Cost allocation of electricity and water in a cogeneration plant

Abstract

Cost accounting in cogeneration plants producing electricity and distilled water has a number of objectives among which cost allocation is one of the most important. Several methods for cost allocation have been in use for a number of years, which mostly use energy as the basis for the costing of water and electricity. Recently it was shown by many authors that exergy represents a better way for cost allocation, which can be used in place of energy. In this paper both energy and exergy are used in allocating the capital and fuel costs between electricity and water from the UANW cogeneration plant which is in operation near Abu Dhabi, UAE. Five major costing methods have been used to estimate the unit production cost of electricity and water using either energy or exergy as the basis for costing. It was shown that when energy is used in cost accounting, the cost of electricity, as calculated from all the cost accounting methods used, is found to be substantially lower than the corresponding cost estimates when exergy is used. On the other hand, the cost of water estimated using energy accounting is correspondingly higher than the value obtained using exergy.