Economic Of Power Generation

          The method of electricity generation plays an important role in determining the cost of generation ,for an example

         The power plant which use fuel oi are more expensive in terms of fuel cost per Kwh generated .But  for hydro power plant the fuel cost per Kwh   is null. Since  there are various other cost componentsmthat have to be taken in to consideration.

                   In general cost of generation can be divide in to two.

    1. Capital ivestment

    2. Annual expenditure

Annula expenditure are again two types

    1.Fixed cost

    2.Running cost or variable cost

         Fixed cost mainly of taxes  insurance charges depreciation and interest on investment.

eg :- Expected life time of hydro power plant = 30yrs

       Capital invest                                         = Rs 10 million

       interest rate                                            = 16%

       Therefore  depreciation                          = Rs 10/30 milllion

       Interest on investment per year               = Rs 10*16%

       Fixed cost                                              = (10/30 + 10*16%) million

Running cost made up on followings

* Fuel cost
* Maintenance cost and repairing charges
* Way of operational and supervisor staff.
* Cost of water,lubricating oil.

The following details apply for certain power plant
1. Install capacity                                                     =50 Mw
2. Capital cost per kw of installed capacity               = Rs35000
3. Annual cost of salaries and wenches                     = Rs 20 000 000
4.Annual cost of maintenance and repairs                = Rs 80 000 000
5. Annual fuel cost                                                   = Rs 200 000 000
6. Interest and depreciation                                      = 15%
             Assuming that 50% of item