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, EstoniaSince the use of an insulating backfill is more efficientwith huge diameters, a DN 700 pipe was chosen for anexample scenario. An annual average for the flow andreturn temperature was taken into account. For thecalculation of the required backfill volume in theembedment, 0.2 m space in every direction of the pipeswas estimated. It is important for the calculation to takeonly the additional costs into account. That means theprice difference between cable sand and the insulationmaterial including the transportation costs.A common value of 6% was chosen for the requiredrate of return (i).The net present value C 0 was calculated with thefollowing equation:CTt0 I (R t) (1 i)t 1(13)The internal rate of return shown in Fig. 4 wascalculated with the IRR- function in Excel.Table 1 Scenario for insulation materialParameter Value UnitLength of the districtheating line:5000 mNominal diameter: DN 700Average flowtemperature:Average returntemperature:Annual hours ofoperation:Heat price (at the time ofthe invest):Required volume ofinsulation material:95 °C50 °C8760 h15 €/MWh th1.85 m 3Additional specific costs: 16 - 17 €/m 3Required volume for thewhole line:Heat loss with use of thematerial:Heat loss without use ofthe material:9250 m 369.6 W/m90.7 W/mEnergy savings: 23.3 %Annual savings of thewhole line:924 MWh thAdditional investment (I): 148,000 – 157,000 €Required rate of return: 6.0 %Time of cash flow: 20 anet present value (20 years) [€]60,00050,00040,00030,00020,00016 €/m 3 17 €/m 316 €/m 3NPV10,000internal17 €/m 3rate ofreturn00.0% 1.0% 2.0% 3.0%growth rate of the heat price10.0%8.0%6.0%4.0%2.0%0.0%Fig. 4 NPV and IRR of the scenario defined in Table 1depending on the additional specific costs of the insulationmaterial.The results in Fig. 4 show, that the additional specificcosts should be below 17 €/m 3 in order to get a positivevalue spread, assumed that the required rate of returnis 6 %. A reduction of specific costs of 5% (16 €/m 3 )results in an increase of the value spread by 1%. Thenet present value after 20 years rises about 10,000 €.The growth rate of the heat price is difficult to predict,but has an important influence within the given periodof 20 years. Presumably the heat price is mainlyinfluenced by emission trading, governmental subsidiesand the development of the fossil fuel price.Other scenarios may estimate higher growth rates, butin order to get realistic results, the rate was varied from0% to 3,5%.Table 2 gives an example of materials with low heatconductivity that could be interesting to use as backfill.It is obvious to look for natural products, because of theprice and environmental regulations.internal rate of returnAnnual growth rate ofthe heat price:0 – 3.5 %300