Exergy costing may be performed using different approaches each one being characterized by a different level of subjectivity. The SPECO methodology, a new process-based methodology for exergy costing, is aimed at minimizing the subjectivity associated with the definitions of fuel and product for various components and the auxiliary cost equations. In the SPECO methodology, the auxiliary cost equations are obtained by directly registering the exergy and cost additions and removals along the exergy streams of a thermal system.

This paper demonstrates how the “fuel” and “product” rules suggested by this methodology for formulating the cost equations are obtained by depicting the process of cost additions and removals in each exergy stream. The application to a cogeneration system highlights the features of the methodology which is here combined with both the Last In First Out (LIFO) and the Average Costing (AVCO) approaches.

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