SPG8024 2021-22 Assessment
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SPG8024 – Quantifying Energy Decision Making
Module Assessment
Achievement of the SPG8024 module learning outcomes is assessed based on a report.
Submit your work on Canvas page in the 'Assignments' area
The deadline is 2 pm on Friday 19 August 2022.
Details of the report requirements are given in this document.
While carrying out this activity, consider that the task you have been given and the associated report
are designed to assess your understanding of the knowledge and skills listed below. Critically review
your work to check that you have demonstrated your learning for each of these. After doing this
review and, if necessary, modify your report to ensure it includes each element.
Elements of knowledge and skill being assessed
1. Concepts of heat, temperature, energy, and power. How they are used to express energy
system properties and performance.
2. The correct way to express physical quantities (including those above) across a wide range of
magnitudes in the International System of units (SI).
3. The effect of the time value of money on investments in long-term projects, as characterised
by energy system technologies.
4. Project financial appraisal measures; lifetime cost, cost-benefit ratio, payback period, internal
rate of return, unit production cost.
5. Fundamental concepts in power systems; supply & demand, availability, security of supply,
reliability, capacity factor, capacity margin.
6. How existing generation and demand dictate the role of existing and future generation within
an electricity supply system; how energy markets, generator marginal costs, and generator
merit order affect these roles.
7. How power generation projects can contribute to the economic, sustainable, and reliable
operation of an electricity supply system, and when and how additional incentives may be
required to achieve this.
8. Exploitation of renewable energy resources with consideration of; availability, system
integration, economic, social, and political factors.
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Task Specification
Part A (~60% relative effort)
You will be provided with information about an island electricity supply system and a range of
electricity generation technologies. You will take the role of a consultant employed by the developer
of a new generation project on the island. Your client wishes to develop a new project using a specific
technology and with a defined budget for construction. You will
1. describe the operation of the new generation technology, including the physical principles
(with use of appropriate mathematics) that explain the energy conversion process and
resource availability,
2. determine the average market clearing price (MCP) of electricity supply on the island before
the addition of the new generation technology using the information provided about the
generation and demand characteristics,
3. determine the capacity the new generation technology, its effect on the average market
clearing price and the number of hours it will operate each year,
4. complete a financial appraisal to give the NPV, IRR, PP, CBR and LCOE (spelt out below), and
5. compare the LCOE of the new generation technology with the average MCP and whether any
additional support should be provided to encourage the uptake of this technology.
Part B (~40% relative effort)
While the specified technology is the client’s preferred option, they are open to alternative
investments if these would provide a better return on their investment and/or better meet the needs
of the system. You should assess the roles fulfilled by the existing generators on the island and to what
extent they meet the system needs in terms of
a. supplying the baseload, intermediate, and peak demand; and
b. ensuring an affordable, sustainable, and reliable supply of electricity.
You will
1. identify any shortcomings in the ability of the existing generation to meet the need for the
energy system to be resilient and operable,
2. propose an alternative project which can help to improve this situation, and
3. discuss the current political, environmental, and societal issues associated with the generation
mix and how alternative generation technology will affect these.
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Report specification
Word count and non-text elements
Approximate word count: 2,000 words. Only the main text is included in this count; the title page,
table of contents, references and similar parts are excluded from the word count.
Non-text elements consisting of diagrams, graphs and tables need to be included to provide
information that cannot be conveyed effectively through words alone. Note that these elements are
essential to include so that your ability to present information in these ways can be assessed.
Clear and concise writing
It is essential that you communicate the information in your report:
Clearly – use an effective structure, use descriptive figure captions, ensure nomenclature is defined,
define the symbols used in equations.
Concisely – ensure that you use as few words as possible to unambiguously explain your work, use
effective referencing to build on the work of others, do not repeat similar information at multiple
places in your report.
Document format
You do not have to use a particular format for the document. Here are some recommendations that
you can follow:
• Use Word or equivalent document preparation software.
• Use Styles to format headings consistently and auto-generate a table of contents.
• Use captions to label your figures and tables, use cross-referencing to refer to these in the
text.
• Include references by using a reference management plugin to a programme such as endNote,
Zotero or Mendeley.
Use an 11pt Arial font or similar.
Report sections
Title page
Include your name, student number, module title, date of submission, report title
Introduction
Briefly outline the purpose and content of the report
Technology description
Explain, using concepts from the physics of energy, the operational principles for the energy
conversion process for the technology which you are assessing. It is expected that mathematical
expressions will be used to express factors including, but not limited to: energy resource, power
conversion, energy density and land use.
Price of generation
Determine the average market clearing price (MCP) of the original combination of generators.
Consider that variable generators with a capacity factor (CP) are available for a period equal to the CF
and not available the remainder of the time. Consider that dispatchable generators (with an
availability) are 100% available for the purpose of calculating the MCP. This means that you will
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calculate six MCPs (two for each of Base, Intermediate and Peak demand periods) and find the time-
weighted average to reach the MCP.
Adding the new generator makes the calculation more complex. You have been provided with a
spreadsheet to allow you to determine the operation of the generators with the new technology
added. Use this to find the new MCP and runtime (hours per year) of the new generation technology.
Financial appraisal
Use the methods you have been shown for financial appraisal to illustrate how the costs and benefits
due to the addition of a new generation technology are assessed over the project lifetime. Your
calculations should include the Net Present Value (NPV), Internal Rate of Return (IRR), Payback Period
(PP), Cost-Benefit Ratio (CBR), and Levelized Cost of Energy (LCOE) for the added generation
technology.
Consider how the existing generation, and resultant market conditions, will affect the project’s
viability. Discuss whether there are reasons to provide financial support to improve the project’s
viability.
Assessment of System Needs
Does the current generation mix meet the needs of the system? Identify areas in which the existing
system is deficient. You should consider:
• Affordability
• Sustainability (CO2 emissions)
• Security of Supply
• Operability
Alternative technologies
Based on the deficiencies identified in the previous section, provide a brief review of an alternative to
the project proposed by your client, identify the key differences between them, and how these
differences would address the system needs.
Non-financial appraisal
Discuss factors other than purely financial considerations that your client should be aware of. You
should consider the environmental, social, and political impacts of the new generator.
Recommendation
Advise your client on what they should do next and identify any uncertainties in your appraisal that
should be assessed in more detail to gain a more complete picture of the decision to be made.


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Project Data
Islands
You will be assigned one island on which to develop your project. For each island, information is
provided about the demand and generation. Demand is described in terms of the base, intermediate
and peak power required and the duration of time for which it is needed. Each renewable generator
has a capacity factor, while each conventional generator has an availability.
Island 1
Island 1 is in the North Sea 100 miles from a
mainland grid connection. It has high winds but
is currently dependent on diesel and gas for
electricity. The mainland has an average price
of £50/MWh and an average CO2 intensity of
200 kg/MWh.
Table 1. Island 1 Demand
Category Demand (MW) Duration
Base 110 30%
Intermediate 300 60%
Peak 550 10%
Table 2. Island 1 Existing Generation
Technology Capacity (MW) Marginal Cost (£/MWh) Capacity Factor Availability
Wind 50 0 40% n/a
Gas 150 40 n/a 85%
Diesel 13 x 50 MW 60 n/a 80%
Island 2
Island 2 is a mountainous island in the
Mediterranean, 100 miles from a mainland grid
connection. It has a run of river hydroelectric
plant, and expensive oil and diesel power
plants. The mainland has an average price of
£40/MWh and an average CO2 intensity of
300 kg/MWh
Table 3. Island 2 Demand
Category Demand (MW) Duration
Base 200 40%
Intermediate 400 40%
Peak 600 20%
Table 4. Island 2 Existing Generation
Technology Capacity (MW) Marginal Cost (£/MWh) Capacity Factor Availability
Oil 2 x 150 50 n/a 80%
Diesel 9 x 50 60 n/a 80%
Hydro 300 0 60% n/a
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Island 3
Island 3 is in the Pacific Ocean, 200 miles from
the mainland grid connection. It has a large
coal power plant with two units, one of which
has been converted to burn biomass. It has
some solar capacity. The mainland has an
average price of £60/MWh and an average CO2
intensity of 50 kg/MWh
Table 5. Island 3 Demand
Table 6. Island 3 Existing Generation
Technology Capacity (MW) Marginal Cost (£/MWh) Capacity Factor Availability
Coal 400 45 n/a 90%
Biomass 400 55 n/a 90%
Solar 250 0 15% n/a
Island 4
Island 4 is in the Mediterranean, 75 miles from
the mainland grid connection. It already has an
interconnector with the mainland and multiple
gas generation units are situated on the island.
There is a moderate level of solar capacity. The
mainland has an average price of £35/MWh
and an average CO2 intensity of 400 kg/MWh
Table 7. Island 3 Demand
Table 8. Island 3 Existing Generation
Technology Capacity (MW) Marginal Cost (£/MWh) Capacity Factor Availability
Solar 250 0 15% n/a
Gas 6 x 90 40 n/a 85%
Interconnection 200 35 n/a 95%
Category Demand (MW) Duration
Base 200 40%
Intermediate 400 50%
Peak 600 10%
Category Demand (MW) Duration
Base 200 40%
Intermediate 350 50%
Peak 500 10%
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Reference Data
Table 9. Investment Conditions
Capital Budget (£Million) 100
Interest Rate 4%
Table 10. Technology cost and performance data
Technology Type Capital Cost (£Million/MW)
Fixed Costs (% of
Capital Costs/yr)
Marginal Cost of
Generation (£/MWh)
Expected
Capacity Factor Availability
Design Life
(years)
CO2 Emissions
(kg/MWh)1
Solar PV 1 1.00% 0 15% n/a 15 48
Concentrating Solar
Power 2.5 1.50% 0 45% n/a 25 27
Onshore Wind 1.25 1% 0 35% n/a 15 11
Offshore Wind 2 1.80% 0 45% n/a 15 12
Combined Cycle Gas 1.25 2.30% 35 n/a 85% 25 490
Tidal Lagoon 4 0.50% 0 20% n/a 60 17
Run of River
Hydroelectric 2.5 0.50% 0 60% n/a 60 24
Dammed
Hydroelectric 1.25 0.10% 0 20% n/a 60 24
Wood pellet Biomass 0.8 2.50% 50 n/a 90% 40 230
HVDC Interconnector 0.8/100 miles 1.50% Mainland Average Price n/a 95% 25
Mainland
Emissions
1 According to IPCC Working Group III – Mitigation of Climate Change, 2014