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...and plant completion date on fuel costs, operating costs, capital costs, and levelized total costs per unit of electrical output. We find important relationships between the type of fuel used and unit-output fuel costs (AFBC plants burning scrap are cheaper in fuel per unit of output, despite the lower heat content of scrap) and between operating costs and plant size (larger AFBC plants are cheaper to run). While we find that the advantage in unit fuel costs is not reflected in levelized total costs (which are affected only by plant size), this result may be caused by our procedure for calculating levelized total costs from component costs.
INTRODUCTION
Investigation of the factors that affect unit production costs is a traditional area of research in economics. In most electrical power generation, solid fuel is burned to produce steam for driving turbine-generators, and the design of the boiler plays a key role in determining production costs. There are several technological alternatives in this design. One important alternative is fluidized-bed combustion. Traditional boiler plant designs do not involve a forced air flow beyond coal injection. In contrast, in fluidized-bed designs, air is introduced continuously from the bottom of the bed. If the air within the boiler is pressurized, the design is pressurized fluidized bed (PFBC; for review of the literature on costs for PFBC, see Fuller and Scherr, 1997). If it is not pressurized, the design is atmospheric fluidized-bed (AFBC; see Bonk, Hand and Le, 1990, for a basic discussion of this technology).
Fluidized-bed designs have become increasingly popular since the 1980s (Simbeck, Johnson, and Wilheim, 1994), in part because they can be designed to efficiently burn standard coal or low-grade fuels such as scrap coal, wood, or various refuse-derived fuels such as deinking sludge. (For discussion, see Gilbert/Commonwealth, 1994; Bonk, McDaniel, DeLallo, and Zahrachuk, 1995; and Abually and Navazo, 1993.) The ability of AFBC designs to efficiently burn scrap coal and other refuse-derived fuels is important environmentally. Burning lower-cost fuels may also reduce power costs, and adding refuse-burning plants to a utility's mix can reduce the utility's vulnerability to swings in coal prices. AFBC has largely supplanted traditional designs in recent construction. Despite this prevalence, relatively little data on its unit costs appear in the literature.
Even though many aspects of unit production costs depend on plant design characteristics, the most common way to investigate unit costs in electric power generation is to use firm-level data rather than plant-level data (see, for example, Nerlove, 1963; Christensen and Greene, 1976; Atkinson and Halvorsen, 1984; and Considine, 2000). This approach is used in part because of the difficulty of obtaining cost data for particular plants, but in part to study questions such as optimal firm size (Considine, 2000) which cannot be studied at the plant level. However, this approach makes it difficult to examine the costs related to particular technologies when firms employ a mix of technologies among their plants. Instead, this paper uses cost data from a sample of operating AFBC power plants to test the effects of fuel type, size of plant, and age of plant on unit costs. (1)
II. AFBC BOILER PLANT DESIGN AND UNIT COSTS
Factors which have important effects on unit production costs of electricity include the type of fuel to be burned, the size of the plant, and the time at which the plant was constructed. (2) Scrap fuels are cheaper per ton to purchase but contain fewer BTUs per ton. Additional capital and operating costs may also be necessary to burn scrap efficiently. Because of these differences, it is not clear that AFBC plants which burn scrap fuels have lower unit costs than those burning standard-grade coal.
Because of returns to scale, it is generally expected that larger plants (plants with a greater power production capacity) will produce power at lower cost per unit. (See Siebenthal, Hoskins, and Tavoulareas, 1991, for a discussion of this expected relationship for AFBC plants.) However, the character and amount of this effect has not been previously investigated empirically for AFBC plants.
While the time at which the plant was constructed has obvious effects on capital and operating costs via inflation, more important are learning-curve effects and technological advancements that occur within the industry as more plants are built. After a first-of-a-kind plant is built and has operated for a time, subsequent similar plants can usually be built at lower cost because of the experience gained (see Notestein, 1990). This phenomenon happens for two reasons: (1) refinements in component or section design reduce the cost of plant sections; and (2) improved construction methodologies are developed (e.g., use of factory fabricated plant modules, pre-engineered scaffolding and forming systems, and better integrated construction sequences) that reduce both the construction time and cost. Also, as more plants are built and operated, technology will advance, reducing operating costs via better process designs and consequent increases in efficiency. The empirical effects of these factors on costs for AFBC pl ants has not been previously investigated.
III. DATA SOURCES FOR AFBC PLANT COSTS
Two streams of research on AFBC plant unit costs have appeared in the literature. (Most of this research appears in the proceedings of technical conferences and in research reports from funded studies; see our references list.) The first employs available cost-estimation computer programs such as "Costeam" (Office of Fossil Energy, 1987), "AFBCVAL" (St. John and Tavoulareas, 1987), "AFBCost" (Siebenthal, Hoskins, and Tavoulareas, 1991), or later versions of these programs. These programs are used to estimate capital and operational costs for a given AFBC plant design. This is called the conceptual" approach in that a plant design is 'conceptualized" and its costs simulated by the equations and relationships within the computer program. Costs for numerous conceptual designs have been estimated via these computer programs and have appeared in the literature....
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