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An International Comparison of Production Techniques : the Coal-Fired Electricity Generating Industry

Published online by Cambridge University Press:  26 March 2020

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Extract

There is a widely held view that Britain's poor performance in exports and economic growth can be attributed to relatively old-fashioned techniques of production—a handicap which might be particularly important in industries where technological progress is rapid. The only way to establish whether this view is right or not is by empirical investigation. Unfortunately such investigation is difficult, because not many industries have adequate statistics.

Type
Research Article
Information
National Institute Economic Review , Volume 36 , May 1966 , pp. 30 - 42
Copyright
Copyright © 1966 National Institute of Economic and Social Research

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Footnotes

This article was prepared by F. P. R. Brechling and A. J. Surrey at the National Institute, with assistance from P. O'Brien and Miss R. Williams. It is part of the National Institute's wider enquiry into strategic factors in economic growth, a project made possible by financial support from the Ford Foundation. The authors are indebted to Electricité de France and the Federal Power Commission of the United States for their co-operation in providing unpublished data, and to a number of people who have read and commented upon earlier drafts of the paper.

References

Notes

note (1) page 30 In 1963 coal-fired plants generated 84 per cent of the public supply of electricity in Britain. The comparable figures for France and the United States were 21 per cent and 54 per cent. The comparison was restricted to the coal-fired electricity generating industry in order to make the sample as homogeneous as possible and so to make the inter-country comparisons as meaningful as possible.

note (1) page 31 For a full discussion of generating costs, see Methods of Calculating the Cost of Electric Power Produced by Thermal Power Stations, ST/ECE/EP 15, United Nations, New York, 1963. For Britain the estimates of factor costs as proportions of total expenditure are as follows : fuel costs 49.4 per cent; capital charges 30.3 per cent; wages and salaries 11.4 per cent; other costs 8.9 per cent. These estimates, however, refer not only to coal-fired stations, but also to hydro and nuclear stations and to the main transmission system. See CEGB Annual Report for 1963/64, para. 374.

note (2) page 31 Output capacity in this industry is measured either in kilowatts (kW) or in megawatts (MW) : 1 MW is 1,000 kW. Output actually supplied is measured in kilowatt hours (kWh).

note (3) page 31 For comparisons of the capital productivities of various kinds of equipment the above measure is valid only if the machines have identical lives, identical load factors at various ages and if the rate of discount is the same.

note (4) page 31 This concept of fuel productivity is the inverse of heat rate (Btu's per kWh), which is a term for fuel efficiency commonly used by engineers.

note (5) page 31 Reheat is a technique by which partially expanded steam is taken from the high pressure section of the turbine, reheated, and then fed back into the intermediate pressure section of the turbine for further work.

note (6) page 31 Inadequate data prevent us from considering a number of other technical characteristics such as alternator cooling and feed-water heating. The above six technical characteristics are, however, the most important and the omissions are unlikely to affect the main conclusions of the paper.

note (7) page 31 See, for instance, F. H. S. Brown, ‘The Duty and Development of Modern Power Station Plant’, 27th Parsons Memorial Lecture, Institution of Mechanical Engineers, December 1962; A. W. C. Hirst, ‘Steam Turbines’, The Chartered Mechanical Engineer, December 1963; and W. M. Darlington, ‘The Steam Cycle : Its Present Application and Future Prospects’, Steam Plant Group Convention, Institution of Mechanical Engineers, 1963.

note (8) page 31 F. H. S. Brown and R. S. Edwards, The Replacement of Obsolescent Plant’, Economica, August 1961, p. 298.

note (1) page 32 Owing to the lack of appropriate data these fuel pro ductivities refer to all conventional (that is, coal-, oil-, and gas-fired) plants. This imperfection is unlikely to alter the impression that the improvement in the fuel productivity of the British coal-fired generating industry has been comparatively small in recent years. The fuel productivities refer to electricity supplied net of the amounts consumed within the generating plants.

note (1) page 33 These estimates were obtained for all coal-fired generating plants installed in the period 1948-1963. Their total output of kilowatts was divided by their total capital costs (at 1948 prices). This measure of capital productivity amounted to .00984 kW per $ in the United States and to .02803 kW per £1 in Britain. The ratio of the latter to the former is 2.85. This measure of capital productivity is valid only on certain assumptions.

note (2) page 33 According to Duncan Burn, who has made an extensive study of generating equipment in Britain and the United States, the price of equipment for the most advanced coal-fired stations (measured at the current rate of exchange) has tended recently to be slightly lower in the United States than in Britain, and over the past 15 years American and British prices of equipment have not diverged very greatly.

note (3) page 33 See, for instance, R. Komiya, Technological progress and the production function in the United States steam power ndustry’, Review of Economics and Statistics, 44 No. 2 (1962).

note (4) page 33 The degree of peakedness of demand is, of course, not entirely outside the control of the electricity industry. If the peakedness of demand could be reduced at relatively low cost (by, for instance, pricing policy or advertising) and the industry omits to reduce it, then the resulting low fuel pro ductivity must be regarded as economically inefficient. We have not examined this question. The higher load factors in the French and United States industries may be due to sociological and climatic factors; or they may have made more determined efforts to reduce the peakedness of demand than the British industry has done.

note (1) page 35 F. H. S. Brown and R. S. Edwards, ‘The replacement of obsolescent plant’, Economica, August 1961, page 298.

note (2) page 35 The sources of the data were as follows: for Britain: the Annual Reports of the Central Electricity Generating Board and its predecessors (the Central Electricity Authority and the British Electricity Authority); Electricité de France; and for the United States : the Federal Power Commission series entitled Steam Electric Plant Construction Cost and Annual Production Expenses. We are much indebted to Electricité de France, especially to M. L. Puiseux, for making their reports available to us.

note (3) page 35 British and United States turbo-alternators may not be entirely comparable, because the United States figures include many cross-compound machines. Unlike the single-line or tandem compound arrangement which is usual in most British turbo-alternators, the cylinders of cross-compound turbines are arranged in two lines so that they drive two rotors.

note (4) page 35 In the calculations of the averages, the sizes have been weighted by their generating capacities. If they had been weighted by the number of turbo-alternators the averages would be somewhat smaller but bear much the same relation to one another. The same weighting procedure has been adopted for the calculation of the mean boiler size, the mean steam temperature and the mean steam pressure.

note (5) page 35 The size of boiler is measured by its capacity to produce steam; that is, by the pounds of steam produced per hour.

note (1) page 36 This is a measure of the extent to which the plant is unavailable because of mechanical breakdown.

note (1) page 38 These averages are weighted by the capacity installed.

note (1) page 40 Report from the Select Committee on Nationalised Indus tries : The Electricity Supply Industry (1963), Vol. I, Report and Proceedings, para. 427; for a further discussion see para. 92 of the same volume and Appendix 75, Vol. III.

note (2) page 40 The Control of Turbo-Alternators (No. 1) Order, 1947, dated November 7, 1947, made by the Minister of Supply under powers conferred on him by Regulation 55 of the Defence (General) Regulations, 1939.

note (3) page 40 Report of the Committee of Inquiry into the Electricity Supply Industry, Cmd. 9672 (the Herbert Report), para. 423.

note (4) page 40 Although numerous enquiries have drawn attention to this problem, the current position seems no different from that of sixteen years ago (see the Second Report from the Select Committee on Nationalised Industries, February 1966, paras. 140-148; Report from the Select Committee on Nationalised Industries : the Electricity Supply Industry, 1963, Vol. I, Report and Proceedings, paras. 491-494; the Herbert Report, op. cit., paras. 87-93; the Productivity Report on Electricity Supply, published by the Anglo-American Council on Pro ductivity, 1950, sub-section 3, paras. 145-148; and the US Productivity Report on the British Electricity System, published by the British Productivity Council, 1953, para. 32). Not only are quoted delivery periods considerably longer in com parison with those of the USA and Japan, but commissioning delays in Britain have recently become very serious indeed (see the Second Report of the Select Committee, op. cit., para. 114 et seq.). In 1964/65, for example, the CEGB commissioned new plant with a capacity of 1,205 MW., leaving a shortfall on the commissioning programme of 3,000 MW.

note (1) page 41 There are two exceptions : (i) two prototype 375MW super-critical units in the Drakelow C plant, due to be com missioned in 1965 /66 and (ii) the Longannet plant, comprising four 600 MW cross-compound units operating at sub-critical steam conditions, now under construction for the South of Scotland Electricity Board. The first units planned by CEGB to use more advanced techniques than those embodied in the standard 500 MW units will be two 660 MW single shaft units operating at 3,500 lbs. per square inch pressure and 538°C. temperature and double stage reheat, at present provisionally scheduled to be installed in the Drax plant which will be commissioned in 1970/71. However, the Electrical Review of 11 March 1966 states that CEGB is now reconsidering the choice of super-critical steam conditions for these Drax units and it is reported in the above article that the American Electric Power Company recently announced that it is ordering three single-shaft 800 MW supercritical units to be installed in a plant between 1969 and 1971.

note (2) page 41 Supercritical pressures are those exceeding 3,206 lbs. per square inch; above this pressure the latent heat in steam drops to zero.

note (3) page 41 One advantage to be gained from standardisation is that it should enable a new class of generating equipment to be freed from teething troubles fairly easily. British practice, however, is to give orders for a new type of unit to several manufacturers, who then build according to their own detailed designs. French experience suggests that success in reducing the forced outage rate of new classes of machine tends to be related more to the distribution of orders between manufacturers than to the total number of orders placed : the teething troubles experienced by one maker are not necessarily those of other makers. There may be a case, then, for a smaller number of detailed designs.

note (1) page 42 C. Freeman,’ Research and development in electronic capital goods’, National Institute Economic Review No. 34, November 1965, page 40.

note (2) page 42 See W. Beckerman and Associates, The British Economy in 1975, Cambridge University Press 1965, page 30. The British incremental capital output ratio over the period 1956-62 was 4.88, compared with 3.05 for Germany, 3.26 for France, 2.34 for Italy and 4.17 for the United States. “… 57 per cent of the excess of the German growth rate over the British growth rate is explained by the lower German ICOR (that is, its higher return to gross capital formation). Table 1.7 implies that if we had had the same investment ratio as Germany our annual growth rate would have been higher by 1.4 per cent, but it would still have been 1.9 per cent lower than the German growth rate on account of the higher German rate of return on gross capital formation. The comparison between Britain and France or Italy is even more unfavourable to Britain since about three-quarters of the excess of the French or Italian growth rate over the British growth rate is due to their lower ICORs.”