Katherine Ovalle 2/1/2011

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Hi Charlie
We are trying to use LEAP for estimate a marginal abatement cost curve for the industrial sector in our country. We are not sure about how to include the information about technology cost. We need to take in account that investments in the industrial sector are made once and the tech will be available for whole life time of the tech (Without new investment cost and only O&M cost). In the examples of freedonia we saw that the traditional bulbs have a lifetime of only 1 year, then every year a new investment is made. In that way a substitution is easy to implement just changing the annual investment for efficient bulbs. In the industry we cannot assume that the lifetime of the machines is one year and if we propose a change in the technology, we should include the loss by the non use of the whole lifetime of the machine. For example, if in the year 1 the model have a new coal furnace (with a lifetime of 30 years) and in the year 5 we change that furnace for a new one that uses natural gas, the cost of that measure is the cost of the new furnace, plus the non depreciated part of the old furnace (25 years remaining) plus the increment in the fuel cost (or savings). How can we evaluate mitigation measures in the industry including the cost due to the change of undepreciated technologies?

Can you help us?
Thank you.

Tory Clark 2/8/2011
 

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Hi Katherine,

Thank you for your question. This is a somewhat unique situation, but it can still be modeled in LEAP. I have posted an example dataset to show you how I would recommend you model this branch. Please see the following link:

ftp://energycommunity.org/areas/testcost.leap

For the activity level variable you need to include data about the number of devices and the amount of time for which you will be paying off the annualized cost. In this case, that is 30 years for the coal furnace.

For the final energy intensity variable you need to enter data about the energy consumption per device annually. The special case here is that the coal furnace must be zeroed out after it is retired because it is no longer consuming energy.

Finally, I recommend using the activity cost method to enter the annualized cost for each device on the demand cost tab. In this case we assumed a 30 year life of each device costing $1000.

You should be able to see accurate cost and energy demand results in the overviews tab.

I hope this helps!

Tory