Cost targets

Another way to utilize LCC calculations is in support of a purchase. The supplier can offer both the purchase price and an estimate of the present value of the life cycle operating costs At the same time the supplier guarantees the operating cost for some period, for example, 3 years. If these target costs are exceeded, the supplier pays a penalty, and if the operating costs were overestimated, the supplier and the customer share the bonus. 

As the materials used in drilling processes are produced from depletable mineral resources, there is a continuous upward trend of cost with time. The field engineer must make a detailed cost comparison of materials available within the target cost of the project. The final choice may be a tradeoff between cost and performance. This is because the choice may narrow down to two or more materials with different initial costs and different expected service lives. Transportation costs of selected materials must also be included in the final cost. 

While first generation fuel cells continued to be of interest, the present goal of the DOE s Fossil Energy fuel cell program is to develop low cost fuel cells. The target cost is 400 per kilowatt or less, which is significantly lower than today s fuel cell products. It is expected that lower cost fuel cells will result in more widespread utilization. 

Figure 13.12. Shares of added value of the individual components of a fuel cell (by the target costing method) and a combustion engine drive system (Schirrmeister et al., 2002).

The greatest uncertainty today is the cost development of the electrochemical part of the system, the fuel-cell stack. Experts agree that it could be mass-produced at reasonable cost. The target-costing approach states that, in the long term, the specific costs of the fuel-cell stack must be in the order of 10/kWel (based on a 75kWel power for each of the two fuel-cell stacks). 

For the economic comparison of the two storage options, the specific re-electrifi-cation costs of the stored wind energy are calculated. These costs are made up of the investment, operation and maintenance costs, input electricity costs (wind electricity) and the fuel costs (natural gas). As hydrogen technologies are not in a commercial state, the calculation is also performed with target costs for electrolysers. Carbon emissions are also monetarily included, assuming a certificate price of 20/t. Table 16.2 summarises the major economic assumptions. 

An overview of possible cost positions of a supplier in a Chemical Leasing contract is shown in the following. Since Chemical Leasing is not a rigid model it may be individually adapted to the actual circumstances in order to meet the targeted cost and mass reduction. 

The next step is to set performance and cost criteria for the system in order to be able to determine whether the new greener design is acceptable. Chelants are often one of the hidden components in a formulation whose value is only found when the system fails. So, what is the cost of batch failure, product spoilage, laundry not being cleaned, reworking in a pulp mill, and so on Also, what is the target cost per dose for the chelant and related chemicals It is important to set acceptable limits on performance - for example, the formulated product needs to be stable for 6 months or show bleach stability >80% over the 30 min wash cycle. 

The target cost of nuclear hydrogen production must be cheaper than that of the conventional electrolysis subtracting the distribution cost. Hydrogen production efficiency of EED-aided SI thermochemical cycle is expected around 43% with current knowledge (Cho, 2009). 

Fig. 5.19. Comparison of reactive and ceramic target sputtering processes. The relative target costs are a rough estimate for planar magnetron targets (from [105])...

Figure 3.11. Estimated effect of fuel-cell lifetime on the target cost for competitive commercialisation (Staffed etal., 2007)...

The utilisation and the on/off cycles of a CHP system affect its potential benefit. Furthermore, higher overall efficiency leads to lower fuel consumption, while longer lifetimes lead to lower annualised capital costs. Concerning the relative influence of the demand profile, the nominal electric capacity, the efficiency and the lifetime of AFC, PAFC, PEMFC and SOFC systems, target costs were found to lie in a rather wide range. 

These cost assumptions were based on European Union (EU) target costs and previous studies. Both cost scenarios are presented in Table 5.5. With respect to future costs of hydrogen energy technologies, a 50% cost reduction for electrolysers and a 40% cost reduction for conventional hydrogen storage tanks were introduced and the EC cost target of 300 /kW for fuel cells was also used. 

The DOE issued a solicitation in January 2003 for the development of stationary PEMFC for buildings, with the target cost of 1500/kW, design life of 40,000 hours with less than 10 percent degradation, and market entry within the next 3 to 5 years.5 Recently UTC Fuel Cells announced that it will introduce 150 kW PEMFC units at 1500/kW in... 

Our process team was able to develop a linear approach that met the target cost of manufacturing for ERH-1 (Scheme 4). The new manufacturing route also afforded a possibility for further improvement that may result in a further reduction in cost by 10%. The details of the chemistry of the linear route are discussed in the journal publication [1]. 

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