Abstract: This study presents a cost/worth analysis approach for optimal Placement and sizing of Combined Heat and Power (CHP) systems. Particle Swarm Optimization (PSO) as a powerful optimization technique is employed for optimization. Different benefits brought up by CHP systems are taken into account as a multi-objective decision making. Economical factors such as power and heat selling, reliability improvement, loss reduction, deferred upgrading investment and CHP costs are considered in this study. In order to incorporate stochastic nature of power system in this study, Monte-Carlo method is used to simulate the effect of uncertainty of loads and system on the optimal location and size of the CHPs in the network. This study conducts two separate case studies, 6-bus meshed test system and 14-bus radial test system to demonstrate economical feasibility for investment planning when cost and CHP benefits are taken into account. The impacts of considering different parameters such as the rate of load growth and interest are studied. Results indicate that the proposed methodology is capable of finding the best location and the optimal size of CHP that can cause improvement in network operation along with financial benefits.

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