The value analysis technique used is straightforward. Maximum allowable life-cycle system cost for the cogeneration system is determined as the sum of the present value of fuels displaced plus the present value of revenues from exported power. Each conventional fuel displaced is described by a unit cost in the first year, a uniform annual consumption rate, and a uniform annual escalation rate for unit cost. Exported energy flows are treated the same as displaced energy

Doane, J. W.

English

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Al? ASSESSMENT OF 
MARKET FOR 
Science  
APPROACH 
THE 1NDUSTRIAL COGENERATION 
PARABOLIC DISH SYSTEMS 
J .  W. Doaae 
Appl ica t ions ,  Inc .  
Golden, CO 
The Federal  Energy Regulatory Cormission (FERC) a c t i n g  under a u t h o r i t y  of t h e  
Pub l i c  U t i l i t i e s  Regulatory P o l i c i e s  Act (PURPA), h a s  r u l e d  t h a t  e l e c t r i c  
u t i l i t i e s  must purchase e l e c t r i c  energy from q u a l i f y i n g  cogenera to r s  and smal l  
power producers ae  r a t e s  r e f l e c t i n g  t h e  c o s t s  t 5 e  purchasing u t i l i t y  can avoid 
by ob ta in ing  energy and c a p a c i t y  from those  sources .  The FERC r u l e s  a l s o  re-  
q u i r e  s a l e  of back-up e l e c t r i c i t y  a t  nondiscr iminatory  r a t e s ,  in te rconnec t ion  
of q u a l i f y i n g  cogenerat ion f a c i l i t i e s  t o  t h e  g r i d ,  and "wheeling" of cogener- 
a t e d  power o u t s i d e  t h e  l o c a l  s e r v i c e  a r e a  i f  a  c o n t r a c t  cannot be achieved 
between t h e  cogenerator  and the  l o c a l  u t i l i t y .  
Science Appl ica t ions ,  Tnc. (SAI) is examining t h e  v a l u e  f o r  p a r a b o l i c  d i s h  
s o l a r  thermal systems i n  cogenerat ion a p p l i c a t i o n s  i n  the southwestern United 
S t a t e s  under these  c i rcumstances .  In  t h i s  s e n s e ,  t h e  s tudy is an a t t empt  t o  
approximate the  economic demand curve  f o r  p a r a b o l i c  d i s h  cogenerat ion systems,  
showing a p o t e n t i a l  amount so ld  a s  a func t ion  of p r i c e .  P r i c e  e s t i m a t e s  w i l l  
be based,  i n s o f a r  a s  p o s s i b l e ,  on a n a l y s i s  of t h e  b e n e f i t  s t reams c r e .  cd by 
a r e fe rence  cogenerat ion system, se rv ing  i n d u s t r y - s p e c i f i c  steam and l e c -  
t r i c i t y  loads ,  under r eg ion-spec i f i c  weather c o n d i t i o n s .  In a d d i t i o n ,  t h e  
r a t e s  f o r  back-up power and e l e c t r i c i t y  buyback used t o  monetize t h e  energy 
flows from the  cogenerat ion system w i l l  be based on u t i l i t y - s p e c i f i c  f i l i n g s  
of i n t e n t  where p o s s i b l e .  
The es t ima t ion  of p o t e n t i a l  q u a n t i t y  so ld  a s  a f u n c t i o n  of  p r i c e  is a famous 
problem i n  new technology market p o t e n t i a l  s t r ~ d i e s .  Th i s  s tudy does no t  t r y  
t o  develop suppor t  f o r  t h e  e x i s t e n c e  of a l a r g e  cogenerat ion market ,  but  in-  
s t ead  t r y s  t o  i d e n t i f y  t h e  "top" ( in  a p r i c e  sense )  of t h a t  market .  Thus, 
SAI w i l l  look f o r  the  most advantageous ( f o r  d i s h  system va lue )  correspon-.  
dence betweeli s t eam-e lec t r i c  energy loads ,  d i s h  system o u t p u t ,  and expected 
r a t e s  f o r  back-up and exported power. The c r e d i b i l i t y  f o r  t h e s e  f i n d i n g s  
w i l l  r e s t  on t h e  a b i l i t y  t o  v e r i f y  t h e  re levance  of the  c o n d i t i o n s  modeled, 
and on t h e  a n a l y s i s  technique used t o  d e r i v e  system v a l u e  from those  condi-  
t ions .  
METHODOLOGY 
The va lue  a n a l y s i s  technique used f o r  t h i s  s tudy  i s  s imple  and s t r a i g h t f o r w a r d .  
Maximum al lowable  l i f e - c y c l e  system c c s t  f o r  t h e  cogenera t ion  system is d e t e r -  
mined a s  t h e  sum of the  p resen t  va lue  of f u e l s  d i s p l a c e d  p l u s  t h e  p r e s e n t  va lue  
of revenues from exported power. Each convent ional  f u e l  d i s p l a c e d  is  desc r ibed  
b - by a u n i t  c o s t  i n  t h e  f i r s t  yea r ,  a uniform a n n u a l c o n s u m p t i o n r a t e ,  and a 
uniform annual e s c a l a t i o n  r a t e  f o r  u n i t  c o s t .  Because t h e  e f f e c t s  on a f t e r -  
f t a x  ea rn ings  of a $1 i n c r e a s e  i n  revenues,  , ire as*.umed t o  be the  same a s  th,,se 
of  a $1  dec rease  i n  c o s t s ,  exported energy flows a r e  t r e a t e d  t h e  same a s  d i s -  
f placed energy. 
2 5 1 
https://ntrs.nasa.gov/search.jsp?R=19810022011 2020-03-21T09:44:49+00:00Z
The question of interest for this study is: how much can a cogeneratCon 
syetem cost and still be competitive with conventional energy technologies? 
An absolute upper bound to this question is defined by the "breakever," 
system cost, defined as the highest installed system cost for which the 
cogeneration project can avoid a negative net present value (NPV) when all 
project-resultant cash flows are considered. All of the application-specific 
characteristics mentioned above, plus the operations and maintenance costs 
of thn cogeneration system, are represented in the project NPV. 
%e technique for determining potential quantity sold is much more empirical 
than the discounted cash flaw methods used to determine value. Subjective 
criteria were used to limit the survey population to service territories of 
eight investor-owned utilities in six major metropolitan of the southwestern 
United States. Use of the utility service territory as th? basic unit of 
analysis has several o-rational advantages. First, the relevant rates for 
back-up and exported pwer will be utility-specific. Thus the utility 
service territory is a logical unit for the value analysis described above. 
Second, service terrt-ories are easily related to the regional manufacturing 
activity data used in estimating potential cogeneration system sales, and 
to other region- and site-specific influences on prospects for solar thermal 
cogeneration(insolation, projections of industrial growth, land availability, 
transmission line availability, etc.). kinaily, the large utilities 
generally have substantial in-bo%e knowledge of the load characteristics 
of their industrial customers. If this prelininary analysis were to be 
disaggregated and extended, visits to the eight utilities might be a 
cost-effective alternative to site visits to all prospective cogenerators. 
Within a given service territory, the gross population of prospective 
cogenerators is determined from lists of local manufacturing activity as 
reported in state manufacturing registers. Initial screening is applied 
to eliminate manufacturing activities whose energy requirements are 
obviously incompatible with paraboli- dish systems. The remaining plants 
are retained for further analysis. Performing this process for each 
service territory resalts in a matrix of "feasible" manufacturing 
establislunents, tabulated by utility service territory. 
Using energy load profiles typical of the industries selected, and local 
insolation an, utility rate data, breakeven costs for parabolic dish 
cogeneration systems are computed for each appiication/service territory 
combination in the matrix. The results, ranked from high to low by 
breakeven value, reyesent a \slue-stratified list of potential cogeneration 
applicationsfor the sample analysed. The last step is to estimate the 
quantities u i  potential sales of parabolic dish cogeneration systems 
corresponding to the respective value strata. This is done from local 
data oil manufacturing sector energy use. This data is used to estimate, 
for each service territory, the total energy use by each manufacturing 
3ctivity modeled. The portions of that total use correspmding to the 
process conditions modeled are estimated from "typical plant profiles" 
for the appropriate industries. 
EXPECTED RESULTS 
Because they will be synthesized Lrom average data, the potential sales data 
are obviously "so£ t .'I Furthermore, the important attrition mechanisms 
separating attainable sales fraigross potential are not modeled at all. The 
value of the study must rest, therefore, on the value stratification results. 
From this perspective, the quantity results should be indicative of applications 
meriting the cost of gathering more detailed information on technical require- 
ments and potential energy displacemect. 


An assessment of the industrial cogeneration market for parabolic dish systems

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