A power company operates two 130 MW gas turbines for electricity generation. The company decided to install two waste heat recovery steam systems. They consist of heat exchange units that capture waste heat from the exhaust stacks of the two gas turbines. The steam generated from the waste heat is capable of driving a 163MW steam turbine/generator. The additional equipment cost $450 million dollars and the steam turbine/generator operates at 90% capacity factor (that is it operates 90% of the time). Electricity is sold for $30/MWh. i) Calculate the simple payback period. ii) If the price of the electricity is inflated at 3% per annum, and for a discount rate of 7%, calculate the NPV for 15 and 16 years, and hence calculate when the NPV = 0. Assume it runs 24hr/day
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