Cost of Auxiliary Commodity

[giulia realmonte]

Dear all,
I would like to know whether the model assign a cost also to auxiliary commodity flows, or the overall cost of a process (capital+operational) is carried only by the primary commodity output.

Thanks
Giulia Realmonte

[Antti-L]

I would like to know whether the model assign a cost also to auxiliary commodity flows, or the overall cost of a process (capital+operational) is carried only by the primary commodity output.

Can you clarify the question a bit?  
You can define variable costs on the process activity, or on specific process flows, or both. Capital costs, fixed O&M costs and decommissioning costs are defined on the process capacity.  Start-up costs can be defined on started-up capacity, and ramping costs can be defined on activity ramping (difference of activity level between successive timeslices). The overall cost of a process thus includes all these components, and the various cost components are "carried by" the variables involved (VAR_ACT, VAR_FLO, VAR_NCAP, and VAR_IRE, when applicable).

You can specify variable costs also on auxiliary commodity flows of processes, by using FLO_COST / FLO_DELIV. Which kind of auxiliary flows are you referring to?

[giulia realmonte]

I would like to know whether the model assign a cost also to auxiliary commodity flows, or the overall cost of a process (capital+operational) is carried only by the primary commodity output.

Can you clarify the question a bit?  
You can define variable costs on the process activity, or on specific process flows, or both. Capital costs, fixed O&M costs and decommissioning costs are defined on the process capacity.  Start-up costs can be defined on started-up capacity, and ramping costs can be defined on activity ramping (difference of activity level between successive timeslices). The overall cost of a process thus includes all these components, and the various cost components are "carried by" the variables involved (VAR_ACT, VAR_FLO, VAR_NCAP, and VAR_IRE, when applicable).

You can specify variable costs also on auxiliary commodity flows of processes, by using FLO_COST / FLO_DELIV. Which kind of auxiliary flows are you referring to?

I am defining a new process, and I would like to understand if the levelized cost for the output commodity is the same for the main activity output (e.g. ELCC) and for an auxiliary commodity that I created (e.g. waste heat). When defining the process cost, I use both capital and variable cost which are referred to the main activity output, while the auxiliary output "waste heat" should come almost for free, or at least it should not have the same cost of the main output.

Is it clearer now?

Giulia

[Antti-L]

Thanks for the clarification.

I did not realize that you were referring to the levelized cost reporting.  The levelized cost reporting is done by post-processing from the model results. You can see the calculation formulation described in the documentation:

http://iea-etsap.org/docs/TIMES-Levelized-Cost.pdf

As described there, the levelized cost is indeed calculated for the main product. And, when you use the first option (RPT_OPT=–1), any emission prices or by-product revenues are excluded from the calculation. This means that the main product does indeed "carry" also the costs of any auxiliary products.

However, if using the second option (RPT_OPT=1), both emission prices and by-product revenues are included in the calculation, meaning that if "waste heat" is a by-product and it has a value, the levelized cost for the main product becomes lower than in the first option. The value is obtained from the marginal price of the waste heat commodity.

Finally, if using the third option (RPT_OPT=2), both emission prices and all product revenues are included in the calculation, including the revenue from the main product.  This means that the reported value represents a "net unit cost".

Does that answer your question?

[giulia realmonte]

Thanks for the clarification.

I did not realize that you were referring to the levelized cost reporting.  The levelized cost reporting is done by post-processing from the model results. You can see the calculation formulation described in the documentation:

http://iea-etsap.org/docs/TIMES-Levelized-Cost.pdf

As described there, the levelized cost is indeed calculated for the main product. And, when you use the first option (RPT_OPT=–1), any emission prices or by-product revenues are excluded from the calculation. This means that the main product does indeed "carry" also the costs of any auxiliary products.

However, if using the second option (RPT_OPT=1), both emission prices and by-product revenues are included in the calculation, meaning that if "waste heat" is a by-product and it has a value, the levelized cost for the main product becomes lower than in the first option. The value is obtained from the marginal price of the waste heat commodity.

Finally, if using the third option (RPT_OPT=2), both emission prices and all product revenues are included in the calculation, including the revenue from the main product.  This means that the reported value represents a "net unit cost".

Does that answer your question?

Thank you for the explanation, but my doubt is not only about the cost reporting, but more about the cost "felt" by the model itself. I mean, the choice of technologies within TIMES is mainly based on their cost, and I was wondering if there is a flow cost linked to the auxiliary commodity "waste heat" for a second process that takes it as an input. (as there is a flow cost for the main output commodity electricity, that is considered as a variable cost for a successive process taking electricity as input)

Giulia

[Antti-L]

The cost "felt" by any second process taking the auxiliary commodity "waste heat" as an input is always the marginal cost (price) of the waste heat commodity (plus any additional exogenously defined cost on that input flow itself), in each timeslice. The marginal price of each commodity (in each timeslice) is endogenously determined by the model. The prices are equal to the so-called dual values of the commodity balance equations, which are also reported by TIMES.

Thus, you can see the cost "felt" by the second process by looking at the EQ_CombalM results for waste heat.

[giulia realmonte]

The cost "felt" by any second process taking the auxiliary commodity "waste heat" as an input is always the marginal cost (price) of the waste heat commodity (plus any additional exogenously defined cost on that input flow itself), in each timeslice. The marginal price of each commodity (in each timeslice) is endogenously determined by the model. The prices are equal to the so-called dual values of the commodity balance equations, which are also reported by TIMES.

Thus, you can see the cost "felt" by the second process by looking at the EQ_CombalM results for waste heat.

Thank you very much, now it is clear!

Giulia