Perform an economic analysis on the solar thermal power plant with concentrating collector (CC) compared to a

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Question:

Perform an economic analysis on the solar thermal power plant with concentrating collector (CC) compared to a ‘power tower’ solar thermal power plant (PT), see photos. Use the net power output of the PT plant from Problem 1 when needed.

Capital Costs - The capital costs to initially build each system are estimated at $1,500 per kilowatt of power output for CC, while capital costs of PT systems are estimated at $1,250 per kilowatt of power output. Assume that the CC system produces 80% of the PT power output.

Expected lifespan & Replacement Costs - The expected lifespans of the CC plant and PT plant are 40 and 30 years respectively. The shorter lifespan of PT is due to it being a newer, untested technology. The CC plant has no replacement costs, however some components in the power tower of the PT plant must be replaced after 15 years. These replaced components cost 30% of initial capital costs.

Annual operating profits - Energy from the PT plant costs 2.5 US cents per kilowatt- hour of energy output to produce and the CC plant produces energy at a cost of 3.5 US cents per kilowatt hour since it is an older technology. The CC and PT plants operates with availabilities of 50% and 35% , respectively, during all years of operation. The availabilities are near 50% to account for the plants not producing power at night. Also the PT plant availability is lower since it is a new technology that requires more maintenance time. The energy produced (electricity) from either power plant can be sold at 8 US cents per kilowatt hour. The current interest rate is 6%. The inflation rate is 0%.

Fill in the table below by calculating (for each system)

a) Capital costs

b) Replacement costs

c) Annual profits

Perform an economic analysis to determine whether to invest in a CC or PT plant. Since the two technologies (CC and PT) have different lifespans, is it correct to compare them with a d) Present work analysis ? OR Annual cost analysis ? (circle one)

Based on your answer from part d), complete a present worth OR an annual cost analysis (that includes the capital costs, replacement costs, and annual profits) to find;

e) The present worth or annual cost of the CC ____________

f) The present worth or annual cost of the PT ____________

g) As an investor, which system would you choose CC PT Why? (briefly discuss here)

h) What government subsidy per kW-hr of energy produced would need to be given to the less profitable system to make the two systems equally profitable. ___________________