Cogeneration, the path to profit.

by Research Dept., Sugarudyog.com

ABSTRACT

Cogeneration is the simultaneous production of power and heat - usually in the form of electricity and steam.

Benefits are much higher fuel efficiency and lower environmental load compared with the levels achievable with purchased electricity and independent steam generation.

With solid fuels, high pressure steam is usually raised in a boiler and passed through a turbine to generate power. The low pressure turbine exhaust steam is then available for process heating.

With liquid and gaseous fuels, it is also possible to run a reciprocating or gas turbine engine to generate power from the hot pressurised gases and then recover exhaust heat for process use.

The characteristics and economics of some available technologies are briefly reviewed, together with the opportunities for improvement.

Some examples of cogeneration in the chemical industry are provided, with an overview of other possible application areas in Australia.

INTRODUCTION

Many commercial and industrial activities have a simultaneous need for power and for heating or cooling to operate their processes, store their products and maintain comfortable working conditions for employees.

Conventionally, electricity would be supplied by a distribution company from remote, large power stations through an extensive, and expensive, high voltage transmission and low voltage distribution network.

Heating could also be supplied by electricity or by on-site fuel combustion in a boiler, raising steam. Cooling can be provided by local mechanical refrigeration or absorption refrigeration utilising either additional power or heat input.

Alternatively, a local COGENERATION scheme could be used whereby useful heat and power is produced sequentially from the same energy source.

The idea is an old one - certainly dating back to the earliest engine drivers, who cheerfully cooked their lunch and brewed their tea on the boiler while attending to the power needs of the mine or mill!

By the end of the 19th Century, cogeneration schemes were common in the heavy end of metallurgical and chemical processes, and in ships engine rooms. In early applications, the "power" would be taken as shaft power, and the "heat" as steam or hot water. With the development of electrical technology, the "power" element increasingly came to be produced as electrical power for improved flexibility of use.

Heat output is still commonly recovered and distributed as steam. However there are many applications where hot water - or hot gas is used.

Of course, the development of refrigeration technology allows either power - through mechanical refrigeration, or heat - through absorption refrigeration to be used to generate cold.

Cogeneration schemes need to be tailored to the particular user demands and considerable professional expertise is needed to understand and meet all requirements in a satisfactory way.

Over recent years, there has been a resurgence in interest in cogeneration, driven by:

• significant advances in the efficiency, reliability and cost of gas turbines, based largely on experience in the aviation industry;
• the widespread availability of natural gas fuel at decreasing prices in real terms;
• privatisation and liberalisation of electricity generation and distribution activities, leading to tariff structures more closely reflecting costs;
• the relentless search in industry for improved efficiencies as a means to improved competitiveness;
• the community desire to maximise fuel efficiency and minimise greenhouse gas emissions as awareness of fossil fuel depletion mounts, and evidence of climate change strengthens;
• the huge size of new coal-fired base load generating plant and long project lead times, coupled with uncertain future demand, creating space for mid-sized generators with relatively short project times;
• the success of cogeneration facilities in North America, Europe and Japan.

OPPORTUNITIES FOR COGENERATION

There is an opportunity for Cogeneration when there is a simultaneous requirement for power and heat.

Modern schemes can have considerable flexibility in the ratio of power to heat provided and may be configured to meet the usual electrical load requirement - with supplementary and standby power from the grid, and with supplementary heat from additional boilers.

Meeting the cyclic demands of large batch processes is awkward - cogeneration sits most comfortably with continuous processes or activities with relatively steady demands.

A fuel or fuels need to be available, competitive with the delivered cost of essentially coal-based electricity. Understanding the economics of a cogeneration proposal is difficult at present, due to uncertainty in the future electricity and gas tariffs. This is a considerable stumbling block.

A further issue, we will briefly return to, is the legal and contractual complexity of out-sourced cogeneration power and steam supplies from utility facilities established to serve several industrial or commercial customers.

COGENERATION TECHNOLOGY

In all the broad sweep of possible approaches to Cogeneration, there are three main avenues:

• "topping cycles"
• "bottoming cycles"
• "combined cycles"

These will be briefly overviewed in turn.

Topping Cycles

Here power is produced prior to the recovery of useful residual thermal energy.

Within these topping cycles, experience teaches that the best way depends on the qualities of the fuel available.

For dirty fuels - whether solid, liquid or gas, it is usual practice to burn the fuel in a boiler to produce high pressure steam, then let the HP steam down to lower pressure in a steam turbine which extracts power, and finally to recover the turbine exhaust steam for heating duties.

This method allows the power turbo machinery to work in a clean steam environment, keeping the fuel and ash problems confined to the boiler and stack systems.

Examples of this way of working may be found:

• in Sugar Mills - utilising bagasse fuel
• in Pulp Mills - utilising digester and wood wastes
• in Municipal Waste Disposal - utilising garbage fuel (in Europe and Japan - not yet in Australia).

Boilers are highly developed and well understood. Usually it is possible to capture more than 85% of the lower heating value of the fuel as high pressure steam energy.

Depending on the scale of operations, steam pressure ratios, steam conditions, and turbine details, some 15-25% of the HP steam energy can be extracted as power. The balance is available in the LP turbine exhaust steam.

Thus the Cogeneration system can capture 85% of the fuel heating value, compared with remote electricity generation from coal, where delivered efficiency is unlikely to exceed 35%.

When the fuel is a clean liquid or gas, it may be burnt directly in an engine to produce power, and the waste heat from engine cooling and exhaust may be recovered for use as hot water, steam or directly as hot gas.

Smaller systems up to about 1 MW electrical commonly use reciprocating gas or diesel engines.

Gas turbines are available in sizes from 200 kW up to 200 MW in a single unit. These machines typically produce exhaust gases at about 500oC at high load, and it is common to recover much of this energy with a Heat Recovery Steam Generator (HRSG) fitted into the exhaust ducting.

Usually 80% of the fuel lower heating value can be recovered as shaft power or heat with these systems. Reciprocating engines have some additional losses or thermal outputs which are not economic to recover, while gas turbine engines with HRSGs have higher stack losses than conventional boilers.

Reciprocating engines can give up to 30% of the fuel LHV as shaft power, while modern gas turbines can now achieve more than 40%.

Means have been developed for improving the power/steam flexibility of the gas turbine/HRSG system. Where additional and/or higher pressure steam is required, this can be raised by supplementary firing of additional fuel in the exhaust duct at the inlet to the HRSG. Fuel conversion to steam approximates 100% efficiency as stack losses are little changed by this practice.

Alternatively, on certain gas turbines, steam surplus to process requirements can be injected into the gas turbine itself, significantly increasing the power output from the machine at little capital cost - but at the operating cost of losing the water to atmosphere in the turbine exhaust.

Combined Cycles

Alternatively, surplus steam from a gas turbine/HRSG system can be utilised in a condensing steam turbine as in normal power station practice, to generate additional power. This so called "Combined Cycle" operation can yield a fuel efficiency to power of better than 50%, substantially better than the best of coal-fired generating systems.

Bottoming Cycles

Here waste heat is captured for process use and the residual utilised to power a turbine.

This cycle is relatively uncommon, but does occasionally arise in metallurgical or chemical processes where there is considerable heat of reaction.

While the power output is useful, the efficiency of bottoming cycles is typically low.

BENEFITS OF COGENERATION

Compared with purchased electricity and boilers to produce steam, cogeneration requires considerable additional investment.

This additional investment may be rewarded, and cogeneration will be economic, when:

• fuel is available at low cost, or even negative cost if alternative disposal charges must be met. This situation arises in situations such as:
  • sugar mill - bagasse disposal
  • oil and gas - production and refining
  • pulp mill - black liquor/wood waste disposal
  • municipal waste - garbage disposal
  • landfills - methane disposal.
    
• electricity is not available at affordable prices.
  for example:
  • oil and gas - offshore rigs
  • mineral processing - remote areas.
    
• fuel efficiency gain justifies additional investment.
  for example:
  • institutional - hospitals
  • industry - chemicals.

While economics may be the prime driver from the users point of view, cogeneration offers substantial additional benefits to the community:

• reduced environmental load
• efficiency gain reduces fuel consumption
• clean gas fuel displaces coal fired electricity
• lower CO₂, NOx, SOx, dust, ash
  (every 100 MW of gas fired cogen saves about 500 ktpa CO₂ emission)
• reduced or deferred investment for HV transmission capacity
• transmission and distribution losses largely eliminated
• small step size of cogeneration plant and distributed locations makes the grid system more reliable
• 2 year project time for small projects compared with about 8 years for a major new power station reduces forecasting risks on both the supply/demand side and the financing side.

Of course, it needs also to be recognised that gas turbine cogeneration consumes gas, which is a relatively scarce resource compared with coal.

COGENERATION PROJECT ARRANGEMENTS

Small scale cogeneration facilities may be owned, operated and financed by the energy host organisation. Then relatively simple economic evaluation and investment approval processes can be used.

Specialist cogeneration companies exist who can assist with evaluation, equipment selection and operation of cogeneration facilities.

The fuel supplier, and electrical energy supply authority will also be involved in providing tariff information and scoping and evaluating the project, and agreeing arrangements for purchase of any excess power supplied into the grid, and for sale of supplementary or stand-by requirements from the grid.

Large scale projects with shared users and substantial electricity sales are much more complex. The evaluation, technology selection, approval, financing and operating arrangements are all quite complex, with many different possibilities. The relationships between the many different parties have to be defined in contractual agreements, which need to provide for all kinds of future possibilities.

Even the economic evaluation is difficult to define at present, with a wide range of future power and fuel prices suggested by different "experts".

A large cogeneration facility will involve at least the following parties and agreements:

• Host - services agreements for purchase of electricity and steam. The host may have an equity participation.
• Electricity Distributor - power purchase and standby power supply agreements.
• Investors - equity funds
• Financiers - loan funds
• Operator - operation and maintenance functions. May also be an equity participant.
• Prime Contractor - engineering design, supplier selection, procurement and construction. May also be an equity participant.
• Fuel Supplier - long term contract.
• Consultants - for technical, environmental, financing and legal matters are also likely to be involved.

For any other queries regarding cogeneration please email us at services@sugarudyog.com