Project costs can be broken down into three
categories: 1) capital2) operation & maintenance3) disposal.
The economic analysis for selecting the least-cost
installed capacity for the hydro plant was based upon the
standard industry rule-of-thumb that capital
cost of generation equipment and installation is £1000 per kW of
installed capacity (in the range 100kW to
1000kW).The connection cost was estimated at £208000.
Generation operation and maintenance costs
were set at 2% of generation capital cost per annum, and
transmission operation and maintenance at 6% of connection
capital cost per annum.These values are
estimates.In the light of further information on costs,
a spreadsheet has been provided here
for modifying
the analysis.
Considering that the investment is spread
across the life of the plant (i.e 40 years) with a discount rate of 8%,
it was concluded that the optimum economic
level of generation is 400kW installed capacity for the small scale
hydro plant.Graph 3 shows the results of the
economic comparison between wind turbines and small scale hydro
plants for various installed capacity.
Graph 3.Economic comparison
between wind turbines and small scale hydro
The power output, as supplied to the local
demand, is shown in graph 4.
graph 4.Power output, as supplied to the local demand.
From the above graph it can be seen that the daily base load
is met by the hydro plant The output of the plant is not constant,however,as
the water resource can
not maintain a constant energy
supply to the turbine (in times of very low water levels). These variations
can be seen on the graph, where there
are dips in the supply line. Nevertheless a high level of generation is maintained,
which gives rise to a high
capacity factor - in this case greater than 90%. This is the result of utilising
only a relatively small proportion of the
maximum possible potential, in order to meet the requirements of local demand.
More energy could be extracted from
the resource, but the supply profile would be far more unpredictable due to
the greater degree of fluctuations.
But as this is the economic optimum generation level, to tap the resource
any further would be uneconomical
because the turbine would be rated even farther
into the intermittent
load zone, i.e. much of the time the generation
capability would be greater than the demand. By
means of utilising only a small proportion of such a large resource the
energy cost for small-scale distributed generation can be brought into competitiveness
with traditional forms of generation.
In this the cost of electricity was calculated at 4.9p per kWh - if spread
across the life of the plant.
Investors
Energy costs can vary depending
on the return required by the investor.Typically,
public
sector investments demand a
rate of return of only about 8% (excluding
inflation), and require
payback over the life of the
plant (40yrs.).A private investor will require a greater
rate of
return - perhaps 15% - and a shorter payback
period - often 15 years.
The effect on the cost of energy production
is illustrated,with this example, in the graph below.
