Economy and

Management of
energy systems
Basic revision,Specific
costs

Electricity Grid Structure

j=0
Power
plant
gn/vvn

400 kV
220 kV

110 kV
vvn/vvn

EZ, a.s.

Transmission grid:

Elektrrny Opatovice, a.s.

EPS, a.s.

vvn/vn

22 kV
35 kV

0.4 kV
vn/nn

Distribution grids PRE, ,EZ , E.ON

Energotrans, a.s.
Sokolovsk uheln, a.s.
..

Transmission Voltage levels:

400 kV (2900 km); 220 kV (1440 km); 110 kV (105 km)
Distribution Voltage levels:
110 kV 22 (35) kV 0,4 kV ; 35 kV
Generator Voltage (Extra) High Voltage (Extra)
Low Voltage
2

Consumption

Load diagram and energy sources

within

energy

Basic Nuclear PP, Hydro PP (flow!),

Modern condensing power plants,
Heating plants with back pressure
turbines, purchase from UCTE
Semi-peak condensing power plants,
Hydro PP (accumulative)

7 500

7 000

Peak

6 500

P (MW)

Sources
systems:

6 000

Semi-peal

5 500

5 000

Basic

Peak Pumping Hydro PP, Gas PP

4 500

RES - basic, semi-peak and peak sources

(small hydro, wind, PV, biomass,
geothermal)

4 000
0

12
t (hod)

16

20

24

District heating systems

Dlkov napje Primary grid

Secondary grid
Primary
source

Pedvac stanice

Local
Peak
Source

Tertiary grid
Customers
Customers

Heat delivery:

- Steam piping
- Hot water piping (Heat lines > 110 OC; Primary and
secondary grids)
- Hot water piping (Heat
lines < 110 OC; Tertiary grids)
4

Basic revision
Time of the Maximum Load (Doba vyuit maximlnho zaten)
T

Tm

P(t )dt

WT
Pm

Pm

Time of the Full Losses (Doba plnch ztrt)

Tz

WzT
Pzm

3RI (t )
0

3RI m2

dt

P(t )
3
R
0 3U cos M dt
2

Pm

3R
3
cos
M
U

P(t )
0

Pm2

In state regulation:

TZ

Tm
T
m
0,2  0,8 T
T
T

T Time of the observed period

Energy characteristics of transformer

Energy characteristics of transformer represents the dependency of energy
losses on the load.
No-load Losses (Hysteresis losses, Magnetostriction,) (in iron) Po,; these
losses are permanent and do not depend on the load!
Load Losses (Winding resistance) (in copper) Pkn, Jouls losses; these losse
are fluctuating a DO depend on the load.

Pz

S2
Po  Pkn 2
Sn

S load
Sn nominal output of transformer

Energy losses of transformer

Wzr

S m2
Po Tpr  Pkn 2 Tz
Sn

Wzr annual energy losses in transformer

Tpr annual working time of transformer
Sm annual maximum load of transformer

Power factor compensation

I

Power grid with power

factor compensation

Mk
Compensator
M

Inductive
consumption

Ij
Ij

Power factor compensation benefits:

1) Smaller cross-section of the power lines
2) Lower investment cost of the new power lines
3) Lower drop of potential
4) Decrease of losses within the power lines
'U
5) Better transients in the power grid
Pztr

Ik

I - active current
I - apparent current
Ij - blind current
3 ( RI cos M  X L I sin M )
3R( I cos M  j I sin M ) 2

Specific costs for electricity

generation and transportation
Fixed costs (FC)
are independent on the volume of the production
(power generation)
are including costs such as: depreciations,
interests, salaries, material, indirect costs,
maintenance and repair.
Variable costs (VC)
are dependent on the production (power
generation)
for our case are usually reduced to fuel costs

Structure of costs (expenditures) of

energy investments in time
One time costs (directly connected with construction)
Preparation of construction, project (blueprints,),
construction, installation of equipment, measurement
and regulation.
Purchase of stockpile fuel, spare parts, initial training
of employees
Annual Fixed Costs (during operation)
Fixed Capital Costs (NS):

- loan interests
- depreciations
- leasing repayment

Specific costs for electricity

generation and transportation
Fixed operating costs (NPS)
Costs of operation:
- Salaries of employees
- Operating material
- Maintenance and repair
- Insurance, taxes, fees,
Costs of management: - Salaries, education, audits,

Variable operating costs (NPP) costs that are dependent on the

production
- Fuel (transportation included)
- Purchase of electricity, heat and other forms of energy
- Costs of waste disposal
- Emission fees

Production costs
Production costs (NVYR)
Operating Costs (NP = NPP + NPS)
+ Depreciations (NO)
= Actual Costs (NVL)
+ Interests (N)
= Production costs (NVYR)

N vyr

N vl  N

N p  No  N

N p  po N i  p a N i
Depreciations

Nvyr

N p  Ni ( po  pa )

A aT Ni

Np  A

Annuity - average annual value derived from the investment

costs. Present value of the annuity (taken for the economic
lifetime) gives the value that equals the investment costs

Proportional annuity:

T
r
po
pa

N p  Ni aT

Interests

aT

(1  r )T r
(1  r )T  1

po  pa

economic lifetime
discount rate
proportional depreciations (po = 1/T)
proportional annuity interest

13

Specific costs for power generation

Nvyr

Ns  N p

Pm
W
Tm

annual maximum output (MW)

annual energy production (MWh)
time of the Maximum Load (hod)

nvyr

N vyr

N vyr

Pm Tm

Pm ns  W n p

Pm (ns  Tm n p )
ns
np

specific fixed costs based on

output (K/MW)
specific variable costs based on
energy (K/MWh)

ns
 n p (K/MWh) average (specific) production costs of
Tm
1 unit of production

The higher Tm the lesser is the influence of fixed costs within the production costs

Kad cena stanoven jen na zklad prmrnch vrobnch nkladech (jednoslokov

cena K/MWh) nic nevypovd o vnitku, o stavu, kter odbratel vytv.

14

Costs division methods CHP (Combined Heat and

Power)
Used in the situations when it is impossible to reliably distinguish costs for boiler and
steam engine.
The aim is to correctly set the costs for electricity production and heat production (to
calculate the proper electricity and heat prices)
Methods: - physical
- value index
A) Physical Methods
1. Calorific Method
The overall costs are divided in a ratio of heat energy in steam for electricity
production and heat energy in steam that directly delivered to end customers.
The economic effect from CHP goes to electricity production

kal
e

E tkal

ia  iodb
ia  iko

kal
e

iodb  iko
ia  iko

kal
t

ia  i pt

ia  iko
i pt  iko
ia  iko

ia
iodb
ipt
iko

enthalpy of admission
enthalpy of take-off
enthalpy of back pressure
enthalpy of condensate
15

2. Thermodynamic Method
Heat energy in steam for electricity production from CHP is set to the value that is
corresponding with heat energy of alternative condensing power plant .
The economic effect from CHP goes to heat production.

E etd

ia  iodb
ia  ik

td
e

iodb  ik
ia  ik

td
t

td
t

ia  i pt
ia  ik

ik

emission enthalpy ( before

condenser)

i pt  ik
ia  ik

3. Exergy Method
The overall costs are divided in a ratio of exergy in steam used for electricity production
and heat production
Exergy - the value of energy (within the overall energy) that can be transform into useful
mechanical labor

16

B) Value index Methods

1. Triangle Method
The overall costs of heating power plant (also the economic effects from CHP) are
divided based on the choice of alternative heating plant (only heat without electricity
production) and alternative condensing power plant
ne

Nvyr
ne
nt

ne E  nt Q
specific costs of electricity production
(K/MWh)
specific costs of heat production (K/GJ)

nt
2. Differential Method
The one form of energy is priced with fixed specific costs (electricity) and costs for the
other form of energy (heat) is the complement (to the total costs)
3. Business Method
Reflects the situation when the price of electricity produced in heating plant (CHP) is
given.
The costs for heat is the difference between the total costs and the incomes for the
electricity.
17

Marginal costs
Why marginal costs?
The main aim of LRMC (Long Run Marginal Costs) calculation is to represent the
production costs of the change of electricity consumption or rather of electricity
production from the macroeconomic point of view.
It can be used for the purposes of economic effectiveness calculation,
development of new tariffs, feed-in tariffs, etc.

Marginal costs
TC total costs
VC variable costs
FC fixed costs
AC average costs
TR total revenue
AR average revenue
MC marginal costs
MR marginal incomes
TP total profit
TC=FC+VC
ATC=TC/Q
AFC=TFC/Q
AVC=TVC/Q
ATC=AFC+AVC
TP=TR TC
AP=TP/Q
MC curve intersect with AC curve in
minimum of AC
If MR=MC, revenue is maximized

Marginal costs definition

The marginal cost of an additional unit of output is the cost of the additional inputs
needed to produce that output. More formally, the marginal cost is the derivative of total
production costs with respect to the level of output.

MC

dTC TC2  TC1

#
dQ
Q2  Q1

Tangent definition

Secant definition

SRMC (Short Run MC) : FC = const o

MC

dVC
dQ

LRMC (Long Run MC) : FC konst o

MC

dTC
dQ

SRMC Short Run Marginal Cost)

Defined as incremental production costs caused by the increase of supply in case of
unchanged capacity of production or transportation facilities.
SRMC are often extended with losses caused by non-supply of electricity

LRMC Long Run Marginal Cost

Defined as incremental production costs caused by the increase of supply
Include the investments into required production and transportation capacity
If the electricity supply system is developed in optimal way than:

SRMC { LRMC
'N pr  'N nd { 'N pr  'N pst  'Ni aT
'Npr increase of variable operating costs (costs for losses)
'Nnd increase of costs caused by non-supply
'Npst increase of fixed operating costs (maintenance, repair)

'NiaT increase of annuity value of investment costs

Costs caused by non-supply (supplier x consumer):
direct revenue losses, profit margin losses
indirect back-up sources, switching to different transmission lines
system repair costs of facilities that are unscheduled built

Marginal costs calculation methods

1) System Method
Fixed part of production costs within
electricity supply system

nv

National economic costs caused by

non-supply
National economic costs caused by
securing the supply
zvopt Optimum of supply safeguard
0,9

0,99

zvopt

0,999

0,9999

zv

 System method (of MC calculation) is based on experiments on mathematical

economical model of electricity supply system
System method includes variable and fixed operating costs and annuity value of
investments of all sources within electricity supply system

2) Method of representatives
Assume the balance between demand and supply within electricity supply system. Any
additional production (without the increase of installed capacity) is impossible.
Therefore:

LRMC { ACnew _ sources _ and _ grids

This method is calculating only with chosen types of sources closing power plants
(development and operation is not limited in the near future)
Closing power plant is such power plant that is closing the balance of electricity
supply system
Vyluujc podmnky zvrnch elektrren:
- nedostatek paliva
- nedostatek lokalit pro vstavbu
- ekologick problmy
- zvislost vroby elektiny na jin hlavn vrob (teplrny), na klimatickch podmnkch

Obecn vztah:

>

nm k zp km kvs kr niE (aTE  p psE )  niS (aTS  p psS )  Tm k zw nwE

niE mrn investin nklady novch zvrnch elektrren (k/kW)
niS mrn investin nklady novch st (k/kW)
km koeficient asti maxima odbratele na maximu soustavy (-)
kvs koeficient vlastn spoteby (-)
kzp, kzw koeficient ztrt vkonu, resp. prce v stch soustavy (-)
kr koeficient zlohy vkonu v zvrnch elektrrnch (-)
ppsE ron pomrn stl provozn nklady elektrren
ppsS ron pomrn stl provozn nklady st
Tm ron doba vyuit Pm odbratele
nwE mrn promnn nklady vroby elektiny (K/kWh)
aTE, aTS pomrn anuita za ekonomickou dobu ivotnosti zvrnch elektrren a st