Executive Summary
The primary objective of this study is to determine the feasibility of implementing a Combined Heat and Power (CHP) or cogeneration plant to meet our polymer production line’s energy needs. Key steps followed were: * Perform an analysis of the energy consumption of the production line * Perform an economic analysis on a variety of potential cogeneration schemes based on the energy and thermal load profiles * Recommend next steps to undertake as a follow up to this study
Table 1 below illustrates current energy demands for our production line. Electricity demand is fairly stable over the calendar year, with peaks as expected during production hours, and a fairly high baseload during off production hours. Only 75% of the heating demand can be met by a cogeneration scheme. Demand in heating (hot water) is only necessary during production hours. Part of the electricity demand is to supply the production line with chilled water. The current chiller plant is electric driven. | Summer | Winter | | Weekday | Weekend | Weekday | Weekend | | Day | Night | Day | Night | Day | Night | Day | Night | Electricity consumption (kWh) | 2,205,072 | 836,654 | 309,605 | 126,821 | 2,194,749 | 813,301 | 343,068 | 137,186 | Fuel consumption (kWh) | 3,024,635 | 1,245,438 | - | - | 3,618,453 | 1,489,951 | - | - |
Table 1 - Electricity and Gas consumption over a calendar year
Table 2 below illustrates possible cogeneration schemes. As heating (hot water) is only required during production hours, the CHP plant will be installed in primary position, with a conventional boiler meeting electricity demand during off production hours. It would not be economically viable to install a larger CHP plant to meet the entire electricity needs of the production line, as all the heat generated during off production hours would be wasted. | Estimated savings per annum | Estimated capital expenditures | Simple payback time (years) | Option 1 | 81 625 | 300,000 | 4.06 | Option 2 | 171 012 | 600,000 | 3.81 | Option 3 | 248 153 | 648,000 | 3.46 | Option 4 | 265 878 | 720,000 | 3.63 |
Tableau 1 - CHP unit options with payback times
Over the past decade, electricity and gas prices have respectively doubled and tripled, bringing an inevitable rise to our production costs. The implementation of the CHP unit allows us to better manage the rising share of our energy costs, and remain competitive vis-à-vis our direct competitors.
Our recommendation is to invest into the Option 4 CHP unit. While its simple payback time is slightly higher than Option 3’s, rising energy prices in the next decade will make Option 4 ultimately more cost efficient for our company.
A future study will need to consider the implementation of trigeneration for our production line.

Current situation
The study focuses on our polymer production line, which runs 5 days a week and 24 hours a day. The production line is shut off for 4 weeks in the year to allow for necessary yearly maintenance. Our production line requires electricity, heat, and cooling. Only 75% of the heat demand can be met by the CHP unit.
Currently, the production plant is meeting the energy demand derived for electrical power through electricity from the grid, high temperature steam from the use of conventional gas fired boilers, and chilled water through an electric chiller plant.
Data collection & analysis Electricity consumption
The data used for this analysis covers a one year period from July 1st, 2009 to June 30th, 2010. The production plant’s energy consumption can be measured accurately as it is metered separately from the rest of our facilities. Electricity consumption is measured on a half hourly basis. Natural gas consumption is measured monthly following meter readouts done by our energy company. Based on our production line needs, one can assume that our natural gas consumption is minimal outside of production hours. Likewise, as our cooling demand mirror our heating demand; electrical consumption needed for cooling is also minimal outside of production hours. Our first step is to determine consumption profiles and determine how consumption varies from an hourly, daily, or seasonal basis.
As shown in Figure 1, electricity consumption isn’t influenced by seasonal factors. Our production line requires the same levels of electricity regardless of seasonal changes, temperature variations, etc.
Figure 1 – Electricity consumption - Seasonal trends
Electricity consumption stays stable regardless of seasonal changes | Summer | Winter | | | | Production hours | 3 041 726 | 3 008 050 | Non production hours | 436 426 | 480 253 | Total electricity consumption | 3 478 152 | 3 488 303 |

As seen in Figure 2 and 3, consumption is relatively steady around 25,000 kWh, with a drop in consumption during non production hours during the weekends to 10,000 kWh.
Figure 2 - Consumption trend in the first 3 months of 2010
Consumption is fairly steady on weekdays, with a high baseload during off production hours

Figure 2 illustrates consumption trends during the first 3 months of 2010. Similar graphs in other periods of the year illustrate similar consumption trends at similar levels. This data is corroborated by Figure 3, clearly indicating that consumption is fairly stable around 25 MWh per day during production hours, and 10 MWh per day during off production hours.
Figure 3 - Consumption trends over a 7 day period

Figure 4 illustrates consumption trends on an hourly basis on a production day. Electricity consumption ranges from 400+ kWh to 650 kWh.
Figure 4 - Daily electricity consumption trends

Electrical consumption on the production site is fairly stable over the seasons and keeps a relative stable profile over a 24 hour day period. The site’s base load is high, accounting for approximately 40% of the total electrical consumption of the site. The first measure to optimize energy costs is to limit all energy consumption not linked or required by production.
Gas consumption
Gas consumption is available via monthly invoices from the energy bills. As stated earlier, heating requirements on the production line are only needed during production. After an analysis of the production line, 25% of the gas consumption is for a process requiring heat that can’t be supplied by a cogeneration unit. We will only therefore consider the remaining 75% of the gas consumption. As indicated in figure 5 below, the heating demand reaches peaks in the winter months. The production process has a minimal consumption of 533,392 kWh in the month of August. The current heated water is generated by a gas fired boiler, which has an efficiency of 80%.

We will therefore categorize consumption under the following criteria: * Summer / Winter: To reflect the influence of seasonal changes on gas consumption * Weekday / Weekend: To reflect the production cycle and illustrate that gas consumption is minimal during off production hours. * Day / Night: As our energy contract uses a peak and off-peak electricity price. | Summer | Winter | | Weekday | Weekend | Weekday | Weekend | | Day | Night | Day | Night | Day | Night | Day | Night | Production time (hours) | 2040 | 840 | 816 | 336 | 2040 | 840 | 816 | 336 | Electricity consumption (kWh) | 2,205,072 | 836,654 | 309,605 | 126,821 | 2,194,749 | 813,301 | 343,068 | 137,186 | Electricity demand (kW) | 1,081 | 996 | 379 | 377 | 1,076 | 968 | 420 | 408 | Fuel consumption (kWh) | 3,024,635 | 1,245,438 | - | - | 3,618,453 | 1,489,951 | - | - | Fuel conversion efficiency (%) | 80 | 80 | - | - | 80 | 80 | - | - | Heat demand (kWh) | 2,419,708 | 996,350 | - | - | 2,894,762 | 1,191,961 | - | - |

CHP Implementation - Technical analysis
CHP units are most effective when they reach 100% of heat utilization. As seen in Paragraph 1.2, the minmal heat demand occurred in the month of August, with a need or heated water during 480 hours. Based on this production uptime of 480 hours, the minimal heating demand is thus:
533,392*0.8480=889 k
A CHP plant of a thermal output power close to 889 kW is to be considered. However, due to the consumption profile of our site, where a sizable portion of electricity consumption occurs during off production hours, we will consider several additional options, listed in Figure 5 below: | Fuel input (kW) | Electricity Output (kWe) | Thermal output (kWth) | Heat to power ratio | Option 1 | 990 | 300 | 430 | 1.43 | Option 2 | 1950 | 600 | 880 | 1.33 | Option 3 | 2350 | 810 | 1060 | 1.31 | Option 4 | 3000 | 1000 | 1300 | 1.3 |
Figure 5 - CHP units under evaluation
Tableau 2 - Option 1: a 300 kWe, 430 kWth output gas engine CHP with a 990 kW fuel input | Summer | Winter | | Weekday | Weekend | Weekday | Weekend | | Day | Night | Day | Night | Day | Night | Day | Night | Production time (hours) | 2040 | 840 | 816 | 336 | 2040 | 840 | 816 | 336 | Electricity consumption (kWh) | 2,205,072 | 836,654 | 309,605 | 126,821 | 2,194,749 | 813,301 | 343,068 | 137,186 | CHP Electricity produced (kWh) | 612 000 | 252 000 | | | 612 000 | 252 000 | | | Electricity surplus / shortfall (kWh) | 1 593 072 | 584 654 | 309,605 | 126,821 | 1 582 749 | 561 301 | 343,068 | 137,186 | Heat consumption (kWh) | 2,419,708 | 996,350 | - | - | 2,894,762 | 1,191,961 | - | - | CHP Heat produced (kWh) | 877 200 | 361 200 | - | - | 877 200 | 361 200 | - | - | Heat surplus / shortfall (kWh) | 1 542 508 | 635 150 | - | - | 2 017 562 | 830 761 | - | - |

Option 1 is clearly undersized, with the CHP unit failing to generate enough heat for our production line needs.
Tableau 3 - Option 2: a 600 kWe, 880 kWth output gas engine CHP with a 1950 kW fuel input | Summer | Winter | | Weekday | Weekend | Weekday | Weekend | | Day | Night | Day | Night | Day | Night | Day | Night | Production time (hours) | 2040 | 840 | 816 | 336 | 2040 | 840 | 816 | 336 | Electricity consumption (kWh) | 2,205,072 | 836,654 | 309,605 | 126,821 | 2,194,749 | 813,301 | 343,068 | 137,186 | CHP Electricity produced (kWh) | 1 224 000 | 504 000 | 0 | 0 | 1 224 000 | 504 000 | 0 | 0 | Electricity surplus / shortfall (kWh) | 981 072 | 332 654 | 309 605 | 126 821 | 970 749 | 309 301 | 343 068 | 137 186 | Heat consumption (kWh) | 2,419,708 | 996,350 | - | - | 2,894,762 | 1,191,961 | - | - | CHP Heat produced (kWh) | 1 795 200 | 739 200 | - | - | 1 795 200 | 739 200 | - | - | Heat surplus / shortfall (kWh) | 624 508 | 257 150 | - | - | 1 099 562 | 452 761 | - | - |

Option 2 is sized to meet the minimal heating demands (880 kW thermal output to match a 889 kW minimal heating demand). There is a large shortfall in heating and electricity demand however, which brings us to the next two, larger, CHP options.
Tableau 4 - Option 3: a 810 kWe, 1060 kWth output gas engine CHP with a 2350 kW fuel input | Summer | Winter | | Weekday | Weekend | Weekday | Weekend | | Day | Night | Day | Night | Day | Night | Day | Night | Production time (hours) | 2040 | 840 | 816 | 336 | 2040 | 840 | 816 | 336 | Electricity consumption (kWh) | 2,205,072 | 836,654 | 309,605 | 126,821 | 2,194,749 | 813,301 | 343,068 | 137,186 | CHP Electricity produced (kWh) | 1 652 400 | 680 400 | 0 | 0 | 1 652 400 | 680 400 | 0 | 0 | Electricity surplus / shortfall (kWh) | 552 672 | 156 254 | 309 605 | 126 821 | 542 349 | 132 901 | 343 068 | 137 186 | Heat consumption (kWh) | 2,419,708 | 996,350 | - | - | 2,894,762 | 1,191,961 | - | - | CHP Heat produced (kWh) | 2 162 400 | 890 400 | - | - | 2 162 400 | 890 400 | - | - | Heat surplus / shortfall (kWh) | 257 308 | 105 950 | - | - | 732 362 | 301 561 | - | - |

While Option 3 CHP’s heat production meets more closely the heating demand of the site, the production line still relies a lot on heat production from the boiler to meet its energy needs.
Tableau 5 – Option 4: a 900 kWe, 1200 kWth output gas engine CHP with a 2700 kW fuel input | Summer | Winter | | Weekday | Weekend | Weekday | Weekend | | Day | Night | Day | Night | Day | Night | Day | Night | Production time (hours) | 2040 | 840 | 816 | 336 | 2040 | 840 | 816 | 336 | Electricity consumption (kWh) | 2,205,072 | 836,654 | 309,605 | 126,821 | 2,194,749 | 813,301 | 343,068 | 137,186 | CHP Electricity produced (kWh) | 1 836 000 | 756 000 | 0 | 0 | 1 836 000 | 756 000 | 0 | 0 | Electricity surplus / shortfall (kWh) | 369 072 | 80 654 | 309 605 | 126 821 | 358 749 | 57 301 | 343 068 | 137 186 | Heat consumption (kWh) | 2,419,708 | 996,350 | - | - | 2,894,762 | 1,191,961 | - | - | CHP Heat produced (kWh) | 2 448 000 | 1 008 000 | - | - | 2 448 000 | 1 008 000 | - | - | Heat surplus / shortfall (kWh) | -28 292 | -11 650 | - | - | 446 762 | 183 961 | - | - |

Option 4 CHP more closely matches the heat demand in the summer period. If we analyze in detail the heating demand on a monthly basis, the production line will always require at least 1100kW of heat, aside from the months of June (979kW) and August (889 kW). The CHP unit will produce heat in excess of our needs during those months. While that excess can’t be valorised and will be wasted, our operating costs will ultimately make option 4 the best choice in terms of cost efficiency.

CHP Implementation – Economic Analysis
Sizing our CHP options
Basing ourselves on current prices for gas (2.45p/kWh) and electricity (9.15p/kWh peak, 6.644p/kWh off-peak), | | Option 1 | Option 2 | Option 3 | Option 4 | WITHOUT CHP | Electricity costs | 589 467 | 589 467 | 589 467 | 589 467 | | Gas costs | 229 773 | 229 773 | 229 773 | 229 773 | | Total OPEX | 819 239 | 819 239 | 819 239 | 819 239 | CHP | CAPEX | 300,000 | 600,000 | 648,000 | 720,000 | | Fuel costs | 139 709 | 275 184 | 331 632 | 381 024 | | Shortfall costs | 531 215 | 346 043 | 228 330 | 172 337 | | Total OPEX | 737 614 | 648 228 | 571 087 | 553 361 | Cost savings | 81 625 | 171 012 | 248 153 | 265 878 | Payback time (years) | 4.06 | 3.81 | 3.46 | 3.63 |

When comparing simple payback time for all options, option 3 appears to be the most cost efficient. However, as seen in Paragraph 1.3, it still forces the production line to rely on conventional boilers for 1.3 MWh worth of heat and 1.5 MWh worth of electricity. In light of our objective to limit the rising weight of energy in our overall production costs, it is in our best interest to limit our operational costs. While the option 4 CHP unit has a higher capital cost, it completely covers our production line’s heat demand during the summer period. By simulating the increase in energy prices over the next 10 years, it becomes apparent that option 4 is actually the most profitable option for our company.
The CHP unit also meets the criteria necessary for Climate Change Levy (CCL) exemption.
The CCL requires for the power efficiency of the CHP to be over 20% and for the Quality Index (QI) to be over 105. Our CHP power efficiency is 33% and our QI is 134. Our CHP unit therefore qualifies for the Good Quality criteria and benefits from discounted energy prices.
Protection against price fluctuation
Despite the current economic recession reducing production and energy demand in Europe, energy prices are increasing due to the increasing shortage in supply. Energy prices are expected to continue their upwards trend. The investment is increasingly attractive as energy prices soar. The likelihood of this scenario confirms that our Option 4 CHP unit is the option to consider.
Conclusion
The implementation of a CHP unit would be very cost efficient for our production line, and would protect our operating margins from a foreseen rise in energy costs. This will allow our company to remain competitive on the global market, in particular against new industrial players who benefit from heavily state subsidized energy prices. The next step of this study would be to study the potential benefit of trigeneration and using the new CHP unit to supply our production line with chilled water.