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Cogeneration - Economics
The easiest way to visualize cogeneration
system economics is to carefully value the power and thermal outputs,
subtract the costs of system operation, and compare system savings to system
cost. Never base the economics on the average cost of power, heating, or
cooling. Averages can be misleading. Consult both fuel and power rate
schedules from serving utilities to be sure you have factored in all costs.
The following summary of potentially
misleading assumptions captures the most common errors:
- Overstated power generation: This
combines failure to consider system parasitics and the usually mistaken
assumption that the system operates at full power all the time.
- Overstated power values: This is a
failure to consider the electric rate schedule specifics, especially
demand charges, energy charges, standby & backup tariffs, and ratchets.
- Overstated thermal credits: This assumes
too many hours of annual operation at too high a heat recovery potential.
- Overstated thermal values: Displacing
heat from an inefficient heating system often produces an unrealistically
high assumption of savings. Remember that inefficient heating systems
become even less efficient at lower loads. Therefore, the only way these
inefficiencies can be significantly reduced is to shut down the system.
- Understated operating & maintenance
costs: This often results from the failure to consider periodic engine
overhaul in the economics. While potentially unimportant in many cooling
system designs operating just a few thousand hours a year, these engine
rebuilds occur every 3-4 years in heavy use applications. Good O&M
planning numbers for base-loaded cogeneration system designs are
$0.012-$0.020 per kWh for recip engines, $0.008-$0.012 for gas turbines,
and $0.003-$0.004 for steam turbine designs.
- Understated system cost: Cogeneration
systems are much more costly than engines and heat recovery systems. The
specific costs of electrical and thermal interconnection, building space,
exhaust stack, back-up fuel supply, and site-specific engineering and
permitting all add up. These are best estimated by professionals. It can
be quite dangerous to use simple rules of thumb.
Other common errors include:
- Failure to Consider Alternatives: If
cogeneration is economically viable, would a less costly system
alternative produce superior economics? For example, where current heating
costs are high, would a new more efficient heating system be better? Where
current cooling costs are high, would a new high efficiency chiller be
more cost-effective?
- Lure of the Guaranteed Savings Deal:
Many cogeneration vendors recognize that the economics of cogeneration are
not good enough for certain applications and offer a lease based on
"guaranteed savings." Savings are quoted as being greater than lease
payments. This makes the deal seem too good to pass up! But, before
signing on the dotted line, ask the same questions you would if you were
making the investment personally. Many of these deals are merely equipment
leases with no real guarantee that savings will exceed payments,
especially over an extended period of time.
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Cogeneration - Designs |
Cogeneration is generally defined as the
coincident production of electricity and usable thermal energy from a single
fuel or thermal input. For example, a water-cooled engine-generator can
produce power and hot water. Further heat recovery, if economically
worthwhile, could also recover exhaust gas energy.
Cooling system cogeneration designs are
most often:
- Engine-driven chillers with heat
recovery,
- Steam turbine-driven chillers in large
cogeneration systems, or
- Steam absorption chillers used to
condense "waste steam."
The easiest way to evaluate cogeneration
system alternatives is to start with the site's heating loads. The following
rules of thumb are useful in selecting the "prime mover:"
- Reciprocating engines work best for
small heating loads (less than 2,000 Btu of heat per kW of power used), or
whenever hot water heat recovery is desired.
- Gas turbines fit situations where 5,000
- 10,000 Btu of heat per kW of power is needed. This tends to be large
hospitals, universities, and industrial plants.
- Steam turbines: are appropriate where
20,000+ Btu of heat per kW of power is needed. The best applications are
usually large industrial plants.
These prime movers can drive electric
generators, air compressors, process equipment, or chillers. The choice is
based on annual operating hours and the integration of heat and power making
the most sense. Consequently, most cogeneration designs use the prime mover
to generate power rather than drive a chiller. Waste heat from each prime
mover can be recovered to displace steam that would have otherwise been
generated in a boiler, or can be used to produce cooling in an absorption
chiller.
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