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Load Requirements vs Resources

This report, commissioned by ISO-NE and authored by Ken Bekman, analyzes the levelized cost for simple cycle gas turbines based on data from 1999 to 2001. It reflects an assumed capital cost of $413/KW, resulting in a levelized margin requirement of $74/KW-yr (excluding fuel). Analysis of the top 500 hours highlights remarkably consistent results: $528/MWh in 1999, $538/MWh in 2000, and $532/MWh in 2001. The findings suggest that while the cost of new peakers is relatively low, high operational revenue requirements and market constraints pose challenges.

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Load Requirements vs Resources

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  1. Load Requirements vs Resources Energy Infrastructure Conference January 23-25, 2002 Ken Bekman

  2. What is the Levelized Cost for a Simple Cycle Gas Turbine • E-Acumen commissioned by ISO-NE • Report issued on December 10 • Assumed Capital Cost of $413/Kw • Considered low based on CEE experience • Results in levelized margin requirement of $74/Kw-yr (not including fuel)

  3. Analysis of Top 500 Hours 1999 thru 2001 • Assumptions • All energy requirements filled by Peakers • Peakers have no other source of revenue • All peaking energy suppliers share in revenue equally

  4. Analysis of Top 500 Hours 1999 thru 2001 • Calculation Method • Integrated Hourly Energy Requirement for top 500 Hours (Delivered Energy) • Calculated Delta between Peak Load and Load at 500th Hour in MWs. (Capacity Requirement) • Applied the following Equation • $/MWHr = Capacity Requirement*$74,000 Delivered Energy

  5. Analysis of Top 500 Hours all 1999 thru 2001 • Results - Remarkably Consistent • 1999 $528/MWHr + Fuel • 2000 $538/MWHr + Fuel • 2001 $532/MWHr + Fuel

  6. Analysis of Incremental Energy Requirement for 2001 • Methodology Similar to Top 500 Hrs • Only Looked at Incremental Energy Requirement above 1999 Peak • $2350/MWHr + Fuel required to support Incremental Peaker

  7. What Does It All Mean • Cost of New Peaker is relatively low • $700/KW for Base load combined cycle • $500/KW for Peaking Unit • Capacity Factor Very Poor • Very high revenue requirement per hour of operation • Capped energy prices and lack of viable I’Cap market may make revenue unattainable

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