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Three Modes of Energy Cost Analysis: Then-Current Dollars, Base-Year Dollars, and Perpetual-Constant Dollars

机译:能源成本分析的三种模式:当时美元,基准年美元和永久常数美元

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The cost analysis of energy supplied by a facility over its life cycle is complicated by inflation and by discount rates. Neglect of inflation and improper use of discount rates have often rendered elaborate cost calculations meaningless and have added to the great confusion as to the merits of competing technologies. It is shown in this paper that three modes of energy-cost calculations can be clearly distinguished by the manner in which inflation is treated. Each mode has a well-defined discount rate and is used in conjunction with a well-defined set of input data. The then-current dollar mode of analysis has inflation internalized and yields a cost result measured in the sliding dollar, similar in nature to the home mortgage payment. The base-year dollar mode of analysis attempts to project the then-current dollar results to the year of decision (base year). The perpetual-constant dollar mode of analysis subtracts the inflation component from the market cost of money and from prices, such that all calculations can be performed without the influence of inflation. By invoking the principle of financial equivalence in cash-flow analysis, the three modes of calculation are shown to be the same with the exception of some small aberration introduced by taxation and depreciation practices. The proper use of each mode consistently results in a unique ranking of priorities when several energy alternatives are to be compared. For simplicity, only the most significant component of cost--the depreciable capital cost component--was selected to compare the three modes of calculations. A numerical example is provided for the cost comparison of several alternatives for supplying synthetic fuels. (ERA citation 03:052869)

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