Life-cycle cost analysis for direct-use geothermal systems
In the midst of our frantic search to discover new renewable energies and our rush to develop the technology of solar and wind applications, the old reliable direct-use geothermal energy continues to surface. There is no need to wait for the development of direct-use geothermal technology. It has been on-line, tried and proven, since the turn of the century. Nearly all the equipment required for direct-use geothermal systems has been available for decades as off-the-shelf items. The only remaining question for direct-use geothermal development is the economic feasibility of the proposed direct-use system. If the resource is proven and the proposed end use is compatible with the temperature and flow rate of the resource, the only element left for consideration is the economic viability of the project. That is, will the system create sufficient benefits, savings, or revenues to justify the amount of capital investment necessary to bring it on-line. Life-cycle cost analysis is the method generally used to determine economic feasibility. This paper will acquaint the reader with the basic principles of this analysis. Life-cycle costing combines all the techniques of projecting and evaluating total system costs over the expected life of the system. These costs include capital investment, annual costs of operating and maintaining the system, financing costs, taxes and insurance, etc. associated with the system. The end result of all these cost projections is to evaluate the ratio of the annual benefit (revenue or savings) to the cost or required capital investment to determine if the project is worthwhile. Once life-cycle costs have been calculated it is easy to determine the present worth of these cash flows, the internal rate of return on invested capital, and the payback period.
- Research Organization:
- Geo-Heat Center, Oregon Institute of Technology
- OSTI ID:
- 5954067
- Journal Information:
- Geotherm. Energy Mag.; (United States), Journal Name: Geotherm. Energy Mag.; (United States) Vol. 12:3; ISSN GTEMA
- Country of Publication:
- United States
- Language:
- English
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Related Subjects
150500 -- Geothermal Energy-- Economics
Industrial
& Business Aspects
151000* -- Geothermal Energy-- Direct Energy Utilization
AIR CONDITIONING
CAPITAL
COOLING
COOLING SYSTEMS
COST
COST BENEFIT ANALYSIS
ENERGY SYSTEMS
GEOTHERMAL AIR CONDITIONING
GEOTHERMAL HEATING SYSTEMS
GEOTHERMAL REFRIGERATION
HEATING SYSTEMS
INVESTMENT
LIFE-CYCLE COST
REFRIGERATION