EXTERNALLY-AUTHORED REPORT
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Variable Operations and Maintenance Cost
December 26, 2018
EXTERNALLY-AUTHORED REPORT
Variable Opertions & Maintenance Cost
www.caiso.com
This report was developed by an external party at the request of the California
Independent System Operator for posting to the CAISO website in conjunction with a
Stakeholder-involved initiative or similar activity. The document was not produced by
the CAISO and therefore does not necessarily reflect its views or opinion.
Background
Variable Operations and Maintenance (VOM) costs are used in default energy bids and
minimum load costs as per MWh dollar amounts that are intended to capture the variable, non-
fuel costs associated with running a generator. The VOM has been refined since 2009 with the
CAISO reviewing VOM adders every three years as indicated in the BPM for Market
Instruments Attachment D.5.4. In 2012, the category of VOM values was expanded from two
categories to ten categories based on a consultant study of the various types of generating
plants operating in the CAISO Control Area. The CAISO reviewed the ten categories in 2015
and retained the values established in 2012.
Tariff Section 39.7.1.1.2 details the current default VOM values: “The default value for the
variable operation and maintenance cost portion will vary by fuel source or technology as
follows: (1) solar $0.00/MWh; (2) nuclear $1.00/MWh; (3) coal $2.00/MWh; (4) wind $2.00/MWh;
(5) hydro $2.50/MWh; (6) natural gas-fired combined cycle and steam units $2.80/MWh; (7)
geothermal $3.00 WMh; (8) landfill gas $4.00/MWh; (9) combustion turbines and reciprocating
engines $4.80/MWh; and (10) biomass $5.00/MWh. Resource specific values may be
negotiated with the CAISO or the Independent Entity charged with calculating the Default
Energy Bid. Default operation and maintenance values as well as any negotiated values will
also be used to calculate Minimum Load Costs pursuant to Section 30.4.”
The CAISO has engaged Nexant consulting for the 2018 review of VOM. The 2018 review is a
detailed review of the costs associated with VOM and consistent with the definition of VOM as
the variable non-fuel costs that may include raw water, water and wastewater disposal
expenses, chemicals and other consumable materials and supplies. The CAISO has been
identifying and refining generator commitment and energy costs through a series of stakeholder
initiatives including Commitment Costs Enhancements Phases 1 through 3, Bidding Rules
Enhancements Phase 1 & 2 and Commitment Costs and Default Energy Bid Enhancements
(CCDEBE) and this detailed review of VOM is consistent with those initiatives.
The ISO is starting a review process to update, as applicable, the adders for VOM. During this
process, stakeholders will have an opportunity to review and comment on the methodology
used to calculate VOM. Nexant’s report includes a review of the data sources and methodology
used to determine VOM considering the generating fleet and resource technologies in the
Western Interconnect.
EXTERNALLY-AUTHORED REPORT
Variable Opertions & Maintenance Cost
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Revision History
Date
Version
Description
Author
12/26/2018
1.0
Initial Version
Nexant
REPORT
Variable Operations and
Maintenance Costs Report
Submitted to: California Independent System Operator
December 21, 2018
CAISO Operations and Maintenance Cost Report i
Contents
1 Introduction and Background .............................................................. 1
1.1 Objectives and Requirements ................................................................... 1
1.2 Report Overview ......................................................................................... 1
2 Cost Definitions, Data Sources and Methodology for Cost
Development .......................................................................................... 2
2.1 Cost Definitions .......................................................................................... 2
Variable Operations and Maintenance (VOM) ................................... 2 2.1.1
Major Maintenance Costs (MM) ......................................................... 3 2.1.2
Other Maintenance Costs (OM) ......................................................... 3 2.1.3
2.2 Data Sources .............................................................................................. 3
General .............................................................................................. 3 2.2.1
Independent System Operators’ Cost of New Entry (CONE) Study 2.2.2
Reports .............................................................................................. 4
Sargent and Lundy ............................................................................ 4 2.2.3
EPA Compilation of Air Pollutant Emissions Factors (AP-42) ............ 5 2.2.4
DOE Utility-Scale Solar Reports ........................................................ 5 2.2.5
DOE Wind Technologies Market Reports .......................................... 5 2.2.6
NREL O&M Cost Reports .................................................................. 6 2.2.7
EIA Annual Energy Outlook Reports .................................................. 6 2.2.8
Geothermal H2S Abatement Costs .................................................... 7 2.2.9
Black & Veatch .................................................................................. 7 2.2.10
Wood Fuels Handbook ...................................................................... 7 2.2.11
Lazard’s Levelized Cost of Energy .................................................... 7 2.2.12
EPA Combined Heat and Power ........................................................ 8 2.2.13
Parson Brinkerhoff Report ................................................................. 8 2.2.14
IRENA (Renewable Power Generation Cost Reports) ....................... 8 2.2.15
2.3 Methodology Used to Develop VOM Costs .............................................. 8
Escalating Costs to 2019 Target Year ............................................... 9 2.3.1
2.4 Generators Included in Report .................................................................. 9
3 Cost Information for Generating Plants ............................................ 10
3.1 Coal and Natural Gas Generators ........................................................... 10
3.2 Combustion Turbine and Combined Cycles Generators ...................... 11
CAISO Operations and Maintenance Cost Report ii
3.3 Nuclear and Advanced Nuclear ............................................................... 12
3.4 Renewable Generating Units with VOM .................................................. 13
3.5 Plants without Variable Operations and Maintenance Costs ............... 14
CAISO Operations and Maintenance Cost Report 1
1 Introduction and Background
1.1 Objectives and Requirements
The CAISO engaged Nexant to assist them to review and to potentially update the variable
operations and maintenance cost values that are used in their market processes. The CAISO’s
overall objectives for this engagement are as follows:
1) To perform a review of the variable operations and maintenance costs (VOM) of
generators in order to help ensure that the cost inputs used in CAISO markets are
reasonable reflections of expected costs.
2) To potentially revise the current technology types and default values for VOM in its Tariff
to reflect the current technology and technology-specific VOM costs in the Western
Interconnection.
In addition, listed below are a few other requirements that went into the development of the
VOM default cost values:
VOM values should be developed for generator types that have a significant market
presence in the Western Interconnection
VOM values should adhere to the CAISO’s definition of Variable Operations and
Maintenance costs.
Since VOM values developed will be used by the CAISO as default values in the CAISO
market they should be representative of a large fraction of the generators in the class -
for generators whose variable O&M costs are different the default VOM value, the
CAISO is expected to continue its past practices of working with generator owners to
develop generator-specific VOM values.
To the extent possible, VOM values should be developed using publicly available
information.
The VOM costs developed should be representative of the costs in the year 2019. To
accomplish this, the project included the development of a methodology to escalate cost
data from years prior to 2019 (i.e. in 2009 dollars) to cost in 2019 dollars.
1.2 Report Overview
This report summarizes the work that was performed to the meet objectives while meeting the
requirements listed above – namely the review and potential revision of the default VOM values
used in the CAISO market.
This draft report is organized into the following sections:
Section 2: Cost Definitions, Data Sources and Methodology for Cost Development
Section 3: Cost Information for Generating Plants
CAISO Operations and Maintenance Cost Report 2
2 Cost Definitions, Data Sources and
Methodology for Cost Development
2.1 Cost Definitions
We note that in the course of searching for data and developing the various costs factors, there
are no standard definitions for what operations and maintenance costs should be considered
variable vs. what costs should be considered fixed. Further, there are no standard definitions
regarding what costs should be considered variable with respect to energy production (MWh) or
plant starts or plant operating hours. This report utilizes the following CAISO definitions (directly
or indirectly) in characterizing cost information in this report. They are intended to be consistent
with the CAISO’s definition related to VOM costs as they are designed to be used in the CAISO
market processes.
Variable Operations and Maintenance (VOM) 2.1.1
Variable Operations and Maintenance (VOM) costs are the portion of the O&M costs that are a
function of the level energy production (MWh) of the generating unit over any period of interest.
In other words, the portion of O&M costs (excluding fuel costs) that varies directly with the MWh
production of the generating unit. To be consistent with how the VOM costs are used in the
CAISO market, the VOM values developed in this report include only costs associated with
consumables and waste disposal. The VOM values do not include any major maintenance (MM)
costs or other maintenance (OM) Costs (which are described below).
The use of the term VOM in industry and in many of the data sources available is not
standardized. In some cases, VOM is defined in same way that the CAISO defines it
(consumable and waste related costs) and in other cases VOM values provided in industry
reports include MM and/or OM costs
1
. All references to VOM cost in this report are based upon
the CAISO definition unless otherwise stated.
Examples of costs that are included in the VOM values per the CAISO definition are costs for:
Raw water
Waste and wastewater disposal expenses
Chemicals, catalysts and gases
Ammonia for selective catalytic reduction
Lubricants whose use depends upon energy production
Consumable materials and supplies
1
A good example of an industry report that for the most part includes Major Maintenance and Other Maintenance in their VOM
values is the U.S. Energy Information Authority’s Annual Energy Outlook (AEO) report which has been published since1979.
SECTION 2 COST DEFINITIONS, DATA SOURCES AND METHODOLOGY FOR COST DEVELOPMENT
CAISO Operations and Maintenance Cost Report 3
Major Maintenance Costs (MM) 2.1.2
Major Maintenance Cost (MM) is the cost of performing periodic O&M work required to maintain
the generating unit in an efficient and reliable condition. This work is normally performed during
extended periods of shut down of the generating unit lasting multiple weeks. These costs
generally include for example:
Scheduled major overhaul expenses for maintaining prime mover
Major maintenance labor expenses
Major maintenance spare parts costs
Balance-of-Plant (BOP) major maintenance costs that cannot be done with routine
maintenance or while in commercial operation
These costs are not included in the VOM values in this report.
Other Maintenance Costs (OM) 2.1.3
Other Maintenance Cost is the cost of performing other periodic O&M work required to maintain
the generating unit in an efficient and reliable condition. This work is normally not performed
during extended periods of shut down of the generating unit but performed during short
shutdowns (e.g. weekends). These costs generally include, for example:
Maintenance of equipment such as water circuits, feed pumps, main steam piping, and
demineralizer systems
Maintenance of electric plant equipment, which includes service water, DCS,
condensate system, air filters, and plant electrical
Maintenance of miscellaneous plant equipment such as communication equipment,
instrument and service air, and water supply system
These costs are not included in the VOM values in this report.
2.2 Data Sources
General 2.2.1
Generally, data that could be used to develop O&M values often come from reports that were
developed for generation planning or analysis. As such, they are focused heavily on capital
costs and the O&M costs are normally treated at a high level. In these sources, O&M cost is not
generally segregated into categories that are useful to developing a CAISO VOM default value –
in general MM and OM costs are not shown as individual items and VOM, particularly in recent
years contains MM and OM costs in many reports. For developing VOM costs that are
consistent with the CAISO market design, emphasis was placed upon finding data sources that
segregated the costs related to consumables and waste disposal from other costs making it
possible to more accurately estimate VOM costs for use in the CAISO market. The various
sources referred to in the course of developing the default VOM values are listed below.
SECTION 2 COST DEFINITIONS, DATA SOURCES AND METHODOLOGY FOR COST DEVELOPMENT
CAISO Operations and Maintenance Cost Report 4
Independent System Operators’ Cost of New Entry (CONE) 2.2.2
Study Reports
Independent System Operators that operate capacity markets in the US (Example: New York
ISO, PJM, and ISO New England) periodically perform Cost of New Entry (CONE) studies to
develop the demand curve for their capacity auctions. Typically, the ISOs hire an Independent
Consultant to develop the inputs for the demand curve, including the cost of a new peaking unit.
These studies involve the detailed development of construction cost estimates, operating cost
data and plant operating characteristics by an engineering firm or based on inputs from an
engineering, procurement and construction (EPC) company. In these studies, the CONE for two
types of plants are typically developed – peaking plants which include simple cycle
aeroderivative combustion turbines, frame combustion turbines and reciprocating internal
combustion engines (RICE) and combined cycle power plants using 1x1 or 2x1 configurations of
frame combustion turbines.
In addition to capital costs for new units, the fixed operating and maintenance (O&M) costs and
variable O&M costs are also developed in these studies. Typical fixed plant expenses include
plant staff labor cost, routine O&M, routine planned maintenance, and administrative and
general costs. Variable O&M costs are directly related to plant electrical generation and start-
ups and consist of two components. One variable operating cost component includes the
consumables such as ammonia for the Selective Catalytic Reduction (SCR), chemicals, and
lube oil for the RICEs, water, and other production-related expenses including SCR and
oxidation catalyst replacement. This component is similar to the CAISO VOM definition. The
other variable operating cost component is major equipment maintenance. For the simple cycle
combustion turbines, the major maintenance variable cost component is for the combustion
turbine. For the RICE plant, the major maintenance variable cost component is for the engine
major maintenance. For the combined cycle plants, the major maintenance variable cost
component also includes the major steam cycle equipment such as the steam turbine, heat
recovery steam generator, and condenser. These major maintenance costs (parts and labor)
associated with gas turbine, steam turbine, and HRSG are provided as a separate line item in
these reports but are not included in the VOM values developed in this report.
The CONE reports for NYISO and PJM can be accessed using the links below. NYISO and PJM
have performed these CONE studies every three years.
https://www.nyiso.com/installed-capacity-market
https://www.pjm.com/markets-and-operations/rpm.aspx
Sargent and Lundy 2.2.3
Sargent & Lundy published the “New Coal Fired Power Plant Performance and Cost Estimates
report” in August 2009. This one-time report which was produced for the EPA provides a
detailed breakdown of the variable O&M components for coal plants in a manner that is
consistent with the CAISO VOM definition. This disaggregation of O&M costs allows for the
calculation of VOM associated with consumables and waste only which enables a bottom-up
SECTION 2 COST DEFINITIONS, DATA SOURCES AND METHODOLOGY FOR COST DEVELOPMENT
CAISO Operations and Maintenance Cost Report 5
calculation of VOM values. This data is used for the many coal fueled power plants in the report
as well as a reference to other fossil fueled plants with similar water and emission control
systems.
https://www.epa.gov/sites/production/files/2015-08/documents/coalperform.pdf
EPA Compilation of Air Pollutant Emissions Factors (AP-42) 2.2.4
Compilation of Air Pollutant Emissions Factors (AP-42) has been published by EPA since 1972
as the primary compilation of EPA's emission factor information. It contains emissions factors
and process information for more than 200 air pollution source categories. A source category is
a specific industry sector or group of similar emitting sources. The emissions factors have been
developed and compiled from source test data, material balance studies, and engineering
estimates. Data from this source was used to compare/develop estimates for consumables
related to emission controls for various generation types including coal, natural gas and
biomass.
https://www.epa.gov/sites/production/files/2015-07/documents/emission-factors_2014.pdf
DOE Utility-Scale Solar Reports 2.2.5
The DOE Utility-Scale Solar Report, published annually since 2011, provides an overview of
developments and trends in the U.S. solar power market. This report summarizes the trends in
the solar industry related to installation, technology, performance, cost and solar power
purchase agreement (PPA) prices. In addition to capital costs, this report also provides a
detailed summary of O&M costs. Berkeley Lab, the primary author of this report, has compiled
limited O&M cost data for 40 solar projects in the United States, totaling 800 MW and with
commercial operation dates of 2011 through 2016. Although the data sources do not all clearly
define what items are included in O&M costs, in most cases the reported values include the
costs of wages and materials associated with operating and maintaining the solar project, as
well as rent. Other ongoing expenses, including general and administrative expenses, taxes,
property insurance, depreciation, and workers’ compensation insurance, are generally not
included.
https://emp.lbl.gov/sites/default/files/lbnl_utility_scale_solar_2018_edition_report.pdf
DOE Wind Technologies Market Reports 2.2.6
The DOE Wind Technologies Market Report published annually since 2005 provides an
overview of developments and trends in the U.S. wind power market. These reports summarize
the trends in the wind industry related to installation, technology, performance, cost, wind power
price and policies. In addition to capital costs, this report also provides a detailed summary of
O&M costs. Berkeley Lab, the primary author of this report, has compiled limited O&M cost data
for 164 installed wind power projects in the United States, totaling 14,146 MW and with
commercial operation dates of 1982 through 2016. These data cover facilities owned by both
IPPs and utilities, although data since 2004 are exclusively from utility-owned projects and so
may not be broadly representative. The treatment of O&M costs for wind projects is similar to
SECTION 2 COST DEFINITIONS, DATA SOURCES AND METHODOLOGY FOR COST DEVELOPMENT
CAISO Operations and Maintenance Cost Report 6
the treatment of O&M costs for solar projects as described in the previous section in that data
sources do not all clearly define what items are included in O&M costs but generally include or
exclude the same type of costs as listed in the previous section.
https://www.energy.gov/sites/prod/files/2018/08/f54/2017_wind_technologies_market_report_8.
15.18.v2.pdf
NREL O&M Cost Reports 2.2.7
The National Energy Renewable Laboratory periodically publishes detailed reports on the O&M
costs associated with wind and solar PV plants. These reports give a detailed breakdown of the
O&M cost components for wind and solar plants and can be used to determine the costs that
are variable and fixed as per CAISO’s definition. These reports, in conjunction with the DOE
reports can be used for estimating the MM and other O&M costs for wind and solar plants.
https://www.nrel.gov/docs/fy08osti/40581.pdf
https://www.nrel.gov/docs/fy17osti/68023.pdf
EIA Annual Energy Outlook Reports 2.2.8
The U.S. Energy Information Authority (EIA) has been publishing the Annual Energy Outlook
(AEO) since 1979. Projections for the AEO report are obtained from the North American Energy
Modeling System (NEMS), a model developed and maintained by the Office of Energy Analysis
of the U.S. EIA. NEMS has several modules of which the Electricity Market Module (EMM) is
one. The NEMS Electricity Market Module (EMM) represents the capacity planning, dispatching,
and pricing of electricity. Based on fuel prices and electricity demands provided by the other
modules of NEMS, the EMM determines the most economical way to supply electricity, within
environmental and operational constraints. The cost and performance characteristics of new
generating technologies are inputs to the EMM electricity capacity planning submodule. EIA
maintains an archive (https://www.eia.gov/outlooks/aeo/archive.php) of assumptions used in the
NEMS model. These assumptions are available for the years 1996 and later.
Every three years on average, the EIA commissions an external consultant to update current
cost estimates for certain utility scale electric generating plants. The external consultant reports
from 2010, 2013, and 2016 are available on EIA’s website. The focus of these studies is to
gather information on the engineering, procurement and construction costs, operating costs,
and performance characteristics for a wide range of generating technologies. Where possible,
costs estimates are based on information derived from actual or planned projects known to the
consultant.
Non-fuel operations and maintenance (O&M) costs associated with each of the power plant
technologies are also evaluated in these external consultant studies. The O&M costs that do not
vary significantly with a plant’s electricity generation are classified as fixed, while the costs
incurred to generate electricity are classified as variable. However, in these reports, all the
major maintenance costs are included under variable O&M costs.
SECTION 2 COST DEFINITIONS, DATA SOURCES AND METHODOLOGY FOR COST DEVELOPMENT
CAISO Operations and Maintenance Cost Report 7
EIA scales the costs using a cost adjustment factor for the years that an external consultant’s
report is not produced. The cost adjustment factor, based on the producer price index for metals
and metal products, allows the overnight costs (capital costs) to fall in the future if this index
drops, or rise further if it increases. It should be noted that the methodology for calculating the
various costs has been consistent only for the past 10 years. Older data, while available should
be used with caution since the methodology used for classifying various costs followed a
different approach. In addition, the most recent studies are generally high level and do not go
into the detailed engineering analysis that one finds in the NY CONE studies or the Sargent and
Lundy coal studies discussed above.
Geothermal H2S Abatement Costs 2.2.9
A paper titled “Geysers Power Plant H2S Abatement Update” by John Farison, Brian Benn,
Brian Berndt, Calpine Corporation; was published in the Geothermal Research Council
Transactions, Vol. 34, 2010. The paper deals with hydrogen sulfide treatment at the Geysers
Power Plant in northern California including effluent abatement and the operations and
maintenance costs associated with the H2S treatment. A link to the paper is included below.
This source was used to develop default VOM values for geothermal generating units.
https://www.geothermal-library.org/index.php?mode=pubs&action=view&record=1028816
Black & Veatch 2.2.10
This report (COST AND PERFORMANCE DATA FOR POWER GENERATION
TECHNOLOGIES, 2012) was prepared for the National Renewable Energy Laboratory NREL
(NREL) for comparison of cost of conventional technologies vs. renewable technologies. NREL
contracted Black & Veatch to provide the power generating technology cost and performance
estimates that are described in this report. This data was used to compare against other
sources of cost for renewable generation plants. Some of the cost data in this report is based
upon EIA reports.
https://www.bv.com/docs/reports-studies/nrel-cost-report.pdf
Wood Fuels Handbook 2.2.11
Report prepared by Dr. Nike Krajnc and published by the Food and Agriculture Organization of
the United Nations (FAO-UN), 2015. This report provides data on various biomass fuels and
their detailed analysis. This handbook was used in estimating the Biomass VOM.
https://roycestreeservice.com/wp-content/uploads/Wood-Fuels-Handbook.pdf
Lazard’s Levelized Cost of Energy 2.2.12
Lazard regularly publishes LCOE reports that include capital and O&M costs. However these
reports do not provide detailed breakdown of cost components. This source was used as a
source of O&M data for nuclear plant O&M costs.
https://www.lazard.com/perspective/levelized-cost-of-energy-2017/
SECTION 2 COST DEFINITIONS, DATA SOURCES AND METHODOLOGY FOR COST DEVELOPMENT
CAISO Operations and Maintenance Cost Report 8
EPA Combined Heat and Power 2.2.13
EPA published a Catalogue of CHP Technologies in partnership with ORNL and ICF in
September 2017. It provides O&M cost breakdown for various generation technologies,
including IC engines and Fuel Cells.
https://www.epa.gov/sites/production/files/2015-07/documents/catalog_of_chp_technologies.pdf
Parson Brinkerhoff Report 2.2.14
Parson Brinkerhoff Report for the CCS O&M costs - July 2012 by Parsons Brinkerhoff for IEA
Environmental Projects, 2012. This report estimates O&M costs of carbon capture from
combined cycle plants. Developed for IEA, it was used to estimate the cost of Carbon Capture
and Sequestration costs.
https://ieaghg.org/docs/General_Docs/Reports/2012-08.pdf
IRENA (Renewable Power Generation Cost Reports) 2.2.15
The O&M cost review for some solar, wind, and small and large hydro plants were performed
using the IRENA Renewable Power Generation Cost Reports. These reports are published
regularly by IRENA and are developed from a cost database that includes 15000 data points for
LCOE from projects around the globe, representing over 1000 gigawatts (GW) of power
generation capacity. An additional auctions database encompasses over 7,000 projects with
nearly 300 GW of capacity. A link to the report is included below.
https://www.irena.org/publications/2018/jan/Renewable-Power-Generation-Costs-in-2017
2.3 Methodology Used to Develop VOM Costs
The overall approach taken to develop the VOM cost estimates was to first find public sources,
if possible, that included VOM type information that is consistent with the CAISO’s definition of
VOM costs. When possible this was done with sources that disaggregated VOM costs from
other types of O&M costs (MM, OM and other fixed costs) thus allowing a type of bottom up
estimation methodology. In cases where such data was found, the next steps was to revise the
data, if required, to reflect CAISO’s requirement of establishing VOM default values that are
representative of the VOM costs that would be applicable to many of the units for this type of
generator. As indicated earlier, the expectation is that if there are plants that have VOM costs
different than the default VOM value, that the plant owner/operator can approach the CAISO to
develop a unit specific VOM value.
It was possible in the case of most generation types to use the approach previously described.
In a few cases when a bottom up approach was not possible, VOM costs were estimated using
aggregated O&M costs that were then partially disaggregated into VOM and other costs using
engineering judgement. An example of this approach was the method used to develop the VOM
default value for an Advanced Combined Cycle Plant with Carbon Capture and Sequestration.
SECTION 2 COST DEFINITIONS, DATA SOURCES AND METHODOLOGY FOR COST DEVELOPMENT
CAISO Operations and Maintenance Cost Report 9
Finally, these VOM costs which represent data for years prior to 2018 were adjusted to be
representative of the costs in the year 2019 – the target year for all potential revised VOM
values. This simple methodology used for escalating a cost from a prior year to 2019 is
described below.
Escalating Costs to 2019 Target Year 2.3.1
We reviewed the various cost components in the VOM and the range of types of costs in
various VOM values and observed that these costs can include a range of chemical costs, a
range of disposal costs, some labor costs and some disposal fees.
Based upon that review of the components of VOM costs and their escalation over time, it was
decided that the best, as well as the simplest approach to escalate costs from a previous year
(for example, 2016) to the 2019 was to use the US Consumer Price Index (CPI) published
periodically by the US Bureau of Labor Statistics (BLS). In this approach, the ratio of the CPI for
the two years of interest (i.e., CPI2019/CPI2016) is used to escalate the VOM value from 2016 to the
year 2019. A link to the CPI used is provided below.
https://www.bls.gov/cpi/tables/detailed-reports/home.htm
2.4 Generators Included in Report
As requested by the CAISO, the types and subtypes of units covered in this report are intended
to include those types and subtypes that are representative of the generation technology
installed in the Western Interconnect or those that are likely to be installed in the near future.
Thus, generating plants that are one of kind or one of a few may not be represented in the
report results because they do not meet the “significant market presence” criteria discussed
earlier.
CAISO Operations and Maintenance Cost Report 10
3 Cost Information for Generating Plants
The potential Variable Operations and Maintenance Cost default values for all generating plants
covered by this report are shown in several tables in this Section 3. The generators have been
grouped such that similar generators are listed in the same section and cost table. The
information in each grouping includes:
Name of the Generator Group
Discussion of the generators in the group
A brief discussion of the costs included
A brief discussion of the key sources used to develop the VOM value for generators in
the group
A table that list the Generator Types included in the Group and the VOM costs in $/MWh
in 2019 dollars
3.1 Coal and Natural Gas Generators
Generators in this group include plants that are fueled by coal or natural gas in a variety of
configurations. The group includes coal and natural gas-fired, sub-critical conventional plants,
supercritical and ultra-supercritical coal units, an advanced supercritical coal unit with 90%
carbon capture and sequestration (CCS) and an Integrated Gasification Combined Cycle
(IGCC) plant.
The variable costs associated with this group of generators includes: 1) water used in
water/steam cycle and other processes in the generation facility that utilize water (e.g., coal pile
management), 2) chemicals associated with the plant emissions control processes and 3) waste
treatment and disposal.
Chemicals that are included for this group (as appropriate to each plant) are:
Limestone Reagent (dry FGD)
Activated Carbon (AC) – for mercury control
Ammonia – for NOx control
SCR Catalyst Replacement
Bags for Baghouse
Other miscellaneous consumables and waste costs
Waste treatment and disposal that are included (as appropriate to each plant) are:
Bottom Ash Disposal
Fly Ash Disposal
Gypsum Disposal
AC Waste Disposal
SECTION 3 COST INFORMATION FOR GENERATING PLANTS
CAISO Operations and Maintenance Cost Report 11
In keeping with the aim to develop default VOM values, the variable costs for this group of
generator types do not include costs for obtaining NOx or SO2 allowances and do not reflect the
revenue associated with the sales of waste products.
The primary sources of data used to develop these VOM cost estimates included:
Sargent and Lundy Report
EPA Compilation of Air Pollutant Emissions Factors (AP-42) - Emissions of criteria
pollutants were used to estimate NOx emissions and NOx emission control related
consumables for various thermal plants.
Table 3-1: Variable Operations and Maintenance Costs – Coal and Natural Gas Plants (2019$)
Plant Type
Variable O&M Cost
Coal Plant - Pulverized Coal – Subcritical
$2.69 MWh
Coal Plant - Pulverized Coal – Supercritical
$2.64 MWh
Coal Plant - Ultra-Super-Critical Coal Plant
$2.60 MWh
Coal Plant - Super-Critical with 90% Carbon Capture and Sequestration (CCS)
$5.21 MWh
Integrated Coal Gasification Combined-Cycle (IGCC)
$1.57 MWh
Oil/Gas Steam Plant – Subcritical
$0.32 MWh
3.2 Combustion Turbine and Combined Cycles
Generators
Generators in this grouping include a range of combustion turbine generator types in a both
simple and combined cycle arrangements and advanced arrangements with carbon
sequestration. They include:
Combined Cycle (CC) Heavy Duty Frame F – This category represents the majority of
the existing CCs in WECC. The values were derived based on a 328 MW Siemens 1 x 1
x 1 SGT6-5000F Combined Cycle Power Plant.
Combined Cycle Heavy Duty Frame H – This category represents the new CCs entering
into service. The values were derived based on a 383 MW Siemens 1 x 1 x 1 SGT6-
8000H Combined Cycle Power Plant.
Advanced Combined Cycle with Carbon Capture and Sequestration. This category
represents advanced power plants that use the latest combined cycle technology along
with 90% Carbon Capture and Sequestration Technology. The plant size is 860MW
Gross and 789 MW net.
Combustion turbines - E Class - This category represents the older frame gas turbines
that are in service (Frame B/E) in WECC. The values were derived based on a 74MW,
GE Frame 7000E Simple Cycle Power Plant.
Combustion turbines - F Class - This category represents the majority of the frame gas
turbines in WECC. The values were derived based on a 250 MW Siemens SGT6-5000F
Simple Cycle Power Plant Cycle Power Plant.
SECTION 3 COST INFORMATION FOR GENERATING PLANTS
CAISO Operations and Maintenance Cost Report 12
Combustion turbines - H Class - This category represents the new frame combustion
turbines entering the WECC region. The values were derived based on a 337 MW GE
7HA.02 Simple Cycle Power Plant Cycle Power Plant.
Combustion turbines (Aeroderivative) – This category represents the majority of the
aeroderivative combustion turbines (LM6000 and earlier). The values were derived
based on a 51 MW GE LM6000PA Simple Cycle Power Plant.
Combustion turbines (Aeroderivative) LMS100 – This category represents the
new/recent aeroderivative combustion turbines in the WECC region. The values are
based on a 100 MW GE LMS100 PA Simple Cycle Power Plant.
The variable costs associated with this group of generators includes: 1) water used in
water/steam cycle and 2) chemicals associated with the water and plant emission’s control
processes, 3) chemicals required for CO2 capture for the Advanced Combined Cycle with CCS
Unit and 4) other miscellaneous consumable costs
The primary sources of data used to develop these VOM cost estimates included:
The ISO CONE Reports
Parson Brinkerhoff Report for the CCS O&M costs.
Table 3-2: Variable Operations and Maintenance Costs – Combustion Turbines and
Combined Cycle Plants (2019$)
Plant Type
Variable O&M
Cost w/o SCR
Variable O&M
Cost SCR
Combined Cycle CC Heavy Duty Frame F
$0.17 MWh
$0.26 MWh
Combined Cycle Heavy Duty Frame H
$0.17 MWh
$0.38 MWh
Advanced Combined Cycle with Carbon Capture
and Sequestration
$2.64 MWh
Combustion Turbines - E Class
$0.47 MWh
$1.58 MWh
Combustion Turbines - F Class
$0.29 MWh
$0.82 MWh
Combustion Turbines - H Class
$0.29 MWh
$0.82 MWh
Combustion turbines (Aeroderivative) LM6000
$0.70 MWh
$1.88 MWh
Combustion turbines (Aeroderivative) LMS100
$0.72 MWh
$1.82 MWh
3.3 Nuclear and Advanced Nuclear
This group includes existing conventional nuclear plants with ratings of about 1100 MW and an
advanced nuclear plant with a rating of 1137 MW.
The primary source of data used to develop these VOM cost estimates is the EIA reports.
Table 3-3: Variable Operations and Maintenance Costs – Nuclear Plants (2019$)
Plant Type
Variable O&M Cost
Nuclear Plant Size 1100 MWs
$1.87 MWh
Advanced Nuclear Plant
$1.96 MWh
SECTION 3 COST INFORMATION FOR GENERATING PLANTS
CAISO Operations and Maintenance Cost Report 13
3.4 Renewable Generating Units with VOM
The plants in this group are all renewable in nature, except the Fuel Cell and the Internal
Combustion Engine generator which are primarily fueled by natural gas. The group includes
VOM costs of geothermal plants, biomass plants operating on agriculture waste, two solar
thermal power plants one with and one without storage, a fuel cell, a land fill gas generation
plant and an internal combustion plant.
Table 3-4: Variable Operations and Maintenance Costs – Renewable Generators with VOM (2019$)
Plant Type
Variable O&M Cost
Geothermal Power Plant
$1.16 MWh
Biomass Power Plant
$1.65 MWh
Solar Thermal Power Plant w/o storage
$0.24 MWh
Solar Thermal Power Plant with storage
$0.26 MWh
Fuel Cell
$37.7 MWh
Land Fill Gas
$1.21 MWh
Internal Combustion Engine
$1.10 MWh
The primary sources of data used to develop these VOM cost estimates included:
Geothermal H2S Abatement Report
Sargent and Lundy
EPA Air Pollutant Emissions Factors (AP-42)
EIA 2016 Report
EPA CHP Report
VOM costs for these generators will vary based on type or renewable energy and technology.
The following is the list of VOM components for each type of generating units.
Geothermal Power Plant – costs associated with H2S removal, and chemicals and water
for the steam cycle cooling and other miscellaneous consumables and waste costs.
Biomass Power Plant – costs associated with water for the steam cycle and for cooling
system, ammonia and SCR for NOx control, ash disposal costs and other miscellaneous
consumables and waste costs.
Solar Thermal Power Plant w/o storage – Cost of water and water chemicals for the
steam cycle and cooling tower and other miscellaneous consumables costs.
Solar Thermal Power Plant with storage – Cost of water and water chemicals for the
steam cycle and cooling tower, cost of Nitrogen (or inert gas) blanketing of the molten
salt storage tanks and other miscellaneous consumables
Fuel Cell – cost of fuel cell stack (or membrane) replacement that is directly proportional
to MWh generated
Land Fill Gas – cost associated with NOx control (ammonia and SCR catalyst) and other
miscellaneous consumables and waste costs.
Internal Combustion Engines - cost associated with NOx control (ammonia and SCR
catalyst), and other miscellaneous consumables costs.
SECTION 3 COST INFORMATION FOR GENERATING PLANTS
CAISO Operations and Maintenance Cost Report 14
3.5 Plants without Variable Operations and Maintenance
Costs
There are a number of types of generation plants that do not have variable operations and
maintenance cost that meet the CAISO definition of VOM. That is, they don’t have costs that are
a function of the level of production (MWhs) that are consumables and waste related. The
generation types that are in this category include:
Table 3-5: Generating Plants without Variable Operations and Maintenance Costs
Plant Type
Small Hydro
Large Hydro
Pumped Storage
Solar PV of all sizes
Wind Generators
Battery Storage Units
