7.3 Data Needs of Economic Evaluation

Much of the data and assumptions required to make a reasonable evaluation is gathered in the process of site assessment described in the preceding chapter, past utility bills, quotes from equipment providers and packagers, or public sources on CHP costs and performance. Typical data needs are broken down below.

Determine Electricity and Demand Displaced by CHP

  • CHP Capacity (kW)
  • Site Annual Peak Demand (kW)
  • Site Annual Electricity Usage including daily and seasonal variations(kWh)
  • CHP Availability (%)
  • Site Electric Load Displaced by CHP (kWh/year)
  • Electricity Sold to Utility (kWh/year)
  • Monthly Peak Demand (kW)
  • Average Monthly Demand Reduction (kW)

Determine Fuel Thermal Load Displaced by the CHP System

  • Thermal Heat Recovered (MMBtu/year)
  • Existing Site Boiler Efficiency
  • Site Fuel Displaced by CHP (MMBtu/year)

Determine Fuel Consumed by CHP System

  • Site Electric Load Displaced by CHP system (kWh/year)
  • Electricity Sold Back to Utility (kWh/year)
  • CHP Electrical Efficiency (% HHV) or Heat Rate (Btu/kWh)
  • Fuel Consumption (MMBtu/year)

Determine Energy Savings

  • Electricity Displaced (summer/winter, on/mid/off peak kWh)
  • Displaced Demand (summer/winter kW)
  • Electricity Sell Back (kWh)
  • Ratchet Demand or Stand-by charge ($/kW)
  • Electricity Rates ($/kW and $/kWh)
  • Buy Back Electricity Rate ($/kWh)
  • Displaced Fuel Rate ($/MMBtu)
  • CHP Fuel Consumption Rate ($/MMBtu)
  • Value of Displaced Electricity
  • Electricity Sell Back ($/year)
  • Cost of Fuel ($/year)
  • Forecast future year energy costs (escalation factors are sector and site specific)

Determine Total Investment Costs

  • Equipment costs ($/kW)
  • Heat recovery equipment cost ($)
  • Heat recovery utilization equipment cost ($)
  • Controls and Interconnect costs ($)
  • Gas compression equipment if needed ($)
  • Labor and materials ($)
  • Project and construction management ($)
  • Engineering and permitting fees ($)
  • Contingency (% of investment costs)

Determine Financing Options

  • Debt to equity ratio
  • Interest rate
  • Tax credits
  • Renewable energy credits (REC’s)
  • Internal cost of capital
  • Depreciation schedule
  • Leasing terms if applicable

From this information the forecasted annual cash flows can be calculated.
Custom financial models are generally provided by the project developer or equipment manufacturer. For an independent evaluation, The Energy Solutions Center (ESC) created a payback and LCC calculation tool. This tool provides a simple payback calculation for various CHP technologies based off the size and energy rates. The calculations use average pricing, efficiencies, & maintenance costs provided in the CHP Technology Catalogs available from the Combined Heat and Power partnership of the EPA. More detailed financial analysis requires specific equipment and financial details.

Share This