Cost-based steam pricing

The critical question for enthalpy-based, work-based, and FE-based stem pricing methods is Do the steam prices from these methods reflect the true costs The question can be answered the best with the following example. 

Example 17.5 Cost-Based Steam Cost Calculations 

Solution. To determine the tme cost, the actual ways of producing steam must be assessed. There are three flows contributing to the MP steam header, which have been identified previously. 

For path 1, which involves power generation from TG-1001, the power generation should be accounted to reflect that imported power is reduced with the same amount of power. Instead of using PEE, the actual power price is used in the cost-based method. Thus, for a path involving power generation, the steam price for the exhaust steam is 

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Both enthalpy and work-based steam pricing methods rely on thermodynamic laws as the basis. Cooper (1989) argued that the steam pricing should reflect economic reality. Since the operating cost for a steam system mainly consists of fuel burned for steam generation. Cooper (1989) proposed to use the concept of fuel equivalent (FE) as the basis for steam pricing. In this method, the ratio of FE for steam at different pressures is used to derive the steam prices in placement of the ratios of enthalpy and availability. 

MW plant and 3.3% for the 200 MW plant. Not surprisingly, the savings become less as the plant becomes smaller. The costs ia Figure 12b are based on the capital cost curve (Fig. 12a) and fuel costs based on the modified EGAS reference steam plant efficiency of 34.3%. The cost comparisons are based on a coal price of 1.00/GJ ( 1.05/MBtu). Higher fuel costs would iacrease the attractiveness of MHD because of its more efficient use of the fuel. 

FIGURE G-4 Estimated effects of the price of natural gas on the cost of hydrogen at plants of three sizes using steam methane reforming. Costs based on current technology. NOTE SD = stream day. 

There can be confusion and misunderstanding from plant personnel on steam prices. Are we talking about steam price based on the point of use (marginal steam price) or total steam from the boiler house (average steam price) Should the steam be priced at the point of generation or point of use Does the steam price include both fixed and variable costs Does the average steam price vary for different production rates Why is the steam price obtained based on steam enthalpy instead of costs These are the questions that will become the focus of this chapter. 

Whenever possible, true steam prices should be set in the very early stages to foster plant energy efficiency. With steam priced based on its cost, engineers and operators will strive to reduce energy operating cost and identify beneficial... 

Although the cost components should be estimated rigorously in principle, it could be a good approximation to estimate the variable steam price with the approximation based on the fuel cost ... 

The most common method for steam pricing in the process industry is based on the steam enthalpy. The method is straightforward for a given cost of steam at generation pressure, the price of steam at lower pressure is based on the amount of heat available with this steam in comparison with the heat available for the steam at the generation pressure. In other words, HP steam is generated from boilers and the cost of HP steam can be calculated via equation (17.3). Then, MP and LP steam costs are prorated from the HP cost based on the ratio of enthalpy values. It seems the idea makes sense however, there are fundamental flaws. The method and its limitations can be best illustrated via the example presented next. 

Calculate the steam prices based on the cost-based method for the same steam system (Figure 17.1). 

The FE-based method attempts to address these issues and is less likely to have inherent dangers in providing misleading steam prices than the enthalpy- and exergy-based methods however, it will be more prudent to use the cost-based method if potential pricing errors are to be avoided. This is because the cost-based method can provide accounting values for steam and power, which reflect the tme costs, and the best approach to economic reality. 

The costs in Table 18.7 serve as the average costs for the cost centers. For any increased and reduced steam use from the base demand, marginal steam prices, as discussed in Chapter 17, will be used to cost the incremental amount of steam for the cost center. 

For tackling this challenge, the method based on marginal analysis can indicate true steam costs at point of use. The reason why the marginal price method (Chapter 17) can provide the true steam cost is that it is based on the last incremental amount of steam saved or generated. Determination of marginal steam prices relies on an overall steam and power balance model, which takes into account the effects from steam balances. 

Table 1 shows that the major cost is for toluene. The overall conversion-of toluene in the base case is 99.3%, allowing a potential savings in toluene cost of approximately 140,000 per year. This savings would have only a minor inpact (approx. 0.003 per kg) on the differential break-even price of benzene therefore, the overall conversion of toluene is not considered a variable in the cases studied here. However, the hydrogen cost can be reduced significandy if a suitable separation technique can be found to purify the recycle gas. Streams 5 and 7. Of the remaining costs, the steam, fuel gas, and equipment are the most significant. 

Today s biopower capacity is based on mature, direct-combustion boiler/steam turbine technology. The average size of biopower plants is 20 MW (the largest approach 100 MW) and the average efficiency from steam-turbine generators is 17 to 25 percent. The small plant sizes lead to higher capital cost per kilowatt-hour of power produced and the low electrical conversion efficiencies increase sensitivity to fluctuations in feedstock price.658... 

Partial oxidation has practically no restrictions regarding the nature of the hydrocarbon and the sulfur content. Natural gas, refinery gases, LPG, naphtha, heavy fuel, vacuum residue, visbreaker oil, asphalt, and tar can be used as feedstock. As the investment costs for partial oxidation are higher than for steam reforming, mainly because of the cyrogenic air separation, it is usually not a choice for the lighter hydrocarbons, but heavy feedstocks from fuel oil to asphalt, when favorably priced, can be a competitive option for various locations and circumstances. In some special cases, where the primary reformer is a bottleneck for a capacity increase, a small parallel partial oxidation unit based on natural gas could be installed, if a surplus of... 

Natural gas is by far the most economical feedstock for ammonia production, achieving the lowest energy consumption and requiring the lowest investment [404], This can also be seen from Table 45, which gives an estimate of ammonia production costs in Northwest Europe for different feedstocks using state-of-the-art technological standards. The lump turn key price for the ammonia plant were assumed as 180 x 106 for steam reforming of natural gas, 270 x 106 for partial oxidation of vacuum residue and 400 x 106 for coal-based plants (Capacity 1800 mt/d). 

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