SPG8024 2021-22 Assessment 1 SPG8024 – Quantifying Energy Decision Making Module Assessment Achievement of the SPG8024 module learning outcomes is assessed based on a report. Submit your work on Canvas page in the ‘Assignments’ area The deadline is 2 pm on Friday 19 August 2022. Details of the report requirements are given in this document. While carrying out this activity, consider that the task you have been given and the associated report are designed to assess your understanding of the knowledge and skills listed below. Critically review your work to check that you have demonstrated your learning for each of these. After doing this review and, if necessary, modify your report to ensure it includes each element. Elements of knowledge and skill being assessed 1. Concepts of heat, temperature, energy, and power. How they are used to express energy system properties and performance. 2. The correct way to express physical quantities (including those above) across a wide range of magnitudes in the International System of units (SI). 3. The effect of the time value of money on investments in long-term projects, as characterised by energy system technologies. 4. Project financial appraisal measures; lifetime cost, cost-benefit ratio, payback period, internal rate of return, unit production cost. 5. Fundamental concepts in power systems; supply & demand, availability, security of supply, reliability, capacity factor, capacity margin. 6. How existing generation and demand dictate the role of existing and future generation within an electricity supply system; how energy markets, generator marginal costs, and generator merit order affect these roles. 7. How power generation projects can contribute to the economic, sustainable, and reliable operation of an electricity supply system, and when and how additional incentives may be required to achieve this. 8. Exploitation of renewable energy resources with consideration of; availability, system integration, economic, social, and political factors. SPG8024 2021-22 Assessment 2 Task Specification Part A (~60% relative effort) You will be provided with information about an island electricity supply system and a range of electricity generation technologies. You will take the role of a consultant employed by the developer of a new generation project on the island. Your client wishes to develop a new project using a specific technology and with a defined budget for construction. You will 1. describe the operation of the new generation technology, including the physical principles (with use of appropriate mathematics) that explain the energy conversion process and resource availability, 2. determine the average market clearing price (MCP) of electricity supply on the island before the addition of the new generation technology using the information provided about the generation and demand characteristics, 3. determine the capacity the new generation technology, its effect on the average market clearing price and the number of hours it will operate each year, 4. complete a financial appraisal to give the NPV, IRR, PP, CBR and LCOE (spelt out below), and 5. compare the LCOE of the new generation technology with the average MCP and whether any additional support should be provided to encourage the uptake of this technology. Part B (~40% relative effort) While the specified technology is the client’s preferred option, they are open to alternative investments if these would provide a better return on their investment and/or better meet the needs of the system. You should assess the roles fulfilled by the existing generators on the island and to what extent they meet the system needs in terms of a. supplying the baseload, intermediate, and peak demand; and b. ensuring an affordable, sustainable, and reliable supply of electricity. You will 1. identify any shortcomings in the ability of the existing generation to meet the need for the energy system to be resilient and operable, 2. propose an alternative project which can help to improve this situation, and 3. discuss the current political, environmental, and societal issues associated with the generation mix and how alternative generation technology will affect these. SPG8024 2021-22 Assessment 3 Report specification Word count and non-text elements Approximate word count: 2,000 words. Only the main text is included in this count; the title page, table of contents, references and similar parts are excluded from the word count. Non-text elements consisting of diagrams, graphs and tables need to be included to provide information that cannot be conveyed effectively through words alone. Note that these elements are essential to include so that your ability to present information in these ways can be assessed. Clear and concise writing It is essential that you communicate the information in your report: Clearly – use an effective structure, use descriptive figure captions, ensure nomenclature is defined, define the symbols used in equations. Concisely – ensure that you use as few words as possible to unambiguously explain your work, use effective referencing to build on the work of others, do not repeat similar information at multiple places in your report. Document format You do not have to use a particular format for the document. Here are some recommendations that you can follow: Use Word or equivalent document preparation software. Use Styles to format headings consistently and auto-generate a table of contents. Use captions to label your figures and tables, use cross-referencing to refer to these in the text. Include references by using a reference management plugin to a programme such as endNote, Zotero or Mendeley. Use an 11pt Arial font or similar. Report sections Title page Include your name, student number, module title, date of submission, report title Introduction Briefly outline the purpose and content of the report Technology description Explain, using concepts from the physics of energy, the operational principles for the energy conversion process for the technology which you are assessing. It is expected that mathematical expressions will be used to express factors including, but not limited to: energy resource, power conversion, energy density and land use. Price of generation Determine the average market clearing price (MCP) of the original combination of generators. Consider that variable generators with a capacity factor (CP) are available for a period equal to the CF and not available the remainder of the time. Consider that dispatchable generators (with an availability) are 100% available for the purpose of calculating the MCP. This means that you will SPG8024 2021-22 Assessment 4 calculate six MCPs (two for each of Base, Intermediate and Peak demand periods) and find the time- weighted average to reach the MCP. Adding the new generator makes the calculation more complex. You have been provided with a spreadsheet to allow you to determine the operation of the generators with the new technology added. Use this to find the new MCP and runtime (hours per year) of the new generation technology. Financial appraisal Use the methods you have been shown for financial appraisal to illustrate how the costs and benefits due to the addition of a new generation technology are assessed over the project lifetime. Your calculations should include the Net Present Value (NPV), Internal Rate of Return (IRR), Payback Period (PP), Cost-Benefit Ratio (CBR), and Levelized Cost of Energy (LCOE) for the added generation technology. Consider how the existing generation, and resultant market conditions, will affect the project’s viability. Discuss whether there are reasons to provide financial support to improve the project’s viability. Assessment of System Needs Does the current generation mix meet the needs of the system Identify areas in which the existing system is deficient. You should consider: Affordability Sustainability (CO2 emissions) Security of Supply Operability Alternative technologies Based on the deficiencies identified in the previous section, provide a brief review of an alternative to the project proposed by your client, identify the key differences between them, and how these differences would address the system needs. Non-financial appraisal Discuss factors other than purely financial considerations that your client should be aware of. You should consider the environmental, social, and political impacts of the new generator. Recommendation Advise your client on what they should do next and identify any uncertainties in your appraisal that should be assessed in more detail to gain a more complete picture of the decision to be made. SPG8024 2021-22 Assessment 5 Project Data Islands You will be assigned one island on which to develop your project. For each island, information is provided about the demand and generation. Demand is described in terms of the base, intermediate and peak power required and the duration of time for which it is needed. Each renewable generator has a capacity factor, while each conventional generator has an availability. Island 1 Island 1 is in the North Sea 100 miles from a mainland grid connection. It has high winds but is currently dependent on diesel and gas for electricity. The mainland has an average price of ￡50/MWh and an average CO2 intensity of 200 kg/MWh. Table 1. Island 1 Demand Category Demand (MW) Duration Base 110 30% Intermediate 300 60% Peak 550 10% Table 2. Island 1 Existing Generation Technology Capacity (MW) Marginal Cost (￡/MWh) Capacity Factor Availability Wind 50 0 40% n/a Gas 150 40 n/a 85% Diesel 13 x 50 MW 60 n/a 80% Island 2 Island 2 is a mountainous island in the Mediterranean, 100 miles from a mainland grid connection. It has a run of river hydroelectric plant, and expensive oil and diesel power plants. The mainland has an average price of ￡40/MWh and an average CO2 intensity of 300 kg/MWh Table 3. Island 2 Demand Category Demand (MW) Duration Base 200 40% Intermediate 400 40% Peak 600 20% Table 4. Island 2 Existing Generation Technology Capacity (MW) Marginal Cost (￡/MWh) Capacity Factor Availability Oil 2 x 150 50 n/a 80% Diesel 9 x 50 60 n/a 80% Hydro 300 0 60% n/a SPG8024 2021-22 Assessment 6 Island 3 Island 3 is in the Pacific Ocean, 200 miles from the mainland grid connection. It has a large coal power plant with two units, one of which has been converted to burn biomass. It has some solar capacity. The mainland has an average price of ￡60/MWh and an average CO2 intensity of 50 kg/MWh Table 5. Island 3 Demand Table 6. Island 3 Existing Generation Technology Capacity (MW) Marginal Cost (￡/MWh) Capacity Factor Availability Coal 400 45 n/a 90% Biomass 400 55 n/a 90% Solar 250 0 15% n/a Island 4 Island 4 is in the Mediterranean, 75 miles from the mainland grid connection. It already has an interconnector with the mainland and multiple gas generation units are situated on the island. There is a moderate level of solar capacity. The mainland has an average price of ￡35/MWh and an average CO2 intensity of 400 kg/MWh Table 7. Island 3 Demand Table 8. Island 3 Existing Generation Technology Capacity (MW) Marginal Cost (￡/MWh) Capacity Factor Availability Solar 250 0 15% n/a Gas 6 x 90 40 n/a 85% Interconnection 200 35 n/a 95% Category Demand (MW) Duration Base 200 40% Intermediate 400 50% Peak 600 10% Category Demand (MW) Duration Base 200 40% Intermediate 350 50% Peak 500 10% SPG8024 2021-22 Assessment 7 Reference Data Table 9. Investment Conditions Capital Budget (￡Million) 100 Interest Rate 4% Table 10. Technology cost and performance data Technology Type Capital Cost (￡Million/MW) Fixed Costs (% of Capital Costs/yr) Marginal Cost of Generation (￡/MWh) Expected Capacity Factor Availability Design Life (years) CO2 Emissions (kg/MWh)1 Solar PV 1 1.00% 0 15% n/a 15 48 Concentrating Solar Power 2.5 1.50% 0 45% n/a 25 27 Onshore Wind 1.25 1% 0 35% n/a 15 11 Offshore Wind 2 1.80% 0 45% n/a 15 12 Combined Cycle Gas 1.25 2.30% 35 n/a 85% 25 490 Tidal Lagoon 4 0.50% 0 20% n/a 60 17 Run of River Hydroelectric 2.5 0.50% 0 60% n/a 60 24 Dammed Hydroelectric 1.25 0.10% 0 20% n/a 60 24 Wood pellet Biomass 0.8 2.50% 50 n/a 90% 40 230 HVDC Interconnector 0.8/100 miles 1.50% Mainland Average Price n/a 95% 25 Mainland Emissions 1 According to IPCC Working Group III – Mitigation of Climate Change, 2014
