This research proposes a new method for optimisation of a power generation system based on exergy fuel cost and external social cost of air pollution. A thermodynamic model is provided to estimate the outlet mass flow rates of CO2, CO, NO and NO2 for a gas turbine based on maximising the first and second law efficiencies and minimising the objective function. Results show that inclusion of the external social cost of air pollution increases the optimum excess air ratio if temperature constraint due to metallurgical consideration is disregarded. Otherwise external social cost of air pollution is independent of optimised conditions.
Keywords: optimisation, exergy analysis, economic analysis, environmental analysis, social cost, air pollution, micro turbines, gas turbines, power generation, fuel cost, thermodynamics, modelling