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.

Question

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.

Accepted Answer

Before using the power-sizing model to estimate the cost of the 600-MW plant ([latex]C_{A}[/latex]), 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 : [latex] C_{n}= C_{k} \left(\frac {\bar { I_{n}} }{\bar{I_{k}} } \right) [/latex]), we find that the current cost of a 200-MW plant is

[latex]C_{B}[/latex]= $100 million [latex] \left( \frac{ 12.000}{400} \right)[/latex] = $300 million.

So, using Equation (3-4 : [latex]C_{A}= C_{B} \left( \frac { S_{A}}{S_{B}} \right)^{X}[/latex]), we obtain the following estimate for the 600-MW plant:

[latex]C_{A}[/latex] = $300 million [latex]\left(\frac{600-MW}{200-MW} \right)^{0.79}[/latex]

[latex]C_{A}[/latex]= $300 million × 2.38 = $714 million.

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