Economic Comparison of Power and Chilled Water Generation by Cogeneration System and Public Utility

The paper presents an economic comparative study on the electricity and chilled water generation between using cogeneration system and public utility. A comparative evaluation using Net Present Value method was adopted in this study. The study shows that using cogeneration system is economically feasible compared to PU if the failure frequency per year is 5 or less.


Introduction
In general, public utility (PU) provides electricity requirements for the domestic and industrial consumers.In some cases, power could also be independently generated by consumers or industries using decentralized power plants.Some of these plants could also produce chilled water through cogeneration systems.In cogeneration system, the electricity is generated by Gas Turbine (GT) and the waste heat from the plant is used to produce steam by Heat Recovery Steam Generator (HRSG).The steam is then used for production of chilled water using Steam Absorption Chiller (SAC).The utilization of the waste heat from the turbines contribute the reduction of the energy costs as reported by Donghao Xu and Min Qu [1].Economic study on the system had been undertaken.One such study is by Omar F. Can et al. [2], it is indicate that the payback period of cogeneration plant is 3.65 years.This proves that the cogeneration plant is profitable.It is also reported that the efficiency of the system is between 80-90% which is considered the system is efficient.Other studies have also addressed the benefits of cogeneration system [3], [4], [5] and [6].Among the benefits are by using the cogeneration system, the amount of fuel used is reduced and reduced environment emission.However, one of the disadvantages, the plant requires a PU back up when the turbines failed.The study of using electricity from PU as a back-up was done by Alexis and Liakos [7].This is to overcome the electricity deficit for the cogeneration system in a hospital in Greece.The used of back up from the PU will increase the cost of operation of the cogeneration system.This study is looking into comparison between the operational cost of cogeneration plant and using PU for the electricity and chilled water generation.

Methodology
Net Present Value (NPV) approach is used for this study.The approach requires the acquisition of relevant cost data.The data needs to be analysed.
Estimated the operation cost of the cogeneration system.The process flow of the power and chilled water generation are shown in Figure 1a.The operating cost of the cogeneration system consists of annual cost of fuel ), capital recovery of equipment , annual cost of operation and maintenance , maximum demand charged per year and annual electricity cost when the GT failed .The maximum demand charged is imposed when the plant has to be hooked up to the PU for power supply when GT failed.
The total annual operation cost of using cogeneration system was calculated as Eq. ( 1).
(1) where; (2) where is the mass flow rate of the fuel (kg/s), LHV is a Low Heating Value of the fuel, i is a number of GT running and is the cost of fuel per unit of energy (RM/kWh). ( where is the capital cost of the equipment (RM), nis the equipment type, m is the equipment number, S is the salvage value of the J equipment (RM) and is the capital recovery factor.
(4) where, j is a type of equipment, is a labor cost, refers to the cost of repairing damage and is refer to routine maintenance yearly.
(5) where are a number of failures.(6) where is the electricity tariff rate and is a number of failures.
(ii) Estimated the operation cost using Electric Chiller (EC) with power supply from PU.The total power for operation of EC was assumed to be supplied by the PU while the chilled water demand was fulfilled through the electric chillers.The schematic diagram of the distribution of power by a PU is shown in Figure 1b.
In order to estimate the annual operation cost using EC with electrical supply from PU, the method used is divided into five steps; (i) Identifying the amount of electricity for the user.This was obtained from historical data from the plant.(ii) Estimation the amount of chilled water generated.The number of EC needed was based on the estimation of chilled water generated daily.The estimation of the chilled water was based from the historical data.(iii) Identifying the number of EC required was calculated using Eq. ( 7).(7) where x is the amount of chilled water generated.
(iv) Estimation of total annual electricity consumption calculated using Eq. ( 8). ( where y is the number of EC. (v) Estimation of total annual costs of using EC was calculated using Eq. ( 9). ( where the capital recovery of installation PU substation is defined in Eq. ( 10). ( where is the capital cost of installation the PU substation (RM) and is a capital recovery factor.While, the capital recovery of EC was calculated by Eq. ( 11).
(11) where is the capital cost of EC (RM) which is I is the number of EC, is the salvage value of EC (RM).
The annual cost of electricity consumption for y ECs to generate chilled water was calculated by Eq. ( 12). (12) The annual cost for electricity supply to the user is shown in Eq. ( 13).    Figure 2 shows that the trend of the electricity generation is almost similar for five working days.The electricity generated was higher during peak period 7.00 a.m. to 7.00 p.m.During this period, both GT were operated in order to fulfill the electricity requirements.While during off peak period, only one GT was operated.The daily average amount of electricity generated was around 127 000 kWh.
(ii) Chilled water generation.Based on the historical data, the plot of chilled water generated is shown in Figure 3.The chilled water was supplied from two SACs and one TES during peak hour.The total daily chilled water generated by the SACs and TES was about 32E3 RTh.
The operation cost of using cogeneration system Estimation of operation cost using cogeneration plant was calculated using Eq. ( 1).The results are shown in Table 3. From Table 3, it is noted the total annual cost of using cogeneration for electricity and chilled water production depends on number of failure.The annual cost increased while the increase of the number of failure.The estimated cost was based on i=10%, plant life of 20 years.

The annual operation cost based on EC using electrical supply from PU
Eq. ( 7) was used to estimate the number of EC required to fulfill the chilled water requirements daily.From Figure 4, it is estimated that 32 872 Rth is required daily.The results shown, nine (9) ECs were needed to generate chilled water demand.The capital cost of EC was calculated by Eq. ( 11) and the estimated results is RM0.17 Million.Assuming the electricity consumption for one EC is 300 kWh, the total costs of electricity consumption for nine ECs were calculated by using Eq.(12).It is estimated that the total cost of using nine ECs is RM3.5 Million.Eq. ( 13) was used to estimate the total cost of electricity charged by the PU to fulfill the electricity demand.Summary of the results is shown in Table 4.

Break-even analysis
From the comparison, the results shown that the estimated operation costs of power and chilled water using cogeneration plant is lower than using PU.The operation costs using cogeneration plant increased when the number of failures increased as shown in Figure 4. From the break even analysis, PU proves to be better option if the failure of the GT is more than 5 times.

Conclusions
GDC plant in UTP produced electric power and chilled water for the campus requirements.The comparative study of the economic feasibility was done in order to identify the profitable method to produce electricity and chilled water.The NPV approach was used for two cases namely cogeneration system and PU.The results indicate, the annual operation cost of using cogeneration plant is lower than using PU.However, from the break even analysis for both cases, if the GT failures frequencies are more than 5 times per year, PU option is more economic.

Figure 1b .
Figure 1b.Schematic diagram of distribution power by PU.
UTP GDC plant was selected for the case study.The plant generated power and chilled water.The plant operating parameters are shown in
The steps involved are;

Table 1 .
. Operating parameters for UTP GDC plant

Table 2 .
UTP GDC economic parametersThe data on electricity production was based on the plant operating data.Figure2shows the hourly electricity generation from 6 th May 2013 to 10 th May 2013 in the UTP GDC plant.
Figure 2. Hourly electricity generation by UTP GDC plant.Figure 3. Hourly chilled water generation by UTP GDC plant.

Table 3 .
Estimated annual operation cost of cogeneration plant.

Table 4 .
Summary of operation cost based on PU tariff.