The feasibility of fuel cells in cogeneration applications is studied from engineering and economic viewpoints by using an optimization approach. Capacities of fuel cell cogeneration units and auxiliary devices are determined together with maximum utility demands so as to minimize the annual total cost by considering the plant’s annual operational strategy. This optimization problem is solved efficiently by considering the hierarchical relationship between unit sizing and operational planning problems. Through a numerical study on a plant for installation in a hotel and office building with a maximum electrical demand of 1000 kW, the effect of initial capital cost of fuel cell cogeneration units is examined from the perspective of the plant capacity, economics, and energy savings. The results show that a fuel cell cogeneration plant may have better economic and energy-saving characteristics than a conventional gas engine cogeneration plant with a reduction in the capital cost of fuel cell.

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