Ch En 310

Reading Questions for Class 12

From Boyle et al., Chapter 12

Topic: Costing energy

1. Please comment on why taxes on gasoline are so much higher in Europe and Japan than in the United States.  What do they do with the gasoline tax money?  How does this affect their economy?

2. Describe the consumer price index and how it is used to adjust energy prices.  A good table for the U.S. is on the DOE EIA Annual Energy Review Page (in the appendix).  http://www.eia.doe.gov/aer/ (it is actually called the implicit price deflator, Appendix D1).

3          What is the difference between Figures 12.9 and 12.10?  Which is the better way to normalize?

4          Show the total cost as a function of time for a regular 60 W incandescent light bulb and an equivalent 15 W compact fluorescent light bulb.  The 60 W bulbs are on sale at Walmart (4 bulbs for $0.96), and the CFL’s are $1.58 each.  The price of electricity is $.085/kWh, and the bulbs are to be used 9 hours per day.  The lifetime of the 60W bulbs is 1000 hours, and the CFL’s last 8000 hours.  How much money will you save after 8000 hours?

5. Explain how to use present values, net present values, and annuitization to determine the discounted costs of energy.

6. From the graph below on electricity costs in 2001 (http://www.uic.com.au/nip08.htm ), estimate the following for nuclear, coal, and gas-fired power plants:
(a) amount paid for capital costs in cents per kW-year (assume 7000 hrs of operation/yr)
(b) the amount paid for O&M costs per year in cents per kWh (assume coal is $1.25/MBtu and is 34% efficient, natural gas is $5/MBtu and is 52% efficient in a combined cycle plant, and uranium costs are $.0054/kWh).
(c) the initial installation costs per kW based on 10% annual interest and a plant life of 40 yrs for a nuclear plant, 30 yrs for a coal plant, and 20 yrs for a natural gas plant.

Hints for this problem

7. What are some of the other considerations besides discounted cash flow when considering an energy source?

Write a question that will help the next class better study an important point in this chapter, or that will serve as a good discussion topic.

Source: US Utility Data Inst. (pre 1995), Resource Data International (1995- )

Note: the above data refer to fuel plus operation and maintenance costs only, they exclude capital, since this varies greatly among utilities and states, as well as with the age of the plant. On the basis of the OECD projections opposite, capital costs in USA are 55% of total for nuclear, 45% of total for coal and 16% of total for gas. Grossing these up on this basis for 2001 gives 3.73 c/kWh for nuclear, 3.27 c/kWh for coal and 5.87 c/kWh for gas.