The study on cost-effectiveness analysis methods used for electric power equipments

Abstract

With the rapid expansion of power systems in China, asset-intensive electric power companies need novel techniques in the asset management. Life cycle cost (LCC) technique has attracted wide attention because of its advanced concepts and successful applications in military fields. Among all the execution steps of LCC technique, LCC evaluation is critical which brings the LCC technique into practical application. The major work in LCC evaluation is to carry out cost-effectiveness analysis accurately. However, cost-effectiveness analysis on electric power equipment is still at preliminary stage with few practical examples, for the present. Therefore, the study on cost-effectiveness analysis methods applied to electric power equipment field is of great significance. Two main methods for cost-effectiveness analysis (cost-effectiveness ratio (CER) method and comprehensive analysis method) are summarized and compared in this paper. It shows that CER method is more applicable for the analysis of equipments with single function in simple structures because of its clearer concept and less computation. On the contrary, comprehensive analysis method is more applicable for the analysis of equipments with multiple functions in complex structures because of the comprehensive and accurate evaluation conclusion it provides. Three electric power equipment oriented cost-effectiveness analysis mathematical models of these two methods mentioned above are analyzed and compared based on their practical application examples, summarizing different application scopes of the three models. In conclusion, all the efforts made in this paper are to provide some help for successful implementation of LCC technique in electric power companies.