Cogeneration systems are extensively used in Malaysia to produce power as a primary
source. However, in the event of cogeneration system failure, the customer or the client are
forced to use a redundancy to avoid power interruptions. There are two methods commonly
used as a backup in the cogeneration systems which are Generator set and public utility. In
order to choose the best redundancy for a particular cogeneration system, it is essential to
evaluate the economic benefit analysis by considering several factors such as Maximum
demand charge, installation cost and Discount interest. In the evaluation of economic
benefit, this study identifies the number of failure and associated downtime using reliability
and availability approach, and then present value method was applied. The result shows
that the usage of public utility as redundancy is beneficial if the cogeneration system
operates within five years period. However, if the cogeneration system operates more than
five years, generator set option would be a better option to minimize the total cost. This
research also addresses the effect of various factors such as installation cost, maximum
demand charge, fuel cost, discount interest rate and production capacity. In general, the
output of the research would be beneficial for the plant operator to select the appropriate
redundancy option based on the economic advantages.