W5_Nasser_Getting FOP in
RO/GJ required to calculate FC under a PPA.
1. Problem Definition
OPWP (as a BUYER) entered into a Power Purchase Agreement (PPA) with
an ABCD Power Company (GENERATOR) for 15 years. According to the PPA, generator
shall make the capacity available and sells the output to the buyer. Accordingly,
in monthly basis OPWP pays to the generator the Power Capacity Charges (PCC),
the Electrical Energy Charges (EEC) and Fuel Charges (FC).
The FC is paid, based on Gas Price (GPm) and Fuel Oil Price
(FOP), to compensate the generator for the theoretical required fuel to be
consumed for generated power output. Unlike GPm in RO/GJ, the methodology for
calculating FOP in in RO/GJ is not defined in the PPA.
The generator receives a bill from the Fuel Oil (FO) supplier at
each fill. FO prices from the supplier given in RO/Litter but not in RO/GJ which
is required for calculating the FOP.
In this blog, I will find out what is the best way for getting
the FOP in RO/GJ using Multi Attributes Decision Making (MADM).
2. Identify the Feasible
Alternative
Option 1 :
having the FOP in RO/GJ instead of RO/letter
in the bill submitted FO supplier in RO
Option 2 :
Finding a methodology to convert the FOP from RO/letter,
as submitted in FO supplier bill, to RO/GJ, as required for calculating FC.
3. Development of the
Outcome for Alternative
Looking at the 1st
Option, since selling the FO in a unit price/letter is internationally followed
method, having the FOP in RO/GJ instead of RO/letter in the bill submitted FO
supplier in RO is invalid choice.
Where as in the 2nd
option, for FOP conversion from RO/letter to RO/GJ, we need to get FO Density
in kg/m3 and Lower Heating Value in kj/kg using the following formula.
FOP in RO/GJ = [(FOP in RO/Letter) / ((FO
Density in kj/kg) / 1000) * (LHV in kj/kg) * (10^6)]
4. Selection Criteria:
My selection criteria
will be based on the followings:
- Possible to do
- Accuracy
- Time saving (ready-made)
- Cost saving
Table1: Criteria Analysis Comparison
5. Analysis and
Comparison of the Alternative:
Using Grid Analysis, which is a useful
technique for deciding and it is most effective where you have many good
alternatives and many factors to consider. The comparison of the above criteria
is ranked as following:
- 1=Possible/ Accurate/ very much/ Yes
- 0=Not possible/ Inaccurate/ not much /No
Table2: Weight Assessment
6. Selection of the Preferred
Alternative
Notwithstanding both option1 and option2 scored
the same, since option 1 is not possible, my selection is option 2 which is FOP to be converted from RO/letter to RO/GJ in
monthly basis.
7. Performance Monitoring
and the Post Evaluation of Result
Since the best decision was found to calculate
the FOP in RO/GJ, my W6 blog will be about “Selecting methodology for
calculating Fuel Oil Price (FOP) for a Generator”.
8. References:
o The Engineering Toolbox. (n.d.). Density
of fuel oils as function of temperature. Retrieved from https://www.engineeringtoolbox.com/fuel-oil-density-temperature-gravity-volume-correction-ASTM-D1250-d_1942.html
o
Hindawi, & Mathematical Problems
in Engineering. (2016, April 27). Multiple Attribute Decision Making Based on
Cross-Evaluation with Uncertain Decision Parameters. Retrieved from https://www.hindawi.com/journals/mpe/2016/4313247/
o
Mba tools. (n.d.). Grid Analysis.
Retrieved from http://www.mbatools.co.uk/Toolbox/DecisionMaking/gridanalysis.htm
o Planning
Planet. (2014, July 2). | Project Controls - planning, scheduling, cost
management and forensic analysis (Planning Planet). Retrieved from http://www.planningplanet.com/guild/gpccar/managing-change-the-owners-perspective%20Figures%208-14
o Terence
Holmes. (2015, September 1). Fishbein Models [Video file]. Retrieved
from https://www.youtube.com/watch?v=JL1UFF-HJlQ&feature=youtu.be
Hmmmmmm........ Gotta think about this one a bit..... NORMALLY whenever you use MADM methods and end up with a TIE, it means you either need to ADD more feasible alternatives OR if that is not possible then add more ATTRIBUTES.
ReplyDeleteThe other option is that this is not the appropriate tool to use for this analysis? That perhaps a pure "benefit to cost" analysis or more traditional IRR, ERR, NPV or payback period analysis would be preferable?
I will accept this posting but remain very skeptical that this analysis was done as completely or correctly as it could or should have been.
BR,
Dr. PDG, Jakarta