Abstract
Maintaining high facility reliability in power plants is essential to secure long-term electricity supply. This paper applies the survival analysis to the actual unit level power generation data in Korea to estimate the relationship between facility reliability and the preventive maintenance. Duration of generators between forced outages is used to measure plant reliability. the empirical analysis shows that preventive maintenance cost, planned outage for maintenance, use rate, and reserve margin lead to the longer duration of generators and, in turn, the lower forced outage rates. We uncover that the marginal benefit of the preventive maintenance cost is decreasing at an increasing rate. It indicates that the marginal benefit of the “current” maintenance cost is minimal. Results in the paper imply that power plants in Korea might be spending unnecessarily high maintenance costs considering already having world’s lowest forced outage rates.
Highlights
Energy security, securing a long-term electricity supply, is indispensable to meet any changes in electricity demand
What is the marginal benefit of spending more preventive maintenance cost? Are power plants in Korea spending unnecessarily high preventive maintenance cost? This paper demonstrates that the marginal benefit of maintenance cost at current level is pretty low
Major power companies in Korea are owned by Korea Electric Power Corporation (KEPCO) as indicated in Introduction and their performance including forced outage rates are evaluated by Ministry of Economy and Finance (MOEF), which imply that their management decisions should be similar
Summary
Energy security, securing a long-term electricity supply, is indispensable to meet any changes in electricity demand. Power plants in Korea spend unnecessarily high preventive maintenance cost to keep the UCLF extremely low compared to other countries. Are power plants in Korea spending unnecessarily high preventive maintenance cost? This paper demonstrates that the marginal benefit of maintenance cost at current level is pretty low It is an important question since the Korean government has been using the UCLF for power plants’ performance assessment, which may have caused power plants to spend unnecessarily high preventive maintenance cost. As will be discussed in result section, the marginal benefit of the preventive maintenance at current level in Korea is minimal implying that, policy-wise, Korean power plants are spending unnecessarily high preventive maintenance cost to keep the UCLF extremely low
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