7.5 For the cogeneration system case study, calculate the levelized annual costs associated with carrying charges, operation and maintenance, and fuel using the following simplified model:
(1) The purchased-equipment costs should be calculated from the functions and constants given in Appendix B. These values are expressed in mid-1994 dollars.
(2) The average annual inflation rate is 4.0%; the average nominal escalation rate of all (except fuel) costs is 4.0%, and the average nominal escalation rate f the natural gas (CH) cost is 4.2%. The economic life is 20 years, the average annual cost of money is 12.0%, and the average capacity factor is estimated to be 90%. The unit cost of fuel is 3.0 mid-1994 dollars per GJ lower heating value.
(3) The effects of taxes, insurance, and financing of capital expen ditures are neglected. (4) Overnight construction is assumed (i.e., the allowance for funds
used during construction is zero).
(5) Startup costs, working capital, and costs of licensing, research, and development are assumed to be zero.
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(6) The total capital investment (TCI) is four times higher than the sum of purchased-equipment costs expressed in mid-1997 dollars.
(PEC),
TCI = 4.0
(7) Commercial operation of the plant starts on January 1, 1998. The purchased-equipment costs will be escalated with the inflation
rate.
(8) The annual operating and maintenance expenses (expressed in mid-1997 dollars) are estimated to be 20% of the total purchased equipment costs expressed in mid-1997 dollars:
ZOM = 0,20 (PEC),
(9) The annual levelized carrying charges are obtained by multiplying
the total capital investment by the capital-recovery factor. (10) The annual levelized operating and maintenance costs are ob tained by multiplying the O&M costs in mid-1997 dollars by the
constant escalation levelization factor. Calculate in current dollars for a 20-year period the annualized level ized (a) carrying charges, (b) operating and maintenance costs, and (c)
fuel costs.