Initial Feasibility Report:

Combined Heat and Power Plant

I. Introduction

The Northeast CHP Application Center operating within the Center for Energy Efficiency
and Renewable Energy (CEERE) at the University of Massachusetts, Amherst, investigated a
feasibility of utilizing cogeneration at sample facility in Massachusetts. The objectives of the
feasibility are to perform engineering analyses to determine the technical viability of utilizing
cogeneration, To select and perform savings and cost analyses on a variety of cogeneration
configurations based on the energy consumption and thermal load profiles, To evaluate previous analyses
provided to sample facility by a cogeneration system developer, To Provide supplemental information on
combined heat and power in general, inclusive of the various prime mover and heat recovery technologies
involved along with a general description of the benefits and risks associated with implementing
cogeneration and To recommend next steps for the facility to pursue.

II. Objective

To evaluate the financial analysis of the feasibility report: Combined Heat and Power Plant.

III. Methodology

Data gathered are shown in tables, Annual Energy Savings, Estimated Installation Cost and Simple
Payback and Internal Rate of Return were tabulated.

IV. Results and Discussion

From the tables shown in the financial analysis, the economic summary of cogeneration
design options that were analyzed for sample facility is presented. The annual electric generating
efficiency and annual average combined heat and power system efficiency values are also
provided. The values provide an indication of how efficiently the various systems perform as
well as how part- load operation and availability of a thermal load affects engine and system
performance.

In the analysis, the discount rate is assumed to be 5.5%, Inflation rate is 1.5%, Project life
time is said to be 20 years and tax implications are not accounted in the project. There were five
different options tested where Annual Energy Savings was given and the Estimated Installed
Cost, Simple Payback and Internal Rate of Return were obtained. There were two cases
considered: First one is without Gas Company Rebate and second is with Gas Company Rebate.
The Investment Capital Method of Internal Rate of Return and Payout Period Method are then
used.

The four alternatives presented in the table cover a wide range of installation costs to
provide various first cost options. All have a simple payback under 10 years with two of the
options have rates of return over 10%. Overall, the analysis indicates that this site has a well
above average potential for implementing a cost effective and successful cogeneration plant.

V. Conclusion

Methods of Investment Capital were used in this feasibility to determine whether the site
is potential for the implementation of a cost and cogeneration plant. These were also used to
select and perform savings and cost analyses on a variety of cogeneration configurations based on the
energy consumption and thermal load profiles. Therefore the Economic Analysis is important and useful
in determining the technical viability of utilizing cogeneration at the facility and also in performing
savings and cost study on a variety of cogeneration configurations based on the energy consumption and
thermal load profiles.

VI. Recommendation

The combined heat and power system is the best cogeneration configuration for it saves
money, improves power reliability, reduces environmental impact, and conserves the limited
resources of fossil fuels.