Cost Drivers, Marginal Cost Conversion, and Additional Modeling

Combined Cycle Power Plant Operations and
Maintenance Cost Modeling

Christopher P. Curry, Dmitry M. Gurinsky
Energy Systems Engineering Institute, Lehigh University, Bethlehem, PA 18015, USA
Abstract
Combined cycle plants contribute load following flexibility to the electric system through
changes in operating mode. Variable O&M cost is not always directly proportional to unit
output but may also be impacted by operating mode. The purpose of this project is to
develop a model to predict variable operations and maintenance (O&M) costs for a
combined cycle power plant based on operating mode. The creation of the model
involved analyzing the plants costs as extracted from the plants SAP Maintenance
Management module for the 2007-2008 time period and associating these costs by
operating mode and maintenance process. Development of the model relied on the
identification and subsequent classification of cost drivers. The cost drivers were defined
as cyclic and severe operations (modeled as dollars per megawatt-hour after first being
per equivalent operating hour), normal O&M, preventative maintenance, and
additions and improvements (also per megawatt-hour). Costs outside of the control of
plant personnel were not incorporated into this model. These included fuel, regulatory
compliance labor, and other fixed costs.
It has been determined that the variable operating and maintenance cost is $3.36/MWh.
Its sensitivities include capacity factor, water-to-fuel ratio, and plant start-up.
Figure 1 below shows the breakdown of cost in $/MWh for the various types of generation assets in
the United States. It illustrates how small differences in costs or bid prices can shift the dispatch
order for similar, competing plants.
Cost Drivers, Marginal Cost Conversion, and Additional

Modeling
In determining the marginal costs of our cost categories, the various cost buckets are
divided by the unit of measurement which drives the total figure. Depending on the type of
classified cost bucket, this is done according to the number of megawatt-hours of electrical
power generated that year, or more interestingly, equivalent operating hours. EOHs, or
equivalent operating hours, quantify the stresses that the system experiences as a result of
generating energy and will increase according to variables including start/stops, water-to-fuel
ratios, and peak operating hours. The industry-based equation used to determine equivalent
operating hours was determined to be :
EOH = a1*n1 + f*w* (b1*t1 + b2*t2) .

In this equation, a1 is the starting factor and is typically 10 EOH per 1 normal operating
hour. This factor is multiplied by the number of starts, n1. f is the fuel factor and this
number can vary depending on the quality of the fuel used. In this plant, f varied from 1,
being the highest quality, to 4, being the lowest). In this equation, w is a weighting factor
for injection of water/steam into a gas turbine. B1, b2, t1, and t2 represent base and
peak load factors and the related hours under which the turbines are operating under these
specified conditions.
Once EOHs were calculated for the 2003-2008 period under which our data is
applicable, a relationship was determined that allowed for the conversion to megawatt-hours.
The ultimate goal is to determine the costs according to this measure since it is the industry
norm and allows for a better comparison among other plants. Below, figures and tables
illustrate the progression of this portion of the project.
Variable Costs (2009)
The first step in the modeling process was compiling all of the work orders over a two year
time span. This list included labor, fixed, and variable costs. Since internal labor was
considered fixed, all internal labor costs were removed from the work order totals. Work
orders not directly related to power generation, but addressing plant infrastructure and
considered to be fixed (not a function of MWHRS), were removed. Work orders
representing fixed costs associated with regulatory-driven tasks were removed (but are
included below for information only). With the refined list, it was determined that all of
the remaining work orders fall under preventative maintenance, additions &
improvements, maintenance, and equivalent operating hour maintenance. The breakdown
of variable work orders for the years 2007 and 2008 can be seen in the table below, where
M is for routine maintenance and R is regulatory.
Table I: Breakdown of O&M Costs Classified by Cost Categories

2007
2008
$243,063.60
$175,413.05
$321,374.05
$236,768.93
$460,119.47
$737,681.25
PM
$67,266.36
$49,914.92
A&I ($ / MWh)
0.31
PM ($ / MWh)
0.09
EOH ($ / EOH)
53.82
Overhaul (CT) ($ / EOH)
125.06
Overhaul (ST) ($ / EOH)
74.41
Consumables ($ / EOH)
68.47
R
$114,418.62
$ 53,668.54
Sum
$1,206,242.10
$1,253,446.69
y = 198.32x - 298542
R = 0.9847
900000
800000
700000
600000
Modeling
0.95
Figure 2: Linear Regression relating Megawatt-hours to Equivalent Operating

Hours
1000000
MW*h
Create an itemized & comprehensive list of plant costs using SAP Management
Maintenance Module
Create new set of cost categories in which items would be separated
Analyze costs in the categories and apply to drivers
Determine driver for variable costs by analyzing previously recorded costs
Develop trends for capacity factor, MWh, and water-to-fuel ratio
Determine relationship between MWh and EOH drivers and develop model using
this relationship
Create multiple input model (i.e. fuel, power output, etc.)
Utilize cost curves and other data in order to provide bid-in guidance according to
varying conditions on daily and more long-term basis
EOH
Table II: Cost Divided According to Cost Driver and Corrected for 2009
Objectives
A&I
Maint ($ / MWh)
500000
400000
300000
200000
100000
0
3000
3500
4000
4500
5000
5500
6000
EOH
Table III: Final Marginal Costs per Megawatt-hours

Variable Costs
2008
2007
Average
Maint ($ / MWh)
$ 1.24
$ 0.65
0.95
A&I ($ / MWh)
$ 0.28
$ 0.35
0.31
PM ($ / MWh)
$ 0.08
$ 0.10
0.09
EOH ($ / MWh)
$ 0.40
$ 0.44
0.42
Overhaul (CT) ($ / MWh)
$ 0.66
$ 0.66
0.66
Overhaul (ST) ($ / MWh)
$ 0.40
$ 0.40
0.40
Consumables ($ / MWh)
$ 0.49
$ 0.58
0.54
Total
$ 3.55
$ 3.18
3.36
6500

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Combined Cycle Power Plant Operations and

Maintenance Cost Modeling

Cost Drivers, Marginal Cost Conversion, and Additional

EOH = a1n1 + fw* (b1t1 + b2t2) .

Table I: Breakdown of O&M Costs Classified by Cost Categories

Overhaul (CT) ($ / EOH)

Overhaul (ST) ($ / EOH)

Figure 2: Linear Regression relating Megawatt-hours to Equivalent Operating

Table III: Final Marginal Costs per Megawatt-hours

Overhaul (CT) ($ / MWh)

Overhaul (ST) ($ / MWh)

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