Economics for Small Scale Package Cogeneration: A Case Study

Document Type



Engineering (HMC)

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High energy efficiency and special low-cost races make cogeneration an attractive energy production method. Large cogeneration units have proven economic for many applications. Here we report a case study on the profitability of a small, gas fired. 4 kW packaged cogenerator in a home or small business to heat hot water and generate electricity. A sensitivity analysis shows results for the following variables: initial cogenerator cost, cogenerator efficiency, cogenerator life. number of hours per day of operation, amount of electricity sold back to the utility, electricity sellback prices, natural gas prices, maintenance costs, depreciation versus expensing, and incremental tax rates. Rate of return and payback period results ore reported as a function of these variables for a 4 kW cogenerator. At an overall efficiency of 72%, an initial cogenerator cost of $4.000 and a cogenerator life of 25.000 running hours, investing in the cogenerator gives a 2.4 year payback period.

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