PROJECT REPORT

OF
ENGINEERING ECONOMICS

LIFE CYCLE COST ANALYSIS OF FUEL CELL BASED

SYSTEM IN MALAYSIA

Reference: Life cycle cost analysis of fuel cell based for residential application in Malaysia;
author: T.M.I Mahlia and P.L. Chan

Comparison papers:
a) Life cycle cost and energy analysis of a Net Zero Energy House with solar combisystem;
author: Mitchell Leckner and Radu Zmeureanu.
b) Life cycle cost of ethanol production from cassava in Thailand; author: Chumnong
Sorapipatana and Suthamma Yoosin.

SHANDY RADITYA SYAHRON

1206229585
CHEMICAL ENGINEERING INTL
Date of submission: October 23rd 2014

1. ABSTRACT
Malaysia has developed a new alternative source for residential electrical needs by using a
fuel cell cogeneration system. This alternative is an eco-friendly method that can produce
electricity and thermal energy, which the thermal energy can be used to meet the heating loads.
In this paper, the comparison between fuel cell cogeneration system and conventional grid
system was shown. The comparison shown is the energy developed of these two systems. Also,
the comparison of life cycle cost and payback period between these two models is presented.
The purpose of comparisons above is to analyze the feasibility of fuel cell cogeneration system
to be used in Malaysia. The results are indicating that the fuel cell cogeneration system can
reduce the primary energy use by 30-40%, from the conventional system.
2. BACKGROUND, THEORY, AND EVALUATION
A. Background and Introduction
Electricity is one of the main needs in our daily life. Every little thing needs electricity for
them to be working, such as; refrigerator, TV, air conditioner, etc. These examples are the goods
in our home. In Malaysia, the residential energy use accounts for more than 19% of total
electricity in Peninsular Malaysia in 2006, or equals to 14,365 GWh. Most of the residential
complex in Malaysia uses the conventional grid energy system that providing all of the facilities
around the nation. But, the thermal energy waste of this conventional system could not be used
for other purposes, even if the efficiency of the thermal energy reached nearly 40%. Therefore,
Malaysia government needs to look for an alternative way to solve this problem since the
conventional system is not proper enough, since the number of residential development is
increasing annually.
Ministry of Science, Technology and Innovation (MOSTI) has been funding the Malaysia
National Fuel Cell Research and Development Program from year 1996 to 2007 with total
amount of MYR34 million. The government of Malaysia has been working hard to change the
system from conventional one to the fuel cell cogeneration system. Thus, the life cycle cost and
payback period of this alternative has to be calculated to look if it is proper or not to be used in
the residential complex.

B. Theoretical Approach
The design of fuel cell cogeneration system consists of fuel cell system and vapor
compression heat pump. As I mentioned before, the fuel cell cogeneration system producing a
thermal energy waste that can be stored and used for water heating that uses for bathing,
cooking, or every household that uses hot water. Since Malaysia is in the tropical area, to convert
normal temperature water in Malaysia (26oC) to the temperature of 60oC for bath only takes 6
seconds for 1 liter of incoming feed. While the electricity produced by the system itself can
provide the residential needs for lights and common appliances. Also, the vapor compression
heat pump can be used for space cooling. Comparing this system with the conventional system
that the waste of thermal energy cannot be used, by conclusion, this new alternative system is
much better than the old one.
Survey data says that 14% of the electricity used in Malaysia is for water heater, which is in
the 4th rank of the electricity consumption besides refrigerator (38%), air conditioner (21%), and
washing machine (17%). This data means that if the government can replace the conventional
energy system to the fuel cell cogeneration system for residential use, the thermal waste energy
could be so helpful to fulfill the needs of the problem. There will be reducing the consumption of
electricity itself by using the fuel cell system.

Another advantage of this alternative is that the fuel cell cogeneration system uses
oxygen and hydrogen, which this system is converting chemical energy into electrical energy by
combining hydrogen fuel and oxygen. Water is the only output of this system that means no
pollutants are produced if pure hydrogen is used. This means that the system is much more
efficient than conventional energy sources because it converts chemical energy of the fuel
directly into electrical energy without combustion step; no pollutants are produced by this
system. In conclusion, we can claim that this system will produce electricity better than the
current residential electricity rates and significant cost savings especially at countries where
electricity is more expensive.

But, this system has some weaknesses also, such as; Malaysia is placed in the tropical area of
the Earth that the use of the heat pump for space heating cannot be used, for producing pure
hydrogen needs feed of natural gas that the supply of natural does not last forever, and also to
start or change the conventional system to this new alternative system needs an expensive initial
cost.
C. Evaluation
-

Scenario A

Typical family in Malaysia use electricity load and thermal load for 10.3 kWh/day and 1.85
kWh/day respectively. For this first case, the fuel cell system is not using battery option to store

the excess of the electricity. Therefore, in this scenario we do not need thermal storage energy
because the supply of the thermal energy is enough to meet the demand of the use of the thermal
energy for water heating. The new alternative system must meet the demands and also with the
minimum net present cost. The first potential combination (scenario A) is chosen, which can
provide 11 kWh/day for electricity load and 2 kWh/day for thermal load, with a total net present
cost of MYR 22,995. This new fuel cell energy system cost which can be used for 20 years.
With the annual real interest rate of 5%, the cash flow diagram for Scenario A is shown
below. The fuel cell system has to be replaced for every 5 years, as the lifetime of the fuel cell is
only 40,000 h or approximately 5 years. The initial capital cost for the whole project is MYR
3700 with the consideration of annual interest rate and the total cost for the whole project would
be MYR 22,995 for 22 years (Net present cost). The salvage cost of the project is MYR 818 at
the end of the project lifetime.

Fuel cell production

Primary load

Thermal energy

Thermal load consumption

(kWh/yr)

consumption

production

(kWh/yr)

(kWh/yr)

(kWh/yr)

4015

2812

4364

730

Scenario B
The difference of this option than before is that the system uses battery option to store the

excessive electricity and this can minimalize the usage hours of the system. But, this scenario
also capable to meet the baseline demands which is 11 kWh/day for electricity load and 2
kWh/day for thermal load, just like the first scenario.
With the battery pack option, the lifespan of fuel cell is two times comparing to scenario
A, which required four times throughout the lifespan of the project. This indirectly reduces
the replacement cost as battery is only required to be replaced every 10 years. The salvage
value for this case is MYR 831. For scenario B with the battery pack backup, fuel cell system
only has to operate 4958 h to meet the required demands. By using this scenario, we could
possibly save our net present cost that for this system needs MYR 18,978 for the net present
cost.

Fuel cell production

Primary load

Thermal energy

Thermal load

(kWh/yr)

consumption

production

consumption (kWh/yr)

(kWh/yr)

(kWh/yr)

4015

3118

4840

730

Brief Argumentation

By comparing the scenario A with scenario B, we can clearly state that the scenario B is
better than the scenario A because the maintenance cost is much less, because of the life cycle of
the system is 10 years rather 5 years (for scenario A). Therefore, for the fuel cell cogeneration
system, scenario B is the best
However, the fuel cell cogeneration system is not an attractive option to replace the
conventional grid system, which we can see from the table above. Also, the fuel cell system
needs feed of natural gas for converting pure hydrogen that use for producing electrical energy.
Since, we all know the source of natural gas in the Earth is slightly decreasing as the time goes
by. But, also the fuel cell system has the value of 60% efficiency. Although the conventional grid
system has a high total energy cost, it just has a small amount of initial cost. Besides, the
maintenance cost for conventional grid system is charged on consumer. Thus, for the company
who wants to invest is still being confused in which options they have to choose, whether they
stay with the conventional one or the fuel cell cogeneration system.

3. COMPARE AND CONTRAST

A. Life cycle cost and energy analysis of a Net Zero Energy House with solar
combisystem.
The concept of the Net Zero Energy House (NZEH) implies that the systems installed in,
on or near the house can convert energy from renewable sources to generate at least as much
primary energy as the house uses over the course of the year. At peak demand times, when the
home system is not sufficient to satisfy the demand, the electricity is purchased from the utility
grid; the electricity is sold back. Also, this does not affect the environment (does not produce
pollution waste). Europe, US, Canada has been started to use this kind of system for the
residential there. Two types of solar collectors are analyzed and results compared: flat plate
collectors and evacuated tube collectors, but the flat plate is the better option based of financial
cost. Analysis of life cycle cost analysis is shown before to compare and contrast for NZEH with
flat plate.

B. Life cycle cost analysis of ethanol production from cassava in Thailand.

This paper is much different from the first two papers, to give a contrast between the
productions of energy related with residential purpose. Ethanol production usually uses sugar
cane, but the Thai law prohibits using the sugar cane directly to produce ethanol. So, the
scientists there are estimating an alternative method by using cassava to produce ethanol. Even
though the real calculation for this production is not being given because the plant is still a
concept, an approximation for the life cycle cost is being shown below.

Table below is to compare the cost for the three different projects.

Fuel Cell Cogeneration

Net Zero Energy House in

Ethanol Production in

System in Malaysia

Europe, US, and Canada

Thailand

MYR 20,000

USD 89,000 97,500

Total of 1,208 million baht

Duration of 20 years

Duration of 40 years

Production of 150,000 l/day

(Scenario B)

4. CONCLUSION AND CRITICS

For concluding the comparison of three different projects above about life cycle cost, each of
the system has its own advantages and disadvantages. For the main paper, fuel cell cogeneration
system to replace the conventional grid system, I can conclude that the fuel cell is not an
attractive option to replace, although the thermal energy waste from the system can be used for
water heating, but in the financial cost for 20 years, the difference of net present cost between
this alternative and the old one is not much. The second paper is generating electrical energy
without producing waste or pollution, same as the fuel cell system, but the NZEH does not use
natural gas in the system which we all know the stock of natural gas in our Earth is slowly
decreasing. The last paper about ethanol production from cassava is still a concept project, but
this alternative is an attractive option since the government of Thailand prohibits the use of sugar
cane to produce ethanol.
In financial aspect, the first two papers, fuel cell cogeneration system and Net Zero Energy
House, give a high net present cost, but also for building plant for ethanol production needs a
high investment in the first place. The data is shown above.
In my point of view, fuel cell system and Net Zero Energy House are eco-friendly projects
and useful for human beings. While, the ethanol production project is purely a business point of
view. So, in financial and economic aspects, the first two projects do not give a high profit for
the investor since it is for the replacement from the old one. Whilst, the ethanol production
project gives a high profit as the initial investment that needs high cost, the demands of ethanol is
widely open, that the plant just needs to have a good marketing strategy to sell their products
while it can cover the maintenance cost for the plant or equipment.

5. REFERENCES

a. http://www.fuelcellenergy.com/why-fuelcell-energy/benefits/combined-heatpower-chp/
b. http://sustainability.csusb.edu/Projects/Cogeneration%20Fuel%20Cell.html
c. http://www.acgov.org/sustain/documents/fuelcellfactsheet.pdf
d. http://www.acronymfinder.com/Net_Zero-Energy-Home-(Canada)-(NZEH).html
e. http://link.springer.com/article/10.1007%2FBF00933613#page-1
f. http://www.businessdictionary.com/definition/net-present-value-NPV.html