POWER June 2011 - 65

PLANT ECONOMICS
3. Calculating the COE. Applying the
assumptions listed in Table 1 to the original and
modified COE formulas to Plant A illustrates
the usefulness of this new way of calculating
COE. The assumed price of natural gas used to
calculate the COE was $5/mmBtu. An energy
replacement cost of $60/MWh was assumed.
Values shown in the table are in millions of dollars.
Source: GE Energy
Fixed O&M
5.2%
Variable O&M
5.5%
Table 2. Evaluating the COE of two plant design options. Note the dramatic
negative economic impact of a small decrease in Plant B's reliability. The detrimental impact on
plant economics would be even more pronounced should a maintenance factor and/or nonrecoverable
performance degradation be considered as well. Dollar values reflect the difference
from the Plant A baseline. Be aware that electricity sale price or ancillary market opportunities
and payments are not included in this analysis. Source: GE Power
$5/mmBtu fuel price $10/mmBtu fuel price
COE
COE
Plant design option
Plant A
LF R
79.30% 99%
$
$/MWh
Base $108.90
$
$/MWh
Base $155.20
Plant B (improved part-load heat rate only) 79.30% 99% $7,000,000 $108.30 $13,000,000 $154.00
78.50% 98% ($8,000,000) $109.60 ($9,000,000) $155.90
Plant B (improved part-load heat rate plus 82.40% 99% $17,000,000 $107.40 $26,000,000 $152.90
10% Scenario B1, 90% Scenario B2
Fuel
48.1%
Capital
41.3%
Notes: COE = cost of generating electricity, LF = load factor, R = reliability.
(lower than their nominal baseload counterparts)
and additional cost components.
(Note the significant contribution of emissions
even when only CO2
When NOx
is considered.
, CO, and other emissions are
Original
COE
Equation term
Capital
Fixed O&M
Fuel
Variable O&M
Emissions
Replacement power
Total
equation
$35.30
$4.40
$41.10
$4.70
$0.00
$0.00
$85.50
Variable O&M
4.3%
Fixed O&M
5.0%
Emissions
6.9%
Fuel
40.2%
Capital
40.1%
Replacement
3.5%
Modified
COE
equation
$43.70
$5.50
$43.80
$4.70
$7.50
$3.80
$108.90
also thrown into the mix with systemspecific
" known " costs, the impact will be
more pronounced.) The real benefit of the
proposed formulation, however, is its ability
to account for plant metrics other than
rated performance, thereby providing an
improved plant life-cycle cost evaluation.
From the equipment supplier's point of
view, an interesting question is now raised:
What is the market value of the Plant B upgrades,
assuming Plant B COE remains the
same as Plant A's? If the Plant B upgrades
are evaluated by assuming 10% unplanned
starts (a reasonable assumption given the
earlier discussion), then the results, summarized
in Table 2, are quite interesting:
■ A CC design with a better part-load heat
rate has a value of $7 million to $13
million for $5 and $10 fuel, respectively.
This is quite significant when you
consider that each 0.1 percentage point
in rated efficiency is worth ~$1 million
to ~$2 million (with the assumptions of
this example) for the same fuel price
range. The implication is that there is
room for about 0.7 net CC efficiency
points for a trade-off between ultimate
rated performance and sustained performance
across a wider load range.
A comparison of the COE calculated
using the standard (original) and modified
(proposed) formulations is shown in
Figure 3. The new formulation returns
a 25% higher value, driven by the use of
" real " effective kWh and efficiency values
June 2011 | POWER
■ A nimbler CC design, which slashes the
start time and load ramp rate by 50%,
has an additional value of $10 million
to $13 million for $5 and $10 fuel for a
total value of $17 million to $26 million
compared with Plant A, assuming no
difference in plant reliability, maintainwww.powermag.com
ability,
or component degradation.
■ A reduction of 1% in reliability (R = 98%
instead of 99%) is more than enough to
wipe out all the value compared with
Plant A, or even more (a reduction in
value by $15 million to $22 million). The
economics worsen if any potentially adverse
impact on maintenance factor and/
or nonrecoverable degradation is thrown
into the mix.
■ In order to simplify the treatment herein,
NOx
and CO emissions (typically reduced
during faster starts) are ignored.
Inclusion of either will increase the value
of Plant B with the fast-start feature.
■ Similarly, in extremely hot climates
and/or applications with duct firing, hot
day part-load performance characteristics
of the plant become important. This
refinement can be easily incorporated
into the proposed COE formula using
applicable correction curves or a load
profile table.
The expected increased use of CC plants
in the future will place a premium on units
that can be heavily cycled and quickly
started. By adding these effects to the familiar
COE equation, we get a new formulation
that can be easily used to perform
screening studies to determine the value of
a plant more comprehensively.
In most applications, significant life-cycle
cost savings are possible for plants that
can operate at part load with improved efficiency
or that can start and reach baseload
faster than conventional plants. Now you
have a screening tool to estimate the value
of those operational improvements. ■
-S. Can Gülen, PhD, PE (can.gulen @
ge.com) is a principal engineer with
GE Energy.
65
81.50% 98% $2,000,000 $108.80 $4,000,000 $154.80

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POWER June 2011

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