Energy Policy amp Economics Paul Derwin

Course Code Year DT 018 year 1 Module Energy Policy amp EconomicsLecturer Mr Martan Barrett

Student Name Paul DerwinStudent Number D07114349Assignment No 1Submission Date 08122011Word Count 1833

Department Stamp

Where Necessary

Energy Policy amp Economics Paul Derwin

Declaration

I hereby certify that the material which is submitted in this

assignmentproject is entirely my own work and has not been submitted for

any academic assessment other than as part fulfillment of the assessment

procedures for the program Bachelor of Science in Electrical Services and

Energy Management (BSc (Hons)) (DT 018) (United Nations Framework

Convention 2011)

Signature of studenthelliphelliphelliphelliphelliphelliphelliphellip

Datehelliphelliphelliphelliphelliphelliphelliphelliphelliphellip

D07114349 Pageii

Energy Policy amp Economics Paul Derwin

Table of Contents

Declaration ii

Table of Contents iii

List of Figures amp Tables iv

10 Introduction 1

11 Energy Policies 1

12 Policy Structure 2

National Factors 3

Policy objectives amp strategy 3

Policy Outcomes 3

Assessment of outcome 3

13 New Technologies 4

14 Feasibility Evaluation 4

15 Site Data 5

Electrical Load requirement5

Heating Load requirement 5

Oil Prices 6

Monthly running costs for CHP 6

Bord Gais Gas Rates 6

16 CO2 Emissions Reductions 8

17 Comparative Analysis 9

CHP 9

18 Conventional Electricity Generation (Peat or Oil Powered Stations)11

Bibliographyhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip12

D07114349 Page

Energy Policy amp Economics Paul Derwin

List of Figures amp Tables

Figure 1 Policy Structure 2

Table 1 Bord Gais Electricity Rates 2008 5

Table 2 The Manufacturing Plants Existing Monthly Electrical Bill 5

Table 3 Pay Back Calculation (Euro) 7

Table 4 CHP Greenhouse Gas Impact (SEI) 8

Figure 2 Assessment of NVP of the Project 8

Figure 3 CHP Operation 10

Figure 4 CHP vs Grid Electricity and Boiler Generation 11

D07114349 Page

Energy Policy amp Economics Paul Derwin

10 Introduction

The main purpose of this report is to develop an energy policy and an

economic energy supply strategy for a manufacturing company A

comparative analysis of the present and future technologies will be carried out

and a financial appraisal Other aimrsquos of this assignment is to find a suitable

replacement for electricity being purchased currently by the ESB and the

heating supplied through oil

11 Energy Policies

The Kyoto Protocol requires the significant reduction in Irish emissions of

GHGrsquos or p (PB Power for The Royal Academy of Engineering nd)ay hefty

fines Under the Kyoto Protocol industrialized countries are required to

reduce the emissions of six greenhouse gases (CO2 which is the most

important one methane nitrous oxide hydro fluorocarbons per fluorocarbons

and sulphur hexafluoride) on average by 52 below the 1990 levels during

the first ldquocommitment periodrdquo from 2008 to 2012 A five-year commitment

period was chosen rather than a single target year to smooth out annual

fluctuations in emissions due to uncontrollable factors such as weather

(United Nations Framework Convention 2011)

Key measures published by the National Climate Change Strategy 2007ndash

2012 include production of electricity from renewable sources to increase to

15 by 2010 and 33 by 2020 Biomass to contribute up to 30 of energy

input at peat stations by 2015 and support for Combined Heat and Power

projects Measures for industrial Commercial and Services include building

regulations and building energy rating energy agreements programme bio

heat and CHP programmes and support for eco-efficient technology and

practices (Department of the Environment Heritage and Local Government

2007)

The EU Emissions Trading Scheme came into operation in January 2005 and

under this scheme the C02 emissions of 12000 installations across the EU are

controlled on a cap and trade basis over 100 installations in Ireland are in the

Page1

Energy Policy amp Economics Paul Derwin

scheme

The installation has to monitor its emissions and report the total emissions on

an annual basis

The installation is the required to surrender allowances where one allowance

equals one tonne of CO2 if the installation cannot reduce its emissions during

the course of the year more allowances must be bought or face high penalty

fines This strategy sets out to reduce emissions by 06 million tonnes in the

industrial commercial and services sector out of a total 302 million tonnes by

2012

12 Policy Structure

Figure 1 Policy Structure

Page

Policy Objectives amp

Strategyrsquos

National Factors

Policy

Outcomes

Assessment of

Outcomes

2

Energy Policy amp Economics Paul Derwin

National Factors

High-energy prices

High running costs

Low profit margins

New governmentEU policies

Policy objectives amp strategy

What would the business like to achieve

A plan for achieving the objectives

Government grants

Achieving a cost effective route of delivering its energy requirements

Policy Outcomes

Economic energy supply for the manufacturing plant

Lower C02 emissions to stop penaltiesfines from EU Emissions

Trading Scheme

Ensuring affordable energy

Being prepared for energy supply disruptions

Assessment of outcome

Feasibility report financial appraisal

Cost benefit analysis

Page3

Energy Policy amp Economics Paul Derwin

13 New Technologies

The aim of this report is to find an economical replacement to buying

electricity from the ESB and heating supplied through oil for the manufacturing

plan Large scale CHP plant will be assessed to determine whether itrsquos a

viable replacement for purchasing electricity from the ESB and using oil as a

heating fuel The prime mover in large scale CHP will be gas turbine which

drives a generator that produces electricity The cost of electricity generated

by a gas powered CHP plant will be constant throughout the day since gas

tariffs are independent of the time of day so the electricity generated on site

will be cheaper A CHP plant will provide energy cost savings per KWh The

savings result from the ability to generate power and use the heat released at

a cost below the imported power costs from the ESB These savings are

dependent on the prices of fuel which in turn will lead to a viable project but it

must be recognized that the evaluation will require investment in both time

and money

14 Feasibility Evaluation

The manufacturing company in question is in full operation 24 hours a day

seven days a week 365 and days a year The plant has a combined thermal

and electrical energy requirement as follows 1GWhr pa supplied by electricity

purchased by the ESB 90MWhr pa supplied by electricity purchased by the

ESB for the manufacturing plant and office equipment and general services

respectively The thermal requirement is 2GWhr pa all year round and cooling

at 170MWhr pa in the months between May and August

(Note although cooling is just required between May and August The CHP

will be sized on cooling all year round for worst-case scenario along with the

electrical and thermal energy requirement through an absorption chiller)

Page4

Energy Policy amp Economics Paul Derwin

15 Site Data

Electrical Load requirement

Manufacturing Plant = 1000000KWhr divide365 days = 2740 KWhr

Office equipment and GS = 90000KWhr divide365 days = 245 KWhr

Cooling 170000KWhr divide 120 days = 1415 KWhr

2740 + 245 + 1415 = 4400 KWhr divide 24 hours = 183 factor of 13 to allow for

losses = 240 KW per day

Heating Load requirement

Heating = 2000000KWhr divide 365 days = 5480 KWhr

5480KWhr divide 24 hours = 228 KW factor of 13 to allow for losses = 296 KW

per day

Table 1 Bord Gais Electricity Rates 2008

(Bord Gais) 2008 Rates

Unit per KWh (EuroKWh) 01302

Max Demand Charge (EuroKW) Av 15795

Service Capacity Charge (EuroKVA) Av 19809

Standing Charge (EuroMonth) 150

PSO Levy (EuroKVA Capacity) 0438

Table 2 The Manufacturing Plants Existing Monthly Electrical Bill

Day chargemonth KWh 13200001302 171864Euro

Max demand charge 5001575 788Euro

Service capacity charge 5001975 987Euro

Standing charge 150 Euro

PSO levy 5000438 219Euro

Total 193304Euro

Page5

Energy Policy amp Economics Paul Derwin

Oil Prices

Conversion Factor 1 Litre of Oil = 1083kWh

Cost of Oil = 070 Euro per Litre (DIT 200809)

2000000kWh divide 1083 = 1846722 Litres of Oil is required to heat the

premises for the year at a cost of 070 Euro 1846722 = 1292705 Euro

Monthly running costs for CHP

The Technical specification of the CHP plant is based on the Combined Heat

and Power Installation Case Study in the Rochestown Park Hotel Co Cork

(Board Gais Networks 2008)

CHP Model ENERG 210

345KW Heat Output

240KW Electrical Output

720 Hours Operation monthly

Electrical Output = 240 720 = 172800KWh

Heat Output = 345 720 = 248400KWh

Bord Gais Gas Rates

The gas rates for 2008 is 00281 per KWh of gas (seai 2009)

In generating 240KW of electricity and 345KW of heat the CHP consumes

640KW of gas at 00281 EuroKW 8640 hours 625KW 00281 = 155382

Euro per year

Therefore the CHP will cost 15538200 Euro per year + a maintenance

charge Annual maintenance costs per year costs 4000 Euro

Energy savings increase of 2 per annum

Maintenance increase of 6 per annum

Cost of plant 230000 Euro

Maintenance per annum 4000 Euro

Scrapage of old boiler 20000 Euro

CHP fuel (Gas) costs 15538200 ndash ((Electricity) 2319648 + (Oil) 1292705)

=(Energy Savings) 2058533 Euro

Page6

Energy Policy amp Economics Paul Derwin

Table 3 Pay Back Calculation (Euro)

Year Capital

Costs

Energy

Savings

Maintenance Tax

30

Net After

Tax

DC

F

PV

0 -230000 -230000 1000 -230000

1 2058533 -4000 1452973 893 1297505

2 2099704 -4240 1482513 797 1181563

3 2141697 -44944 1512671 712 1077022

4 20000 2184531 -47641 1543464 636 1181643

Total 2437733

From the data in figure 2 on page 10 it is noted that the project of installing a

more energy efficient plant for meeting the energy needs of the manufacturing

plant is viable Installing a CHP unit is an effective route in achieving its

energy requirement Investing 23000000 euro on a new gas powered CHP

plant the project breaks even after 1 year and 10 months and in year 3 the

project has made savings of over 10000000 euro and it increases above

20000000 euro in year 4

Page7

Energy Policy amp Economics Paul Derwin

Figure 2 Assessment of NVP of the Project

0 1 2 3 4

-300000

-200000

-100000

0

100000

200000

300000

YEAR

NV

P

16 CO2 Emissions Reductions

CHP can be used to achieve environmental targets for the manufacturing

plants emissions reduction The environmental benefits of installing CHP are

significant and the emissions savings are shown below

Table 4 CHP Greenhouse Gas Impact (SEI)

Gas Estimated net reduction in emissions per

kWh of electricity produced (gkWh)

Carbon dioxideCO2 1000

Sulphur dioxideSO2 17

Nitrogen oxide NOX 46

Carbon monoxide CO (3)

Carbon tetroxide CO4 39

Page8

Energy Policy amp Economics Paul Derwin

17 Comparative Analysis

CHP

CHP is the simultaneous production and utilization of heat and electricity from

the same primary fuel source minimizing the waste of the heat byproduct of

the electricity generating process and converting the heat into hot water or

steam Combined heat and power recovers the heat as well as generates

electricity-providing efficiencies up to 90 CHP can provide a secure and

highly efficient method of generating electricity and heat ldquoDue to utilization of

heat from electricity generation and the avoidance of transmission losses

because electricity is generated on site CHP achieves a significant reduction

in primary energy usage compared with power stations and heat only boilersrdquo

(SEAI 2000) The heat generated by the CHP system can also provide chilled

water using an absorption chiller The absorption process uses a condenser

and evaporator just like vapor compression systems but replaces the motor

and compressor assembly with a thermal fluid compressor to transfer low-

temperature energy to high-temperature heat rejection The absorption cycle

uses thermal energy or waste heat not electricity to create chilled water

CHP Components

All CHP plants consist of standard components such as

The prime mover (engine) to drive the electrical generator an electrical

generator that produces the electricity

A heat recovery system to recover usable heat a cooling system to

dissipate heat rejected from the engine that cannot be recovered

Combustion and ventilation air systems to carry away harmful exhaust

gases away

Control system to maintain safe and efficient operation and finally an

enclosure to achieve physical and environmental protection for the

engine and operators and to reduce noise levels

Page9

Energy Policy amp Economics Paul Derwin

Figure 3 CHP Operation

The CHP plant operation uses different types of fuel such as natural gas

diesel or oil which powers a reciprocating engine or gas turbine An electrical

generator which produces electricity is connected to the prime mover Heat

from the prime mover is captured and used for heating water for central

heating or for hot water

Cooling needs of the building can be met by using an absorption chiller The

type of prime mover that is used to drive the electrical generator classifies

CHP plant The two most common types used are

Steam turbine this is a common CHP component different types of

fuels are burned in a boiler to produce high-pressure steam that

passes through a steam turbine to produce power

Gas turbine a gas turbine uses large amounts of intake air which is

compressed and then expanded by adding fuel which is ignited The

Page10

Energy Policy amp Economics Paul Derwin

expanded air rotates the turbine blades similar to a jet engine light oil

or gas can be used as a fuel

The gas turbine drives an electrical generator the exhaust gas goes to

a heat recovery boiler which produces heat and steam (Canadian

Centre for Energy 2002)

18 Grid Electricity and Boiler Generation (Peat or Oil Powered Stations)

Figure 4 CHP vs Grid Electricity and Boiler Generation

From figure 4 above it is noted that CHP reduces primary energy consumption

in comparison to conventional methods involved in the generation of heating

hot water and electricity There are considerable losses of electrical energy

starting from the power plant through the transmission lines transformers and

then into the consumer building anything from 35 to 55 can be expected

According to SEAI ldquoThe full advantage of natural gas-fired CHP technology is

achieved when the production of power and heat is combined For this to be

technically and economically feasible it generally requires a simultaneous

demand for heat and electricity on the premises for a minimum of 14 hours

Page11

Energy Policy amp Economics Paul Derwin

per day or around 5000 hours per annumrdquo (SEAI 2000) The manufacturing

plant in question with the CHP operating 720 hours per month 24 hours a day

is very much suited to CHP technology In case of breakdown and

maintenance on the CHP plant the manufacturing plant will still be connected

to the grid Surplus electricity will be sold to the electricity grid if required

Schemes for receiving a feed-in tariff for this electricity will be worked on

Bibliography

Board Gais Networks 2008 Rochestown Park Hotel Tri-GenerationCombined

Heat amp Power Installation (CHP) viewed 26 november 2011

lthttpwwwtemptechiepdf4_bg-rochestownpdfgt

Canadian Centre for Energy 2002 Centre for Energy viewed 3 Dec 2011

lt

httpwwwcentreforenergycomAboutEnergyEnergyElectricityGeneration

Overviewasppage=11gt

Commission for energy regulation 2009 viewed 1 november 2011

lthttpceriegt

Department of Communications 2006 CHP in Ireland viewed 28 october

2011

lt

httpwwwseaiieAbout_EnergyEnergy_Policyy_DriversCHP_Policy_Repor

t_18082006pdfgt

Department of the Environment Heritage and Local Government 2007

Ireland National Climate Change Strategy 2007-2012 viewed 13 november

2011

DIT 200809 DIT library energy_policy_and

_economics_semester_1_examinations_200809 viewed 26 november 2011

lthttpDITieLibraryExampapersgt

PB Power for The Royal Academy of Engineering The Cost of Generating

Electricity viewed 26 november 2011

lt

Page12

Energy Policy amp Economics Paul Derwin

Declaration

I hereby certify that the material which is submitted in this

assignmentproject is entirely my own work and has not been submitted for

any academic assessment other than as part fulfillment of the assessment

procedures for the program Bachelor of Science in Electrical Services and

Energy Management (BSc (Hons)) (DT 018) (United Nations Framework

Convention 2011)

Signature of studenthelliphelliphelliphelliphelliphelliphelliphellip

Datehelliphelliphelliphelliphelliphelliphelliphelliphelliphellip

D07114349 Pageii

Energy Policy amp Economics Paul Derwin

Table of Contents

Declaration ii

Table of Contents iii

List of Figures amp Tables iv

10 Introduction 1

11 Energy Policies 1

12 Policy Structure 2

National Factors 3

Policy objectives amp strategy 3

Policy Outcomes 3

Assessment of outcome 3

13 New Technologies 4

14 Feasibility Evaluation 4

15 Site Data 5

Electrical Load requirement5

Heating Load requirement 5

Oil Prices 6

Monthly running costs for CHP 6

Bord Gais Gas Rates 6

16 CO2 Emissions Reductions 8

17 Comparative Analysis 9

CHP 9

18 Conventional Electricity Generation (Peat or Oil Powered Stations)11

Bibliographyhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip12

D07114349 Page

Energy Policy amp Economics Paul Derwin

List of Figures amp Tables

Figure 1 Policy Structure 2

Table 1 Bord Gais Electricity Rates 2008 5

Table 2 The Manufacturing Plants Existing Monthly Electrical Bill 5

Table 3 Pay Back Calculation (Euro) 7

Table 4 CHP Greenhouse Gas Impact (SEI) 8

Figure 2 Assessment of NVP of the Project 8

Figure 3 CHP Operation 10

Figure 4 CHP vs Grid Electricity and Boiler Generation 11

D07114349 Page

Energy Policy amp Economics Paul Derwin

10 Introduction

The main purpose of this report is to develop an energy policy and an

economic energy supply strategy for a manufacturing company A

comparative analysis of the present and future technologies will be carried out

and a financial appraisal Other aimrsquos of this assignment is to find a suitable

replacement for electricity being purchased currently by the ESB and the

heating supplied through oil

11 Energy Policies

The Kyoto Protocol requires the significant reduction in Irish emissions of

GHGrsquos or p (PB Power for The Royal Academy of Engineering nd)ay hefty

fines Under the Kyoto Protocol industrialized countries are required to

reduce the emissions of six greenhouse gases (CO2 which is the most

important one methane nitrous oxide hydro fluorocarbons per fluorocarbons

and sulphur hexafluoride) on average by 52 below the 1990 levels during

the first ldquocommitment periodrdquo from 2008 to 2012 A five-year commitment

period was chosen rather than a single target year to smooth out annual

fluctuations in emissions due to uncontrollable factors such as weather

(United Nations Framework Convention 2011)

Key measures published by the National Climate Change Strategy 2007ndash

2012 include production of electricity from renewable sources to increase to

15 by 2010 and 33 by 2020 Biomass to contribute up to 30 of energy

input at peat stations by 2015 and support for Combined Heat and Power

projects Measures for industrial Commercial and Services include building

regulations and building energy rating energy agreements programme bio

heat and CHP programmes and support for eco-efficient technology and

practices (Department of the Environment Heritage and Local Government

2007)

The EU Emissions Trading Scheme came into operation in January 2005 and

under this scheme the C02 emissions of 12000 installations across the EU are

controlled on a cap and trade basis over 100 installations in Ireland are in the

Page1

Energy Policy amp Economics Paul Derwin

scheme

The installation has to monitor its emissions and report the total emissions on

an annual basis

The installation is the required to surrender allowances where one allowance

equals one tonne of CO2 if the installation cannot reduce its emissions during

the course of the year more allowances must be bought or face high penalty

fines This strategy sets out to reduce emissions by 06 million tonnes in the

industrial commercial and services sector out of a total 302 million tonnes by

2012

12 Policy Structure

Figure 1 Policy Structure

Page

Policy Objectives amp

Strategyrsquos

National Factors

Policy

Outcomes

Assessment of

Outcomes

2

Energy Policy amp Economics Paul Derwin

National Factors

High-energy prices

High running costs

Low profit margins

New governmentEU policies

Policy objectives amp strategy

What would the business like to achieve

A plan for achieving the objectives

Government grants

Achieving a cost effective route of delivering its energy requirements

Policy Outcomes

Economic energy supply for the manufacturing plant

Lower C02 emissions to stop penaltiesfines from EU Emissions

Trading Scheme

Ensuring affordable energy

Being prepared for energy supply disruptions

Assessment of outcome

Feasibility report financial appraisal

Cost benefit analysis

Page3

Energy Policy amp Economics Paul Derwin

13 New Technologies

The aim of this report is to find an economical replacement to buying

electricity from the ESB and heating supplied through oil for the manufacturing

plan Large scale CHP plant will be assessed to determine whether itrsquos a

viable replacement for purchasing electricity from the ESB and using oil as a

heating fuel The prime mover in large scale CHP will be gas turbine which

drives a generator that produces electricity The cost of electricity generated

by a gas powered CHP plant will be constant throughout the day since gas

tariffs are independent of the time of day so the electricity generated on site

will be cheaper A CHP plant will provide energy cost savings per KWh The

savings result from the ability to generate power and use the heat released at

a cost below the imported power costs from the ESB These savings are

dependent on the prices of fuel which in turn will lead to a viable project but it

must be recognized that the evaluation will require investment in both time

and money

14 Feasibility Evaluation

The manufacturing company in question is in full operation 24 hours a day

seven days a week 365 and days a year The plant has a combined thermal

and electrical energy requirement as follows 1GWhr pa supplied by electricity

purchased by the ESB 90MWhr pa supplied by electricity purchased by the

ESB for the manufacturing plant and office equipment and general services

respectively The thermal requirement is 2GWhr pa all year round and cooling

at 170MWhr pa in the months between May and August

(Note although cooling is just required between May and August The CHP

will be sized on cooling all year round for worst-case scenario along with the

electrical and thermal energy requirement through an absorption chiller)

Page4

Energy Policy amp Economics Paul Derwin

15 Site Data

Electrical Load requirement

Manufacturing Plant = 1000000KWhr divide365 days = 2740 KWhr

Office equipment and GS = 90000KWhr divide365 days = 245 KWhr

Cooling 170000KWhr divide 120 days = 1415 KWhr

2740 + 245 + 1415 = 4400 KWhr divide 24 hours = 183 factor of 13 to allow for

losses = 240 KW per day

Heating Load requirement

Heating = 2000000KWhr divide 365 days = 5480 KWhr

5480KWhr divide 24 hours = 228 KW factor of 13 to allow for losses = 296 KW

per day

Table 1 Bord Gais Electricity Rates 2008

(Bord Gais) 2008 Rates

Unit per KWh (EuroKWh) 01302

Max Demand Charge (EuroKW) Av 15795

Service Capacity Charge (EuroKVA) Av 19809

Standing Charge (EuroMonth) 150

PSO Levy (EuroKVA Capacity) 0438

Table 2 The Manufacturing Plants Existing Monthly Electrical Bill

Day chargemonth KWh 13200001302 171864Euro

Max demand charge 5001575 788Euro

Service capacity charge 5001975 987Euro

Standing charge 150 Euro

PSO levy 5000438 219Euro

Total 193304Euro

Page5

Energy Policy amp Economics Paul Derwin

Oil Prices

Conversion Factor 1 Litre of Oil = 1083kWh

Cost of Oil = 070 Euro per Litre (DIT 200809)

2000000kWh divide 1083 = 1846722 Litres of Oil is required to heat the

premises for the year at a cost of 070 Euro 1846722 = 1292705 Euro

Monthly running costs for CHP

The Technical specification of the CHP plant is based on the Combined Heat

and Power Installation Case Study in the Rochestown Park Hotel Co Cork

(Board Gais Networks 2008)

CHP Model ENERG 210

345KW Heat Output

240KW Electrical Output

720 Hours Operation monthly

Electrical Output = 240 720 = 172800KWh

Heat Output = 345 720 = 248400KWh

Bord Gais Gas Rates

The gas rates for 2008 is 00281 per KWh of gas (seai 2009)

In generating 240KW of electricity and 345KW of heat the CHP consumes

640KW of gas at 00281 EuroKW 8640 hours 625KW 00281 = 155382

Euro per year

Therefore the CHP will cost 15538200 Euro per year + a maintenance

charge Annual maintenance costs per year costs 4000 Euro

Energy savings increase of 2 per annum

Maintenance increase of 6 per annum

Cost of plant 230000 Euro

Maintenance per annum 4000 Euro

Scrapage of old boiler 20000 Euro

CHP fuel (Gas) costs 15538200 ndash ((Electricity) 2319648 + (Oil) 1292705)

=(Energy Savings) 2058533 Euro

Page6

Energy Policy amp Economics Paul Derwin

Table 3 Pay Back Calculation (Euro)

Year Capital

Costs

Energy

Savings

Maintenance Tax

30

Net After

Tax

DC

F

PV

0 -230000 -230000 1000 -230000

1 2058533 -4000 1452973 893 1297505

2 2099704 -4240 1482513 797 1181563

3 2141697 -44944 1512671 712 1077022

4 20000 2184531 -47641 1543464 636 1181643

Total 2437733

From the data in figure 2 on page 10 it is noted that the project of installing a

more energy efficient plant for meeting the energy needs of the manufacturing

plant is viable Installing a CHP unit is an effective route in achieving its

energy requirement Investing 23000000 euro on a new gas powered CHP

plant the project breaks even after 1 year and 10 months and in year 3 the

project has made savings of over 10000000 euro and it increases above

20000000 euro in year 4

Page7

Energy Policy amp Economics Paul Derwin

Figure 2 Assessment of NVP of the Project

0 1 2 3 4

-300000

-200000

-100000

0

100000

200000

300000

YEAR

NV

P

16 CO2 Emissions Reductions

CHP can be used to achieve environmental targets for the manufacturing

plants emissions reduction The environmental benefits of installing CHP are

significant and the emissions savings are shown below

Table 4 CHP Greenhouse Gas Impact (SEI)

Gas Estimated net reduction in emissions per

kWh of electricity produced (gkWh)

Carbon dioxideCO2 1000

Sulphur dioxideSO2 17

Nitrogen oxide NOX 46

Carbon monoxide CO (3)

Carbon tetroxide CO4 39

Page8

Energy Policy amp Economics Paul Derwin

17 Comparative Analysis

CHP

CHP is the simultaneous production and utilization of heat and electricity from

the same primary fuel source minimizing the waste of the heat byproduct of

the electricity generating process and converting the heat into hot water or

steam Combined heat and power recovers the heat as well as generates

electricity-providing efficiencies up to 90 CHP can provide a secure and

highly efficient method of generating electricity and heat ldquoDue to utilization of

heat from electricity generation and the avoidance of transmission losses

because electricity is generated on site CHP achieves a significant reduction

in primary energy usage compared with power stations and heat only boilersrdquo

(SEAI 2000) The heat generated by the CHP system can also provide chilled

water using an absorption chiller The absorption process uses a condenser

and evaporator just like vapor compression systems but replaces the motor

and compressor assembly with a thermal fluid compressor to transfer low-

temperature energy to high-temperature heat rejection The absorption cycle

uses thermal energy or waste heat not electricity to create chilled water

CHP Components

All CHP plants consist of standard components such as

The prime mover (engine) to drive the electrical generator an electrical

generator that produces the electricity

A heat recovery system to recover usable heat a cooling system to

dissipate heat rejected from the engine that cannot be recovered

Combustion and ventilation air systems to carry away harmful exhaust

gases away

Control system to maintain safe and efficient operation and finally an

enclosure to achieve physical and environmental protection for the

engine and operators and to reduce noise levels

Page9

Energy Policy amp Economics Paul Derwin

Figure 3 CHP Operation

The CHP plant operation uses different types of fuel such as natural gas

diesel or oil which powers a reciprocating engine or gas turbine An electrical

generator which produces electricity is connected to the prime mover Heat

from the prime mover is captured and used for heating water for central

heating or for hot water

Cooling needs of the building can be met by using an absorption chiller The

type of prime mover that is used to drive the electrical generator classifies

CHP plant The two most common types used are

Steam turbine this is a common CHP component different types of

fuels are burned in a boiler to produce high-pressure steam that

passes through a steam turbine to produce power

Gas turbine a gas turbine uses large amounts of intake air which is

compressed and then expanded by adding fuel which is ignited The

Page10

Energy Policy amp Economics Paul Derwin

expanded air rotates the turbine blades similar to a jet engine light oil

or gas can be used as a fuel

The gas turbine drives an electrical generator the exhaust gas goes to

a heat recovery boiler which produces heat and steam (Canadian

Centre for Energy 2002)

18 Grid Electricity and Boiler Generation (Peat or Oil Powered Stations)

Figure 4 CHP vs Grid Electricity and Boiler Generation

From figure 4 above it is noted that CHP reduces primary energy consumption

in comparison to conventional methods involved in the generation of heating

hot water and electricity There are considerable losses of electrical energy

starting from the power plant through the transmission lines transformers and

then into the consumer building anything from 35 to 55 can be expected

According to SEAI ldquoThe full advantage of natural gas-fired CHP technology is

achieved when the production of power and heat is combined For this to be

technically and economically feasible it generally requires a simultaneous

demand for heat and electricity on the premises for a minimum of 14 hours

Page11

Energy Policy amp Economics Paul Derwin

per day or around 5000 hours per annumrdquo (SEAI 2000) The manufacturing

plant in question with the CHP operating 720 hours per month 24 hours a day

is very much suited to CHP technology In case of breakdown and

maintenance on the CHP plant the manufacturing plant will still be connected

to the grid Surplus electricity will be sold to the electricity grid if required

Schemes for receiving a feed-in tariff for this electricity will be worked on

Bibliography

Board Gais Networks 2008 Rochestown Park Hotel Tri-GenerationCombined

Heat amp Power Installation (CHP) viewed 26 november 2011

lthttpwwwtemptechiepdf4_bg-rochestownpdfgt

Canadian Centre for Energy 2002 Centre for Energy viewed 3 Dec 2011

lt

httpwwwcentreforenergycomAboutEnergyEnergyElectricityGeneration

Overviewasppage=11gt

Commission for energy regulation 2009 viewed 1 november 2011

lthttpceriegt

Department of Communications 2006 CHP in Ireland viewed 28 october

2011

lt

httpwwwseaiieAbout_EnergyEnergy_Policyy_DriversCHP_Policy_Repor

t_18082006pdfgt

Department of the Environment Heritage and Local Government 2007

Ireland National Climate Change Strategy 2007-2012 viewed 13 november

2011

DIT 200809 DIT library energy_policy_and

_economics_semester_1_examinations_200809 viewed 26 november 2011

lthttpDITieLibraryExampapersgt

PB Power for The Royal Academy of Engineering The Cost of Generating

Electricity viewed 26 november 2011

lt

Page12

Energy Policy amp Economics Paul Derwin

Table of Contents

Declaration ii

Table of Contents iii

List of Figures amp Tables iv

10 Introduction 1

11 Energy Policies 1

12 Policy Structure 2

National Factors 3

Policy objectives amp strategy 3

Policy Outcomes 3

Assessment of outcome 3

13 New Technologies 4

14 Feasibility Evaluation 4

15 Site Data 5

Electrical Load requirement5

Heating Load requirement 5

Oil Prices 6

Monthly running costs for CHP 6

Bord Gais Gas Rates 6

16 CO2 Emissions Reductions 8

17 Comparative Analysis 9

CHP 9

18 Conventional Electricity Generation (Peat or Oil Powered Stations)11

Bibliographyhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip12

D07114349 Page

Energy Policy amp Economics Paul Derwin

List of Figures amp Tables

Figure 1 Policy Structure 2

Table 1 Bord Gais Electricity Rates 2008 5

Table 2 The Manufacturing Plants Existing Monthly Electrical Bill 5

Table 3 Pay Back Calculation (Euro) 7

Table 4 CHP Greenhouse Gas Impact (SEI) 8

Figure 2 Assessment of NVP of the Project 8

Figure 3 CHP Operation 10

Figure 4 CHP vs Grid Electricity and Boiler Generation 11

D07114349 Page

Energy Policy amp Economics Paul Derwin

10 Introduction

The main purpose of this report is to develop an energy policy and an

economic energy supply strategy for a manufacturing company A

comparative analysis of the present and future technologies will be carried out

and a financial appraisal Other aimrsquos of this assignment is to find a suitable

replacement for electricity being purchased currently by the ESB and the

heating supplied through oil

11 Energy Policies

The Kyoto Protocol requires the significant reduction in Irish emissions of

GHGrsquos or p (PB Power for The Royal Academy of Engineering nd)ay hefty

fines Under the Kyoto Protocol industrialized countries are required to

reduce the emissions of six greenhouse gases (CO2 which is the most

important one methane nitrous oxide hydro fluorocarbons per fluorocarbons

and sulphur hexafluoride) on average by 52 below the 1990 levels during

the first ldquocommitment periodrdquo from 2008 to 2012 A five-year commitment

period was chosen rather than a single target year to smooth out annual

fluctuations in emissions due to uncontrollable factors such as weather

(United Nations Framework Convention 2011)

Key measures published by the National Climate Change Strategy 2007ndash

2012 include production of electricity from renewable sources to increase to

15 by 2010 and 33 by 2020 Biomass to contribute up to 30 of energy

input at peat stations by 2015 and support for Combined Heat and Power

projects Measures for industrial Commercial and Services include building

regulations and building energy rating energy agreements programme bio

heat and CHP programmes and support for eco-efficient technology and

practices (Department of the Environment Heritage and Local Government

2007)

The EU Emissions Trading Scheme came into operation in January 2005 and

under this scheme the C02 emissions of 12000 installations across the EU are

controlled on a cap and trade basis over 100 installations in Ireland are in the

Page1

Energy Policy amp Economics Paul Derwin

scheme

The installation has to monitor its emissions and report the total emissions on

an annual basis

The installation is the required to surrender allowances where one allowance

equals one tonne of CO2 if the installation cannot reduce its emissions during

the course of the year more allowances must be bought or face high penalty

fines This strategy sets out to reduce emissions by 06 million tonnes in the

industrial commercial and services sector out of a total 302 million tonnes by

2012

12 Policy Structure

Figure 1 Policy Structure

Page

Policy Objectives amp

Strategyrsquos

National Factors

Policy

Outcomes

Assessment of

Outcomes

2

Energy Policy amp Economics Paul Derwin

National Factors

High-energy prices

High running costs

Low profit margins

New governmentEU policies

Policy objectives amp strategy

What would the business like to achieve

A plan for achieving the objectives

Government grants

Achieving a cost effective route of delivering its energy requirements

Policy Outcomes

Economic energy supply for the manufacturing plant

Lower C02 emissions to stop penaltiesfines from EU Emissions

Trading Scheme

Ensuring affordable energy

Being prepared for energy supply disruptions

Assessment of outcome

Feasibility report financial appraisal

Cost benefit analysis

Page3

Energy Policy amp Economics Paul Derwin

13 New Technologies

The aim of this report is to find an economical replacement to buying

electricity from the ESB and heating supplied through oil for the manufacturing

plan Large scale CHP plant will be assessed to determine whether itrsquos a

viable replacement for purchasing electricity from the ESB and using oil as a

heating fuel The prime mover in large scale CHP will be gas turbine which

drives a generator that produces electricity The cost of electricity generated

by a gas powered CHP plant will be constant throughout the day since gas

tariffs are independent of the time of day so the electricity generated on site

will be cheaper A CHP plant will provide energy cost savings per KWh The

savings result from the ability to generate power and use the heat released at

a cost below the imported power costs from the ESB These savings are

dependent on the prices of fuel which in turn will lead to a viable project but it

must be recognized that the evaluation will require investment in both time

and money

14 Feasibility Evaluation

The manufacturing company in question is in full operation 24 hours a day

seven days a week 365 and days a year The plant has a combined thermal

and electrical energy requirement as follows 1GWhr pa supplied by electricity

purchased by the ESB 90MWhr pa supplied by electricity purchased by the

ESB for the manufacturing plant and office equipment and general services

respectively The thermal requirement is 2GWhr pa all year round and cooling

at 170MWhr pa in the months between May and August

(Note although cooling is just required between May and August The CHP

will be sized on cooling all year round for worst-case scenario along with the

electrical and thermal energy requirement through an absorption chiller)

Page4

Energy Policy amp Economics Paul Derwin

15 Site Data

Electrical Load requirement

Manufacturing Plant = 1000000KWhr divide365 days = 2740 KWhr

Office equipment and GS = 90000KWhr divide365 days = 245 KWhr

Cooling 170000KWhr divide 120 days = 1415 KWhr

2740 + 245 + 1415 = 4400 KWhr divide 24 hours = 183 factor of 13 to allow for

losses = 240 KW per day

Heating Load requirement

Heating = 2000000KWhr divide 365 days = 5480 KWhr

5480KWhr divide 24 hours = 228 KW factor of 13 to allow for losses = 296 KW

per day

Table 1 Bord Gais Electricity Rates 2008

(Bord Gais) 2008 Rates

Unit per KWh (EuroKWh) 01302

Max Demand Charge (EuroKW) Av 15795

Service Capacity Charge (EuroKVA) Av 19809

Standing Charge (EuroMonth) 150

PSO Levy (EuroKVA Capacity) 0438

Table 2 The Manufacturing Plants Existing Monthly Electrical Bill

Day chargemonth KWh 13200001302 171864Euro

Max demand charge 5001575 788Euro

Service capacity charge 5001975 987Euro

Standing charge 150 Euro

PSO levy 5000438 219Euro

Total 193304Euro

Page5

Energy Policy amp Economics Paul Derwin

Oil Prices

Conversion Factor 1 Litre of Oil = 1083kWh

Cost of Oil = 070 Euro per Litre (DIT 200809)

2000000kWh divide 1083 = 1846722 Litres of Oil is required to heat the

premises for the year at a cost of 070 Euro 1846722 = 1292705 Euro

Monthly running costs for CHP

The Technical specification of the CHP plant is based on the Combined Heat

and Power Installation Case Study in the Rochestown Park Hotel Co Cork

(Board Gais Networks 2008)

CHP Model ENERG 210

345KW Heat Output

240KW Electrical Output

720 Hours Operation monthly

Electrical Output = 240 720 = 172800KWh

Heat Output = 345 720 = 248400KWh

Bord Gais Gas Rates

The gas rates for 2008 is 00281 per KWh of gas (seai 2009)

In generating 240KW of electricity and 345KW of heat the CHP consumes

640KW of gas at 00281 EuroKW 8640 hours 625KW 00281 = 155382

Euro per year

Therefore the CHP will cost 15538200 Euro per year + a maintenance

charge Annual maintenance costs per year costs 4000 Euro

Energy savings increase of 2 per annum

Maintenance increase of 6 per annum

Cost of plant 230000 Euro

Maintenance per annum 4000 Euro

Scrapage of old boiler 20000 Euro

CHP fuel (Gas) costs 15538200 ndash ((Electricity) 2319648 + (Oil) 1292705)

=(Energy Savings) 2058533 Euro

Page6

Energy Policy amp Economics Paul Derwin

Table 3 Pay Back Calculation (Euro)

Year Capital

Costs

Energy

Savings

Maintenance Tax

30

Net After

Tax

DC

F

PV

0 -230000 -230000 1000 -230000

1 2058533 -4000 1452973 893 1297505

2 2099704 -4240 1482513 797 1181563

3 2141697 -44944 1512671 712 1077022

4 20000 2184531 -47641 1543464 636 1181643

Total 2437733

From the data in figure 2 on page 10 it is noted that the project of installing a

more energy efficient plant for meeting the energy needs of the manufacturing

plant is viable Installing a CHP unit is an effective route in achieving its

energy requirement Investing 23000000 euro on a new gas powered CHP

plant the project breaks even after 1 year and 10 months and in year 3 the

project has made savings of over 10000000 euro and it increases above

20000000 euro in year 4

Page7

Energy Policy amp Economics Paul Derwin

Figure 2 Assessment of NVP of the Project

0 1 2 3 4

-300000

-200000

-100000

0

100000

200000

300000

YEAR

NV

P

16 CO2 Emissions Reductions

CHP can be used to achieve environmental targets for the manufacturing

plants emissions reduction The environmental benefits of installing CHP are

significant and the emissions savings are shown below

Table 4 CHP Greenhouse Gas Impact (SEI)

Gas Estimated net reduction in emissions per

kWh of electricity produced (gkWh)

Carbon dioxideCO2 1000

Sulphur dioxideSO2 17

Nitrogen oxide NOX 46

Carbon monoxide CO (3)

Carbon tetroxide CO4 39

Page8

Energy Policy amp Economics Paul Derwin

17 Comparative Analysis

CHP

CHP is the simultaneous production and utilization of heat and electricity from

the same primary fuel source minimizing the waste of the heat byproduct of

the electricity generating process and converting the heat into hot water or

steam Combined heat and power recovers the heat as well as generates

electricity-providing efficiencies up to 90 CHP can provide a secure and

highly efficient method of generating electricity and heat ldquoDue to utilization of

heat from electricity generation and the avoidance of transmission losses

because electricity is generated on site CHP achieves a significant reduction

in primary energy usage compared with power stations and heat only boilersrdquo

(SEAI 2000) The heat generated by the CHP system can also provide chilled

water using an absorption chiller The absorption process uses a condenser

and evaporator just like vapor compression systems but replaces the motor

and compressor assembly with a thermal fluid compressor to transfer low-

temperature energy to high-temperature heat rejection The absorption cycle

uses thermal energy or waste heat not electricity to create chilled water

CHP Components

All CHP plants consist of standard components such as

The prime mover (engine) to drive the electrical generator an electrical

generator that produces the electricity

A heat recovery system to recover usable heat a cooling system to

dissipate heat rejected from the engine that cannot be recovered

Combustion and ventilation air systems to carry away harmful exhaust

gases away

Control system to maintain safe and efficient operation and finally an

enclosure to achieve physical and environmental protection for the

engine and operators and to reduce noise levels

Page9

Energy Policy amp Economics Paul Derwin

Figure 3 CHP Operation

The CHP plant operation uses different types of fuel such as natural gas

diesel or oil which powers a reciprocating engine or gas turbine An electrical

generator which produces electricity is connected to the prime mover Heat

from the prime mover is captured and used for heating water for central

heating or for hot water

Cooling needs of the building can be met by using an absorption chiller The

type of prime mover that is used to drive the electrical generator classifies

CHP plant The two most common types used are

Steam turbine this is a common CHP component different types of

fuels are burned in a boiler to produce high-pressure steam that

passes through a steam turbine to produce power

Gas turbine a gas turbine uses large amounts of intake air which is

compressed and then expanded by adding fuel which is ignited The

Page10

Energy Policy amp Economics Paul Derwin

expanded air rotates the turbine blades similar to a jet engine light oil

or gas can be used as a fuel

The gas turbine drives an electrical generator the exhaust gas goes to

a heat recovery boiler which produces heat and steam (Canadian

Centre for Energy 2002)

18 Grid Electricity and Boiler Generation (Peat or Oil Powered Stations)

Figure 4 CHP vs Grid Electricity and Boiler Generation

From figure 4 above it is noted that CHP reduces primary energy consumption

in comparison to conventional methods involved in the generation of heating

hot water and electricity There are considerable losses of electrical energy

starting from the power plant through the transmission lines transformers and

then into the consumer building anything from 35 to 55 can be expected

According to SEAI ldquoThe full advantage of natural gas-fired CHP technology is

achieved when the production of power and heat is combined For this to be

technically and economically feasible it generally requires a simultaneous

demand for heat and electricity on the premises for a minimum of 14 hours

Page11

Energy Policy amp Economics Paul Derwin

per day or around 5000 hours per annumrdquo (SEAI 2000) The manufacturing

plant in question with the CHP operating 720 hours per month 24 hours a day

is very much suited to CHP technology In case of breakdown and

maintenance on the CHP plant the manufacturing plant will still be connected

to the grid Surplus electricity will be sold to the electricity grid if required

Schemes for receiving a feed-in tariff for this electricity will be worked on

Bibliography

Board Gais Networks 2008 Rochestown Park Hotel Tri-GenerationCombined

Heat amp Power Installation (CHP) viewed 26 november 2011

lthttpwwwtemptechiepdf4_bg-rochestownpdfgt

Canadian Centre for Energy 2002 Centre for Energy viewed 3 Dec 2011

lt

httpwwwcentreforenergycomAboutEnergyEnergyElectricityGeneration

Overviewasppage=11gt

Commission for energy regulation 2009 viewed 1 november 2011

lthttpceriegt

Department of Communications 2006 CHP in Ireland viewed 28 october

2011

lt

httpwwwseaiieAbout_EnergyEnergy_Policyy_DriversCHP_Policy_Repor

t_18082006pdfgt

Department of the Environment Heritage and Local Government 2007

Ireland National Climate Change Strategy 2007-2012 viewed 13 november

2011

DIT 200809 DIT library energy_policy_and

_economics_semester_1_examinations_200809 viewed 26 november 2011

lthttpDITieLibraryExampapersgt

PB Power for The Royal Academy of Engineering The Cost of Generating

Electricity viewed 26 november 2011

lt

Page12

Energy Policy amp Economics Paul Derwin

List of Figures amp Tables

Figure 1 Policy Structure 2

Table 1 Bord Gais Electricity Rates 2008 5

Table 2 The Manufacturing Plants Existing Monthly Electrical Bill 5

Table 3 Pay Back Calculation (Euro) 7

Table 4 CHP Greenhouse Gas Impact (SEI) 8

Figure 2 Assessment of NVP of the Project 8

Figure 3 CHP Operation 10

Figure 4 CHP vs Grid Electricity and Boiler Generation 11

D07114349 Page

Energy Policy amp Economics Paul Derwin

10 Introduction

The main purpose of this report is to develop an energy policy and an

economic energy supply strategy for a manufacturing company A

comparative analysis of the present and future technologies will be carried out

and a financial appraisal Other aimrsquos of this assignment is to find a suitable

replacement for electricity being purchased currently by the ESB and the

heating supplied through oil

11 Energy Policies

The Kyoto Protocol requires the significant reduction in Irish emissions of

GHGrsquos or p (PB Power for The Royal Academy of Engineering nd)ay hefty

fines Under the Kyoto Protocol industrialized countries are required to

reduce the emissions of six greenhouse gases (CO2 which is the most

important one methane nitrous oxide hydro fluorocarbons per fluorocarbons

and sulphur hexafluoride) on average by 52 below the 1990 levels during

the first ldquocommitment periodrdquo from 2008 to 2012 A five-year commitment

period was chosen rather than a single target year to smooth out annual

fluctuations in emissions due to uncontrollable factors such as weather

(United Nations Framework Convention 2011)

Key measures published by the National Climate Change Strategy 2007ndash

2012 include production of electricity from renewable sources to increase to

15 by 2010 and 33 by 2020 Biomass to contribute up to 30 of energy

input at peat stations by 2015 and support for Combined Heat and Power

projects Measures for industrial Commercial and Services include building

regulations and building energy rating energy agreements programme bio

heat and CHP programmes and support for eco-efficient technology and

practices (Department of the Environment Heritage and Local Government

2007)

The EU Emissions Trading Scheme came into operation in January 2005 and

under this scheme the C02 emissions of 12000 installations across the EU are

controlled on a cap and trade basis over 100 installations in Ireland are in the

Page1

Energy Policy amp Economics Paul Derwin

scheme

The installation has to monitor its emissions and report the total emissions on

an annual basis

The installation is the required to surrender allowances where one allowance

equals one tonne of CO2 if the installation cannot reduce its emissions during

the course of the year more allowances must be bought or face high penalty

fines This strategy sets out to reduce emissions by 06 million tonnes in the

industrial commercial and services sector out of a total 302 million tonnes by

2012

12 Policy Structure

Figure 1 Policy Structure

Page

Policy Objectives amp

Strategyrsquos

National Factors

Policy

Outcomes

Assessment of

Outcomes

2

Energy Policy amp Economics Paul Derwin

National Factors

High-energy prices

High running costs

Low profit margins

New governmentEU policies

Policy objectives amp strategy

What would the business like to achieve

A plan for achieving the objectives

Government grants

Achieving a cost effective route of delivering its energy requirements

Policy Outcomes

Economic energy supply for the manufacturing plant

Lower C02 emissions to stop penaltiesfines from EU Emissions

Trading Scheme

Ensuring affordable energy

Being prepared for energy supply disruptions

Assessment of outcome

Feasibility report financial appraisal

Cost benefit analysis

Page3

Energy Policy amp Economics Paul Derwin

13 New Technologies

The aim of this report is to find an economical replacement to buying

electricity from the ESB and heating supplied through oil for the manufacturing

plan Large scale CHP plant will be assessed to determine whether itrsquos a

viable replacement for purchasing electricity from the ESB and using oil as a

heating fuel The prime mover in large scale CHP will be gas turbine which

drives a generator that produces electricity The cost of electricity generated

by a gas powered CHP plant will be constant throughout the day since gas

tariffs are independent of the time of day so the electricity generated on site

will be cheaper A CHP plant will provide energy cost savings per KWh The

savings result from the ability to generate power and use the heat released at

a cost below the imported power costs from the ESB These savings are

dependent on the prices of fuel which in turn will lead to a viable project but it

must be recognized that the evaluation will require investment in both time

and money

14 Feasibility Evaluation

The manufacturing company in question is in full operation 24 hours a day

seven days a week 365 and days a year The plant has a combined thermal

and electrical energy requirement as follows 1GWhr pa supplied by electricity

purchased by the ESB 90MWhr pa supplied by electricity purchased by the

ESB for the manufacturing plant and office equipment and general services

respectively The thermal requirement is 2GWhr pa all year round and cooling

at 170MWhr pa in the months between May and August

(Note although cooling is just required between May and August The CHP

will be sized on cooling all year round for worst-case scenario along with the

electrical and thermal energy requirement through an absorption chiller)

Page4

Energy Policy amp Economics Paul Derwin

15 Site Data

Electrical Load requirement

Manufacturing Plant = 1000000KWhr divide365 days = 2740 KWhr

Office equipment and GS = 90000KWhr divide365 days = 245 KWhr

Cooling 170000KWhr divide 120 days = 1415 KWhr

2740 + 245 + 1415 = 4400 KWhr divide 24 hours = 183 factor of 13 to allow for

losses = 240 KW per day

Heating Load requirement

Heating = 2000000KWhr divide 365 days = 5480 KWhr

5480KWhr divide 24 hours = 228 KW factor of 13 to allow for losses = 296 KW

per day

Table 1 Bord Gais Electricity Rates 2008

(Bord Gais) 2008 Rates

Unit per KWh (EuroKWh) 01302

Max Demand Charge (EuroKW) Av 15795

Service Capacity Charge (EuroKVA) Av 19809

Standing Charge (EuroMonth) 150

PSO Levy (EuroKVA Capacity) 0438

Table 2 The Manufacturing Plants Existing Monthly Electrical Bill

Day chargemonth KWh 13200001302 171864Euro

Max demand charge 5001575 788Euro

Service capacity charge 5001975 987Euro

Standing charge 150 Euro

PSO levy 5000438 219Euro

Total 193304Euro

Page5

Energy Policy amp Economics Paul Derwin

Oil Prices

Conversion Factor 1 Litre of Oil = 1083kWh

Cost of Oil = 070 Euro per Litre (DIT 200809)

2000000kWh divide 1083 = 1846722 Litres of Oil is required to heat the

premises for the year at a cost of 070 Euro 1846722 = 1292705 Euro

Monthly running costs for CHP

The Technical specification of the CHP plant is based on the Combined Heat

and Power Installation Case Study in the Rochestown Park Hotel Co Cork

(Board Gais Networks 2008)

CHP Model ENERG 210

345KW Heat Output

240KW Electrical Output

720 Hours Operation monthly

Electrical Output = 240 720 = 172800KWh

Heat Output = 345 720 = 248400KWh

Bord Gais Gas Rates

The gas rates for 2008 is 00281 per KWh of gas (seai 2009)

In generating 240KW of electricity and 345KW of heat the CHP consumes

640KW of gas at 00281 EuroKW 8640 hours 625KW 00281 = 155382

Euro per year

Therefore the CHP will cost 15538200 Euro per year + a maintenance

charge Annual maintenance costs per year costs 4000 Euro

Energy savings increase of 2 per annum

Maintenance increase of 6 per annum

Cost of plant 230000 Euro

Maintenance per annum 4000 Euro

Scrapage of old boiler 20000 Euro

CHP fuel (Gas) costs 15538200 ndash ((Electricity) 2319648 + (Oil) 1292705)

=(Energy Savings) 2058533 Euro

Page6

Energy Policy amp Economics Paul Derwin

Table 3 Pay Back Calculation (Euro)

Year Capital

Costs

Energy

Savings

Maintenance Tax

30

Net After

Tax

DC

F

PV

0 -230000 -230000 1000 -230000

1 2058533 -4000 1452973 893 1297505

2 2099704 -4240 1482513 797 1181563

3 2141697 -44944 1512671 712 1077022

4 20000 2184531 -47641 1543464 636 1181643

Total 2437733

From the data in figure 2 on page 10 it is noted that the project of installing a

more energy efficient plant for meeting the energy needs of the manufacturing

plant is viable Installing a CHP unit is an effective route in achieving its

energy requirement Investing 23000000 euro on a new gas powered CHP

plant the project breaks even after 1 year and 10 months and in year 3 the

project has made savings of over 10000000 euro and it increases above

20000000 euro in year 4

Page7

Energy Policy amp Economics Paul Derwin

Figure 2 Assessment of NVP of the Project

0 1 2 3 4

-300000

-200000

-100000

0

100000

200000

300000

YEAR

NV

P

16 CO2 Emissions Reductions

CHP can be used to achieve environmental targets for the manufacturing

plants emissions reduction The environmental benefits of installing CHP are

significant and the emissions savings are shown below

Table 4 CHP Greenhouse Gas Impact (SEI)

Gas Estimated net reduction in emissions per

kWh of electricity produced (gkWh)

Carbon dioxideCO2 1000

Sulphur dioxideSO2 17

Nitrogen oxide NOX 46

Carbon monoxide CO (3)

Carbon tetroxide CO4 39

Page8

Energy Policy amp Economics Paul Derwin

17 Comparative Analysis

CHP

CHP is the simultaneous production and utilization of heat and electricity from

the same primary fuel source minimizing the waste of the heat byproduct of

the electricity generating process and converting the heat into hot water or

steam Combined heat and power recovers the heat as well as generates

electricity-providing efficiencies up to 90 CHP can provide a secure and

highly efficient method of generating electricity and heat ldquoDue to utilization of

heat from electricity generation and the avoidance of transmission losses

because electricity is generated on site CHP achieves a significant reduction

in primary energy usage compared with power stations and heat only boilersrdquo

(SEAI 2000) The heat generated by the CHP system can also provide chilled

water using an absorption chiller The absorption process uses a condenser

and evaporator just like vapor compression systems but replaces the motor

and compressor assembly with a thermal fluid compressor to transfer low-

temperature energy to high-temperature heat rejection The absorption cycle

uses thermal energy or waste heat not electricity to create chilled water

CHP Components

All CHP plants consist of standard components such as

The prime mover (engine) to drive the electrical generator an electrical

generator that produces the electricity

A heat recovery system to recover usable heat a cooling system to

dissipate heat rejected from the engine that cannot be recovered

Combustion and ventilation air systems to carry away harmful exhaust

gases away

Control system to maintain safe and efficient operation and finally an

enclosure to achieve physical and environmental protection for the

engine and operators and to reduce noise levels

Page9

Energy Policy amp Economics Paul Derwin

Figure 3 CHP Operation

The CHP plant operation uses different types of fuel such as natural gas

diesel or oil which powers a reciprocating engine or gas turbine An electrical

generator which produces electricity is connected to the prime mover Heat

from the prime mover is captured and used for heating water for central

heating or for hot water

Cooling needs of the building can be met by using an absorption chiller The

type of prime mover that is used to drive the electrical generator classifies

CHP plant The two most common types used are

Steam turbine this is a common CHP component different types of

fuels are burned in a boiler to produce high-pressure steam that

passes through a steam turbine to produce power

Gas turbine a gas turbine uses large amounts of intake air which is

compressed and then expanded by adding fuel which is ignited The

Page10

Energy Policy amp Economics Paul Derwin

expanded air rotates the turbine blades similar to a jet engine light oil

or gas can be used as a fuel

The gas turbine drives an electrical generator the exhaust gas goes to

a heat recovery boiler which produces heat and steam (Canadian

Centre for Energy 2002)

18 Grid Electricity and Boiler Generation (Peat or Oil Powered Stations)

Figure 4 CHP vs Grid Electricity and Boiler Generation

From figure 4 above it is noted that CHP reduces primary energy consumption

in comparison to conventional methods involved in the generation of heating

hot water and electricity There are considerable losses of electrical energy

starting from the power plant through the transmission lines transformers and

then into the consumer building anything from 35 to 55 can be expected

According to SEAI ldquoThe full advantage of natural gas-fired CHP technology is

achieved when the production of power and heat is combined For this to be

technically and economically feasible it generally requires a simultaneous

demand for heat and electricity on the premises for a minimum of 14 hours

Page11

Energy Policy amp Economics Paul Derwin

per day or around 5000 hours per annumrdquo (SEAI 2000) The manufacturing

plant in question with the CHP operating 720 hours per month 24 hours a day

is very much suited to CHP technology In case of breakdown and

maintenance on the CHP plant the manufacturing plant will still be connected

to the grid Surplus electricity will be sold to the electricity grid if required

Schemes for receiving a feed-in tariff for this electricity will be worked on

Bibliography

Board Gais Networks 2008 Rochestown Park Hotel Tri-GenerationCombined

Heat amp Power Installation (CHP) viewed 26 november 2011

lthttpwwwtemptechiepdf4_bg-rochestownpdfgt

Canadian Centre for Energy 2002 Centre for Energy viewed 3 Dec 2011

lt

httpwwwcentreforenergycomAboutEnergyEnergyElectricityGeneration

Overviewasppage=11gt

Commission for energy regulation 2009 viewed 1 november 2011

lthttpceriegt

Department of Communications 2006 CHP in Ireland viewed 28 october

2011

lt

httpwwwseaiieAbout_EnergyEnergy_Policyy_DriversCHP_Policy_Repor

t_18082006pdfgt

Department of the Environment Heritage and Local Government 2007

Ireland National Climate Change Strategy 2007-2012 viewed 13 november

2011

DIT 200809 DIT library energy_policy_and

_economics_semester_1_examinations_200809 viewed 26 november 2011

lthttpDITieLibraryExampapersgt

PB Power for The Royal Academy of Engineering The Cost of Generating

Electricity viewed 26 november 2011

lt

Page12

Energy Policy amp Economics Paul Derwin

10 Introduction

The main purpose of this report is to develop an energy policy and an

economic energy supply strategy for a manufacturing company A

comparative analysis of the present and future technologies will be carried out

and a financial appraisal Other aimrsquos of this assignment is to find a suitable

replacement for electricity being purchased currently by the ESB and the

heating supplied through oil

11 Energy Policies

The Kyoto Protocol requires the significant reduction in Irish emissions of

GHGrsquos or p (PB Power for The Royal Academy of Engineering nd)ay hefty

fines Under the Kyoto Protocol industrialized countries are required to

reduce the emissions of six greenhouse gases (CO2 which is the most

important one methane nitrous oxide hydro fluorocarbons per fluorocarbons

and sulphur hexafluoride) on average by 52 below the 1990 levels during

the first ldquocommitment periodrdquo from 2008 to 2012 A five-year commitment

period was chosen rather than a single target year to smooth out annual

fluctuations in emissions due to uncontrollable factors such as weather

(United Nations Framework Convention 2011)

Key measures published by the National Climate Change Strategy 2007ndash

2012 include production of electricity from renewable sources to increase to

15 by 2010 and 33 by 2020 Biomass to contribute up to 30 of energy

input at peat stations by 2015 and support for Combined Heat and Power

projects Measures for industrial Commercial and Services include building

regulations and building energy rating energy agreements programme bio

heat and CHP programmes and support for eco-efficient technology and

practices (Department of the Environment Heritage and Local Government

2007)

The EU Emissions Trading Scheme came into operation in January 2005 and

under this scheme the C02 emissions of 12000 installations across the EU are

controlled on a cap and trade basis over 100 installations in Ireland are in the

Page1

Energy Policy amp Economics Paul Derwin

scheme

The installation has to monitor its emissions and report the total emissions on

an annual basis

The installation is the required to surrender allowances where one allowance

equals one tonne of CO2 if the installation cannot reduce its emissions during

the course of the year more allowances must be bought or face high penalty

fines This strategy sets out to reduce emissions by 06 million tonnes in the

industrial commercial and services sector out of a total 302 million tonnes by

2012

12 Policy Structure

Figure 1 Policy Structure

Page

Policy Objectives amp

Strategyrsquos

National Factors

Policy

Outcomes

Assessment of

Outcomes

2

Energy Policy amp Economics Paul Derwin

National Factors

High-energy prices

High running costs

Low profit margins

New governmentEU policies

Policy objectives amp strategy

What would the business like to achieve

A plan for achieving the objectives

Government grants

Achieving a cost effective route of delivering its energy requirements

Policy Outcomes

Economic energy supply for the manufacturing plant

Lower C02 emissions to stop penaltiesfines from EU Emissions

Trading Scheme

Ensuring affordable energy

Being prepared for energy supply disruptions

Assessment of outcome

Feasibility report financial appraisal

Cost benefit analysis

Page3

Energy Policy amp Economics Paul Derwin

13 New Technologies

The aim of this report is to find an economical replacement to buying

electricity from the ESB and heating supplied through oil for the manufacturing

plan Large scale CHP plant will be assessed to determine whether itrsquos a

viable replacement for purchasing electricity from the ESB and using oil as a

heating fuel The prime mover in large scale CHP will be gas turbine which

drives a generator that produces electricity The cost of electricity generated

by a gas powered CHP plant will be constant throughout the day since gas

tariffs are independent of the time of day so the electricity generated on site

will be cheaper A CHP plant will provide energy cost savings per KWh The

savings result from the ability to generate power and use the heat released at

a cost below the imported power costs from the ESB These savings are

dependent on the prices of fuel which in turn will lead to a viable project but it

must be recognized that the evaluation will require investment in both time

and money

14 Feasibility Evaluation

The manufacturing company in question is in full operation 24 hours a day

seven days a week 365 and days a year The plant has a combined thermal

and electrical energy requirement as follows 1GWhr pa supplied by electricity

purchased by the ESB 90MWhr pa supplied by electricity purchased by the

ESB for the manufacturing plant and office equipment and general services

respectively The thermal requirement is 2GWhr pa all year round and cooling

at 170MWhr pa in the months between May and August

(Note although cooling is just required between May and August The CHP

will be sized on cooling all year round for worst-case scenario along with the

electrical and thermal energy requirement through an absorption chiller)

Page4

Energy Policy amp Economics Paul Derwin

15 Site Data

Electrical Load requirement

Manufacturing Plant = 1000000KWhr divide365 days = 2740 KWhr

Office equipment and GS = 90000KWhr divide365 days = 245 KWhr

Cooling 170000KWhr divide 120 days = 1415 KWhr

2740 + 245 + 1415 = 4400 KWhr divide 24 hours = 183 factor of 13 to allow for

losses = 240 KW per day

Heating Load requirement

Heating = 2000000KWhr divide 365 days = 5480 KWhr

5480KWhr divide 24 hours = 228 KW factor of 13 to allow for losses = 296 KW

per day

Table 1 Bord Gais Electricity Rates 2008

(Bord Gais) 2008 Rates

Unit per KWh (EuroKWh) 01302

Max Demand Charge (EuroKW) Av 15795

Service Capacity Charge (EuroKVA) Av 19809

Standing Charge (EuroMonth) 150

PSO Levy (EuroKVA Capacity) 0438

Table 2 The Manufacturing Plants Existing Monthly Electrical Bill

Day chargemonth KWh 13200001302 171864Euro

Max demand charge 5001575 788Euro

Service capacity charge 5001975 987Euro

Standing charge 150 Euro

PSO levy 5000438 219Euro

Total 193304Euro

Page5

Energy Policy amp Economics Paul Derwin

Oil Prices

Conversion Factor 1 Litre of Oil = 1083kWh

Cost of Oil = 070 Euro per Litre (DIT 200809)

2000000kWh divide 1083 = 1846722 Litres of Oil is required to heat the

premises for the year at a cost of 070 Euro 1846722 = 1292705 Euro

Monthly running costs for CHP

The Technical specification of the CHP plant is based on the Combined Heat

and Power Installation Case Study in the Rochestown Park Hotel Co Cork

(Board Gais Networks 2008)

CHP Model ENERG 210

345KW Heat Output

240KW Electrical Output

720 Hours Operation monthly

Electrical Output = 240 720 = 172800KWh

Heat Output = 345 720 = 248400KWh

Bord Gais Gas Rates

The gas rates for 2008 is 00281 per KWh of gas (seai 2009)

In generating 240KW of electricity and 345KW of heat the CHP consumes

640KW of gas at 00281 EuroKW 8640 hours 625KW 00281 = 155382

Euro per year

Therefore the CHP will cost 15538200 Euro per year + a maintenance

charge Annual maintenance costs per year costs 4000 Euro

Energy savings increase of 2 per annum

Maintenance increase of 6 per annum

Cost of plant 230000 Euro

Maintenance per annum 4000 Euro

Scrapage of old boiler 20000 Euro

CHP fuel (Gas) costs 15538200 ndash ((Electricity) 2319648 + (Oil) 1292705)

=(Energy Savings) 2058533 Euro

Page6

Energy Policy amp Economics Paul Derwin

Table 3 Pay Back Calculation (Euro)

Year Capital

Costs

Energy

Savings

Maintenance Tax

30

Net After

Tax

DC

F

PV

0 -230000 -230000 1000 -230000

1 2058533 -4000 1452973 893 1297505

2 2099704 -4240 1482513 797 1181563

3 2141697 -44944 1512671 712 1077022

4 20000 2184531 -47641 1543464 636 1181643

Total 2437733

From the data in figure 2 on page 10 it is noted that the project of installing a

more energy efficient plant for meeting the energy needs of the manufacturing

plant is viable Installing a CHP unit is an effective route in achieving its

energy requirement Investing 23000000 euro on a new gas powered CHP

plant the project breaks even after 1 year and 10 months and in year 3 the

project has made savings of over 10000000 euro and it increases above

20000000 euro in year 4

Page7

Energy Policy amp Economics Paul Derwin

Figure 2 Assessment of NVP of the Project

0 1 2 3 4

-300000

-200000

-100000

0

100000

200000

300000

YEAR

NV

P

16 CO2 Emissions Reductions

CHP can be used to achieve environmental targets for the manufacturing

plants emissions reduction The environmental benefits of installing CHP are

significant and the emissions savings are shown below

Table 4 CHP Greenhouse Gas Impact (SEI)

Gas Estimated net reduction in emissions per

kWh of electricity produced (gkWh)

Carbon dioxideCO2 1000

Sulphur dioxideSO2 17

Nitrogen oxide NOX 46

Carbon monoxide CO (3)

Carbon tetroxide CO4 39

Page8

Energy Policy amp Economics Paul Derwin

17 Comparative Analysis

CHP

CHP is the simultaneous production and utilization of heat and electricity from

the same primary fuel source minimizing the waste of the heat byproduct of

the electricity generating process and converting the heat into hot water or

steam Combined heat and power recovers the heat as well as generates

electricity-providing efficiencies up to 90 CHP can provide a secure and

highly efficient method of generating electricity and heat ldquoDue to utilization of

heat from electricity generation and the avoidance of transmission losses

because electricity is generated on site CHP achieves a significant reduction

in primary energy usage compared with power stations and heat only boilersrdquo

(SEAI 2000) The heat generated by the CHP system can also provide chilled

water using an absorption chiller The absorption process uses a condenser

and evaporator just like vapor compression systems but replaces the motor

and compressor assembly with a thermal fluid compressor to transfer low-

temperature energy to high-temperature heat rejection The absorption cycle

uses thermal energy or waste heat not electricity to create chilled water

CHP Components

All CHP plants consist of standard components such as

The prime mover (engine) to drive the electrical generator an electrical

generator that produces the electricity

A heat recovery system to recover usable heat a cooling system to

dissipate heat rejected from the engine that cannot be recovered

Combustion and ventilation air systems to carry away harmful exhaust

gases away

Control system to maintain safe and efficient operation and finally an

enclosure to achieve physical and environmental protection for the

engine and operators and to reduce noise levels

Page9

Energy Policy amp Economics Paul Derwin

Figure 3 CHP Operation

The CHP plant operation uses different types of fuel such as natural gas

diesel or oil which powers a reciprocating engine or gas turbine An electrical

generator which produces electricity is connected to the prime mover Heat

from the prime mover is captured and used for heating water for central

heating or for hot water

Cooling needs of the building can be met by using an absorption chiller The

type of prime mover that is used to drive the electrical generator classifies

CHP plant The two most common types used are

Steam turbine this is a common CHP component different types of

fuels are burned in a boiler to produce high-pressure steam that

passes through a steam turbine to produce power

Gas turbine a gas turbine uses large amounts of intake air which is

compressed and then expanded by adding fuel which is ignited The

Page10

Energy Policy amp Economics Paul Derwin

expanded air rotates the turbine blades similar to a jet engine light oil

or gas can be used as a fuel

The gas turbine drives an electrical generator the exhaust gas goes to

a heat recovery boiler which produces heat and steam (Canadian

Centre for Energy 2002)

18 Grid Electricity and Boiler Generation (Peat or Oil Powered Stations)

Figure 4 CHP vs Grid Electricity and Boiler Generation

From figure 4 above it is noted that CHP reduces primary energy consumption

in comparison to conventional methods involved in the generation of heating

hot water and electricity There are considerable losses of electrical energy

starting from the power plant through the transmission lines transformers and

then into the consumer building anything from 35 to 55 can be expected

According to SEAI ldquoThe full advantage of natural gas-fired CHP technology is

achieved when the production of power and heat is combined For this to be

technically and economically feasible it generally requires a simultaneous

demand for heat and electricity on the premises for a minimum of 14 hours

Page11

Energy Policy amp Economics Paul Derwin

per day or around 5000 hours per annumrdquo (SEAI 2000) The manufacturing

plant in question with the CHP operating 720 hours per month 24 hours a day

is very much suited to CHP technology In case of breakdown and

maintenance on the CHP plant the manufacturing plant will still be connected

to the grid Surplus electricity will be sold to the electricity grid if required

Schemes for receiving a feed-in tariff for this electricity will be worked on

Bibliography

Board Gais Networks 2008 Rochestown Park Hotel Tri-GenerationCombined

Heat amp Power Installation (CHP) viewed 26 november 2011

lthttpwwwtemptechiepdf4_bg-rochestownpdfgt

Canadian Centre for Energy 2002 Centre for Energy viewed 3 Dec 2011

lt

httpwwwcentreforenergycomAboutEnergyEnergyElectricityGeneration

Overviewasppage=11gt

Commission for energy regulation 2009 viewed 1 november 2011

lthttpceriegt

Department of Communications 2006 CHP in Ireland viewed 28 october

2011

lt

httpwwwseaiieAbout_EnergyEnergy_Policyy_DriversCHP_Policy_Repor

t_18082006pdfgt

Department of the Environment Heritage and Local Government 2007

Ireland National Climate Change Strategy 2007-2012 viewed 13 november

2011

DIT 200809 DIT library energy_policy_and

_economics_semester_1_examinations_200809 viewed 26 november 2011

lthttpDITieLibraryExampapersgt

PB Power for The Royal Academy of Engineering The Cost of Generating

Electricity viewed 26 november 2011

lt

Page12

Energy Policy amp Economics Paul Derwin

scheme

The installation has to monitor its emissions and report the total emissions on

an annual basis

The installation is the required to surrender allowances where one allowance

equals one tonne of CO2 if the installation cannot reduce its emissions during

the course of the year more allowances must be bought or face high penalty

fines This strategy sets out to reduce emissions by 06 million tonnes in the

industrial commercial and services sector out of a total 302 million tonnes by

2012

12 Policy Structure

Figure 1 Policy Structure

Page

Policy Objectives amp

Strategyrsquos

National Factors

Policy

Outcomes

Assessment of

Outcomes

2

Energy Policy amp Economics Paul Derwin

National Factors

High-energy prices

High running costs

Low profit margins

New governmentEU policies

Policy objectives amp strategy

What would the business like to achieve

A plan for achieving the objectives

Government grants

Achieving a cost effective route of delivering its energy requirements

Policy Outcomes

Economic energy supply for the manufacturing plant

Lower C02 emissions to stop penaltiesfines from EU Emissions

Trading Scheme

Ensuring affordable energy

Being prepared for energy supply disruptions

Assessment of outcome

Feasibility report financial appraisal

Cost benefit analysis

Page3

Energy Policy amp Economics Paul Derwin

13 New Technologies

The aim of this report is to find an economical replacement to buying

electricity from the ESB and heating supplied through oil for the manufacturing

plan Large scale CHP plant will be assessed to determine whether itrsquos a

viable replacement for purchasing electricity from the ESB and using oil as a

heating fuel The prime mover in large scale CHP will be gas turbine which

drives a generator that produces electricity The cost of electricity generated

by a gas powered CHP plant will be constant throughout the day since gas

tariffs are independent of the time of day so the electricity generated on site

will be cheaper A CHP plant will provide energy cost savings per KWh The

savings result from the ability to generate power and use the heat released at

a cost below the imported power costs from the ESB These savings are

dependent on the prices of fuel which in turn will lead to a viable project but it

must be recognized that the evaluation will require investment in both time

and money

14 Feasibility Evaluation

The manufacturing company in question is in full operation 24 hours a day

seven days a week 365 and days a year The plant has a combined thermal

and electrical energy requirement as follows 1GWhr pa supplied by electricity

purchased by the ESB 90MWhr pa supplied by electricity purchased by the

ESB for the manufacturing plant and office equipment and general services

respectively The thermal requirement is 2GWhr pa all year round and cooling

at 170MWhr pa in the months between May and August

(Note although cooling is just required between May and August The CHP

will be sized on cooling all year round for worst-case scenario along with the

electrical and thermal energy requirement through an absorption chiller)

Page4

Energy Policy amp Economics Paul Derwin

15 Site Data

Electrical Load requirement

Manufacturing Plant = 1000000KWhr divide365 days = 2740 KWhr

Office equipment and GS = 90000KWhr divide365 days = 245 KWhr

Cooling 170000KWhr divide 120 days = 1415 KWhr

2740 + 245 + 1415 = 4400 KWhr divide 24 hours = 183 factor of 13 to allow for

losses = 240 KW per day

Heating Load requirement

Heating = 2000000KWhr divide 365 days = 5480 KWhr

5480KWhr divide 24 hours = 228 KW factor of 13 to allow for losses = 296 KW

per day

Table 1 Bord Gais Electricity Rates 2008

(Bord Gais) 2008 Rates

Unit per KWh (EuroKWh) 01302

Max Demand Charge (EuroKW) Av 15795

Service Capacity Charge (EuroKVA) Av 19809

Standing Charge (EuroMonth) 150

PSO Levy (EuroKVA Capacity) 0438

Table 2 The Manufacturing Plants Existing Monthly Electrical Bill

Day chargemonth KWh 13200001302 171864Euro

Max demand charge 5001575 788Euro

Service capacity charge 5001975 987Euro

Standing charge 150 Euro

PSO levy 5000438 219Euro

Total 193304Euro

Page5

Energy Policy amp Economics Paul Derwin

Oil Prices

Conversion Factor 1 Litre of Oil = 1083kWh

Cost of Oil = 070 Euro per Litre (DIT 200809)

2000000kWh divide 1083 = 1846722 Litres of Oil is required to heat the

premises for the year at a cost of 070 Euro 1846722 = 1292705 Euro

Monthly running costs for CHP

The Technical specification of the CHP plant is based on the Combined Heat

and Power Installation Case Study in the Rochestown Park Hotel Co Cork

(Board Gais Networks 2008)

CHP Model ENERG 210

345KW Heat Output

240KW Electrical Output

720 Hours Operation monthly

Electrical Output = 240 720 = 172800KWh

Heat Output = 345 720 = 248400KWh

Bord Gais Gas Rates

The gas rates for 2008 is 00281 per KWh of gas (seai 2009)

In generating 240KW of electricity and 345KW of heat the CHP consumes

640KW of gas at 00281 EuroKW 8640 hours 625KW 00281 = 155382

Euro per year

Therefore the CHP will cost 15538200 Euro per year + a maintenance

charge Annual maintenance costs per year costs 4000 Euro

Energy savings increase of 2 per annum

Maintenance increase of 6 per annum

Cost of plant 230000 Euro

Maintenance per annum 4000 Euro

Scrapage of old boiler 20000 Euro

CHP fuel (Gas) costs 15538200 ndash ((Electricity) 2319648 + (Oil) 1292705)

=(Energy Savings) 2058533 Euro

Page6

Energy Policy amp Economics Paul Derwin

Table 3 Pay Back Calculation (Euro)

Year Capital

Costs

Energy

Savings

Maintenance Tax

30

Net After

Tax

DC

F

PV

0 -230000 -230000 1000 -230000

1 2058533 -4000 1452973 893 1297505

2 2099704 -4240 1482513 797 1181563

3 2141697 -44944 1512671 712 1077022

4 20000 2184531 -47641 1543464 636 1181643

Total 2437733

From the data in figure 2 on page 10 it is noted that the project of installing a

more energy efficient plant for meeting the energy needs of the manufacturing

plant is viable Installing a CHP unit is an effective route in achieving its

energy requirement Investing 23000000 euro on a new gas powered CHP

plant the project breaks even after 1 year and 10 months and in year 3 the

project has made savings of over 10000000 euro and it increases above

20000000 euro in year 4

Page7

Energy Policy amp Economics Paul Derwin

Figure 2 Assessment of NVP of the Project

0 1 2 3 4

-300000

-200000

-100000

0

100000

200000

300000

YEAR

NV

P

16 CO2 Emissions Reductions

CHP can be used to achieve environmental targets for the manufacturing

plants emissions reduction The environmental benefits of installing CHP are

significant and the emissions savings are shown below

Table 4 CHP Greenhouse Gas Impact (SEI)

Gas Estimated net reduction in emissions per

kWh of electricity produced (gkWh)

Carbon dioxideCO2 1000

Sulphur dioxideSO2 17

Nitrogen oxide NOX 46

Carbon monoxide CO (3)

Carbon tetroxide CO4 39

Page8

Energy Policy amp Economics Paul Derwin

17 Comparative Analysis

CHP

CHP is the simultaneous production and utilization of heat and electricity from

the same primary fuel source minimizing the waste of the heat byproduct of

the electricity generating process and converting the heat into hot water or

steam Combined heat and power recovers the heat as well as generates

electricity-providing efficiencies up to 90 CHP can provide a secure and

highly efficient method of generating electricity and heat ldquoDue to utilization of

heat from electricity generation and the avoidance of transmission losses

because electricity is generated on site CHP achieves a significant reduction

in primary energy usage compared with power stations and heat only boilersrdquo

(SEAI 2000) The heat generated by the CHP system can also provide chilled

water using an absorption chiller The absorption process uses a condenser

and evaporator just like vapor compression systems but replaces the motor

and compressor assembly with a thermal fluid compressor to transfer low-

temperature energy to high-temperature heat rejection The absorption cycle

uses thermal energy or waste heat not electricity to create chilled water

CHP Components

All CHP plants consist of standard components such as

The prime mover (engine) to drive the electrical generator an electrical

generator that produces the electricity

A heat recovery system to recover usable heat a cooling system to

dissipate heat rejected from the engine that cannot be recovered

Combustion and ventilation air systems to carry away harmful exhaust

gases away

Control system to maintain safe and efficient operation and finally an

enclosure to achieve physical and environmental protection for the

engine and operators and to reduce noise levels

Page9

Energy Policy amp Economics Paul Derwin

Figure 3 CHP Operation

The CHP plant operation uses different types of fuel such as natural gas

diesel or oil which powers a reciprocating engine or gas turbine An electrical

generator which produces electricity is connected to the prime mover Heat

from the prime mover is captured and used for heating water for central

heating or for hot water

Cooling needs of the building can be met by using an absorption chiller The

type of prime mover that is used to drive the electrical generator classifies

CHP plant The two most common types used are

Steam turbine this is a common CHP component different types of

fuels are burned in a boiler to produce high-pressure steam that

passes through a steam turbine to produce power

Gas turbine a gas turbine uses large amounts of intake air which is

compressed and then expanded by adding fuel which is ignited The

Page10

Energy Policy amp Economics Paul Derwin

expanded air rotates the turbine blades similar to a jet engine light oil

or gas can be used as a fuel

The gas turbine drives an electrical generator the exhaust gas goes to

a heat recovery boiler which produces heat and steam (Canadian

Centre for Energy 2002)

18 Grid Electricity and Boiler Generation (Peat or Oil Powered Stations)

Figure 4 CHP vs Grid Electricity and Boiler Generation

From figure 4 above it is noted that CHP reduces primary energy consumption

in comparison to conventional methods involved in the generation of heating

hot water and electricity There are considerable losses of electrical energy

starting from the power plant through the transmission lines transformers and

then into the consumer building anything from 35 to 55 can be expected

According to SEAI ldquoThe full advantage of natural gas-fired CHP technology is

achieved when the production of power and heat is combined For this to be

technically and economically feasible it generally requires a simultaneous

demand for heat and electricity on the premises for a minimum of 14 hours

Page11

Energy Policy amp Economics Paul Derwin

per day or around 5000 hours per annumrdquo (SEAI 2000) The manufacturing

plant in question with the CHP operating 720 hours per month 24 hours a day

is very much suited to CHP technology In case of breakdown and

maintenance on the CHP plant the manufacturing plant will still be connected

to the grid Surplus electricity will be sold to the electricity grid if required

Schemes for receiving a feed-in tariff for this electricity will be worked on

Bibliography

Board Gais Networks 2008 Rochestown Park Hotel Tri-GenerationCombined

Heat amp Power Installation (CHP) viewed 26 november 2011

lthttpwwwtemptechiepdf4_bg-rochestownpdfgt

Canadian Centre for Energy 2002 Centre for Energy viewed 3 Dec 2011

lt

httpwwwcentreforenergycomAboutEnergyEnergyElectricityGeneration

Overviewasppage=11gt

Commission for energy regulation 2009 viewed 1 november 2011

lthttpceriegt

Department of Communications 2006 CHP in Ireland viewed 28 october

2011

lt

httpwwwseaiieAbout_EnergyEnergy_Policyy_DriversCHP_Policy_Repor

t_18082006pdfgt

Department of the Environment Heritage and Local Government 2007

Ireland National Climate Change Strategy 2007-2012 viewed 13 november

2011

DIT 200809 DIT library energy_policy_and

_economics_semester_1_examinations_200809 viewed 26 november 2011

lthttpDITieLibraryExampapersgt

PB Power for The Royal Academy of Engineering The Cost of Generating

Electricity viewed 26 november 2011

lt

Page12

Energy Policy amp Economics Paul Derwin

National Factors

High-energy prices

High running costs

Low profit margins

New governmentEU policies

Policy objectives amp strategy

What would the business like to achieve

A plan for achieving the objectives

Government grants

Achieving a cost effective route of delivering its energy requirements

Policy Outcomes

Economic energy supply for the manufacturing plant

Lower C02 emissions to stop penaltiesfines from EU Emissions

Trading Scheme

Ensuring affordable energy

Being prepared for energy supply disruptions

Assessment of outcome

Feasibility report financial appraisal

Cost benefit analysis

Page3

Energy Policy amp Economics Paul Derwin

13 New Technologies

The aim of this report is to find an economical replacement to buying

electricity from the ESB and heating supplied through oil for the manufacturing

plan Large scale CHP plant will be assessed to determine whether itrsquos a

viable replacement for purchasing electricity from the ESB and using oil as a

heating fuel The prime mover in large scale CHP will be gas turbine which

drives a generator that produces electricity The cost of electricity generated

by a gas powered CHP plant will be constant throughout the day since gas

tariffs are independent of the time of day so the electricity generated on site

will be cheaper A CHP plant will provide energy cost savings per KWh The

savings result from the ability to generate power and use the heat released at

a cost below the imported power costs from the ESB These savings are

dependent on the prices of fuel which in turn will lead to a viable project but it

must be recognized that the evaluation will require investment in both time

and money

14 Feasibility Evaluation

The manufacturing company in question is in full operation 24 hours a day

seven days a week 365 and days a year The plant has a combined thermal

and electrical energy requirement as follows 1GWhr pa supplied by electricity

purchased by the ESB 90MWhr pa supplied by electricity purchased by the

ESB for the manufacturing plant and office equipment and general services

respectively The thermal requirement is 2GWhr pa all year round and cooling

at 170MWhr pa in the months between May and August

(Note although cooling is just required between May and August The CHP

will be sized on cooling all year round for worst-case scenario along with the

electrical and thermal energy requirement through an absorption chiller)

Page4

Energy Policy amp Economics Paul Derwin

15 Site Data

Electrical Load requirement

Manufacturing Plant = 1000000KWhr divide365 days = 2740 KWhr

Office equipment and GS = 90000KWhr divide365 days = 245 KWhr

Cooling 170000KWhr divide 120 days = 1415 KWhr

2740 + 245 + 1415 = 4400 KWhr divide 24 hours = 183 factor of 13 to allow for

losses = 240 KW per day

Heating Load requirement

Heating = 2000000KWhr divide 365 days = 5480 KWhr

5480KWhr divide 24 hours = 228 KW factor of 13 to allow for losses = 296 KW

per day

Table 1 Bord Gais Electricity Rates 2008

(Bord Gais) 2008 Rates

Unit per KWh (EuroKWh) 01302

Max Demand Charge (EuroKW) Av 15795

Service Capacity Charge (EuroKVA) Av 19809

Standing Charge (EuroMonth) 150

PSO Levy (EuroKVA Capacity) 0438

Table 2 The Manufacturing Plants Existing Monthly Electrical Bill

Day chargemonth KWh 13200001302 171864Euro

Max demand charge 5001575 788Euro

Service capacity charge 5001975 987Euro

Standing charge 150 Euro

PSO levy 5000438 219Euro

Total 193304Euro

Page5

Energy Policy amp Economics Paul Derwin

Oil Prices

Conversion Factor 1 Litre of Oil = 1083kWh

Cost of Oil = 070 Euro per Litre (DIT 200809)

2000000kWh divide 1083 = 1846722 Litres of Oil is required to heat the

premises for the year at a cost of 070 Euro 1846722 = 1292705 Euro

Monthly running costs for CHP

The Technical specification of the CHP plant is based on the Combined Heat

and Power Installation Case Study in the Rochestown Park Hotel Co Cork

(Board Gais Networks 2008)

CHP Model ENERG 210

345KW Heat Output

240KW Electrical Output

720 Hours Operation monthly

Electrical Output = 240 720 = 172800KWh

Heat Output = 345 720 = 248400KWh

Bord Gais Gas Rates

The gas rates for 2008 is 00281 per KWh of gas (seai 2009)

In generating 240KW of electricity and 345KW of heat the CHP consumes

640KW of gas at 00281 EuroKW 8640 hours 625KW 00281 = 155382

Euro per year

Therefore the CHP will cost 15538200 Euro per year + a maintenance

charge Annual maintenance costs per year costs 4000 Euro

Energy savings increase of 2 per annum

Maintenance increase of 6 per annum

Cost of plant 230000 Euro

Maintenance per annum 4000 Euro

Scrapage of old boiler 20000 Euro

CHP fuel (Gas) costs 15538200 ndash ((Electricity) 2319648 + (Oil) 1292705)

=(Energy Savings) 2058533 Euro

Page6

Energy Policy amp Economics Paul Derwin

Table 3 Pay Back Calculation (Euro)

Year Capital

Costs

Energy

Savings

Maintenance Tax

30

Net After

Tax

DC

F

PV

0 -230000 -230000 1000 -230000

1 2058533 -4000 1452973 893 1297505

2 2099704 -4240 1482513 797 1181563

3 2141697 -44944 1512671 712 1077022

4 20000 2184531 -47641 1543464 636 1181643

Total 2437733

From the data in figure 2 on page 10 it is noted that the project of installing a

more energy efficient plant for meeting the energy needs of the manufacturing

plant is viable Installing a CHP unit is an effective route in achieving its

energy requirement Investing 23000000 euro on a new gas powered CHP

plant the project breaks even after 1 year and 10 months and in year 3 the

project has made savings of over 10000000 euro and it increases above

20000000 euro in year 4

Page7

Energy Policy amp Economics Paul Derwin

Figure 2 Assessment of NVP of the Project

0 1 2 3 4

-300000

-200000

-100000

0

100000

200000

300000

YEAR

NV

P

16 CO2 Emissions Reductions

CHP can be used to achieve environmental targets for the manufacturing

plants emissions reduction The environmental benefits of installing CHP are

significant and the emissions savings are shown below

Table 4 CHP Greenhouse Gas Impact (SEI)

Gas Estimated net reduction in emissions per

kWh of electricity produced (gkWh)

Carbon dioxideCO2 1000

Sulphur dioxideSO2 17

Nitrogen oxide NOX 46

Carbon monoxide CO (3)

Carbon tetroxide CO4 39

Page8

Energy Policy amp Economics Paul Derwin

17 Comparative Analysis

CHP

CHP is the simultaneous production and utilization of heat and electricity from

the same primary fuel source minimizing the waste of the heat byproduct of

the electricity generating process and converting the heat into hot water or

steam Combined heat and power recovers the heat as well as generates

electricity-providing efficiencies up to 90 CHP can provide a secure and

highly efficient method of generating electricity and heat ldquoDue to utilization of

heat from electricity generation and the avoidance of transmission losses

because electricity is generated on site CHP achieves a significant reduction

in primary energy usage compared with power stations and heat only boilersrdquo

(SEAI 2000) The heat generated by the CHP system can also provide chilled

water using an absorption chiller The absorption process uses a condenser

and evaporator just like vapor compression systems but replaces the motor

and compressor assembly with a thermal fluid compressor to transfer low-

temperature energy to high-temperature heat rejection The absorption cycle

uses thermal energy or waste heat not electricity to create chilled water

CHP Components

All CHP plants consist of standard components such as

The prime mover (engine) to drive the electrical generator an electrical

generator that produces the electricity

A heat recovery system to recover usable heat a cooling system to

dissipate heat rejected from the engine that cannot be recovered

Combustion and ventilation air systems to carry away harmful exhaust

gases away

Control system to maintain safe and efficient operation and finally an

enclosure to achieve physical and environmental protection for the

engine and operators and to reduce noise levels

Page9

Energy Policy amp Economics Paul Derwin

Figure 3 CHP Operation

The CHP plant operation uses different types of fuel such as natural gas

diesel or oil which powers a reciprocating engine or gas turbine An electrical

generator which produces electricity is connected to the prime mover Heat

from the prime mover is captured and used for heating water for central

heating or for hot water

Cooling needs of the building can be met by using an absorption chiller The

type of prime mover that is used to drive the electrical generator classifies

CHP plant The two most common types used are

Steam turbine this is a common CHP component different types of

fuels are burned in a boiler to produce high-pressure steam that

passes through a steam turbine to produce power

Gas turbine a gas turbine uses large amounts of intake air which is

compressed and then expanded by adding fuel which is ignited The

Page10

Energy Policy amp Economics Paul Derwin

expanded air rotates the turbine blades similar to a jet engine light oil

or gas can be used as a fuel

The gas turbine drives an electrical generator the exhaust gas goes to

a heat recovery boiler which produces heat and steam (Canadian

Centre for Energy 2002)

18 Grid Electricity and Boiler Generation (Peat or Oil Powered Stations)

Figure 4 CHP vs Grid Electricity and Boiler Generation

From figure 4 above it is noted that CHP reduces primary energy consumption

in comparison to conventional methods involved in the generation of heating

hot water and electricity There are considerable losses of electrical energy

starting from the power plant through the transmission lines transformers and

then into the consumer building anything from 35 to 55 can be expected

According to SEAI ldquoThe full advantage of natural gas-fired CHP technology is

achieved when the production of power and heat is combined For this to be

technically and economically feasible it generally requires a simultaneous

demand for heat and electricity on the premises for a minimum of 14 hours

Page11

Energy Policy amp Economics Paul Derwin

per day or around 5000 hours per annumrdquo (SEAI 2000) The manufacturing

plant in question with the CHP operating 720 hours per month 24 hours a day

is very much suited to CHP technology In case of breakdown and

maintenance on the CHP plant the manufacturing plant will still be connected

to the grid Surplus electricity will be sold to the electricity grid if required

Schemes for receiving a feed-in tariff for this electricity will be worked on

Bibliography

Board Gais Networks 2008 Rochestown Park Hotel Tri-GenerationCombined

Heat amp Power Installation (CHP) viewed 26 november 2011

lthttpwwwtemptechiepdf4_bg-rochestownpdfgt

Canadian Centre for Energy 2002 Centre for Energy viewed 3 Dec 2011

lt

httpwwwcentreforenergycomAboutEnergyEnergyElectricityGeneration

Overviewasppage=11gt

Commission for energy regulation 2009 viewed 1 november 2011

lthttpceriegt

Department of Communications 2006 CHP in Ireland viewed 28 october

2011

lt

httpwwwseaiieAbout_EnergyEnergy_Policyy_DriversCHP_Policy_Repor

t_18082006pdfgt

Department of the Environment Heritage and Local Government 2007

Ireland National Climate Change Strategy 2007-2012 viewed 13 november

2011

DIT 200809 DIT library energy_policy_and

_economics_semester_1_examinations_200809 viewed 26 november 2011

lthttpDITieLibraryExampapersgt

PB Power for The Royal Academy of Engineering The Cost of Generating

Electricity viewed 26 november 2011

lt

Page12

Energy Policy amp Economics Paul Derwin

13 New Technologies

The aim of this report is to find an economical replacement to buying

electricity from the ESB and heating supplied through oil for the manufacturing

plan Large scale CHP plant will be assessed to determine whether itrsquos a

viable replacement for purchasing electricity from the ESB and using oil as a

heating fuel The prime mover in large scale CHP will be gas turbine which

drives a generator that produces electricity The cost of electricity generated

by a gas powered CHP plant will be constant throughout the day since gas

tariffs are independent of the time of day so the electricity generated on site

will be cheaper A CHP plant will provide energy cost savings per KWh The

savings result from the ability to generate power and use the heat released at

a cost below the imported power costs from the ESB These savings are

dependent on the prices of fuel which in turn will lead to a viable project but it

must be recognized that the evaluation will require investment in both time

and money

14 Feasibility Evaluation

The manufacturing company in question is in full operation 24 hours a day

seven days a week 365 and days a year The plant has a combined thermal

and electrical energy requirement as follows 1GWhr pa supplied by electricity

purchased by the ESB 90MWhr pa supplied by electricity purchased by the

ESB for the manufacturing plant and office equipment and general services

respectively The thermal requirement is 2GWhr pa all year round and cooling

at 170MWhr pa in the months between May and August

(Note although cooling is just required between May and August The CHP

will be sized on cooling all year round for worst-case scenario along with the

electrical and thermal energy requirement through an absorption chiller)

Page4

Energy Policy amp Economics Paul Derwin

15 Site Data

Electrical Load requirement

Manufacturing Plant = 1000000KWhr divide365 days = 2740 KWhr

Office equipment and GS = 90000KWhr divide365 days = 245 KWhr

Cooling 170000KWhr divide 120 days = 1415 KWhr

2740 + 245 + 1415 = 4400 KWhr divide 24 hours = 183 factor of 13 to allow for

losses = 240 KW per day

Heating Load requirement

Heating = 2000000KWhr divide 365 days = 5480 KWhr

5480KWhr divide 24 hours = 228 KW factor of 13 to allow for losses = 296 KW

per day

Table 1 Bord Gais Electricity Rates 2008

(Bord Gais) 2008 Rates

Unit per KWh (EuroKWh) 01302

Max Demand Charge (EuroKW) Av 15795

Service Capacity Charge (EuroKVA) Av 19809

Standing Charge (EuroMonth) 150

PSO Levy (EuroKVA Capacity) 0438

Table 2 The Manufacturing Plants Existing Monthly Electrical Bill

Day chargemonth KWh 13200001302 171864Euro

Max demand charge 5001575 788Euro

Service capacity charge 5001975 987Euro

Standing charge 150 Euro

PSO levy 5000438 219Euro

Total 193304Euro

Page5

Energy Policy amp Economics Paul Derwin

Oil Prices

Conversion Factor 1 Litre of Oil = 1083kWh

Cost of Oil = 070 Euro per Litre (DIT 200809)

2000000kWh divide 1083 = 1846722 Litres of Oil is required to heat the

premises for the year at a cost of 070 Euro 1846722 = 1292705 Euro

Monthly running costs for CHP

The Technical specification of the CHP plant is based on the Combined Heat

and Power Installation Case Study in the Rochestown Park Hotel Co Cork

(Board Gais Networks 2008)

CHP Model ENERG 210

345KW Heat Output

240KW Electrical Output

720 Hours Operation monthly

Electrical Output = 240 720 = 172800KWh

Heat Output = 345 720 = 248400KWh

Bord Gais Gas Rates

The gas rates for 2008 is 00281 per KWh of gas (seai 2009)

In generating 240KW of electricity and 345KW of heat the CHP consumes

640KW of gas at 00281 EuroKW 8640 hours 625KW 00281 = 155382

Euro per year

Therefore the CHP will cost 15538200 Euro per year + a maintenance

charge Annual maintenance costs per year costs 4000 Euro

Energy savings increase of 2 per annum

Maintenance increase of 6 per annum

Cost of plant 230000 Euro

Maintenance per annum 4000 Euro

Scrapage of old boiler 20000 Euro

CHP fuel (Gas) costs 15538200 ndash ((Electricity) 2319648 + (Oil) 1292705)

=(Energy Savings) 2058533 Euro

Page6

Energy Policy amp Economics Paul Derwin

Table 3 Pay Back Calculation (Euro)

Year Capital

Costs

Energy

Savings

Maintenance Tax

30

Net After

Tax

DC

F

PV

0 -230000 -230000 1000 -230000

1 2058533 -4000 1452973 893 1297505

2 2099704 -4240 1482513 797 1181563

3 2141697 -44944 1512671 712 1077022

4 20000 2184531 -47641 1543464 636 1181643

Total 2437733

From the data in figure 2 on page 10 it is noted that the project of installing a

more energy efficient plant for meeting the energy needs of the manufacturing

plant is viable Installing a CHP unit is an effective route in achieving its

energy requirement Investing 23000000 euro on a new gas powered CHP

plant the project breaks even after 1 year and 10 months and in year 3 the

project has made savings of over 10000000 euro and it increases above

20000000 euro in year 4

Page7

Energy Policy amp Economics Paul Derwin

Figure 2 Assessment of NVP of the Project

0 1 2 3 4

-300000

-200000

-100000

0

100000

200000

300000

YEAR

NV

P

16 CO2 Emissions Reductions

CHP can be used to achieve environmental targets for the manufacturing

plants emissions reduction The environmental benefits of installing CHP are

significant and the emissions savings are shown below

Table 4 CHP Greenhouse Gas Impact (SEI)

Gas Estimated net reduction in emissions per

kWh of electricity produced (gkWh)

Carbon dioxideCO2 1000

Sulphur dioxideSO2 17

Nitrogen oxide NOX 46

Carbon monoxide CO (3)

Carbon tetroxide CO4 39

Page8

Energy Policy amp Economics Paul Derwin

17 Comparative Analysis

CHP

CHP is the simultaneous production and utilization of heat and electricity from

the same primary fuel source minimizing the waste of the heat byproduct of

the electricity generating process and converting the heat into hot water or

steam Combined heat and power recovers the heat as well as generates

electricity-providing efficiencies up to 90 CHP can provide a secure and

highly efficient method of generating electricity and heat ldquoDue to utilization of

heat from electricity generation and the avoidance of transmission losses

because electricity is generated on site CHP achieves a significant reduction

in primary energy usage compared with power stations and heat only boilersrdquo

(SEAI 2000) The heat generated by the CHP system can also provide chilled

water using an absorption chiller The absorption process uses a condenser

and evaporator just like vapor compression systems but replaces the motor

and compressor assembly with a thermal fluid compressor to transfer low-

temperature energy to high-temperature heat rejection The absorption cycle

uses thermal energy or waste heat not electricity to create chilled water

CHP Components

All CHP plants consist of standard components such as

The prime mover (engine) to drive the electrical generator an electrical

generator that produces the electricity

A heat recovery system to recover usable heat a cooling system to

dissipate heat rejected from the engine that cannot be recovered

Combustion and ventilation air systems to carry away harmful exhaust

gases away

Control system to maintain safe and efficient operation and finally an

enclosure to achieve physical and environmental protection for the

engine and operators and to reduce noise levels

Page9

Energy Policy amp Economics Paul Derwin

Figure 3 CHP Operation

The CHP plant operation uses different types of fuel such as natural gas

diesel or oil which powers a reciprocating engine or gas turbine An electrical

generator which produces electricity is connected to the prime mover Heat

from the prime mover is captured and used for heating water for central

heating or for hot water

Cooling needs of the building can be met by using an absorption chiller The

type of prime mover that is used to drive the electrical generator classifies

CHP plant The two most common types used are

Steam turbine this is a common CHP component different types of

fuels are burned in a boiler to produce high-pressure steam that

passes through a steam turbine to produce power

Gas turbine a gas turbine uses large amounts of intake air which is

compressed and then expanded by adding fuel which is ignited The

Page10

Energy Policy amp Economics Paul Derwin

expanded air rotates the turbine blades similar to a jet engine light oil

or gas can be used as a fuel

The gas turbine drives an electrical generator the exhaust gas goes to

a heat recovery boiler which produces heat and steam (Canadian

Centre for Energy 2002)

18 Grid Electricity and Boiler Generation (Peat or Oil Powered Stations)

Figure 4 CHP vs Grid Electricity and Boiler Generation

From figure 4 above it is noted that CHP reduces primary energy consumption

in comparison to conventional methods involved in the generation of heating

hot water and electricity There are considerable losses of electrical energy

starting from the power plant through the transmission lines transformers and

then into the consumer building anything from 35 to 55 can be expected

According to SEAI ldquoThe full advantage of natural gas-fired CHP technology is

achieved when the production of power and heat is combined For this to be

technically and economically feasible it generally requires a simultaneous

demand for heat and electricity on the premises for a minimum of 14 hours

Page11

Energy Policy amp Economics Paul Derwin

per day or around 5000 hours per annumrdquo (SEAI 2000) The manufacturing

plant in question with the CHP operating 720 hours per month 24 hours a day

is very much suited to CHP technology In case of breakdown and

maintenance on the CHP plant the manufacturing plant will still be connected

to the grid Surplus electricity will be sold to the electricity grid if required

Schemes for receiving a feed-in tariff for this electricity will be worked on

Bibliography

Board Gais Networks 2008 Rochestown Park Hotel Tri-GenerationCombined

Heat amp Power Installation (CHP) viewed 26 november 2011

lthttpwwwtemptechiepdf4_bg-rochestownpdfgt

Canadian Centre for Energy 2002 Centre for Energy viewed 3 Dec 2011

lt

httpwwwcentreforenergycomAboutEnergyEnergyElectricityGeneration

Overviewasppage=11gt

Commission for energy regulation 2009 viewed 1 november 2011

lthttpceriegt

Department of Communications 2006 CHP in Ireland viewed 28 october

2011

lt

httpwwwseaiieAbout_EnergyEnergy_Policyy_DriversCHP_Policy_Repor

t_18082006pdfgt

Department of the Environment Heritage and Local Government 2007

Ireland National Climate Change Strategy 2007-2012 viewed 13 november

2011

DIT 200809 DIT library energy_policy_and

_economics_semester_1_examinations_200809 viewed 26 november 2011

lthttpDITieLibraryExampapersgt

PB Power for The Royal Academy of Engineering The Cost of Generating

Electricity viewed 26 november 2011

lt

Page12

Energy Policy amp Economics Paul Derwin

15 Site Data

Electrical Load requirement

Manufacturing Plant = 1000000KWhr divide365 days = 2740 KWhr

Office equipment and GS = 90000KWhr divide365 days = 245 KWhr

Cooling 170000KWhr divide 120 days = 1415 KWhr

2740 + 245 + 1415 = 4400 KWhr divide 24 hours = 183 factor of 13 to allow for

losses = 240 KW per day

Heating Load requirement

Heating = 2000000KWhr divide 365 days = 5480 KWhr

5480KWhr divide 24 hours = 228 KW factor of 13 to allow for losses = 296 KW

per day

Table 1 Bord Gais Electricity Rates 2008

(Bord Gais) 2008 Rates

Unit per KWh (EuroKWh) 01302

Max Demand Charge (EuroKW) Av 15795

Service Capacity Charge (EuroKVA) Av 19809

Standing Charge (EuroMonth) 150

PSO Levy (EuroKVA Capacity) 0438

Table 2 The Manufacturing Plants Existing Monthly Electrical Bill

Day chargemonth KWh 13200001302 171864Euro

Max demand charge 5001575 788Euro

Service capacity charge 5001975 987Euro

Standing charge 150 Euro

PSO levy 5000438 219Euro

Total 193304Euro

Page5

Energy Policy amp Economics Paul Derwin

Oil Prices

Conversion Factor 1 Litre of Oil = 1083kWh

Cost of Oil = 070 Euro per Litre (DIT 200809)

2000000kWh divide 1083 = 1846722 Litres of Oil is required to heat the

premises for the year at a cost of 070 Euro 1846722 = 1292705 Euro

Monthly running costs for CHP

The Technical specification of the CHP plant is based on the Combined Heat

and Power Installation Case Study in the Rochestown Park Hotel Co Cork

(Board Gais Networks 2008)

CHP Model ENERG 210

345KW Heat Output

240KW Electrical Output

720 Hours Operation monthly

Electrical Output = 240 720 = 172800KWh

Heat Output = 345 720 = 248400KWh

Bord Gais Gas Rates

The gas rates for 2008 is 00281 per KWh of gas (seai 2009)

In generating 240KW of electricity and 345KW of heat the CHP consumes

640KW of gas at 00281 EuroKW 8640 hours 625KW 00281 = 155382

Euro per year

Therefore the CHP will cost 15538200 Euro per year + a maintenance

charge Annual maintenance costs per year costs 4000 Euro

Energy savings increase of 2 per annum

Maintenance increase of 6 per annum

Cost of plant 230000 Euro

Maintenance per annum 4000 Euro

Scrapage of old boiler 20000 Euro

CHP fuel (Gas) costs 15538200 ndash ((Electricity) 2319648 + (Oil) 1292705)

=(Energy Savings) 2058533 Euro

Page6

Energy Policy amp Economics Paul Derwin

Table 3 Pay Back Calculation (Euro)

Year Capital

Costs

Energy

Savings

Maintenance Tax

30

Net After

Tax

DC

F

PV

0 -230000 -230000 1000 -230000

1 2058533 -4000 1452973 893 1297505

2 2099704 -4240 1482513 797 1181563

3 2141697 -44944 1512671 712 1077022

4 20000 2184531 -47641 1543464 636 1181643

Total 2437733

From the data in figure 2 on page 10 it is noted that the project of installing a

more energy efficient plant for meeting the energy needs of the manufacturing

plant is viable Installing a CHP unit is an effective route in achieving its

energy requirement Investing 23000000 euro on a new gas powered CHP

plant the project breaks even after 1 year and 10 months and in year 3 the

project has made savings of over 10000000 euro and it increases above

20000000 euro in year 4

Page7

Energy Policy amp Economics Paul Derwin

Figure 2 Assessment of NVP of the Project

0 1 2 3 4

-300000

-200000

-100000

0

100000

200000

300000

YEAR

NV

P

16 CO2 Emissions Reductions

CHP can be used to achieve environmental targets for the manufacturing

plants emissions reduction The environmental benefits of installing CHP are

significant and the emissions savings are shown below

Table 4 CHP Greenhouse Gas Impact (SEI)

Gas Estimated net reduction in emissions per

kWh of electricity produced (gkWh)

Carbon dioxideCO2 1000

Sulphur dioxideSO2 17

Nitrogen oxide NOX 46

Carbon monoxide CO (3)

Carbon tetroxide CO4 39

Page8

Energy Policy amp Economics Paul Derwin

17 Comparative Analysis

CHP

CHP is the simultaneous production and utilization of heat and electricity from

the same primary fuel source minimizing the waste of the heat byproduct of

the electricity generating process and converting the heat into hot water or

steam Combined heat and power recovers the heat as well as generates

electricity-providing efficiencies up to 90 CHP can provide a secure and

highly efficient method of generating electricity and heat ldquoDue to utilization of

heat from electricity generation and the avoidance of transmission losses

because electricity is generated on site CHP achieves a significant reduction

in primary energy usage compared with power stations and heat only boilersrdquo

(SEAI 2000) The heat generated by the CHP system can also provide chilled

water using an absorption chiller The absorption process uses a condenser

and evaporator just like vapor compression systems but replaces the motor

and compressor assembly with a thermal fluid compressor to transfer low-

temperature energy to high-temperature heat rejection The absorption cycle

uses thermal energy or waste heat not electricity to create chilled water

CHP Components

All CHP plants consist of standard components such as

The prime mover (engine) to drive the electrical generator an electrical

generator that produces the electricity

A heat recovery system to recover usable heat a cooling system to

dissipate heat rejected from the engine that cannot be recovered

Combustion and ventilation air systems to carry away harmful exhaust

gases away

Control system to maintain safe and efficient operation and finally an

enclosure to achieve physical and environmental protection for the

engine and operators and to reduce noise levels

Page9

Energy Policy amp Economics Paul Derwin

Figure 3 CHP Operation

The CHP plant operation uses different types of fuel such as natural gas

diesel or oil which powers a reciprocating engine or gas turbine An electrical

generator which produces electricity is connected to the prime mover Heat

from the prime mover is captured and used for heating water for central

heating or for hot water

Cooling needs of the building can be met by using an absorption chiller The

type of prime mover that is used to drive the electrical generator classifies

CHP plant The two most common types used are

Steam turbine this is a common CHP component different types of

fuels are burned in a boiler to produce high-pressure steam that

passes through a steam turbine to produce power

Gas turbine a gas turbine uses large amounts of intake air which is

compressed and then expanded by adding fuel which is ignited The

Page10

Energy Policy amp Economics Paul Derwin

expanded air rotates the turbine blades similar to a jet engine light oil

or gas can be used as a fuel

The gas turbine drives an electrical generator the exhaust gas goes to

a heat recovery boiler which produces heat and steam (Canadian

Centre for Energy 2002)

18 Grid Electricity and Boiler Generation (Peat or Oil Powered Stations)

Figure 4 CHP vs Grid Electricity and Boiler Generation

From figure 4 above it is noted that CHP reduces primary energy consumption

in comparison to conventional methods involved in the generation of heating

hot water and electricity There are considerable losses of electrical energy

starting from the power plant through the transmission lines transformers and

then into the consumer building anything from 35 to 55 can be expected

According to SEAI ldquoThe full advantage of natural gas-fired CHP technology is

achieved when the production of power and heat is combined For this to be

technically and economically feasible it generally requires a simultaneous

demand for heat and electricity on the premises for a minimum of 14 hours

Page11

Energy Policy amp Economics Paul Derwin

per day or around 5000 hours per annumrdquo (SEAI 2000) The manufacturing

plant in question with the CHP operating 720 hours per month 24 hours a day

is very much suited to CHP technology In case of breakdown and

maintenance on the CHP plant the manufacturing plant will still be connected

to the grid Surplus electricity will be sold to the electricity grid if required

Schemes for receiving a feed-in tariff for this electricity will be worked on

Bibliography

Board Gais Networks 2008 Rochestown Park Hotel Tri-GenerationCombined

Heat amp Power Installation (CHP) viewed 26 november 2011

lthttpwwwtemptechiepdf4_bg-rochestownpdfgt

Canadian Centre for Energy 2002 Centre for Energy viewed 3 Dec 2011

lt

httpwwwcentreforenergycomAboutEnergyEnergyElectricityGeneration

Overviewasppage=11gt

Commission for energy regulation 2009 viewed 1 november 2011

lthttpceriegt

Department of Communications 2006 CHP in Ireland viewed 28 october

2011

lt

httpwwwseaiieAbout_EnergyEnergy_Policyy_DriversCHP_Policy_Repor

t_18082006pdfgt

Department of the Environment Heritage and Local Government 2007

Ireland National Climate Change Strategy 2007-2012 viewed 13 november

2011

DIT 200809 DIT library energy_policy_and

_economics_semester_1_examinations_200809 viewed 26 november 2011

lthttpDITieLibraryExampapersgt

PB Power for The Royal Academy of Engineering The Cost of Generating

Electricity viewed 26 november 2011

lt

Page12

Energy Policy amp Economics Paul Derwin

Oil Prices

Conversion Factor 1 Litre of Oil = 1083kWh

Cost of Oil = 070 Euro per Litre (DIT 200809)

2000000kWh divide 1083 = 1846722 Litres of Oil is required to heat the

premises for the year at a cost of 070 Euro 1846722 = 1292705 Euro

Monthly running costs for CHP

The Technical specification of the CHP plant is based on the Combined Heat

and Power Installation Case Study in the Rochestown Park Hotel Co Cork

(Board Gais Networks 2008)

CHP Model ENERG 210

345KW Heat Output

240KW Electrical Output

720 Hours Operation monthly

Electrical Output = 240 720 = 172800KWh

Heat Output = 345 720 = 248400KWh

Bord Gais Gas Rates

The gas rates for 2008 is 00281 per KWh of gas (seai 2009)

In generating 240KW of electricity and 345KW of heat the CHP consumes

640KW of gas at 00281 EuroKW 8640 hours 625KW 00281 = 155382

Euro per year

Therefore the CHP will cost 15538200 Euro per year + a maintenance

charge Annual maintenance costs per year costs 4000 Euro

Energy savings increase of 2 per annum

Maintenance increase of 6 per annum

Cost of plant 230000 Euro

Maintenance per annum 4000 Euro

Scrapage of old boiler 20000 Euro

CHP fuel (Gas) costs 15538200 ndash ((Electricity) 2319648 + (Oil) 1292705)

=(Energy Savings) 2058533 Euro

Page6

Energy Policy amp Economics Paul Derwin

Table 3 Pay Back Calculation (Euro)

Year Capital

Costs

Energy

Savings

Maintenance Tax

30

Net After

Tax

DC

F

PV

0 -230000 -230000 1000 -230000

1 2058533 -4000 1452973 893 1297505

2 2099704 -4240 1482513 797 1181563

3 2141697 -44944 1512671 712 1077022

4 20000 2184531 -47641 1543464 636 1181643

Total 2437733

From the data in figure 2 on page 10 it is noted that the project of installing a

more energy efficient plant for meeting the energy needs of the manufacturing

plant is viable Installing a CHP unit is an effective route in achieving its

energy requirement Investing 23000000 euro on a new gas powered CHP

plant the project breaks even after 1 year and 10 months and in year 3 the

project has made savings of over 10000000 euro and it increases above

20000000 euro in year 4

Page7

Energy Policy amp Economics Paul Derwin

Figure 2 Assessment of NVP of the Project

0 1 2 3 4

-300000

-200000

-100000

0

100000

200000

300000

YEAR

NV

P

16 CO2 Emissions Reductions

CHP can be used to achieve environmental targets for the manufacturing

plants emissions reduction The environmental benefits of installing CHP are

significant and the emissions savings are shown below

Table 4 CHP Greenhouse Gas Impact (SEI)

Gas Estimated net reduction in emissions per

kWh of electricity produced (gkWh)

Carbon dioxideCO2 1000

Sulphur dioxideSO2 17

Nitrogen oxide NOX 46

Carbon monoxide CO (3)

Carbon tetroxide CO4 39

Page8

Energy Policy amp Economics Paul Derwin

17 Comparative Analysis

CHP

CHP is the simultaneous production and utilization of heat and electricity from

the same primary fuel source minimizing the waste of the heat byproduct of

the electricity generating process and converting the heat into hot water or

steam Combined heat and power recovers the heat as well as generates

electricity-providing efficiencies up to 90 CHP can provide a secure and

highly efficient method of generating electricity and heat ldquoDue to utilization of

heat from electricity generation and the avoidance of transmission losses

because electricity is generated on site CHP achieves a significant reduction

in primary energy usage compared with power stations and heat only boilersrdquo

(SEAI 2000) The heat generated by the CHP system can also provide chilled

water using an absorption chiller The absorption process uses a condenser

and evaporator just like vapor compression systems but replaces the motor

and compressor assembly with a thermal fluid compressor to transfer low-

temperature energy to high-temperature heat rejection The absorption cycle

uses thermal energy or waste heat not electricity to create chilled water

CHP Components

All CHP plants consist of standard components such as

The prime mover (engine) to drive the electrical generator an electrical

generator that produces the electricity

A heat recovery system to recover usable heat a cooling system to

dissipate heat rejected from the engine that cannot be recovered

Combustion and ventilation air systems to carry away harmful exhaust

gases away

Control system to maintain safe and efficient operation and finally an

enclosure to achieve physical and environmental protection for the

engine and operators and to reduce noise levels

Page9

Energy Policy amp Economics Paul Derwin

Figure 3 CHP Operation

The CHP plant operation uses different types of fuel such as natural gas

diesel or oil which powers a reciprocating engine or gas turbine An electrical

generator which produces electricity is connected to the prime mover Heat

from the prime mover is captured and used for heating water for central

heating or for hot water

Cooling needs of the building can be met by using an absorption chiller The

type of prime mover that is used to drive the electrical generator classifies

CHP plant The two most common types used are

Steam turbine this is a common CHP component different types of

fuels are burned in a boiler to produce high-pressure steam that

passes through a steam turbine to produce power

Gas turbine a gas turbine uses large amounts of intake air which is

compressed and then expanded by adding fuel which is ignited The

Page10

Energy Policy amp Economics Paul Derwin

expanded air rotates the turbine blades similar to a jet engine light oil

or gas can be used as a fuel

The gas turbine drives an electrical generator the exhaust gas goes to

a heat recovery boiler which produces heat and steam (Canadian

Centre for Energy 2002)

18 Grid Electricity and Boiler Generation (Peat or Oil Powered Stations)

Figure 4 CHP vs Grid Electricity and Boiler Generation

From figure 4 above it is noted that CHP reduces primary energy consumption

in comparison to conventional methods involved in the generation of heating

hot water and electricity There are considerable losses of electrical energy

starting from the power plant through the transmission lines transformers and

then into the consumer building anything from 35 to 55 can be expected

According to SEAI ldquoThe full advantage of natural gas-fired CHP technology is

achieved when the production of power and heat is combined For this to be

technically and economically feasible it generally requires a simultaneous

demand for heat and electricity on the premises for a minimum of 14 hours

Page11

Energy Policy amp Economics Paul Derwin

per day or around 5000 hours per annumrdquo (SEAI 2000) The manufacturing

plant in question with the CHP operating 720 hours per month 24 hours a day

is very much suited to CHP technology In case of breakdown and

maintenance on the CHP plant the manufacturing plant will still be connected

to the grid Surplus electricity will be sold to the electricity grid if required

Schemes for receiving a feed-in tariff for this electricity will be worked on

Bibliography

Board Gais Networks 2008 Rochestown Park Hotel Tri-GenerationCombined

Heat amp Power Installation (CHP) viewed 26 november 2011

lthttpwwwtemptechiepdf4_bg-rochestownpdfgt

Canadian Centre for Energy 2002 Centre for Energy viewed 3 Dec 2011

lt

httpwwwcentreforenergycomAboutEnergyEnergyElectricityGeneration

Overviewasppage=11gt

Commission for energy regulation 2009 viewed 1 november 2011

lthttpceriegt

Department of Communications 2006 CHP in Ireland viewed 28 october

2011

lt

httpwwwseaiieAbout_EnergyEnergy_Policyy_DriversCHP_Policy_Repor

t_18082006pdfgt

Department of the Environment Heritage and Local Government 2007

Ireland National Climate Change Strategy 2007-2012 viewed 13 november

2011

DIT 200809 DIT library energy_policy_and

_economics_semester_1_examinations_200809 viewed 26 november 2011

lthttpDITieLibraryExampapersgt

PB Power for The Royal Academy of Engineering The Cost of Generating

Electricity viewed 26 november 2011

lt

Page12

Energy Policy amp Economics Paul Derwin

Table 3 Pay Back Calculation (Euro)

Year Capital

Costs

Energy

Savings

Maintenance Tax

30

Net After

Tax

DC

F

PV

0 -230000 -230000 1000 -230000

1 2058533 -4000 1452973 893 1297505

2 2099704 -4240 1482513 797 1181563

3 2141697 -44944 1512671 712 1077022

4 20000 2184531 -47641 1543464 636 1181643

Total 2437733

From the data in figure 2 on page 10 it is noted that the project of installing a

more energy efficient plant for meeting the energy needs of the manufacturing

plant is viable Installing a CHP unit is an effective route in achieving its

energy requirement Investing 23000000 euro on a new gas powered CHP

plant the project breaks even after 1 year and 10 months and in year 3 the

project has made savings of over 10000000 euro and it increases above

20000000 euro in year 4

Page7

Energy Policy amp Economics Paul Derwin

Figure 2 Assessment of NVP of the Project

0 1 2 3 4

-300000

-200000

-100000

0

100000

200000

300000

YEAR

NV

P

16 CO2 Emissions Reductions

CHP can be used to achieve environmental targets for the manufacturing

plants emissions reduction The environmental benefits of installing CHP are

significant and the emissions savings are shown below

Table 4 CHP Greenhouse Gas Impact (SEI)

Gas Estimated net reduction in emissions per

kWh of electricity produced (gkWh)

Carbon dioxideCO2 1000

Sulphur dioxideSO2 17

Nitrogen oxide NOX 46

Carbon monoxide CO (3)

Carbon tetroxide CO4 39

Page8

Energy Policy amp Economics Paul Derwin

17 Comparative Analysis

CHP

CHP is the simultaneous production and utilization of heat and electricity from

the same primary fuel source minimizing the waste of the heat byproduct of

the electricity generating process and converting the heat into hot water or

steam Combined heat and power recovers the heat as well as generates

electricity-providing efficiencies up to 90 CHP can provide a secure and

highly efficient method of generating electricity and heat ldquoDue to utilization of

heat from electricity generation and the avoidance of transmission losses

because electricity is generated on site CHP achieves a significant reduction

in primary energy usage compared with power stations and heat only boilersrdquo

(SEAI 2000) The heat generated by the CHP system can also provide chilled

water using an absorption chiller The absorption process uses a condenser

and evaporator just like vapor compression systems but replaces the motor

and compressor assembly with a thermal fluid compressor to transfer low-

temperature energy to high-temperature heat rejection The absorption cycle

uses thermal energy or waste heat not electricity to create chilled water

CHP Components

All CHP plants consist of standard components such as

The prime mover (engine) to drive the electrical generator an electrical

generator that produces the electricity

A heat recovery system to recover usable heat a cooling system to

dissipate heat rejected from the engine that cannot be recovered

Combustion and ventilation air systems to carry away harmful exhaust

gases away

Control system to maintain safe and efficient operation and finally an

enclosure to achieve physical and environmental protection for the

engine and operators and to reduce noise levels

Page9

Energy Policy amp Economics Paul Derwin

Figure 3 CHP Operation

The CHP plant operation uses different types of fuel such as natural gas

diesel or oil which powers a reciprocating engine or gas turbine An electrical

generator which produces electricity is connected to the prime mover Heat

from the prime mover is captured and used for heating water for central

heating or for hot water

Cooling needs of the building can be met by using an absorption chiller The

type of prime mover that is used to drive the electrical generator classifies

CHP plant The two most common types used are

Steam turbine this is a common CHP component different types of

fuels are burned in a boiler to produce high-pressure steam that

passes through a steam turbine to produce power

Gas turbine a gas turbine uses large amounts of intake air which is

compressed and then expanded by adding fuel which is ignited The

Page10

Energy Policy amp Economics Paul Derwin

expanded air rotates the turbine blades similar to a jet engine light oil

or gas can be used as a fuel

The gas turbine drives an electrical generator the exhaust gas goes to

a heat recovery boiler which produces heat and steam (Canadian

Centre for Energy 2002)

18 Grid Electricity and Boiler Generation (Peat or Oil Powered Stations)

Figure 4 CHP vs Grid Electricity and Boiler Generation

From figure 4 above it is noted that CHP reduces primary energy consumption

in comparison to conventional methods involved in the generation of heating

hot water and electricity There are considerable losses of electrical energy

starting from the power plant through the transmission lines transformers and

then into the consumer building anything from 35 to 55 can be expected

According to SEAI ldquoThe full advantage of natural gas-fired CHP technology is

achieved when the production of power and heat is combined For this to be

technically and economically feasible it generally requires a simultaneous

demand for heat and electricity on the premises for a minimum of 14 hours

Page11

Energy Policy amp Economics Paul Derwin

per day or around 5000 hours per annumrdquo (SEAI 2000) The manufacturing

plant in question with the CHP operating 720 hours per month 24 hours a day

is very much suited to CHP technology In case of breakdown and

maintenance on the CHP plant the manufacturing plant will still be connected

to the grid Surplus electricity will be sold to the electricity grid if required

Schemes for receiving a feed-in tariff for this electricity will be worked on

Bibliography

Board Gais Networks 2008 Rochestown Park Hotel Tri-GenerationCombined

Heat amp Power Installation (CHP) viewed 26 november 2011

lthttpwwwtemptechiepdf4_bg-rochestownpdfgt

Canadian Centre for Energy 2002 Centre for Energy viewed 3 Dec 2011

lt

httpwwwcentreforenergycomAboutEnergyEnergyElectricityGeneration

Overviewasppage=11gt

Commission for energy regulation 2009 viewed 1 november 2011

lthttpceriegt

Department of Communications 2006 CHP in Ireland viewed 28 october

2011

lt

httpwwwseaiieAbout_EnergyEnergy_Policyy_DriversCHP_Policy_Repor

t_18082006pdfgt

Department of the Environment Heritage and Local Government 2007

Ireland National Climate Change Strategy 2007-2012 viewed 13 november

2011

DIT 200809 DIT library energy_policy_and

_economics_semester_1_examinations_200809 viewed 26 november 2011

lthttpDITieLibraryExampapersgt

PB Power for The Royal Academy of Engineering The Cost of Generating

Electricity viewed 26 november 2011

lt

Page12

Energy Policy amp Economics Paul Derwin

Figure 2 Assessment of NVP of the Project

0 1 2 3 4

-300000

-200000

-100000

0

100000

200000

300000

YEAR

NV

P

16 CO2 Emissions Reductions

CHP can be used to achieve environmental targets for the manufacturing

plants emissions reduction The environmental benefits of installing CHP are

significant and the emissions savings are shown below

Table 4 CHP Greenhouse Gas Impact (SEI)

Gas Estimated net reduction in emissions per

kWh of electricity produced (gkWh)

Carbon dioxideCO2 1000

Sulphur dioxideSO2 17

Nitrogen oxide NOX 46

Carbon monoxide CO (3)

Carbon tetroxide CO4 39

Page8

Energy Policy amp Economics Paul Derwin

17 Comparative Analysis

CHP

CHP is the simultaneous production and utilization of heat and electricity from

the same primary fuel source minimizing the waste of the heat byproduct of

the electricity generating process and converting the heat into hot water or

steam Combined heat and power recovers the heat as well as generates

electricity-providing efficiencies up to 90 CHP can provide a secure and

highly efficient method of generating electricity and heat ldquoDue to utilization of

heat from electricity generation and the avoidance of transmission losses

because electricity is generated on site CHP achieves a significant reduction

in primary energy usage compared with power stations and heat only boilersrdquo

(SEAI 2000) The heat generated by the CHP system can also provide chilled

water using an absorption chiller The absorption process uses a condenser

and evaporator just like vapor compression systems but replaces the motor

and compressor assembly with a thermal fluid compressor to transfer low-

temperature energy to high-temperature heat rejection The absorption cycle

uses thermal energy or waste heat not electricity to create chilled water

CHP Components

All CHP plants consist of standard components such as

The prime mover (engine) to drive the electrical generator an electrical

generator that produces the electricity

A heat recovery system to recover usable heat a cooling system to

dissipate heat rejected from the engine that cannot be recovered

Combustion and ventilation air systems to carry away harmful exhaust

gases away

Control system to maintain safe and efficient operation and finally an

enclosure to achieve physical and environmental protection for the

engine and operators and to reduce noise levels

Page9

Energy Policy amp Economics Paul Derwin

Figure 3 CHP Operation

The CHP plant operation uses different types of fuel such as natural gas

diesel or oil which powers a reciprocating engine or gas turbine An electrical

generator which produces electricity is connected to the prime mover Heat

from the prime mover is captured and used for heating water for central

heating or for hot water

Cooling needs of the building can be met by using an absorption chiller The

type of prime mover that is used to drive the electrical generator classifies

CHP plant The two most common types used are

Steam turbine this is a common CHP component different types of

fuels are burned in a boiler to produce high-pressure steam that

passes through a steam turbine to produce power

Gas turbine a gas turbine uses large amounts of intake air which is

compressed and then expanded by adding fuel which is ignited The

Page10

Energy Policy amp Economics Paul Derwin

expanded air rotates the turbine blades similar to a jet engine light oil

or gas can be used as a fuel

The gas turbine drives an electrical generator the exhaust gas goes to

a heat recovery boiler which produces heat and steam (Canadian

Centre for Energy 2002)

18 Grid Electricity and Boiler Generation (Peat or Oil Powered Stations)

Figure 4 CHP vs Grid Electricity and Boiler Generation

From figure 4 above it is noted that CHP reduces primary energy consumption

in comparison to conventional methods involved in the generation of heating

hot water and electricity There are considerable losses of electrical energy

starting from the power plant through the transmission lines transformers and

then into the consumer building anything from 35 to 55 can be expected

According to SEAI ldquoThe full advantage of natural gas-fired CHP technology is

achieved when the production of power and heat is combined For this to be

technically and economically feasible it generally requires a simultaneous

demand for heat and electricity on the premises for a minimum of 14 hours

Page11

Energy Policy amp Economics Paul Derwin

per day or around 5000 hours per annumrdquo (SEAI 2000) The manufacturing

plant in question with the CHP operating 720 hours per month 24 hours a day

is very much suited to CHP technology In case of breakdown and

maintenance on the CHP plant the manufacturing plant will still be connected

to the grid Surplus electricity will be sold to the electricity grid if required

Schemes for receiving a feed-in tariff for this electricity will be worked on

Bibliography

Board Gais Networks 2008 Rochestown Park Hotel Tri-GenerationCombined

Heat amp Power Installation (CHP) viewed 26 november 2011

lthttpwwwtemptechiepdf4_bg-rochestownpdfgt

Canadian Centre for Energy 2002 Centre for Energy viewed 3 Dec 2011

lt

httpwwwcentreforenergycomAboutEnergyEnergyElectricityGeneration

Overviewasppage=11gt

Commission for energy regulation 2009 viewed 1 november 2011

lthttpceriegt

Department of Communications 2006 CHP in Ireland viewed 28 october

2011

lt

httpwwwseaiieAbout_EnergyEnergy_Policyy_DriversCHP_Policy_Repor

t_18082006pdfgt

Department of the Environment Heritage and Local Government 2007

Ireland National Climate Change Strategy 2007-2012 viewed 13 november

2011

DIT 200809 DIT library energy_policy_and

_economics_semester_1_examinations_200809 viewed 26 november 2011

lthttpDITieLibraryExampapersgt

PB Power for The Royal Academy of Engineering The Cost of Generating

Electricity viewed 26 november 2011

lt

Page12

Energy Policy amp Economics Paul Derwin

17 Comparative Analysis

CHP

CHP is the simultaneous production and utilization of heat and electricity from

the same primary fuel source minimizing the waste of the heat byproduct of

the electricity generating process and converting the heat into hot water or

steam Combined heat and power recovers the heat as well as generates

electricity-providing efficiencies up to 90 CHP can provide a secure and

highly efficient method of generating electricity and heat ldquoDue to utilization of

heat from electricity generation and the avoidance of transmission losses

because electricity is generated on site CHP achieves a significant reduction

in primary energy usage compared with power stations and heat only boilersrdquo

(SEAI 2000) The heat generated by the CHP system can also provide chilled

water using an absorption chiller The absorption process uses a condenser

and evaporator just like vapor compression systems but replaces the motor

and compressor assembly with a thermal fluid compressor to transfer low-

temperature energy to high-temperature heat rejection The absorption cycle

uses thermal energy or waste heat not electricity to create chilled water

CHP Components

All CHP plants consist of standard components such as

The prime mover (engine) to drive the electrical generator an electrical

generator that produces the electricity

A heat recovery system to recover usable heat a cooling system to

dissipate heat rejected from the engine that cannot be recovered

Combustion and ventilation air systems to carry away harmful exhaust

gases away

Control system to maintain safe and efficient operation and finally an

enclosure to achieve physical and environmental protection for the

engine and operators and to reduce noise levels

Page9

Energy Policy amp Economics Paul Derwin

Figure 3 CHP Operation

The CHP plant operation uses different types of fuel such as natural gas

diesel or oil which powers a reciprocating engine or gas turbine An electrical

generator which produces electricity is connected to the prime mover Heat

from the prime mover is captured and used for heating water for central

heating or for hot water

Cooling needs of the building can be met by using an absorption chiller The

type of prime mover that is used to drive the electrical generator classifies

CHP plant The two most common types used are

Steam turbine this is a common CHP component different types of

fuels are burned in a boiler to produce high-pressure steam that

passes through a steam turbine to produce power

Gas turbine a gas turbine uses large amounts of intake air which is

compressed and then expanded by adding fuel which is ignited The

Page10

Energy Policy amp Economics Paul Derwin

expanded air rotates the turbine blades similar to a jet engine light oil

or gas can be used as a fuel

The gas turbine drives an electrical generator the exhaust gas goes to

a heat recovery boiler which produces heat and steam (Canadian

Centre for Energy 2002)

18 Grid Electricity and Boiler Generation (Peat or Oil Powered Stations)

Figure 4 CHP vs Grid Electricity and Boiler Generation

From figure 4 above it is noted that CHP reduces primary energy consumption

in comparison to conventional methods involved in the generation of heating

hot water and electricity There are considerable losses of electrical energy

starting from the power plant through the transmission lines transformers and

then into the consumer building anything from 35 to 55 can be expected

According to SEAI ldquoThe full advantage of natural gas-fired CHP technology is

achieved when the production of power and heat is combined For this to be

technically and economically feasible it generally requires a simultaneous

demand for heat and electricity on the premises for a minimum of 14 hours

Page11

Energy Policy amp Economics Paul Derwin

per day or around 5000 hours per annumrdquo (SEAI 2000) The manufacturing

plant in question with the CHP operating 720 hours per month 24 hours a day

is very much suited to CHP technology In case of breakdown and

maintenance on the CHP plant the manufacturing plant will still be connected

to the grid Surplus electricity will be sold to the electricity grid if required

Schemes for receiving a feed-in tariff for this electricity will be worked on

Bibliography

Board Gais Networks 2008 Rochestown Park Hotel Tri-GenerationCombined

Heat amp Power Installation (CHP) viewed 26 november 2011

lthttpwwwtemptechiepdf4_bg-rochestownpdfgt

Canadian Centre for Energy 2002 Centre for Energy viewed 3 Dec 2011

lt

httpwwwcentreforenergycomAboutEnergyEnergyElectricityGeneration

Overviewasppage=11gt

Commission for energy regulation 2009 viewed 1 november 2011

lthttpceriegt

Department of Communications 2006 CHP in Ireland viewed 28 october

2011

lt

httpwwwseaiieAbout_EnergyEnergy_Policyy_DriversCHP_Policy_Repor

t_18082006pdfgt

Department of the Environment Heritage and Local Government 2007

Ireland National Climate Change Strategy 2007-2012 viewed 13 november

2011

DIT 200809 DIT library energy_policy_and

_economics_semester_1_examinations_200809 viewed 26 november 2011

lthttpDITieLibraryExampapersgt

PB Power for The Royal Academy of Engineering The Cost of Generating

Electricity viewed 26 november 2011

lt

Page12

Energy Policy amp Economics Paul Derwin

Figure 3 CHP Operation

The CHP plant operation uses different types of fuel such as natural gas

diesel or oil which powers a reciprocating engine or gas turbine An electrical

generator which produces electricity is connected to the prime mover Heat

from the prime mover is captured and used for heating water for central

heating or for hot water

Cooling needs of the building can be met by using an absorption chiller The

type of prime mover that is used to drive the electrical generator classifies

CHP plant The two most common types used are

Steam turbine this is a common CHP component different types of

fuels are burned in a boiler to produce high-pressure steam that

passes through a steam turbine to produce power

Gas turbine a gas turbine uses large amounts of intake air which is

compressed and then expanded by adding fuel which is ignited The

Page10

Energy Policy amp Economics Paul Derwin

expanded air rotates the turbine blades similar to a jet engine light oil

or gas can be used as a fuel

The gas turbine drives an electrical generator the exhaust gas goes to

a heat recovery boiler which produces heat and steam (Canadian

Centre for Energy 2002)

18 Grid Electricity and Boiler Generation (Peat or Oil Powered Stations)

Figure 4 CHP vs Grid Electricity and Boiler Generation

From figure 4 above it is noted that CHP reduces primary energy consumption

in comparison to conventional methods involved in the generation of heating

hot water and electricity There are considerable losses of electrical energy

starting from the power plant through the transmission lines transformers and

then into the consumer building anything from 35 to 55 can be expected

According to SEAI ldquoThe full advantage of natural gas-fired CHP technology is

achieved when the production of power and heat is combined For this to be

technically and economically feasible it generally requires a simultaneous

demand for heat and electricity on the premises for a minimum of 14 hours

Page11

Energy Policy amp Economics Paul Derwin

per day or around 5000 hours per annumrdquo (SEAI 2000) The manufacturing

plant in question with the CHP operating 720 hours per month 24 hours a day

is very much suited to CHP technology In case of breakdown and

maintenance on the CHP plant the manufacturing plant will still be connected

to the grid Surplus electricity will be sold to the electricity grid if required

Schemes for receiving a feed-in tariff for this electricity will be worked on

Bibliography

Board Gais Networks 2008 Rochestown Park Hotel Tri-GenerationCombined

Heat amp Power Installation (CHP) viewed 26 november 2011

lthttpwwwtemptechiepdf4_bg-rochestownpdfgt

Canadian Centre for Energy 2002 Centre for Energy viewed 3 Dec 2011

lt

httpwwwcentreforenergycomAboutEnergyEnergyElectricityGeneration

Overviewasppage=11gt

Commission for energy regulation 2009 viewed 1 november 2011

lthttpceriegt

Department of Communications 2006 CHP in Ireland viewed 28 october

2011

lt

httpwwwseaiieAbout_EnergyEnergy_Policyy_DriversCHP_Policy_Repor

t_18082006pdfgt

Department of the Environment Heritage and Local Government 2007

Ireland National Climate Change Strategy 2007-2012 viewed 13 november

2011

DIT 200809 DIT library energy_policy_and

_economics_semester_1_examinations_200809 viewed 26 november 2011

lthttpDITieLibraryExampapersgt

PB Power for The Royal Academy of Engineering The Cost of Generating

Electricity viewed 26 november 2011

lt

Page12

Energy Policy amp Economics Paul Derwin

expanded air rotates the turbine blades similar to a jet engine light oil

or gas can be used as a fuel

The gas turbine drives an electrical generator the exhaust gas goes to

a heat recovery boiler which produces heat and steam (Canadian

Centre for Energy 2002)

18 Grid Electricity and Boiler Generation (Peat or Oil Powered Stations)

Figure 4 CHP vs Grid Electricity and Boiler Generation

From figure 4 above it is noted that CHP reduces primary energy consumption

in comparison to conventional methods involved in the generation of heating

hot water and electricity There are considerable losses of electrical energy

starting from the power plant through the transmission lines transformers and

then into the consumer building anything from 35 to 55 can be expected

According to SEAI ldquoThe full advantage of natural gas-fired CHP technology is

achieved when the production of power and heat is combined For this to be

technically and economically feasible it generally requires a simultaneous

demand for heat and electricity on the premises for a minimum of 14 hours

Page11

Energy Policy amp Economics Paul Derwin

per day or around 5000 hours per annumrdquo (SEAI 2000) The manufacturing

plant in question with the CHP operating 720 hours per month 24 hours a day

is very much suited to CHP technology In case of breakdown and

maintenance on the CHP plant the manufacturing plant will still be connected

to the grid Surplus electricity will be sold to the electricity grid if required

Schemes for receiving a feed-in tariff for this electricity will be worked on

Bibliography

Board Gais Networks 2008 Rochestown Park Hotel Tri-GenerationCombined

Heat amp Power Installation (CHP) viewed 26 november 2011

lthttpwwwtemptechiepdf4_bg-rochestownpdfgt

Canadian Centre for Energy 2002 Centre for Energy viewed 3 Dec 2011

lt

httpwwwcentreforenergycomAboutEnergyEnergyElectricityGeneration

Overviewasppage=11gt

Commission for energy regulation 2009 viewed 1 november 2011

lthttpceriegt

Department of Communications 2006 CHP in Ireland viewed 28 october

2011

lt

httpwwwseaiieAbout_EnergyEnergy_Policyy_DriversCHP_Policy_Repor

t_18082006pdfgt

Department of the Environment Heritage and Local Government 2007

Ireland National Climate Change Strategy 2007-2012 viewed 13 november

2011

DIT 200809 DIT library energy_policy_and

_economics_semester_1_examinations_200809 viewed 26 november 2011

lthttpDITieLibraryExampapersgt

PB Power for The Royal Academy of Engineering The Cost of Generating

Electricity viewed 26 november 2011

lt

Page12

Energy Policy amp Economics Paul Derwin

per day or around 5000 hours per annumrdquo (SEAI 2000) The manufacturing

plant in question with the CHP operating 720 hours per month 24 hours a day

is very much suited to CHP technology In case of breakdown and

maintenance on the CHP plant the manufacturing plant will still be connected

to the grid Surplus electricity will be sold to the electricity grid if required

Schemes for receiving a feed-in tariff for this electricity will be worked on

Bibliography

Board Gais Networks 2008 Rochestown Park Hotel Tri-GenerationCombined

Heat amp Power Installation (CHP) viewed 26 november 2011

lthttpwwwtemptechiepdf4_bg-rochestownpdfgt

Canadian Centre for Energy 2002 Centre for Energy viewed 3 Dec 2011

lt

httpwwwcentreforenergycomAboutEnergyEnergyElectricityGeneration

Overviewasppage=11gt

Commission for energy regulation 2009 viewed 1 november 2011

lthttpceriegt

Department of Communications 2006 CHP in Ireland viewed 28 october

2011

lt

httpwwwseaiieAbout_EnergyEnergy_Policyy_DriversCHP_Policy_Repor

t_18082006pdfgt

Department of the Environment Heritage and Local Government 2007

Ireland National Climate Change Strategy 2007-2012 viewed 13 november

2011

DIT 200809 DIT library energy_policy_and

_economics_semester_1_examinations_200809 viewed 26 november 2011

lthttpDITieLibraryExampapersgt

PB Power for The Royal Academy of Engineering The Cost of Generating

Electricity viewed 26 november 2011

lt

Page12

Energy Policy amp Economics Paul Derwin

httpwwwraengorguknewspubblicationslistreportsCost_Generation_Co

mmentartypdfgt

SEAI 2000 A Guide to Combined Heat and Power in Ireland viewed 13

november 2011

lt

httpwwwseaiiePublicationsYour_Business_PublicationsGuide_to_CHP_i

n_Ire_low_pdfgt

SEAI 2002 SEAI Building Energy Rating viewed 1 november 2011

lthttpwwwseaiieYour_BuildingBERgt

SEAI 2002 Sustainable Energy Authority of Ireland strategic plan 2010-2014

viewed 1 november 2011 lthttpSEAIiegt

seai 2009 Electricity amp Gas Pirices in Ireland viewed 5 december 2011

lt

httpwwwseaiiePublicationsStatistics_Publications_Electricity_amp_Gas_Pric

es_in_Irelandpdfgt

United Nations Framework Convention 2011 United Nations Framework

Convention on Climate Change viewed 18 November 2011

lthttpunfcccint2860gt

Page13