Appendices - GSA

- Gasification
- Anaerobic Digestion
• Percentage of office, packaging and warehouse roofs to be occupied by
daylighting skylights.
Life-cycle cost was calculated for the RE Solutions Case and for the Base Case
by adding initial cost to any annual costs inflated over time and discounted to
their present value. Initial cost used for the Base Case was zero. Initial costs for
the RE Solutions Case were taken from NREL assessments and data of each RE
industry. Annual costs for both the RE Solutions Case and the Base Case
include maintenance, fuel, standby charges from the utility, payments to the utility
associated with the difference between retail and delivered power, any
production incentives, or other cash flows.
The discount rate (4.6 percent) and energy cost escalation rates were used
according to regulation 10CFR436. [2] The regulation specifies a maximum
analysis period of 25 years for mechanical and electrical equipment, and the
renewable energy measures considered here may be expected to last that long.
In order to model costs which are not constant from year to year, such as
accelerated depreciation, a 25-year cash flow analysis was prepared.
The life-cycle cost analysis discounted all costs over a 25-year analysis period to
their present worth. RE projects with life-cycle costs lower than the Base Case
are good options. Life-cycle cost results were used to calculate return on
investment. Cost-effective RE projects have rates of return higher than the
discount rate used in the life-cycle analysis (4.6 percent).
The solver routine calculates the change in life-cycle cost associated with a
change in the size of each of the renewable energy technologies and then moves
in the direction of LCC by an amount determined by a quadratic approximation
(Figure A-20).
The solver routine finds the minimum life-cycle cost in 13 variables, but only two
variables can be illustrated in this two-dimensional figure. An increase and
decrease in the size of each RE component is used to indicate direction of
reducing life-cycle cost. The solver routine involved the following parameters—
precision: value of energy use 0.0 +/- 0.0001; convergence: change in life-cycle
cost less than $0.0001 for five iterations; quadratic extrapolation to obtain initial
estimates of the variables in one-dimensional search; central derivatives used to
estimate partial derivatives of the objective and constraint functions; and
Newtonian Search Algorithm used at each iteration to determine the direction to
search.
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