A Comparative Study of the Economic Feasibility of Employing CHP Systems in Different Industrial Manufacturing Applications

Abstract

Extensive research work including multiple methodologies and numerous simulations have been completed in order to determine the economic effectiveness of employing CHP at commercial and residential sites. In contrast to the above, very few attempts have been made to develop methodologies to study the feasibility of CHP systems at industrial manufacturing facilities. As a result, practical opportunities for CHP at industrial sites are often not realized or even investigated. It follows that there is a need in the CHP related literature for an analysis that is explicit and yet general enough to determine the economic viability and potential for success of CHP systems at industrial manufacturing facilities. Therefore, the purpose of this paper is to clearly outline a methodology to determine the economic effectiveness of installation and operation of a CHP system at industrial facilities that have a need for space or process heating in the form of steam. The effect on the CHP system economic performance of several parameters, such as the project payback, internal rate of return, net present value, etc., are considered in the proposed methodology. The applicability and generality of the methodology is illustrated by examples including four different manufacturing facilities. The effects of the variability of factors such as annual facility operational hours during which both process heat and electricity are needed, facility average hourly thermal load, cost of utility supplied electricity, and CHP fuel type and associated fuel cost, on the outcome of the economic analysis are also examined.