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A Combined Heat and Power Strategy Can Pay for Itself

Posted by Ritchie Ware on Jun 15, 2017 3:46:21 PM

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Companies in the market for a new boiler have options to consider. One option is to replace the boiler with essentially the same unit and add some features to make it more efficient. Another option would be to implement a combined heat and power (CHP) strategy, which would make your company eligible for a 10% Federal Investment Tax Credit.

There are several different CHP strategies, and you should weigh them all to see which works best for your company.

CHP is the simultaneous and sequential generation of heat and power from the same fuel source.

The minimum flow conditions where CHP should be considered are:

  • A flow rate of 5,000 lb/hr of saturated steam
  • Available pressure drop of 100 psi
  • At least 4,000 operating hours per year

One CHP strategy that works well for many industrial customers, including hospitals, universities and district heating plants is installing a high-pressure boiler with a backpressure steam turbine generator.

Let’s consider a current steam load that varies from 10,000 lb per hour to 22,000 lb per hour, with a mean flow rate of 16,000 lb per hour. The process operates 8,000 hours per year and requires 90 psi of saturated steam. Currently there is one boiler online and one offline available for backup. This setup has always served the plant well, however a CHP strategy could be much more efficient and cost effective.

In this scenario, a WARE professional would suggest that the company purchase a boiler with a maximum allowable working pressure (MAWP) of 300 psi rather than 200 psi. While operating the boiler at 250 psi, the steam would first go through a backpressure steam turbine generator which would drop the pressure to the 90 psi the system requires.

The steam turbine generator will produce 59 KW at the 10,000 lb per hour flow rate. At the mean flow rate of 16,000 lb per hour, the steam turbine generator will produce 138 KW.

The savings will depend on what your company is currently playing per kWh. If the current kWh charge is .07¢ per hour — using 138 KW output for this example — the savings will add up to approximately $75,000 per year in electrical production. The additional fuel cost to operate at a higher pressure using $4.00 per dekatherm of natural gas is approximately $128,000 per year in electrical production. At a rate of .19¢ per kWh the value of the electrical production will be approximately $203,000. It’s important to remember, the savings will only be realized if the electrical production is a byproduct of the steam production. Also, typically 2% to 4% of the total flow of BTUs will be lost going through a turbine.

Many customers question what the return on investment will be for the steam turbine generator. The answer depends on what the company spends per kWh and what, if any, the KW demand charges are. However, a return on investment within two years or less is not uncommon before the tax credit.

To learn more about the eligibility requirements for the 10% CHP tax credit, visit www.irs.gov and search for Investment Credit Form 3468. For more information on selecting a steam turbine generator, call the WARE Sales Team at 1.888.904.9273 or email [email protected].    

Topics: Preventative Maintenance Checklist, Boiler Tuning

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