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purchased at $0.15 kWh. The industry has hired you to evaluate building a
power plant using renewable energy sources as opposed to purchasing power
from the local electric company. The three renewable energy sources in
consideration are (1) Solar, (2) Wind, and (3) Geothermal. To build the
infrastructure each renewable energy source consists of a one-time initial
permitting fee to be filed with Texas Commission on Environmental Quality
(TCEQ) which is as follows: (1) Solar - $10,000 ; (2) Wind - $20,000 ; (3)
Geothermal ; $40,000. As shown in Table 1 each of the renewable energy
sources has other annual costs including waste disposal costs and other life
cycle assessment costs (LCA) which include the violations of environmental
laws, supplier failures and other regulatory risks. The estimated life cycles for
each renewable energy source as well as discount rates to be applied are also
shown in Table 1.
The capital, operating and maintenance cost for each energy source to be used
are shown below:
Solar energy: Solar panels with capacity of 150 kW per square meter with a
total efficiency of 15% are best available choice in the market for usage as of
today.
Capital cost for as well as operating and maintenance (O&M) cost for Solar
panels.
Capital costs
Cost Component
System cost
Module cost
O&M Costs
Cost Component
System O&M
Inverter Maintenance
Wind energy:
Wind turbine capable of producing 100 kW at efficiency of 40% is to be used.
The capital cost for as well as operating and maintenance cost for each wind
turbine is as follows:
Capital costs
O&M Costs
Cost Component
System cost
Turbine capital cost
Cost Component
Replacement Costs
Land Lease
Maintenance
Utilities
Insurance
Geothermal energy:
Capital cost for as well as operating and maintenance cost for geothermal
Capital costs
Drill and completion of well
Equipment, pumps
O&M ($/kWh
Equipment Maintenance
Scale removal
Equipment failure
1) Calculate the base case cost of power consumption for the time period of 15 years.
2) Evaluate the three renewable energy sources cost effectiveness through net present value
(NPV), payout, Rate of return (R) for 15 years