ABCX Foods Ltd have cooking, freezing and cooling processes which results in a high demand for electricity. Gas is also in high demand for cooking, sterilisation and heating. You are an energy consultant contracted to investigate the viability of installing a CHP system. The total demand of electricity for ABCX is 1,200,000 kWh whilst gas has a demand of 600000kWh.
You have metered your demand for heat and electricity over the last two years and consider that a CHP system would save 550,000 kWh of heat and would displace 150,000 kWh of electricity from the grid.
The CHP system would cost €610,000 to install and would last 15 years and has a salvage value of €100.
The factory has a minimum rate of return of 10% before considering any project. The Factory currently pays 18c/kWh for electricity and 11c per kWh of gas. The price paid/kWh to the company for exported electricity is 9c.
Q 2(a)
Is it viable to install the CHP system?
[17 Marks]
Q 2(b)
[11 Marks]
A wind turbine installation on its own would displace 2.7 MWh of electricity from the grid. It would cost €2,800,000 to install and would have a life of twenty years. It has a salvage value of €250000 at that time. Is it viable to install the turbine Text of Question2 part b
Q 2(c)
State which option is the best? Discuss your answer briefly. State all your assumptions, if any (in bullet point form).
[6 Marks]
Discuss briefly if there any other considerations that would better inform your decision to advise which one you would select other than economic options.
Text of Question2 part c
