An order-of-magnitude cost estimation is needed for a proposed 1,240- MW power p

Question

An order-of-magnitude cost estimation is needed for a proposed 1,240- MW power plant, as of January 2017. Research indicates that a combined cycle power plant with a capacity of 620 MW with the same technology had construction completed in 2011 in the same regional area. The total cost of that plant in 2011 dollars was approximately $580,000,000. It is concluded that the historical cost of this plant is a good reference for the required cost estimation. Because the existing plant is located in the same regional area, no locational adjustment is required; further, the almost identical design requires no additional cost adjustment for unique design characteristics. Further research has shown that an appropriate cost index for power plans had a value of 1.56 in 2011 and has a 2017 value of 1.88. What do you estimate the cost of the new power plant will be?

Explanation / Answer

Cost estimate of the new plant = (1240/620)*580000000*(1.88/1.56) = 1397948718 that is approximately 1400 million dollars.

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