Techno-economic analysis of a coal-fired CHP based combined heating system with gas-fired boilers for peak load compensation

Energy Policy 39 (2011) 7950–7962

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Techno-economic analysis of a coal-fired CHP based combined heating system with gas-fired boilers for peak load compensation Hai-Chao Wang a,b, Wen-Ling Jiao a,n, Risto Lahdelma b, Ping-Hua Zou a a b

School of Municipal & Environmental Engineering, Harbin Institute of Technology, Harbin 150090, China Department of Energy Technology, Aalto University School of Engineering, P.O. Box 14100, FI-00076 Aalto, Finland

a r t i c l e i n f o

a b s t r a c t

Article history: Received 12 July 2011 Accepted 23 September 2011 Available online 15 October 2011

Combined heat and power (CHP) plants dominate the heating market in China. With the ongoing energy structure reformation and increasing environmental concerns, we propose gas-fired boilers to be deployed in underperforming heating substations of heating networks for peak load compensation, in order to improve both energy efficiency and environmental sustainability. However, due to the relatively high price of gas, techno-economic analysis is required for evaluating different combined heating scenarios, characterized by basic heat load ratio (b). Therefore, we employ the dynamic economics and annual cost method to develop a techno-economic model for computing the net heating cost of the system, considering the current state of the art of cogeneration systems in China. The net heating cost is defined as the investment costs and operations costs of the system subtracted by revenues from power generation. We demonstrate the model in a real-life combined heating system of Daqing, China. The results show that the minimum net heating cost can be realized at b ¼ 0.75 with a cost reduction of 16.8% compared to coal heating alone. Since fuel cost is the dominating factor, sensitivity analyses on coal and gas prices are discussed subsequently. & 2011 Elsevier Ltd. All rights reserved.

Keywords: Techno-economic analysis Combined heat and power Combined heating system

1. Introduction Energy savings and environmental concerns of district heating (DH) systems have remarkable influence on the development of society and national economies. China is now undergoing a stage of extensive urbanization and industrialization. The annual rate of new construction for residential buildings is approximately 2000 million square meters, which accounts for about 40% of worldwide residential construction (Zhang, 2005). As a consequence, heating areas in China have boomed dramatically in recent years, particularly in the urban areas within the national Eleventh Five-Year Plan period (2006–2010). An objective of 15% primary energy savings on the basis of unit floor area in the district heating sector has been set during this Five-Year period. Meanwhile, China has always confronted the problems of low efficiency heating systems characterized by huge primary energy consumption and poor operation and regulation, particularly in some heating systems worn down by the years in large cities. This also causes aggravated environmental pollution, especially during heating seasons. Since the ultimate way to improve the atmospheric environment is to

n Correspondence to: School of Municipal & Environmental Engineering, Harbin Institute of Technology, Mail Box 2645, 73 Huanghe Road, Nangang District, Harbin 150090, China. Tel.: þ 86 13009803373; fax: þ 86 451 8628 3342. E-mail addresses: haichao.wang@aalto.fi (H.-C. Wang), [email protected] (W.-L. Jiao).

0301-4215/$ - see front matter & 2011 Elsevier Ltd. All rights reserved. doi:10.1016/j.enpol.2011.09.050

change the energy structure (Marbe et al., 2006; Tromborg et al., 2007) and with the background of energy structure reformation in China, we propose gas-fired boilers to be deployed in underperforming heating substations for peak shaving. Gas-fired boilers can provide effective adaptation to the regulation demands of heat load fluctuations, improve the energy efficiency, and thus mitigate the environmental impacts caused by DH systems. In fact, gas-fired boilers are becoming more and more common in the heating markets. Papadopoulos et al. (2008) pointed out that with the introduction of natural gas in the Greek energy market, the DH options were broadened. In Finland, gas accounts for more than a third of the fuel market for district heating and combined heat and power generation (Finish Energy Industries, 2010). Barelli et al. (2006) modulated the heat load with auxiliary boilers fueled by natural gas, which resulted in savings in primary energy. Brkic´ and Tanaskovic´ (2008) carried out a systematic study of natural gas usage for domestic heating in urban areas including direct use with individual gas-fired boilers and indirect combustion through DH systems. Park and Kim (2008) tried to verify the high energy efficiencies of DH using combined-cycle gas power plants (CCs) including CHPs and gas-condensing boilers. Nevertheless, due to the projection percentage of coal more than 50% in energy structure even by the year of 2050 (Lin, 2002), and with the premise of coal being the basic energy source of Chinese heating systems in the near future (Zhang et al., 2009), combined heating systems with CHP plants as basic heat

H.-C. Wang et al. / Energy Policy 39 (2011) 7950–7962

Nomenclature Ac a B b CNY C d E G G02 g H h I J Kz l n n0 P p Q Q 0load Q Sg tw tn t 0g t 0h

annual cost, f/a thermalization coefficient coal consumption or gas consumption, t/a or N m3/a coal consumption rate, gce/Kwhe Chinese Yuan, labeled as f, 1 US dollar E7 CNY (2008) various cost of a combined heating system, f/a nominal diameter of a heating pipeline, m electricity consumption, kWh/a flow rate, t/h design flow rate of secondary heating network, t/h supplementary water consumption, t/a water head of a pump, m operation time of a coal-fired boiler in a CHP plant, h internal rate of return (IRR), % electricity or water price, f/kWh or f/t the integrated investment index of CHP plants, f/kW length of a heating pipeline, m service life, a the number of operation hours during a year of a water pump, h rated power capacity or steam production capacity, kW or t/h fuel price, f/t or f/N m3 heat provisions, GJ/a design heat load of a combined heating system, MW relative heat load factor estimated local salary level in district heating sectors, f/(person  a) outdoor temperature, 1C design indoor temperature, 1C design supply water temperature, 1C design return water temperature of heat users, 1C

production facilities and gas-fired boilers for peak load compensation are starting to appear (Wang et al., 2010). Further, Rezessy et al. (2006) reported that greater decentralization is the key determinant to local authorities’ involvement in the market for energy services and energy efficiency equipment. Also, the decentralized energy supply solutions are more and more favored in China, but ‘decentralized’ does not mean low efficiency; on the contrary, it should require high efficiency energy supply systems, such as the proposed combined heating systems. They may alleviate the huge economic differences between coal and gas as well as reduce primary energy consumption and pollutant emissions. However, fuel price of gas heating is in general much higher than that of coal in China. Therefore, it is of great importance from the national energy policy perspective to seek economic harmony for successful penetration of gas into the heating market. For this reason, a rational techno-economic analysis of the combined heating system needs to be performed to identify the optimal basic heat load ratio (b) that leads to acceptable economic performance, on the premise of reliable heating provisions. Such an analysis has not been reported before for Chinese combined heating systems. Many researchers have implemented various economyoriented analyses on heating systems. Bowitz and Trong (2001) developed criteria using DH projects as a case study for costbenefit analyses, emphasizing both economic and environmental costs. Dzenajavicˇiene_ et al. (2007) presented an economic analysis of heat power generation costs for various technological solutions

t 0w,tf W X Z

7951

critical peak heating temperature, 1C estimation of electric energy production from a combined heating system, kWh/a thermalized power generation percentage of extraction condensing steam turbine units, % net heating cost, f/a

Subscripts R jb tf by c cn d r N inv ope fj p gl

heat production facilities basic heat production facilities peak shaving gas-fired boilers back-pressure steam turbine units extraction condensing steam turbine units pure condensing steam turbine units power generation heating heating network initial investment operating cost accessories of a heating system water pumps boilers in CHP plants

Greek letters

a b

Z t0g t0h o

depreciation and maintenance rate, % basic heat load ratio efficiency, % design supply water temperature of primary heating network, 1C design return water temperature of primary heating network, 1C flow ratio of peak heating in a heating substation, %

and capacities suitable for consumers in small towns. Badescu (2007) studied economic feasibility of different active space heating systems based on ground thermal energy utilization. Ouyang et al. (2009) aimed to determine whether energy-saving renovations are applicable in an urban residential building for heating and cooling purposes using a life cycle cost (LCC) method. Some researchers have also concerned the economic aspects of heat production facilities themselves. Saidur et al. (2010) analyzed economic performances of energy saving measures for increasing energy and exergy efficiencies of industrial boilers. Lahdelma and Hakonen (2003) and Rong and Lahdelma (2007) planned the costefficient operation of a CHP system using an optimization model based on hourly load forecasts. They modeled the hourly CHP operation as a linear programming (LP) problem. Rong and Lahdelma (2005) also extended this analysis tool to the optimization of trigeneration planning. In addition, some multi-criteria decision making (MCDM) methods are also introduced to optimize different alternatives in energy sectors in the recent years (Lipoˇsc´ak et al., 2006; Lahdelma et al., 2009; Wang et al., 2008; Xu et al., 2011). In particular, Wei et al. (2010) evaluated seven DH systems in China using fuzzy comprehensive evaluation method, in which the economics, environment and energy technology factors were taken into account synthetically. They concluded that CHP is the best choice from all systems; gas-fired boiler system is the best fossil-fed solution among coal- and oil-fired ones for heating purposes. The conclusion is well consistent with the idea of combined heating systems proposed in this study.

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H.-C. Wang et al. / Energy Policy 39 (2011) 7950–7962

The aim of this paper is to develop a rational techno-economic model for hybrid heating systems consisting of CHP plants and gas-fired boilers, to verify their feasibility and sustainability. Furthermore, the model can also be used for determining the optimal b according to different price levels, which is meaningful for the energy sector facing decision-making issues related to energy utilization policy and corresponding energy planning. During this process, we can also examine the economic performance and corresponding characteristics under different b of the combined heating system. Our analysis of the combined heating system is a real-life engineering application of the techno-economic theories and methods, while it highlights the energy economic effects of the technical development process of DH. Moreover, this study also provides a reliable theoretical foundation for the authorized energy and regulation sectors to plan DH systems and to establish energy-related investment policy more rationally.

2. Combined heating systems with gas-fired boilers for peak load compensation Generally, in a combined heating system, the CHP plant supplies basic heat load for the whole heating season. However, if the outdoor temperature (tw) declines to a certain extent,

To heat user

namely, under the critical peak heating temperature ðt 0w,tf Þ, then gas-fired boilers supply corresponding peak shaving heat provisions. The connecting mode of gas-fired boilers and heating network of a typical combined heating system is illustrated in Fig. 1. In a certain heating substation as shown in Fig. 1, return water from secondary heating network is firstly heated by the heat exchanger, and then a portion of flow rate ðoG02,i Þ will be sent to the gas-fired boiler to be heated up again; the rest of return water will flow through bypass pipe and finally incorporate with reheated water flow. Then, the mixed water will be sent to heat users if the temperature satisfies operation and regulation requirements. The heat load duration curve is very helpful and thus utilized to analyze the combined heating system. Here, we adopt the method of non-dimensional comprehensive equations to draw this curve, as demonstrated in Fig. 2. Fig. 2 is a composite of two relationships; the left hand part shows the variation of Q with different tw while the cumulative heat provisions during a heating season are graphically demonstrated in the right hand panel. Q indicates the ratio of actual heat load at a certain tw and the design heat load. Q¼

Q load,tw t n t w ¼ t n t 0w Q 0load

ð1Þ

To heat user 4

4

3

5

ωG'2,i, t'g,tf

3

6 t'g

2

t'h

G'2,i, t'g,hr 'g

1

7

2

supply water

To heat user

'h

return water

Fig. 1. Connecting mode of gas-fired boilers and heating network, the left hand part shows the sketch of primary heating network, while the right hand part illustrates the connection of secondary heating network. 1—CHP; 2—heat exchanger; 3—peak heating circulating pump; 4—gas-fired boiler; 5—valve; 6—heat user; 7—secondary circulating pump.

Q [Q'load]

1.0 0.9 0.8

Qtf

0.7 0.6 0.5 0.4 [Qload,k]

0.3 Qjb,1

0.2

Qjb,2

0.1

tw (°C) +5 +2

-4

-8

-10

Basic heat provisions under full load of CHP plant

-14

-18

-22

-265

N (d) 20

40

60

Basic heat provisions under partial load of CHP plant

80

100

120

140

160

181

Heat provisions of peak shaving gas-fired boilers

Fig. 2. Heat load duration curve of a combined heating system in Daqing, China. The expressions in square brackets denote the relative position of starting heat load and design heat load of the combined heating system. tw—outdoor temperature; N—cumulative heating time; Q —relative heat load factor. Cumulative heat provisions for producing domestic hot water are excluded from the analysis.

H.-C. Wang et al. / Energy Policy 39 (2011) 7950–7962

the interval of Q should be within ½Q k ,1, where Q k ¼ Q load,k =Q 0load , and Qload,k is the starting heat load of the heating system, MW. Q k is a function of design outdoor temperature, it is 0.295 in this case. It also can be seen from Fig. 2 that the total heat provisions comprise heat provisions of the CHP plant (Qjb,1 þQjb,2) and of the peak shaving gas-fired boilers (Qtf). In some southeastern countries of Europe, high efficiency gas-fired boilers are also proposed for supplying the heat provisions under partial load of CHP plant to enhance the overall efficiency (Iacobescu and Badescu, 2011). Therefore, the design heat load of a combined heating system can be divided into two parts correspondingly. Q 0load ¼ Q 0load,jb þ Q 0load,tf Q 0load,jb

ð2Þ

Q 0load,tf

and mean the design heat load of basic heat where production facilities and of peak shaving gas-fired boilers, MW. The basic heat load ratio b is then defined as

b¼

Q 0load,jb Q 0load

ð3Þ

Eq. (3) indicates that b can reach anywhere within [0, 1], while Q apparently cannot. Further, when s is determined somehow for a combined heating system, the value of b is then fixed (design b), and when we talk about b later before sensitivity analyses, it means the design b. However, the actual optimal b may change a little according to influencing factors like coal and gas prices. Therefore, we need to alter the design b to adapt this possible variation. In particular, we can operate the combined heating system in different combination of heat production facilities to control the deviation amount of design b, but not freely due to the determined infrastructure, which is to be discussed in Section 5. Here, thermalization coefficient (a ¼ Q load,jb =Q 0load here) indicating the proportion of heat load supplied by heating units of CHP and the maximum (design) heat load of the heating system should be referred to. In fact, a is different with b, because it can fluctuate in an interval under real-life operation conditions, but b is a fixed value once determined. However, a can be equal to b only if the combined heating system is under full heat load operation of the CHP plant. Note that b a(Qjb,1 þQjb,2)/(Qjb,1 þQjb,2 þQtf), because it is not the ratio between heat provisions, but heat loads. In this paper, we assume that b varies from 0.5 to 1.0, since CHP plants serve as the basic heat production facilities. Combined heating systems are preferred to traditional DH systems, because they can: (1) regulate heat supplies in time and avoid excessive heating to some extent (Wang et al., 2010); (2) optimize hydraulic conditions; (3) extend heating capacities by peak shaving gas-fired boilers, especially in urban area; (4) enhance the reliability of DH systems; (5) prolong the highefficiency running time of the CHP plants; and (6) alleviate environmental impacts.

3. Methodologies Techno-economic analysis methods can be classified as dynamic and static approaches according to whether the time value of money is to be considered or not. Since the dynamic approach can reflect the time value of money, it is adopted in combination with annual cost method to develop the model for evaluating the economic performance of a combined heating system. 3.1. Techno-economic analysis model 3.1.1. Annual cost According to the time value theory, the initial investment cost of a project can be discounted equally to each year of the n-year

7953

life cycle with capital recovery equation, and annual cost is then derived from the summation of this discounted value and operating costs, as shown in the following equation (Thomas and Peter, 2000):   Ið1 þIÞn Ac ¼ C inv þ C ope ð4Þ n ð1 þIÞ 1 where Ac is the annual cost, f/a; Cinv denotes the initial investment cost, f; Cope means the operating costs, f/a; I is the internal rate of return (IRR) and n is service life in years. However, service lives may vary with different infrastructure and equipment, which induce problems into analysis. Even though, the economic performances can be compared on the yearly basis, no matter how many years of service lives are for different infrastructure and equipment. Namely, the annual cost should be written as " # M X Ið1 þ IÞnðjÞ Ac ¼ C inv,j þC ope ð5Þ nðjÞ 1 j ¼ 1 ð1 þIÞ where M is the number of types of infrastructure and equipment; n(j) is the service life of jth infrastructure or equipment in years. If the operating costs are different annually during the service life, then it is recommended that present value be first calculated within service life prior to computing the annual cost. 3.1.2. Net heating cost In general, a CHP plant supplies heat and power commodities simultaneously at the expenses of the initial investment cost and operating costs. Moreover, the heat provisions of the combined heating system are basically identical while the electric energy production varies evidently due to the different cogeneration units with different b. Therefore, it is proposed that revenue of power generation be taken into account in combination with annual cost, and then the net heating cost is defined as " # M X Ið1 þIÞnðjÞ Z¼ C inv,j þ C ope WJdw ð6Þ nðjÞ 1 j ¼ 1 ð1þ IÞ where W is the estimation of annual electric energy production of the combined heating system, kWh/a; Jdw is the network power uploading price, f/kWh. 3.2. Initial investment cost The initial investment cost usually includes two parts as follows: C inv ¼ C R þ C N

ð7Þ

where CR and CN are the initial investment costs of heat production facilities and heating network, respectively, f. 3.2.1. Initial investment cost of heat production facilities The initial investment cost of heat production facilities mainly comprises the investment of basic heat production facilities CR,jb and peak shaving gas-fired boilers CR,tf. C R ¼ C R,jb þ C R,tf

ð8Þ

(1) Initial investment of a CHP plantThe integrated investment index method is adopted to calculate the initial investment of a CHP plant in accordance with the power capacities and the number of power generation units, as shown in the following equation: C R,jb ¼

m X i¼1

P el,m K z,m

ð9Þ

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H.-C. Wang et al. / Energy Policy 39 (2011) 7950–7962

where Pel is the rated power capacity of a generation unit, kW; Kz is the integrated investment index of CHP plants. In China, the index varies at present from 5000–7500 f/kW for backpressure units to 8000–9000 f/kW for extraction condensing steam turbine units. In this study, we assume the integrated investment of back-pressure and extraction condensing steam turbine units are 5000 f/kW and 8000 f/kW, respectively. (2) Initial investment of gas-fired peak shaving boilersThere are mainly four components that need considering to calculate initial investment of gas-fired boilers, namely the investment of equipment, relevant construction, installations and other costs including extra fees for water and gas supply increments, listed in Table 1. 3.2.2. Initial investment cost of heating network The piping arrangements should be based on the heat load distribution and different b, because they influence the dimensioning of heating network seriously. Thus, the hydraulic calculations of the primary heating network are necessary prerequisites for dimensioning. In addition, the initial investment cost of the combined heating network can be calculated according to an estimate guideline for civil engineering investment (PRC Ministry of Construction, 2007), which presents the initial cost per kilometer of the heating pipelines with nominal diameters from 100–1200 mm with various laying, thermal insulation and construction methods. Consequently, the initial investment cost of the heating network is expressed as CN ¼

S X

f ðdi Þli

ð10Þ

i¼1

where S is the number of heating pipelines; f(di) is the initial investment cost per meter of heating pipeline with nominal diameter of di, f/m; li is the length of ith pipeline, m. 3.3. Operating costs Operating costs of a combined heating system usually consist of six parts, given by C ope ¼ C 1 þ C 2 þ C 3 þ C 4 þ C 5 þ C 6

ð11Þ

where C1 is the fuel costs; C2 is the electricity costs; C3 is the water costs; C4 is the depreciation and maintenance costs; C5 is the salaries and welfare and C6 stands for some other costs, they are all in f/a. 3.3.1. Fuel costs Fuel costs are the primary costs of a combined heating system, including the costs of coal and gas. They are supposed to be calculated based on their respective heat provisions with different b and corresponding energy conversion processes as well as efficiencies. Further, coal consumption of a CHP plant can be classified as for heating or power generation, which needs to be evaluated on the

basis of annual operation and rational allocation of heat and electricity commodities. For achieving the heating target, we use the allocation strategy of priority given to heat provisions in this paper. (1) Coal consumption of a CHP plant for heating Br ¼

Q jb

where Zgl is the thermal efficiency of a CHP plant, which basically varies from 76–93% in China; Zgd is the transportation efficiency of heating network; Q yd,coal is the low heat value of coal, MJ/kg. (2) Coal consumption of back-pressure steam turbine units for power generation Bd,by ¼ 106 W d,by bd,by

Rated capacity (MW)

Equipment (104 f/unit)

Construction (104 f/unit)

Installation (104 f/unit)

Other costs (104 f/unit)

Total (104 f/unit)

0.7 1.4 2.8 7.0 14.0 24.5

19.5 28.4 48.5 100 210 260

9.5 14.6 18.2 27.2 36.5 165

2 2.8 4.9 10 21 52

4.9 7.1 12.1 25 52.5 70

35.9 52.9 83.7 162.2 320 547

ð13Þ

where Wd,by is the electric energy production of back-pressure steam turbine units, kWh; bd,by is the coal consumption rate of back-pressure steam turbine units for power generation, given by bd,by ¼

123

Zgl Zgd ð1ðR=f ÞÞ

ðgce=kWhe Þ

ð14Þ

where 123 gce/kWhe is the minimum standard coal equivalent consumption for generating 1 kWh of electricity with a theoretical energy conversion efficiency of 100%; R is the ratio of steam leakage, mechanical losses plus station power service to the rated power of the back-pressure steam turbine units, it is assumed to be 0.2; f is the ratio of actual heat load to the rated heat load of the back-pressure steam turbine units. The load properties of different back-pressure steam turbine units vary slightly, but the coal consumption defers clearly with heat load, because all of the electric energy is totally thermalized power generation. Therefore, we can firstly calculate the heat provisions of back-pressure steam turbine units in the heating season by integrating the heat load over outdoor temperatures with the assistance of heat load duration curve. Then, annual electric power production is derived from W d,by ¼

1000oby Q by 3:6

ð15Þ

where oby and Qby are thermalized power generation rate and annual heat provisions of back-pressure steam turbine units, GJ/a. (3) Coal consumption of extraction condensing steam turbine units for power generation.Weighted average method can be utilized to calculate the coal consumption of extraction condensing steam turbine units for power generation, since they are normally recognized as the combination of equivalent back-pressure and pure condensing steam turbine units. Therefore, the coal consumption rate of extraction condensing steam turbine units for power generation is bd,c ¼

Table 1 Initial investment indexes of gas-fired boiler plants (Huang, 2008).

ð12Þ

Zgl Zgd Q yd,coal

W d,by W b þ d,cn bcn ¼ Xbd,by þ ð1XÞbd,cn W d,c by W d,c

ð16Þ

where bd,c and Wd,c are coal consumption rate and electric energy production of extraction condensing steam turbine units for power generation, Wd,c ¼Wd,by þWd,cn; Wd,by and Wd,cn are electric energy production of equivalent backpressure and pure condensing steam turbine units, respectively; bd,by and bd,cn are coal consumption rates of equivalent back-pressure and pure condensing steam turbine units, respectively; X is the thermalized power generation percentage, X¼ Wd,by/Wd,c.

H.-C. Wang et al. / Energy Policy 39 (2011) 7950–7962

Therefore, coal consumption of extraction condensing steam turbine units for power generation is Bd,c ¼ 106 W d,c bd,c

ð17Þ

where Wd,c ¼1000ocQc/3.6; oc and Qc are thermalized power generation rate and annual heat provisions of extraction condensing steam turbine units, respectively, GJ/a. (4) Gas consumption of peak shaving gas-fired boilersGas consumption calculation should take into account the capacity and peak heat provision of each peak shaving gas-fired boiler. Btf ¼

T X 1000Q gas,i i¼1

ð18Þ

Zgas,i Q yd,gas

where Btf is the total gas consumption of peak shaving gasfired boilers, N m3/a; Qgas,i and Zgas,i are heat provision, GJ/a, and thermal efficiency of the ith peak shaving gas-fired boiler, detailed in Table 2; Q yd,gas is the low heat value of gas, MJ/N m3; T is the number of peak shaving gas-fired boilers. (5) Coal and gas costsTo conclude, coal cost can be expressed as C 1,jb ¼ Bjb pcoal

ð19Þ

heating network, which will be discussed later. Ep ¼ 2:78  104

C 1,tf ¼ Btf pgas

ð20Þ

where C1,tf is the gas cost of peak shaving gas-fired boilers, f/a; pgas is the gas price, f/N m3. We also compare the prediction results of coal consumption for cogeneration and gas consumption for heating using different bases reported by International Energy Agency, Coal Industry Advisory Board (IEA-CIAB; 2010). The results show that our present results are approximately 5 10% larger than that based on the IEA’s report. Besides, cogeneration efficiency in China are averagely 4–5% lower compared to some European countries or US (IEA-CIAB, 2010). Further, the coal quality and transportation issues may cause an increase on coal consumption for Chinese CHP plants even evaluated on a common basis. For this reason, we use the present calculation results in the context of this study. 3.3.2. Electricity costs The combined heating system can produce electricity itself, but this power usually cannot be directly harnessed to drive any kind of electrical equipment of the heating network, due to the separation between energy and the heating management sector in China. Instead, power is transmitted to the electric power grid. Therefore, the electricity used for heat production and distribution should be purchased from local industrial electricity commodities. The electrical equipment of a combined heating system mainly consists of water pumps for various purposes and accessories, such as ventilation, dust catching, fuel supplying and automatic controlling equipment. (1) Electricity consumption of water pumpsIt can be calculated using Eq. (21) in combination with the regulation strategy of

Ep,t ¼

T X

Capacity of gas fired boiler (MW) Thermal efficiency (%)

0.7 83

1.4 85

2.8 86

7 88

14 90

24.5 92

n0

ð21Þ

Ep ¼ 2:78  104

T X

Gi H i

i¼1

rwater Zp,i

n0,i

ð22Þ

where Ep,t is the electricity consumption of all water pumps, kWh/a; T is the number of water pumps. (2) Electricity consumption of accessoriesWe assume that the accessorial electrical equipment of gas-fired boilers will consume much less electric power, which can be neglected compared to that of coal-fired boilers in a CHP plant. Furthermore, electricity consumption of accessories in a CHP plant can be estimated based on the assumption of a proportional relationship between boiler capacity and its electricity consumption. Specifically, 8 kW/(t/h) is assumed in this paper, as shown in the following equation: L X

Ef j ¼ 8

Pgl,i hi

ð23Þ

i¼1

where Efj is the electricity consumption of accessories, kWh/a; Pgl,i is the power rating of the ith coal-fired boiler in a CHP plant, t/h; L is the number of coal-fired boilers; hi means the operation time of the ith coal-fired boiler, h. To sum up, the electricity costs of a combined heating system is C 2 ¼ ðEp,t þ Ef i ÞJ d

ð24Þ

where Jd is the local electricity price for industrial use, f/kWh.

3.3.3. Water costs Water consumption mainly includes the supplementary water needed for cogeneration and distribution of heat provisions. Thus, it can be classified as supplementary water of coal-fired boilers in CHP plant and heating network, and their water costs are consequently expressed as in Eqs. (25) and (26). C 3,jb ¼ g jb Js

ð25Þ

where gjb is the supplementary water consumption of coal-fired boilers in a CHP plant, t/a; it accounts for approximately 5% of steam flow of coal-fired boilers in China; Js is the local water price for industrial use, f/t. C 3,N ¼ g N J s

Table 2 Low estimation of thermal efficiencies of gas-fired boilers in China.

GH

rwater Zp

where Ep is the electricity consumption of a water pump, kWh/a; G is the circulating flow rate, t/h; H is the water head of the pump, m; n0 is the number of operation hours during a year, h; rwater is the density of water, kg/m3; Zp is the efficiency of the water pump, within 60–70% normally. As stated before, we should keep in mind that the regulation strategy of the heating network is crucial for calculating electricity consumption of water pumps. In this study, episodic variable flow control strategy is employed. Consequently, the electricity consumption of water pumps should be calculated according to different flow rates and water heads during different regulation periods. In particular, electricity consumption of supplementary water pumps will be calculated on the basis of 1% water loss rate.All in all, the electricity consumption of all kinds of water pumps can be expressed as

i¼1

where C1,jb is the coal cost of basic heat production facilities, f/a; Bjb is the coal consumption of basic heat production facilities, t, Bjb ¼Br þBd,by þBd,c; pcoal is the local coal price, f/t. Similarly, gas cost takes form

7955

ð26Þ

where gN is the supplementary water consumption of heating network, t/a; it is usually recognized as 1% of circulating water flow rate. Consequently, water costs are obtained from the summation of the above mentioned two costs.

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H.-C. Wang et al. / Energy Policy 39 (2011) 7950–7962

3.3.4. Depreciation and maintenance costs Economic depreciation is the reduction over a given period in the remaining value of future services, as a result of wear and tear, age, or obsolescence. In this study, fixed percentage is used to compute the depreciation expense, which begins when the combined heating system has been placed in service. On the other hand, regular maintenance is essential for operating the combined heating system, which also needs fiscal investment. Therefore, depreciation and maintenance costs can be described as follows: C 4 ¼ aR C R þ aN C N

4. Techno-economic analysis of a combined heating system in Daqing, China Currently, Daqing is undergoing a rigid revolution regarding heating systems as a demonstration project of China’s Eleventh Five-year Plan, which requires the rational use of local resources and promotion of energy efficiencies and emission reduction.

ð27Þ

where aR is depreciation and maintenance rate of heat production facilities, we calculate it to be 3.2% here on the 30-year service life basis; aN is depreciation and maintenance rate of heating network, 2.5% is adopted here. 3.3.5. Salaries and welfare Salaries and welfare of employees should also be taken into account since they prove not to be negligible in the analysis. Practically, welfare can be computed as 14% of salaries in the heating sector of China. Furthermore, the number of employees can be estimated based on the preliminary feasibility reports or an index relating to heat provisions. This index varies from 1.5 to 2.5 people per 1 GJ/h of heating capacity, while the low estimation is adopted here. C 5 ¼ 1:14Sg Y

ð28Þ

where Sg is the estimation of local salary level in the heating sector, f/(person  a); Y is the number of employees. 3.3.6. Other costs There are still some other costs that are not discussed above, such as expenses on office work, traveling, training employees as well as financing research and education. Costs of these activities Table 3 Design parameters of the combined heating system in Daqing. Item

Value

Unit

Heat load Annual heat provisions Specific fractional resistance of main pipelines Local resistance rate Design supply and return water temperature Design outdoor temperaturea Design indoor temperaturea Heating perioda

616 6,217,900 30–70 30 130/80  26 18 181

MW GJ/a Pa/m % 1C 1C 1C d

a

can also be estimated using an index concerning unit heat provision. We assume it to be 1 f/(GJ  a) in this study.

Referred to in the handbook of regular-use data in HVAC of China, 2002.

4.1. Basic situation of the combined heating system At present, Daqing combined heating network has 50 heating substations, heating a floor area of 8.6 million square meters. Some relevant design parameters of the system are shown in Table 3. Besides, heat loads and provisions of basic and peak shaving gas-fired boilers vary clearly once basic heat load changes. These heat provisions combined with some other parameters are listed in Table 4. In addition, the main technical economic indices have been investigated in detail and shown in Table 5. 4.2. Techno-economic analysis of the combined heating system In the following, we perform the techno-economic analysis on Daqing combined heating system with different values of b in the range of 0.50–1.00. 4.2.1. Initial investment cost analysis Initial investment cost of heat production facilities varies with different b, owing to the flexible combinations of the CHP units Table 5 Primary techno-economic indices of Daqing (2008). Item

Value

Unit

Coal price Gas price Low heat value of standard coal Low heat value of gas Coal-fired boiler’s efficiency Efficiency of coal-fired boiler with partial load Electricity price for industrial usea Electricity uploading pricea Design service life time IRR Water price

450 3 29.306 35.588 90 70–80 0.808 0.365 30 10 5

f/t f/m3 MJ/kg MJ/N m3 % % f/kWh f/kWh a % f/t

a Referred to in the notification of enhancing the electricity price of Northeastern power grids (National Development and Reform Commission (NDRC), 2008).

Table 4 Parameters of heat production facilities of the combined heating system with different b.

b

Basic heat load (MW)

Peak heat load (MW)

Critical peak heating temperature (1C)

Accumulative time of peak heating (d)

Basic heat provisions (GJ)

Peak heat provisions (GJ)

Percentage of peak heat provisions (%)

0.50 0.55 0.60 0.65 0.70 0.75 0.80 0.85 0.90 0.95 1.00

308.0 338.8 369.6 400.4 431.2 462.0 492.8 523.6 554.4 585.2 616.0

308.0 277.2 246.4 215.6 184.8 154.0 123.2 92.4 61.6 30.8 0.0

 4.0  6.2  8.4  10.6  12.8  15.0  17.2  19.4  21.6  23.8 –

128.1 115.3 102.6 89.9 77.3 64.8 52.4 40.1 28.0 16.2 0.0

4,504,100 4,823,400 5,109,200 5,361,700 5,581,100 5,767,600 5,921,300 6,042,800 6,132,200 6,190,300 6,217,900

1,713,800 1,394,500 1,108,700 856,200 636,800 450,300 296,600 175,100 85,700 27,600 0

27.6 22.4 17.8 13.8 10.2 7.2 4.8 2.8 1.4 0.4 0.0

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and gas-fired boilers. Similarly, the initial investment cost of the heating network is also clearly influenced by b, because its dimensioning relies on the hydraulic conditions differentiated by b. The variations of initial investment costs of heat production facilities and heating network are illustrated in Fig. 3; while their savings ratios compared to the scenario of pure coal heating (b ¼ 1.00) are shown in Table 6. As can be seen from Fig. 3 and Table 6, the initial investment cost of heat production facilities declines obviously with decreasing b, because investment cost of the CHP plant can be reduced dramatically once b drops, even though gas-fired boilers’ investment cost increases simultaneously. That is to say, the investment cost of the CHP plant is much higher with respect to that of gasfired boilers, on the basis of supplying the same heat load. Moreover, the design circulating flow rate of the primary heating network also decreases markedly if b is reduced. This can allow relatively small diameters for the heating pipelines on the basis of recommended specific fractional resistance within 30–70 Pa/m. For these reasons, initial investment costs of heat production facilities and heating network can be reduced by 36.4% and 21.2%, respectively, when b is reduced from 1.00 to 0.50, and total initial investment cost decreases 35.1% at the same time. 4.2.2. Operating cost analysis Operating costs listed in Section 3.3 are computed and illustrated in Fig. 4, while their cost percentages are shown in Fig. 5 so as to examine the fluctuations and characteristics of each cost with different b. Fig. 4 shows that only fuel cost increases with dwindling b among all kinds of operating costs, because the gas heat load evidently increase once b drops, which makes fuel cost increase dramatically. Nowadays, this also is the major retarding force preventing extensive gas heating applications in China. Fig. 5 clearly indicates that fuel cost dominates the operating costs with percentage between 65.5% and 78.9%, followed by depreciation and maintenance cost whose percentage varies from 23.7% to 14.6%, and thus they add up to 89.2–93.5% of the whole operating costs. The depreciation and maintenance cost ranks second mainly due to the relative high initial investment cost of CHP plants and the heating network. On the other hand, water cost is the least important contributor to the operating costs, with percentage no more than 0.5%, while other costs are the second least important ingredient whose share is approximately 1%. The electricity cost and salaries and welfare have similar intermediate proportions. Basically, almost all of the operating cost percentages

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decrease while b falls, except the fuel cost, whose variation is totally reversed compared to others’. It can be concluded form Fig. 6 that initial investment cost consistently drops with decreasing b; however, the operating costs fluctuate to some extent, while they reach the minimum at b ¼ 0.85, with operating costs to be f5.68  108. 4.2.3. Annual cost analysis Annual cost includes annual operating costs and the discounted initial investment cost listed as the first part of right hand expression in Eq. (4), we illustrated the variations of them with different b, as shown in Fig. 7. Although operating costs reach the minimum at b ¼0.85, annual cost, however, always augments with increasing b, which is caused by the huge initial investment and subsequently constant increase in discounted initial investment. However, as stated in Section 3.1, combined heating systems supply heat and power commodities simultaneously at the expenses of the initial investment cost and operating costs. Therefore, the revenue of power generation should also be taken into account, since electric energy production is transmitted to the electric power grid as a commodity. In fact, electricity selling usually forms the majority of CHP company’s revenues in most cases, especially in China. Because, CHP companies prefer to generate more electricity due to the high retail price so as to make more profit. This also makes the combined heating more feasible considering that heat production and transportation is less profitable in China, due to the immature

Table 6 Savings ratios of initial investment costs compared to the data of b ¼ 1.00 for Daqing combined heating system.

b

Saving ratio of heat production facilities (%)

Saving ratio of heating network (%)

Total savings ratios (%)

0.50 0.55 0.60 0.65 0.70 0.75 0.80 0.85 0.90 0.95 1.00

36.4 32.7 29.1 25.5 21.8 18.2 14.6 10.9 7.3 3.6 0

21.2 18.3 16.2 14.9 12.0 11.4 6.1 5.3 4.2 0.9 0

35.1 31.5 28.0 24.5 21.0 17.6 13.8 10.4 7.0 3.4 0

5.0x109 Total Initial Investment Cost Initial Investment Cost of Heat Production Facilities Initial Investment Cost of Heating Network

Initial Investment Cost (CNY)

4.5x109 4.0x109 3.5x109 3.0x109 2.5x109 2.0x109 1.5x109 1.0x109 5.0x108 0.0 0.50

0.55

0.60

0.65

0.70 0.75 0.80 Basic Heat Load 

0.85

0.90

0.95

1.00

Fig. 3. Variation of initial investment costs of heat production facilities, heating network and the total initial investment cost with different b for Daqing combined heating system.

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Fuel Cost Depreciation and Maintenance Cost Salaries and Welfare Electricity Cost

Water Cost Other Costs

4.5x108 Operating Cost (CNY)

4.0x108 3.5x108 3.0x108 2.5x108 2.0x108 1.5x108 1.0x108 5.0x107 0.0 0.50

0.55

0.60

0.65

0.70 0.75 0.80 Basic Heat Load 

0.85

0.90

0.95

1.00

Fig. 4. Variations of operating costs with different b for Daqing combined heating system.

100

Fuel Cost Depreciation and Maintenance Cost Salaries and Welfare Electricity Cost

%

Water Cost Other Costs

90 Cost Percentage

80 70 60 50 40 30 20 10 0 0.50

0.55

0.60

0.65

0.70 0.75 0.80 Basic Heat Load 

0.85

0.90

0.95

1.00

Fig. 5. Operating costs percentages with different b for Daqing combined heating system.

Operating Cost

Total Initial Investment Cost 4.4x109

6.1x108

4.2x109

6.0x108

4.0x109 3.8x109

5.9x108

3.6x109

5.8x108

3.4x109

5.7x108

3.2x109

5.6x108

3.0x109

Total Investment Cost (CNY)

Operating Cost (CNY)

6.2x108

2.8x109

5.5x108 0.50 0.55 0.60 0.65 0.70 0.75 0.80 0.85 0.90 0.95 1.00 Basic Heat Load 

Fig. 6. Variations of the total initial investment cost and operating costs with different b for Daqing combined heating system.

pricing mechanism of heat supply and heat metering. Accordingly, we define a term called net heating cost to incorporate the influences of electric power generation on heating cost analysis.

4.2.4. Net heating cost analysis As shown in Eq. (6), the net heating cost is defined as the investment costs and operating costs of the system subtracted by

H.-C. Wang et al. / Energy Policy 39 (2011) 7950–7962

Annual Cost

1.1x109

Operation Costs

7959

Disconted Initial Investment Cost

1.0x109

Cost (CNY)

9.0x108 8.0x108 7.0x108 6.0x108 5.0x108 4.0x108 3.0x108 0.50

0.55

0.60

0.65

0.70 0.75 0.80 0.85 Basic Heat Load Ratio 

0.90

0.95

1.00

Electric Energy Production

Fig. 7. Variations of annual cost, operating cost and discounted initial investment cost with different b for Daqing combined heating system.

2,400 2,200 2,000 1,800 1,600 1,400 1,200 1,000 800 600 400 200 0

GWh

0.50

0.55

0.60

0.65

0.75 0.70 0.80 Basic Heat Load Ratio 

0.85

0.90

0.95

1.00

Fig. 8. Estimation of annual electric energy production with different b for Daqing combined heating system.

Annual Cost

1.1x109

Revenue of Power Generation

Net Heating Cost

1.0x109

Cost (CNY)

9.0x108 8.0x108 7.0x108 6.0x108 5.0x108 4.0x108 3.0x108 2.0x108 0.50

0.5

50.60

0.65

0.70 0.75 0.80 Basic Heat Load Ratio 

0.85

0.90

0.95

1.00

Fig. 9. Variations of net heating cost, annual cost and revenue of power generation with different b for Daqing combined heating system.

revenues from power generation. In addition, the annual electric energy production of the combined heating system can be estimated according to Section 3.3 and illustrated in Fig. 8. Therefore, the net heating cost can be computed, as shown in Fig. 9. It can be seen from Fig. 9 that the net heating cost reach its minimum value of f2.08  108 when b equals 0.75, with a cost reduction of 16.8% compared to that of pure coal heating. Besides, when b varies between 0.70 and 0.85, net heating cost remains

relatively low with cost reduction of 15.7–16.8%. In the mean time, as can be seen from Table 6, the initial investment cost of heat production facilities, heating network can be reduced by 10.9–21.8% and 5.3–12.0%, respectively, which makes the total initial investment cost decrease 10.4–21.0%. However, as the dominating contributor of operating costs, fuel cost increases by 2.7–7.0% at the same time. That is to say, the techno-economic performance of Daqing combined heating system can be superior

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to that of pure coal heating when the fuel cost increases by around 7.0% owing to the applications of gas-fired boilers. In fact, the net heating cost when b equals 0.60 is almost identical to that of pure coal heating, which justifies that combined heating systems can be economically feasible and sustainable.

5. Sensitivity analyses and discussion Sensitivity analysis is the study of how the variation in the output of a mathematical model can be apportioned, qualitatively or quantitatively, to different sources of variation in the input of the model (Saltelli et al., 2008). For a heating project, seriously determining the dominant contributors to the net heating cost, systematically analyzing their influences on the techno-economic performance and subsequently judging the risk taking capabilities of the combined heating scenarios is one kind of sensitivity analysis. According to the above mentioned discussion, fuel cost is the dominating factor influencing the operating costs and the net heating cost. Thereby, we mainly execute sensitivity analyses on coal and gas prices, which directly account for the fuel cost. The time period over which the analyses to be conducted covers the first stage of present combined heating system, prior to next large scale retrofitting due to the increasing heat load or new heat user connections. When we analyze the influences of coal price, the gas price is assumed to be the original value in Table 5, and vice versa. 5.1. Sensitivity analysis on coal price

Net Heating Cost (CNY)

Coal price is of great importance to the fuel cost, because the share of basic heat provisions varies from 72.4–100%, namely CHP

plants always supply the majority of the heat needed. The net heating cost will change once coal price varies, and so does the optimal value of b. We thereby make the coal price vary with 10% from the original price in Table 5 to examine the influences of coal price on techno-economic performance of the combined heating system, as illustrated in Fig. 10. It can be seen from Fig. 10 that the net heating cost rises rapidly as long as coal price mounts up. The optimal value of b reaches 0.75 while the coal price remains in the range of f450–675/t. if the coal price is reduced, the net heating cost will reach its minimum at b ¼0.80. The variation trend of b is also shown in Fig. 10 using a black polygonal line, indicating that the optimal b is most likely to decrease while coal price goes up.

5.2. Sensitivity analysis on gas price As mentioned in Section 4.2, the high price level of gas is the major retarding force preventing extensive gas heating applications. However, in the combined heating system addressed in this study, the gas-fired boilers are put into service for the purpose of peak load compensation when the outdoor temperature drops below t 0w,tf . Therefore, the percentage of peak heat provisions is much lower than the peak heat load ratio (1–b) itself, for instance, the gas-fired boilers only supply10.2% of the heat needed even they undertake 30% of the heat load, as shown in Table 4. Similarly, we also make the gas price vary 10% from the original value to check the gas fuel impacts on net heating cost of the combined heating system, as shown in Fig. 11. As can be seen in Fig. 11, the net heating cost also increases clearly if gas price goes up, especially under the conditions of

4.5x108 4.0x108 3.5x108 3.0x108 2.5x108 2.0x108 1.5x108 1.0x108 5.0x107 0.0

675/t 630/t 585/t 540/t 495/t 450/t 405/t 360/t 315/t 270/t 225/t 0.50 0.55 0.60 0.65 0.70 0.75 0.80 0.85 0.90 0.95 1.00 Basic Heat Load Ratio 

Nwt Heating Cost (CNY)

Fig. 10. Sensitivity analysis on coal price for Daqing combined heating system; the original variation is highlighted in boldfaced curve.

3.8x108 3.6x108 3.4x108 3.2x108 3.0x108 2.8x108 2.6x108 2.4x108 2.2x108 2.0x108 1.8x108

4.5/m3 4.2/m3 3.9/m3 3.6/m3 3.3/m3 3.0/m3 2.7/m3 2.4/m3 2.1/m3 1.8/m3 1.5/m3 0.50 0.55 0.60 0.65 0.70 0.75 0.80 0.85 0.90 0.95 1.00 Basic Heat Load Ratio 

Fig. 11. Sensitivity analysis on gas price for Daqing combined heating system; the original variation is highlighted in boldfaced curve, and the interval of optimal b is marked by two dash lines between 0.70 and 0.85 corresponding to 7 50% variation of gas price.

H.-C. Wang et al. / Energy Policy 39 (2011) 7950–7962

relatively low b. The combined heating scenario is optimal at b ¼0.75 with gas price to be f3/m3. The optimal b may mount up to the range of 0.80–0.85 if the price rises and go down to be 0.70 if the price decreases. Similarly, it also can be concluded from the curves of sensitivity analysis that the optimal b is likely to drop as long as the gas price goes down. In addition, Figs. 10 and 11 indicate that the net heating cost of a CHP based combined heating system is more sensitive to coal price, while the optimal value of b is more easily influenced by gas price. Figs. 10 and 11 also show that the possible optimal b is from 0.70–0.85 for Daqing heating combined heating system with 750% variations of coal and gas price. Although the price would probably not change so much in reality in the first stage of the combined heating system, we still have to confront a problem of adaption to the possible variation of actual optimal b, as stated in Section 2. For this reason, we can resort to the combinations of basic and peak shaving heat production facilities to control the deviation of b in a certain extent. In particular, there are two CHP plants in the Daqing combined heating system; the bigger one (A) is equipped with extraction condensing steam turbine units, while the smaller one (B) is a back-pressure CHP plant having a capacity of 150 MW, consisting of 50 MW and 25 MW units. On this basis, CHP A is supposed to be under full load operation during the heating period when Q Z0:50, therefore, we can make full use of the back-pressure steam turbine units to meet the value of actual optimal b. Furthermore, the peak shaving gas-fired boilers have been chosen with a certain amount of abundance in heating capacities to meet this adaption. Moreover, the positions for installing prospective gas-fired boilers should be reserved in case of increasing peak shaving heat load. In addition, if there is only one CHP plant in a combined heating system, we can regulate the basic heat load by altering thermalized power generation percentage X and corresponding peak shaving heat load to realize the required value of actual optimal b.

6. Conclusions In this study we have developed a techno-economic model for analyzing hybrid heating systems consisting of combined heat and power (CHP) plants and gas-fired boilers for peak load compensation. We have applied the model for evaluating different combined heating scenarios, characterized by basic heat load ratio (b), in a real-life combined heating system of Daqing, China. The results shows that the net heating cost reaches its minimum when b equals 0.75, with a cost reduction of 16.8% compared to that of coal heating alone. Besides, net heating cost remains in a relatively low level with cost reduction of 15.7–16.8% at b ¼0.70–0.85. However, fuel cost increases by 2.7–7.0% at the same time. That is to say, the techno-economic performance of Daqing combined heating system can be superior to that of pure coal heating when the fuel cost increases by around 7.0% owing to the applications of gas-fired boilers. Moreover, fuel cost is the dominating contributor to the operating costs and the net heating cost, regardless of the value of b. In addition, water cost and other costs account for less than 1% of the operating costs, which can be removed from future similar analyses. But the rest of operating costs, especially fuel costs should be emphasized in order to make the modeling more accurate. Sensitivity analyses on coal and gas prices indicate that the optimal b has the tendency to drop as long as coal price rises, gas price drops or both. Furthermore, the net heating cost of a CHP based combined heating system is more sensitive to coal price, while the optimal b is more easily influenced by gas price. The possible optimal b is from 0.70 to 0.85 for Daqing heating combined heating system with 750% variations of coal and gas price. To

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conclude, CHP based combined heating systems with gas-fired boilers for peak load compensation have relatively high energy efficiency and environmental sustainability. What is more, they can be economically more feasible and sustainable with appropriate b and corresponding judicious regulation. Although this work may appear straightforward to some extent, it is sophisticated in the investigation, preparation and interpretation of the source data, particularly for some complicated combined heating systems of this kind in China. In addition, many planning district heating systems also are in favor of this hybrid system. This work elicits the techno-economic analysis of the combined heating systems consisting of CHP plants and gasfired boilers, but the model can also be extended to other kinds of hybrid heating systems, especially those with CHP plants as basic heat production facilities.

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