"Estimation of Simple Payback for CHP
Installations" Help page:
Back to the "Simple
Payback" page
Basics:
What is CHP?
What the Graph shows
Entering data
How Can it be so Simple?
Data Input:
(A) Average Retail Electric Price
(B) Fuel Cost
(D) Hours of Operation
(F) Installed Cost
(F) Calculate Payback Button
Calculated Values:
(C) Hourly Cost Savings
(E) Annual Savings
(G) Payback in Years
Basics:
What is CHP?:
What the Graph Shows:
The graph is actually a composite of three graphs tied together to form a
picture, or nomograph. This composite graph can show you how long it will take to
save as much money as your installation costs depending upon the average retail electric
price, cost of fuel, and hours of operation. Some combinations of values may be
outside the graph's boundaries, and therefore might not produce a reasonable answer.
Entering Data:
Enter appropriate data from your site into each of the four boxes to calculate a
new Payback in Years. You must press the Calculate Payback button
in order to perform the calculation. Use numeric values within the ranges suggested in the
Valid Ranges column to obtain best results. If you leave any of the
input boxes blank, the corresponding figures in the Last Data column will
be used in the payback calculation.
How can it be so Simple?
Remember that this is a simplified screening tool, not a detailed evaluation.
This step is designed to help you decide whether a full investigation of combined heat and
power for your plant is reasonable. To make it simple, this tool includes many assumptions
and simplifications. For example, it uses average fuel and electricity prices, thus
neglecting the seasonal variations and demand charges that you may incur (and that a
combined heat and power installation might help you to avoid). It further assumes: (1)
that your new equipment will produce electricity with a 30% efficiency, (2) that your
thermal load is equal to your electrical load and is currently met with a 95% efficient
furnace or boiler, and (3) that your operating and maintenance costs will be unchanged by
the installation of the new equipment. All petroleum fuels are assigned a heat content of
5.2 million BTU/barrel (the industrial weighted average).
Data Input
Average Retail Electric Price:
Fuel Cost:
This field should contain your estimate of the cost of fuel in U.S. dollars for
the period of time in question.
The fuel costs can be entered using one of five units. Choose one that is
appropriate for your site. The default choice is $/million Btu.
Hours of Operation:
Installed Cost:
This field should contain the total cost of installing CHP at your site.
Values are sensitive to the size and type of your CHP equipment and will range from $500
to $2000/kW. Generally, the larger values will apply to smaller systems (less than
1MW) and larger systems (greater than 10MW) will be less expensive.
Calculate Payback Button:
You must press the Calculate Payback button to calculate new values for the
graph. If you leave any of the input boxes blank, the corresponding figures in the Last
Data column will be used in the payback calculation.
Calculated Values:
Hourly Cost Savings:
Contains the cost savings calculated from average retail electric price and cost
of fuel, assuming that the CHP electric generation is 30% efficient, not including
operating and maintenance costs, and including a small credit for the thermal energy use.
Annual Savings:
Contains the annual cost savings due to CHP operation.
Payback in Years:
Contains the number of years it will take to recoup your installation costs,
ignoring such economic factors as fuel and electricity price escalation, tax treatments,
and return on investment. It is simply the installed cost divided by the annual
savings.