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Evaluation of the economic viability of the application of a trigeneration system in a small hotel

Evaluation of the economic viability of the application of a trigeneration system in a small hotel Energy is an indispensable factor for any human activity. Transport, industrial production, trade, communications, etc. depend on the energy availability. Traditionally, consumers meet their energy demand by buying separately electricity and fuel to the distribution companies. With regard to electric energy generation acquired by consumers, a good portion is produced in conventional thermoelectric power plants. In modern power plants, the total losses in energy can go up to 52.5 % without any kind of recovery. Thermal energy is obtained from the fuel purchased by consumers in burning systems with a maximum average efficiency, at best, about 90 % (10 % lost). Faced with this problem arises the need to increase the efficiency of electricity production processes and heat generation in order to reduce the financial and environmental costs. Thus, as an alternative to large conventional power plants, decentralized production of electricity arises, and, in particular cogeneration, in order to take advantage of the inherent limitations of the conversion of heat into work. CHP (Combined Heat and Power) is a combined process of production and exploitation of thermal energy and electricity, in an integrated system, from the same primary source. In spite of not being a new technology its applications are mainly used in the industry. These kind of systems contributes also for a decrease of CO emissions to the environment. The aim of this study is to analyse the technical and economic potential of a real situation in a small hotel located in a city of Portugal. Instead of using only a CHP, the generated heat was also used for cooling - CHCP (Combined Heat, Cooling and Power). For that, besides the energetic analysis carried out, a detailed economic analysis was done in order to evaluate its feasibility and risk regarding the main parameters to be taken in account, namely the NPV (Net Present Value), IRR (Internal Rate of Return), Payback Period and PES (Primary Energy Savings) and Avoided Emissions (AE) of CO . The main conclusions obtained are that the CHCP contributes to a PES of 57 tep/year, the AE being 68 teq CO /year. The payback period is 3.6 years. Keywords: CHCP, CO emissions, NPV, IRR, AE, PES, Energetic analysis Background Traditionally, consumers satisfy their electrical energy Satisfaction of our energy needs in cities has been made demand by purchasing separately electricity and fuel mostly at the expense of conventional energy such as oil, from distribution companies. Regarding the electricity coal and natural gas. Although, present in large-scale in acquired by consumers, much is produced in thermal the planet, they are not renewable on a human scale, power plants. The older ones, running in single cycle, bringing negative consequences to the environment. typically convert only about 37 % of the chemical energy This leads to a new concept, called sustainable develop- contained in the fuel into electrical energy. Taking into ment (rational use of energy and energy needs) that account energy losses inherent in the transport, low emerges to try to reduce this issue. overall efficiencies of around 33 % are obtained, meaning that about 67 % of the energy is lost as waste heat. In most modern power plants operating in combined cycles, efficiency values are about 52.5 % at the central * Correspondence: clito@fe.up.pt Universidade do Porto, Faculdade de Engenharia, Department Engª Mecânica outlet and approximately 48.5 % if it is taking into - Porto, Rua Dr. Roberto Frias, 4200-465 Porto, Portugal © 2016 Afonso and Rocha. Open Access This article is distributed under the terms of the Creative Commons Attribution 4.0 International License (http://creativecommons.org/licenses/by/4.0/), which permits unrestricted use, distribution, and reproduction in any medium, provided you give appropriate credit to the original author(s) and the source, provide a link to the Creative Commons license, and indicate if changes were made. Afonso and Rocha Future Cities and Environment (2016) 2:2 Page 2 of 9 account the losses inherent in the transport of electri- used to run an absorption chiller, it is possible to obtain city, which means that about 51.5 % of the primary en- chilled water for cooling. The sketch of principle of tri- ergy continues to be lost to the environment as waste generation (CHCP) principle is shown in Fig. 2. heat. The power generation of thermal energy produced from fuels purchased by consumers is obtained in burning sys- Benefits and drawbacks of CHCP tems. The average efficiency is, at best, about 90 % (re- The CHCP when compared with conventional systems ferred to the lower calorific value of the fuel). From the for the same purpose have benefits to the countries, for foregoing it can be seen once again that at least about 10 % the consumers and for electric energy companies. of the fuel energy used to generate heat is also lost to the For the country: environment without the possibility of practical use. Economics of primary energy: The successful imple- Given these issues, arises the need to increase the effi- mentation of cogeneration and trigeneration leads to a ciency of production processes for electricity and heat reduction of fuel consumption by approximately 25 % generation in order to reduce the financial and environ- compared to conventional power generation. At the na- mental costs. tional level encourages decentralized generation, redu- Thus, as an alternative to large power plants and dis- cing the need for installation of large thermal power tribution networks of high voltage, emerges the decen- plants, and increases the stability of the electrical net- tralized production of electricity, and in particular the work in the country. It also contributes to increasing Combined Heat and Power (CHP) or Cogeneration, in local employment. order to take advantage of the inherent limitations on Greater energy diversity: due to taking profit of waste the conversion of heat into work [1–3]. Through a suc- heat from the energy production process. Likewise, en- cinct definition, CHP is a process of exploration and dogenous resources could be utilized for energy produc- production of combined heat and power, in an inte- tion in cogeneration. grated system, from the same primary source, Fig. 1. Reduced environmental impact: the reduction of at- Among the primary sources used in cogeneration sys- mospheric pollution follows the same proportion. With tems are: oil products (fuel oil), natural gas, propane gas, the utilization of natural gas instead of oil or coal fuels, coal, biomass, industrial waste, etc. The use of the same SO emissions and particles are reduced to zero. primary energy source to generate electricity and heat Improvement of the national energy efficiency: due to simultaneously results in high levels of savings and the use of conversion systems with much higher hence a very significant reduction of the energy bill efficiencies. without changing the production process of the Security of supply: some applications require un- consumer [4, 5]. interrupted availability of energy, such as hospitals This technology can also be applied in almost cities or and industrial establishments, where the process inter- buildings on a large or small scale (not only in the in- ruption can cause major disruption. As such, cogener- dustry). If part of the heat obtained from the system is ation can function as uninterruptedness guarantee, Fig. 1 The cogeneration principle, [15] Afonso and Rocha Future Cities and Environment (2016) 2:2 Page 3 of 9 Fig. 2 Sketch of principle of trigeneration (CHCP) always operating, even when electrical power is maintenance and repair operations, so there are no ser- unavailable. ious failures in the supply of electricity to the grid from For the consumers: small producers. Lower losses: with decentralized energy production - Network control problems: the transmission and distribution energy have lower The parallel connection of the cogeneration plant with losses. the power supply network creates regulatory problems. Reduction in energy bills: lower cost of electricity con- Leave that on the dependence of power failures provided sumed allows economic cost savings, reducing the pro- by independent producers. duction costs of industrial units and promoting Market Reduction: If independent producers (cogener- increased competitiveness. ation) which logically produce most of the energy they Continuous power supply: through a cogeneration consume there will be smaller market for producers and plant operated in parallel with the external network, one electricity distributors. can have an uninterrupted power supply with a security Investments: guarantee that in case of failure of the external network Companies are required to more investment and on the own energy produced can meet the needs of the top of that in a branch where they have their greatest user. skills, and facing unknown risks. For producers of electric energy companies: Environmental: Increased available electricity – there is greater guar- Increased pollution in the vicinity of manufacturing antee of supply of electricity to consumers by the dis- process due to emission of products of combustion co- tributor of electricity. generation, although at national level there is a Reduction of reserve power: it is not necessary to have decentralization, and reduced pollution. high reserve powers as at any time as mall CHP facility can sell this, releasing any surplus resulting from the Methodology production of electricity and thermal energy. In this study, a CHCP system was designed for a hotel Drawbacks: located in a city of Portugal. The transient energy needs Need for appropriate legislation: for heating and cooling were simulated hour per hour all Appropriate legislation is mandatory and will need to the year around. It was used the software HAP (Hourly arbitrate conflicts and disputes that necessarily occur be- Analysis Program) from Carrier. The energy needs for tween independent producers and the electricity gener- sanitary hot water (SHW) was evaluated through the ating companies. Solterm code, [6]. In this case it was considered that all Infrastructures: days of one month would have the same hourly con- It is necessary to create appropriate infrastructures to sumption according to the established utilization profile. monitoring compliance with legislation and technical The next step was to choose the most adequate CHCP regulations and for the implementation of appropriate system for the hotel in accordance with national laws Afonso and Rocha Future Cities and Environment (2016) 2:2 Page 4 of 9 [5–9]. Once chosen the system, several parameters of hours and super empty, turning off the CHCP overnight viability were carried out, namely an energy analysis, an (from 00:00h till 07:00 h am.) as also the advantage of environment impact assessment and a study of the eco- reducing the annual hours of operation and thereby in- nomic viability. crease the time between repairs. Figure 4 summarizes the results for one year in both situations. Heating and cooling loads The hotel with eight floors has all the facilities that can be Legal framework for cogeneration in Portugal found in a 5* hotel. After the characterization of the enve- Once know the energy needs of the hotel, several param- lope, the heating and cooling loads and energy spent for eters of viability were evaluated [8], namely an energy the sanitary hot water were evaluated as shown in Fig. 3. analysis, an environment impact assessment and a study The results are displayed of the economic viability. The design values used for the heating and cooling cal- National legislation for cogeneration application has culations are as follows. Summer: external temperature = over the years suffered a lot of changes. At the time of 30 °C, outside relative humidity = 37,3 %, Internal the opening of the hotel, several Decree-laws, Ordi- temperature = 25 °C, and inside relative humidity = 40 %. nances and Dispatch were in force and were used for the Winter: external temperature = 1,7°C, outsider relative hu- legal framework for cogeneration in Portugal, [9–13]. midity = 49,5 %, Internal temperature = 20 °C and inside relative humidity = 50 %. This values are the ones obtained  EEE (Equivalent Electrical Efficiency) by RCCTE, [7]. By the Decree Laws in force, this parameter is given The total area of the hotel to be heated and cooled is by equation 1: 5942,4m . From the second floor until the eight floor, there are eight identical rooms per floor. In the ground floor there is the lobby, reception, bar, offices, laundry, EEE ¼ ð1Þ C− kitchen. In the first floor there meeting rooms, hall, res- CR 0:9 − 0:2 taurant and gym. The total heat energy needed to run all the three sub- Where: systems is the sum up of each one. While the heat har- E [kWh]: electricity generated annually by the cogen- nessed by CHCP drives directly the environment heating eration system, excluding the consumption in internal loads and sanitary hot water, for the cooling system is auxiliary power generation systems; needed an absorption chiller. It was chosen one with a T [kWh]: useful thermal energy consumed annually COP value of 0.72. So, in order to get all the heat energy from the thermal energy produced by cogeneration, needed by the whole system, the cooling load must di- excluding the consumption in the internal auxiliary vided by mentioned value of the COP, which results in a power generation systems; total thermal load of 742 MWH for all the year. C [kWh]: the primary energy consumed annually in Due to the fact that the selling price of electricity to the cogeneration system, evaluated from the lower heat- the public network is substantially lower in off-peak ing value of fuel and other resources used; Fig. 3 Thermal loads of the hotel Afonso and Rocha Future Cities and Environment (2016) 2:2 Page 5 of 9 Fig. 4 Annual energy and maximum thermal power needs CR [kWh]: equivalent energy of renewable resources Electric output ¼ 70 kW; Heat output ¼ 104 kW at 81 C; or industrial waste, agricultural or urban consumed an- Fuel inputðÞ LHV ¼ 204 kW; Fuel inputðÞ gross ¼ 226 kW nually in cogeneration facility. EEE must assume the following values, according to the same Decrees-Laws: E : maximum quantity of electricity to provide er annually to the Electric System of Public Service not – EEE ≥ 0.55 for installations using natural gas as fuel, higher than the value given by equation 2: gas petroleum or liquid fuels with the exception of fuel; – EEE ≥ 0.50 for installations using fuel oil as fuel, E þ T E ¼ 4:5 −4:5 E ð2Þ alone or together with waste fuels; er E þ 0:5T – EEE ≥ 0.45 for installations using biomass as fuel or residual fuels, alone or in conjunction with a fuel support, a percentage not exceeding 20 % annual average. As the power to be installed is lower than 10MW (actually it is 0.7 MW), the same Decree-Laws are also applicable. So, the selling price of the electricity to the national grid from the cogeneration system is Before proceeding with the analysis of the remaining given by equation: 3 parameters, it is necessary to choose the appropriate CHP engine for the hotel. The choice was between internal combustion engines and micro turbines SP ¼ PFðÞ VRD þ PVðÞ VRD þ PAðÞ VRD =ðÞ 1−LEV m m m running with natural gas (comparing with fuels ð3Þ obtained from petroleum or coal, there are no emissions of SO and particles to the environment). Where: Regarding to the selling market, it was found only one SP is the remuneration applicable to cogeneration in- that has an EEE ≥ 0.55 running with natural gas. stallations, in month m; PF(SP) is the fixed portion of compensation applic- The main characteristics of the four stroke spark able to cogeneration installations, engine (6 cylinders in line) are, [14]: in month m; Afonso and Rocha Future Cities and Environment (2016) 2:2 Page 6 of 9 Fig. 5 Global energy fluxes PA(SP) is the environmental portion of the compensa-  Payback time: is the project's operating time tion applicable to cogeneration facilities in the month m; necessary to obtain the sum of revenue and LEV are the losses in transmission and distribution expenditure flows that equalize the value of the networks, avoided by the cogeneration plant. investment, equation 6: Saving Energy Index (SEI): ratio of the fuel economy obtained in the cogeneration engine when compared Initial Investment Payback ¼ ð6Þ to the amount of fuel consumed in a conventional Annual Revenues installation, i.e. an electrical plant with an efficiency η , a boiler with an efficiency η and an electric c b chiller with a COP . It is given by equation 4: comp Net Present Value (NPV): is the calculation of the sum of annual revenues obtained updated in the SEI ¼ 1− ð4Þ chosen rate and deducting the amount of η η xRCE η xRFE e;C e;C e;C þ þ η η COP investment, upgraded at same rate, equation (7): comp c b Where: RCE and RFE are respectively the ratios between heat n R −D k k NPV ¼ −Inv0 þ ð7Þ and electricity and the ratio between cooling and electri- k¼1 ðÞ 1 þ TA city in the CHCP; Where: Demand rate of primary energy (DRPE): ratio between Inv0 is the initial investment in year 0; the amounts of fuel consumed in cogeneration/ R are the annual revenues trigeneration by the corresponding amount of a D are the annual expenses conventional system. Compared to the SEI, is: TA is the discount interest rate N is the number of years of the project life For a project to be viable, the NPV must be positive, DRPE ¼ 1−SEI ð5Þ only because in this case the project will generate bene- When DRPE is less than one, the implementation of fits, which will recover the investment made and provide cogeneration allows a fuel economy (primary energy), a more cost effective alternative reference. This criterion whereas if its value is greater than one means that are is strictly dependent on the discount rate. It is related to no energy advantages. three parameters: Table 2 TOE of the CHP system Table 1 TOE of a conventional system Energy Conversion [TOE/ TOE η COP Necessary thermal Conversion TOE [kWh] kWh] energy [kWh] [TOE/kWh] 3 CHP Fuel consumed (FC) 1265820 0.086/10 109 Conventional UH 0.9 262230 0.086/10 23 Electricity produced 434350 0.29/10 126 system NC 2.8 59058 0.29/10 17 (E) Afonso and Rocha Future Cities and Environment (2016) 2:2 Page 7 of 9 Table 3 Economic analysis of the CHP system Table 5 Annual revenues of produced cooling E [MWh] T [MWh] C [MWh] CR [MWh] T/E EEE Eer [MWh] Annual energy consumed and associated costs 434 465 1266 0 1 0.58 26367 Peak hours Off peak hours Empty Total [kWh] 9928 37328 11803 As E< Eer, all the electrical energy produced can be sold to grid -1 Price [€(kWh) ] 0.114 0.0765 0.05 SEI =0.15 DRPE = 0.85 <1 Partial [€] 1132 2856 590 The cogeneration allows a fuel economy (primary energy) Annual revenue = 4577 € 1. Real compensation desired for own funds, based on PES½ TOE ¼ðÞ W þ UH þ NC – F ¼ 57 TOE=year e CG the real interest rate of a risk-free investment; ð8Þ 2. Economic and financial risks associated with the Once calculated the PES value it is possible to evaluate project; the avoided CO 3. Annual rate of expected inflation. This rate will only emissions to the environment. By the same Decree Laws, the CO emissions per kgOE are influence the calculations were all forecasts of equal to 0.0012 tonnes of CO equivalent (TOE)/kgOE. revenue and expenses are made at current prices So the avoided emissions (AE) are: because the constant price method considers the future absence of inflation and devaluation mount. AE ¼ 68 TOE CO =year Discussion and evaluation It is noticeable that this facility is friendly to the envir- Once known the thermal loads of the hotel and already onment because that are saved emissions into the envir- chosen the CHP engine, it is possible to carry out a glo- onment in the order of 68 tons of CO compared to bal analysis of the system for all the year, the results be- conventional systems. ing shown in Fig. 5. It must be noticed that the cooling To evaluate the economic analysis according to the power is the product of the heat output of the CHP (104 equations shown in section 3, it was taken in account all kW) by the COP of the absorption chiller installed the necessary parameters involved. Table 3 displays the (0.72), which is equal to 75 kW. It can also be seen that results obtained. the CHP that doesn’t satisfy all the thermal energy To carry out the final economic analysis, it is neces- needed, reason why there is a need for an additional sary to know the annual revenues and expenses of the chiller and boiler. The chiller can be based on a vapour CHCP. compression cycle with a power between 180 and 190 kW and the boiler with a power of 190 kW. Annual revenues It is necessary to compare the benefits of the CHP to The annual revenues are due to the electricity produced be installed with conventional systems for the same pur- and sold to the public network. The useful heat and pose, heating and cooling. So, for a conventional system, cooling are achieved savings, considered in the study as the choice for the cooling demand was on a chiller based equivalent revenues. As said, the selling price of electri- on a vapour compression system with a power in the city to the public network is substantially lower in off- range of 230-240 kW and a COP =2.8; for the total heat- peak hours and super empty hours, and are a function ing demands it was chosen a boiler running with natural of several parameters as already shown. Besides, from gas with a power of 300 kW and an efficiency of 0.9. In Monday to Friday the electric tariff is the same, being order to make a correct comparison between the two sit- different on Saturdays and Sundays. Also they differ uations the energy, MWh, was converted in TOEs as from summer and winter time. So, taking in account all shown in Tables 1 and 2. the electric tariffs the SP per year is: Taking into account Tables 1 and 2, the primary en- SP ¼ 65120 €=year ergy savings (PES) is obtained by the following equation: Table 4 Annual revenues of produced heat UH (kWh) 236007 Table 6 Costs of natural gas η 90 % b Energy consumed (FC) [kWh] 1265820 3 3 LHV [kWh/m ] 10,54 LHV [kWh/m ] 10,54 NG NG 3 3 Boiler consumption [m ] 24879 Natural gas consumed [m ] 120097 3 -3 Selling price of natural gas [€/m ] 0.5 Selling price of natural gas [€m ] 0.289 Annual revenue 12440 € Annual expenses [€] 34708 € Afonso and Rocha Future Cities and Environment (2016) 2:2 Page 8 of 9 To assess the annual price of useful heat in cogeneration The study is very attractive to the tertiary sector, system, it will be compared with the same energy produced housing and services, with the implementation of co- in a conventional boiler with an efficiency of η =90%. generation/trigeneration having as primary fuel natural The annual consumption of natural gas of the boiler is: gas. The equivalent electrical efficiency, make it immedi- UH½ kWh ately delete cogeneration systems that might not be the 3 b Consumption of natural gas m ¼  most advised individually. kWh LHV NG 3 Cogeneration is mandatory for large buildings (floor ð9Þ area greater than 10000m ), however, as shown by this study, the implementation of these systems can be very Where LHV is the Lower heating value of the natural useful in smaller sized buildings using also trigeneration NG gas. (5942m , in this case). The annual revenue is displayed in Table 4. It was achieved a primary energy savings in the order To evaluate the annual price of useful cooling of the of 57 TOE per year, and the associated reduction of CHCP, the cooling needs were compared to the ones ob- emissions of greenhouse gas effect in the order of 68 tained with an electric chiller with a COP of 2.8. The re- tonnes of CO equivalent, compared with conventional sults are shown in Table 5. power generation systems. The result of the economic balance is also very attract- Total expenses ive because beyond having a short payback time, around The total expenses are due the cost of natural gas con- 3.6 years, brings significant savings (net present value), sumption for the CHP system and the costs of installa- in the first 10 years of operation in relation to the con- tion maintenance. ventional system. Regarding the cost of natural gas for the CHP, the tar- It was shown that when a cogeneration system is well iff was published by the Regulatory Authority for Energy designed, is advisable to be implemented it in small Services by Dispatch no. 4/2008, [7], which use different towns, neighborhoods in cities and factories. The tech- formulas before obtaining the final value. However nology is the same. traders apply the rate 0.289 €/m , which will be applied Competing interests in this study. Table 6 shows the estimated annual expen- The authors declare that they have no competing interests. ditures associated to cost of natural gas in the studied Authors’ contributions installation. The contributions of the authors were mainly to prove in a real situation, The costs associated to the CHP maintenance is the that the trigeneration technology is critical for the rational use of energy and -1 product of the maintenance factor (0.013 € (kWh )of to reduce the CO emissions to the environment. It has also proven that this technology is economically advantageous for companies that use it, and can electricity produced), times the electricity produced, E, be implemented in city neighborhoods. Both authors read and approved the which results in an annual cost of 5647 €. final manuscript. So, the annual balance is the difference between the Acknowledgements total revenues and total expenses: The authors are grateful to the company PROTERMIA for all relevant Annual balance = 41782 € information made available to the target hotel of this study. The total initial investment of the CHP is 150000 € Received: 4 December 2015 Accepted: 21 March 2016 and the payback period is: Initial Investment 150000 References Payback ¼ ¼ ¼ 3:6 years 1. Çengel, Yunus,. Boles, Michael. Termodynamics. Mc Graw Hill, 2002 Annual Revenues 41782 2. Afonso, C. Termodinâmica para Engenharia (in english “Termodynamics for Engineeres”). FEUP editions, 2012 For the evaluation of the NPV it was considered a dis- 3. Sonntag, R., Borgnakke, C., Wyley, G. Fundamentals of Thermodynamics. count rate of 8 % and the NPV was calculated over a John Wiley & Sons, Inc. 1998 4. Polimeros, George. Energy Cogeneration Handbook, Industrial Press Inc. period of 10 years. 5. The European Association for the Promotion of Cogeneration. http://www. Over ten years, the NPV is 236870 €.Itmust benoticed cogeneurope.eu/ that the lifetime of the engine is higher. 6. Laboratório Nacional de Energia e Geologia, I.P. Unidade de Análise Energética e Alterações Climáticas. Lisboa, Maio 2010 7. Regulatory Authority for Energy Services by Dispatch no. 4/2008 Conclusions 8. Afonso, C., Moutinho, T. Energetic, Economical Analysis and Avoided CO The aim of this study is to analyse the technical and eco- Emissions in a Cogeneration System Regarding the Legislation. International Journal of Mechanical Engineering and Automation. Vol. 1, n°2, 2014. nomic potential of a real situation in a small hotel lo- 9. Decree-Law n. ° 538/99. 13 December. cated in a city of Portugal. Instead of using only a CHP, 10. Decree-Law n. ° 313/2001. 10 December. the generated heat was also used for cooling – CHCP. 11. Ordinance 57, 58 and 59/2002. 15 de January. Afonso and Rocha Future Cities and Environment (2016) 2:2 Page 9 of 9 12. Dispatch n.° 19111/2005. 13. Decree-Law n. ° 78/2006. 4 April. 14. Technical data – ENER’G 70M. http://www.energ.hu/termekek-es- szolgaltatasok/kogeneracio/termekpaletta/energ-gazmotor-termekpaletta 15. COGEN, 2013, Cogeração. http://www.cogenportugal.com/ficheirosupload/ brochura%20cogeração.pdf Submit your manuscript to a journal and benefi t from: 7 Convenient online submission 7 Rigorous peer review 7 Immediate publication on acceptance 7 Open access: articles freely available online 7 High visibility within the fi eld 7 Retaining the copyright to your article Submit your next manuscript at 7 springeropen.com http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Future Cities and Environment Springer Journals

Evaluation of the economic viability of the application of a trigeneration system in a small hotel

Afonso, Clito; Rocha, Carlos
Future Cities and Environment , Volume 2 (1) – Mar 31, 2016
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Energy; Energy Efficiency (incl. Buildings); Renewable and Green Energy; Energy Technology; Landscape/Regional and Urban Planning
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Abstract

Energy is an indispensable factor for any human activity. Transport, industrial production, trade, communications, etc. depend on the energy availability. Traditionally, consumers meet their energy demand by buying separately electricity and fuel to the distribution companies. With regard to electric energy generation acquired by consumers, a good portion is produced in conventional thermoelectric power plants. In modern power plants, the total losses in energy can go up to 52.5 % without any kind of recovery. Thermal energy is obtained from the fuel purchased by consumers in burning systems with a maximum average efficiency, at best, about 90 % (10 % lost). Faced with this problem arises the need to increase the efficiency of electricity production processes and heat generation in order to reduce the financial and environmental costs. Thus, as an alternative to large conventional power plants, decentralized production of electricity arises, and, in particular cogeneration, in order to take advantage of the inherent limitations of the conversion of heat into work. CHP (Combined Heat and Power) is a combined process of production and exploitation of thermal energy and electricity, in an integrated system, from the same primary source. In spite of not being a new technology its applications are mainly used in the industry. These kind of systems contributes also for a decrease of CO emissions to the environment. The aim of this study is to analyse the technical and economic potential of a real situation in a small hotel located in a city of Portugal. Instead of using only a CHP, the generated heat was also used for cooling - CHCP (Combined Heat, Cooling and Power). For that, besides the energetic analysis carried out, a detailed economic analysis was done in order to evaluate its feasibility and risk regarding the main parameters to be taken in account, namely the NPV (Net Present Value), IRR (Internal Rate of Return), Payback Period and PES (Primary Energy Savings) and Avoided Emissions (AE) of CO . The main conclusions obtained are that the CHCP contributes to a PES of 57 tep/year, the AE being 68 teq CO /year. The payback period is 3.6 years. Keywords: CHCP, CO emissions, NPV, IRR, AE, PES, Energetic analysis Background Traditionally, consumers satisfy their electrical energy Satisfaction of our energy needs in cities has been made demand by purchasing separately electricity and fuel mostly at the expense of conventional energy such as oil, from distribution companies. Regarding the electricity coal and natural gas. Although, present in large-scale in acquired by consumers, much is produced in thermal the planet, they are not renewable on a human scale, power plants. The older ones, running in single cycle, bringing negative consequences to the environment. typically convert only about 37 % of the chemical energy This leads to a new concept, called sustainable develop- contained in the fuel into electrical energy. Taking into ment (rational use of energy and energy needs) that account energy losses inherent in the transport, low emerges to try to reduce this issue. overall efficiencies of around 33 % are obtained, meaning that about 67 % of the energy is lost as waste heat. In most modern power plants operating in combined cycles, efficiency values are about 52.5 % at the central * Correspondence: clito@fe.up.pt Universidade do Porto, Faculdade de Engenharia, Department Engª Mecânica outlet and approximately 48.5 % if it is taking into - Porto, Rua Dr. Roberto Frias, 4200-465 Porto, Portugal © 2016 Afonso and Rocha. Open Access This article is distributed under the terms of the Creative Commons Attribution 4.0 International License (http://creativecommons.org/licenses/by/4.0/), which permits unrestricted use, distribution, and reproduction in any medium, provided you give appropriate credit to the original author(s) and the source, provide a link to the Creative Commons license, and indicate if changes were made. Afonso and Rocha Future Cities and Environment (2016) 2:2 Page 2 of 9 account the losses inherent in the transport of electri- used to run an absorption chiller, it is possible to obtain city, which means that about 51.5 % of the primary en- chilled water for cooling. The sketch of principle of tri- ergy continues to be lost to the environment as waste generation (CHCP) principle is shown in Fig. 2. heat. The power generation of thermal energy produced from fuels purchased by consumers is obtained in burning sys- Benefits and drawbacks of CHCP tems. The average efficiency is, at best, about 90 % (re- The CHCP when compared with conventional systems ferred to the lower calorific value of the fuel). From the for the same purpose have benefits to the countries, for foregoing it can be seen once again that at least about 10 % the consumers and for electric energy companies. of the fuel energy used to generate heat is also lost to the For the country: environment without the possibility of practical use. Economics of primary energy: The successful imple- Given these issues, arises the need to increase the effi- mentation of cogeneration and trigeneration leads to a ciency of production processes for electricity and heat reduction of fuel consumption by approximately 25 % generation in order to reduce the financial and environ- compared to conventional power generation. At the na- mental costs. tional level encourages decentralized generation, redu- Thus, as an alternative to large power plants and dis- cing the need for installation of large thermal power tribution networks of high voltage, emerges the decen- plants, and increases the stability of the electrical net- tralized production of electricity, and in particular the work in the country. It also contributes to increasing Combined Heat and Power (CHP) or Cogeneration, in local employment. order to take advantage of the inherent limitations on Greater energy diversity: due to taking profit of waste the conversion of heat into work [1–3]. Through a suc- heat from the energy production process. Likewise, en- cinct definition, CHP is a process of exploration and dogenous resources could be utilized for energy produc- production of combined heat and power, in an inte- tion in cogeneration. grated system, from the same primary source, Fig. 1. Reduced environmental impact: the reduction of at- Among the primary sources used in cogeneration sys- mospheric pollution follows the same proportion. With tems are: oil products (fuel oil), natural gas, propane gas, the utilization of natural gas instead of oil or coal fuels, coal, biomass, industrial waste, etc. The use of the same SO emissions and particles are reduced to zero. primary energy source to generate electricity and heat Improvement of the national energy efficiency: due to simultaneously results in high levels of savings and the use of conversion systems with much higher hence a very significant reduction of the energy bill efficiencies. without changing the production process of the Security of supply: some applications require un- consumer [4, 5]. interrupted availability of energy, such as hospitals This technology can also be applied in almost cities or and industrial establishments, where the process inter- buildings on a large or small scale (not only in the in- ruption can cause major disruption. As such, cogener- dustry). If part of the heat obtained from the system is ation can function as uninterruptedness guarantee, Fig. 1 The cogeneration principle, [15] Afonso and Rocha Future Cities and Environment (2016) 2:2 Page 3 of 9 Fig. 2 Sketch of principle of trigeneration (CHCP) always operating, even when electrical power is maintenance and repair operations, so there are no ser- unavailable. ious failures in the supply of electricity to the grid from For the consumers: small producers. Lower losses: with decentralized energy production - Network control problems: the transmission and distribution energy have lower The parallel connection of the cogeneration plant with losses. the power supply network creates regulatory problems. Reduction in energy bills: lower cost of electricity con- Leave that on the dependence of power failures provided sumed allows economic cost savings, reducing the pro- by independent producers. duction costs of industrial units and promoting Market Reduction: If independent producers (cogener- increased competitiveness. ation) which logically produce most of the energy they Continuous power supply: through a cogeneration consume there will be smaller market for producers and plant operated in parallel with the external network, one electricity distributors. can have an uninterrupted power supply with a security Investments: guarantee that in case of failure of the external network Companies are required to more investment and on the own energy produced can meet the needs of the top of that in a branch where they have their greatest user. skills, and facing unknown risks. For producers of electric energy companies: Environmental: Increased available electricity – there is greater guar- Increased pollution in the vicinity of manufacturing antee of supply of electricity to consumers by the dis- process due to emission of products of combustion co- tributor of electricity. generation, although at national level there is a Reduction of reserve power: it is not necessary to have decentralization, and reduced pollution. high reserve powers as at any time as mall CHP facility can sell this, releasing any surplus resulting from the Methodology production of electricity and thermal energy. In this study, a CHCP system was designed for a hotel Drawbacks: located in a city of Portugal. The transient energy needs Need for appropriate legislation: for heating and cooling were simulated hour per hour all Appropriate legislation is mandatory and will need to the year around. It was used the software HAP (Hourly arbitrate conflicts and disputes that necessarily occur be- Analysis Program) from Carrier. The energy needs for tween independent producers and the electricity gener- sanitary hot water (SHW) was evaluated through the ating companies. Solterm code, [6]. In this case it was considered that all Infrastructures: days of one month would have the same hourly con- It is necessary to create appropriate infrastructures to sumption according to the established utilization profile. monitoring compliance with legislation and technical The next step was to choose the most adequate CHCP regulations and for the implementation of appropriate system for the hotel in accordance with national laws Afonso and Rocha Future Cities and Environment (2016) 2:2 Page 4 of 9 [5–9]. Once chosen the system, several parameters of hours and super empty, turning off the CHCP overnight viability were carried out, namely an energy analysis, an (from 00:00h till 07:00 h am.) as also the advantage of environment impact assessment and a study of the eco- reducing the annual hours of operation and thereby in- nomic viability. crease the time between repairs. Figure 4 summarizes the results for one year in both situations. Heating and cooling loads The hotel with eight floors has all the facilities that can be Legal framework for cogeneration in Portugal found in a 5* hotel. After the characterization of the enve- Once know the energy needs of the hotel, several param- lope, the heating and cooling loads and energy spent for eters of viability were evaluated [8], namely an energy the sanitary hot water were evaluated as shown in Fig. 3. analysis, an environment impact assessment and a study The results are displayed of the economic viability. The design values used for the heating and cooling cal- National legislation for cogeneration application has culations are as follows. Summer: external temperature = over the years suffered a lot of changes. At the time of 30 °C, outside relative humidity = 37,3 %, Internal the opening of the hotel, several Decree-laws, Ordi- temperature = 25 °C, and inside relative humidity = 40 %. nances and Dispatch were in force and were used for the Winter: external temperature = 1,7°C, outsider relative hu- legal framework for cogeneration in Portugal, [9–13]. midity = 49,5 %, Internal temperature = 20 °C and inside relative humidity = 50 %. This values are the ones obtained  EEE (Equivalent Electrical Efficiency) by RCCTE, [7]. By the Decree Laws in force, this parameter is given The total area of the hotel to be heated and cooled is by equation 1: 5942,4m . From the second floor until the eight floor, there are eight identical rooms per floor. In the ground floor there is the lobby, reception, bar, offices, laundry, EEE ¼ ð1Þ C− kitchen. In the first floor there meeting rooms, hall, res- CR 0:9 − 0:2 taurant and gym. The total heat energy needed to run all the three sub- Where: systems is the sum up of each one. While the heat har- E [kWh]: electricity generated annually by the cogen- nessed by CHCP drives directly the environment heating eration system, excluding the consumption in internal loads and sanitary hot water, for the cooling system is auxiliary power generation systems; needed an absorption chiller. It was chosen one with a T [kWh]: useful thermal energy consumed annually COP value of 0.72. So, in order to get all the heat energy from the thermal energy produced by cogeneration, needed by the whole system, the cooling load must di- excluding the consumption in the internal auxiliary vided by mentioned value of the COP, which results in a power generation systems; total thermal load of 742 MWH for all the year. C [kWh]: the primary energy consumed annually in Due to the fact that the selling price of electricity to the cogeneration system, evaluated from the lower heat- the public network is substantially lower in off-peak ing value of fuel and other resources used; Fig. 3 Thermal loads of the hotel Afonso and Rocha Future Cities and Environment (2016) 2:2 Page 5 of 9 Fig. 4 Annual energy and maximum thermal power needs CR [kWh]: equivalent energy of renewable resources Electric output ¼ 70 kW; Heat output ¼ 104 kW at 81 C; or industrial waste, agricultural or urban consumed an- Fuel inputðÞ LHV ¼ 204 kW; Fuel inputðÞ gross ¼ 226 kW nually in cogeneration facility. EEE must assume the following values, according to the same Decrees-Laws: E : maximum quantity of electricity to provide er annually to the Electric System of Public Service not – EEE ≥ 0.55 for installations using natural gas as fuel, higher than the value given by equation 2: gas petroleum or liquid fuels with the exception of fuel; – EEE ≥ 0.50 for installations using fuel oil as fuel, E þ T E ¼ 4:5 −4:5 E ð2Þ alone or together with waste fuels; er E þ 0:5T – EEE ≥ 0.45 for installations using biomass as fuel or residual fuels, alone or in conjunction with a fuel support, a percentage not exceeding 20 % annual average. As the power to be installed is lower than 10MW (actually it is 0.7 MW), the same Decree-Laws are also applicable. So, the selling price of the electricity to the national grid from the cogeneration system is Before proceeding with the analysis of the remaining given by equation: 3 parameters, it is necessary to choose the appropriate CHP engine for the hotel. The choice was between internal combustion engines and micro turbines SP ¼ PFðÞ VRD þ PVðÞ VRD þ PAðÞ VRD =ðÞ 1−LEV m m m running with natural gas (comparing with fuels ð3Þ obtained from petroleum or coal, there are no emissions of SO and particles to the environment). Where: Regarding to the selling market, it was found only one SP is the remuneration applicable to cogeneration in- that has an EEE ≥ 0.55 running with natural gas. stallations, in month m; PF(SP) is the fixed portion of compensation applic- The main characteristics of the four stroke spark able to cogeneration installations, engine (6 cylinders in line) are, [14]: in month m; Afonso and Rocha Future Cities and Environment (2016) 2:2 Page 6 of 9 Fig. 5 Global energy fluxes PA(SP) is the environmental portion of the compensa-  Payback time: is the project's operating time tion applicable to cogeneration facilities in the month m; necessary to obtain the sum of revenue and LEV are the losses in transmission and distribution expenditure flows that equalize the value of the networks, avoided by the cogeneration plant. investment, equation 6: Saving Energy Index (SEI): ratio of the fuel economy obtained in the cogeneration engine when compared Initial Investment Payback ¼ ð6Þ to the amount of fuel consumed in a conventional Annual Revenues installation, i.e. an electrical plant with an efficiency η , a boiler with an efficiency η and an electric c b chiller with a COP . It is given by equation 4: comp Net Present Value (NPV): is the calculation of the sum of annual revenues obtained updated in the SEI ¼ 1− ð4Þ chosen rate and deducting the amount of η η xRCE η xRFE e;C e;C e;C þ þ η η COP investment, upgraded at same rate, equation (7): comp c b Where: RCE and RFE are respectively the ratios between heat n R −D k k NPV ¼ −Inv0 þ ð7Þ and electricity and the ratio between cooling and electri- k¼1 ðÞ 1 þ TA city in the CHCP; Where: Demand rate of primary energy (DRPE): ratio between Inv0 is the initial investment in year 0; the amounts of fuel consumed in cogeneration/ R are the annual revenues trigeneration by the corresponding amount of a D are the annual expenses conventional system. Compared to the SEI, is: TA is the discount interest rate N is the number of years of the project life For a project to be viable, the NPV must be positive, DRPE ¼ 1−SEI ð5Þ only because in this case the project will generate bene- When DRPE is less than one, the implementation of fits, which will recover the investment made and provide cogeneration allows a fuel economy (primary energy), a more cost effective alternative reference. This criterion whereas if its value is greater than one means that are is strictly dependent on the discount rate. It is related to no energy advantages. three parameters: Table 2 TOE of the CHP system Table 1 TOE of a conventional system Energy Conversion [TOE/ TOE η COP Necessary thermal Conversion TOE [kWh] kWh] energy [kWh] [TOE/kWh] 3 CHP Fuel consumed (FC) 1265820 0.086/10 109 Conventional UH 0.9 262230 0.086/10 23 Electricity produced 434350 0.29/10 126 system NC 2.8 59058 0.29/10 17 (E) Afonso and Rocha Future Cities and Environment (2016) 2:2 Page 7 of 9 Table 3 Economic analysis of the CHP system Table 5 Annual revenues of produced cooling E [MWh] T [MWh] C [MWh] CR [MWh] T/E EEE Eer [MWh] Annual energy consumed and associated costs 434 465 1266 0 1 0.58 26367 Peak hours Off peak hours Empty Total [kWh] 9928 37328 11803 As E< Eer, all the electrical energy produced can be sold to grid -1 Price [€(kWh) ] 0.114 0.0765 0.05 SEI =0.15 DRPE = 0.85 <1 Partial [€] 1132 2856 590 The cogeneration allows a fuel economy (primary energy) Annual revenue = 4577 € 1. Real compensation desired for own funds, based on PES½ TOE ¼ðÞ W þ UH þ NC – F ¼ 57 TOE=year e CG the real interest rate of a risk-free investment; ð8Þ 2. Economic and financial risks associated with the Once calculated the PES value it is possible to evaluate project; the avoided CO 3. Annual rate of expected inflation. This rate will only emissions to the environment. By the same Decree Laws, the CO emissions per kgOE are influence the calculations were all forecasts of equal to 0.0012 tonnes of CO equivalent (TOE)/kgOE. revenue and expenses are made at current prices So the avoided emissions (AE) are: because the constant price method considers the future absence of inflation and devaluation mount. AE ¼ 68 TOE CO =year Discussion and evaluation It is noticeable that this facility is friendly to the envir- Once known the thermal loads of the hotel and already onment because that are saved emissions into the envir- chosen the CHP engine, it is possible to carry out a glo- onment in the order of 68 tons of CO compared to bal analysis of the system for all the year, the results be- conventional systems. ing shown in Fig. 5. It must be noticed that the cooling To evaluate the economic analysis according to the power is the product of the heat output of the CHP (104 equations shown in section 3, it was taken in account all kW) by the COP of the absorption chiller installed the necessary parameters involved. Table 3 displays the (0.72), which is equal to 75 kW. It can also be seen that results obtained. the CHP that doesn’t satisfy all the thermal energy To carry out the final economic analysis, it is neces- needed, reason why there is a need for an additional sary to know the annual revenues and expenses of the chiller and boiler. The chiller can be based on a vapour CHCP. compression cycle with a power between 180 and 190 kW and the boiler with a power of 190 kW. Annual revenues It is necessary to compare the benefits of the CHP to The annual revenues are due to the electricity produced be installed with conventional systems for the same pur- and sold to the public network. The useful heat and pose, heating and cooling. So, for a conventional system, cooling are achieved savings, considered in the study as the choice for the cooling demand was on a chiller based equivalent revenues. As said, the selling price of electri- on a vapour compression system with a power in the city to the public network is substantially lower in off- range of 230-240 kW and a COP =2.8; for the total heat- peak hours and super empty hours, and are a function ing demands it was chosen a boiler running with natural of several parameters as already shown. Besides, from gas with a power of 300 kW and an efficiency of 0.9. In Monday to Friday the electric tariff is the same, being order to make a correct comparison between the two sit- different on Saturdays and Sundays. Also they differ uations the energy, MWh, was converted in TOEs as from summer and winter time. So, taking in account all shown in Tables 1 and 2. the electric tariffs the SP per year is: Taking into account Tables 1 and 2, the primary en- SP ¼ 65120 €=year ergy savings (PES) is obtained by the following equation: Table 4 Annual revenues of produced heat UH (kWh) 236007 Table 6 Costs of natural gas η 90 % b Energy consumed (FC) [kWh] 1265820 3 3 LHV [kWh/m ] 10,54 LHV [kWh/m ] 10,54 NG NG 3 3 Boiler consumption [m ] 24879 Natural gas consumed [m ] 120097 3 -3 Selling price of natural gas [€/m ] 0.5 Selling price of natural gas [€m ] 0.289 Annual revenue 12440 € Annual expenses [€] 34708 € Afonso and Rocha Future Cities and Environment (2016) 2:2 Page 8 of 9 To assess the annual price of useful heat in cogeneration The study is very attractive to the tertiary sector, system, it will be compared with the same energy produced housing and services, with the implementation of co- in a conventional boiler with an efficiency of η =90%. generation/trigeneration having as primary fuel natural The annual consumption of natural gas of the boiler is: gas. The equivalent electrical efficiency, make it immedi- UH½ kWh ately delete cogeneration systems that might not be the 3 b Consumption of natural gas m ¼  most advised individually. kWh LHV NG 3 Cogeneration is mandatory for large buildings (floor ð9Þ area greater than 10000m ), however, as shown by this study, the implementation of these systems can be very Where LHV is the Lower heating value of the natural useful in smaller sized buildings using also trigeneration NG gas. (5942m , in this case). The annual revenue is displayed in Table 4. It was achieved a primary energy savings in the order To evaluate the annual price of useful cooling of the of 57 TOE per year, and the associated reduction of CHCP, the cooling needs were compared to the ones ob- emissions of greenhouse gas effect in the order of 68 tained with an electric chiller with a COP of 2.8. The re- tonnes of CO equivalent, compared with conventional sults are shown in Table 5. power generation systems. The result of the economic balance is also very attract- Total expenses ive because beyond having a short payback time, around The total expenses are due the cost of natural gas con- 3.6 years, brings significant savings (net present value), sumption for the CHP system and the costs of installa- in the first 10 years of operation in relation to the con- tion maintenance. ventional system. Regarding the cost of natural gas for the CHP, the tar- It was shown that when a cogeneration system is well iff was published by the Regulatory Authority for Energy designed, is advisable to be implemented it in small Services by Dispatch no. 4/2008, [7], which use different towns, neighborhoods in cities and factories. The tech- formulas before obtaining the final value. However nology is the same. traders apply the rate 0.289 €/m , which will be applied Competing interests in this study. Table 6 shows the estimated annual expen- The authors declare that they have no competing interests. ditures associated to cost of natural gas in the studied Authors’ contributions installation. The contributions of the authors were mainly to prove in a real situation, The costs associated to the CHP maintenance is the that the trigeneration technology is critical for the rational use of energy and -1 product of the maintenance factor (0.013 € (kWh )of to reduce the CO emissions to the environment. It has also proven that this technology is economically advantageous for companies that use it, and can electricity produced), times the electricity produced, E, be implemented in city neighborhoods. Both authors read and approved the which results in an annual cost of 5647 €. final manuscript. So, the annual balance is the difference between the Acknowledgements total revenues and total expenses: The authors are grateful to the company PROTERMIA for all relevant Annual balance = 41782 € information made available to the target hotel of this study. The total initial investment of the CHP is 150000 € Received: 4 December 2015 Accepted: 21 March 2016 and the payback period is: Initial Investment 150000 References Payback ¼ ¼ ¼ 3:6 years 1. Çengel, Yunus,. Boles, Michael. Termodynamics. Mc Graw Hill, 2002 Annual Revenues 41782 2. Afonso, C. Termodinâmica para Engenharia (in english “Termodynamics for Engineeres”). FEUP editions, 2012 For the evaluation of the NPV it was considered a dis- 3. Sonntag, R., Borgnakke, C., Wyley, G. Fundamentals of Thermodynamics. count rate of 8 % and the NPV was calculated over a John Wiley & Sons, Inc. 1998 4. Polimeros, George. Energy Cogeneration Handbook, Industrial Press Inc. period of 10 years. 5. The European Association for the Promotion of Cogeneration. http://www. Over ten years, the NPV is 236870 €.Itmust benoticed cogeneurope.eu/ that the lifetime of the engine is higher. 6. Laboratório Nacional de Energia e Geologia, I.P. Unidade de Análise Energética e Alterações Climáticas. Lisboa, Maio 2010 7. Regulatory Authority for Energy Services by Dispatch no. 4/2008 Conclusions 8. Afonso, C., Moutinho, T. Energetic, Economical Analysis and Avoided CO The aim of this study is to analyse the technical and eco- Emissions in a Cogeneration System Regarding the Legislation. International Journal of Mechanical Engineering and Automation. Vol. 1, n°2, 2014. nomic potential of a real situation in a small hotel lo- 9. Decree-Law n. ° 538/99. 13 December. cated in a city of Portugal. Instead of using only a CHP, 10. Decree-Law n. ° 313/2001. 10 December. the generated heat was also used for cooling – CHCP. 11. Ordinance 57, 58 and 59/2002. 15 de January. Afonso and Rocha Future Cities and Environment (2016) 2:2 Page 9 of 9 12. Dispatch n.° 19111/2005. 13. Decree-Law n. ° 78/2006. 4 April. 14. Technical data – ENER’G 70M. http://www.energ.hu/termekek-es- szolgaltatasok/kogeneracio/termekpaletta/energ-gazmotor-termekpaletta 15. COGEN, 2013, Cogeração. http://www.cogenportugal.com/ficheirosupload/ brochura%20cogeração.pdf Submit your manuscript to a journal and benefi t from: 7 Convenient online submission 7 Rigorous peer review 7 Immediate publication on acceptance 7 Open access: articles freely available online 7 High visibility within the fi eld 7 Retaining the copyright to your article Submit your next manuscript at 7 springeropen.com

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