12th International Symposium on District Heating and Cooling

The <strong>12th</strong> <strong>International</strong> <strong>Symposium</strong> on District Heating and Cooling,September 5 th to September 7 th , 2010, Tallinn, EstoniaABSTRACTCOMPETITIVENESS OF COMBINED HEAT AND POWER PLANT TECHNOLOGIESIN ESTONIAN CONDITIONSThe goal of this paper is to evaluate competitiveness ofmarket ready combined heat and power (hereaftercalled as ―CHP‖) technologies for CHP expansionpotential locations in Estonian. The main criteria toindicate preference of CHP technology is a heat priceby which the internal rate of return is equal to investors‘expectations.Calculation results shows, that in spite of theadvantages of gas engines (relatively low investmentcosts and high electrical efficiency) the calculated heatprices are the highest. Heat price for expected 7% IRRis 53–61 EURO/MWhheat depending on heat demand.It is mainly because of relatively high natural gas price.Under 5 MWel ORC is competitive to steamturbine/engine technology. Heat prices are lower for1–4 EURO/MWhfuel, depending on heat demands.Heat prices for places with annual heat demand under20 000 MWh are mainly above 45 EURO/MWhfuel(average heat prices for biomass boiler houses inEstonia is between 40–45 EURO/MWh). Developing ofCHP plants in such areas is feasible in the case ofgrant payments for investments. CHP plantdevelopment based on wood chips or peat could befeasible without grant payments in the places whereheat demand exceed 30 000–40 000 MWh annual.Carefully selected CHP technology and capacity canafford higher IRR when keeping competitive heatprices.The most feasible places for CHP expansion in Estoniaare Maardu, Viljandi, Rakvere, Valga, Haapsalu, Võru,Paide and Põlva.INTRODUCTIONThis paper draws on ongoing project ‗Analysis on thetechnical and economic consequences of renewableenergy based CHP systems in new areas with thelowered useful heat demand or after implementation ofenergy conservation measures in the areas with olderbuildings‘ within the project ‗Primary Energy Efficiency‘partly financed by NER, which contributes to the effortof enhancing the primary energy efficiency (PEE) andreducing CO2 emissions in the energy sector.Present-day world energy policy is based on two maindirections: energy efficiency and environmentalprotection. Efficient CHP production is one of theE. Latõšov 1 and A. Siirde 11Department of Thermal EngineeringTallinn University of Technology, Tallinn, ESTONIA267energy consumption effective methods, where CHPproduction from the renewable fuels is preferable. [1]During the last 2 years a few CHP plants working onwoodchips and peat were build in Estonia. A few ofbiomass CHP plants are under active development. Allof them are planed or constructed in major Estoniancities and are based on backpressure steam turbinetechnology. At the same time feed-in tariffs as well aspossibilities to get grants for expanding of CHP andusage of renewable fuels makes CHP expansion moreattractive for locations with a lower heat demands.Steam turbine technology is a classic for CHP plants.But in relatively small-scale boilers and district heatingsystems use of steam turbines is connected toeconomically less efficient operation (commonly higherspecific investment costs, O&M costs and lowerelectrical efficiency) where use of other alternative CHPtechnologies could be preferable.The goal of this paper is to evaluate competitiveness ofmarket ready CHP technologies for CHP expansionpotential locations in Estonian. The main criteria toindicate preference of CHP technology is a heat priceby which the internal rate of return (hereafter called as―IRR‖) is equal to investors‘ expectations.The paper is structured as follows. After an overview ofplaces where construction of CHP plants can bereasonable the paper provides principles for evaluationof CHP technologies competitiveness. Next sectionsprovide an overview of the CHP technologies whichcan be used in CHP plants and descriptions of mainfuel sources for energy production in Estonia. The lastsection provides heat price calculation examples basedon proposed principles for evaluation of CHPtechnologies competitiveness.LOCATIONS OF POTENTIAL BIOFUELED CHPPLANTS IN ESTONIAFig. 1 shows major Estonian cities and municipalitieswhich are distributed by the annual heat demands.Places where CHP plants are already constructed orunder construction, as well as in a state of activedevelopment are marked separately.Fig. 1 reflects well known principles, where theconsumers with higher annual heat consumptions aremore preferable.