Case 1 Background

Hydrogen will play a key role in the energy transition. A green hydrogen power plant facility in South Australia is a step closer to completion with announcement of a generator supplier. Australian hydrogen infrastructure developer H2U confirmed today that it will use Baker Hughes NovaLT gas turbine generators at its South Australian Renewable Hydrogen and Ammonia Supply Chain Demonstrator in Port Lincoln. H2U won the AUD$117.5 million greentech project a year ago in partnership with German-based Thyssenkrupp. Baker Hughes contributes to the hydrogen economy with major technology advances across our entire portfolio: gas turbines capable of burning 100% H2 and blends, as well as centrifugal and reciprocating compressors. If you want to see how hydrogen power machine works

https://www.energy.gov/eere/fuelcells/fuel-cell-basics.

The Company remains committed to reducing its carbon footprint as well as those of its customers. In the second quarter, TPS successfully completed a testing campaign to replace conventional refrigerant gases for compressor testing at its largest global rotating machinery testing facility in Massa, Italy. The new hydrofluoro-olefin gas will enable the Company to save an average of 20,000 tons of CO2 equivalent emissions per year for the Massa and Florence TPS sites combined. On the report of OECD, THE lower-end estimates put the damage from emitting 1 tonne of CO2 at $47.

1. assuming (not the actual number), producing a Baker Hughes generator will cost $80,000 to build a new machine, with annual operating and maintenance costs (O&M) of $5,000. The machine is estimated to save 300 tons of CO2, save costs of CO2 of $14100, and save other handling cost of $10,000 compared with other types of machine. The salvage value after 5 years is $10,000, Calculate the machine's equivalent uniform annual worth (EUAW) and machine's capital recovery cost (EUAC) for an interest rate of 9%. example 6-1

2. South Australian Renewable Hydrogen plans to buy the Baker Hughes generator for $80,000 and it can qualify for 100% bonus depreciation. It is estimated that the company can save $14,100 per year over 5 years of life. The company can also reduce operation costs by $5,000 each year, and gain extra subsidies from Government of $1200 each year. After five years the generator can be sold for $10,000, questions: (Example 12-6)

A.What is the before-tax present worth and rate of return? Assume a MARR of 15%

B.What is the after-tax present worth and rate of return? Assume tax rate is 11%

Case 2 Background

Mt Gambier has been using human supervised fire towers to watch fires to report. Good fire reporting would potentially save $2m. In recent years the fire tower has degraded and needs more considerable maintenance. There are 8 towers which will cost $150,000 /tower for repair, with an annual person watch cost of $120,000 for labour, and has a salvage value at year 5 of $80,000. Alternatively, if a newly designed smart camera technology system was introduced, the older towers would only need minimal repairs of $2,000/tower,while 4 new towers would need to be built for camera installation at $10,000/each, plus $13000/camera for set up, and a maintenance fee of $3,000 per year, with a salvage value at $100,000, with an interest rate at 6%,

3. which option should Forestry SA consider in the next 5 years.