Investment Decision Analysis Of Distribution Projects Using Full Life Cycle Theory And Its Applications

With the rapid development of Chinese economics, electric power enterprises continuously promote the investment speed. Especially, power distribution project investment accounted for a significantly incteased proportion of the total investment in fixed assets of electric power enterprises. To make full use of electric power enterprise funds, the investment decision is of great importance, which further affects the market competitiveness of enterprises. At present, the distribution project of our country, especially, in the investment decision stage, tends to one-time investment cost. The underestimation of subsequent equipment costs during operation seriously affects the accuracy of investment decision. In fact, the distribution engineering investment cost should cover all the input including the power distribution equipment planning, purchase, and the costs during the whole life cycle until disuse.This paper applied life cycle cost theory to the investigation of investment decision and distribution engineering, achieving a comprehensive, reasonable, and objective evaluation of the distribution of engineering science. The main research contents are listed as follow.First, we analyzed the typical character of the investment decision in distribution project. Conventional methods that have been used in distribution engineering have been compared. Based on these results, the problems in the investment decision of Chinese distribution engineering have been summarized, and the reason for these problems has been analyzed.Secondly, according to the problems of investment decision in Chinese power distribution project, we highlight the importance of bringing a new life cycle cost (LCC) theory to this field, and find a solution to the above mentioned problems. Additionally, we analyzed the total life cycle cost of a distribution project based on the LCC theory. Furthermore, we applied this method to selection of candidate schemes before the final decision. The cost in different status has been analyzed, and a LCC investment decision model for distribution projects has been set up, in which the sensitive factors have been investigated. Based on the researches on investment decision in distribution projects, we summarized the procedures for investment decision on the basis of total-life-cycle power distribution project. Thirdly, taking a power distribution project of lOkV as a typical example, with the help of our LCC model, we found that massive investment could be saved for various electric power companies during the reconstruction of transformers. Moreover, we found that LCC model is very sensitive to the operation and maintenance cost. In addition, we also found that the operation cost has great influence on the LCC example. As compared with conventional methods, we could get the conclusion based on the LCC model that, for the purpose of realizing the lowest costs and the highest efficiency of instruments, equipments with full-blown techniques, energy-saving property and low-cost feature could be selected as a preference.