Failure Cost Model for a Multi-State Electricity Supply System with Main Utility as Redundancy

This study deals with the failure cost of electricity generation of a cogeneration power plant. Since cogeneration power plant is required to work for a long period continuously, this system may subject to failure in a random fashion. In case of failure event or interruption of system, the plant incurs high cost due to maximum demand charge, cost of repair and electricity charge cost besides the loss of opportunity. This cost need to be quantified to justify the economic viability of the system. In this paper the cost incurred due to system failure with redundancy is investigated. A Markov and net present value are applied to evaluate the equipment failure probability and economic impact respectively. Results show that 43% of the cost of failure of electricity generation system is due to maximum demand charge.