Page 161 - Sustainable On-Site CHP Systems Design, Construction, and Operations

134 T h e Fe a s i b i l i t y S t u d y

There may be instances when the engineer is unable to use the optimal sizing tool. In
such cases, he/she should consider, as a starting point, a prime mover(s) with the capa-
bility of providing a portion of the site electrical power demand and the majority of the
site thermal load. This approach is known as thermal base-loading following and results in
higher system efficiency since it maximizes the use of waste heat. The following is a sum-
mary of different types of CHP design options [per Turner (2006) with modifications]:

1. Sized for isolated operation where the site is stand-alone, that is, the site does not
have grid power, and hence, all the thermal and electric needs have to be met
by the CHP system. Excess standby capacity for scheduled and unscheduled
maintenance as well as momentary demand spikes and energy creep issues
must also be considered.
2. Sized by electric base-load where the CHP is sized such that it meets the minimum
electric billing demand (which can be gleaned from historic utility bills).
Supplemental power is purchased from the electric grid, while any thermal
energy shortfalls have to be met by a separate heating source.
3. Sized by thermal base-load where the CHP is sized so that most of the thermal
energy is met with heat recovered from the prime mover, with any excess
electric power sold to the electric grid and any shortfalls met by supplemental
grid power.
4. Sized for intermediate loads where some amount of thermal load and some amount
of electric load are met by the CHP plant. This is probably the most common
design option since in actual reality, the final CHP design and equipment sizing
will depend on location-specific economics and issues such as energy security
and reliability. Economic issues would involve considering not only the cost of
thermal and electric energies, but also operation and maintenance costs of the
equipment as well as environmental costs.
5. Sized for peaking loads where the CHP system is specifically designed to curtail
electric demand by utility peak shaving, and thereby save on demand charges.

Economic Analysis
Since the intent of the Level 1 feasibility study is also to determine the economic feasi-
bility of a CHP system, the economic analysis plays a major role in this stage. Typical
techniques for economic analysis are simple payback which is the simplest (and the least
accurate) to more accurate and sophisticated methods such as present value (also known
as present worth), internal rate of return (IRR), and life-cycle costs (LCC). Chapter 9 dis-
cusses these techniques in more detail.
Typically, for Level 1 feasibility study the simple payback method is often adequate.
This is simply the ratio of the initial cost divided by the annual net savings. The cost of
borrowing money, inflation, and other factors associated with the operation of the
system during its lifetime are ignored. However, the simple payback analysis does
include the following effects:
1. Heat and power produced by the CHP system, and the estimated amount of
each to be used on the site
2. Avoided costs of utility-purchased heat and power