Redundancy system is very useful to enhance the performance and reliability of the power generation system of a cogeneration plant. However, the associated operating cost of redundancy system is very high. The common redundancies used in a cogeneration power plant are public utility and generator set. In order to select the best redundancy options which incurs minimum operating cost, it is required to evaluate the cost of different redundancy options. In this paper, net present value model (NPV) is developed to evaluate the cost of redundancy considering availability and reliability of the cogeneration system. Two steps applied to evaluate the redundancy cost of the cogeneration system. The first step is predicting the number of failures and downtime hours using availability and reliability analysis because redundancy is frequently used when the system failed. The second step is evaluating the cost of redundancy using NPV model. The results indicate that the use of public utility as redundancy option is costly compared to generator set option for long period of time. The major operation cost of public utility is contributed by the maximum demand charge cost which is about 57.9 of the total cost of redundancy. The study will be useful as a guide for the cogeneration operation to evaluate and select the redundancy option. © 2014 Owned by the authors, published by EDP Sciences.