Marginal value of revitalisation

13 February 2001

Slavko Aleric explains an energy-economic analysis which was applied to the Peruca hydro power plant to determine if repair work was the best economic option for the plant after it was damaged during the liberation war in Croatia

The Peruca hydro power plant on the Cetina river in Croatia has been in operation since 1960. It is a seasonal reservoir plant with 2x20.8MW generating units and an installed water flow of 120m3/sec. Peruca’s average annual power generation is about 120GWh.

During the liberation war in Croatia, the Peruca dam was mined and severely damaged, but it has been reconstructed and restored. Peruca includes a 460M m3 storage basin, which serves for the regulation and electricity generation of downstream plants with a total power capacity of over 550MW, one of which dates from 1912.

The average annual power output of the plants in the Cetina river basin is more than 2500GWh of electricity.

Potential power

The potential generating capacity of a hydro power plant is a basic indicator of the abundance and characteristics of a water flow. It is actually a value which is taken equally into consideration by the electric energy industry as well as the economy. Therefore, its calculation should be given major attention and include all the factors that could influence its value.

Calculating the potential generating capacity of a hydro plant can be carried out to define the highest possible variable (peak) energy in the shortest period of time and with the largest power production. It enables generation to be adjusted to meet consumer needs at any moment. Generation calculated in such a way can serve for further energy-economic analyses. It includes all the features and specifics of plant location, topography, hydrology and other characteristics of water flows and hydro power facilities.

To perform an energy-economic analysis for the revitalisation of the electrical and mechanical equipment of Peruca, the potential generation of the plant was calculated, firstly with the old turbine wheel and then with the new (reconstructed) one. The generation difference is analysed within the electricity system of Croatia in order to determine the scope of the revitalisation or the marginal reconstruction value. The analysis of a (new) facility or part of the existing one within the electricity system can lead to the calculation of positive or negative effects achieved by the construction of new elements or, as in this case, by the revitalisation of existing ones. These energy effects can easily be converted into economic effects. The programme package which is used to calculate the potential hydro power plant generation needs the following data:

• Natural water flows.

• Downfall curve (pool curve).

• Specific power coefficients.

• Turbine absorption coefficients.

• Generator limitation aimed at pool conditions.

The generating capacity of Peruca is dependent on the water flow, net downfall (56m) and the turbine wheel characteristics (old or new). It was deduced that the installation of a new turbine wheel would produce an extra 20MW of power.

To review and analyse a certain power facility (existing or new) within the system, it is necessary to carry out electricity balances because they determine the energy-economic relationship between the consumers (demand) and the available sources (hydro power and thermal plants). Taking into consideration all the characteristics of individual facilities and the characteristics of power consumption, electricity balances show that the construction of power plants is necessary to meet consumer demand, while taking into account the fuel costs of thermal plants and damage after reductions.

Electricity balances

The results of electricity balances for the Croatian system in 2005 and 2010 are shown in the table on p37. The usable power of a hydro power plant is often less than its installed power due to the stochastic character of the water flow, but in some cases it can be equal or even higher. Therefore the construction of a hydro power plant or its revitalisation (power enlargement) and inclusion into the electricity system decreases the need for thermal plants with the same level of safe consumer supply. It should be mentioned that the availability of power from thermal plants is taken into consideration, ie their unavailability due to failure, operation interruption because of attendance, maintenance and annual repair.

Evaluating the energy contribution of a plant can be carried out by analysing the anticipated consumption and taking into consideration all system characteristics, such as consumption features, characteristics of facilities, availability of energy sources etc. The economic evaluation of a plant is conducted by the actualisation of all costs that occur through the period of construction and exploitation, and the comparison with alternative solutions which could in energy terms completely replace the observed plant.

The ratio of the cost function of an equivalent plant and the observed plant gives the relative energy-economic value of a plant ‘e’, that is:

e = EE/PE

Value ‘e’ allows an estimate to be made of how favourable the construction of an observed plant is for the electric energy system in relation to an equivalent plant. A value exceeding 1 gives preference to the observed plant, and a lower value to the equivalent plant. Relative energy-economic values can also be calculated by means of average annual costs. The relationship between the energy-economic values of Peruca are expressed through cost savings within the electricity system if Peruca replaces an alternative solution.

In order to calculate the relative energy-economic value of a certain facility it is necessary to be aware of the investments into alternative solutions (supplementary plant), as well as savings in fuel costs and damage because of reductions and constant annual costs of the observed facility. Therefore, the marginal value of a certain facility or part of a facility is a financial amount, which is more justifiable as an investment than an alternative solution.

On the basis of electricity balances, it is possible to determine the relative energy-economic value, ie the marginal value up to which it is justifiable to invest into reconstructing the turbine wheels of Peruca. This was calculated based on theoretical assumptions. The energy-economic analysis of the reconstruction of Peruca concluded that the installation of new turbine wheels into Peruca would result in 20MW of new power and 18GWh of new generation.

According to the results of electric energy balances and energy-economic analysis, the reconstruction of Peruca would bring about considerable savings (power from thermal plants, fuel costs). If these savings are turned into the investment’s marginal value (the amount justifying the procedure), we arrive at the amounts of US$5.4-7.3M. This range of marginal value depends on the actualisation rate. Finally, it can generally be said that Peruca has to be reconstructed if the reconstruction does not exceed the amounts calculated in the course of this analysis.

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