6.7 Economic Feasibility Assessment

Once the Conceptual System Design is complete, the designer must evaluate the economic potential of the design. During this phase, the designer will continue to fine tune the conceptual design as well as evaluate alternative concepts that could be utilized. The goal of this phase is to gain a full understanding of the energy and ownership economics of the proposed CHP design.

1. Compare Cost Estimates for the proposed CHP System Against Alternative Options.

  • With the conceptual design for the CHP system complete, the designer can develop a cost estimate for all required equipment. This should include the generator, electric switchgear, all heat exchangers, single stage absorption chiller (if used), pumps, cooling towers, etc. The cost estimate for operation and maintenance should also be developed.
  • In a parallel path to developing the Conceptual System Design, all alternatives that may be applicable need to be developed through the point of developing a cost estimate.
  • Once the cost estimates of all options are complete, the designer can conduct an economic comparison of the various systems.

2. Further Investigation Warranted

  • Prior to evaluating financing or ownership options, the designer must analyze the economic benefits of the Conceptual System Design to see if the project still makes sense. At this point, the designer still has not performed the detailed engineering to install the CHP System, but has enough detail to make a final determination of the viability of the project.
  • A “YES” or “NO” decision should be made before proceeding.
  • A “YES” response warrants further discussion with client to determine the best way to capitalize the
    project.
  • A “NO” response ends the review of the project
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