Question 3.6: Power-Sizing Model for Cost Estimating Suppose that an aircr...
Power-Sizing Model for Cost Estimating
Suppose that an aircraft manufacturer desires to make a preliminary estimate of the cost of building a 600-MW fossil-fuel plant for the assembly of its new long distance aircraft. It is known that a 200-MW plant cost $100 million 20 years ago when the approximate cost index was 400, and that cost index is now 1,200. The cost-capacity factor for a fossil-fuel power plant is 0.79.
Before using the power-sizing model to estimate the cost of the 600-MW plant (C_{A}), we must first use the cost index information to update the known cost of the 200-MW plant 20 years ago to a current cost. Using Equation (3-1 : C_{n}= C_{k} \left(\frac {\bar { I_{n}} }{\bar{I_{k}} } \right) ), we find that the current cost of a 200-MW plant is
C_{B}= $100 million \left( \frac{ 12.000}{400} \right) = $300 million.
So, using Equation (3-4 : C_{A}= C_{B} \left( \frac { S_{A}}{S_{B}} \right)^{X}), we obtain the following estimate for the 600-MW plant:
C_{A} = $300 million \left(\frac{600-MW}{200-MW} \right)^{0.79}
C_{A}= $300 million × 2.38 = $714 million.