Relative Power Factor Correction costs

Transcription

1 SSG REF: S026 Friday 19 th October 2007 TO: John Gleadow Senior Adviser Transmission Electricity Commission FROM: David Hume Ranil de Silva System Studies Group NZ Ltd Relative Power Factor Correction costs 1. Introduction In this report we compare the costs of installing HV grid connected capacitors on the transmission system versus LV power factor correction capacitors on the distribution system. Our study is based on the premise that the demand is in a region that requires voltage support to meet the peak load (this situation currently exists in the Upper North Island and Upper South Island). We assume that any dynamic reactive support is installed on the transmission system and that the overall demand power factor is to be corrected to unity by either : a) Installing HV grid connected capacitors close to the GXP b) Installing LV power factor correction capacitors within the distribution network close to the demand Page 1 of 5

2 2. Simplified Model Figure 1 shows the simplified model we have used to represent the distribution network connected to the transmission system. The transmission system at 220 kv or 110 kv feeds the 33 kv distribution system via supply transformers. The distribution system is represented as a lumped impedance feeding a lumped demand of 100 MW peak and 62 MW average at 11 kv. The HV grid capacitors are connected to the 220 kv or 110 kv bus whilst the LV power factor correction capacitors are connected to the 11 kv bus. (We do not consider power factor correction at lower voltages such as 240 V). We have assumed that the supply transformers and distribution network have a lumped resistance of pu (relative to the peak demand). This value of resistance is based on a review of distribution loss factors published by Orion Cost Assumptions We have assumed a long run marginal cost for losses at $100 / MWh. We have assumed that grid connected capacitors will cost about $16,480 / MVAR for a dual bus connected capacitor at 220 kv or 110 kv. This is based on 2006 ODV information published by Transpower with a CPI of 3% 2. We have assumed that distribution power factor correction capacitors will cost about $34,690 / MVAR for switched 11 kv zone substation capacitors. This is based on 2004 ODV information published by Vector with a CPI of 3% 3. 1 Distribution Loss Factors (applying from 1 October 1999, text updated 1 February 2007), Orion New Zealand Limited Report of the Optimized Deprival Valuation of Transpower s System Fixed Assets as at 30 June 2006, Transpower New Zealand Limited, November Vector Optimized Deprival Valuation - Auckland, Wellington, and Lichfield Electricity Networks, Vector Limited, 31 March Page 2 of 5

3 Figure 1. Simplified Model for Distribution Network Transmission System 220 kv or 110 kv bus Grid Connected Capacitors Supply Transformers 33 kv bus Lumped distribution network and transformers 11 kv bus Power Factor Correction Capacitors Lumped Demand 100 MW Peak 62 MW Average pf Page 3 of 5

4 4. Analysis To gain an appreciation for the difference in correcting power factor on either the LV or HV networks we compare the annualized cost of each, including benefits associated with reduction in distribution losses. Our example assumes the system in Figure 1 with a lumped demand of 100 MW peak and 62 MW average on the lumped LV network with a demand power factor ranging from 0.95 to The distribution resistance has been estimated from average distribution loss factors supplied by Orion 1. Figure 2 shows the annualized costs for correcting peak demand power factor to unity. HV capacitors generally tend to be about half the total cost of LV capacitors, but on the other hand correcting power factor on the LV network appears to have significant loss benefits. For example, if the demand on our simplified network has a power factor of 0.97 lagging at peak then, from Figure 2, the annualized cost of capacitors to correct power factor to unity on the HV network would be around $40,000 and on the LV network around $80, However, LV correction would also provide an annual loss benefit of $165,000 giving a total annual benefit of $85,000 for LV correction. Figure 2 also indicates that there is an economic benefit in correcting LV power factor to about 0.99 even if there is no requirement to support transmission. Note that correcting power factor on both the HV and LV networks improves the losses in the transmission grid but that these benefits are common to both the HV and LV compensation options and are therefore not taken into account. 4 With lower power factors the total current is greater than 1 pu, while with unity power factor the current is 1 pu. Hence, the losses, defined by I 2 R are higher with lower power factors, improving to unity. 5 Assuming a Capital Recovery Factor (CRF) of 0.1. Page 4 of 5

5 Figure 2. Annualized Costs for HV and LV Unity Power Correction (To Supply 100 MW Peak Demand) Costs (NZ$000/year) LV Power Factor Cost of LV Capacitors to Correct to Unity PF Loss Benefit from LV Correction Cost of HV Capacitors to Correct to Unity PF Total LV Correction Cost (LV Capacitor Cost + Loss Benefit) 5. Summary The results of our simplified analysis suggest that if demand power factor correction is required to support transmission then it is more economic to correct power factor to unity on the LV distribution network rather than the HV transmission grid. This is because the lower cost of HV capacitors are outweighed by the reduced losses associated with LV capacitors. Furthermore, the results suggest that there is an economic benefit in correcting LV power factor to about 0.99 even if there is no requirement to support transmission. Note that this is a simplified preliminary analysis and SSG would welcome comment on our assumptions and methodology. Page 5 of 5