LEAP

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Topic: Cost of Electricity ProductionSubscribe | Previous | Next

María Mercedes Vanegas Cantarero 9/24/2015

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Hi!

I just realised that the option of Cost of Production that was available in the previous versions of LEAP (versions 2014....) is no longer available in the newest versions. I was wondering whether this is an involuntary mistake or if it was intentionally replaced by another option? Perhaps you could advise us what is the best way to calculate the LCOE per feedstock fuel or in general. I am personally very confused about what kind of costs are included in the category of Social Costs that LEAP offers.

Thanking you in advance for your help!

Best Regards,

Mar��a

Taylor Binnington 9/24/2015

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Hi Maria - can you clarify what you mean by "Cost of Production"? There are a number of different types of resource cost:

http://www.energycommunity.org/WebHelpPro/Resources/Resource_Costs.htm

...but none of them are specifically called "cost of production".

Taylor

María Mercedes Vanegas Cantarero 10/19/2015

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Hi Taylor:

Sorry for the late response.

In the previous versions of LEAP (2014) there was an option within the costs called "Cost of Production" which, to my understanding, was the generation costs or in the case of electricity the levelized cost. In the newest versions (2015) such an option is no longer there. We only have Social Costs and Investment Costs (I don't truly understand the concept of Social Costs in LEAP, maybe you can help me with that as well).

Ultimately, what I am looking for is a way to calculate the levelized costs of electricity per feedstock fuel. The LCOE includes a combination of capital costs, operations and maintenance (O&M), performance, and fuel costs. This will help me to compare the production of electricity from different sources from an economic perspective. Could you advise me what would be the most appropriate way of calculating such information with the use of LEAP?

Unfortunately I can't use the indigenous production costs because my system considers only imported crude oil which is refined locally.

Thank you in advance.

Taylor Binnington 10/19/2015

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Hi Maria,

First, apologies for my first response, which I think was misleading. You are correct that LEAP can display a *result* variable called "Cost of Production" - this was present in LEAP 2014 and continues to be in LEAP 2015. if you don't see it in Results view under Costs: Cost of Production, ensure that you have enabled its calculation by selecting General: Result Variables to Save, from the main menu.

Note that you can view a complete cost balance for your module as well, by selecting Costs: Module Cost Balance.

Hope this helps, and sorry for my earlier reply,
Taylor

María Mercedes Vanegas Cantarero 10/20/2015

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760 Views

Thank you Taylor! I've found it. You were very helpful.

Best Regards,

Mar��a M. Vanegas

Dorji Yangka 12/30/2016

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Hi Taylor,

doesn't LEAP calculate the LCOE get reflected in the demand sector wherever electricity is being consumed?

or do the user have to provide the electricity price for each of the power plant modelled in LEAP?

My understanding was that when the user inputs the capital cost, O&M costs, availability and lifetime, LEAP calculates the cost of electricity production, which then gets reflected in the social cost, when we view the result.

Look forward to you valuable response.

thank you

Taylor Binnington 1/5/2017

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Hi Dorji,

I'm not sure I understand your comment about the LCOE being "reflected in the demand sector". You should either implicitly specify costs of fuels within the Transformation module which produces those fuels (by conducting a bottom-up accounting of these costs using capital costs, variable costs, etc.), or assign an Indigenous Cost or Import Cost to the fuel in the Resources branches.

LEAP will calculate the total production cost, which you can view by selecting the result Costs: Cost of Production. Select "All Module Cost Categories" in the menu on the right of the chart to show what types of costs are included in these values. If you wish, you may use this to calculate the LCOE by dividing the Cost of Production by the electricity generated, using the result Transformation: Outputs by Output Fuel (this is probably something best done outside of LEAP, in Excel).

Be careful - the Cost of Production may not be exactly represented in the Social Cost results, since the Cost of Production relies on the Fuel Cost variable which is found for each process' feedstock fuel (see this help page: http://www.energycommunity.org/WebHelpPro/Transformation/Fuel_Costs.htm). The Fuel Cost may be freely specified without affecting the Social Cost. Instead, the Social Cost for fuels comes from the Indigenous Cost or Import Cost variables under the Resources branches.

Note that for both Social Cost and Cost of Production results, LEAP ignores capital cost contributions for capacity which was pre-existing before the model's base year.

Hope this helps,

Taylor

Dorji Yangka 1/6/2017

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thank you Taylor..... yeah over those few days I also went through the result area and thought that I can use the cost of production and electricity generated to calculate the LCOE. but then the cost of production just includes only the O&M cost, so I don't think this will calculate LCOE.

anyways thanks for your suggestion and time. I have some more question..

1) I have put future hydropower plants to start from 2030 and I have put the costs in the current account. then in the result: cost of production includes the costs of these future plants in all years earlier to the start year. so to avoid cost getting reflected in the earlier years before the start year of the hydropower plants, what expression do I use to put in the capital and O&M costs for these future hydropower plants?

2) how do I put an upper limit/lower limit on the import/export of electricity throughout my planning period? I did put it in the import target, but the result shows increasing trend for electricity import.

thank you for your time and look forward to your continued support.

Dorji Yangka

Taylor Binnington 1/9/2017

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Hi Dorji,

Just to clarify - the Cost of Production result does include capital costs (not just O&M), but only for processes which are added in years after the model Base Year. This means that capital costs for capacity which is "pre-existing" are not included (i.e. these costs are considered sunk). To your other questions:

Can you explain how you have added these processes in the year 2030? Which variable did you use? I ask because you should not be seeing any costs for these processes prior to 2030 if you have entred their capacity data correctly, despite having added Capital Costs in Current Accounts.
Lower limits on the quantity of imported electricity can be set using the Import Target variable, as you have already found. Upper limits are more complicated. LEAP dispatches a module's available capacity to meet the module's requirements in each time slice. If there is insufficient available capacity, then LEAP uses the "Shortfall Rule", which you may set for each of the module's output fuels by selecting the Output Properties variable at that branch in the tree. When selecting "Import fuel to meet shortfall", LEAP will import *all* remaining requirements. Otherwise those requirements remain unmet at that module (though they may be met by other modules located below, or, imported directly into the Resources branches after all of the Transformation calculations have been resolved).
There is no single variable you can use to impose a maximum import quantity. However, you might be able to find another solution which works for you. For example, you could create a new transformation module *below* your existing electricity generation module, which contains a process entitled "Imports". Assign it Exogenous Capacity and Maximum Availability which are derived from your maximum allowable import quantity. You would then select "Requirements remain unmet" as the shortfall rule for both of your transformation modules. The effect is that the upper module (containing your power plants) will be used to meet electricity requirements first, and the "Imports" module will be used to meet the remaining requirements. You will also need to set the properties of the Electricity fuel (found by right-clicking the branch Resources\Secodary\Electricity) to "Any remaining requirements remain unmet". Note that once your maximum import limit is reach, all other electricity requirements will be labeled "unmet" by LEAP.

I've attached a simple example of a Transformation branch structure to show you what I mean. Hope this helps,

Taylor

Attachments:

Dorji.leap [6]

Dorji Yangka 1/9/2017

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Hi Taylor,

thank you for your valuable response. thanks for your alternative method to resolve my issue - however I find it a bit confusing.

Please find below my response and further doubts:

1) I have entered the start year for future power plants under the 'first simulation year' tab. eg. 2019, 2025 and 2030.

2) the cost of production in the result shows the cost of these future plants from 2015, whereas the output by output fuel shows output from these plants only from the start year as mentioned at 1) above. Further the result from the 'transformation - capacity' shows the capacity of these future plants from 2015, earlier than the actual start date.

3) I have checked the cost of production (I did calculation from the result); it includes O&M costs only and not the capital costs.

4) does import target and export target imply lower limit or upper limit? In Bhutan, around 75% of the hydroelectricity are exported, and with lots of hydropower coming online down the planning period, I want to limit the import to the baseyear import value and maximise export. can I model this feature in LEAP?

Look forward to you continued support!

thanks a lot for your time and clarifying my doubts and providing solutions!

Dorji Yangka

Taylor Binnington 1/11/2017

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Hi Dorji,

1) + 2) The First Simulation Year controls only the dispatch of power plants - it does not affect their capacity. Have a look here for an explanation of this variable: http://www.energycommunity.org/WebHelpPro/Transformation/First_Simulation_Year.htm. If a plant is not constructed until (for example) 2019, then you should use a time-series expression in the plant's Exogenous Capacity variable (example: Step(2018, 0, 2019, 100)).

3) The Cost of Production will exclude Capital Costs for capacity which exists in the Base Year of your model, since these capital costs are assumed to be sunk. Based on what you have described, it's likely that your power plants have non-zero capacity in the Base Year of your model (which means their Capital Costs are not shown in the Cost of Production), but that they are not dispatched until the First Simulation Year that you have set.

4) No, the Import Target and Export Target variables should not be thought of as "limits". They are specific targets, which are either added (as is the case for the Export Target) or subtracted (as is the case for the Import Target) from the energy requirements which the module attempts to meet. For a little bit more context, see these help pages:

http://www.energycommunity.org/WebHelpPro/Transformation/Imports.htm

http://www.energycommunity.org/WebHelpPro/Transformation/Exports.htm

Including an upper or lower *limit* on the quantity of imports or exports, but permitting a smaller quantity of imports or exports which do not exceed that limit, is slightly more complicated. This is what I was trying to demonstrate in my previous post and LEAP example. LEAP simply imports all of the remaining requirements which a module's processes cannot satisfy, or it imports none of those remaining requirements (although other transformation modules below may then have the opportunity to meet these remaining requirements).

Hope this helps,

Taylor

Dorji Yangka 1/12/2017

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Hi taylor,

thank you so much for your valuable support. my doubt on cost of production specifying capacity for future power plants are now resolved.

your suggestion for creating a separate import branch is also understood..... however while I was adding an imported electricity in the fuel list..... somehow the 'output properties' tab got locked........... and thereafter I didn't dare to change.....

For increasing my electricity export...............I have changed the dispatch rule from merit order to full capacity.............it works....but social cost increases too.

anyways taylor thank you for your support. your time is very much appreciated!

Dorji Yangka