Conductors are a very small component of electrical system lifecycle costs

Conductors contribute greatly to the performance and reliability of electrical systems although conductor costs are a very small component of system lifecycle costs.

Design and procurement processes for electrical systems often focus narrowly on the optimisation of individual cost components such as cables, transformers and motors whereas these should consider the system as a whole over its lifecycle. An objective economic evaluation of systems would conclude that individual components such as conductors cost a relatively small part of the total system while contributing greatly to its performance and reliability. This can clearly be seen from the examples below:

Capital costs

a) Power distribution systems

At the product level itself, a power cable is more than just conductors it comprises insulation and several layers of screens, sheaths, shields, armor etc. as well. Similarly, a transformer includes magnetic steel, a tank, oil and accessories in addition to the conductors.

At a system level, the costs include those for

  • Engineering of the system.
  • Procurement of equipment and materials including cables, transformers and switchgear.
  • Civil Construction works comprising the digging of cable ways, the construction of ducts and inspection covers, the construction of transformer bays and switchgear foundations, the construction of sub-stations and the restoration of the constructed area.
  • Electrical construction works comprising cable laying and termination, and the installation and commissioning of transformers and switchgear.

b) Motor driven systems

At the product level, a motor comprises magnetic steel, housing, shaft, bearings, terminal box and accessories in addition to stator and rotor conductors.

At a system level, the costs include those for

  • Mechanical equipment such as gears, belts, clutches and brakes.
  • Driven equipment such as conveyors, fans and pumps.
  • Other electrical equipment such as variable speed drives, harmonic filters, cabling and switchgear in addition to motors.
  • Design, construction and commissioning of the system.

Operating expenditure

Operating expenditure incurred over the lifecycle of the systems which can extend to 40-50 years or more, comprises the costs of energy losses, of outages due to system failures, of repairs, of operation and of maintenance. Additionally, there are the costs of disposal at end of life minus the residual value of the system. Operating expenditure invariably dwarfs the upfront capital investment by far.

It becomes quite clear from the above that individual components such as conductors, while critical to performance and reliability, cost only a relatively small part of the total system over its lifecycle. An economic choice between systems using alternative conductor materials should consider the net present value (NPV) of all three components of the total cost of ownership (TCO) – capital investments, operating expenditure and end of life. It will be found that there is hardly any long-term economic advantage in choosing the initially less expensive aluminium conductors over the better performing and more reliable copper.

Reference:

 DNV paper on cable lifecycle costs

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