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The economics of a CHP system for a facility depends on the following major cost components:
Installed cost (purchased cost plus cost of installation), or capital investment cost, of a CHP system consists of the cost of installing the following major system components:
Information on capital costs presented here is only a rough estimate and should be used for only relative cost comparison and evaluation of various type of equipment. Pricing of CHP equipment fluctuates with the development and deployment of new types of equipment. It is highly recommended that you contact the equipment manufacturers, or their representatives, listed in the equipment guide for their latest costs. Generally, it is relatively easy to get cost estimates for purchasing equipment from vendors. The harder part is to estimate the cost for installing the equipment at a specific site. Installation costs could vary significantly among various sites. Typically, installation costs become clear only during Level III analysis.
The capital cost for power generation equipment depends on the technology used for power generation. Different technologies operate at different efficiency and capacity size levels, and have different cost/kW. The following chart illustrates the energy efficiency advantages of various technologies relative to the equipment capacity.
(Source: Northeast Midwest study titled "Combined Heat and Power Education and Outreach Guide to State and Federal Government.")
Please note that even though the above chart incorporates information on sterling engines, PEM and MC fuel cells, these technologies are not yet commercially ready for CHP systems.
The following table lists "typical" installed costs for various capacity power generation equipment.
Capacity (kW) |
Installed Cost ($/kW) |
Combustion Turbine Capacity, kW |
600 |
2,300 |
1,500 |
2,000 |
2,000 |
1,500 |
3,000 |
1,100 |
4,000 |
750 |
Reciprocating Engine Capacity, kW |
1200 - 4,000 |
650 - 800 |
Phosphoric Acid Fuel Cell Capacity, kW |
200 |
3,000 |
Source: GRI Report 98/0028 titled "Distributed Generation for Municipal Utilities
The installed cost for microturbines is between $1000/kW to $2000/kW depending on the capacity in the range of 30kW to 400kW, respectively.
Capital cost for the electric and absorption chillers of various capacities is as follows:
Chiller Capacity, RT |
Installed Cost, $/ton |
300 |
500 |
1000 |
Electric Centrifugal |
340 |
340 |
350 |
Single-Effect Steam-Heated Absorption |
520 |
430 |
365 |
Double-Effect Direct-Fired Absorption |
625 |
625 |
625 |
Source: ORNL-funded Study by TA Engineering, Inc. for AGCC, June 2001
Desiccant dehumidifiers are generally sized on the basis of air flow rate in cubic feet per minute (CFM), their capital costs are reported in $/CFM. Installed capital cost for active solid desiccant systems range from $4 to $9 per CFM capacity for air handling, depending upon the total capacity and equipment enclosure requirement. The higher-end of the cost range applies to systems with <5,000 CFM. Installed cost for passive desiccant systems is in the range of $3-$4/CFM.
There are two major components of annual operating cost for CHP systems:
Estimating the annual energy cost is the most complex and time-consuming aspect of evaluating the economics of a CHP system. Such an estimate requires the following information:
- Annual power load profiles for the facility
- Annual cooling and heating load profiles for the facility
- Performance characteristics of power generators
- Performance characteristics of the chiller and cooling tower
- Performance characteristics of desiccant systems
- Applicable gas and electric utility rates for the facility
Estimating electric power, heating and cooling load profiles for a facility is the most difficult part of estimating annual energy cost. Estimates of these load profiles depend on many factors, including facility application, geographical location, floor area, height, shape, glazed area, construction materials, HVAC system designs, lighting, occupancy, desired temperature and humidity control schedule, and other thermal loads. For dependable economic analysis, these loads must be estimated for all 8,760 hours of the year using typical weather data for the desired location.
Many CHP systems such as those that incorporate reciprocating engines, combustion turbines and microturbines use natural gas as a primary fuel. For these systems fuel cost constitutes the majority of the variable/operating cost. In order to facilitate preliminary economic assessment of CHP systems a number of tools are available and are discussed later in this section.
Annual maintenance cost for various components of a CHP system is different and also depend on equipment capacity. Typical maintenance cost ranges for some of the system components are as follows:
Natural Gas Engines
Natural gas engine maintenance costs are generally in the range of $0.01-$0.0 15/kWh. DOE is developing natural gas-engine-packaged cogenerators for on-site CHP applications. These systems are expected to reduce cost and increase the ease of maintenance.
Gas Turbines
Gas turbine maintenance costs generally vary in the range of $0.008-$0.012/kWh range. Gas turbines being developed by DOE's Advanced Turbine Systems program are designed with modular assembly and maintenance components, and are expected to reduce maintenance cost. The major subsystems of these gas turbines — including the burner, turbine, compressor, recuperator, gearbox, and generator — can be changed independently in the field without replacing the entire gas turbine.
Fuel Cells
Fuel cell routine maintenance cost of fuel cells, is in the range of $0.01 to $0.015/kWh. Over the typical 20 year life of a CHP system, fuel cells also require cost for replacing the fuel cell stack almost every five years (40,000 hours). The routine maintenance costs do not include stack replacement cost that is estimated to be about $0.04/kWh.
Microturbines
Microturbines maintenance costs are generally in the range of $0.002-$0.015/kWh. Modular packaged CHP systems, using microtubines, are now being developed that are expected to reduce maintenance costs.
Electric Chillers
The annual maintenance cost for electric chillers ranges from $18 to $28 per ton of cooling capacity, depending upon whether the chiller uses a reciprocating, screw, or centrifugal compressor.
Absorption Chillers
This cost for absorption chillers ranges from $18 to $31 per ton of cooling, depending upon whether the chiller is single- or double-effect steam heated, or double-effect direct fired. Typically, the average annual maintenance cost of modern single-effect steam heated absorption chillers is fairly close to that for electric chillers.
Financing cost, cost of capital, or cost of money is the effective interest rate at which commercial customers of banks and other financial institutions can borrow money. Effective interest rate is the interest rate plus any service cost incurred for initiating a loan. Financing cost impacts the regular payments, to be made by the borrowing company, over a period of time to payback the loan taken for installing CHP systems. Of course, higher the cost of capital for installing the equipment, higher will be the amount of regular payments. These payments in turn impact the economic attractiveness of an alternative.
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