Page 313 - Handbook of Energy Engineering Calculations

2. Compute levelized coefficient of initial costs (M) over the life of the
system

CRF R, N is the capital recovery factor which is a function of the market

discount rate (R)* over the expected lifetime of the system (20 years) and is
determined as follows:

DEP is the depreciation which will be calculated by an accelerated method,

the sum of the years digits (SOYD), in accordance with the following
formula:

where DP is an allowed depreciation period, or tax life, of 12 years.
Prepare a tabulation (see below) of M values for various market discount
rates (R).

3. Compute the levelized cost of solar energy (S), for the life cycle of the
system in $/million Btu ($/MJ)
Use the relation, S = (K )(M). Since M varies with R, refer to the tabulation*
s
of S for various market discount rates.

4. Compute the levelized cost of fuel (F) in $/million Btu ($/MJ) and
compare to S