Lecture 3 – Lifecycle cost analysis & Efficiency chains

Question 1

Which Parameters shoud we consider when we are calculating the Storage Costs for output energy cent/kwh with annuaty Method

Answer 1

• costs of installed capacity
• costs of power interface
• Efficieny and self discharge Rate
• DOD
• # Cycle at DOD
• Maintanance &Repair Costs per year

Question 2

High interest rates give an advantage to technologies with low investment costs (Cpx) and high operational costs (OPEX), e.g. gas turbines, why?

Answer 2

High interest rates are basically fees that companies have to pay when borrowing money from the bank to buy things like machines or equipment. When interest rates are high, it means that borrowing money from the bank becomes more expensive.

Now, there are some technologies, like gas turbines, that don’t cost a lot to buy, but they cost a lot to operate and maintain. So these technologies have low upfront costs (Capex) but high ongoing operating costs (Opex).

In a situation where interest rates are high, it may be more challenging for companies to borrow a lot of money from the bank to purchase expensive technologies. However, technologies with low upfront costs like gas turbines can be more attractive because they don’t require as much money upfront. This means that companies may be more able to afford or finance these technologies, even when interest rates are high.

Furthermore, technologies with low upfront costs and high ongoing operating costs like gas turbines can generate revenue from their operation more quickly to cover the costs. This can allow companies to recoup the costs faster and make more profit, even when interest rates are high.

So, high interest rates can give technologies with low upfront costs and high ongoing operating costs like gas turbines an advantage because they help companies save money, utilize more flexible financing options, and generate profits faster, even though borrowing money from the bank is more expensive.

Question 3

low interest rates give an advantage to technologies with high investment costs (Cpx) and low operational costs (OPEX), e.g. hydro power stations , why?

Answer 3

Low interest rates are like fees that companies have to pay when they borrow money from the bank to buy things like machines or equipment, but when interest rates are low, it means that borrowing money from the bank becomes cheaper.

Now, there are some technologies, like hydro power stations, that cost a lot to build or invest in, but once they’re built, they have low ongoing operating costs. So these technologies have high upfront investment costs (Capex) but low ongoing operational costs (Opex).

In a situation where interest rates are low, it becomes easier for companies to borrow money from the bank at a lower cost to finance the high upfront investment costs of technologies like hydro power stations. This means that companies may be more able to afford or finance these technologies, especially when interest rates are low.

Furthermore, technologies with high upfront investment costs and low ongoing operational costs like hydro power stations can generate revenue from their operation more easily, since their operational costs are low. This can allow companies to generate profits more quickly and potentially make more money, especially when interest rates are low.

So, low interest rates can give technologies with high upfront investment costs and low ongoing operational costs like hydro power stations an advantage because they make it cheaper for companies to borrow money to finance the initial investment, and these technologies can generate profits more easily due to their low operational costs