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Jeff King Northwest Power and Conservation Council Generating Resources Advisory Committee

Sixth Northwest Conservation & Electric Power Plan Proposed Combined-cycle Power Plant Capital Cost Assumptions. Jeff King Northwest Power and Conservation Council Generating Resources Advisory Committee Portland, OR September 25, 2008. Combined-cycle cost elements. Capital cost

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Jeff King Northwest Power and Conservation Council Generating Resources Advisory Committee

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  1. Sixth Northwest Conservation & Electric Power PlanProposed Combined-cycle Power Plant Capital Cost Assumptions Jeff King Northwest Power and Conservation Council Generating Resources Advisory Committee Portland, OR September 25, 2008

  2. Combined-cycle cost elements • Capital cost • Plant development and construction ($/kW) • Operating costs • Fixed operation and maintenance ($/kW/yr) • Variable operation and maintenance ($/MWh) • Fixed fuel (capacity payments) (zone-specific) ($/kW/yr) • Variable fuel (commodity payments) (zone-specific) ($/MMBtu) • Transmission from point of interconnection to LSE wholesale delivery point (BPA Point to Point tariff as proxy) ($/kW/yr) • Emission costs - Cost of CO2 allowances ($/tonCO2) September 25, 2008

  3. Assessing combined-cycle capital costs • Problems: • Rapid escalation of plant capital costs in recent years • Variety of plant configurations and features • Sensitivity of output to elevation, ambient temperature and certain features • Several recently reported costs are for completions of suspended projects • Reported costs are poorly documented more often than not. • Sources: • Primary: Reported costs for actual and proposed plants • Supplementary: Other surveys and estimates September 25, 2008

  4. Establishing comparability I • Initial screen to identify representative projects • Omit completions of suspended projects • Limit to "F, G & H" technology • Omit unusually large (3 & 4 plant) projects • Omit unusual configurations (e.g., 3x1) • Focus on post-2004 completions; closely focus on 2006 & later • Adjust costs to baseload technology w/evaporative cooling • Deduct for dry cooling costs (-6% total cost) • Deduct for fired HSRG (duct firing MW ~ 30% cost of baseload MW) September 25, 2008

  5. Establishing comparability II • Normalize capacity to lifecycle ISO conditions at the point of interconnection • Problem - reported capacity may be site-rated or nominal, winter or summer, typically not reported • Use OEM reference plant ISO ratings from GTW (new & clean nominal capacity, unfired HSRG, wet cooling, adjusted for auxiliary loads) • Reduce capacity 0.5% for main transformer losses (post-analysis) • Reduce capacity 2.7% for lifecycle aging losses (post-analysis) • Normalize to "overnight" cost in 2006 dollar values • IPP projects: Assume reported costs are EPC costs, add owner's cost allowance (5%); development cost allowance (1.4%); financing costs (2% of debt); back-calculate overnight cost for service year using MICROFIN • Utility projects: Assume reported costs are "all-in", back-calculate overnight cost for service year using MICROFIN September 25, 2008

  6. Assign a vintage to the samples • Problem: Environment w/significant annual escalation • Objective: Cost of project w/2010 service • Reported all-in costs - MICROFIN yields a comparable constant dollar overnight cost for constructing a project for service in year x. • Cost estimates - generally, costs at time of estimate plus an contingency for anticipated escalation to a future expenditure date - and allowance which may not prove accurate. Vintage is time of cost estimate release. • Plot all-in and estimates separately - will illustrate changing perception of escalation. September 25, 2008

  7. Useable reported costs September 25, 2008

  8. Normalized combined-cycle project cost September 25, 2008

  9. Other surveys and estimates • EIA 2008 Annual Energy Outlook (Jun 2008) • NETL Cost & Performance Baseline for Fossil Energy Plants (Aug 2007) • CEC Comparative costs of California Central Station Electricity Generation Technologies (Jun 2007) • Lazard Levelized Cost of Energy Analysis (Jan 2008) September 25, 2008

  10. CEC based on survey of projects constructed between 2001 & 06 Comparison to other surveys & estimates September 25, 2008

  11. Proposed Sixth Plan costs September 25, 2008

  12. Adjustments to model input values • 540 MW @ $850/MW + 70 MW @ 255/MW • IOU financing September 25, 2008

  13. Cost of baseload energy(Point of interconnection) IOU financing 2010 service Westside NG, 2007 NPCC forecast CapFac ~ 90% of baseload rating September 25, 2008

  14. Where things stand 2010 service Point of interconnection (wind incl. R & LF) 2008 Federal production tax credits Baseload operation Bingaman/Specter CO2 capping cost September 25, 2008

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