NEW VISION OF ENGINEERING ECONOMY COURSE (VISION) MODULE 3

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NEW VISION OF ENGINEERING ECONOMY COURSE (VISION)
MODULE 3

• LECTURE 7
• Cairo, 17 July 2005

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Case Studies - 2

• Objective
• Application of the NPV and IRR method
• Evaluation of a hydro-power station
• Effect of environmental parameters on an energy
  investment implementation
• Comparative assessment of a nuclear and a
  RES-based power station

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in Greece
Where?
Problem Statement (1)
a small hydro power plant
Why?
What?
(scale economy, funding)
for a private investment
How big?
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Problem Statement (2)
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Initial Cost
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Annual Revenues
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Viability Analysis-IRR Prediction(1)
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Viability Analysis-IRR Prediction(2)
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Initial Cost Impact on IRR
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State Subsidization Impact on IRR
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Effect of Environmental Parameters on the
Possibility of an Energy Investment
Implementation
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Session Objective

• to Demonstrate the Environmental Impact of the
  Operation of Power Plants
• to Present the Social and Environmental Cost of
  Energy

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Are New Power Plants Necessary ?

• The worldwide Rate of Energy Demand Increases by
  4 per annum.
• The Increase is Driven by the Developing
  Countries and the USA.
• The Central/Northern European Countries have
  Almost Stabilized their Demand.
• In the Mediterranean Region this Rate Ranges
  Between 3-10.

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We Need New Power Plants in order to

• Cover the Increased Energy Consumption
• Meet the Increased Peak Demand
• Replace Old Power Plants
• Exploit New Sources of Energy

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Why do we care about Environmental Impact
Assessment ?

• The Energy Plants have Major Environmental
  Impacts
• Public Reaction to an Investment can Cancel its
  Realization
• Strict / Complicated Environmental Legislation
• Pollution Control Leads to Savings in Energy and
  Materials through better Management
• Environmentally Friendly Projects are a Potential
  Subsidization Source

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Environmental Indicators

• Sectors of the
• Environmental Impact Assessment
• Natural Resources Exploitation
• Pollution
• Environmental Hazards or Disturbance

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Natural Resources Exploitation

• Renewable Energy Sources
• Precipitations
• Solar Radiation
• Wind
• Biomass
• Waves
• Non Renewable Energy Sources
• Oil
• Coal
• Natural Gas
• Nuclear Fuels

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Pollution

• Air Pollutants Emissions that cause
• Global Warming
• Ozone Layer Depletion
• Aquatic and Soil Acidification
• Aquatic and Soil Eutrofication
• Hazards to Humans and Ecosystems Health

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Environmental Hazards / Disturbance

• Land usage for Buildings or Roads
• Noise
• Smell
• Radiation

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External Cost of Energy

• Social Cost
• Public Health
• Environmental Cost
• Restoration of Natural Ecosystems
• Exploitation of Natural Resources
• State Subsidies
• Fuel Subsidies
• Auditing Control of Environmental Parameters

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NIMBY Syndrome in Energy Plants

• Not In My Back Yard
• People
• Want the Comforts of Electricity
• Dont Want the Power Plants Disturbance
• Strong Public Opposition May Cause
• The Cancellation of Power Plants

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Quantitative Approach

• Basic Figures Presenting Mean Values for
  Comparison Purposes
• Carbon Dioxide CO2
• Sulfur Dioxide SO2
• Nitrogen Oxides NOX
• Land Use

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Comparative Assessment of a Nuclear and a
RES-based Power Station

• Case Study
• Wind vs Nuclear
• Power Station
• in the Aegean Sea Region

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Problem Description

• Greece and Turkey are Both Fast Developing,
  Mediterranean countries.
• Annual Electricity Demand Growth is 4 and 10
  respectively for Greece and Turkey.
• Both Countries Have to Control their Air
  Emissions in order to Comply to the EU
  Directives.
• Nuclear and RES are the possible solutions

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Why RES in the Aegean Region?

• Reliable Solar Potential even in Winter
• Excellent Wind Potential
• High Enthalpy Geothermal fields
• Decentralized Energy Generation
• Independence of Imported Fuels
• Significant EU Subsidization

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Factors Against RES

• Low Energy Density (W/m2) Leads to Extended Land
  Use
• Seasonal and Diurnal Variation of Energy
  Availability Makes Imperative the Use of
  Large-Scaled Energy Storage Systems
• High Initial Investment Cost

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Why Nuclear Energy ?

• Reliable Electricity Supply without
• Time Variation
• Relatively Low Operational Cost
• High Energy Density Leads to Limited Land Use
  (fuel mines excluded)

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Factors Against Nuclear Energy

• High Initial Investment Cost (financing
  constraints)
• No Safe Method of Nuclear Waste Disposal
• Enormous Heat Waste to the Nearby Environment
• Technology Dependence for Developing Countries
• Wide Range of Negative Consequences in Case of
  Major Accidents

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Economic Cost Comparison
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Social Cost Comparison

• NUCLEAR ENERGY
• Accident Risk Cost
• Possibility ranges Between
• 1 / 2000 20000 operational years
• Total distraction of the Natural Environment in
  a very wide Distance
• Normal Operation Cost
• Minor Radiation Releases
• Not Safe Final Disposition of Nuclear Waste

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Social Cost Comparison

• WIND ENERGY
• Noise Emissions
• Long Distance Visual Impact
• Extensive Land Use
• Bird Mortality

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Conclusions

• RES and NUCLEAR are Potential Solutions to
• meet Energy Demands
• Control Greenhouse Gas Emissions
• The Analysis made Clear that Wind Energy is
  Preferable
• Environmental-Wise
• Economically-Wise (under Conditions)