Saturday, January 3, 2015

Power plant O&M: how does the industry stack up on cost?


29 October 2014 Chris Lo



Operations and maintenance costs vary widely between different forms of power generation but form an important part of any power plant's business case. Power Technology ranks average O&M costs in the energy sector to find out which generating facilities are the cheapest to run and maintain.

Whether the energy source is fossil fuel-based, nuclear or renewable, the cost of operation and maintenance (O&M) forms an important part of a power plant's business case, a piece of the investment puzzle along with capital expenditure and fuel costs that must be balanced against life-cycle profitability, output efficiency and availability. These ongoing costs - both fixed and variable - include day-to-day preventative and corrective maintenance, labour costs, asset and site management, maintaining health and safety, and a host of other important tasks.
O&M costs vary widely between different forms of power generation, and the O&M burden often plays a varying role in the basic cost analysis of different power plants - high maintenance costs are often offset by advantages in other areas, and vice versa. Here we present the average O&M costs for six of the most common power generation methods while exploring the reasons for those costs and how they fit into the wider landscape of power plant economics.
The basis for this analysis is data taken from the International Energy Agency's (IEA) World Energy Investment Outlook 2014, which includes raw information on average yearly O&M costs in the power industry, both currently and in the future. The IEA's future cost predictions are based on its so-called New Policies Scenario (NPS), which incorporates countries' announced policy commitments and plans in its projections. Current costs are taken from 2012 data, with projections given for 2020 and 2035. As the IEA's O&M data is split between different countries and regions, we have taken the data for Europe as the default comparison point between power generation methods.

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