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The economics and financing of decommissioning
Published in Martin J. Pasqualetti, Nuclear Decommissioning and Society, 2019
Stephen Fothergill, Gordon MacKerron
In reaching such decisions the principles of economic assessment are little different from those made in considering investment in a new power station. The capital costs need to be determined alongside the potential savings, so that a rate of return on the capital investment can be calculated. If the rate of return is above a minimum threshold level, the capital expenditure on repair will be undertaken; if it is below, the plant will be scrapped. All the uncertainties of operating performance and costs are brought into the calculation just as with a new power station. The difference with an old nuclear station is that the utility may perceive the risks of continued operation (including the political risk) to be high relative to decisions on less controversial technology. The only factors which might lead to a deviation from following the results of this kind of evaluation are, first, fear of an imminent shortfall in generating capacity, in which case the reactor would probably be patched up at a higher price (unless expanded load management were even cheaper) and, second, the adverse and mainly political implications which a closure decision might have for a family of similar reactors.
Relevance of Maintenance Function in Asset Management
Published in Diego Galar, Peter Sandborn, Uday Kumar, Maintenance Costs and Life Cycle Cost Analysis, 2017
Diego Galar, Peter Sandborn, Uday Kumar
Capital costs are the costs of acquiring an asset. These include not only the purchase price but all associated fees and charges, and the delivery and installation costs incurred in putting the asset into operational use. They also include planning costs such as those for feasibility studies and tendering. One significant capital cost not routinely recognized by budget-dependent companies is the “finance” cost of the funds “locked up” in the value of the asset. An exception to this is the situation where companies borrow against future appropriations as part of the running cost arrangements and are charged interest. However, this reflects finance costs at the margins and generally does not extend over the life of the asset. The purchasing organization incurs a “finance” cost for capital funds either directly, as the interest expense on borrowing and the expected return on equity (stock), or indirectly, as interest foregone on funds that would otherwise have been available to the organization. When evaluating non-asset solutions and alternative acquisition strategies, it is important for the company to recognize this “cost.”
Natural Gas
Published in Roy L. Nersesian, Energy Economics, 2016
The normal approach for examining the economics of each of these options utilizes the levelized cost methodology. The basic elements of a levelized cost model are the capital, fixed, and variable costs of operating an electricity generating plant. There are various approaches to obtaining the levelized cost.51 One levelized cost model calculates total cost of operating a plant for 20 years and total amount of generated electricity to obtain cost in dollars per kilowatt or megawatt-hour. Another calculates the annual cost over the life of the project, which is then discounted to obtain the levelized cost. Variable costs are predominantly fuel costs, but could include other costs that are a function of the utilization rate of a generating plant. Other than fuel costs, most operational costs are fixed. Utility workers are not hired and fired as utilization rates rise and fall. Property taxes, insurance, salaried personnel, and nearly every other cost remain the same (fixed) regardless of the power output of a generating plant. Capital costs take into account the equity investment and its associated return on equity, the amount of the asset financed by debt and its associated interest rate and amortization schedule, and taxes on profits.
Reconfigurable manufacturing systems from an optimisation perspective: a focused review of literature
Published in International Journal of Production Research, 2021
Abdelkrim R. Yelles-Chaouche, Evgeny Gurevsky, Nadjib Brahimi, Alexandre Dolgui
Capital cost is mainly associated with the fixed and one-time expenses related to the purchase of machines, modules, and tools. Authors such as Spicer, Yip-Hoi, and Koren (2005) and Youssef and ElMaraghy (2006, 2008b), considered the capital cost as an objective function that needs to be minimised in the design phase of an RMS. Operating costs include all costs incurred during the operational phase. These costs strongly depend on the configuration of an RMS. Operating costs are considered as part of the production cost in Abbasi and Houshmand (2009, 2010), along with an inventory-holding cost, which is also studied in (Choi and Xirouchakis 2014; Eguia et al. 2016). Xie, Li, and Xue (2012) considered operating cost as the sum of production and reconfiguration costs. The former is calculated by considering the line configuration, production volume related, and workstation idleness costs. The setup cost is considered in Aljuneidi and Bulgak (2016). Authors such as Ye and Liang (2006), Musharavati and Hamouda (2012a), Eguia et al. (2016), and Touzout and Benyoucef (2018, 2019) considered the material handling and transportation costs of products between machines, cells, or workstations. Ye and Liang (2006) considered work-in-process cost, which is related to the time a product spends within a line.
Global status of wind power generation: theory, practice, and challenges
Published in International Journal of Green Energy, 2019
Muhammad Arshad, Brendan O’Kelly
Three types of cost breakdown are associated with wind energy production, comprising: capital cost, operation and maintenance (O&M), and the levelized cost of energy (IRENA(International Renewable Energy Agency) 2012; Søren, Poul-Erik, and Shimon 2009; Mengal et al. 2014). Capital costs occur at the initial stage of the project and involve the initial expenses for planning & design, equipment, engineering system, and installation. The operating and maintenance costs include the regular repair, operation, inspection, and salaries of the regular staff/labor while additional costs may also occur due to the adverse environment impacts (Arshad and O’Kelly 2013; Mousavi, Ghanbarabadi, and Moghadam 2012). The levelized cost gives an overall depiction of the investments required over the life cycle of the wind power plant (Cambell 2008; Søren, 2009). A significant portion of the cost reductions is coming through technology improvements, which are generally evolutionary.
Improving planning by integrating spatial data into decision support systems
Published in Journal of Decision Systems, 2019
Tim Schröder, Jutta Geldermann
In this equation, the input costs are of particular interest for our purposes. These costs – and the overall profitability of the plant – both depend on the type and quantity of biomass inputs available nearby, their purchase price, and the distance they must be transported to reach the plant. The capital costs (i.e. the costs for the financing the investment of a potential plant), often depend on the production capacity. This, in turn, influences the quantity of inputs required and thus the distance from where specific types of biomass have to be hauled to the plant. The revenues may depend on the products that can be produced from the specific inputs. E. g., for the example of the lignocellulose biorefinery in the following, the products that can be produced depend on the amounts of broadleaf and coniferous wood entering the production system. The closer to reality these factors are reflected in the decision model, the better the decision will be. Thus, the editing steps described later are designed to represent the spatial availability of the biomass in the decision model as accurately and in as much detail as is reasonably possible.