# Presentation: 273331

## Industrial Cogeneration or Combined Heat and Power in Bangladesh - Business

- Zia Haq
- US Department of Energy
- Energy Information Administration
- January, 2004

## Introduction

- Combined heat and power technology description, cost
- Cost data for illustrative purposes only
- Local manufacture and learning can substantially reduce costs
- Policy environment that has facilitated the growth of CHP in India
- Case studies – Bangladesh, India, Thailand, Indonesia, Malaysia
- Potential for CHP in Bangladesh
- Recommended future actions

## What is Combined Heat and Power?

- Sequential generation of two different forms of energy from a single energy source – electrical, thermal
- Conventional electricity generation efficiency 33%, separate heat and power system 45%, CHP 85%
- Large and medium industrial CHP systems – “process industries” petroleum refining, pulp and paper, chemicals, capacities > 25 MW, steam generation rates measured in thousands of pounds of steam/hr
- Small industrial – boilers providing process steam to manufacturing plants, 50 kW to 25 MW, can repower existing boilers or install new systems
- Small commercial and institutional – reciprocating engines, small combustion turbines, building electrical and heating/cooling, starting at about 25 kW, restaurants, large commercial buildings

## CHP Technologies (Reciprocating Engine)

| Technology | Typical size | Sectors | Equipment |
| --- | --- | --- | --- |
| Reciprocating engine | 100 kW | Commercial | MAN 80 kW |
| Reciprocating engine | 300 kW | Commercial | Cummins QSK19G |
| Reciprocating engine | 1 MW | Commercial | Cummins QSV91G |
| Reciprocating engine | 3 MW | Commercial, industrial | Caterpillar G3616 LE |
| Reciprocating engine | 5 MW | Commercial, industrial | Wartsilla 18V34SG |

## CHP Technologies (Gas Turbines)

| Technology | Typical size | Sectors | Equipment |
| --- | --- | --- | --- |
| Gas turbine | 1 MW | Commercial | Solar Saturn 20 |
| Gas turbine | 5 MW | Commercial, industrial | Solar Taurus 60 |
| Gas turbine | 10 MW | Commercial, industrial | Solar Mars 100 |
| Gas turbine | 25 MW | Industrial | GE LM2500 |
| Gas turbine | 40 MW | Industrial | GE LM6000 |

## Reciprocating Engine Based CHP Systems

- Low first cost, easy startup, proven reliability when properly maintained, good load-following characteristics
- Well-suited for packaged CHP in commercial and light industrial applications of 20 kW to 5+ MW
- Ability to produce steam is limited due to waste heat being rejected in jacket water at low temperatures
- Jacket water generally suitable for production of hot water
- Good for food and manufacturing industries that do not require high pressure steam but use large quantities of wash water and low pressure steam
- Other systems – high pressure boilers, steam turbines, combined cycle systems

## Gas Turbine or Combustion Turbine Based CHP Systems

- Produces high quality heat that can be used to generate steam for additional power (combined cycle) or on-site steam use
- Can burn natural gas, diesel, or be dual-fuel capable
- Low maintenance cost
- Good for > 5 MW applications
- Industrially sized CHP plant is a complex process with many inter-related subsystems
- Construction for larger sizes can take over 2 years

## Benefits of CHP Systems

- Lower fuel consumption and lower electricity costs leading to reduced operating costs
- Boilers, turbines and other components are available in the region Bangladesh, India, Thailand, Malaysia
- Increases reliability of industry reduces the impact of energy supply disruptions
- Small size, rural location, can reduce transmission and distribution system losses by 8-10%
- Financial burden can be shared by industry and utilities
- Can improve the quality of power supply for local utility
- Can delay the need for peak demand driven capacity expansion
- Diversification of energy supply
- Reduced dependence on imported sources of energy

## Comparison of CHP Technologies

| Property | Reciprocating engine | Steam turbine | Combustion turbine | Combined cycle |
| --- | --- | --- | --- | --- |
| Electric efficiency (LHV) | 25-45% | 15-25% | 25-40% | 40-50% |
| Size (MW) | 0.05-5 | Any | 1-100 | 25-300 |
| Footprint (sqft/kW) | 0.2-0.3 | <0.1 | 0.02-0.6 | 0.6 |
| Installed cost ($/kW) | 800-1,500 | 800-1,000 | 700-900 | 600-800 |
| O&M cost ($/kWh) | 0.007-0.015 | 0.004 | 0.002-0.008 | 0.002-0.008 |
| Availability | 92-97% | Near 100% | 90-98% | 90-98% |
| Hours of operation between overhauls | 24,000 – 60,000 | >50,000 | 30,000 – 50,000 | 30,000 – 50,000 |

**Notes:**
Reciprocating engine cost characteristics
Total installed cost about double the cost of basic engine generator and heat recovery equipment
Smallest system more expensive and have higher added costs for installation
Multi-megawatt engines operate at medium to slow speed (600-900 rpm) whereas smaller engines operate at higher speeds (1,200 – 1,800 rpm) which may impact operating and maintenance costs
Smaller systems better packaged and require less site work than larger systems but this effect overcome by economies of scale
Cost of interconnection switchgear as example of economy of scale
Combustion turbine cost characteristics
Performance numbers based on unfired heat recovery steam generator (HRSG) producing dry saturated steam at 150 psig
Electrical efficiency increases as size increases
Power to steam ratio changes as size increases
Changing power to steam ratio impacts project economics which have to be matched to customer needs

## Application Issues

- Industrial sector
- Most favorable application in pulp and paper, chemicals and petroleum refining industries
- Construction lead times for larger systems can be 2 years or more
- Cogeneration for fertilizer, process plants, refineries, tea industry
- Commercial sector
- Typical applications at: colleges/universities, government buildings, hospitals
- Disadvantages of commercial sector CHP applications
- On average commercial sites smaller than industrial sites, technologies for smaller applications more expensive and less efficient than larger systems
- Commercial establishments operate fewer hours per year and have lower load factors, providing fewer hours of operation in which to pay back their higher capital cost
- Unlike the majority of industrial sites that can absorb the entire thermal output of CHP systems on-site, many commercial sites have either an inadequate thermal load or a highly seasonal load such as space heating
- The best overall efficiency and economics come from a steady thermal load

**Notes:**
Other commercial sector applications include: solid waste facilities, offices, airports, water treatment facilities, prisons, apartments, warehousing and storage, hotels, schools, stores, and restaurants

## Criteria for Selecting CHP Technology

- Amount of power needed
- Duty cycle
- Space constraints
- Thermal needs
- Emission regulations
- Fuel availability
- Utility prices and interconnection issues

**Notes:**
Define power to steam ratio

## When Should Cogeneration Be Considered?

- When it makes economic sense to the industry
- Is the cost of electricity supplied by the utility greater than the cost of electricity from the cogeneration system?
- Is the utility not able to provide reliable power causing inconvenience or loss of production to the industry?
- Is the power quality inferior?
- When there are gains to be made from efficiency improvements
- First step is a walk-through analysis to give payback estimate
- Second step is a detailed feasibility analysis – many consulting firms, energy service companies, or can be done by industry
- Many publications and analysis tools available

## Regulatory and Policy Issues in India

- Central government issued a resolution on “Promotion of Cogeneration Power Plants” in November, 1996
- Defines cogeneration system – a system that produces two or more forms of energy (electricity/steam or electricity/mechanical, etc.)
- A facility qualifies as a cogeneration facility if it satisfies certain operating and efficiency standards
- Two cogeneration cycles – topping cycle and bottoming cycle
- Topping cycle – fuel is used for electricity generation and heat for other industrial activities
- Bottoming cycle – waste heat is utilized for electricity generation

## HUDCO Sanctioned Bagasse-based Cogeneration Project Capital Costs in India

| Project/borrowing organization | Installed capacity/Surplus capacity (MW) | Total project cost of installed capacity (Rs/kW) | Total project cost of installed capacity ($/kW) |
| --- | --- | --- | --- |
| Ryatar Niyamit, Mudhol | 12.3/7.7 | 20,280 | 414 |
| Vasant Dada, Sangli | 12.5/6.9 | 32,040 | 654 |
| Mysore Sugars, Mandya | 28/19.2 | 27,270 | 556 |
| Jeypore Sugars, Chagallu | 16.3/9.4 | 16,610 | 339 |
| Kukkuwada, Karnataka | 24/15.1 | 33,990 | 694 |
| Bellad, Karnataka | 14/9.2 | 28,210 | 576 |
| Chikkodi, Karnataka | 20/14.8 | 27,800 | 567 |

-   Assuming Rupees 49 = 1 US$

**Notes:**
Note how these capital costs are significantly less than costs shown earlier (comparing to reciprocating engine system costs)
Could be due to local manufacture and learning, labor costs

## Status of Industrial Cogeneration in India

| Industry | Potential (MW) |
| --- | --- |
| Sugar | 5,200 |
| Distilleries | 2,900 |
| Rice mills | 1,000 |
| Fertilizers | 1,000 |
| Pulp and paper | 850 |
| Others | 4,250 |
| Total | 15,000 |

| State | Sugarcane cogen capacity (MW) |
| --- | --- |
| Tamil Nadu | 98 |
| Karnataka | 61.6 |
| Andhra Pradesh | 36.2 |
| Uttar Pradesh | 46.5 |
| Others | 30.5 |
| Total | 272.8 |

**Notes:**
Note sugar industry has potential to install 5,200 MW, and has installed capacity of about 273 MW

## Problems Faced by CHP Projects in India

- Stand-alone plants are meeting emergency or captive requirements of industry
- Back-up supply from the utility is required in most cases
- Installed capacity is far below of estimated potential in India
- Significant work and experience has been obtained
- Problems with the State Electricity Boards
- Delay in construction of transmission lines
- Synchronization with grid
- Inconsistent State government policies pertaining to power purchase agreements
- Bagasse/biomass availability

## CHP Study - Bangladesh

- Based on 1998 BUET-AIT-UNDP study preliminary survey of CHP potential in Bangladesh – 1,000 MW potential in Bangladesh
- Some experience with technology meeting 10% of total electrical requirement – fertilizer, sugar, paper, textile spinning
- Potential sites in industrial sector: pharmaceutical, edible oil, refinery
- Potential sites in commercial sector: hotel, hospital, cinema hall,
- How much follow-on and project implementation work has been done since then?
- How much of the capacity is only stand-by emergency capacity and how much wheeling, banking and buy-back activities are being done between BPDB, REB and CHP sites?

**Notes:**
Other potential sites in industrial sector include: paper recycling, textile processing, textile spinning, jute, tobacco curing, food processing, tea, tannery, knitting and hosiery, soap and chemicals, cement, ceramics, distillery, and industrial estates
Other potential sites in commercial sector include: housing complex, shopping, office

## CHP Application in Textile Spinning Mill

- Largest spinning mill in Bangladesh, established July 92, 24 hours/day, 260 days/year operation
- 7 Waukesha gas generators (920 kW each) for total capacity of 6.4 MW
- Electrical energy for motors, fans, lights, heaters, other loads
- Space cooling using 2 waste heat boilers to generate 5 tons/hr steam at 6 bar (5.9 atm, 87 psia) to drive vapor absorption chillers
- Low pressure boilers compared to state-of-the-art boilers available in India
- Chilled water used to cool production section

## CHP Application in Sugar Mill I

- One mill, 3 water tube boilers, 16 tons steam/hr at 14.7 bar (213 psia, 14.5 atm) at 246 C
- Low pressure boilers compared to state-of-the-art boilers available in India
- Steam turbine used to generate electricity for motor drives, process steam
- 1 steam turbine during milling season to meet the entire electric demand, 1 standby diesel generator also available and run during emergency
- Cogeneration facilities operate only during season 150 days/year, can be operated off-season with balancing, modernization, rehabilitation, and expansion (BMRE)

## CHP Application in Sugar Mill II

- Most sugar industries operate low-pressure boilers (15 bar)
- High-pressure boilers needed to increase efficiency
- 2,500 tons crushed/day (TCD) plant can sell 10 MW of excess capacity to grid with high pressure 64 kg/cm2 (910 psi, 63 bar) boiler
- Sound technical management needed in sugar mills to maintain high-pressure boilers
- Existing low-pressure boilers not being maintained properly leading to outages

## CHP Application in Paper Mill

- Newsprint mill with steam turbine cogeneration facility
- Capacity 13.1 MW, purchases 2.5 MW from utility grid
- Furnace oil used in boilers for steam generation
- Steam at 42 bar (41 atm, 609 psia) 400 C, 3 boilers, 161 tons steam/hr used in 3 back pressure turbines to generate electricity, steam for paper machines, autoclaves

## CHP Application in Fertilizer Plant

- One of the largest in Bangladesh, 1.8 million tons of urea/year
- Most electricity self-generated with provision for buying from grid
- 2 boilers with capacities to produce 180 tons steam/hr and 171 tons steam/hr, 60 bar (59 atm, 871 psia), at 510 C
- Steam used in 2 back pressure steam turbines to generate up to 11 MW of electricity, and used for processing

## CHP Potential in Bangladesh I

| Industry | Number of sites | Avg. installation potential per site (kW) | Potential (MW) |
| --- | --- | --- | --- |
| Tea gardens | 180 | 900 | 162 |
| Sugar (surplus capacity) | 15 | 10,000 | 150 |
| Jute | 70 | 1,500 | 105 |
| Textile spinning | 50 | 2,000 | 100 |
| Hospital | 150 | 500 | 75 |
| Office complex | 150 | 500 | 75 |
| Textile processing | 50 | 1,000 | 50 |
| Paper recycling | 14 | 3,000 | 42 |
| Ceramics | 20 | 1,500 | 30 |
| Knitting and hosiery | 50 | 600 | 30 |
| Tannery | 50 | 600 | 30 |
| Export processing zone | 5 | 5,000 | 25 |
| Hotel | 50 | 500 | 25 |
| Industrial estate | 5 | 5,000 | 25 |
| Soap and chemicals | 20 | 800 | 16 |
| Food | 15 | 1,000 | 15 |
| Housing complex | 10 | 1,000 | 10 |
| Cement | 10 | 800 | 8 |
| Distillery | 10 | 600 | 6 |
| Total |  |  | 979 |

## Sugar mill average potential per site may be high since mills are not big in terms of TCD
2,500 TCD provide an excess of 10 MWe to grid with high pressure boiler according to Indian experience
Using this as a guide, potential for sugar industry surplus capacity may be about 80 MW
Sugar mills have to upgrade to high pressure boilers to realize the 80 MW potential
Sugar mills have to find alternative sources of biomass to augment sugarcane bagasse, extend operation of CHP system, increase profitability
Jute industry with closing of Adamjee may have lower potential than indicated in table
If jute is approximately halved from 105 to 50, sugar is reduced to 80, the total reduces to 860 MW CHP potential in Bangladesh

- 2,500 TCD provide an excess of 10 MWe to grid with high pressure boiler according to Indian experience
- Using this as a guide, potential for sugar industry surplus capacity may be about 80 MW
- Sugar mills have to upgrade to high pressure boilers to realize the 80 MW potential
- Sugar mills have to find alternative sources of biomass to augment sugarcane bagasse, extend operation of CHP system, increase profitability
- Jute industry with closing of Adamjee may have lower potential than indicated in table
- If jute is approximately halved from 105 to 50, sugar is reduced to 80, the total reduces to 860 MW CHP potential in Bangladesh

- CHP Potential in Bangladesh II

## Sugar Mills in Bangladesh, 1993-94

| Mill | Cane processing capacity (TCD) | Existing electricity capacity (MW) | Potential electricity capacity (MW)* | Operating season (days/year) |
| --- | --- | --- | --- | --- |
| Panchagar | 1,016 | 2.0 | 4.1 | 150 |
| Thakurgaon | 1,524 | 3.0 | 6.1 | 148 |
| Shetabganj | 1,250 | 4.0 | 5.0 | 114 |
| Shyampur | 1,016 | 2.0 | 4.1 | 138 |
| Rangpur | 1,321 | 2.6 | 5.3 | 131 |
| Joypurhat | 2,032 | 2.5 | 8.1 | 136 |
| Rajshahi | 2,000 | 3.5 | 8.0 | 162 |
| Natore | 1,500 | 4.0 | 6.0 | 167 |
| North Bengal | 1,500 | 2.0 | 6.0 | 166 |
| Kushtia | 1,524 | 3.0 | 6.1 | 130 |
| Carew | 1,150 | 3.0 | 4.6 | 175 |
| Mobarakganj | 1,500 | 2.0 | 6.0 | 156 |
| Faridpur | 1,016 | 2.0 | 4.1 | 160 |
| Zeal Bangla | 1,016 | 2.0 | 4.1 | 155 |
| Deshbandhu | 300 | 0.5 | 1.2 | 67 |
| Total |  |  | 78.8 |  |

-   Export potential to grid with installation or retrofit of high-pressure boilers

## Feasibility Study Revision Needed

- Feasibility analysis was conducted in 1998 with the following capital cost assumptions: steam turbine US$1,200/kWe, gas turbine US$1,000/kWe, reciprocating engines US$900/kW
- Taka exchange rate of 48 Taka/US$
- These need to be revised, steam turbine, gas turbine costs have come down, further reductions are possible with local manufacture, Indian examples show the potential for cost reductions
- Feasibility analysis was done for paper mill, vegetable oil refinery, textile spinning mill, textile processing mill, hospital, and hotel
- Revisions needed for these with updated costs and financial conditions

## Summary of Feasibility Study for Bangladesh

| Study site | Hypothetical installed capacity (MW) | Hypothetical initial investment (crore Takas) |
| --- | --- | --- |
| Recycled paper mill | 2.75 | 11.88 |
| Vegetable oil refinery | 0.52 | 2.2 |
| Textile spinning | 2.35 | 10.2 |
| Textile processing | 0.875 | 3.7 |
| Hospital | 0.8 | 3.56 |
| Hotel | 0.8 | 3.56 |

-   All sites used reciprocating engine power match option
-   Need to be revised
-   Economics look good but depend on price of natural gas

## Wood Waste Fired Boiler in Indonesia

-   Kurnia Musi Plywood Industried (KMPI) plywood manufacturer with 850 cubic meter of log input/day, Pulau Borang, Palembang, Sumatra, Indonesia
-   Residues used for 3 boilers for steam generation for use as heat source in mills
-   Boilers low pressure, inefficient, poor environmental performance
-   Invested in new high pressure boiler coupled with existing turbo-generator
-   New boiler fired with wood waste, producing superheated steam at 35 bar g (508 psig), 380 C, coupled to existing 3.2 MW fully condensing steam turbine
-   Total cost US$1.6 million (US$500/kW), excluding civil works, expected payback over 1 year

- New 35 tonnes/hr boiler

- Wood complex at Palembang

## Rice Husk Fired Plant in Malaysia

-   Ban Heng Bee rice mill in Pendang, near Alor Setar in Kedah, Malaysia
-   Capacity of 10 tonnes paddy/hour produces 2 tonnes rice husk/hour
-   CHP plant consists of: steam boiler with capacity of 8 tons/hour saturated steam at 32 bar g (464 psig), 450 kW back pressure turbine, 3 million kcal/hour (11.9 million Btu/hour) heat exchange system for paddy drying, multicyclone dust collector
-   Provides power for milling operation, hot water for paddy drying
-   Equipment costs US$1.15 million (excluding civil and structural works), additional income could come from sale of ash, payback expected to be 3 years

## Malaysia

- Palm Energy Sdn. Bhd. to build 9.8 MW biomass fueled cogeneration plant in Lahat Datu, Sabah, Malaysia
- Loan by Bank Industri and Teknologi Malaysia Bhd. of 20 million ringgit (~$5.2 million), 7 year
- Total plant cost 30 million ringgit (~$7.9 million, $806/kW), comparable to US costs
- Feedstock palm oil waste
- Power to be supplied to Kwantas Corp. Bhd., Palm Energy’s parent company
- Supplying energy to Kwantas Palm Oil refinery
- Kwantas also considering possibility of selling power to local customers

## Mauritius

- Latest state of the art CHP plant
- Belle Vue sugar mills, in operation since March 2000
- 2 x 140 tons/hour boilers operating at pressure of 82 bar (81 atm, 1,190 psia) and 525 C
- 2 x 35 extraction/condensing turbine generators
- Operation on bagasse during crushing season, operation on coal and bagasse during off-season
- In-season capacity on bagasse 54 MW
- No high pressure heater, only low pressure heaters, deaerator, boiler inlet feedwater temperature 125 C

## Paper Company in Thailand

-   Paper company in Panom Sarakham, 130 km east of Bangkok
-   600 kW single stage back pressure turbine coupled with an existing locally-made rice husk-fired boiler producing steam at 20 bar (290 psi)
-   System supplies 15 tonnes/hour of process steam at 6 bar and 600 kW of electricity
-   Payback period is claimed to be less than 4 months

- 600 kW back pressure turbo-generator

## Rice Mill in Thailand

-   Chia Meng Co. Ltd., Chakkaraj, Nakorn Ratchasima, Thailand, milling capacity 500 tonnes paddy/day
-   2.5 MW cogeneration plant using rice husk as fuel commissioned in March, 1997, 100 tonnes/day of rice husk input
-   System includes rice husk storage, conveying, and automatic boiler feed equipment
-   Exporting power to grid, may reduce export in future due to mill expansion, earning revenue from ash sales to Europe

## Thailand - Mitr Kalasin Sugar Plant I

- Northeast Thailand, 520 km from Bangkok, owned by Mitr Phol largest sugar producer in Thailand
- Sugarcane bagasse to power internal loads and supply power to nearby villages
- Buying other industrial wastes – wood chips, rice husk, bran to produce power for people in 50 km (30 mile) radius of plant
- One of several dozen small Thai factories that are part of official drive to use waste for electricity
- Other fuels being promoted by Thai authorities – rice husk, rice bran, paddy hay, wood chips
- For small power producers (<90 MW), government has pledged to buy unlimited power from waste
- Mitr Phol supplied 100 million kWh of electricity to EGAT in 2001

## Thailand - Mitr Kalasin Sugar Plant II

- Project began 9 years ago by using bagasse combustion to produce steam to heat water
- In 2001 revenues 300 million baht ($6.93 million) from power sales, equivalent to about 3% of its 10 billion baht revenue from sugar sales
- Over past 10 years, EGAT has purchased 261 MW from 24 biomass power plants – over half of them powered by bagasse
- National Energy Policy Office (NEPO) expects that figure to grow to over 700 MW in the next 10 years

## Thailand – Second Project by Mitr Phol

- 25 MW, in Dan Chang District, Suphan Bari
- Cost $43 million ($1,720/kW), high, planned to start up in 2004
- World Bank grant of $8 million in exchange for carbon credits based on Thai government ratification of the Kyoto Protocol
- Under Kyoto Protocol’s Clean Development Mechanism (CDM), the World Bank Prototype Fund is offering $3/tonne of greenhouse gas saved over a 10 year period

## Manufacturers

- Over 250 component manufacturers
- About 50 system integrators
- Most have presence on the web
- Many have local offices in South Asia
- Significant Indian experience with sugarcane bagasse cogeneration should be exploited by Bangladesh
- Experience with CHP in Thailand, Indonesia, Malaysia, is also valuable in designing projects for Bangladesh

## Conclusions

- Significant potential in Bangladesh
- The hurdles are: institutional structure, policies, energy pricing and tariff, investment and financing
- Strong institutional barriers
- Lack of awareness
- Study needs to be updated to assess cogeneration potential (energy demand patterns, plant size, power-to-heat ratio, access to natural gas)
- Discussions are necessary between PDB and energy users to explore the CHP option

## Recommendations for Follow-up Actions

- Regulatory measures needed for sale of electricity to grid or third party, backup power from grid
- Electricity and gas company partnerships with industries to invest, guarantee O&M, share costs
- Exploration of alternative financing such as third-party participation, leasing, soft loans
- Extension of financial incentives: faster depreciation, soft loans, tax benefits
- Demonstration projects
- Education and outreach
- Survey and pre-feasibility study on CHP

**Notes:**
Alternative financing includes bilateral and international funds targeted towards global environmental protection (clean development mechanism, GEF).
Financial incentives have to be selectively granted to projects that satisfy well-specified technical, economic, and environmental criteria.
Education and outreach includes: Courses, training programs, information exchange on renewable energy, cogeneration, site selection, equipment design, establishment of curricula in schools and colleges for development of long-term human resources