Optimum Investment Strategy in the Power Industry: Mathematical Models

76 Pages·2016·1.571 MB·English

by  Ryszard Bartnik, Berenika Bartnik, Anna Hnydiuk-Stefan (auth.)

SPRINGER BRIEFS IN
APPLIED SCIENCES AND TECHNOLOGY
Ryszard Bartnik
Berenika Bartnik
Anna Hnydiuk-Stefan
Optimum
Investment
Strategy in the
Power Industry
Mathematical
Models
123
SpringerBriefs in Applied Sciences
and Technology
More information about this series at http://www.springer.com/series/8884
Ryszard Bartnik Berenika Bartnik
(cid:129)
Anna Hnydiuk-Stefan
Optimum Investment
Strategy in the Power
Industry
Mathematical Models
123
Ryszard Bartnik Anna Hnydiuk-Stefan
Faculty of ProductionEngineering Faculty of ProductionEngineering and
andLogistics Logistics
OpoleUniversity of Technology OpoleUniversity of Technology
Opole Opole
Poland Poland
and and
Department ofPower Engineering Department ofPower Engineering
Management Management
Institute of Processes andProducts Institute of Processes andProducts
Innovation Innovation
Opole Opole
Poland Poland
Berenika Bartnik
Research Department
TrigonDom Maklerski S.A.
Warsaw
Poland
ISSN 2191-530X ISSN 2191-5318 (electronic)
SpringerBriefs inApplied SciencesandTechnology
ISBN978-3-319-31871-4 ISBN978-3-319-31872-1 (eBook)
DOI 10.1007/978-3-319-31872-1
LibraryofCongressControlNumber:2016936275
©TheAuthor(s)2016
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Contents
1 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1 Traditional and Discounting Techniques. . . . . . . . . . . . . . . . . . . 2
Reference. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
2 A Formulate of Problem of Seeking an Optimum
Investment Strategy in Power Engineering . . . . . . . . . . . . . . . . . . . 9
2.1 Methodology of Seeking Optimum Investment Strategies
in Business. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
2.2 Target Functional in Continuous Time in Search
for an Optimum Investment Strategy . . . . . . . . . . . . . . . . . . . . . 16
2.2.1 Mathematical Model with Continuous Time
of Searching for an Optimum Investment Strategy
in Electricity Sources. . . . . . . . . . . . . . . . . . . . . . . . . . . 22
2.2.2 Mathematical Model with Continuous Time
of Searching for an Optimum Investment Strategy
in Sources of Combined Heat and Electricity
Production . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
2.3 Results of Sample Calculations . . . . . . . . . . . . . . . . . . . . . . . . . 33
2.4 Conclusions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
3 Value of the Heat and Electricity Market and Market
Worth of Power Stations and Heat and Power Plants
Supplying the Market . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
3.1 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
3.2 Methodology of Analysis and Assessment of the Value
of the Heat and Electricity Market and Market Worth
of Power Stations and Heat and Power Plants. . . . . . . . . . . . . . . 44
3.2.1 Continuous Mathematical Models of Analysis
and Valuation of the Value of the Heat and Electricity
Market as Well as Market Worth of Power Stations
and Heat and Power Plants Supplying the Market . . . . . . . 48
v
vi Contents
3.3 Conclusions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
Reference. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
Index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
Notation
A Depreciation rate
a , a , b Control variables for prices of electricity, fuel, and
el coal CO2
CO emission allowances
2
a , a , a , a , a Control variables for specific tariffs for emission of
CO2 CO SO2 NOX dust
pollutantsintotheenvironmentCO ,CO,SO ,NO ,
2 2 x
and dust
ARR Accounting Rate of Return
b Duration of the investment
CF Cash Flow
D Annual operation net profit of the power station or
heat and power plant
DPBP Discounted Pay-Back Period
e , e , e Specific cost of heat, electricity and coal
c el coal
E Net annual electricity output from a heat and power
el,A
plant or a power station
E Annual use of the chemical energy of the fuel heat
ch,A
and power plant or a power station
Egas Chemical energy of gas combustion in the gas
ch
turbine
Ecoal Chemical energy of coal combustion in the boiler
ch
EGT Gross electrical output of the gas turbogenerator
el
EST Gross electrical output of the steam turbogenerator
el
F Time variable interest (financial cost) relative to the
value of investment
i Specific investment (per unit of power)
IPP Independent Power Producer
IRR Internal Rate of Return
J investment expenditure
k Specificcostofheatproductioninaheatandpower
c
plant
vii
viii Notation
kc;av Average specific cost of heat production
k Specificcostofelectricityproductioninapowerunit
el
k Specificcostofelectricityproductioninapowerunit
el,oxy
realizing oxy-fuel process
K Cost associated with thetransport ofcarbon dioxide
CCS
to the destination of its storage
kel;CCS, kCO2;CCS Specific cost of carbon dioxide transport into the
place of its pumping and storage expressed, respec-
tively, per specific unit of electricity production and
unit of carbon dioxide mass
K Annualexploitationcostofheatandpowerplantand
e
power station
K Annual operating costs of a power plant and heat
A
and power station
K Annual heat production cost in a heat and power
Ac
plant
K Cost offuel
coal
K Cost of supplementing water in system circulation
sw
K Cost of remuneration including overheads
sal
K Cost of maintenance and overhaul
serv
K Cost of non-energy resources and supplementary
m
materials
K Cost associated with the use of the environment
env
(includingchargesforemissionoffluegasesintothe
atmosphere, waste disposal, waste storage, etc.)
K Capital cost
cap
Kt Taxes, local charges, and insurance
K Cost of purchasing CO emission allowances
CO2 2
N Calculated exploitation period of the installation
N Gross electrical capacity of a gas or steam
el
turbogenerator
NPV Net Present Value
p Charges associated with emission of harmful com-
bustion products into the atmosphere
p Tax rate on profit before tax
P Income tax on gross profit
Q Annual net heat output of a combined heat and
A
power unit
Q Annual net production of heat
A
Q Heatfromsteamcondensinginthecondenserofthe
con
steam turbine
q Ratio of chemical energy of gas in relation to the
par
chemical energy of coal in the parallel system
Notation ix
q Ratioofchemical energyofgasinproportiontothe
ser
chemical energy of coal in the series system
R Loan installment
r Discount rate
ROE Return on Equity
ROI Return on Investment
S Annual revenues from the operation of heat and
A
power station or from power plant
SPBP Simple Pay-Back Period
t Time
T Exploitation period of the installation calculated in
years
u Ratio of chemical energy offuel to its total use, for
which it is not necessary to purchase CO emission
2
allowances
v Relative value of heat and electricity market
m
x Coefficientaccountingforthecostofsupplementing
sw,m,was
water, auxiliary materials, waste disposal, slag
storage, and waste
x Coefficient accounting for the cost of remuneration,
sal,t,ins
taxes, insurance
x Proportionality coefficient
CCS
z Ratio offreezing an investment
Z Annualoperationgrossprofitofthepowerstationor
heat and power plant
δ Rate offixed costs relative to investment (cost of
serv
maintenance and overhaul)
ε Internal load of power station or heat and power
el
plant
η Efficiency
ρ Emission of harmful combustion products into the
atmosphere
ρ Rate of depreciation including interest
η Gross boiler efficiency
B
η Energy efficiency of heat and electricity production
c
η Gross efficiency of power plant
el
η Grossefficiencyoftheheatrecoverysteamgenerator
HRSG
η Energyefficiencyofsteamheaderusedtofeedsteam
SH
into the turbine
η Gross energy efficiency of the gas turbine
GT
g Energy efficiency of steam turbine
ST
g Electromechanical efficiency of the steam
me
turbogenerator
r Annual cogeneration index
A