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Combined Heat and Power (CHP) Project Finance Model – Compression Ignition (CI) Diesel Engine, Spark Ignition (SI) Gasoline Engine and Open Cycle GT (OCGT) Cogeneration Power Plants

March 18th, 2016 Posted in cogeneration

Combined Heat and Power (CHP) Project Finance Model – Compression Ignition (CI) Diesel Engine, Spark Ignition (SI) Gasoline Engine and Open Cycle GT (OCGT) Cogeneration Power Plants

This new model of a diesel reciprocating engine with waste heat recovery boiler is a cogeneration power plant that produces both electricity and heat/steam energy to raise energy utilization efficiency, and with two revenue streams, reduces significantly the cost of power and heat. For comparison, similar cogeneration plants using a gasoline reciprocating engine and open cycle (simple cycle) GT with waste heat recovery boiler is presented.

Combined Heat and Power (CHP) – is the simultaneous generation of electricity and steam (or heat) in a single power plant. It has been long used by industries and municipalities that need process steam or heat as well as electricity. CHP or cogeneration is not usually used by large utilities which tend to produce electricity only. It is advisable only for industries and municipalities if they can produce electricity cheaper or more conveniently; otherwise, buy from the utility instead.

In theory, CHP provides the most efficient use of energy resources, often utilizing up to 90% of the heat energy of the fossil fuel. In practice, while the efficiency of entire process is recognized, its application has been limited.

Cogeneration Plant Efficiency

From an energy resource point of view, cogeneration is beneficial only if it saves on primary energy when compared to separate generation of electricity and steam.

The cogeneration plant efficiency ηco is given by

  ηco = (E + ΔHs) / Qa

Where:       E = electricity generated, kW

             ΔHs = heat energy in process steam, kJ/s

= (enthalpy of steam entering process) – (enthalpy of process condensate returning to plant)

                Qa = heat added to plant (coal, oil, gas, nuclear, etc.), kJ/s

Efficiency for Separate Generation

The combined efficiency ηc for separate generation is given by

  ηc = 1 / { [e / ηe ] + [(1 – e) / ηh] }

Where:   e = electrical fraction of total energy output

= E / ( E + ΔHs)

             ηe = electric plant efficiency

             ηh = steam or heat plant efficiency

Cogeneration is beneficial only if the efficiency of the cogeneration plant exceeds that of the combined efficiency for separate generation:

ηco >> ηc

Types of Cogeneration

There are two broad categories of cogeneration:

1) Topping cycle – primary heat at the higher temperature end of the Rankine Cycle is used go generate high pressure and temperature steam and electricity in the usual manner. Depending on process requirements, the process steam at low-pressure and low temperature and pressure either goes to:

     a) Extracting turbine – extracted from the turbine at an intermediate stage   (like feed-water heating), or

     b) Back pressure turbine – taken at the turbine exhaust.

2) Bottoming cycle – primary heat is used at high temperature directly for process requirements (high-temperature cement kilns) and the low temperature waste heat is used to generated electricity, obviously at a low efficiency. The bottoming cycle has an efficiency below ηc for separate generation and is therefore of little thermodynamic and economic interest.

Topping Cycles

Only the topping cycle can provide true savings in primary energy and most process applications require low grade (temperature, pressure) steam. Their applicability are as follows:

(a) Steam-electric power plant with a back pressure turbine – most suitable when electric demand is low compared to process heat demand

(b) Steam-electric power plant with steam extraction from a condensing turbine – applicable to a wide range of ratios

(c) Gas-turbine power plant with heat recovery steam generator (HRSG) – lies in between (a) and (d)

(d) Combined cycle gas turbine (CCGT) power plant – when electric demand is high, about comparable to heat demand or much higher

Other CHP Technologies

Diesel engines – waste heat from jacket water cooling, engine exhaust and lubricating oil cooling are recovered for space heating

Gas turbine plants with waste heat boilers – (already discussed)

Combined cycle gas turbine (CCGT) power plant – (already discussed)

Oil, gas, coal and biomass-fired boilers and nuclear plants – combination of back-pressure and condensing turbines to supply heat and electricity.

Fuels cells – when H2 and O2 combines to produce electricity and the CO is likewise burned to keep the proper operating temperature, a great deal of heat is wasted that could be recovered from this electro-chemical cycle.

Fuel cell-gas turbine and IGCC hybrids – achieves 50-58% or even 60% net efficiencies (LHV) by combining the fuel cell to electro-chemically generate power from H2 and O2 and using the exhaust to drive turbine. Fuel derived from gasification of coal or biomass is used by the fuel cell.

Project Finance Model for Combined Heat and Power

A compression ignition (CI) reciprocating diesel engine power plant model was modified to include the recovery of waste heat and provide two revenue streams for sale of electricity and heat/steam.  The same principle may be applied to a spark ignition (SI) reciprocating gasoline engine but with the disadvantage of more expensive gasoline fuel compared to diesel fuel, but perhaps cheaper capital investment for a gasoline engine vs. diesel engine. The waste heat recovery boiler may apply to both engines.

You may download the power point presentation for CHP:

Combined Heat and Power (Cogeneration)

Cogeneration  Project Finance Models

The project finance models for diesel, gasoline and propane (LPG) cogeneration plants are likewise available here:

ADV Diesel Genset and Waste Heat Boiler Model3 – Copy (diesel, fuel oil, gas oil)

ADV Gasoline Genset and Waste Heat Boiler Model3 – Copy (gasoline, land fill gas)

ADV Simple Cycle and Waste Heat Boiler Model3 – Copy (natural gas, land fill gas, propane, butane, LPG)

The incremental advantage of a diesel cogen plant vs. a gasoline cogen and propane plants is illustrated in the comparative table below which was extracted (linked) from the two cogen models. The prices of electricity to meet 14% p.a. equity IRR target are: gasoline cogen (6.33836 PhP/kWh), diesel cogen (3.86791), and propane cogen (4.81343). Thus, diesel cogen is the cheapest, followed by propane cogen while gasoline cogen is most expensive. See comparison below:

 

Comparison (with waste heat recovery) Gasoline Cogen Plant Diesel Cogen Plant Simple Cycle GT Cogen
Exchange rate, PhP/USD 47.00 47.00 47.00
Local debt interest, % p.a. 10.00% 10.00% 10.00%
Local debt term, years 10 10 10
Upfront fee, % 2.00% 2.00% 2.00%
Commitment fee, % p.a. 0.50% 0.50% 0.50%
Grace period, months 12 12 12
Debt service reserve fund, months 6 6 6
Debt, % 70% 70% 70%
Equity, % 30% 30% 30%
Target equity IRR, % p.a. 14.00% 14.00% 14.00%
WACC, % p.a. 11.20% 11.20% 11.20%
WACC after-tax, % p.a. 13.00% 13.00% 13.00%
WACC pre-tax, % p.a. 9.10% 9.10% 9.10%
Installed capacity, MW 3.00 3.00 3.00
Availability, % of time 94.55% 94.55% 94.55%
Load factor, % of installed capacity 100.00% 100.00% 100.00%
Gross capacity Factor, % 94.55% 94.55% 94.55%
Gross generation, MWh 24,848 24,848 24,848
Own use & losses (parasitic load), % 0.27% 0.27% 0.27%
Net capacity factor, % 94.29% 94.29% 94.29%
Net generation = 10,512 MWh/year 24,780 24,780 24,780
Thermal efficiency, % of GHV fuel 30.00% 36.00% 33.22%
Plant heat rate, Btu/kWh 11,372 9,477 10,272
Fuel GHV, Btu/lb 20,500 18,600 19,949
Fuel density, kg/Liter 0.750 0.845 13.810
Fuel price, PhP/Liter 36.000 20.000 14.570
Lube oil rate, gram/kWh 0.500 1.000 0.100
Lube oil density, kg/Liter 0.980 0.980 0.980
Lube oil price, PhP/Liter 200.000 200.000 200.000
Waste heat, % of GHV fuel input 70.00% 64.00% 66.78%
Waste heat recovered, % of waste heat 69.10% 69.10% 69.10%
Overall cogeneration efficiency, % 78.35% 80.19% 79.34%
Target unit costs:
Unit capital cost = engine + boiler, $/kW 1,150.00 1,350.00 2,497.00
Fixed O&M cost, $/kW/year 10.73 10.73 21.74
Variable O&M cost, $/MWh 15.00 10.00 2.44
All-in capital cost, $000:
Land Cost 0 0 0
EPC (Equipment, Balance of Plant, Transport) 1,585 2,006 4,701
Transmission Line Interconnection Facility 42 42 42
Sub-Station Facility 818 818 818
Development & Other Costs (Civil Works, Customs Duty) 427 490 894
Construction Contingency 115 134 258
Value Added Tax 0 0 0
Financing Costs 289 339 261
Initial Working Capital 174 221 517
Total Uses of Fund – $000 3,450 4,050 7,491
                           – PhP 000 162,150 190,350 352,077
Price of electricity, PhP/kWh 6.33836 3.86791 4.81343
Price of electricity, PhP/mmBtu 1857.60 1133.58 1410.68
Price of heat/steam, % of electricity 80.00% 80.00% 80.00%
Price of heat/steam, PhP/mmBtu 1486.08 906.86 1128.55
Equity IRR, p.a. 14.00% 14.00% 14.00%
Equity NPV, 000 PhP 0 (0) 0
Equity PAYBACK, years 10.59 9.91 10.26
Project IRR, p.a. 11.09% 11.91% 12.52%
Project NPV, 000 PhP (30,465) (21,749) (27,736)
Project PAYBACK, years 7.86 7.09 7.13

 

Gasoline and Diesel Genset  Project Finance Models (no waste heat recovery)

The project finance models for gasoline and diesel reciprocating power plants are likewise available here:

ADV Diesel Genset and Waste Heat Boiler Model3 – no waste heat recovery (diesel, fuel oil, gas oil)

ADV Gasoline Genset and Waste Heat Boiler Model3 – no waste heat recovery (gasoline, land fill gas)

ADV Simple Cycle and Waste Heat Boiler Model3 – no waste heat recovery (natural gas, land fill gas, propane, butane, LPG)

However, when the diesel and gasoline reciprocating gensets as well as the propane open cycle GT are operated without waste heat recovery, the price of electricity generated are much higher: diesel genset (7.68473 PhP/kWh), gasoline genset (14.54427) and propane GT  (10.02737). This is due to its lower overall thermal efficiency in stand alone mode and lack of a second revenue stream from heat/steam energy sales. Diesel genset is the cheapest, followed by propane GT while gasoline genset is most expensive.

 

Comparison (no waste heat recovery) Gasoline Cogen Plant Diesel Cogen Plant Simple Cycle GT Cogen
Exchange rate, PhP/USD 47.00 47.00 47.00
Local debt interest, % p.a. 10.00% 10.00% 10.00%
Local debt term, years 10 10 10
Upfront fee, % 2.00% 2.00% 2.00%
Commitment fee, % p.a. 0.50% 0.50% 0.50%
Grace period, months 12 12 12
Debt service reserve fund, months 6 6 6
Debt, % 70% 70% 70%
Equity, % 30% 30% 30%
Target equity IRR, % p.a. 14.00% 14.00% 14.00%
WACC, % p.a. 11.20% 11.20% 11.20%
WACC after-tax, % p.a. 13.00% 13.00% 13.00%
WACC pre-tax, % p.a. 9.10% 9.10% 9.10%
Installed capacity, MW 3.00 3.00 3.00
Availability, % of time 94.55% 94.55% 94.55%
Load factor, % of installed capacity 100.00% 100.00% 100.00%
Gross capacity Factor, % 94.55% 94.55% 94.55%
Gross generation, MWh 24,848 24,848 24,848
Own use & losses (parasitic load), % 0.27% 0.27% 0.27%
Net capacity factor, % 94.29% 94.29% 94.29%
Net generation = 10,512 MWh/year 24,780 24,780 24,780
Thermal efficiency, % of GHV fuel 30.00% 36.00% 33.22%
Plant heat rate, Btu/kWh 11,372 9,477 10,272
Fuel GHV, Btu/lb 20,500 18,600 19,949
Fuel density, kg/Liter 0.750 0.845 13.810
Fuel price, PhP/Liter 36.000 20.000 14.570
Lube oil rate, gram/kWh 0.500 1.000 0.100
Lube oil density, kg/Liter 0.980 0.980 0.980
Lube oil price, PhP/Liter 200.000 200.000 200.000
Waste heat, % of GHV fuel input 70.00% 64.00% 66.78%
Waste heat recovered, % of waste heat 0.00% 0.00% 0.00%
Overall cogeneration efficiency, % 29.92% 35.91% 33.13%
Target unit costs:
Unit capital cost = engine + boiler, $/kW 1,150.00 1,350.00 2,347.00
Fixed O&M cost, $/kW/year 10.73 10.73 21.74
Variable O&M cost, $/MWh 15.00 10.00 2.44
All-in capital cost, $000:
Land Cost 0 0 0
EPC (Equipment, Balance of Plant, Transport) 1,585 2,006 4,369
Transmission Line Interconnection Facility 42 42 42
Sub-Station Facility 818 818 818
Development & Other Costs (Civil Works, Customs Duty) 427 490 844
Construction Contingency 115 134 243
Value Added Tax 0 0 0
Financing Costs 289 339 245
Initial Working Capital 174 221 481
Total Uses of Fund – $000 3,450 4,050 7,041
                           – PhP 000 162,150 190,350 330,927
Price of electricity, PhP/kWh 14.54427 7.68473 10.02737
Price of electricity, PhP/mmBtu 4262.52 2252.18 2938.74
Price of heat/steam, % of electricity 80.00% 80.00% 80.00%
Price of heat/steam, PhP/mmBtu 3410.02 1801.75 2350.99
Equity IRR, p.a. 14.00% 14.00% 14.00%
Equity NPV, 000 PhP (0) (0) (0)
Equity PAYBACK, years 10.59 9.91 10.27
Project IRR, p.a. 11.09% 11.91% 12.50%
Project NPV, 000 PhP (30,465) (21,749) (26,710)
Project PAYBACK, years 7.86 7.09 7.15

 

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Please email me if you need the actual models (not demo) for diesel, gasoline and propane power plants.

To purchase any project finance model with Thermal Power Plant Template (with waste heat recovery, without waste heat recovery), please email me

energydataexpert@gmail.com

Purchase any model for USD 800 for the complete package (deterministic model with Tornado Chart) and remit via PayPal (use my gmail account above) or via bank / wire transfer (BPI current account which I will email you once you confirm your order).

If you want it customized with your own specific data and additional rows and columns for income, expense and balance sheet accounts, add another USD 500 for 2-hours of additional work.

Cheers,

Energy technology selection expert

 

 

 

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