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CogenerationCogenerationCHP (combined heat and CHP (combined heat and
power)power)
Gabriel Pita
•Introduction
•Types of cogeneration systems
•Assessment of cogeneration systems
•Energy efficiency opportunities
• Generation of multiple forms of
energy in one system: heat and
power
What’s a Cogeneration/CHP System?
IntroductionIntroduction
power
• Defined by its “prime movers”• Reciprocating engines
• Combustion or gas turbines,
• Steam turbines
• Microturbines
• Fuel cells
When to consider using Combined Heat & Power
(CHP)
CHP should always be considered when:
• designing a new building,
• installing new boiler plant,
• replacing/refurbishing existing plant, • replacing/refurbishing existing plant,
• reviewing electricity supply,
• reviewing standby electrical generation capacity or
plant,
• considering energy efficiency in general.
In a cogeneration system we have to consider the
following elements:
• Primary energy fuel (natural gas, liquid fuel, solid fuel, industrial
waste, biomass, etc.).
IntroductionIntroduction
• Motor element supplier of mechanical work to the shaft (the gas
turbine, steam turbine, reciprocating engine)
• System to capture the heat energy (conventional boiler, recovery
boiler, dryer, refrigerator cycle absorption ,heat exchanger in
general)
• System to transform the mechanical energy (electric generator,
mechanical drives, etc..)
Components of Combined Heat & Power (CHP)
All CHP schemes consist of a number of core components with variations to
suit the particular application. The fundamental components are:
• Prime mover: an engine to drive the generator
• fuel system
• generator: to produce electricity, which is fed into the building's
power distribution system power distribution system
• heat recovery system: to recover usable heat from the engine
• cooling system: to dissipate heat rejected from the engine that cannot
be recovered
• combustion and ventilation air systems: to supply fresh air to, and
carry exhaust gases away from, the engine,
• control system: to maintain safe and efficient operation
• enclosure: to achieve physical and environmental protection for the
engine and operators, and to reduce noise.
First law of Thermodynamic
The law of conservation of energy
• Heat and work are forms of energy transfer.
• Energy can be neither created nor destroyed.
However, energy can change forms
It is impossible to produce work in the surroundings
Second law of ThermodynamicIt is impossible to produce work in the surroundings
using a cyclic process connected to a single heat
reservoir (Kelvin)
Efficiency Advantage of CHP
IntroductionIntroduction
P1 €/kWh electric energy ; P2 €/kWh fuel
Cm operating , maintenance and amortization costs /kWh
Energy savings 154-100 = 54
Cost savings 30*P1+56*P2-(100*P2+30*Cm)= 30*(P1-Cm)-44*P2
• Increased efficiency of energy conversion and
use
• Lower emissions, especially CO2
Benefits of Cogeneration / CHP
IntroductionIntroduction
• Lower emissions, especially CO2
• Ability to use waste materials
• Large cost savings
• Opportunity to decentralize the electricity
generation
• Promoting liberalization in energy markets
Problems associated with cogeneration
Being cogeneration thermodynamically so attractive why their use is not more
widespread ?
The reasons are mainly economic .
1 - If an industry decides to invest in cogeneration is bound to a course of action for
a specified number of years . The project that will finance this project involves a
number of assumptions in the energy needs of the company , fuel prices and
IntroductionIntroduction
number of assumptions in the energy needs of the company , fuel prices and
availability , interest , maintenance costs , etc ..
2 - Any change in the manufacturing process may result in the need for subsequent
heat or work over a much greater cost than the initial installation.
3 -Any change in the manufacturing process can result in a change in the
proportion of heat / work . With the consequent change in the overall efficiency
of the installation and thus their economic viability .
4 - The need to ensure an emergency system to provide heat and work . This system
is not being heavily used is not able to repay the capital invested .
5 -The problems of noise and pollution may require an extra investment when
regulations are becoming increasingly stringent .
CHP Applications
CHP technology exists in a wide variety of energy-intensive
facility types and sizes, including:
•Industrial manufacturers - chemical, refining, ethanol, pulp and
paper, food processing, glass manufacturing
IntroductionIntroduction
paper, food processing, glass manufacturing
•Institutions - colleges and universities, hospitals, prisons,
military bases
•Commercial buildings - hotels and casinos, airports, high-tech
campuses, large office buildings, nursing homes
•Municipal - district energy systems, wastewater treatment
facilities, K-12 schools
•Residential - multi-family housing, planned communities
IntroductionIntroduction
30
40
50
60
70
Combined heat and power generation
% of gross electricity generation
1994
1996
1997
1998
2000
0
10
20
2000
2002
2004
2005
2006
2007
2008
2009
2010
2011
IntroductionIntroduction
Trigeneration or combined cooling, heat and
power (CCHP)
Simultaneous generation of
electricity and useful heating
and cooling from the
combustion of a fuel or a
IntroductionIntroduction
combustion of a fuel or a
solar heat collector. A plant
producing electricity, heat
and cold is called a
trigeneration
IntroductionIntroduction
Cogeneration technologies covered by Directive 2004/8/EC
(a) Combined cycle gas turbine with heat recovery
(b) Steam backpressure turbine
(a) Combined cycle gas turbine with heat recovery
(b) Steam backpressure turbine
(c) Steam condensing extraction turbine
(d) Gas turbine with heat recovery
(e) Internal combustion engine
(f) Microturbines
(g) Stirling engines
(h) Fuel cells
(i) Steam engines
(j) Organic Rankine cycles
(k) Any other type of technology or combination there of falling under the
definition laid down in Article 3(a)
• Steam turbine
• Gas turbine
• Reciprocating engine
• Other classifications:
Type of Cogeneration SystemsType of Cogeneration Systems
• Other classifications:
- Topping cycle
-Bottoming cycle
• Micro combined heat and power
Steam Turbine Cogeneration System
• Widely used in CHP applications
• Oldest prime mover technology
Type of Cogeneration SystemsType of Cogeneration Systems
• Capacities: 50 kW to hundreds of MWs
• Thermodynamic cycle is the “Rankin cycle” that uses a
boiler
• Most common types
• Back pressure steam turbine
• Extraction condensing steam turbine
• Steam exits the turbine at a higher pressure that the
atmospheric
Back Pressure Steam Turbine
HP Steam Advantages:
-Simple configuration
Type of Cogeneration SystemsType of Cogeneration Systems
Disadvantages:
-Larger steam turbine
-Electrical load and output can
not be matched
Fuel
Boiler Turbine
ProcessCondensate LP
Steam
-Simple configuration
-Low capital cost
-Low need of cooling water
-High total efficiency
• Steam obtained by
extraction from an
intermediate stage
• Remaining steam is
Extraction Condensing Steam
Turbine
Boiler Turbine
HP Steam
Fuel
Type of Cogeneration SystemsType of Cogeneration Systems
• Remaining steam is
exhausted
• Relatively high
capital cost, lower
total efficiency
• Control of electrical
power independent of
thermal load
Process
LP Steam
Condensate
Condenser
Fuel
• Operate on thermodynamic “Brayton cycle”
• atmospheric air compressed, heated, expanded
• excess power used to produce power
• Natural gas is most common fuel
Gas Turbine Cogeneration System
Type of Cogeneration SystemsType of Cogeneration Systems
• 1MW to 100 MW range
• Rapid developments in recent years
• Two types: open and closed cycle
• Open Brayton cycle:
atmospheric air at
increased pressure to
combustor
Open Cycle Gas Turbine
HRSG
Exhaust
Gases
Condensate
from Process
Steam to
Process• Old/small units: 15:1
New/large units: 30:1
Type of Cogeneration SystemsType of Cogeneration Systems
Air
G
Compressor Turbine
Combustor
Fuel
Generator
Process
New/large units: 30:1
• Exhaust gas at 450-
600 oC
• High pressure steam
produced: can drive
steam turbine
• Working fluid circulates
in a closed circuit and
does not cause
corrosion or erosion
Closed Cycle Gas Turbine
Heat Source
Heat Exchanger
Type of Cogeneration SystemsType of Cogeneration Systems
corrosion or erosion
• Any fuel, nuclear or
solar energy can be
used
G
Compressor Turbine
Generator
Condensate
from Process
Steam to
Process
• Used as direct mechanical drives
Reciprocating Engine Cogeneration
Systems
• Many advantages:
operation,
Type of Cogeneration SystemsType of Cogeneration Systems
operation,
efficiency, fuel
costs
• Used as direct
mechanical drives
• Four sources of
usable waste heat
Type of Cogeneration SystemsType of Cogeneration Systems
Combined cycleThe principle is that the exhaust of one heat engine is used as the heat source for
another, thus extracting more useful energy from the heat, increasing the system's
overall efficiency
gas turbine-based trigeneration facility.250 MW combined cycle cogeneration
power facility (85% total efficiency)
Cogeneration systems are normally classified
according to the sequence of energy use and the
adopted operating schemes.
A cogeneration system can be classified as either a
topping or a bottoming cycle on the basis of the
sequence of energy use
Type of Cogeneration SystemsType of Cogeneration Systems
sequence of energy use
• Supplied fuel first produces power
followed by thermal energy
• Thermal energy is a by product
used for process heat or other
• Most popular method of
Topping Cycle
Type of Cogeneration SystemsType of Cogeneration Systems
•
cogeneration
• In a topping cycle, the supplied fuel is used to first produce power and then
thermal energy, which is the by-product of the cycle. This is used to satisfy
process heat or other thermal requirements. Topping cycle cogeneration is
widely used and is the most popular method of cogeneration.
• Examples include a combined-cycle topping system; steam turbine topping
system; and gas turbine topping system
Type of Cogeneration SystemsType of Cogeneration Systems
Bottoming Cycle
• Primary fuel produces high
temperature thermal energy
• Rejected heat is used to
generate power
• Suitable for manufacturing •
processes
• In a bottoming cycle, the primary fuel produces high temperature thermal
energy and the rejected heat from the process is used to generate power
through a recovery boiler and a turbine generator.
• Bottoming cycles are suitable for manufacturing processes that require heat at
high temperature in furnaces and kilns, and that reject heat at significantly high
temperatures. Typical areas of application include cement, steel, ceramic, gas
and petrochemical industries.
Micro combined heat and power or micro-CHP
Type of Cogeneration SystemsType of Cogeneration Systems
A micro-CHP system is a small heat engine (power plant) which provides all the
power for an individual building; heating, ventilation, and air conditioning,
mechanical energy and electric power. It is a smaller-scale version of cogeneration
schemes which have been used with large scale electric power plants.
It is not practical to transport heat long distances, due to heat loss from the
pipes. Since electricity can be transported practically, it is more efficient to generate
the electricity near where the waste heat can be used. So in a "micro-combined
heat and power system" (micro-CHP), small power plants are instead located where
Micro combined heat
and power or micro-CHP
Type of Cogeneration SystemsType of Cogeneration Systems
For three decades, these larger CHP systems were more economically justifiable
than micro-CHP, due to the . After the year 2000, micro-CHP has
become cost effective in many markets around the world, due to rising energy
costs. The development of micro-CHP systems has also been facilitated by recent
technological developments of small heat engines. This includes improved
performance and cost-effectiveness of
.
heat and power system" (micro-CHP), small power plants are instead located where
the secondary heat can be used, in individual buildings. Micro-CHP are defined by
the EC as being of less than 50 kW electrical power output.
http://youtu.be/s5S0seVAGY4
Power to Heat ratio of a cogeneration unit
Type of Cogeneration SystemsType of Cogeneration Systems
"power to heat ratio" shall mean the ratio between electricity from cogeneration
and useful heat when operating in full cogeneration mode using operational data
of the specific unit;
Type of Cogeneration SystemsType of Cogeneration Systems
Assessment of Cogeneration SystemsAssessment of Cogeneration Systems
Total System Efficiency
(Energy Utilisation Factor)
Total System Efficiency
(Energy Utilisation Factor)
Directive 2004/8/EC of the European Parliament and of the Council of 11
February 2004 on the promotion of cogeneration based on a useful heat
demand in the internal energy market and amending Directive 92/42/EE
Values used for calculation of electricity from cogeneration shall be determined on the basis of the
expected or actual operation of the unit under normal conditions of use. For micro- cogeneration
units the calculation may be based on certified values.
(a) Electricity production from cogeneration shall be considered equal to total annual electricity
production of the unit measured at the outlet of the main generators;
(i) in cogeneration units of types (b), (d), (e), (f), (g) and (h) referred to in Part II with an annual(i) in cogeneration units of types (b), (d), (e), (f), (g) and (h) referred to in Part II with an annual
overall efficiency set by Member States at a level of at least 75 %, and
(ii) in cogeneration units of types (a) and (c) referred to in Part II with an annual overall efficiency
set by Member States at a level of at least 80 %.
(a) Combined cycle gas turbine with heat recovery
(b) Steam backpressure turbine
(c) Steam condensing extraction turbine
(d) Gas turbine with heat recovery
(e) Internal combustion engine
(f) Microturbines
(g) Stirling engines
(h) Fuel cells
Cogeneration technologies covered by Directive 2004/8/EC
Effective Electric Efficiency
EE
Electricity - 3 0 Units
Heat - 45 Units
Fuel - 100 Units
Effective electric efficiency (ξEE) where (WE) is the net useful power output, (ΣQTH) is
the sum of the net useful thermal outputs, (QFUEL) is the total fuel input, and ∝ equals
the efficiency of the conventional technology that otherwise would be used to
produce the useful thermal energy output if the CHP system did not exist:
For example, if a CHP system is natural gas fired and produces steam, then α
represents the efficiency of a conventional natural gas-fired boiler. Typical a values
for boilers are: 0.8 for natural gas-fired boiler, 0.75 for a biomass-fired boiler, and
0.83 for a coal-fired boiler.
Typical effective electrical efficiencies for combustion turbine-based CHP systems are
in the range of 51 to 69 percent. For reciprocating engine-based CHP systems are in
the range of 69 to 84 percent.
ANNEX III
Methodology for determining the efficiency of the cogeneration process
Values used for calculation of efficiency of cogeneration and primary energy savings
shall be determined on the basis of the expected or actual operation of the unit under
normal conditions of use.
Directive 2004/8/EC of the European Parliament and of the Council of 11
February 2004 on the promotion of cogeneration based on a useful heat
demand in the internal energy market and amending Directive 92/42/EE
(a) High-efficiency cogenerationFor the purpose of this Directive high-efficiency cogeneration shall fulfill the
following criteria:
- cogeneration production from cogeneration units shall provide primary energy
savings calculated according to point (b) of at least 10 % compared with the
references for separate production of heat and electricity,
- production from small scale and micro cogeneration units providing primary energy
savings may qualify as high-efficiency cogeneration.
"micro-cogeneration unit" shall mean a cogeneration unit with a maximum capacity below 50 kWe;
"small scale cogeneration" shall mean cogeneration units with an installed capacity below 1 MWe;
"cogeneration production" shall mean the sum of electricity and mechanical energy and useful heat from cogeneration.
Directive 2004/8/EC
Calculation of primary energy savingsThe amount of primary energy savings provided by cogeneration production defined in accordance
with Annex II shall be calculated on the basis of the following formula:
Where:
• PES is primary energy savings.
• CHP Hη is the heat efficiency of the cogeneration production defined as annual useful heat
output divided by the fuel input used to produce the sum of useful heat output and electricity
from cogeneration.
• Ref Hη is the efficiency reference value for separate heat production.
• CHP Eη is the electrical efficiency of the cogeneration production defined as annual electricity
from cogeneration divided by the fuel input used to produce the sum of useful heat output and
electricity from cogeneration. Where a cogeneration unit generates mechanical energy, the
annual electricity from cogeneration may be increased by an additional element representing the
amount of electricity which is equivalent to that of mechanical energy. This additional element
will not create a right to issue guarantees of origin in accordance with Article 5.
• Ref Eη is the efficiency reference value for separate electricity production.
The efficiency reference, Ref E and Ref Hη , values shall be calculated according to
the following principles:
1. For cogeneration units the comparison with separate electricity production
shall be based on the principle that the same fuel categories are compared.
2. Each cogeneration unit shall be compared with the best available and
The efficiency reference
Directive 2004/8/EC
2. Each cogeneration unit shall be compared with the best available and
economically justifiable technology for separate production of heat and
electricity on the market in the year of construction of the cogeneration unit.
3. The efficiency reference values for cogeneration units older than 10 years of
age shall be fixed on the reference values of units of 10 years of age.
4. The efficiency reference values for separate electricity production and heat
production shall reflect the climatic differences between Member States.
primary energy savings
Electricity - 3 0 UnitsElectricity - 3 0 Units
Heat - 45 Units
Fuel - 100 Units Natural Gas
Cogeneration with Diesel EngineElectricity 40 u
Heat 40 u
Total System Efficiency
(Energy Utilisation Factor)
work
Diesel
cogeneration
Heat
40.2u
Electricity
40 u
100u
Work
�=40%
Heat 60u
Heat recovering
�=67%
Power to Heat ratio of a
cogeneration unit
primary energy savings
Cogeneration with Diesel Engine
Diesel
cogeneration
Electricity
40 u
100u
Work
�=40% Total System Efficiency
(Energy Utilisation Factor)
Cogeneration with Diesel EngineElectricity 40 u
Heat 80 u
cogeneration
Heat
40.2u
Heat 60u
Heat recovering
�=67%
Power to Heat ratio of a
cogeneration unit
Heat
39.8u
boiler
�=82%
48.5 uprimary energy savings
400
500
600
Av
era
ge
he
ati
ng
de
ma
nd
(k
W)
Base heat load sizing strategy for CHP plant
CHP Boilers
0
100
200
300
Jan Feb Mar April May June July Aug Sept Oct Nov Dec.
Av
era
ge
he
ati
ng
de
ma
nd
(k
W)
The CHP unit is sized to meet the base heating load. The CHP unit can run all the year around.
The payback period on the initial capital investments is short
Load patterns
Load patterns
Assessment of Cogeneration SystemsAssessment of Cogeneration Systems
EIA: The Energy Information Administration. U.S. Department of Energy
CHP plant sizing strategies
Necessary energy data
•Monthly electricity and heat energy consumption data in kWh
•Base and peak load demands (in kW) for both electricity and heat
•The operational characteristics of a particular application
•Unit cost data for electricity and gas (oil)
•Monthly electricity and heat energy consumption data in kWh
CHP plant sizing strategies
•Base and peak load demands (in kW) for both electricity and heat
40
60
80
100
120
140
Av
era
ge
ele
ctri
c d
em
an
d
(kW
)
40
60
80
100
120
140
Av
era
ge
ele
ctri
c d
em
an
d
(kW
)
CHP Grid
Base electric load sizing strategy for CHP plant
CHP plant sizing strategies
0
100
200
300
400
500
600
Av
era
ge
he
ati
ng
de
ma
nd
(kW
)
0
20
1 2 3 4 5 6 7 8 9 10 11 12
Av
era
ge
ele
ctri
c d
em
an
d
0
100
200
300
400
500
600
Jan Feb Mar April May June July Aug Sept Oct Nov Dec.
Av
era
ge
he
ati
ng
de
ma
nd
(kW
)
CHP Boilers
0
20
40
Jan Feb Mar April May June July Aug Sept Oct Nov Dec.
Av
era
ge
ele
ctri
c d
em
an
d
Base heat load sizing strategy for CHP plant
•The operational characteristics of a particular application
CHP plant sizing strategies
CHP plant sizing strategies
•The operational characteristics of a particular application
The Economics of CHP
Factors that dominate the economic viability of CHP
•The capital cost of the installation
•The potential number of operating hours per year•The potential number of operating hours per year
•The relative costs of “bought in” electricity and gas (or fuel oil)
•The heat to power ratio of a particular CHP plant
•The difference in maintenance costs between a CHP scheme and a conventional scheme
•The cost of having mains electricity as backup system in case of breakdown or maintenance
An existing building has an average electrical demand of 80 kWe and an average
combined heating and hot water demand of 180 kW. The average annual load
factor for the building is 0.75 . The heating and hot water demand is currently
served b two gas fired boilers and mains electricity is bought in. It is proposed to
install a micro–CHP plant which will run on gas and have a heat to power ratio of
1.7:1. The existing boilers will supplement the heat output from CHP unit . If the
initial cost of CHP installation is 90,000.00 € , determine the simple payback period.
Payback= Capital cost /Annual cost saving
Data:
Efficiency of existing boilers = 70%
CHP unit electric power output = 80kWe
CHP unit gas power input = 286kW
Unit cost of gas = 0.06€/kWh
Unit cost of electricity = 0.15€/kWh
Existing plant maintenance cost = 1,200 € per year
CHP scheme maintenance cost = 6,000€ per year
The Economics of CHP
•The capital cost of the installation
load factor 0.75 heat/work 1.7 cost of CHP installation 90000€
Nº hours per year 6570hr € elec 0.06
€ gas 0.01
0
tradicional elec 31536 CHP gas 18790 payback 4.35
gas 16894 boiler 4130
mant 1200 mant 6000mant 1200 mant 6000
total 49630€/year total 28920€/year
savings 20710€/year
load factor 0.75 heat/work 1.7 cost of CHP installation 100000€
Nº hours per year 6570hr € elec 0.06
€ gas 0.01
0
tradicional elec 31536 CHP gas 18790 payback 4.83
gas 16894 boiler 4130
mant 1200 mant 6000
total 49630€/year total 28920€/year
savings 20710€/year
•The potential number of operating hours per year
The Economics of CHP
load factor 0.75 heat/work 1.7 cost of CHP installation 90000€
Nº hours per year 6570hr € elec 0.06
€ gas 0.01
0
tradicional elec 31536 CHP gas 18790 payback 4.35
gas 16894 boiler 4130
mant 1200 mant 6000
total 49630€/year total 28920€/year
savings 20710€/year
load factor 0.825 heat/work 1.7 cost of CHP installation 90000€
Nº hours per year 7227hr € elec 0.06
€ gas 0.01
0
tradicional elec 34690 CHP gas 20669 payback 3.87
gas 18584 boiler 4543
mant 1200 mant 6000
total 54473€/year total 31212€/year
savings 23261€/year
The Economics of CHP
•The relative costs of “bought in” electricity
load factor 0.75 heat/work 1.7 cost of CHP installation 90000€
Nº hours per year 6570hr € elec 0.06
€ gas 0.01
0
tradicional elec 31536 CHP gas 18790 payback 4.35
gas 16894 boiler 4130
mant 1200 mant 6000
total 49630€/year total 28920€/year
load factor 0.75 heat/work 1.7 cost of CHP installation 90000€
Nº hours per year 6570hr € elec 0.066
€ gas 0.01
0
tradicional elec 34690 CHP gas 18790 payback 3.77
gas 16894 boiler 4130
mant 1200 mant 6000
total 52784€/year total 28920€/year
savings 23864€/year
savings 20710€/year
The Economics of CHP
•The relative costs of “bought in” gas
load factor 0.75 heat/work 1.7 cost of CHP installation 90000€
Nº hours per year 6570hr € elec 0.06
€ gas 0.01
0
tradicional elec 31536 CHP gas 18790 payback 4.35
gas 16894 boiler 4130
mant 1200 mant 6000
total 49630€/year total 28920€/year
load factor 0.75 heat/work 1.7 cost of CHP installation 90000€
Nº hours per year 6570hr € elec 0.06
€ gas 0.011
0
tradicional elec 31536 CHP gas 20669 payback 4.48
gas 18584 boiler 4543
mant 1200 mant 6000
total 51320€/year total 31212€/year
savings 20108€/year
savings 20710€/year
•The heat to power ratio of a particular CHP plant
The Economics of CHP
load factor 0.75 heat/work 1.7 cost of CHP installation 90000€
Nº hours per year 6570hr € elec 0.06
€ gas 0.01
0
tradicional elec 31536 CHP gas 18790 payback 4.35
gas 16894 boiler 4130
mant 1200 mant 6000
total 49630€/year total 28920€/year
savings 20710€/year
load factor 0.75 heat/work 1.87 cost of CHP installation 90000€
Nº hours per year 6570hr € elec 0.06
€ gas 0.01
0
tradicional elec 31536 CHP gas 18790 payback 4.09
gas 16894 boiler 2853
mant 1200 mant 6000
total 49630€/year total 27643€/year
savings 21987€/year
•The difference in maintenance costs between a CHP scheme and a
conventional scheme
The Economics of CHP
load factor 0.75 heat/work 1.7 cost of CHP installation 90000€
Nº hours per year 6570hr € elec 0.06
€ gas 0.01
0
tradicional elec 31536 CHP gas 18790 payback 4.35
gas 16894 boiler 4130
mant 1200 mant 6000
total 49630€/year total 28920€/year
•The cost of having mains electricity as backup system in case of
breakdown or maintenance
load factor 0.75 heat/work 1.7 cost of CHP installation 90000€
Nº hours per year 6570hr € elec 0.06
€ gas 0.01
0
tradicional elec 31536 CHP gas 18790 payback 4.48
gas 16894 boiler 4130
mant 1200 mant 6600
total 49630€/year total 29520€/year
savings 20110€/year
savings 20710€/year
Cogeneration systems usually considers the investment = the additional capital to
build the cogeneration unit
Annual return (cost savings) the difference between the operating costs of the
traditional system and the costs of the cogeneration system
Payback= Capital cost /Annual cost saving
A refrigeration ton is approximately equivalent to 12,000 BTU/h or 3,517 W.
One therm is equal to about 105.5 megajoulesmegajoules, 25,200 kilocalories or 29.3 kilowatt-hours.
Cost calculations
Total installed system cost $2,581982
Projected annual electric savings - $1,280,123
Generator operating costs $631,792
(including fuel and maintenance )
Net annual cash flow from savings $648,331
Payback period 3.98 years
Advantages and disadvantages of the method.
a) It is simple to apply and favors projects with short payback times, which reduces the
uncertainties to calculate the energy savings for long periods in the future. The effect of
change in technology and changes in fuel prices is also reduced.
b) has the drawback not take account of cash flows (savings) generated after recovered
the capital invested, which makes it inadvisable in the evaluation of long-term projects.the capital invested, which makes it inadvisable in the evaluation of long-term projects.
c) gives no indication of the rate of return on invested capital.
rate of return on investment = (average annual savings) / cost of capital
d) Does not take into account the timing of the return. Does not distinguish whether the
return on investment is done more in the first year or more in the last years, or equally
over the years of payback time.
The NPV criterion is defined by:
t - year
N - number of years of remaining life
i - the discount rate (the rate of return that could be earned on an investment in
the financial markets with similar risk.); the opportunity cost of capital
Rt - the net cash flow i.e. cash inflow – cash outflow, at time t
NPV - Net Present Value
Rt - the net cash flow i.e. cash inflow – cash outflow, at time t
.
If... It means... Then...
NPV > 0 the investment would add value to the firm the project may be accepted
NPV < 0the investment would subtract value from the
firmthe project should be rejected
NPV = 0the investment would neither gain nor lose
value for the firm
We should be indifferent in the decision
whether to accept or reject the project. This
project adds no monetary value. Decision
should be based on other criteria, e.g.,
strategic positioning or other factors not
explicitly included in the calculation.
The IRR of an investment is the discount rate at which the net present value of
costs (negative cash flows) of the investment equals the net present value of
the benefits (positive cash flows) of the investment.
Internal Rate of Return (IRR )
=0
i=IRR
• Prices change over time. One month you're paying x €/kWh, the next month you're
paying y €/kWh. Unfortunately y is usually greater than x, as energy prices typically rise
over time.
• Electricity costs can depend on the time of the day, the day of the week, and the time
of the year. Energy suppliers/utilities come up with complicated tariffs to define these
rules. Just like prices, tariff structures can also change over time.
Electricity costs
rules. Just like prices, tariff structures can also change over time.
• Electricity costs can also depend on the maximum demand, or peak load, across a
period. For example, given half-hourly data for a month, the peak load or maximum
demand could be defined as the half-hour period that had the highest average kW. The
higher the peak load, the higher the peak-load charge (or maximum-demand charge).
• Electricity tariffs often charge different rates depending on how many kWh you use.
For example, the first 100 kWh might cost x €/kWh, the next might cost y €/kWh.
• There are often standing charges - regular fixed fees that aren't related to how much
energy you use.