Risto Lahdelma Professor, Energy technology for communities Tel: Outline

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1 The Ecomomy of DHC Energiatekniikan laitos Risto Lahdelma Professor, Energy technology for communities Tel: Aiying Rong Researcher Department of energy technology School of Engineering Aalto University Otakaari 4, ESPOO, Finland R. Lahdelma, A. Rong 1 Outline Structure of DHC Basics of CHP Cost structure for separate heat and power production Cost allocation method for CHP power and heat Annuity DH cost tariff R.Lahdelma, A.Rong 2 1

2 - Interconnection of various heat and cooling sources by means of heat and cooling network (pipes) to serve space heating and domestic hot water supply and space cooling of buildings - Heat and cooling generation facilities - Heat substation for fulfilling temperature and pressure transformation - Pipes for connection - Cooling supply is sperated from heating supply Structure of DHC R. Lahdelma, A.Rong 3 Role of CHP in DHC CHP (combined heat and power) Simultaneous production of heat and power in a single integrated process Always based on an efficient and integrated system that combines electricity production and heat recovery system Energy efficient technolgy (as compared with separate provision of heat and power) Economic beneft (cost savings): fuel savings for both fossil fuel based and biomass based CHP plants Enviromental benefit (Enviromental friendliness): Emission savings for fossil fuel based CHP plants R.Lahdelma, A.Rong 4 2

3 Role of CHP in DHC DHC: a flexible platform for CHP and renewable Take heat from any source Recycle wasted heat streams that are difficult to use otherwise Change to renewable source as new technoligies available Create a bridge towards future low-carbon system when combined with CHP CHP/DHC: a key to energy security and climate solution Promote using local (renewable) resources Reduce the dependence on imported (fossil) fuels Benefit of CHP can be achived if heat can be utilized DHC provides an excellent platform for deploying CHP Complement the use of intermittent renewables R.Lahdelma, A.Rong 5 Before CHP/DH 3

4 After CHP / DH Combined cooling, heat and power (CCHP) - CCHP (combined cooling, heat and power) - Power (electricity - Heat from CHP split into - Heating - Cooling - further utilization of waste heat from turbine by absorption chiller - waste heat from the chiller can be used for heating domestic water by heat pump - More efficient than CHP - Cost allocation for CCHP can be done based on CHP R. Lahdelma, A.Rong 8 4

5 Combined heat and power (CHP) - CHP (combined heat and power) - Power (electricity) - Heat - CHP lies in the heart of both DH and DHC - More efficient than separate production of heat and power - Heat and power production are interdepent - Backpressure CHP plant - Extraction-based CHP plant Outlet temperature of steam for backpressure plant is higher than that for extraction-condensing counterpart, Which is in turn higher than than for condensing plant R. Lahdelma, A.Rong 9 How backrpressure plant works - In a boiler pressurized water (in state A) is heated to superheated (extremely high-temperature) steam state B, e.g. 400 o C and 500 bar via combustion of fuel. - The pressurized high-temperature steam, known as live steam, is sent to turbine in which it releases energy to produce mechnical work while expanding to a much lower pressure (state C), e.g. 1 bar Back-pressure CHP R. Lahdelma, A.Rong 10 5

6 Backpressure CHP vs condensing power plant - From expanded state, the steam is led to a condenser in which it is cooled and condensed to (saturated) liquid state D. - A water (feedwater) pump increases the pressure and the cycle is closed - Backpressure CHP plant can be viewed as a plant in which the condenser has replace a cold condenser which is cooled by the enviornment (e.g. sea water) Back-pressure CHP R. Lahdelma, A.Rong 11 CHP Charactristic R. Lahdelma, H.C. Wang, A.Rong 12 6

7 CHP Charactristic Q (c 3,p 3,q 3 ) (c 2,p 2,q 2 ) (c 4,p 4,q 4 ) (c 5,p 5,q 5 ) (c 6,p 6,q 6 ) (c 1,p 1,q 1 ) P Three-dimensional drawing Two-dimensional drawing c: cost, p: power,q: heat R. Lahdelma, A.Rong 11 Basics of CHP R.Lahdelma, A.Rong 14 7

8 Cost structure The main part of DHC costs consist of investment costs for the network and production facilities Interest and amortization of investment loan E.g. annuity for investment period Additional costs Other fixed costs Variable costs such as fuel costs Purchase costs of emission allowances Fixed and variable cost Fixed costs are independent of energy production Variable costs depend on produced energy R.Lahdelma, A. Rong 15 Cost structure Operating costs ( /MWh) Cost structure of a solid fuel DH plant and heavy fuel oil DH plant Varible costs include opeating and maintenace Operating and maintenance costs of network Capital costs of network Fuel and other variable costs Fixed operating costs of plant (e.g. salaries) Capital costs of plant Solid fuel plant Heavy fuel oil plant R.Lahdelma, A. Rong 16 8

9 Cost allocation of CHP power and heat CHP was interpreted in two days Power is a by-product when steam or hot water is produced for an industrial plant or a residential area Heat is a by product during the power production process because heat is recovered by utilizing otherwise waste heat in the process The the need for cost allocation for joint production The law requires the cost allocation because Power is subject to competition while heat is natural monopololy Law leaves freedom to the DHC company for choosing cost allocation scheme Different DHC companies use different schemes R.Lahdelma, A. Rong 17 Combined heat and power (CHP) - C sq,q Total cost (fixed and variable together) for alternative way (boiler using the same fuel) to produce the same amount of heat - C sp,p Total cost for alternative way (condensing power using the same fuel or maket value of the the produced electricity) to produce the same amount of electricity - C V =C sp,p +C sq,q - H cost allocation using beneficial method R. Lahdelma, A.Rong 18 9

10 Cost allocation of CHP power and heat No unique way to do allocation Basic principle: total CHP cost is a constant Two extreme ways to do allocation Alternative power generation allocation (point A) Power covers major production cost Total CHP power cost is the total cost of equivalent condensing power plant (variable+fixed) Total CHP heat cost is by substracting total CHP power cost from toal CHP cost Alternative heat generation allocation (Point B) Heat covers the major production cost Total CHP heat cost is the total cost of equivalent heat-only boiler (variable + fixed) Total CHP power cost is by subtracting total CHP cost from total Any allocation between (A,B) is acceptable R.Lahdelma, A. Rong 19 Cost allocation of CHP power and heat Benefit allocation method (point H) The overall costs of CHP are allocated to heat and power in proportion to the costs of alternative separate heat and power production technologies The costs are further divided into fixed and variable costs for each commodity Variable costs of each commodity can be allocated based on produced energy quantity or some other methods The remaining costs are the fixed costs and computed by subtracting variable costs from the total costs R.Lahdelma, A. Rong 20 10

11 Parameters for separate production Operating hours, fuel and fuel price is the same as CHP Separate (alterative) power Condensing power plant (effiency from 30-40%) Capacity is the same as CHP power Separate (alternative) heat Heat only boiler, the efficiency is larger than η tot of CHP plant Capacity is the same as CHP heat R.Lahdelma, A. Rong Cost allocation of CHP power a heat Different ways for computing variable costs Heat and power energy output (simple and easy) Exergy (detailed thermodynamics analysis) Part of energy that can be converted to electricity and mechanical power Treating electircity more valuable than heat Electricty covers the main part of CHP costs Heat product benefit from exergy allocation Value of the produced heat and power R.Lahdelma, A. Rong

12 CHP Example R.Lahdelma, A. Rong 23 Basic calculation R.Lahdelma, A. Rong 24 12

13 Alternative power production method R.Lahdelma, A. Rong 25 Alternative heat production method R.Lahdelma, A. Rong 26 13

14 Beneficial allocation methods R.Lahdelma, A. Rong 27 Summary R.Lahdelma, A. Rong 28 14