION CURVE (LDC) :

Load in MW Hours in a day Time in percentage

30 4 4/24×100=16.67%

20 4+5 9/24×100=37.5%

8 9+14 =23 23/24×100=95.83%

5 23+1 = 24 24/24×100=100%
 BASE
 LOAD DURATION CURVE (LDC) : LOAD

LOAD DECENDING ORDER

IN MAGNITUDES

0 16.67 37.5 95.83 100 %

PEAK
LOAD
STARTS