Switching from oil to coal firing for steam raising A case study at a large industrial site

Switching from oil to coal firing for steam raising A case study at a large industrial site

J. F. Skea

The prospects for a switch horn oil to coal at large industrial sites are assessed, using a detailed examination of the problems at one particular site. These large sites, where combined heat and power generation is common, represent a sizeable fraction of coal's potential industrial market. The problems of coal transport, stocking and handling are discussed, as well as ash disposal, local environmental effects and boiler choice. The economics, as determined by the strict investment criteria currently applied by many companies, of a switch to coal are examined in the light of possible fuel price movements. The implications of boiler plant age and piecemeal replacement for the possible rate at which coal might penebate the industrial energy market are discussed.

As it is becoming apparent that supplies of oil to the Western world are unlikely to grow during the remainder of this century, the need to utilize the world's extensive coal resources has been increasingly recognized. ] Taking the U K as an example, the Department of Energy has projected that a substantial switch from oil and gas to coal will be necessary in the industrial markets, entailing an industrial coal burn of 30-50 million t o n n e s / y e a r by 20002 as opposed to the present 10 mtce. This compares with a present industrial energy market of 90 mtce of which just over 50% consists of sales for 'non-premium' uses where the burning of low grade fuels such as coal is possible. Since the main non-premium use is steamraising, it is apparent that coal firing will need to be adopted at most boiler installations in U K industry if government objectives are to be met. Although the need for an increased coal burn in industry has been established, less attention has been focused on the problems which will be faced by the diverse group of industrialists involved in such a change. The merits of performing a detailed case study include:

The author is now with the Centre for Energy and Environmental Studies, Carnegie Mellon University, Schenley Park, Pittsburgh, PA 15213, USA. The work described was carried out in the Energy Research Group, Cavendish Laboratory, University of Cambridge, Madingley Road, Cambridge CB3 0HE, UK.

T h e plant selected is situated in south east England and currently burns almost 200000 tonnes of heavy (3500 seconds) fuel oil per year to raise steam in large water tube boilers. The steam is used principally for process heat, though 30% is sold to associated companies occupying the same site. A large fraction of the site's electricity requirement is g e n e r a t e d by expanding high pressure steam through back pressure and passout condensing turbines. Since water tube boilers account for 40% of U K industrial boiler capacity 3 and industrial sites (generating at least as much electricity as the one under consideration) burn 14 mtce per year 4

•

•

Providing a vehicle for the realistic assessment of the whole range of problems relating to coal conversion, eg handling, storage, ash disposal and boiler conversion. Collecting information which is useful in a more general appraisal of the prospects for a large-scale switch to coal in the industrial markets.

0301-4215/81/030205-11502.00© 1981 IPC Business Press

205

Switching from oil to coal firing for steam raising

The author would like to thank members of the National Coal Board Marketing Department, members of the Energy Department of the company concerned and Mike Dubar and Mike Morrison of the Energy Research Group at Cambridge University for their

invaluable assistance and support in carrying out this case study. Acknowledgement is made to the National Coal Board, the British Coal Utilisation Research Association Limited, the Science Research Council and the University of Cambridge for financial support for this research, but the views expressed are those of the author and are not necessarily shared by the Board, the Association or the company concerned.

; For instance at the Venice Summit Meeting of Western leaders in June 1980. See also

Carroll L. Wilson, Coal-Bridge to the Future, Report of the World Coal Study, Ballinger, Cambridge, MA, USA, 1980. ZDepartment of Energy, Energy Policy - A Consultative Document, Cmnd 7101, HMSO, London, 1978. 3Based on a continuing study of the UK industrial boiler stock by John Chesshire and Mike Robson of the Science Policy Research Unit, Sussex University. For a preliminary report of results see 'Boilersancient and modem', Energy Manager, Vol 2, No 1, February 1979, pp 46-47. "Department of Energy, Economics and Statistics Division, Inquiry into Private Generation of Electricity in Great Britain 1977, DOE, London. sSteam output is still measured in Imperial units by UK boiler manufacturers and users. 1 000 Ib/hour is approximately 0.3 MW thermal. 6Smalls are the residues left after the more expensive graded coals have been separated from mined coal. The advantage of using washed smalls (which is more expensive) is that the ash content and hence the amount of coal which needs to be handled and ground is reduced.

the plant is representative of the relatively few establishments with combined heat and power generation which account for a substantial p r o p o r t i o n of the steam raising markets. While performing the case study, it has been kept in mind that the benefits of a switch to coal for the operators of any particular plant d e p e n d crucially on the timing; if boilers are due for replacement a switch to coal is much more likely than if boilers have to be retired prematurely. Since all the boilers at this site have several years of life left, two possible timings for a switch to coal have been examined. The first was the 'immediate' switch, which would involve the premature retirement of several (admittedly aging) boilers, while the second was the 'delayed' switch which would become possible if no immediate decision to switch to coal were made and the baseload boilers eventually became due for replacement. This circumstance might not occur until well into the 1990s.

Steam generation at the site Steam is generated centrally in two boilerhouses containing a total of eight boilers and is piped round the 600 acre site in two networks, one at 20 lb/in 2 and the other at 200 lb/in 2. Steam is actually raised at 400 lb/in ~ and 1300 lb/in 2 for expanding through the various turbines. Of the eight boilers listed in Table 1, numbers 6 and 7 are used for baseload operation at almost maximum continuous rating, since they are each connected to a back pressure turbine, while number 8 modulates to meet variations in demand. Numbers 1-5 are used only for meeting peak demand and when one of the other boilers is down for maintenance. T h e r e is a seasonal variation in the level of steam demand at the site. During the four summer months when maintenance is carried out, the average steam demand is 545000 lb/h while the peak demand is 720000 lb/h. 5 During the remainder of the year, the average demand is 630000 lb/h while the peak demand is 860000 lb/h. The variation is due mainly to the passout condensing turbines being used more often in the winter months to avoid paying the high maximum demand charges associated with the public supply of electricity at that time of year.

Coal transport and handling Choice o f coal

T h e choice of coal cannot be made independently of the choice of boiler and firing system, and here coals suitable for pulverized fuel (PF) firing are considered. Being in the south east, the plant could be supplied with blended smalls from the Kent coalfields or with East Midlands washed smalls. 6 Table 1. Boilers at the site.

Age Firing Pressure (Ib/in2) Output (Ib/h) Hours run annually Efficiency (gross)

206

Boiler numbers 1-3

4-5

6-7

8

1938-1940 Stoker converted to oil 425 3x 60000 - 2000 65-73%

1951-1954 Stoker converted to oil 425 2x 100000 - 2000 66-78%

1961-1964 Pulverizedfuel convertedto oil 1320 2x 290000 7000-8000 82-86%

1977 Oil

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POLICY

September

425 220000 8000 82-88%

1981

Switchingfrom oil to coalfiring for steam raising Transport In contrast to the cumbersome system of unloading coal by mechanical grabs, once used at the site, unit (merry-go-round) trains are now the standard m e t h o d for bringing coal to large industrial plants. 7 The minimum amount of railway track required would be three parallel sidings each 400m long (two of which already exist for trains bringing oil to the site) plus an extra siding for moving up to ten wagons at a time over the underground discharge hopper. At the site examined, it would be necessary to store the train in three sections to avoid blocking access roads. Storage and handling It is necessary to hold stocks of any fuel to cope with weekly and annual fluctuations in demand and deliveries and to guard against the risk of unscheduled interruptions to supply. The plant operators felt that it would be unwise to operate without at least a four week stock at any time, building up to a 6-7 week stock at the beginning of winter when supply interruptions are most likely. An area of 10000m 2 would be required, sufficient to stock 35 000 tonnes of coal, the average stocking height being limited to 5 m due to the risk of spontaneous combustion. Although most of the sites previously used for stocking coal had been reutilized for stocking final products, a suitable area of waste ground was available within 250m of the main boilerhouse. For plants of this size, the most economic way of transferring coal" b e t w e e n the discharge point, the stocking area and the boilerhouse bunkers is by belt conveyor. The use of a two-way conveyor from the stocking area to a transfer tower connected to both the discharge point and the boilerhouse bunkers would ensure complete flexibility in operation. The conveyors would need to be able to carry 250 tonnes/h to unload a train in 5-6 hours. Most of a delivery would be transferred direct to the boilerhouse bunkers, but the remainder would be moved to stock in o r d e r to build up supplies for weekends and holidays and to replenish boilerhouse bunker stocks.

q'he standard train is 350 m long and has a capacity of 1000-1100 tonnes of coal carded in 35 hopper bottomed wagons. With an annual coal consumption of 210000-290000 tonnes (see Table 2) deliveries about once per week day are indicated. A less capital-intensive semi- Environmental aspects automatic discharge version of the merrygo-round system is appropriate for these A i r pollution relatively infrequent deliveries. A train can be unloaded in 5-6 hours using this system. Since the site has a boiler capacity of greater than 450000 lb/h and A British Rail locomotive would bring in a full electricity is generated, it falls under the control of HM Alkali and Clean train at an agreed time each day and then clear the 'empties' from the previous day, Air Inspectorate. The regulations set by this body control emissions of giving an effective 24 hours tumround. It particulates and sulphur dioxide. The particulate content of chimney would be the company's responsibility to emissions should not exceed 0.115 g/m 3 and the darkness of smoke unload the wagons with their own equipment, but they would have the freedom to emissions is also controlled, s These conditions can be met by passing flue split the train and shunt it round as necess- gases through electrostatic dust precipitators which are now a standard ary. This system has been successfully part of PF boiler equipment and by giving sufficient attention to combusoperated at sites of a similar size. 8HM Alkali and Clean Air Inspectorate, tion conditions. Notes on Best Practical Means for Control of sulphur dioxide in the atmosphere is effected by regulating Electricity Works, BPM 2/75. chimney heights so that ground level concentrations are kept below a 9Department of the Environment, 'The determination of chimney heights in Britain' certain level (usually 0.17 ppm measured over a period of three Appendix V of the 106th Annual Report on minutes). 9 The site at present satisfies the requirements of the Alkali Alkafi &c Works 1969, HMSO, London, Inspectorate. ~0However, although conversion to coal firing would bring 1970. '°HM Alkali and Clean Air Inspectorate, op a reduction of about 35% in SO2 emissions, with the changing attitude towards acid legislation relating to emissions from chimneys, it is felt cit, Ref 8.

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207

Switching from oil to coal firing for steam raising

advisable to include a new 150m multiflue chimney in the proposed schemes for coal firing. Of the 186 industrial boilers registered with the Alkali Inspectorate in 1976, 32 were connected to substandard chimneys. ~ Solid wastes

If K e n t coal were burned, up to 35000 tonnes of ash would be created annually, with a maximum of 810 tonnes/week in the winter months. Coarse ash from the boilers would make up 20% of the total, while the r e m a i n d e r would consist of precipitator dust, or fly ash, which would be transferred pneumatically to special hoppers. The dust would be d a m p e n e d before loading on to lorries in order to prevent emissions. T h e markets for furnace bottom ash and PF dust in the manufacture of bricks and cement and in civil engineering applications are largely satisfied by the output of the Central Electricity Generating Board. Consequently, the ash produced would need to be dumped somewhere in the vicinity of the site. The local planning officer indicated that as long as suitable precautions were taken to prevent dust emissions there would be no difficulties over dumping ash in one of the many disused quarries within 10 miles of the site. (PF dust is in fact considered less of a nuisance than domestic refuse). The ash would be removed in 10 tonne lorries, with the load covered to prevent dampened dust from drying out. A maximum of 17 trips a day would be necessary in winter, with a total of 3 500 trips per year.

Selection of boilers Boiler conversion possibilities

"Health and Safety Executive, Industrial Air Pollution 1976, HMSO, London, 1978. 208

Seven of the eight boilers at the site were designed for coal firing before their conversion to oil in 1971 and it should, in principle, be possible to reconvert them. However, it is not economic to reconvert older boilers such as numbers 1-5, which have limited life expectancies and low efficiencies. The manufacturers have carried out a feasibility study on boilers 6 and 7 showing that reconversion to PF firing would be possible at a cost of around £4 million, involving a derating from 290000 to 250000 lb/h in each case. This would be considerably cheaper than providing new coal-fired capacity. Conversion would involve: dismantling and removing certain old unsuitable equipment from the boilerhouse; installing a new firing system including pulverizing mills, pipework and burners; installing new coal and ash handling equipment; fitting new internals to the existing electrostatic precipitator casings; installing additional soot blowers; and modifying the existing combustion equipment. As boilers 6 and 7 were designed for burning East Midlands coal, there would be difficulties in burning low volatile Kent coal on its own without expensive modifications. If Kent coal were to be used, 10% supplementary oil firing (by weight) would be necessary for satisfactory combustion. N u m b e r 8 boiler was designed for oil firing and was commissioned in 1977. T h e r e is virtually no possibility of economically converting it to coal. The question surrounding this boiler is whether it would be more economic to keep it purely as standby in case of forced outages at times of peak d e m a n d (ie practically write it off) or whether it should be used regularly for meeting peaks of steam demand and for replacing boilers which are down for planned maintenance. E N E R G Y P O L I C Y September 1981

Switchingfrom oil to coalfiringfor steam raising Type of firing PF firing is possible in boilers with a capacity greater than 150000 lb/h, while stoker firing is possible up to 250000 lb/h. The large boilers at the site are therefore in a 'grey' area. A major U K boiler manufacturer indicated that there would be very little difference between the cost of PF and stoker firing in this size range. A PF boiler would operate more efficiently and burn a wider range of fuels, although the type of ash p r o d u c e d is more difficult to dispose of. On balance, it was decided that PF firing was the appropriate system to consider, since there would be two reconverted PF boilers operating at the site.

Size and total capacity of plant T h e final choice of the number and size of boilers to be ordered depends on the weights given to a number of factors including the costs of the boilers, fuel, labour and maintenance and the desired security of steam supply.In order not to anticipate the decision which the company c o n c e r n e d might make, two possible conversion schemes have been considered for the purpose of the case study. These are compared with the present boiler configuration and steam demand at the site in Figure 1. Scheme A (900000 lb/h) provides the minimum amount of capacity necessary to cover maximum demand and has the following features: • • • • '2This applies to an immediate switch. In the case of a 'delayed' switch boilers 6 and 7 would be replaced by two new boilers, each rated at 250000 Ib/h. '~Scheme A provides barely adequate steam raising capacity and the site engineers and others associated with production might be reluctant to accept the difficulties and inconveniences which would be caused in subsequent operation.

boilers 6 and 7 would be reconverted to PF firing with a consequent derating to 250000 lb/h each;'2 boilers 1-5 would be scrapped; boiler 8 would be retained on oil firing to meet peak demand; and a new PF boiler with a capacity of 180000 lb/h and a new boilerhouse would be commissioned.

Scheme B (1220000 lb/h) would provide as much capacity as at present. It would differ from Scheme A in that boiler 8 would be retained as standby only and two new PF boilers, each 250000 lb/h would be commissioned. Schemes A and B represent the minimum and maximum capacities respectively which the company might be expected to install if a switch to coal should take place. However, it is likely that the chosen scheme would b e a r a closer resemblance to Scheme B. ,3 1200

-8b

I000

-Winter peak

800

10

-Summer peak Winter average

F i g u r e 1. Possible boiler configurations and steam demand. Baseload boilers are at the bottom of the diagram. a Numbers are the boiler numbers. b Standby boiler.

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S e p t e m b e r 1981

600

-Summer average

400

--

200

6a

A Steam demand

Present boilers

B Conversion Schemes

209

Switching from oil to Coalfiring for steam raising Table 2. Estimated running costs of coal conversion schemes (£10OOlannum).

1:4"esent scheme

Coala

Oil b

aAssumed cost is £41/tonne for coal I (East Midlands washed smalls) and £40/tonne for coal ~(Betteshangar blended smalls). heavy fuel oil price of £90.90/tonne is assumed. This price is the average of those paid by 900 large industrial establishments in the second quarter of 1980. Department of Energy, Energy Trends, HMSO, London, September 1980. CCosts shown for Schemes A and B are the costs additional to those of the present scheme. dCosts for 39, 50 and 48 men respectively. eAIIows for the fact that steam shortfalls due to forced boiler outages are more probable with Scheme A.

Fuel costs Electricity c Diesel fuel

Labou~ Ash disposal Maintenance Insurance Rates Steam shortfall allowanceC,e Other costs Total costs

-

16034 (176400 tonnes) 16034 0 -

378

Scheme A Coal I

Coal II

10570 (257 800 tonnes) 1630 (17900 tonnes) 12200 119

8392 (209 800 tonnes) 3749 (41 200 tonnes) 12 141 101

Coal II 9331 (2"33300 tonnes) 2401 (26400 tonnes) 11 732 116 17 407 35 674 166 199

1 1 615 13347

17

17

429

11 753 (286 700 tonnes) 44 (500 tonnes) 1t 797 136 17 407 23 674 166 199

1 1 623 13420

258 105 125

632 129 155

429 32 632 129 155

0 866 16900

108 1 610 13810

108 1 603 13744

-

Schell~ B Coal I

21

Benefits and costs of an immediate switch to coal Significant quantities of oil could be used at the site even after a switch to coal because: • •

" D e p a r t m e n t of Energy, Energy Trends, HMSO, London, September 1980. '~l'he extra electricity would be used in the pulverizing mills and precipitators. Labour requirements would not increase as much as might be expected after a switch to coal because there would be a reduction in the number of boilers. For the switch to coal one person for trimming the coal bunkers and one for the ash handling plant would be required in each boilerhouse on each shift, Five people would be required on a single shift basis for the coal handling system.

with Scheme A, boiler 8 is required to run on oil for a large part of the year, satisfying 10% of the steam demand; with Kent coal, 10% oil firing by weight would be necessary in the PF boilers.

Estimates of the quantities of coal and oil which would be used after conversion and the effects on fuel and other running costs are shown in Table 2. The fuel prices were current in April 1980, '4 while other costs refer to late 1979. A switch to coal would cut the annual fuel bill by £3.8-4.3 million, in the region of 25%. This would be partially offset by an increase in other costs of £0.8 million, due to greater electricity, diesel fuel, labour and maintenance requirements. ~5 Ash disposal would also add to costs. In the case of Scheme A, with the minimum capacity, an allowance has been made for the risk of production interruptions due to forced boiler outages at times of peak steam demand. Overall costs would be very similar for both types of coal. Table 3, Capital costs of coal conversion schemes (£1000 late 1979 pdces, VAT excl-_~,~__).

Sources: Manufacturers' estimates and company purchasing department. aincludes coal and ash handling plant, lverizers, precipitators etc. oundations, steelwork and cladding. CCabling, pipework, instruments, inspection, testg, temporary site services etc. Boiler manufacturer's estimate minus the cost of some conveyors which would have duplicated the handling system alreadycosted. Includes coal and ash handling equipment within the boilerhouse

~

area.

ecabiing, primary air fan motors, site painting,

inspectionfeesetc.

WExcludes the cost of a weighing device for the moving conveyor and a magnetic separator for tramp iron which are both included in the basic cost of converting boilers 6 and 7.

210

Items of expenditure

New boilers Basic costa Associated civil workb Miscellaneousc Conversion of boilers 6 and 7 Basic costd Miscellaneouse Handling system Civil work Railway track Conveyorsr Shunter and bulldozer Electrical Chimney Total

Scheme A

Sclmn~ B

5 198 3800 1 153 245

12 996 9500 2 883 613 3 927 3 843 84 391 37 83 156 105 10 1 078

10 594

18 392

E N E R G Y P O L I C Y September !981

Switching from oil to coal firing for steam raising

6The costs of handling system, the chimney and the boiler conversions were based on manufacturers' estimates or tenders. The cost of the new boilers was discussed with a major UK manufacturer. Miscellaneous cost estimates were obtained from the purchasing department of the company concerned. 'TAssuming Scheme B firing on Midlands coal. ~SThe payback period is defined as the length of time it takes for the cumulative cash flow as the result of a project to become positive after the completion of construction work. The paybacks in this article have been calculated without regard for the effects of tax or depreciation. The treatment of these items can vary considerably from one firm to another. 'gEven then one survey found that almost 50% of firms used only judgement in making decisions about plant replacement. 'Replacement policy', National Institute Economic Review, Vol 30, November 1964, pp 30-43. 2°The incremental investment in Scheme B as opposed to Scheme A would only be recovered in 10-15 years. In spite of this, Scheme B would still be more likely.

The capital costs of Schemes A and B, which would both require the construction of a new boilerhouse and a 150 m multiflue chimney, are summarized in Table 3. Excluding value added tax (VAT), the total costs would come to £10.6 million and £18.4 million. The cost of the new boilers dominates,'6 accounting for almost 50% of the total in Scheme A and 70% in Scheme B. The cost of the handling system outside the boilerhouse is only a small proportion of the total. Including planning and design, converting the plant to coal would take about 31/2 years. Work could be organized so that there was always a d e q u a t e steam raising capacity available. Construction of the handling system would take 6 months, the two boiler conversions 12 months and the new boilerhouse and chimney 18 months each. As the boiler conversions would be carried out first, coal use would commence after 2 years at a level of 2000 tonnes/week, rising to 4000tonnes/week after a further 6 months and 5500 tonnes/week by the end of the project. 17 Because the rundown of expensive oil stocks would not be compensated for entirely by the cost of providing adequate coal stocks, working capital requirements would be reduced by around £0.2 million. Both the costs and benefits of investment in coal-fired capacity are large and careful consideration is usually given to projects such as these. Ideally, the long-term profitability of such projects is measured by calculating the discounted rate of return on the investment. However, because calculations are simpler and a better measure of liquidity is provided for companies with cash flow problems, payback criteria TM are used by most U K companies. 19The payback period is generally used to decide whether an investment proposal is to be rejected or passed on for more serious consideration, which would include an examination of the phasing of the capital expenditure and compatibility with the general investment programme of the company. Payback periods and discounted rates of return for each of the two conversion schemes and the two coals, under three different scenarios for the evolution of fuel prices, are shown in Table 4. With fuel prices constant in real terms, the investment in Scheme A would be recovered after 3 years, and in Scheme B after 5 years. With an annual 3% rise in oil prices the paybacks would be reduced to 2 and 3 years respectively. 2° Since there are strong indications from industry that projects associated with plant not directly linked to production, such as this one, must have a payback of 2-3 years to gain acceptance, there would have to be an expectation of rising oil prices before this particular project would be carried out given the present climate for decision making. In the real world, prices do not evolve as steadily as they do in the scenarios used in Table 4. Since 1973, fuel prices have been volatile and the industrialist has had to make decisions under conditions of uncertainty. This situation tends to inhibit action and has resulted in the industrial fuel markets being virtually static in recent years. Figure 2 indicates the relative prices of coal and oil which would allow Scheme B to be implemented using Midlands coal with various payback criteria. If a Table 4. P a y t a c k pedods for S c h m s

aDiscount rates of retum in brackets, over a 20 ~erar project life. Coal and oil prices remain the same in real terms. il prices rise at 3% per annum. il prices rise at 3% per annum and coal prices at 1% per annum.

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P O L I C Y S e p t e m b e r 1981

Scenario

Scheme A Coal I

Ib IIc IIId

2.9 (27%) 1.8 (48%) 2.0 (43%)

A and B under v a r i o ~ pdce m r i o s ,

a

Coal II

Scheme B Coal I

Coal U

2.9 (27%) 1.8 (46%) 2.0 (42%)

5.2 (17%) 3.1 (34%) 3.4 (31%)

5.1 (17%) 3.2 (32%) 3.5 (30%)

211

Switching from oil to coal firing for steam raising

25

Price poth (1974-1980)

2C

5O "Oil preferred

15

!

40 c

~ 3o 1974

~ ~c ~

20

0

F i g u r e 2. Payback c r i t e d a - S c h e m e

B, Coal I.

;.

25

.

5.

50

.

. I0

Poyback (yeors) 5 3 2

pr%0'/ I0

.

75 (f/tonne)

15

20 25 Oil price (p/therm)

3'0

3'5

coal switch is to be economic under a particular payback criterion, the price regime must be represented by a point lying to the right of the appropriate line. For example, the graph can be interpreted, on the basis of thermal parity, as meaning that the price of oil must exceed the price of coal by 11p/therm to justify a switch to coal on a 2 year payback criterion. The price of oil would need to rise by just over 20% for the price difference to reach this level. Required price differences for other payback periods may be read off the horizontal axis. The time path of coal and oil prices since the beginning of 1974, 2, which has been superimposed on Figure 2, shows how much the apparent payback of the project has varied over the last six years because of changes in prevailing prices. Just after the 1973 oil crisis the apparent payback period would have been 21/2 years, whereas just before the Iranian revolution the comparable value was 10 years.

Benefits and costs of a delayed switch to coal

2'Inflated using the index of material and fuel costs for manufacturing industry to obtain prices at late 1979 values. 22Except that if the site remained on oil, annual labour costs would fall to £320000 due to the reduced number of boilers.

212

The 'delayed' switch refers to a situation in which boilers 1-7 would be replaced, either because of age or accident. Then it would be necessary to buy new combustion equipment anyway (or close the plant) and the question would be whether the incremental investment in coal burning equipment would be justified. The work required for this delayed switch would be the same as for the 'immediate' switch except that boilers 6 and 7 would have to be replaced rather than converted. The capital costs of Schemes A and B with both coal and oil firing are summarized in Table 5. The coal-fired schemes would cost £17 million and £25 million with the equivalent oil-fired schemes costing about 65% of these values, total construction time would be 4 years. Running costs would be similar to those shown in Table 2.22 The payback periods for the incremental investment in coal-fired capacity would be considerably less than for an immediate switch to coal.

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S e p t e m b e r 1981

Switching from oil to coal firing for steam raising Table 5. Capital costs incurred at retirement of boileml-7 (£1000, excluding VAT). Scheme A

Handling Chimney New boilers R e ~ boilers Total

~

B

o,lnr~j

Coal firing

Oil firing

Coal firing

1 078 3377 6 642 11 097

391 1 078 5 198 10 143 16810

1 078 8443 6642 16 163

391 1 078 12996 10 142 24607

If fuel prices were to remain the same in real terms as at present, the incremental investment in coal firing for both Schemes A and B would be r e c o v e r e d 1-11/2 years after the end of construction. ,3 The coal/oil price difference required to promote a switch to coal on a 2 year payback criterion would be 5 p/therm. Given that the present difference is 8 p / t h e r m and the price of oil can be expected to rise relative to coal, it seems that a switch to coal would be very probable when the retirement of existing combustion equipment takes place.

Novel technologies It is b e y o n d the scope of this article to consider other than proved, readily available technology in any detail, but a few remarks on technologies which could become commercially significant in the near future are relevant. Fluidized bed combustion (FBC) is the most commonly mentioned novel technology when considering coal use. However, its advantages o v e r conventional combustion techniques are less pronounced at the 'large' end of the market. PF firing can also cater for a wide range of lower grade coals and has more flexibility as regards turndown. However, FBC could have advantages if regulations governing the emission of SO2 and N O x b e c a m e stricter in the UK. If, as is often claimed, the costs of FBC e q u i p m e n t could be demonstrated to be less than those of conventional e q u i p m e n t , the switch to coal in industry could be speeded up. Coal/oil mixtures would make it possible to burn a certain amount of coal without incurring the cost of expensive new combustion equipment. This technology could provide an interim solution to the problem of selling more coal to industry. BP have established an experimental route for the production of these mixtures z4 and it is believed that they could be competitive with fuel oil in the medium-term future. However, these mixtures could not be cheaper than coal on a thermal basis as 60% of the industrialist's fuel supply would remain oil-based.

Conclusions It has been demonstrated that, at the site examined, with present fuel prices and investment criteria for plant not directly connected with production a switch to coal would be fairly likely when the present baseload boilers have to be retired. However, unless a widening in the =3In this case, the incremental cost of investing in Scheme B as opposed to price difference between coal and oil occurs, a switch before that date Scheme A is recovered in only 2 years. would not satisfy the necessary 2-3 year payback criteria. Over the last 6 2"Wodd Coal Study, Global Perspective to 2 0 0 0 - U K Report, National Coal Board, years the price difference has fluctuated between 4p and 10p/therm (at London, 1980. 1980 values) which would give paybacks in the range 2%-10 years.

ENERGY POLICY September 1981

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Switching from oil to coal firing for steam raising

While the problems of availability of stocking space, the implementation of m o d e r n transport and handling techniques and the local environmental effects of coal use obviously posed some difficulties, they were not found to be insoluble. The site does exhibit one of the difficulties which can arise at some plants because there are several 'generations' of boilers which will come up for replacement at different times. As a result there is no ideal time for a switch to coal and it may prove necessary to retain some oil-fired capacity alongside new coal-fired plant. The fact that the cost of complete coal handling and storage facilities would be incurred when only 'piecemeal' boiler replacement was taking place could act as a deterrent to coal conversion at certain sites. However, the problem is diminished because, being more expensive to run, the oil-fired capacity would drop to the b o t t o m of the site 'merit order' and would be utilized less than the coal-fired capacity. Taking Scheme A as an example, only 10% of the steam would be raised in the oil-fired boiler constituting 25% of the total capacity. While the site is broadly representative of industrial plants with large water tube boilers generating their own electricity, there are, inevitably, several idiosyncracies which distinguish the site from any other. Being located in south east England, the plant is 200 miles from the major coalfields. This would add £1/tonne or 0.4p/therm to the cost of transporting Midlands coal, but opens up the possibility of using Kent coal (though there would be some problems obtaining satisfactory combustion). The cost of constructing a new chimney would penalize coal by just u n d e r l p / t h e r m in the case of an immediate switch, assuming a 2 year payback. On the other hand, the site is fortunate to have two baseload boilers which are in good enough condition to make reconversion to coal firing worthwhile. The extra cost of replacing these as opposed to converting them would be £7 million, equivalent to a penalty of over 4p/ t h e r m against coal in the case of an immediate switch and a 2 year payback. Research on the U K industrial boiler stock 2s indicates that most boilers converted from coal to oil are rather older than the early 1960s vintage boilers at this site, implying that many would not be economically reconvertible. T h e r e is virtually no possibility of converting a boiler designed for oil firing. Although this study indicates that a switch to coal is likely at large industrial sites, under present circumstances this could happen fairly slowly, at a rate governed by the rundown of combustion equipment. It is not certain whether this will be fast enough to secure an adequate UK contribution to the West's drive to reduce oil dependency. Several sets of circumstances which would prevent industry from being locked into a conversion programme imposed by the age profile of combustion equipment are possible: • • •

zsChesshireand Robson,op cit, Ref 3. 214

Oil prices could rise sufficiently to justify the early retirement of oil-fired equipment even with strict investment criteria. The fear of production losses being caused by oil shortages might drive industry to switch to coal regardless of the cost. Arrangements could be made to help companies overcome the capital shortage (which manifests itself in strict investment criteria) preventing an ultimately profitable conversion to coal at many sites.

T h e fear of oil shortages could be particularly potent and was widely shared in 1974 and 1979. Ways of overcoming the problem of capital E N E R G Y POLICY September 1981

Switching from oil to coal firing for steam raising

availability could include the judicious use of grants or loans for which there are already precedents in the field of energy utilization. ~ In May 1981, the U K government announced details of a £50 million grant scheme run by the Department of Industry specifically aimed at encouraging industrial energy users to switch from oil to coal. Successful applicants will obtain up to 25% of the total cost of conversion (including boilerhouse, civil works and auxiliary equipment where appropriate) as long as work is complete by March 1985, and with the provision that no individual award should exceed £5 million. A t the site considered in this article, the grant scheme would cut the payback period for investment in coal firing from 5.2 to 3.8 years in the case of an 'immediate' switch and from 1.4 years to zero in the case of a 'delayed' switch. Therefore, in the context of the strict investment criteria currently applied in industry, it is likely that the scheme would be successful in encouraging users to switch to coal when existing oil-fired boilers are being retired, but less so in circumstances where there is no capital cost incurred in continuing to burn oil. Note that the scheme can only have a limited effect on the industrial energy markets as a whole. Ten sites such as the one described could absorb the entire £50 million grant allocation, raising industrial coal use by 2-3 million tonnes/year. For a 'delayed' switch to coal with Scheme B, the grant available to the site examined would be affected by the £5 million upper limit, as would also be the case at several other large sites. As progress is monitored, the desirability of this feature should be assessed, along with the general effectiveness of the grants, with a view to determining the optimal features of any larger scale aid scheme which might be judged necessary to continue the switch from oil to coal in the late 1980s and 1990s. H o w e v e r , the government is not the only body which could actively p r o m o t e the use of coal. There may be business opportunities for organizing the leasing, as opposed to the purchase, of combustion equipment, which could help companies avoid the damaging effect of major investment on cash flow. Such activities would be suitable for energy suppliers, particularly the National Coal Board. Leasing arrangements could interact with government aid schemes to make coal firing particularly attrac26Department of Industry, Energy Conservation Scheme - Grants for More Efficient tive to industrialists. The use of these types of solutions could only help the U K achieve a more rational allocation of scarce energy resources. Heating in industry and Commerce.

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