Change picture by marking Picture , right click and choose Click on the icon in the middle of the picture and locate the After inserting once again mark the picture, right click and choose send to back.
For best quality the size Position: 1,2 x 1,92
Best Practices in Asset Management:
Life Cycle Cost Assessment
- TCO Calculations
HAPUA WORKING GROUP 3 / PROJECT 1
Overview
1.
Project objectives
2.
Distribution transformers - Key component of network
3.
Total Cost of Ownership (TCO) - Basic concept
4.
Significance of TCO
5.
Key components of TCO
• No-load losses & Factor A
• Load losses & Factor B
6.
TCO calculation methodology and applications
7.
Review of freely available TCO calculation tools
Maximum 2 lines
To change bullet and text level use the ‘increase/decrease list level’ found under the ribbon
Footer text:
Insert Presentation title and
Project Objectives
1.
To share information and experience of maintenance strategies and
asset replacement/refurbishment criteria among the country members
2.
To develop and formulate costing methodology based on life cycle
activities of the following medium voltage equipment:
• Distribution transformers
Distribution Transformers – Key
Component of Network
1.
Project objectives
2.
Distribution transformers - Key component of network
3.
Total Cost of Ownership (TCO) - Basic concept
4.
Significance of TCO
5.
Key components of TCO
• No-load losses & Factor A
• Load losses & Factor B
6.
TCO calculation methodology and applications
7.
Review of freely available TCO calculation tools
Maximum 2 lines
To change bullet and text level use the ‘increase/decrease list level’ found under the ribbon
Footer text:
Insert Presentation title and
Distribution Transformers
• Close to 1 million transformers are
installed across 11 ASEAN utilities
according to the survey in Mar-May
2015
• 2
nd
largest contributor of energy
losses in a network (about 30% of
overall network losses)
• At the time of purchase, the focus is
often on the first cost instead of TCO,
but TCO can be 2-3 times of the first
cost
Maximum 2 lines
To change bullet and text level use the ‘increase/decrease list level’ found under the ribbon
Footer text:
Insert Presentation title and date by opening the header and footer dialog box placed under the ribbon Insert>Text
TCO – Basic Concept
1.
Project objectives
2.
Distribution transformers - Key component of network
3.
Total Cost of Ownership (TCO) - Basic concept
4.
Significance of TCO
5.
Key components of TCO
• No-load losses & Factor A
• Load losses & Factor B
6.
TCO calculation methodology and applications
7.
Review of freely available TCO calculation tools
Maximum 2 lines
To change bullet and text level use the ‘increase/decrease list level’ found under the ribbon
Footer text:
Insert Presentation title and date by opening the header and footer dialog box placed under the ribbon Insert>Text
Total Cost of Ownership (TCO) –
Basic Concept
•
TCO is also known as Life Cycle Cost
(LCC)
•
Sum of all the costs incurred during the life
of a transformer
• Purchase cost
• Installation cost
• Maintenance cost
• Decommissioning cost
• Cost of energy losses
•
In practice, the following three are ignored
due to not much variation from transformer
to transformer:
• Installation cost
• Maintenance cost
• Decommissioning cost
TCO
Purchase cost Installation cost Maintenance cost Decommissioning cost Cost of energy lossesMaximum 2 lines
To change bullet and text level use the ‘increase/decrease list level’ found under the ribbon
Footer text:
Insert Presentation title and
Total Cost of Ownership – Equation
TCO = Purchase Cost + Cost of Energy Losses
TCO
=
C
1
+
C
NLL
+
C
LL
• TCO: Total Cost of Ownership
• C
I: Initial purchase cost of a transformer
• C
NLL: Cost of no-load losses
Significance of TCO
1.
Project objectives
2.
Distribution transformers - Key component of network
3.
Total Cost of Ownership (TCO) - Basic concept
4.
Significance of TCO
5.
Key components of TCO
• No-load losses & Factor A
• Load losses & Factor B
6.
TCO calculation methodology and applications
7.
Review of freely available TCO calculation tools
Maximum 2 lines
To change bullet and text level use the ‘increase/decrease list level’ found under the ribbon
Footer text:
Insert Presentation title and
TCO: Financial, Functional and
Environmental Significance
Financial
• TCO can be
2-3 times first
cost
Functional
• Efficient
transformers:
Savings
capacity,
OPEX and
CAPEX
Environmental
• Reduction in
greenhouse
gas
emissions
Maximum 2 lines
To change bullet and text level use the ‘increase/decrease list level’ found under the ribbon
Footer text:
Insert Presentation title and date by opening the header and footer dialog box placed under the ribbon Insert>Text
TCO: Financial, Functional and
Environmental Significance
• Financial
• TCO can be 2-3 times the initial purchase price
• Transformer with the lowest first price is not the transformer with lowest cost over its lifetime
• Functional
• Makes energy efficient transformers more attractive (an energy-efficient transformer can be
55.5% lower in energy losses)
• Although energy efficient transformers are initially more expensive, the cost premium over a
standard transformer can be paid back several times over a transformer’s lifetime
• Energy savings across the distribution network with cascading effect on the network’s overall
capacity, OPEX and CAPEX
• Environmental
• Reduction in emission of greenhouse gases
• Environmental advantage
Key Components of TCO
1.
Project objectives
2.
Distribution transformers - Key component of network
3.
Total Cost of Ownership (TCO) - Basic concept
4.
Significance of TCO
5.
Key components of TCO
• No-load losses & Factor A
• Load losses & Factor B
6.
TCO calculation methodology and applications
7.
Review of freely available TCO calculation tools
Maximum 2 lines
To change bullet and text level use the ‘increase/decrease list level’ found under the ribbon
Footer text:
Insert Presentation title and date by opening the header and footer dialog box placed under the ribbon Insert>Text
Two Key Components of TCO
TCO
Purchase
cost
Cost of
energy
losses
Maximum 2 lines
To change bullet and text level use the ‘increase/decrease list level’ found under the ribbon
Footer text:
Insert Presentation title and
Energy Loss: No-Load and Load Losses
No-load
energy
loss (W)
Load
energy
loss (W)
Total
energy
loss (W)
P
T
=
P
O
+
P
K
• P
T: Total energy loss in a transformer (W)
• P
O: No-load energy losses (W)
Maximum 2 lines
To change bullet and text level use the ‘increase/decrease list level’ found under the ribbon
Footer text:
Insert Presentation title and date by opening the header and footer dialog box placed under the ribbon Insert>Text
No-Load Losses
• Losses in transformer core,
independent of loading
• Hysteresis and eddy current
losses: 99% of no-load losses
• High-efficiency transformers have
low-loss silicon steel or amorphous
steel with copper windings
Maximum 2 lines
To change bullet and text level use the ‘increase/decrease list level’ found under the ribbon
Footer text:
Insert Presentation title and
TCO Calculation: Cost of No-Load Losses
Cost of no-load
losses
A
No-load loss per
year (W)
C
NLL
=
A
´
P
O
• C
NLL: Cost of no-load losses ($)
• A: Factor for capitalising no-load loss of a transformer ($/W)
• P
O: No-load loss of a transformer per year (W)
Maximum 2 lines
To change bullet and text level use the ‘increase/decrease list level’ found under the ribbon
Footer text:
Insert Presentation title and date by opening the header and footer dialog box placed under the ribbon Insert>Text
What is Factor A?
• Converts no-load energy loss into a cost using electricity price and
total number of hours of operation in a year
• Converts the series of future no-load loss costs to a single present
value cost by using a Present Value Factor for an ordinary annuity
Maximum 2 lines
To change bullet and text level use the ‘increase/decrease list level’ found under the ribbon
Footer text:
Insert Presentation title and
Calculating Factor A
A
=
( )
1
+
i
n
-
1
i 1
( )
+
i
n
´
C
kWh
´
8760
• i: Discount rate applicable (this is specific to utility)
• n: Life of transformer in years
• C
kWh: Electricity cost ($/kWh, cost which consumers pay)
• 8760: Number of hours in a year
Maximum 2 lines
To change bullet and text level use the ‘increase/decrease list level’ found under the ribbon
Footer text:
Insert Presentation title and date by opening the header and footer dialog box placed under the ribbon Insert>Text
Load Losses
•
Transformer’s load losses are due to
the resistance of the primary and
secondary conductors to the flow of
current and eddy currents
•
Also known as I
2
R losses
•
These losses vary according to the
square of transformer loading
•
A fully loaded transformer has four
times the load loss compared to the
one operating at 50% load
Maximum 2 lines
To change bullet and text level use the ‘increase/decrease list level’ found under the ribbon
Footer text:
Insert Presentation title and
Load Losses in TCO Calculation
Cost of load losses
B
Load loss per year
(W)
C
LL
=
B
´
P
K
• C
LL: Cost of load losses ($)
• B: Factor for capitalising no-load loss of a transformer ($/W)
• P
K: Load loss of a transformer per year (W)
Maximum 2 lines
To change bullet and text level use the ‘increase/decrease list level’ found under the ribbon
Footer text:
Insert Presentation title and date by opening the header and footer dialog box placed under the ribbon Insert>Text
What is Factor B?
• Converts load energy loss into a cost using electricity price, total
number of hours of operation in a year and transformer loading
• Converts the series of future load loss costs to a single present value
cost by using a Present Value Factor for an ordinary annuity
Maximum 2 lines
To change bullet and text level use the ‘increase/decrease list level’ found under the ribbon
Footer text:
Insert Presentation title and
Factor B
B
=
( )
1
+
i
n
-
1
i 1
( )
+
i
n
´
C
kWh
´
8760
´
L
2
•
i: Discount rate applicable (this is specific to utility)
•
n: Life of transformer in years
•
C
kWh: Electricity cost ($/kWh, cost which consumers pay)
•
8760: Number of hours in a year
Maximum 2 lines
To change bullet and text level use the ‘increase/decrease list level’ found under the ribbon
Footer text:
Insert Presentation title and date by opening the header and footer dialog box placed under the ribbon Insert>Text
Key Variables: Factors A & B
B
=
( )
1
+
i
n
-
1
i 1
( )
+
i
n
´
C
kWh
´
8760
´
L
2
A
=
( )
1
+
i
n
-
1
i 1
( )
+
i
n
´
C
kWh
´
8760
Maximum 2 lines
To change bullet and text level use the ‘increase/decrease list level’ found under the ribbon
Footer text:
Insert Presentation title and
Key Variables in Factors A & B
Symbol
Name
Remarks
1
i
Discount rate
Typically, 10% (by utility)
2
n
Lifetime of a
transformer
20-50 years (by utility)
3
C
kWHElectricity price
Set by utility ($/kWh)
4
L
Transformer
loading
Depends on demand/load
5
8760
Hours in a year
Operating hours in a year
Maximum 2 lines
To change bullet and text level use the ‘increase/decrease list level’ found under the ribbon
Footer text:
Insert Presentation title and date by opening the header and footer dialog box placed under the ribbon Insert>Text
Load vs. No-load Losses
TCO Calculation Methodology
1.
Project objectives
2.
Distribution transformers - Key component of network
3.
Total Cost of Ownership (TCO) - Basic concept
4.
Significance of TCO
5.
Key components of TCO
• No-load losses & Factor A
• Load losses & Factor B
6.
TCO calculation methodology and applications
7.
Review of freely available TCO calculation tools
Maximum 2 lines
To change bullet and text level use the ‘increase/decrease list level’ found under the ribbon
Footer text:
Insert Presentation title and date by opening the header and footer dialog box placed under the ribbon Insert>Text
TCO Calculation: 4 Steps
Step 1
Decide input
variables
Step 2
Get energy loss
and purchase
price from
manufacturer
Step 3
Calculate A and
B values
Step 4
Calculate TCO
Maximum 2 lines
To change bullet and text level use the ‘increase/decrease list level’ found under the ribbon
Footer text:
Insert Presentation title and
Step 1: Decide key Input Variables
Variable
Example
Discount rate (i)
8.5%
Life of transformer (n)
20 years
C
kWh
2.35 Baht/kWh
Transformer loading (L)
0.5
Maximum 2 lines
To change bullet and text level use the ‘increase/decrease list level’ found under the ribbon
Footer text:
Insert Presentation title and date by opening the header and footer dialog box placed under the ribbon Insert>Text
Step 2: Get Energy Loss Figures and
Purchase Price from Manufacturer
Variable
Example
No-load losses (P
O
)
250 W
Load losses (P
K
)
1550 W
Initial purchase price (C
I
)
156, 700 Baht
Maximum 2 lines
To change bullet and text level use the ‘increase/decrease list level’ found under the ribbon
Footer text:
Insert Presentation title and
Step 3: Calculate A and B Values
Step 1
Step 2
Step 3
Step 4
A
=
(
1
+
0.085
)
20
-
1
0.085 1
(
+
0.085
)
20
´
2.35
´
8760
B
=
(
1
+
0.085
)
20
-
1
0.085 1
(
+
0.085
)
20
´
2.35
´
8760
´
0.5
2A
=
194812Baht / kW
B
=
48703Baht / kW
Maximum 2 lines
To change bullet and text level use the ‘increase/decrease list level’ found under the ribbon
Footer text:
Insert Presentation title and date by opening the header and footer dialog box placed under the ribbon Insert>Text
Step 4: Calculate TCO
Step 1
Step 2
Step 3
Step 4
TCO
=
C
1
+
A
´
P
O
+
B
´
P
K
TCO
=
156700
+
194812
´
0.25
+
48703
´
1.550
Maximum 2 lines
To change bullet and text level use the ‘increase/decrease list level’ found under the ribbon
Footer text:
Insert Presentation title and date by opening the header
Practical Application of TCO - Collaboration
with Manufacturers for Optimum Design
• Cost of losses in a transformer goes
down as the purchase price goes up
• At some point, combination of the two
costs results in lowest TCO
• Cost of losses depend on Factors A &
B—provided by utilities to
manufacturers
• Utilities can carefully choose all the
variables affecting factors A and B to
help manufacturers arrive at right TCO
Maximum 2 lines
To change bullet and text level use the ‘increase/decrease list level’ found under the ribbon
Footer text:
Insert Presentation title and date by opening the header and footer dialog box placed under the ribbon Insert>Text
Practical Application - Transformer Selection
Based on TCO
• Lowest first cost doesn’t mean lowest TCO
• High-efficiency transformer is higher in first cost by 6%, but lower in TCO by 21%
• Transformer selection should be based on TCO only
Variable
Standard 750 kVA
Transformer ($)
High-efficiency 750 kVA
Transformer ($)
Initial purchase cost ($)
10194
10845
Review of Freely Available TCO
Calculators
1.
Project objectives
2.
Distribution transformers - Key component of network
3.
Total Cost of Ownership (TCO) - Basic concept
4.
Significance of TCO
5.
Key components of TCO
• No-load losses & Factor A
• Load losses & Factor B
6.
TCO calculation methodology and applications
7.
Review of freely available TCO calculation tools
8.
Conclusions and recommendations
Maximum 2 lines
To change bullet and text level use the ‘increase/decrease list level’ found under the ribbon
Footer text:
Insert Presentation title and date by opening the header and footer dialog box placed under the ribbon Insert>Text
Freely Available TCO Calculators
1.
ABB’s TCO calculator
2. Life Cycle Analysis Tool by BEE
3. Life Cycle Costing of Transformer Losses – Leonardo
Energy
Maximum 2 lines
To change bullet and text level use the ‘increase/decrease list level’ found under the ribbon
Footer text:
Insert Presentation title and
ABB’s TCO Tool
Maximum 2 lines
To change bullet and text level use the ‘increase/decrease list level’ found under the ribbon
Footer text:
Insert Presentation title and date by opening the header and footer dialog box placed under the ribbon Insert>Text
ABB Tool Inputs Required: SETTINGS &
CONDITIONS
• Currency
Maximum 2 lines
To change bullet and text level use the ‘increase/decrease list level’ found under the ribbon
Footer text:
Insert Presentation title and
ABB Tool Inputs Required: CONDITIONS
• Initial electricity price and annual increase
• Transformer nominal rating, service life, average loading
• Interest rate
Maximum 2 lines
To change bullet and text level use the ‘increase/decrease list level’ found under the ribbon
Footer text:
Insert Presentation title and date by opening the header and footer dialog box placed under the ribbon Insert>Text
ABB Tool Inputs Required: TRANSFORMER
DATA
• Name or designation of the transformer
• Initial purchase price
• No-load losses
• Load losses
Maximum 2 lines
To change bullet and text level use the ‘increase/decrease list level’ found under the ribbon
Footer text:
Insert Presentation title and
ABB Tool – RESULTS
• No-load losses
• Load losses
• Total Cost of Ownership
• Energy and cost savings
• Payback period
Maximum 2 lines
To change bullet and text level use the ‘increase/decrease list level’ found under the ribbon
Footer text:
Insert Presentation title and date by opening the header and footer dialog box placed under the ribbon Insert>Text
ABB TCO Tool: FEATURES AND LIMITATIONS
Features
• Simple layout
• Easy to use
• Includes explanations of key
terms
Limitations
• Doesn’t include option to
include installation,
maintenance, decommissioning
costs
• ASEAN currency options
limited
Maximum 2 lines
To change bullet and text level use the ‘increase/decrease list level’ found under the ribbon
Footer text:
Insert Presentation title and
Life Cycle Analysis Tool by BEE
Excel worksheet, download from:
Maximum 2 lines
To change bullet and text level use the ‘increase/decrease list level’ found under the ribbon
Footer text:
Insert Presentation title and date by opening the header and footer dialog box placed under the ribbon Insert>Text
BEE Tool Inputs: ASSUMPTIONS
• Discount rate
• Tariff escalation
• Inflation
• CO
2
conversion factor
• Salvage value
Maximum 2 lines
To change bullet and text level use the ‘increase/decrease list level’ found under the ribbon
Footer text:
Insert Presentation title and
BEE Tool Inputs: Transformer Data
• No of days in a year
and hours of operation
per day
• Electricity price
• Load factor
• Rated kVA
• No-load and load
losses
• Life of a transformer
• Purchase cost
Maximum 2 lines
To change bullet and text level use the ‘increase/decrease list level’ found under the ribbon
Footer text:
Insert Presentation title and date by opening the header and footer dialog box placed under the ribbon Insert>Text
BEE Tool – RESULTS
• Life Cycle Cost
• Annual energy consumption
• Carbon footprint
Maximum 2 lines
To change bullet and text level use the ‘increase/decrease list level’ found under the ribbon
Footer text:
Insert Presentation title and
BEE Tool: FEATURES AND LIMITATIONS
Features
• Takes into account
maintenance cost, salvage
value, energy price escalation
and inflation
• Easy to use
• Useful for comparing large
number of options
Limitations
• Doesn’t include explanation of
technical terms
• Default current option is Indian
Rupees
Maximum 2 lines
To change bullet and text level use the ‘increase/decrease list level’ found under the ribbon
Footer text:
Insert Presentation title and date by opening the header and footer dialog box placed under the ribbon Insert>Text
Life Cycle Costing Tool – Leonardo Energy
Excel worksheet, download from:
Maximum 2 lines
To change bullet and text level use the ‘increase/decrease list level’ found under the ribbon
Footer text:
Insert Presentation title and
Leonardo Tool – Inputs Required
Economical data
• Discount or interest rate (%)
• Economic life of transformer
(year)
• Energy price (Euro/MWh)
CO
2
emission data
• CO
2emissions cost
(Euro/tonnes)
• CO
2emissions per kWh
(Kg/kWh)
Transformer data
•
No-load loss
•
Load-loss
•
Price
•
Any extra losses
Loading profile
• Loading profile of transformer
along with harmonic spectrum
(default list is available)
Maximum 2 lines
To change bullet and text level use the ‘increase/decrease list level’ found under the ribbon
Footer text:
Insert Presentation title and date by opening the header and footer dialog box placed under the ribbon Insert>Text
Leonardo Tool – RESULTS
• Calculated annual losses – in terms of Euro
• Calculated capitalised losses
• TCO
Maximum 2 lines
To change bullet and text level use the ‘increase/decrease list level’ found under the ribbon
Footer text:
Insert Presentation title and
Leonardo Tool – FEATURES AND
LIMITATIONS
Features
• Provides information on transformer losses when harmonics are present
• Includes the profile of typical transformers available in the industry, which makes it
easier to input relevant data like losses, prices, etc.
• Includes a “help” manual
Limitations
• Complicated to use
• Developed for European users, so some of the data and units may not be
compatible with ASEAN figures
Conclusions & Recommendations …
1.
Project objectives
2.
Distribution transformers - Key component of network
3.
Total Cost of Ownership (TCO) - Basic concept
4.
Significance of TCO
5.
Key components of TCO
• No-load losses & Factor A
• Load losses & Factor B
6.
TCO calculation methodology and applications
7.
Review of freely available TCO calculation tools
Maximum 2 lines
To change bullet and text level use the ‘increase/decrease list level’ found under the ribbon
Footer text:
Insert Presentation title and
… Conclusions and Recommendations
1. TCO calculation is a straightforward process, but validity and usefulness of
calculation depends on the accurate assumptions: Discount rate, transformer
lifespan, electricity cost and transformer loading
Recommendation # 1: ASEAN Utilities should review the variables used for the
calculation of loss capitalisation Factors A and B, and ascertain the same are valid
according to the utilities own financial and functional realities. The basis of all
variables should be formally recorded and reviewed periodically.
2. TCO calculation also depends on two more factors that depend on the
transformer manufacturers: Load and no-load losses.
Recommendation # 2: The utilities should work together to create a common
database of transformer losses for different transformer ratings and manufacturers.
Such a database can facilitate easier, faster and more accurate TCO calculations.
Maximum 2 lines
To change bullet and text level use the ‘increase/decrease list level’ found under the ribbon
Footer text:
Insert Presentation title and date by opening the header and footer dialog box placed under the ribbon Insert>Text