Capital Cost Assumptions

Figure 6.3 allows the user to answer questions regarding uncertain capital cost assumptions. For example, the capital cost of thermochemical nuclear is projected to be 669 /kW-H2. However, some suggest that this figure is on the optimistic side. It is possible that the actual capital... 

Advanced coal generating facilities are cost competitive with gas, solar, geothermal, and wind at any coal capital cost below 1527 /kW (Figure A9). The point at which nuclear facilities become cost competitive is at 1480 /kW. The default DOE capital cost assumption for advanced coal facilities is 1134 /kW. 

Grid-connected wind-generated electricity becomes cost competitive with coal and nuclear at wind capital costs of 850 and 1034 /kW, respectively (Figure A.ll). For comparison, the default DOE wind capital cost assumption is 1060 /kW. Figure All also illustrates the impact on wind economics of a 1.8 cent per kWh production tax credit (PTC). This PTC greatly improves the economic feasibility of wind systems. The wind capital cost at which coal technology becomes competitive... 

In general, the final network design should be achieved in the minimum number of units to keep down the capital cost (although this is not the only consideration to keep down the capital cost). To minimize the number of imits in Eq. (7.1), L should be zero and C should be a maximum. Assuming L to be zero in the final design is a reasonable assumption. However, what should be assumed about C Consider the network in Fig. 7.16, which has two components. For there to be two components, the heat duties for streams A and B must exactly balance the duties for streams E and F. Also, the heat duties for streams C and D must exactly balance the duties for streams G and H. Such balemces are likely to be unusual and not easy to predict. The safest assumption for C thus appears to be that there will be one component only, i.e., C = 1. This leads to an important special case when the network has a single component and is loop-free. In this case, ... 

Chapter 3 treats the most common type of objective function, the cost or revenue function. Historically, the majority of optimization applications have involved trade-offs between capital costs and operating costs. The nature of the trade-off depends on a number of assumptions such as the desired rate of return on investment, service life, depreciation method, and so on. While an objective function based on net present value is preferred for the purposes of optimization, discounted cash flow based on spreadsheet analysis can be employed as well. 

The assumed capital costs of different hydrogen production systems are summarised in Table 15.4, based on H2A s future (2015) technology assumptions (USDOE, 2007b). 

In the example considered, the separation between highest and lowest effluent concentrations, after four temperature reversals, is CHh/Ccc = 16, on the basis of the earlier assumptions. A single bed operating in a similar way would produce a separation of Ch/Cc equal to only 4. There is no theoretical limit to the separation that may be achieved by adding further stages. Clearly, there are practical considerations which will limit the number, such as pressure drop and total capital cost. 

According to the vendor, capital costs for the Aquaplant system are approximately 200 to 300/yd of surface area. This estimate is based on the following assumptions ... 

In 1992, researchers developed an engineering and costing design for a fixed unit that operated at a rate of 2 tons per hour. Costs were estimated to be 149 (Canadian) per metric ton of soil treated. This estimate was based on the following assumptions the unit used medium naphtha as a solvent operations were 24 hours per day, for 260 days per year utilization factor of the facility was 83% capital costs were 2,548 million (Canadian) and capital amortized over 10 years at 10%, two payments per year. The estimate stipulated that the recovered oil was of suitable quality to be sold to offset process costs. It was estimated that the largest component of process costs would be labor ( 56 per ton of waste treated). Other cost components listed were capitalization costs ( 38 per ton), utilities ( 29 per ton), insurance ( 9 per ton), trucking and maintenance (each 5 per ton), equipment rental and site excavation and restoration (each 3 per ton), and waste disposal was estimated to cost 1 per ton (D17896F, p. 8). 

As discussed briefly in Section 13.4, the operating reflux is an amount in excess of the minimum that ultimately should be established by an economic balance between operating and capital costs for the operation. In many cases, however, as stated there the assumptions R = 1.2Rm often is close to the optimum and is used without further study unless the installation is quite a large one. 

The capital equipment costs for the process are shown in Table 5 for the lithium process. These estimates, as well as the operating cost estimates, were obtained using standard chemical engineering practice (Ulrich, 1984). The operating cost assumptions are shown in Table 6. 

These capital cost factors were based on an assumption that each technology faces an 11 percent nominal interest rate, with 2 percent inflation in the economy, a marginal tax rate of 33 percent, a 10-year tax life, and a 20-year project life. 

Table 11. Installed PV and capital cost to produce H2 for 250-million FCVs (with thirty-year PV life and first generation H2 production assumptions).

Further details of this formulation can be found in Balakrishna and Biegler (1992b). In this expression, Fb and Fcd represent the production rates of B and CD, respectively. Fao is the flow rate of fresh feed. The third term corresponds to the reactor capital cost with t, the residence time, and Fq, the total reactor feed the fourth and the fifth terms correspond to the capital cost of the distillation columns. The operating costs of the columns are directly incorporated into the energy network in terms of condenser and reboiler heat loads. We assume that the cost of the reactor can be described by the total residence time and is independent of the type of reactor. The potential error from this assumption can be justified because the capital cost of the reactor itself is usually an order of magnitude or more smaller than the operating costs and the capital costs of the downstream processing steps. 

---