Product cost, estimation

The three general types of cost estimates needed are equipment cost, capital investment cost, and product cost. Equipment cost estimates are needed as part of the capital investment estimate, which indicates the amount of money that is needed to start the venture. Both of these estimates are reflected in the product cost estimate, which is important to both management and marketing groups. 

Factor Methods. A more detailed product cost estimation method is to relate manufacturing cost items to a few calculated items, such as raw materials, labor, and utihties by means of simple factors (1,2). Internal accounting groups often develop factors to use with this method. This factor method is very popular. 

Prepare rough cost economics, including preliminary sizing and important details of equipment, factor to an order of magnitude capital cost estimate [34] (see also [19]), prepare a production cost estimate, and work with economic evaluation representatives to establish a payout and the financial economics of the proposed process. 

B. D. James and J. A. Kalinoski. Mass production cost estimation for direct H2 PEM fuel cell systems for automotive applications. Annual progress report, DOE Hydrogen Program, 700-704. Washington, D.C. U.S. Department of Energy, 2007. 

The percent yield loss and per acre or hectare cost changes are shown in Table 12.3. Due in part to the low estimate of atrazine pounds used, the CEEPES model resulted in a 1.19% yield loss and a 1.08 extra production cost per acre ( 2.66/ha) of corn grown, which is very small as compared with those by Battelle (1989, 1993) and is less than half of the effects shown by NAPIAP (1992), Danielson et al. (1993), and Pike el al. (1994). More recently, USEPA (2003) estimated that without atrazine in com, there would be a yield reduction of 8.8 bu/A, or a 6.4% reduction based on 2001 estimates of 138 bu/A. The total increased production cost estimated by USEPA for com was 28.31/A, based on decreased yield and increased herbicide cost. 

For production cost estimation of PV parabolic trough concentrator module several assumptions were made ... 

The water production cost estimated for the integrated system was 0.92 /m3 with a recovery factor of 76.2% [11]. 

In order to assess the actual potential of the sulphur-iodine cycle for massive hydrogen production at a competitive cost, CEA has been conducting an important programme on this cycle, ranging from thermodynamic measurements to hydrogen production cost evaluation, with flow sheet optimisation, component sizing and investment cost estimation as intermediate steps. The paper will present the method used, the status of both efficiency and production cost estimations, and discuss perspectives for improvement. 

Ernst, S., Garro, O. A., Winkler, S., Venkatraman, G., Langer, R., Cooney, C. L., and Sasisekharan, R. (1997). Process simulation for recombinant protein production Cost estimation and sensitivity analysis for heparinase I expressed in Escherichia coli. Biotecbnol. Bioeng. 53(6), 575-582. 

SMR. Hydrogen production cost estimates by EPRI (Sandell et al 2003) and by the Massachusetts Institute of Technology (Yildiz and Kazim, 2003) indicate that this approach may be competitive with conventional SMR if the natural gas prices go above 6/million Btu. However, their analyses did not include any taxes or fees for C02 production. 

The best source of information for use in total-product-cost estimates is data from similar or identical projects. Most companies have extensive records of their operations, so that quick, reliable estimates of manufacturing costs and general expenses can be obtained from existing records. Adjustments for increased costs as a result of inflation must be made, and differences in plant site and geographical location must be considered. 

In case methanol is used as an intermediate fuel (e.g. in mobile fuel cells), the cost of methanol production is of interest. Produced from fossil fuels, notably natural gas, at a price of 3 US GJ, reforming or series reactor schemes lead to a methanol production cost estimated around 5.5 US GJ (Lange, 1997). Advanced micro-structured string-reactors for this concept are under development (Homy et ah, 2004). 

Table 4.9-6 Production cost estimate for a one-step enzymatic conversion in SCCO2.

For firm production cost estimates, the prices listed in these journals should be verified by consulting the suppliers to make sure that they apply to the quality and quantity of the individual chemicals required in the projected manufacturing operations. Prices for chemicals not listed in the journals should be obtained from the suppliers. Current market prices of chemicals the company purchases for its manufacturing operations as well as interdepartmental or divisional transfer prices of chemicals produced and consumed within the company may be obtained from company files. Such price information is not available to individuals outside the company. Credit for by-products varies with each particular case. Generally, by-products are credited at their sales price minus additional selling, shipping, and purification costs, if any. 

The total installed cost for the air-based plant is nearly 50% greater than for an oxygen-based plant. The capital cost for an air separation unit is not included in the estimate for the oxygen-based process. It is assumed that oxygen is purchased over the fence as a raw material and the cost is accounted for in the production cost estimate as the cost of feedstock. 

The electricity production costs estimated in H2Sim are the levelized costs of electricity over the life of the plant. LCOE often are used as an economic measure of electricity costs as they allow for comparison of technologies with different capital and operating costs over time, as well as different construction times, capacity factors, and plant lives. The LCOE methodology is identical to that used for calculating hydrogen production costs [Equations (l)-(3)]. 

Cost estimates are sometimes used to check vendor bid quotations on outsourced work. This estimate can be used to not only verify appropriate costs for outsourced work but also as a part of the total product cost estimate. 

Table 5.4 Definitions and assumptions used in production cost estimate, for comparing feedstock and process investment effects.

NREL Current (2009) State-of-the-Art Hydrogen Production Cost Estimate Using Water Electrolysis. National Renewable Energy Laboratory, Golden (2009)... 

James, B.D., Moton, B.D., Colella, W.G. Mass Production Cost Estimation of Direct H2PEM Fuel Cell Systems for Transportation Applications 2013 Update, http //energy.gov/sites/prod/ files/2014/ll/fl9/fcto sa 2013 pemfc transpoitation cost analysis.pdf, last viewed Jan... 

When alternative strategies have been identified and the scope of projects established, preliminary cost estimates for the investment project alternatives can follow for opportunity or prefeasibility studies, together with a preliminary Environmental Impact Assessment. Reliability of capital and production cost estimates increase as projects progress from one stege to the next. Acceptable ranges of reliability are ... 

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