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XVI.a Fossil fuel transfers Costs

This is essentially the cost of the national gas grid.

Source data

From Markal3.24Doc

  • Residential: 9.57 £M/PJ investment cost. 0.001 £M/PJ variable operating cost. pg 14 code SRNGA Chapter 4 Markal06 cites source for costs; US EPA (2005)
  • Industrial: 7.98 £M/PJ investment cost. 0.001 £M/PJ variable operating cost. pg 13 code SINGA Chapter 4 Markal06 cites source for costs; US EPA (2005)
* Electricity: 7.98 £M/PJ Investment cost. 0.001 £M/PJ variable operating cost. pg 12 code SENGA cites source for costs: US EPA(2005)

US EPA (2005) US Regional MARKAL model documentation, Office of Research and Development, US Environmental Protection Agency, www.epa.gov/appcdwww/apb/globalchange

These are American numbers. It would be good to cross-check with National Grid data.

Approach

  1. Lump all gas demand together
  2. Assume the numbers above are per PJ of average flow, and that the scaling that has been done to peak demand remains unchanged.
  3. Use +/-50% of the residential range for high and low range, use 35th centile between low and high costs for "Default" figure.
  4. Assume a 30 year life

Issues

  1. Should perhaps work out the size of the gas pipe based on peak demand so benefit from insulation?
  2. The Markal capital value looks much to high compared with the UK National Grid regulated asset values of £4.5bn for the gas transmission network[1] and £7bn for the bit they own (perhaps half)http://www.nationalgrid.com/annualreports/2010/operating-and-financial-review/gas-distribution/about-gas-distribution.html.
  3. The ratio of capital to operating cost looks wrong, compared with national grid. It may be that a lot of the capital replacement in this calculation is actually operating cost in National Grid figures.
  4. These ofgem documents have gas distribution costs[2] [3]

General Comments

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  1. http://www.nationalgrid.com/annualreports/2010/delivering-performance/transmission/about-transmission.html
  2. http://www.ofgem.gov.uk/Networks/GasDistr/otherwork/Documents1/6502-5604Openletter_GasDistributionPriceControl.pdf
  3. http://www.ofgem.gov.uk/Networks/Trans/Archive/TPCR4/ConsultationDecisionsResponses/Documents1/16342-20061201_TPCR%20Final%20Proposals_in_v71%206%20Final.pdf