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INSTITUTE OF INTEGRATED ELECTRICAL ENGINEERS 4
Figure 2.
Cash Flow. Concept of Net Present Value
Figure 1.
Illustration of Levelization
LECN =
$1, 573.32
kW
year
Applying the values and solving for CRF:
CRF =
0.1587(1 + 0.1587)35
(1 + 0.1587) 35 − 1 = 0.159621
The Net Present Value (NPV) is determined using the
following equation:
Where:
∑35
NP V = (1 + r) −N (1 + i) N (CY EC)
N=1
r and N is as given in CRF calculation
i is the escalation rate equivalent to 3% 9
CYEC is the Current Year Energy Cost equivalent to
$0.1444/kWh
The first term in the NPV equation equates the rate of energy
in the Nth year which is (1 + i) N (CY EC) in terms of the
present values. In other words it determines how much must
be invested today at an interest rate “r” in order to have (1 +
i) N (CY EC) in the future. Figure 2 illustrates the principle.
The sum of these present values is the Net Present Value.
Substituting variables and solving for NPV:
The value 0.9897 appearing in the equation above is the
Availability Factor (AF). This figure was determined from
2005-2009 transformer outage statistics from System Operations.
Following the same methodology, LECN for Visayas and
Mindanao Grids are as follows:
LECN =
LECN =
$1, 367.81
kW
year
$2, 219.34
kW
year
Rex F. Corpuz is a former Sr. VP of the National Transmission Corporation
and a former President of National Grid Corporation of the Philippines
(NGCP). He is presently the Sr. Technical Adviser at the Office of the
President, NGCP. He is also a former Regional Governor of IIEE Region
1., e-mail: rfcorpuz@gmail.com
∑35
NP V = (1 + 0.1587) −N (1 + 0.03) N (0.1444) = 1.13697
N=1
The Calculated Levelized No-Load Energy Cost (LECN)
for Luzon Grid is equal to:
LECN = NP V ×CRF ×8760×AF
Gerald R. Pagobo is a Power System Consultant and formerly worked with
the research group of NGCP. He received his MS in Electrical Engineering
degree from the University of the Philippines in 2009. His research interests
include reliability engineering, power system dynamic stability, electricity
market optimization, and computer-based power system modeling and analysis.
Email: grpagobo@gmail.com
LECN = 1.13697×0.159621×8760×0.9897
9 Escalation rate for 2009 figures as used by Project Management. Note a
constant rate of 3% is assumed for the entire book life of transformer