Page 162 - Sustainable On-Site CHP Systems Design, Construction, and Operations

Fundamental Concepts 135

3. Cost of fuel associated with running the CHP system
4. Cost estimates to install and maintain the system
5. Available incentives for CHP installations
These variables are applied to each of the proposed alternatives. It should be noted
that, often, estimated equipment pricing is quite accurate at this initial stage, but other
project development costs (such as the cost of CHP system tie-in and site construction
expenditures, additional structural work, and noise, pollution) are preliminary. Given
these uncertainties it is important that reasonable estimate for all other turnkey costs
associated with CHP system implementation, operation, and maintenance be included
in this preliminary budget. Sometimes additional analysis will be required to account
for benefits such as backup power in events of utility outage or potential increase in the
utility rates.
The determination to proceed to a Level 2 feasibility study will be based on the
simple payback estimated, since owners, based on their own economic criterion, have
an upper threshold value. If all of the previously mentioned costs and benefits are
included in the preliminary economic analysis, it should provide a fairly accurate rep-
resentation of the opportunity or benefit of the CHP project.
It should be clear, however, that the results of this economic analysis are simply a
necessary phase before proceeding to the more accurate economic study that is part of
the Level 2 feasibility study.

Level 1 Feasibility Study—Typical Outline
Although different organizations have their own style and format for a Level 1 feasibility
study, it is typical that the associated report comprise of the following sections:

1. Executive summary
2. Preliminary analysis and assessment
(a) Facility description
(b) Baseline utility cost
(c) Facility electrical, thermal, and cooling load profiles
(d) CHP systems design options and alternatives
(e) Engineering and energy analysis of CHP design alternatives
(f) Emissions
(g) Utility interconnection
(h) Power reliability
(i) Budgetary installation and maintenance costs
3. Economic analysis
4. Conclusions and recommendations for Level 2 feasibility study
5. Appendix

Examples for Level 1 feasibility studies can be found at the U.S. EPA—Combined
Heat and Power Partnership Web sites. ∗

∗ http://www.epa.gov/chp/documents/sample_fa_ethanol.pdf
http://www.epa.gov/chp/documents/sample_fa_industrial.pdf