Amortization costs

Using the several materials selected and the basic design possibilities, products should be designed to meet the criteria as far as deflection is concerned, and the cost of manufacture estimated. If the designer does not have this type experience it is best done with the assistance of the fabricator who will fabricate the product. In addition to the material cost and the production labor costs, the amortization costs of the tools are to be included. 

The estimated cost of constructing a 40 million-gal ethanol facility in the San Joaquin Valley is 55 million (9). Amortizing that investment over an expected useful life of 20 yr at a discount rate of 5% generates an amortized expense of 4.41 million/yr. Dividing that cost by the expected annual production of 40 million gal generates an average amortized cost of 0.11/gal of ethanol. 

Figure 7. Amortized costs of phenolics and neutrals fraction from pine sawdust pyrolysis calculated as a function of feedstock cost and plant size. Note that the calculations include costs associated with all feedstock preparation as if this were an independent plant.

According to Eq. (5.87), the quantities A7 0transfer unit. Generally, operating costs are linearly related to dissipation, while investment costs are linearly related to the size of equipment. The optimum size distribution of the transfer units is obtained when amortization cost is equal to the cost of lost energy due to irreversibility. The cost parameters a and b may be different from one transfer unit to another when a = b, then av/F0pt is a constant, and the optimal size distribution leads to equipartition of the local rate of entropy production. The optimal size of a transfer unit can be obtained from Eq. (5.78)... 

Maintenance and Operation Decisions. The determination of an appropriate cost of available energy at various junctures of a system in a manner similar to that described above for Design Optimization is useful not only in design but also allows decisions regarding the repair or replacement of a specific subsystem to be readily made (9, 10). The amortized cost of such improvements can be easily compared with the cost of the additional available energy that will be dissipated if a component is left to operate in the given condition. The proper decision then becomes very apparent. 

The 1960 system was analyzed without accounting for amortization on the assumption of sunk capital, inasmuch as the system has been almost fully depreciated. In addition to analyses including amortization, costings for the 1976 and 1980 systems were... 

Sum of Investment Costs and Operational Costs f"Amortized Costs" ... 

Many of the equipment vendors have developed cost of ownership (COO) models, some traceable, at lease in part, to SEMATECH. These COO models may be used to account for all aspects of amortized costs and provide a user with a highly accurate anticipated cost schedule. At a minimum a COO model should include the cost of the system, utilities, facilitization, mean-time-between-failures, mean-time-to-repair, preventative maintenance, personnel, all consumable safety costs (including that of required support equipment), reactant, and substrate costs. Each of these parameters" should be well defined and guaranteed, and the user of such models should precisely understand how up-time, mean-time-to-repair, and other terms are defined. A 90% uptime schedule is useless if the system is routinely defined to be out of service, for maintenance, 25 % of the time. 

A preliminary calculation indicated that a solar collector area of approximately 25,000,000 square feet would be required to capture sufficient heat to operate the multistage flash evaporator shown in Figure 1. Since a large number of collector units would be required, the cost of installing 1000 units containing 24,000,000 square feet of collector surface was estimated, so that the cost per unit area and the amortized cost per unit area could be determined. For a variation of no more than 10% in the collector area the unit cost would remain the same. 

Total operation, maintenance, and amortization costs at the estimated actual load factor for the first year of the Buckeye plant s operation (48% of theoretical full-load capability) will be 50.9 cents per 1000 gallons. Operation at 98% of theoretical full-load factor (the plant s maximum practical capability) would result in total costs of 33 cents per 1000 gallons (Table II). The 33 cent figure can be compared with previous cost estimates made by this company (I, 2, 5), the Office of Saline Water (8), or others (9), who have usually assumed full-load or virtually full-load operation in such calculations. Most of the factors making up this cost estimate have been guaranteed to the town of Buckeye. However, the 48% load faotor is an estimate based on the historical demand pattern for untreated water around the year. It is difficult without actual experience over the next year or two to predict the effect, if any, of a substantial rate rise on the usage of water and the load factor. 

For the feed water assumed in Tables I and II little trouble was expected from polarization, and the current density used was close to the optimum. In the calculations of effect of unit costs on total costs, the current densities used in the original estimates were not changed to optimize them for each new cost condition. For this reason the changes in the total cost of demineralization with changes in unit costs or technical factors (Figures 2 to 5) should be viewed as only approximations. Use of a different operating current density (and therefore a different membrane replacement and amortization cost) would alter the slope of the various curves. However, the curves provide an approximate picture of the... 

For the basic compression, transfer, and injection molding processes, a wide variety of mold types may be considered. Decisions as to the optimum type will often be based on the production volume anticipated and the allowable final part cost, including mold maintenance and amortization costs and hourly cost rates for molding machine and labor. 

Machining is also used in combination with other processes. Some processes require that gates be removed or parts trimmed by mechanical means before they are ready to be used. Machining may be used to create details the process cannot create. An example of this type of application would be holes in thermoformed parts. Finally, machining may be used because the product s production volume is too low to warrant the additional tooling cost necessary to mold the detail into the part. An example of this type of application would be a hole in an injection-molded part parallel to the parting line that would require an expensive side action. The additional amortization cost could exceed the cost of drilling the hole for low volumes. 

For example, if i = 0.08, and n = 30, the formula shows that the annual payments are 8.88% of the principal borrowed. Based on 4200/kW, these amortization costs amount to 373/year/kW, or 448 million/year for a 1200 MW plant. The factor for a 6% loan over 20 years is quite similar, 8.72%. 

Once the loan is paid off, after the 30-year period, for the remainder of the plant lifetime there will be no payments to the bank. During those latter years of operation, the only costs that the plant operator will incur will be normal operating costs, including the cost of fuel. Many of the 104 operating nuclear power plants in the United States now are in this situation, being free of the burden of the amortization costs. However, major maintenance and repair costs, such as steam generator replacements, may also be amortized, adding capital costs later in the plant life. 

GTCC plants have a capital cost which is about half the cost of nuclear plant, amounting to an amortization cost of about 2 cents/kWh amortized over a 20-year period. Operating costs (not including fuel) will be less than for a similar sized coal plant, or about 0.5 cent/kWh. 

Capital cost is the major contributor to the cost of solar power. With photovoltaic power systems presently costing about 4 per peak watt, the capital cost of 4000/kW would be equivalent to 8888/kW at 100% capacity, equating to 9 cents/kWh when amortized over 30 years (at 8% interest rate). Obviously, this is well above the nuclear capital cost of nominally 4200/kW with a 90% capacity factor (equivalent to 4667/kW at 100% capacity factor), and an amortized cost of 4.7 cents/kWh. 

Many solar engineers are projecting that photovoltaics will eventually come down to 1.5/W, putting the equivalent cost at 3333 for 100% capacity factor, or about 3.4 cents/ kWh for amortization costs (30 years at 8%). However, even with such a significant cost reduction, solar will require backup reliable generation capability or energy storage. 

All costs due to owning and operating a plant depend on the type of financing, the required capital, the expected life of a component, and so on. The annualized (levelized) cost method [8] was used to estimate the capital cost of system components. The amortization cost for a particular plant component may be written as ... 

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