CE 11 Homework #10

Hand in by the beginning of class on Friday May 1. Remember to include a short

problem statement (objectives of problem, assumptions, equations you are solving, sketch
of system if appropriate) as well as a concluding sentence discussing key implications
and/or uncertainties of your analysis.
1. An electric utility is required to install pollution control equipment to reduce nitrogen
oxide (NOx) emissions from their power plant. As a result of the costs that will be
incurred, the utility makes an application for a rate increase to the public utilities
commission (PUC). The application is for an increase of $0.01 per kWh, which the PUC
rejects as too high. Suppose you are an energy analyst working at the PUC, and you are
given the assignment of redoing the economic analysis to figure what rate increase
($/kWh) should be allowed.
Relevant data to use in your analysis:
500 MW gas-fired power plant
Annual average load factor = 80% (fraction of time the plant is operating)
Capital costs of selective catalytic reduction (SCR) system = $75 million
Annual operating costs (ammonia reagent, catalyst replacement) = $2.2 million
Negligible scrap value of SCR system
Cost recovery to occur over a 15-year time period
Allowed interest rate of 10%
2. Compute the cost effectiveness ($/ton of NOx removed) for installing catalytic
converters on new cars to control NOx emissions.
Relevant data to use in your analysis:
Increased new vehicle purchase price = $500 for the catalytic converter
No effect on operating costs
Vehicle useful lifetime is 10 years
$50 scrap value of catalytic converter (recovered platinum group metals)
Assumed interest rate of 10%
Amount of driving = 10,000 miles per year
NOx emission rate decreases from 1.0 to 0.1 grams per mile
with use of the catalytic converter
3. (a) Calculate simple and actual payback periods (in years) for a more expensive
refrigerator (P = $125) that gives 190 kWh/year of electricity savings compared to a less
expensive model. Assume electricity cost is $0.10/kWh, and consider interest rates of 5,
10, and 20%. Does the investment (added upfront cost) pay off over the expected 15-year
lifetime of the refrigerator? Assume there is no difference in scrap value of the two
refrigerator options. (b) Calculate return on investment (ROI, the effective interest rate)
given the above costs and savings per year, over the 15-year lifetime of the fridge.

4. New instrumentation is needed to monitor the performance of control systems at a

large manufacturing plant. Two available systems give identical performance. One
system costs $100,000 and will last for 10 years; the other costs $60,000 and will last for
6 years. The scrap value is negligible in both cases. Both systems also have an annual
maintenance cost of $1,000/year. Is one of these systems preferable to the other based on
cost? Assume the companys interest rate is 10%. Since the useful lifetimes of the two
systems differ, it is not appropriate to compare net present values for this question.
5. Estimate emissions and associated uncertainties in on-road vehicle sources of nitrogen
oxides (NOx) in California, separately for gasoline (mostly cars) and diesel engines
(mostly large trucks). Also calculate the combined total (gasoline + diesel) for NOx
emissions and estimate uncertainty in the sum.
Statewide fuel sales estimates are derived from excise tax reports submitted by fuel
wholesalers. Diesel fuel sales are known less accurately than gasoline because of
uncertainties that arise in trying to exclude off-road uses of diesel fuel in farm,
construction, railroad, marine and other heavy engines. The diesel NOx emission factor
(rate of NOx emitted per unit of fuel burned) is much higher than for gasoline because
most cars now are equipped with catalytic converters.
Engine Type

Fuel Density
(kg per liter)

Statewide On-Road
Fuel Use (liters)

Emission factor
(g NOx/kg fuel)

Gasoline

0.73 0.02

(56.3 4.4) 109

3.9 1.2

Diesel

0.84 0.03

(10.6 1.4) 109

28.0 5.7

Summary of Cost Factors for Engineering Economic Analysis

Symbol

Equation

Converts

P|F

1
n
(1+ i)

F to P

P|U

1 (1+ i)
i

(1+ i)

F|U

F|P

U to P

U to F

(1+ i)n

P to F

U|P

i
1 (1+ i)n

P to U

U|F

i
(1+ i)n 1

F to U

In general, given A, multiply by B|A to calculate B.

Note B|A is the reciprocal of A|B.

nPB

) # P & ,
log +1 %
( i.
* $ U ' log (1+ i)

Payback period

The payback period indicates how long it takes to recoup a capital investment (P) that
leads to lower annual operating costs (U). Useful comparisons can be made with the
design life of the project or product, and with payback periods of other competing
efficiency measures that could also generate cost savings.