Coal, Gas

True DG Costs Identified

Issue 6 and Volume 107.

While the equipment or purchase cost of a DG system is very important, a system’s installation, operation, and maintenance (IOM) costs also are significant and are often overlooked. A new report from EPRI reviews IOM costs for both mature and emerging DG technologies. Some equipment cost data is included for reference, but is not the focus of the report.

IOM costs for emerging microturbines and fuel cells are relatively high and unpredictable compared to more mature DG systems like internal combustion (IC) engines and combustion turbines. However, as microturbines and fuel cells approach full-scale commercialization, it is expected that IOM costs will decline and become more consistent with mature technologies. Factors that will contribute to lower IOM costs and higher predictability include increased population of trained installation and maintenance personnel; increased competition between companies that install and maintain equipment; well-developed and uniform standards that govern installation requirements; and improved reliability of equipment as delivered by manufacturers.

The detailed IOM costs in the report will help users make informed decisions for business planning or selecting DG technologies for a given application

EPRI’s study of IOM costs for DG technologies had two objectives: first, to characterize current IOM costs for IC engines, combustion turbines, microturbines, and fuel cells; and second, to speculate how IOM costs for emerging DG technologies may decline as these products become widely deployed, by comparing them to equipment in mature industries (for example, heating, ventilating, and air conditioning, or HVAC, and diesel backup generators).

IOM costs are a significant part of an overall distributed generation project. Often, many aspects of IOM costs are overlooked or left out of installed cost estimates. In addition, IOM costs can vary significantly due to many factors, including equipment size, local labor rates, and technology add-ons, such as heat recovery. The report reviews and characterizes 2002 IOM costs for IC engines, small combustion turbines, microturbines, and fuel cells.

IC engines generally have the lowest installation costs for DG technologies, followed closely by combustion turbines. Microturbines and fuel cells tend to have much higher installation costs. Data in the new report are primarily from actual installations and are intended to reflect real and current costs.

“Estimating costs for distributed resources projects can be difficult,” notes Doug Herman, EPRI manager for distributed resources. “Capital equipment costs are generally well known, at least for mature DG technologies. However, IOM costs are frequently underestimated, especially for emerging DG technologies. The current report provides a frame of reference for comparing and estimating IOM costs. Cost data in the report are based primarily on firm quotes and field data from actual installations.