Han Kyul Yoo 10/7/2013

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Hello,

I am using LEAP as a device to analyze not only the energy consumption of industries, but also their overall economic performance.

So i am using the transformation branches to calculate the costs of various industries. I realize that transformation branches are meant to be used to analyze the power industry, but i found it also useful in other sectors.

My problem is that, in the 'results view' option, I would like to view the total cost of the transformation branches - including the exogenous capital costs.

I read in another thread that the resulting costs for transformation leaves out exogenous capital costs because they are considered sunk. However, it would be much more useful to me to see the entire cost, since addition of new capacity is not always dependent solely on demand.


So I am wondering if there is any option that I can choose to include exogenous capital costs in cost calculations and whether you have plans to include this option in a future version of the LEAP model.

Thanks.

Best,
Han

Taylor Binnington 10/8/2013
 

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Hello Han Kyul,

Glad you're able to use LEAP in your analysis, we're always interested in its usage in new and different projects! This is a good question, too.

Let me clarify the way that costs are calculated for exogenous capacity. You're partly correct to say the exogenous costs are considered sunk, and are therefore not shown in the Results view - however, this applies only to exogenous capacity that is built before the first scenario year. In addition, it only applies to the capital recovery portion of the cost. Running costs (fixed and variable OM, fuel) are counted as long as the plant continues to operate, no matter when it was built.

For transformation processes that have been added exogenously during the scenario years, instead of before (for example, using a Step() function to add capacity some time after the first scenario year), capital costs are *not* ignored. They are amortized over the lifetime of the plant, specified by the 'Lifetime' variable, which is visible in Current Accounts.

There remains one detail that I should mention. In the current version of LEAP (2012.0049), exogenous capacity is not retired, even after 'Lifetime' years have elapsed, and after the capital costs have been paid off. However, the plant's running costs continue to appear after 'Lifetime' years, and it's capacity remains available. This is something that we're aware of, and which we are addressing for a future version of LEAP.

Hope this helps!

Taylor

Han Kyul Yoo 10/13/2013
 

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Thanks, Taylor. This was helpful.


Can I ask when you will release a newer version that addresses the issue you mentioned in the last paragraph?

If it takes a while, I might have to input the historical capacity as endogenous capacity, by manipulating historical production and the planning marginal reserve rate.

Do you think this would work?

Han

Taylor Binnington 10/13/2013
 

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Hi Han,

We don't have a specific release date in mind right now. Sorry!

To your second question, it's a good idea but wouldn't quite work. Historical production is useful when you want to carefully control the electricity production manually, in each year, but you still need sufficient exogenous capacity to generate it.

What you could do is to manually retire your exogenous capacity using a Step() function (even though you force it, this retirement will still appear in Transformation:Capacity Retired in Results view), and allow LEAP to make up for the lost capacity using the endogenous capacity that you've allowed it to build. The new capacity will be paid for in the way that you expect, over Lifetime years.

Good luck,

Taylor