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Costing

The total cost of electrical energy generation includes fixed costs, semi-fixed costs, and running costs. Fixed costs remain constant and include management costs, employee salaries, and land costs. Semi-fixed costs depend on maximum demand and include interest on capital costs, depreciation costs, and some staff salaries. Running costs depend on the energy generated and primarily include fuel costs, maintenance and repair costs, operating staff salaries, and other minor costs varying by plant type.

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241 views5 pages

Costing

The total cost of electrical energy generation includes fixed costs, semi-fixed costs, and running costs. Fixed costs remain constant and include management costs, employee salaries, and land costs. Semi-fixed costs depend on maximum demand and include interest on capital costs, depreciation costs, and some staff salaries. Running costs depend on the energy generated and primarily include fuel costs, maintenance and repair costs, operating staff salaries, and other minor costs varying by plant type.

Uploaded by

abhi24052008
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd
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Cost Of Electrical Energy

The total cost of power (electrical energy) generation comprises


of the following charges:

(i) Fixed cost,


(ii) Semi-fixed cost,
(iii)Running or operating cost.
Fixed cost
• This includes those costs which remain constant.
• It is independent of the maximum demand, the plant
capacity and the energy generated.

• Fixed cost includes:


Annual charges of the central organization management
Salary of the employees (usually higher officials)
Interest on the land costs
All of these costs are fixed, and hence, fixed cost remains
constant under all conditions.
Semi-Fixed Cost
• Such charges are independent of the energy (kWh)
generated but depend upon the maximum demand.
• Higher the max demand, the greater the semi-fixed
costs.
• Semi-fixed cost includes:
Interest on the capital costs (investment and insurance)
on the land the buildings (construction costs) ,the costs
of the equipment needed for generation, transmission
and distribution of the electricity. The capital investment
of the plant is huge and usually loaned. The interest of
this loaned amount is considered in the cost of
production. Such interest may range up to 8% depending
upon the market conditions.
Semi-Fixed Cost
Depreciation costs : It is related to the reduction in cost
or value due to wear and tear of the equipment that are
used constantly.
Semi-fixed charges will also include the salaries of the
management and other (clerical) staff, since these
depend upon the size (and cost) of installation which
again depends on the max demand.
Running Or Operating Cost
• Running charges will depend mainly upon the energy in units or
kWh generated by the plant.
• Running cost includes:
Cost of fuel: This cost, of course, varies with the type of plant. It
is lower in thermal (coal based) plants than nuclear plants.
However, for hydroelectric plants this cost is nil.
Cost of maintenance and repairs: As a plant ages, wear and tear
occur, and maintenance is needed. The wear and tear of the
plant requires use of lubricating oil which has its own cost.
Salaries of the operating staff: The higher the size (capacity), the
more the number of operating personnel required.
Other Costs: These costs are not applicable for all plants and
consist of charges for feed water in Thermal Power Station, the
water treatment costs in Hydro Power Station and Thermal
Power Station) and enrichment of fuel costs in Nuclear Power
Station.

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