Cogeneration—An energy alternative for the U.S.?

A Total Energy System (TES) is proposed to supply the Massachusetts Institute of Technology (MIT) with its total electrical and steam energy needs at a cost below that of the present system of a steam-production facility and purchased electricity. Diesel-engine, steam-turbine, and gas-turbine plants, with supplementary or auxiliary fired boilers, are the design alternatives to the current boiler plant. Each system design is evaluated for economic potential using the net present value method of analysis. Results show that only the diesel engine may be competitive with the current cost of producing steam and purchasing electricity. Preliminary analysis indicates that the annual savings of this plant may be as high as $959,000. However, a more realistic figure of $278,000 results after considering the costs of back-up service, the use of higher priced fuel, and the savings due to peak-pricing plans. This figure is exclusive of the difficult-to-quantify variables such as the cost of emission controls and the future price of oil. The cost of fuel for each TES option accounts for over 81% of the annual cost (capital charge + fuel + operation and maintenance) indicating a higher degree of sensitivity to oil prices than for a utility. Because of the many uncertainties and the dependence on oil, such a system is not economically attractive for MIT.