PTQ Q3 2024 Issue

encountered in refineries. Throughout this article, the cost of carbon credit is considered as €50 per tonne (~Rs. [Indian Rupees] 4,250 per tonne), the concurrent ETS cost. There is a good possibility that the carbon cost may rise further in the coming years and may even breach €100. However, higher carbon cost will not impact the outcome of the study; rather, it will drive more strongly towards the inferences noted in this discussion. Heat recovery equipment economics Will carbon price affect heat recovery equipment econom - ics? To answer this question, the impact of carbon cost on the selection of APH system is analysed in Case Study 1. One of the refiners had a charge heater operating at 83% efficiency. They intended to revamp this heater to retro - fit it with an outboard APH system. Also, maximum heat recovery potential was required to be utilised by shifting to 100% fuel gas firing from the current fuel oil firing. An engi - neering study and evaluation were carried out to establish the feasibility of implementing the project, accounting for conventional evaluating parameters such as plot space, fuel savings, and revamp complexity. However, the economics of this project were found to be constrained by its payback, which is also consistent with the generic criteria seen in Table 1. Being a relatively small heater with 10 Gcal/h heat duty, an outboard APH system for this heater fell in the range of infeasibility from an eco- nomic viewpoint. Table 2 gives a detailed picture of net savings projected post-implementation. The overall project cost was estimated to be more than Rs 200 million. With an annual payback of Rs 42 million, the project was looking at a simple payback of around five years, which exceeded the threshold of three years, gen- erally considered acceptable. Therefore, a more detailed calculation of IRR was employed. After calculation, the IRR of the project was obtained as 10.1%, again below the 12-13% threshold set by client standards. If carbon cost was taken into consideration, the IRR improved to 15.1%, easily surpassing the client’s expectations and making the project feasible (see Figure 1 ). Thus, including carbon cost in project economics can overturn decisions where projects were previously infeasi- ble. In fact, including carbon cost in the economic evalua- tion of heat recovery options can re-assign the demarcation lines of fired heater duty, beyond which installation of APH becomes profitable. Carbon cost as a new method of deriving project eco- nomics can substantially impact the decision regarding investment in efficiency improvement measures like APH and may soon become an important consideration. Carbon price affects fuel choice In Case Study 2, the scenario of shifting to fuel gas firing is considered. This scenario is often struck with the roadblock of ‘total operating cost’. Fuel oil has conventionally been the choice among refiners because of its relatively lower price. Thus, over years of operation, fuel oil firing yields sub - stantial monetary benefits, barring few specialised service heaters where only fuel gas is mandated.

Without carbon cost With carbon cost

-5

C apex (millions x 10)

N PV (millions x 10)

IRR in %

Figure 1 Comparative costs of Case Study 1

heat duty less than 20 Gcal/h, there remains a strong possibility that the efficiency takes a beating in lieu of additional APH system Capex. However, over the lifetime of the fired heater, valuable energy may be lost to the environment. The effect of Capex vs efficiency is best illustrated through an example. Let us consider a small-capacity heater with 6 Gcal/h absorbed duty. According to established design practices, this heater should be designed to operate with- out any outboard APH, thus yielding a fuel efficiency of only 80% as opposed to a heater with an outboard APH system with an efficiency of 90%+. This means the heater of the subject example will be firing an additional 600 tonnes per annum of fuel gas. In other words, the subject heater will consume an addi- tional 6,700 million Kcal per year (Kcal/y) to perform the same task as a heater with 90% efficiency. With Opex determined solely by the price of fuel, and the price of fuel mainly determined by internal refinery configuration, which is generally lower compared to external bought-out energy cost such as for regasified liquefied natural gas (RLNG), this differential in terms of Opex may not overcome the bur - den of Capex. However, with the introduction of a carbon price on each tonne of CO₂ being emitted, the cost of CO₂ becomes an additional factor for Opex calculation. For a comparative analysis, different examples have been considered to cover the entire gamut of fired heaters

Case Study 1

Parameters

Pre-revamp Post-revamp

Fired duty, Gcal/h

12.05 1,097

11.11 1,011

Fuel consumed (fuel LHV of 10,984 Kcal/kg and mol. wt. of 16), kg/h Annual fuel saving, tonne/annum

712

Additional electrical power

289,800

consumption in fans, kWh per year Net annual savings (without carbon

cost), millions of Rs/annum Net annual carbon savings,

(Fuel + MP steam + LP steam)

~2000

tonne/annum

Table 2

PTQ Q3 2024