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Energy Systems and Technologies for the Coming Century ...

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production, divided by <strong>the</strong> anticipated load factor over <strong>the</strong> life period, which is <strong>the</strong>ndiscounted based on a derived discount rate. There<strong>for</strong>e, this can be represented as followsin <strong>the</strong> equation. …… 6Capital costs (C c ) are <strong>the</strong> initial investment <strong>for</strong> purchasing equipment <strong>and</strong> installing <strong>the</strong>mbe<strong>for</strong>e <strong>the</strong> system is placed in operation i.e. in year zero. If <strong>the</strong> initial investments havebeen made in several years be<strong>for</strong>e <strong>the</strong> plant comes in operation, <strong>the</strong>n all thoseinvestments should be discounted to <strong>the</strong> year zero (year of plant operation). This can beapplicable <strong>for</strong> <strong>the</strong> micro hydro installation which might take few years to be installed.The residual value of <strong>the</strong> plant after its life time <strong>and</strong> <strong>the</strong> system degradation factor has notbeen taken into account <strong>for</strong> <strong>the</strong> simplification.Operation <strong>and</strong> maintenance costs are <strong>the</strong> cost that incurred during <strong>the</strong> operation of <strong>the</strong>system. This includes <strong>the</strong> recurring cost each year spent <strong>for</strong> staffing <strong>and</strong> repairing <strong>and</strong>maintaining <strong>the</strong> components as <strong>and</strong> when required. The operation <strong>and</strong> maintenance costare comparatively low <strong>for</strong> renewable energy in comparison to <strong>the</strong> fossil basedconventional technologies. If “AOMC” represents <strong>the</strong> annual operation <strong>and</strong> maintenancecost of <strong>the</strong> year one, e 0 is <strong>the</strong> general escalation factor <strong>and</strong> r is <strong>the</strong> discount rate, <strong>the</strong>annualized operation <strong>and</strong> maintenance cost (C om ) can be expressed as: ∗ 1 ... eq. 7Replacement Cost is associated with <strong>the</strong> investment needed <strong>for</strong> replacing those equipmentor <strong>the</strong> components in <strong>the</strong> system that has relatively shorter life span than <strong>the</strong> project underevaluation. The replacement cost can be expressed as: ∑ ∗ ….. eq. 8 Where, Item Cost i is <strong>the</strong> replace cost of <strong>the</strong> item “I” with <strong>the</strong> life span of N R. “v” is <strong>the</strong>numbers of components to be replaced.Fueling Cost represents <strong>the</strong> cost invested in <strong>the</strong> consumption of <strong>the</strong> fossil fuels, in <strong>the</strong>case of operation of conventional diesel generators. If “AFC” is <strong>the</strong> annual fuel cost <strong>and</strong>F f represents <strong>the</strong> yearly increment in <strong>the</strong> fossil fuel price, <strong>the</strong>n annualized fuel cost over<strong>the</strong> project period is represented by: ∗ 1 ∗1 1 1 …...9In this study, we have taken <strong>the</strong> general escalation based on <strong>the</strong> projected inflation ratebetween 2011 <strong>and</strong> 2015 using <strong>the</strong> data of International Monetary Fund (IMF) (For <strong>the</strong>Risø International <strong>Energy</strong> Conference 2011 Proceedings Page 365

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