| Abstract | Hotels which consume energy extensively s hould use energy effi ciently to reduce their cost of operation and be more competitive, indirectly assisting to relieve the burden on utility. Cogeneration is one of the possible ways to meet this challenge. Optimum sizing of equipment that can minimize the electric and thermal energy costs s hould be found out. A mathematical model developed to find the techni cal solution s hould be supplemented by an economic feasibility study. For this purpose , a mathematical model has been devel oped which uses linear prograimning (LP) technique to predict the optimal sizes of the cogenerator, absorption chill er, and thermal storage . The model takes the e lectricity price, fuel cost, land cost, labor cost, standby charges, and capacity costs as constants and simulates optimal electricity production and thermal energy usage pattern over the year. This model was applied to a case study of a hypothetical hotel complex based in Sri Lanka . Actual el ectri city and cooling demand, data were gathered from five big hotels in Colombo. Possible scena rios considered for simulation were : with and with out thermal storage; new installations and retrofitting of existing installations; and the possibility of selling excess electricity back to grid . Optimal sizes of the cogenerator, abs orption chiller, and thermal storage tank were found as outcome of a CHP scheme for all the scenarios considered . The results s howed a possible annual electricity bill savings of 13.39% to 30. 27% , and are hence profitable with t he existing price structure . It was a lso found t hat the total annual cost with thermal storage was less than t hat without thermal storage for all scenarios . In order to investigate dependency of simulation results on input parameters, sensitivity analysis was carried out , t he results of which s howed that CHP is still viable up to 30% increase in fuel price. Electricity generation for sell back was found non- profitable for fuel price increases beyond 10%. Capacity cost of diesel generator could increase up to 47.5%, beyond which CHP scheme is not viable . In addition , determining the costs of various cogeneration and thermal stor age configurations, t he model also provides marginal costs and allowabl e range of demand variation without affecting to optimal sizes. |