Thermal-economic analysis of heat-matched industrial cogeneration systems

Recent federal incentives in the U.S. concerning tax credits, fuel-use exemptions, and facilitation of sale of electric power to local electric utilities have greatly stimulated interest in industrial cogeneration. In particular, the ability to sell excess or all cogenerated electric power (i.e. arbitrage) has widened the options available to a potential cogenerator. In the present paper we consider a comparison of alternate cogeneration plants with an existing steam-only plant in terms of energy conservation and engineering economics. The concept of marginal cost of production is applied throughout. The criterion of economic selection is acceptable incremental rate of return on incremental investment based on the challenger-defender test of successively greater capital costs. As an example, coal-fired topping steam turbines as well as natural-gas-fired gas turbines and oil-fired diesels with waste-heat boilers are considered to replace a gas-fired steam-only plant and provide a range of electric power for the same thermal load.