Ranking factors of an investment in cogeneration: Sensitivity analysis ranking the technical and economical factors

A deregulation of the electricity market in Europe will result in increased competition among the power-producing companies. They will therefore caref ully estimate the financial risk in an investment in new power-producing ca pability. One part of the risk assessment is to perform a sensitivity analy sis. This paper presents a sensitivity analysis using factorial design, res ulting in an assessment of the most important technical and economical fact ors affecting an investment in a gas turbine combined cycle and a steam cyc le fired by woodchips. The study is performed using a simulation model that optimizes the operation of existing power plants and potential new investm ents to fulfil the desired heat demand. The local utility system analysed i s a Swedish district heating system with 655 GWh y(-1) heat demand. The con clusion is that to understand which of the technical and economical Factors affect the investment, it is not sufficient to investigate the parameters of the studied plant, but also the parameters related to the competing plan ts. Both the individual effects of the factors and the effect of their inte raction should be investigated. For the energy system studied the price of natural gas, price of woodchips and investment cost have the major influenc e on the profitability of the investment. Copyright (C) 2001 John Wiley & S ons, Ltd.