CHP plannin Newcastle upon Tyne by I. F? Burdon

This article covers the development $a combined heat and power scheme, with an associated community heating network, in the centre ofthe city o f Newcastle upon Tyne. The proposed scheme would comprise a gas-jred gas- turbine-driven electricity generator to provide electrical energy to a major hospital complex and the adjacent university. Waste heat from the gas turbine would be used to displace or supplement existing boilerpltant in the hospital and university and also in those munic@al buildings (including a second university) in the centre ofthe city connected to the community heating network. The technical and financial evaluation work carried' out during thejrst phase ofthe project is described. The stages in the development process which would lead to the establishment o f the necessary agreements with the heat and electricity consumers are discussed.

study of heat loads in central Newcastle w l c h could be served by a combined heat and power (CHP) and community heating

, (CH) scheme was undertaken in early 1993 by Merz and McLellan Ltd. and its subsidiary organization Merz Orchard Ltd. on behalf ofNorthern Electric Generation Ltd. The outcome ofthe study was sufficiently encouraging to result in the establishment of a joint venture between four major organisations involved in the energy business. They agreed that preliminary, or pre-feasibhty, work be taken forward in more detail to establish, with more certainty, whether or not a commercial venture could be sustained to supply heat and electricity to city centre loads. The organisations involved in the joint venture were:

Associated Energy Projects plc Merz and McLellan Ltd. Northern Electric Generation Ltd. Rolls Royce Power Engineering Ltd

In addition to the above commercial organisations, support for the project was given by Newcastle City Council and financial advice was provided by Lloyds Bank Ltd.

The joint venture was established in August 1993 and a project co-ordinator was appointed to manage the resources of the joint venture in the execution of the project. Task groups, through which the resources of the joint venture were provided, were established at the commencement of the work to deal with the technical and commercial aspects of the project. Both

task groups reported to a steering group, which represented the interests of the joint venture companies at senior management level and to whch the project co-ordinator reported.

Development philosophy The scheme was based on CHP plant located on the

hospital site, which lies very close to the centre of the city. The advantages of this location are:

a suitable location for the proposed ClHP plant was avdable close to the existing hospital main boiler- house considerable encouragement had been. given to the joint venture by the Board ofTrustees ofthe hospital in the establishment of the scheme on their site there is a large heat (steam) demand at the hospital with a relatively high load factor the close proximity of the univer'sity provides another large steam load near to the proposed site both the hospital and the university are inter- connected by a private HV electrical dstribution network the existing boiler plant at the hospital can be incorporated into the scheme as top-up and standby plant.

The location of the plant and the arrangement of the CH network (or district heating, DH, as it is also known) is shown in Fig. 1.

The CHP plant would be based on a gas turbine fired on natural gas with waste heat recovery boilers

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producing both steam and hot water. The heat loads at the hospital are served by a high-

pressure steam distribution system. Those at the university are served, in part, by a vacuum steam system and a medmm-pressure hot-water system.

The loads on the C H network would be served by a hot-water distribution system comprising pre- insulated pipes buried directly in the ground. Such schemes are commonplace in mainland Europe.

Technical aspects of the scheme

Heat loads The total heat load on the CHP plant in a typical

year would be about 120 GWh. In order to accurately model the operation of the CHP plant, data was gathered on the daily variation in heat demand and on the dfference in demand between weekdays and weekends at both the hospital and the university sites and at the indwidual premises comprising the load on the C H network. Empirical assessment was used where detailed records did not exist. Heat demand profiles for City Council buildmgs on the C H network were established with the assistance of the City’s Energy Manager. The heat load data was processed in the system model described in the subsection ‘Scheme modehng’ .

Electricity production The net capacity of the CHP generator would be

about 10 MWe; it would be connected directly to a

substation on the university’s own 11 kV distribution system.

A deliberate commercial strategy adopted by the joint venture at the outset was to supply electricity and heat at a price equal to or less than the hospital or uniyersity could obtain it for under their existing arrangements. The commercial arrangements for selling the electricity would principally comprise:

(a) a CHP company producing electricity and heat and hsplacing imported power at the university thus reducing the amount that the university paid as Fossil Fuel Levy on its electricity purchases

(b) a second tier electricity supply company (which would be a wholly-owned subsidmy of the CHP company) selling electricity to the hospital and incurring the Fossil Fuel Levy on its sales but avoiding Use of System charges by means of dedicated cabling &om the generator to the hospital main switchboard

(c) the second tier company sehng surplus electricity either to an REC (Regional Electricity Company) or to other electricity purchasers via the Northern Electric distribution system; sales to other con- sumers or suppliers (but not Northern Electric) would incur the addition of Use of System charges and Fossil Fuel Levy.

At those times when the electrical output of the CHP station is insufficient to meet the combined demands of the university and the hospital, electricity will be

Fig. 1 Location plan showing CHP station and CH network

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7000

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5 4000 ’ 3000 2000

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n J F M A M J J A S O N D

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J F M A M J J A S O N D month

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Fig. 2 Aggregated heat and electricity load profiles for the scheme: (a) electricity production; (b) electricity sold; (c) heat production; and (d ) heat sold

purchased by the CHP company &om another second tier supplier or the REC as a ‘top-up’ supply. Sirmlarly, when the gas turbine is not operational, standby supplies d be purchased to meet the load.

In order to predict the value of electricity sales, the half-hourly electrical loads at the university and the hospital were obtained from metering data for the most recent 12 month period. This information was processed to provide a 24 hour profile for an average weekday and average weekend day for each month of the year for use in the system model.

Scheme modelling The operating model ofthe scheme uses premctions

of heat and electrical loads for an average weekday and an average weekend day in each month of the year. Given the operating characteristics of the gas turbine, and hence the available heat and electrical capacity of the CHP scheme, a spreadsheet model was used to determine the operating mode ofthe plant in each time period of each day of each month of the year. The model assumed that the plant would be operated so as to supply the heat demanded by the three principal loads (with assistance &om the standby boiler plant

when necessary). The corresponding electrical output in each period was calculated and the amount of import or export electricity established and costs/ revenues determined accordingly. Fuel consumption in each time period was calculated by the operating model.

An operational strategy for the scheme was established to ensure that the heat demands could be met with no reduction in security and in the most efficient manner. The strategy is based on the following four basic operational modes:

(a) Peak heat demand-CHP plant available: The peak steam demand requires certain steam-raising boilers at the hospital and a boiler at the university to be in service. The peak CH network demand would be met by the CHP plant and steadhot-water heat exchangers fed fiom the hospital steain boilers.

(b) Peak heat demand-CHPplant out ofservice: Planned or forced outages (or gas supply interruption) would require the standby boilers at the hospital to be in service (fired on alternative &el if necessary). The steam demand at the university would be fed, in part, fiom the steam interconnector fiom the

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I 0 1 2 3 4 5 10 15 SCALE ( I N WETRES)

Fig. 3 Site proposed for the plant

hospital, together with certain of their existing boilers. Steam/hot-water heat exchangers at the hospital would supply the CH network system.

(c) Decreasing heat demand-CHP plant available: The output of the hospital boiler plant would be progressively reduced until all the heat demand is met by the CHP plant. Further reduction of heat demand would result in less heat being demanded &om the CHP water heater with the bulk of the CH load being fed from the steam/water heat exchanger. This enables the gas turbine to be run at maximum electrical output for a longer period. A point is eventually reached when all the heat is supplied by the CHP steam boiler and none by the CHP water heater. The latter remains in the hot gas path, however, with pressurised water at about 190OC. Beyond this point, the gas turbine output would be modulated to follow the heat demand with some heat being transferred to a thermal store.

(d) Minimum heat demand-CHP plant outage: Below about 30% of maximum capacity, it becomes uneconomic to operate the gas turbine because of its low efficiency and the plant is shut down. Typically t h s occurs during July and August when

all of the heat demand is met by the hospital boilers whch would also supply the university and the C H load via steam/hot-water heat exchangers. Routine maintenance of the CHP plant would be scheduled for this period.

The aggregated heat and electricity load proaes for the scheme, with the contribution made by the CHP plant, are shown in Figs. 2 e 2 d .

Operation of the plant in accordance with the above strategy would be controlled via a microprocessor based system, incorporating a plant modehng and optimisation package. This would continuously assess the heat and power demands and, after takmg into account power import/export prices, fuel costs and sales revenues, would establish the optimum plant configuration of CHP plant and boiler plant to satisfji the demand at minimum cost. The package would also monitor actual running plant performance and provide cost and revenue data to enable the impact of ‘off- design’ operation to be assessed.

Overall, the control system would enable integration of the existing hospital and unrversity boilerhouses with the new CHP plant and would be designed for one- man operation. Occasional operator attendance at the

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university boilerhouse would be required when that plant is called up for service.

Plant awangement The plant would be situated on land immediately

adjacent to the existing hospital boilerhouse, thus allowing ready access to the steam system supplying the hospital. The main steam interconnector and condensate return pipe between the hospital and the university would comprise a buried, insulated pipe, running to one of the main boilerhouses on the university campus. The main electrical connections would be taken via 11 kV cables to the local electricity substation. The buried CH pipework system would comprise a pre-insulated steel-in-plastic system to EN 253. The confined nature of the site proposed for the plant resulted in an extremely compact arrangement being devised for the gas turbine and the waste heat recovery boiler, as shown in Fig. 3.

Environmental considerations There would be a significant reduction in the

emissions from fuel combustion in the city centre when the CHP plant is brought into service as existing boiler plant (mainly burning heavy fuel oil) is taken out of service. Further environmental advantages would be obtained, nationally, by allowing part of the capacity of power stations operated by other generators (generally less efficient and more polluting) to be displaced. These can be quantified as shown in Table 1.

Financial analysis

The Project Finance Divison of Lloyds Bank Ltd. advised the joint venture on the financial modelling of the scheme. This was based on a scheme capital cost of A12 d i o n . The scheme would be financed on a

Table 1: Environmental advantages of the scheme

Gaseous effluent Total reduction, Percentage reduction on tonnes pa existing arrangement

con NOx SO7

20 500 28 148 65 620 75

conventional project finance structure where 80% of the project cost is funded by debt and the remaining 20% by equity provided by the joint venture partners.

Project implementation

The proposed management structure for the scheme is shown in Fig. 4. Separate contracts would be placed by the CHP company for the following:

(a) fuel supplies (gas and oil) (b) operations and maintenance services (c) design and construction of the plant (d) supplies of standby and top-up electricity.

Sales agreements would be entered into by the company for the following:

( a ) supplies of heat to the university, thl: hospital and

(b) supplies of electricity to the university (c) supplies of electricity to its second tier electricity

subsidiary which, in turn, would need to secure contracts for the onward sale of electricity to the hospital and other consumers.

individual customers on the CH network

In order to provide the debt capital for the scheme, the banks would want to see risk-free contracts in place for all of the above. The period or term of these contracts would generally need to be at least as long as the term

\ I 4 electricity

CHP company supplier

I Fig. 4 Proposed management structure for the scheme

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of the loan. In the case of the contracts for the outputs of the scheme, i.e. the heat and electricity offtake agreements, a ‘take or pay’ arrangement (or some other sort of long-term commitment) would be necessary. These stringent requirements are intended to ensure that there would always be a revenue stream of sufficient magnitude to ensure that the loans wdl be repaid. The banks would additionally require to see a margin of at least 30% on revenues over and above that required to service the loan.

Current status

Phase I activities associated with the scheme are now complete. These have identified a potentially viable project. The next phase of activity would establish the contractual arrangements for the sale ofheat and power from the scheme and for its design and construction and its operation and maintenance.

These further developments are complicated by the requirements for compulsory competitive tendering in the public sector and the current aversion of many institutional organisations to enter into long-term contracts for the provision of energy as a result of their recent gains obtained by negotiating attractive short- term deals for fuel and power. The scheme is recognised as fulfilling the requirements laid down under the Government’s Private Finance Initiative (PFI) concerning risk transfer and private sector participation in public sector projects.

Conclusions

A CHP scheme proposed for a major hospital and

university in the centre of Newcastle upon Tyne has been shown to be potentially viable. It allows the aggregation of significant heat and power loads at two major institutional sites whch results in economies of scale as well as sipficant reductions in standby boiler plant capacity. Reductions in energy costs would follow as a result. It would lead to major environmental benefit by reductions in gaseous emissions to the atmosphere. It provides a ‘showcase’ for a major PFI project based on CHP/CH technology capable of replication in other city centres.

Acknowledgments

The author is gratell to the Directors of Merz and McLellan Ltd. and Parsons Brinckerhoff Ltd. for permission to publish ths article and to the members of the Newcastle City CHP Joint Venture (Associated Energy Projects plc, Northern Electric Generation Ltd. and Rolls Royce Power Engineering Ltd.) for their agreement to allow him to describe the scheme and the activities of the joint venture.

0 IEE: 1998

Mr Burdon is a Vice-president of Merz and McLeUan Ltd., Consulting Engineers, Amber Court, William Armstrong Drive, Newcastle upon Tyne NE4 7YQ, UK. He is an IEE Fellow

This paper was delivered at a colloquium on ‘Develop- ments in combined heat and power into the d e n n i u m ’ (IEE Colloquium Digest No. 98/226), organised by IEE Professional Group S1 and held at the Scottish Engineer- ing Centre, Glasgow on 20th May 1998.

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