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Research on the Economic Benefit Evaluation of Combined Heat and Power (CHP) Technical Renovation Projects Based on the Improved Factor Analysis and Incremental Method in China

Xiaolong Yang (), Yan Li (), Dongxiao Niu () and Lijie Sun ()
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Xiaolong Yang: School of Economics and Management, North China Electric Power University, Beijing 102206, China
Yan Li: School of Economics and Management, North China Electric Power University, Beijing 102206, China
Dongxiao Niu: School of Economics and Management, North China Electric Power University, Beijing 102206, China
Lijie Sun: School of Economics and Management, North China Electric Power University, Beijing 102206, China

Sustainability, 2019, vol. 11, issue 19, 1-23

Abstract: With the increasingly prominent problems of resources and environment, thermal power enterprises in China are facing more severe challenges. To improve energy efficiency, a great number of thermal power enterprises implement the technical renovation of equipment. However, current methods cannot meet the needs of scientific and effective evaluations. In this context, the internal rate of return (IRR) is used as the main index to evaluate the economic benefits of the technical renovation of combined heat and power (CHP) plants. In order to improve the accuracy of the economic benefit evaluation results, the incremental cash flow is calculated through the incremental method, which is based on the existence and non-existence method, and the improved factor analysis method is utilized to eliminate the influence of price factors from markets that have no direct and definite relationship with the technical renovation. Then, the evaluation method is validated by taking a CHP technical renovation project in B city of China as an example. By comparing with other methods, the results show that the IRRs calculated by different methods are quite different, and the difference between the maximum and the minimum can reach 69.95%. The result of the method proposed in this paper is more reasonable and reliable and can effectively evaluate the economic benefits of CHP technical renovation projects.

Keywords: economic benefit evaluation; thermal power enterprise; technical renovation; improved factor analysis method; incremental method (search for similar items in EconPapers)
JEL-codes: Q Q0 Q2 Q3 Q5 Q56 O13 (search for similar items in EconPapers)
Date: 2019
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