Steam Pricing : Site Utility Systems

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Lecture 14

Steam Pricing*

*Smith R and Varbanov P, July 2005, Chem Eng Progr, 29-33.


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Utility Systems (v3.0)

Site utility systems

POWER

Fuel
Air

Fuel

COND

HIGH PRESS
MED. PRESS
LOW

Fuel

Fuel
PROCESS A

PROCESS B

PROCESS C
COOLING WATER

REFRIGERATION

Realistic steam prices are necessary...


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PRESS

Utility Systems (v3.0)

Why is a steam price needed?


Steam

Process
A

Power

Steam

Process
B

Power

:
:
:

Site utility system

(steam cost for Process A)

(steam cost for Process B)

Costs for the provision of heat and power to be allocated


to the different business on the site
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Utility Systems (v3.0)

Why is a steam price needed? (continued)


Site Process

Site utility system

HP steam
VHP
T1

QP

T2

HP
T3

MP
LP

HP steam

Saving of QP

It saves steam,
BUT
how much money?

Surplus of QP

An economic basis is required to assess changes to the


steam system.

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Utility Systems (v3.0)

Why is a steam price needed? (continued)

Steam

Utility company

Process
A
Power

Purchase
from the 3rd party

Straightforward. But, is the price fair ?


The purchaser should be in position to assess this.

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Utility Systems (v3.0)

Complexities of Steam Pricing

VHP

Fuel

T1

T2

HP
MP

Power

LP

Power tariffs usually vary


with day, week and/or
season.
Fuel tariffs vary with the
season.

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Different cost implications for each path


Minimise cost ? Maximise power ?
Many structural options
Complex configurational interactions

Utility Systems (v3.0)

How do we set a price for steam ?


Let us look at simple method first.

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Utility Systems (v3.0)

Simple Enthalpy-based Method


Cost of High Pressure Steam

Fuel1

GT

Fuel2

Fuel3

HRSG

Boiler

m1

COSTHP =

m2
HP

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Utility Systems (v3.0)

3 (fuel cost)i
3mi

< As a first approximiation,


take the cost of the fuel for
the HP steam generation
< Other costs can be
included: power for steam
generation, costs for water
and treatment chemicals,
labour costs, etc.

Simple Enthalpy-based Method (cont)


Cost of Low Pressure Steam
f1

GT

f2

HRSG

f3

Boiler

m1

m2

hHP

HP

hLP

LP

COSTLP = COSTHP ( hHP hLP )


i

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(fuel

cos t )i
fi NCVi

Utility Systems (v3.0)

Simple Enthalpy-based Method (cont)


Steam pricing based on enthalpy difference is only reasonable
when power generation is not economic or required. (e.g. small
systems)

There exists significant potential for power generation in utility


systems.
< Energy extracted from steam as power is usually more expensive than heat.

Steam pricing must recognize the potential for high pressure steam
to generate power in the utility systems !!
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Utility Systems (v3.0)

Consideration of Power Generation

HRSG Boiler

GT

HP

Power generation can be


estimated using isentropic
efficiency model

T1

LP

COSTLP = COSTHP - PROFITPOWER GENERATED

?
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Utility Systems (v3.0)

When power generation is estimated from simple


model or structure...

Configurations

T1
T1

T1

T2

......

T1

Performance of steam turbine

<
<
<
<

0.85

0.42
W min

W max

W (MW)

Nonlinear efficiency trend


Full load vs. Part load ?
Existing vs. New equipment ?
Constraints
(e.g. min. and max. Flowrate)

Still power generation has not been properly reflected


in steam pricing....
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Utility Systems (v3.0)

A more fundamental approach is needed.

Modelling and Optimisation of Utility Systems

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Utility Systems (v3.0)

Modelling and Optimisation of Utility Systems


First, a simulation model is required to analyse a utility
systems. The model should be able to:
< consider part-load performance of equipment
< simulate the complete mass and energy balance
< predict power generation, fuel requirements, water requirements,
etc, for any condition
< consider the operating constraints

Optimisation of utility systems

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Utility Systems (v3.0)

A fundamental approach (modelling and


optimisation of utility systems) is now applied.

Case 1:
Setting steam prices for fixed process loads

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Utility Systems (v3.0)

Setting steam prices for fixed process loads


Step 1: Optimise for the current demands

HRSG

Boiler

HRSG

Boiler

Optimisation

- Current demands
- Current flows

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allows economics
to be evaluated
more precisely
in the next steps...

Utility Systems (v3.0)

- Current demands
- Optimal flows

Setting steam prices for fixed process loads


Step 2: Obtain the amount of power generated
HRSG

Boiler
VHP

POWERVHP-HP
HP

POWERHP-MP

MP

POWERMP-LP

LP

Optimised site utility system

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calculated from optimisation

Utility Systems (v3.0)

Setting steam prices for fixed process loads


Step 3: Steam pricing for each steam level
HRSG

Boiler
VHP

3 (fuel cost)i
3mi

HP

COSTHP = COSTVHP - PROFIT power VHP-HP

MP

COSTMP = COSTHP - PROFIT power HP-MP

LP

COSTLP = COSTMP - PROFIT power MP-LP

Optimised site utility system

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COSTVHP =

< Now cost incorporates the


performance data and
constraints associated with
acutal system, rather than
some idealised model.

Utility Systems (v3.0)

Case Study
Initial settings for the utility system
Natural Gas

Fuel Oil

Coal
Current: 200.0
Min: 50
Max: 250

Boiler 1

Current: 99.8
Min: 40
Max: 180

Boiler 2

Current: 209.5
Min:
115.0
Max:
335.0

T4
Current : 44.0
Min:
15.0
Max:
75.0

2.0 t/h

LP Vent

HRSG

Current:
25.6

VHP (101 bara, 530EC)

Current : 95.9
Min:
60.0
Max:
165.0

Current : 51.9
Min:
30.0
Max:
90.0

GT
18 MW

20.0

T6

0.0

HP (41bara)
Current: 35.5
Min:
15.0
Max:
65.0

T5

54.5
5.0

MP (15 bara)
Current : 20.0
Min:
20.0
Max:
20.0

T7

Current : 65.0
Min:
40.0 CW
Max:
75.0

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55.9

Current: 65.0
Min:
30.0
Max:
70.0

0.073 bara

Current: 109.0
Min:
60.0
Max:
150.0

1.0

LP (3 bara)
128.0

Flows in th-1

Utility Systems (v3.0)

Case Study
Site configuration data
Fuel 1
solid (coal)
NHV [kJ/kg] 28000
Cost [$/t]
65.0
[$/kWh] 0.0084
Ambient temperature
BFW temperature
CW temperature
Site power demand
Min power Import
Max power Import

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EC
25
EC
110
EC
25
MW 68
MW
0
MW 50

Fuel 2
liquid (fuel oil)
40000
120.0
0.0108

Fuel 3
gaseous (natural gas)
52000
220.0
0.0152

Min power Export


Max power Export
Unit Power Cost (Import)
Unit Power Value (Export)
Unit CW Cost

Utility Systems (v3.0)

MW
MW
$/kWh
$/kWh
$/kWh

0
50
0.05
0.05
0.005

Case Study
Existing steam system at its optimised conditions
Coal

Fuel Oil
Current: 250

Current: 65.0

Min: 50
Max: 250

Boiler 1
Current :105.0
Min:
60.0
Max:
165.0

Natual Gas
Min: 40
Max: 180

Boiler 2

HRSG

Current:
25.5. t/h

VHP (101 bara, 530EC)


Current: 215.5
Min:
115.0
Max:
335.0

T4

Current : 15.0
Min:
15.0
Max:
75.0

T6

20.0
0.0

HP (41 bara)

Current : 90.0
Min:
30.0
Max:
90.0

Current: 59.5
Min:
15.0
Max:
65.0

T5

54.5
0.0

MP (15 bara)
Current : 20.0
Min:
20.0
Max:
20.0

7.1

GT
18 MW

LP Vent

Current: 40.9
Min:
30.0
Max:
70.0

T7

Current : 75.0
Min:
40.0 CW
Max:
75.0

Current: 115.1
Min:
60.0
150.0

55.9
0.0

LP (3 bara)
128.0

0.073 baraMax:

Flows in th-1
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Utility Systems (v3.0)

Case Study
Steam prices
Priced based on
ideal steam turbines*

Priced based on
actual steam turbines

Base case Optimised

Base case Optimised

Steam
Level

Priced based
on Enthalpy
difference

VHP

8.32

8.32

7.94

8.32

7.94

HP

7.78

5.17

4.78

5.78

5.32

MP

7.26

2.21

1.83

3.34

2.61

LP

6.54

-1.47

-1.86

0.17

-0.55

Negative steam cost can happen if fuel is


relatively cheap and/or power is relatively
expensive.

(Cost in $/t)

*An isentropic efficiency steam turbine model is used, assuming 85% isentropic efficiency and 95%
machine efficiency.
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Utility Systems (v3.0)

Steam Pricing
Case 2:
Setting steam prices for changes in steam load
A project for reduction in energy demand
< e.g. retrofit of a heat exchanger network for increased heat recovery

A project involving an increase in heat demand as a result of


commissioning of new plant or expansion of an existing plant.

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Utility Systems (v3.0)

Implications of energy (steam) reduction


Let us suppose the decrease in HP steam demand from the process

Retrofit
HP Steam

HP Steam

VHP
T1

QP

T2

HP
T3

MP
LP

Surplus of QP
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Utility Systems (v3.0)

Impies that, if all other process


steam loads are constant, and
boiler load unchanged, there is a
surplus amount of Qp steam
available in the utility system

What can we do with surplus QP ?

Fuel
saving

Save it
(reduce
boiler load)

Heat
surplus
(Qp)

Use Qp
more efficiently

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Extra
power

Utility Systems (v3.0)

What are the effects on the utility system of saving


Qp amount of surplus steam?
Boiler load
reduced

Boiler

VHP
T1

QP

W
reduced

T2

W
reduced
HP

Reduce HP steam
required by process

Reducing HP steam use


in a process can either;
Reduce power produced from
T1 and boiler steam load

OR
Reduce power produced from
T2 and boiler steam load

So, saving steam will result in power penalty as reduced flow through turbines.
May need to import power to make up deficit.
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Utility Systems (v3.0)

Alternatively, how do we use the heat surplus more


efficiently?
Boiler
VHP
T1 W

T2

reduced

Reduce HP T3 W
steam use
increased

QP

W
increased
HP
MP
LP

CW

Reduce HP steam use in process


Reduce power produced by turbine T1
DO NOT reduce boiler steam load, BUT
Pass boiler steam through turbine T2 and T3 to produce additional power
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Utility Systems (v3.0)

How do we set a price of steam for changes


in steam loads?
VHP
T1

QP

T2

Different options

HP
T3

MP
LP
CW

Different cost
implications

Steam costs obtained from the model for the existing steam
loads cannot be used to provide steam costs for an increase or
decrease of steam demands.
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Utility Systems (v3.0)

Marginal Cost is used as an indicator for


steam pricing
Marginal Cost

Pr Header

Cost
=
m Header

! )Cost: change in the site cost


(operating)
! )mHeader: change in the header
mass balance
! Pr Header: Marginal price of steam in
such a header

Marginal steam price is related to steam flows.


The steam balance of a header may be changed by:
< Increase / Decrease in process steam demand
< Increase / Decrease in process steam generation
< Switch a process demand from one steam main to another
< Change in the utility system, e.g. shutdown of a boiler, steam turbine, etc.
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Utility Systems (v3.0)

Stepwise Optimisation Procedure


START
Optimise the operation under current process
steam demands

For each header:


Calculate marginal price of steam Pr(hdr)
For the header with highest Pr(hdr):
Decrease process steam demand
until change in marginal price or constraint
YES

Further demand
decrease possible
?

NO

END
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Utility Systems (v3.0)

Allows true steam


prices to be
obtained
Implicitly
determines the
most beneficial path
trade-offs
Exhaust the path
capacity / limitation

Case Study Revisited


GT
Boiler 1

Boiler 2

HRSG

VHP (101 bara, 530EC)


20.0

T6

T4

HP (41bara)
54.5

T5

MP (15 bara)
55.9
T7

LP Vent

LP (3 bara)
128.0

CW

Now the steam loads on the various steam headers


are varied.
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Utility Systems (v3.0)

Marginal Steam Prices for the Case Study


Marginal Cost ($@t-1)
MP Steam

HP Steam

Saving LP steam has no


value.

10
8
6

Step change:

4
2
0
0

20

40

60

Steam Savings (t@h-1)

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Utility Systems (v3.0)

80

Further saving in steam


along the path in the utility
system is restricted by a
constraint, typically a lower
bound on a flowrate.
Indications for potential
modifications to the utility
system

Marginal Steam Prices for Changes in


Process Steam Loads
When the process steam load changes, the cost of steam
depends on:
< the costs for fuel and power
< the utility configuration
< equipment performance
< the constraints within the utility system

Steam savings in pricing does not represent the feasibility of


steam saving within the processes.
< The results can be used for What if analysis.
(i.e. What would be the economic consequences of eventual steam savings
in processes?)

Marginal steam pricing provides a strategy for energy


conservation on the site without modification to the utility system.
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Utility Systems (v3.0)

Summary

Fundamental approach is required to allocate realistic steam


costs to an integrated utility site.
A simulation and optimisation model for the existing system is
needed to obtain:
< Steam prices for existing steam loads
< Marginal steam prices when the steam loads are changed.

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Utility Systems (v3.0)

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