The influence of the life of a cell stack due to performance degradation on a system's economy is investigated in unit sizing of fuel cell cogeneration systems. An optimal unit sizing method proposed by the authors is extended to this case so that it enables the life and performance degradation of the cell stack to be considered. In the method, equipment capacities and maximum contract demands of utilities such as electricity and natural gas are determined so as to minimize the annual total cost leveled for a whole planning period based on the annualized costs method, in consideration of operational strategies which change with performance degradation of the cell stack. Numerical studies are carried out for normally and highly pressurized phosphoric acid fuel cell cogeneration systems installed in two urban areas. Through the studies, it is found that the life of the cell stack greatly influences system' economics and equipment capacities.