Power System Economics I

Exercise December 19th

Today

Invited Talk Exercise 3

BTU Cottbus Chair of Energy Economics Prof. Dr. Felix Msgens

Invitation
The Chair of Energy Economics welcomes
Dr. Marco Nicolosi (ECOFYS)
Speaking about:

Short- and Long-Term Effects of Renewable Electricity Market Integration

January, 09th 2013 at 5:15 pm Audimax 2 Everyone interested is warmly welcome! The language of the presentation will be english.
BTU Cottbus Lehrstuhl Energiewirtschaft Lehrgebude 3 / Eingang A Walther-Pauer-Str. 5 03046 Cottbus Telefon: +49 (3 55) 69-45 04 E-Mail: energiewirtschaft@tu-cottbus.de

 Exercise 3

BTU Cottbus Chair of Energy Economics Prof. Dr. Felix Msgens

Exercise 3: Various Power Plants and the ETS Problem I

Its 2005. You are working for Vattenfall. The company considers to invest in a new lignite power plant or in a new gas power plant (CCGT) close to Cottbus (both with a capacity of 500 MWel). The PP should start to produce electricity in 2008. Therefore the newly introduced Emission Trading System has to be considered!

Parameters of a new lignite power plant

Parameter NAP FLH Fuel Specific Benchmark Expected FLH Efficiency Investment/Overnight Cost Other Fixed Costs Operating Costs Fuel Costs Life Time (T) CO2-Emissions Value Unit 7500 [h/a] 750 [g/kWhel] 8000 [h/a] 44% 1150 [/kWel] 38 [/(kWel*a)] 0.20 [ct/kWhel] 0.36 [ct/kWhth] 40 [a] 0.396 [kg/kWhth]

Parameters of a new Combined Cycle Gas Turbine (CCGT) power plant

Parameter NAP FLH Fuel Specific Benchmark Expected FLH Efficiency Investment/Overnight Cost Other Fixed Costs Operating Costs Fuel Costs Life Time (T) CO2-Emissions Value Unit 7500 [h/a] 365 [g/kWhel] 3500 [h/a] 59% 450 [/kWel] 14 [/(kWel*a)] 0.05 [ct/kWhel] 1.50 [ct/kWhth] 30 [a] 0.200 [kg/kWhth]

BTU Cottbus Chair of Energy Economics Prof. Dr. Felix Msgens

Exercise 3: Various Power Plants and the ETS Problem II

Take the following conditions into account:
1. Both power plants are going to put into operation on Jan. 1st 2008 (allocation period 20082012), we consider 2008. 2. We assume two different CO2-prices
A) CO2-Price: 22 /tCO2 B) CO2-Price: 6.5 /tCO2

3. Interest rate (r): 10% 4. Assumed Utilization Factors (German NAP)

7500 h/a for the Lignite Power Plant 7500 h/a for the Combined Cycle Gas Turbine Power Plant

5. Fuel-specific Benchmark (no uniform allocation for new power plants) (best-available technology or best-practice-of-technology-in-fuel-class)
750 gCO2/kWhel (lignite) 365 gCO2/kWhel (gas)

BTU Cottbus Chair of Energy Economics Prof. Dr. Felix Msgens

Exercise 3: Various Power Plants and the ETS

3.1: Your CEO asks you to calculate the fixed [TAFC],

variable [TAVC] and total cost [ATC] parameters for each power plant with and without the CO2-cost-burden in [/(kWel*a)].

]=

11/(1+)

BTU Cottbus Chair of Energy Economics Prof. Dr. Felix Msgens

Exercise 3: Various Power Plants

a) Lignite Power Plant
Annual FC (Investment, Annuity) TAFC = Annuity + Other FC TAVC (excl. CO2-Costs, 22) TAVC (excl. CO2-Costs, 6.5) CO2-Cost, 22 CO2-Cost, 6.5 TAVC (incl. CO2-Costs, 22) TAVC (incl. CO2-Costs, 6.5) ATC (incl. CO2-Costs, 22) ATC (incl. CO2-Costs, 6.5) 117.60 /(kWel*a) 155.60 /(kWel*a)

BTU Cottbus Chair of Energy Economics Prof. Dr. Felix Msgens

Exercise 3: Various Power Plants

b) CCGT Power Plant
Annual FC (Investment, Annuity) TAFC = Annuity + Other FC TAVC (excl. CO2-Costs, 22) TAVC (excl. CO2-Costs, 6.5) CO2-Cost, 22 CO2-Cost, 6.5 TAVC (incl. CO2-Costs, 22) TAVC (incl. CO2-Costs, 6.5) ATC (incl. CO2-Costs, 22) ATC (incl. CO2-Costs, 6.5) 47.74 /(kWel*a) 61.74 /(kWel*a)

BTU Cottbus Chair of Energy Economics Prof. Dr. Felix Msgens

Exercise 3: Various Power Plants and the ETS

3.1: Your CEO asks you to calculate the fixed [TAFC],

variable [TAVC] and total cost [ATC] parameters for each power plant with and without the CO2-cost-burden in [/(kWel*a)].

]=

11/(1+)
+

BTU Cottbus Chair of Energy Economics Prof. Dr. Felix Msgens

10

Exercise 3: Various Power Plants

a) Lignite Power Plant
Annual FC (Investment, Annuity) TAFC = Annuity + Other FC TAVC (excl. CO2-Costs, 22) TAVC (excl. CO2-Costs, 6.5) CO2-Cost, 22 CO2-Cost, 6.5 TAVC (incl. CO2-Costs, 22) TAVC (incl. CO2-Costs, 6.5) ATC (incl. CO2-Costs, 22) ATC (incl. CO2-Costs, 6.5) 239.85 /(kWel*a) 158.40 /(kWel*a) 117.60 /(kWel*a) 155.60 /(kWel*a) 81.45 /(kWel*a)

BTU Cottbus Chair of Energy Economics Prof. Dr. Felix Msgens

11

Exercise 3: Various Power Plants

b) CCGT Power Plant
Annual FC (Investment, Annuity) TAFC = Annuity + Other FC TAVC (excl. CO2-Costs, 22) TAVC (excl. CO2-Costs, 6.5) CO2-Cost, 22 CO2-Cost, 6.5 TAVC (incl. CO2-Costs, 22) TAVC (incl. CO2-Costs, 6.5) ATC (incl. CO2-Costs, 22) ATC (incl. CO2-Costs, 6.5) 116.83 /(kWel*a) 26.10 /(kWel*a) 47.74 /(kWel*a) 61.74 /(kWel*a) 90.73 /(kWel*a)

BTU Cottbus Chair of Energy Economics Prof. Dr. Felix Msgens

12

Exercise 3: Various Power Plants

a) Lignite Power Plant
Annual FC (Investment, Annuity) TAFC = Annuity + Other FC TAVC (excl. CO2-Costs, 22) TAVC (excl. CO2-Costs, 6.5) CO2-Cost, 22 CO2-Cost, 6.5 TAVC (incl. CO2-Costs, 22) TAVC (incl. CO2-Costs, 6.5) ATC (incl. CO2-Costs, 22) ATC (incl. CO2-Costs, 6.5) 117.60 /(kWel*a) 155.60 /(kWel*a) 81.45 /(kWel*a) 81.45 /(kWel*a) 158.40 /(kWel*a) 46.80 /(kWel*a) 239.85 /(kWel*a) 128.25 /(kWel*a)

BTU Cottbus Chair of Energy Economics Prof. Dr. Felix Msgens

13

Exercise 3: Various Power Plants

b) CCGT Power Plant
Annual FC (Investment, Annuity) TAFC = Annuity + Other FC TAVC (excl. CO2-Costs, 22) TAVC (excl. CO2-Costs, 6.5) CO2-Cost, 22 CO2-Cost, 6.5 TAVC (incl. CO2-Costs, 22) TAVC (incl. CO2-Costs, 6.5) ATC (incl. CO2-Costs, 22) ATC (incl. CO2-Costs, 6.5) 47.74 /(kWel*a) 61.74 /(kWel*a) 90.73 /(kWel*a) 90.73 /(kWel*a) 26.10 /(kWel*a) 7.71 /(kWel*a) 116.83 /(kWel*a) 98.44 /(kWel*a)

BTU Cottbus Chair of Energy Economics Prof. Dr. Felix Msgens

14

Exercise 3: Various Power Plants and the ETS

3.1: Your CEO asks you to calculate the fixed [TAFC],

variable [TAVC] and total cost [ATC] parameters for each power plant with and without the CO2-cost-burden in [/(kWel*a)].

BTU Cottbus Chair of Energy Economics Prof. Dr. Felix Msgens

= +

]=

11/(1+)
+

15

Exercise 3: Various Power Plants

a) Lignite Power Plant
Annual FC (Investment, Annuity) TAFC = Annuity + Other FC TAVC (excl. CO2-Costs, 22) TAVC (excl. CO2-Costs, 6.5) CO2-Cost, 22 CO2-Cost, 6.5 TAVC (incl. CO2-Costs, 22) TAVC (incl. CO2-Costs, 6.5) ATC (incl. CO2-Costs, 22) ATC (incl. CO2-Costs, 6.5) 117.60 /(kWel*a) 155.60 /(kWel*a) 81.45 /(kWel*a) 81.45 /(kWel*a) 158.40 /(kWel*a) 46.80 /(kWel*a) 239.85 /(kWel*a) 12.25 /(kWel*a) 395.45 /(kWel*a) 283.85 /(kWel*a)

BTU Cottbus Chair of Energy Economics Prof. Dr. Felix Msgens

16

Exercise 3: Various Power Plants

b) CCGT Power Plant
Annual FC (Investment, Annuity) TAFC = Annuity + Other FC TAVC (excl. CO2-Costs, 22) TAVC (excl. CO2-Costs, 6.5) CO2-Cost, 22 CO2-Cost, 6.5 TAVC (incl. CO2-Costs, 22) TAVC (incl. CO2-Costs, 6.5) ATC (incl. CO2-Costs, 22) ATC (incl. CO2-Costs, 6.5) 47.74 /(kWel*a) 61.74 /(kWel*a) 90.73 /(kWel*a) 90.73 /(kWel*a) 26.10 /(kWel*a) 7.71 /(kWel*a) 116.83 /(kWel*a) 98.44 /(kWel*a) 178.57 /(kWel*a) 160.18 /(kWel*a)

BTU Cottbus Chair of Energy Economics Prof. Dr. Felix Msgens

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Exercise 3: Various Power Plants

450,00 /(kWel*a) 400,00 /(kWel*a) 350,00 /(kWel*a) 300,00 /(kWel*a) 250,00 /(kWel*a) 200,00 /(kWel*a) 155,60 150,00 /(kWel*a) 117,60 100,00 /(kWel*a) 50,00 /(kWel*a) 0,00 /(kWel*a) Annual FC (Investment, Annuity) TAFC = Annuity + Other FC TAVC (excl. CO2-Costs, 22) TAVC (excl. CO2-Cost, 22 CO2-Cost, CO2-Costs, 6.5 6.5) Lignite Power Plant CCGT Power Plant TAVC (incl. CO2-Costs, 22) TAVC (incl. CO2-Costs, 6.5) ATC (incl. CO2-Costs, 22) ATC (incl. CO2-Costs, 6.5) 47,74 61,74 26,10 7,71 81,45 90,73 81,45 90,73 46,80 116,83 158,40 128,25 98,44 239,85 283,85 395,45

178,57 160,18

BTU Cottbus Chair of Energy Economics Prof. Dr. Felix Msgens

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Exercise 3: Various Power Plants

3.2 Furthermore the CEO asks you: What is the annual emission grant ( in [], [t] and [/kWa]) of each power plant?
NAP regulation says: = []

[]

BTU Cottbus Chair of Energy Economics Prof. Dr. Felix Msgens

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Exercise 3: Various Power Plants

3.2 Furthermore the CEO asks you: What is the annual emission grant ( in [], [t] and [/kWa]) of each power plant?
= [] Grant [t] [] [/kWel]

Lignite Power Plant Grant = Capacity*Benchmark*FLH NAP [t], CO2-Cost, 22 Grant = Capacity*Benchmark*FLH NAP [t], CO2-Cost, 6.5 CCGT Power Plant Grant = Capacity*Benchmark*FLH NAP [t], CO2-Cost, 22 Grant = Capacity*Benchmark*FLH NAP [t], CO2-Cost, 6.5

[]

BTU Cottbus Chair of Energy Economics Prof. Dr. Felix Msgens

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Exercise 3: Various Power Plants

3.2 Furthermore the CEO asks you: What is the annual emission grant ( in [], [t] and [/kWa]) of each power plant?
= [] Grant [t] 2,812,500 2,812,500 [] [/kWel]

Lignite Power Plant Grant = Capacity*Benchmark*FLH NAP [t], CO2-Cost, 22 Grant = Capacity*Benchmark*FLH NAP [t], CO2-Cost, 6.5 CCGT Power Plant Grant = Capacity*Benchmark*FLH NAP [t], CO2-Cost, 22 Grant = Capacity*Benchmark*FLH NAP [t], CO2-Cost, 6.5

[]

CO2-costs (earlier calculation) 158.40 /(kWel*a) 46.80 /(kWel*a)

61,875,000 18,281,250

123.75 36.56

1,368,750 1,368,750

30,112,500 8,896,875

60.23 17.79

26.10 /(kWel*a) 7.71 /(kWel*a)

BTU Cottbus Chair of Energy Economics Prof. Dr. Felix Msgens

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 What would happen if that would have been realized:

Uniform allocation for new power plants

BTU Cottbus Chair of Energy Economics Prof. Dr. Felix Msgens

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Exercise 3 Part 3: Calculation of Levelized Cost of Electricity (LCOE) for the two power plants
1 + 1 +

[ ]=

0 + =1 =1

0 = = + =

Capacity: 500 MWel CO2-Price: 22/t and 6/t

BTU Cottbus Chair of Energy Economics Prof. Dr. Felix Msgens

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 Thats it for today! Have a nice break!

BTU Cottbus Chair of Energy Economics Prof. Dr. Felix Msgens

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