Techno-economic analysis of renewable energy source options for a district heating project

Abstract

With the increased interest in exploiting renewable energy sources for district heating applications, the economic comparison of viable options has been considered as an important step in making a sound decision. In this paper, the economic performance of several energy options for a district heating system in Vancouver, British Columbia, is studied. The considered district heating system includes a 10 MW peaking/ backup natural gas boiler to provide about 40% of the annual energy requirement and a 2.5 MW base-load system. The energy options for the base-load system include: wood pellet, sewer heat, and geothermal heat. Present values of initial and operating costs of each system were calculated over 25-year service life of the systems, considering depreciation and salvage as a negative cost item. It was shown that the wood pellet heat producing technologies provided less expensive energy followed by the sewer heat recovery, geothermal and natural gas systems. Among wood pellet technologies, the grate burner was a less expensive option than powder and gasifier technologies. It was found that using natural gas as a fuel source for the peaking/backup system accounted for more than 40% of the heat production cost for the considered district heating center. This is mainlymore » due to the high natural gas prices which cause high operating costs over the service life of the district heating system. Variations in several economic inputs did not change the ranking of the technology options in the sensitivity analysis. However, it was found that the results were more sensitive to changes in operating costs of the system than changes in initial investment. It is economical to utilize wood pellet boilers to provide the base-load energy requirement of district heating systems Moreover, the current business approach to use natural gas systems for peaking and backup in district heating systems could increase the cost of heat production significantly.« less