62 Annex CO 2 saving from CHP and their value, and potential penalty under the pilot Emissions Trading Scheme lndustry Exam plo District Heating Exam ple Be fore ln s ta ll a tio n B o fo re insta llatlon Un it CH P o f CHP o f CH P CHP Part 1: l n c re a s e of dire c t C O 2 em is s io n s a fto r install a tio n of CHP Fuel type N a tura I G as N atural Gas C o a 1 C o a 1 Electrical Efficiency [% 1 0% 3 5 % 0% 3 O% Therm al Efficiency [% 1 9 O% 5 O% 8 5 % 5 O % R a te d Therm a l in p u t [kW I 2 5 .o O O 4 5 .o O O 4 O .o O O 6 8 .o O O H eatCapacity [kW I 2 2 ,5 0 0 2 2 ,5 O O 3 4 .o O O 3 4 .o O O E le c tric a I C a p a c ity [kW I o 1 5,75O o 2 O ,4 O O Fuel lnput [ kW h /ye a rl 175 .oOO.oOO 315,000,000 120,000,000 2O4.oOO.oOO Electrical Output [kW h/yea rl o 110,250,000 o 61,200,000 UsefuI HeatOuiput (kW h lye a rı 1 57,5OO.oOO 1 57,500,000 1 02,000,000 1 02,000,000 Annual Operation Tim e [h /ye a r] 7 .o O O 7 ,O O O 3 .o O O 3 .o O O M a rg in a I E le cırica I E fficien ey [% 1 n la 7 8 .8 % n la 7 2 .9 % Fuel Em lsslon Factor (kg co2ikW h] O .2 O O .2 O O .3 3 O .3 3 O i r e et C O 2E m is s io n s [tiye a r) 3 5 ,o O O 6 3 ,O O O 3 9 ,6 O O 6 7 ,3 2 O Par! 2: Potential "ponalty" from lncroased d lrec t C0 2 em iss ions a fto r in s ta lla tio n of C H P Cost per Em iss i ons Allowance [€1allowance) 2 O 2 0 Addltlonal Allowances needed [n J 2 8 .o O O 2 7 , 7 2 0 Tota I C ost ofadditionaI Allow ances [€ /ye a r) 5 6 0 ,0 0 0 5 5 4 ,4 0 0 Costofadditional Allowances perkWh [€ clk W h .,) O ,5 1 O ,9 1 Part 3: Actual CO2 savings from CH P a n d thelr potentia l v a luo (C om p a r is o n w ith reference case accordlng to proposed Europoan CHP Dlroctive) E ffi ciency of Reference Power P I a n t [% 1 5 5 % 4 2 % Network Loss 1% l 5% 5% Fueı inpuıReferenco Power Planı (kW hlyea r) 2 1 1 .o O 4 .7 8 5 1 5 3 ,3 8 3 ,4 5 9 C O 2 E m is s io n s R e fe re n ce Power Planı (tiye ar) 4 2 ,2 O 1 5 O ,6 1 7 E fficiency a r R efe re nce Boiler (% 1 9 O% 8 5 % Fuel lnputReference Boller (kW h lyea r) 1 7 5 .o O O ,o O O 1 2 O .o O O ,o O O C O 2 E m is s i o n s R e fo re n c e B o ile r [tlye,a r) 3 5 ,O O O 3 9 ,6 O O T o ta I C O 2 E m İS s İO n s R e fe re n ce C a s e [tiye a r] 7 7 ,2 O 1 9 O ,2 1 7 C 02 Saving ofC H P (tiye a r) 1 4 ,2 O 1 2 2 ,8 9 7 C O 2 Sa vin g of C H P (% 1 1 8 ,4 2 5 ,4 Subm iss i on ofAl lowances w ilh CHP [n ) 2 0 ,7 9 9 1 6 ,7 0 3 Value ofC02 Savings of C H P [€ iye a r) 2 8 4 ,0 1 9 4 7 5 , 9 3 1 Value ofC0 2 Savings of C H P [€ C /k w h ,ıl O .2 6 O . 7 5 Part 4:TolaI potentla1 "penalty" for having in s ta l lo d C H P Potential "Penalty• lor C H P [€ /ye a r) 8 4 4 ,0 1 9 1 .o 1 2,331 Potential "Penalıy• lor CHP [€ clkW h ,ı) O .7 7 1 .6 5 Explanations to the table in the Annex: The table calculates for two exaınples - a gas-fired indusırial site and a coal-fuelled disırict-heaıing installation - ıhe changes in CO, emissions and ıhe potential economic implicatioııs ofswitching froııı heat-only production to CHP under ıhe proposed Eıııissions Trading Scheıııe. The assumed total efficiency ofthe CHP schemes is 85% and 80% respectively. These efficiencies canbe realistically expected froııı a well-designed scheme. The C02eıııission factors ofthe fuels used are based on values proposed in ıhe draft Emissions Trading Direcıive. Part 1: The installaıion o fCHP would increase ıhe direcı CO, emissions from 35,000 to 63,000 (39,600 to 67,320) ıonnes per year, because togeıher with the heaı producıion, which remains unchanged (157,500/102,000 MWh/year), an additional amount ofelectricity (1 I0,000/61,200 MWh/year) would be generated. This would raisc the rated ıhermal input from 25 ıo 45 (40 ıo 68) MW and the annual fuel input from 175,000 ıo 3 15,000 (120,000 to 204,000) MWh. Yet, ıhe marginal electrical efficiency ofthe CHP installation (i.e. the conversion cfficiency ofıhe fucl used for electricity geııeration) would be very high: 78.8% (72.9%) ofthe fuel's energy conıenı would be converıed inıo electricity. Part 2: Without specific compensation mechanisms, ıhe operator ofıhe site which has been converıed lo CHP would need ıo buy additional allowances to cover ıhe increasc in direct CO, emissions. Based on a price of€ 20 per allowance this would imply an additional annual cosı of€ 560,000 (554,400). This would ıranslaıe into an additional cosı of€c 0.51 (0.91) to produce eaclı k\Vh ofelecıricity. Part 3: Because ıhe decentralised CHP installaıion would replace condensing elecıricity centralised power planıs, which is less efficienı and ıherefore produces more CO, for the soıııe output ofuscful energy (lowcr convcrsion efficiency and elecıricity transport losscs). The reference figures for a powcr planı and boiler are based on ıhc proposed European CHP Direcıive. For ıhe indusırial exaıııple, this reference could be criıicised for being ıoo optiıııistic about the efficiency ofseparate production (especially the assumed 55% efficiency ofa moderngas-firedpower planı), and for ıhe unrealistic assuıııption lhat CHP electriciıy would currently replace elecıricity from such a power planı. Bul even under this scenario ıhe CHP installation would reduce overall CO, emissions by 14,201 (22,897 in the District l-leaıing examplc) tonnes per year- i.e. 18.4% (25.4%) less - by replacing elecıricity from the reference power planı. Ba-sed on the saving he achieved, ıhe operator ofıhe CHP insıallation should have to submit only 20,799 ( 16,703) allowances per year from his iniıial allocaıion, assumed ıo be 35,000 (39,600). Selling the remaining allowances on the market would allow him ıo realise a benefit of€ 284,0 1 9 (457,93 1), and to recluce his specific electriciıy generatioı) cosıs by €c 0.26 (O.75) per kWh. Part 4: in the worst case, ifıhe Emissions Trading Scheme did not include a mechanisııı ıo take indirect CO, savings froııı CHP into accounı, the financial disadvantage for having installed CHP would amounı ıo € 844,019 (1,012,331) per year. This would include ıhe cosı ofadditional allowances needed to cover ıhe increase in direcı CO, emissions, and ıhe benefit from ıhe total CO, savings which ıhe operators ıvould not be alloıved to realise. The emission trading scheme would ıhus increase electricity production cosıs for ııew CHP operaıors by €c 0.77 (1.65). ECOGENERATION WORLO
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