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Economic principles in energy and power plants management

Updated on August 22, 2015

Points of intersection between economic management and the energy field are many; for example we can list: the role of energy production in the national economy and the presence of the power stations and their management. Let's take the second one. The power stations are the main sources of power since they overcome the smaller sources such as the domestic production (that actually represents 10 on 290 as a proportion). When thinking on power stations management there are some basic notions precluding the argument. Load factor, baseload plant and peaking power plant.

a) the load factor indicates the relation between the produced power and the maximum power that can be produced. It is an valid index of effectiveness.

b) the baseload plant is a station working where the demanding market has to be satisfied with a minimum level of production that rarely grows up from there.

c) the peaking power plant is a plant present when there are high level of demand. Very often in these plants we find a gas turbine fueled by gas.

With these three concepts one can understand better some internal dynamics.

Moreover every source as Coal, Nuclear and Gas have got different aspects in the economy field.

Most important voices of costs are:

• Construction;

• Fuel;

• Operation & Maintenance (O&M);

• Decommissioning;

• Others costs

Biggest and most noticiable ones are O&M costs for the coal power plants and dismissal cost for the nuclear plants. Construction cost for this last kid of plants is very high too, especially in non-experienced countries. When building up a FOAKE (first of all kind engineering – first time a power house with this technology is build up) the construction time is from 5 to 7 years. The life time of the power house is estimated in 30 – 40 years. In this financial “masterpiece” that is the business plan for a power plant these are various elements that have to be taken into account very precisely over the power created and the sustainability.

Compared to this, the subject of the allowances and green credits market is a very simple one.

European allowances for the CO2 emissions are, for example, based on a very simple system of allowance certificates that have got their price (want to pollute? got to pay!). Green and white certificates are assigned for using renewable energy (you go green, you can earn); they are credits for the green friendly owner, as very polluting companies are obliged to buy them.

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