contemporary engineering economics, 4 th edition, © 2007 life-cycle cost analysis lecture no.22...

Contemporary Engineering

Economics, 4th edition, © 2007

Life-Cycle Cost Analysis

Lecture No.22Chapter 6Contemporary Engineering EconomicsCopyright © 2006



Why Life-Cycle Cost (LCC) Analysis? To select from among design

alternatives that fulfill the same performance requirements, but differ with respect to initial costs and operating costs

To predict the most cost-effective solution



Stages of Life-Cycle Cost



Sketch of a Pumping System in Which the Control Valve Fails



Engineering Solution Alternatives Option A: A new control valve can be installed to

accommodate the high pressure differential. Option B: The pump impeller can be trimmed so

that the pump does not develop as much head, resulting in a lower pressure drop across the current valve.

Option C: A variable frequency drive (VFD) can be installed, and the flow control valve removed. The VFD can vary the pump speed and thus achieve the desired process flow.

Option D: The system can be left as it is, with a yearly repair of the flow control valve to be expected.



Life-Cycle Cost Elements



Cost Comparison for Options A Through D



Sample LCC Calculation for Option A



Comparison of LCC for Option A - D



Standard Premium Motor Efficient Motor25 HP 25 HP$13,000 $15,60020 Years 20 Years$0 $089.5% 93%$0.07/kWh $0.07/kWh3,120 hrs/yr. 3,120 hrs/yr.

SizeCostLifeSalvageEfficiencyEnergy CostOperating Hours

(a) At i= 13%, determine the operating cost per kWh for each motor.(b) At what operating hours are they equivalent?

Life-Cycle Cost Analysis – Standard Motor versus Premium Efficiency Motor



Solution:(a): Operating cost per kWh per unit

Determine total input power

Conventional motor:

input power = 18.650 kW/ 0.895 = 20.838kW

PE motor:

input power = 18.650 kW/ 0.93 = 20.054kW

Input power =output power

% efficiency



Determine total kWh per year with 3120 hours of operation

Conventional motor:

3120 hrs/yr (20.838 kW) = 65,018 kWh/yr

PE motor:

3120 hrs/yr (20.054 kW) = 62,568 kWh/yr

Determine annual energy costs at $0.07/kwh: Conventional motor:

$0.07/kwh 65,018 kwh/yr = $4,551/yr PE motor:

$0.07/kwh 62,568 kwh/yr = $4,380/yr



Capital cost: Conventional motor:

$13,000(A/P, 13%, 12) = $1,851 PE motor:

$15,600(A/P, 13%, 12) = $2,221 Total annual equivalent cost:

Conventional motor: AE(13%) = $4,551 + $1,851 = $6,402 Cost per kwh = $6,402/58,188 kwh = $0.11/kwh

PE motor: AE(13%) = $4,380 + $2,221 = $6,601 Cost per kwh = $6,601/58,188 kwh

= $0.1134/kwh



(b) break-evenOperating Hours = 6,742

123456789

10111213141516171819202122232425262728293031323334353637383940414243444546474849

B C D E F G H

Example 6.6 How Premium Efficiency Motors Can Cut Your Electric Costs

Conventional Premium Motor Efficiency Motor Operating Conventional PE

Hours Motor MotorOutput power (hp) 25 25Operating hours per year 6,742 6,742 0 1,851$ 2,221$ Efficiency (%) 89.5 93 500 2,580$ 2,923$

1000 3,309$ 3,624$ Initial cost ($) 13,000$ 15,600$ 1500 4,039$ 4,326$ Salvage value ($) 0 0 2000 4,768$ 5,028$ Service life (year) 20 20 2500 5,497$ 5,730$ Utility rate ($/kWh) 0.07 0.07 3000 6,227$ 6,432$ interest rate (%) 13 13 3500 6,956$ 7,134$

4000 7,685$ 7,836$ 4500 8,415$ 8,538$

Capital cost ($/year) 1,850.60$ 2,220.72$ 5000 9,144$ 9,240$ Energy cost ($/year) 9,834.28$ 9,464.17$ 5500 9,873$ 9,941$ Total Equ. annual cost 11,684.88$ 11,684.89$ 6000 10,603$ 10,643$ Cost per kWh 0.09$ 0.09$ 6500 11,332$ 11,345$

7000 12,061$ 12,047$ 7500 12,791$ 12,749$ 8000 13,520$ 13,451$ 8500 14,249$ 14,153$ 8750 14,614$ 14,504$

0

2000

4000

6000

8000

10000

12000

14000

16000

Conventional Motor

PE Motor

contemporary engineering economics, 4 th edition, © 2007 life-cycle cost analysis lecture no.22...

Documents