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Column: Big business is, simply, vampiric – Opinion – USATODAY.com

2010-March-4
SAN JOSE, CA - FEBRUARY 24:  Bloom Energy CEO ...
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via Column: Big business is, simply, vampiric – Opinion – USATODAY.com.

The strategy was that hydrogen should cost no more than gasoline on an equivalent energy basis. Since one kilogram of hydrogen contains approximately the same energy as one gallon of gasoline, the hydrogen cost goal was set at $1.50/kg (or $1.50/gge) to be equivalent to the untaxed cost of gasoline.

The new hydrogen cost goal of $2.00-$3.00/gge (delivered, untaxed, 2005$, by 2015) is independent of the pathway used to produce and deliver hydrogen.
Assumptions and Ground Rules

The following common cost assumptions are applied for all H2A Central and Forecourt supply options, unless a case for any different values is provided otherwise:

Analysis Methodology — Discounted Cash Flow (DCF) model that calculates a levelized H2 price that yields prescribed IRR
Reference Financial Structure — 100% equity with 10% IRR — Include levelized H2 price plot for 0 to 25% IRR – Model allows debt financing
Reference Year Dollars — 2005, to be adjusted at half-decade increments (e.g., 2005, 2010)
Technology Development Stage — All Central and Forecourt cost estimates are based on mature, commercial facilities
Inflation Rate — 1.9%, but with resultant price of H2 in reference year constant dollars
Income Taxes — 35% Federal; 6% State; 38.9% Effective
Property Taxes and Business Insurance — 2%/year of the total initial capital cost
Sales Tax — Not included on basis that facilities and related purchases are wholesale and through a general contractor entity
Working Capital Rate — 15% of the annual change in the total operating costs
Analysis Period — 40 years for Central; 20 years for Forecourt
Facility Life — 40 years for Central with case exceptions; 20 years for Forecourt with case exceptions
Depreciation Type and Schedule for Initial Depreciable Capital Cost — MACRS — 20 years for Central with case exceptions; 7 years for Forecourt
Construction Period and Cash Flow — Varies per case for Central; 0 for Forecourt
Planned Replacement Capital — Post startup capital costs spread over time based on specific replacement estimates. Depreciation is based on MACRS schedule and 7 years or the same as the replacement period if it is shorter than 7 years.
Unplanned Replacement Capital — Specified percentage of initial depreciable capital cost meant to handle unplanned replacement capital expenses that occur during an operating year of the plant. Depreciation is based on MACRS schedule and 7 years.
Project Contingency — % adjustment to the total initial capital cost such that the result represents the mean or expected cost value. Periodic replacement capital includes project contingency.
Process Contingency — % adjustment to the total initial capital cost such that the result incorporates the mean or expected overall performance.
Land Cost — 5000$/acre purchased for Central; $0.5/sqft/month for long-term lease for Forecourt
Capacity Factor — 90% for Central, with case exceptions; 70% for Forecourt
Average Burdened Labor Rate for Staff — 50$/hour for Central; 15$/hour for Forecourt
G&A Rate — 20% of the staff labor costs above
Forecourt Maintenance and Repair — 5%/yr of initial depreciable capital cost for small capacity and 3%/yr for large capacity
Co-produced and Cogenerated Electricity Price — $30/MWh with sensitivities based on 20$/MWh low and 50$/MWh high
CO2 incentive (when CO2 sequestration is not plausible) — not included in Base cases, sensitivity included at 100$/tonne C (27.3$/tonne CO2) for Central and Forecourt.
O2 Credit — Not included in Base cases, sensitivity included at 20$/tonne for Central and Forecourt.
Salvage Value — 10% of initial capital, with case exceptions; 0% for Forecourt
Decommissioning — 10% of initial capital, with case exceptions; 0% for Forecourt
Hydrogen Pressure at Central Gate — 300 psig. If higher pressure is inherent to the process, apply pumping power credit for pressure >300psig.
Central Storage — Buffer only as required for efficient operations
Poor class is socialist, redistribution of wealth.
Upper class is socialist, bailout please !
Only middle class is working for the customers !

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