The Effect of Natural Gas Pricing on Cogeneration Profitability In Example 1.6, we determined the profit if our
existing system, consisting of a stand-alone boiler for steam
generation and electricity purchase, was replaced with a
cogeneration system. As noted in the discussion of Example
1.6, cogeneration profitability is affected by natural gas costs.
Determine a price for natural gas when the cogeneration
system is no longer profitable.
Solution: The solution can be found using the Excel file
Example 1.6.xls. If you are not familiar with Excel, you may
want to wait until after reading Chapter 2 before using the
Excel file. Otherwise, simply vary the natural gas cost (or use
Goal Seek) until the profit = 0; at $9.37 per 106 Btu, cogeneration is no longer profitable assuming all other costs remain
constant.
We can consider the costs as provided in Example 1.6 to
be long-term or levelized costs. Levelized utility costs are
explained in Chapter 16. Cogeneration profitability is also
strongly affected by the net heat rate, and cogeneration heat
rate quickly erodes in part load operation as detailed in Chapters 7 and 9.