The United States Department of Defense (DOD) has been directed by Congress to decrease its dependence on foreign oil and increase its use of domestic coal. The use of micronized coal-water slurry fuels (MCWSFs) is one of the alternatives under consideration. This retrofitting has attendant costs and problems. The purpose of this paper is to present an economic evaluation of retrofitting oil-designed boilers to fire MCWSF. The evaluation is presented on two fronts: commercial and governmental. It also includes a stochastic risk analysis using Monte Carlo simulation. The variables that most strongly influence the economic feasibility of retrofitting to fire MCWSF are the differential fuel cost (DFC), the expected life of the boiler plant, its size (or capacity), total capital requirement (TCR), boiler derated capacity (BDC), and the discount rate. The TCR is modeled as a function of BDC. The DFC is the major driving force, and a DFC of at least $1.50/MMBtu is required for commercial viability. Given the current trend in oil prices, there seems to be not much incentive to retrofit commercially, however, DOD can take advantage of a lower discount rate.
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