The combination of specified operating and performance parameters for an SOFC system, such as fuel flow rates, operating voltage and power density, affects capital and operating costs. Additional components of the cost of electricity are attributable to finance costs and system maintenance costs. While computing the cost of electricity from a given set of conditions is fairly straightforward, minimization of the cost of electricity generated from a solid oxide fuel cell power system requires development of functional relationships between the various design and operating parameters. Such a set of relationships is developed for a simple cycle natural gas-fueled SOFC power system. This work builds on the analysis methodology developed previously by the authors for SOFC operation on natural gas to include capital and operating cost maps. Relationships between fuel flow rates, stack resistance and operating voltage were defined in a closed form parametric model to predict power density, fuel utilization and efficiency at a specified operating point. The stack performance model was coupled via mass and energy balances with design equations to size system components such as heat exchangers and insulation. Estimated component costs, based on the required size of each component, are used to obtain an estimate of total system capital cost. The cost of electricity for some typical operating conditions is then calculated. The cost framework provides a useful tool for determining opportunities for cost minimization. The overall strategy employed in developing such a model is described and illustrated with various examples. This cost framework can be extended to SOFC power systems involving gas turbine combined cycles as well. (C) 2000 Elsevier Science B.V. All rights reserved.