1. Electrical Engineering Department, Amirkabir University of Technology, Tehran, Iran M. Poursistani N. Hajilu G. B. Gharehpetian M. Shafiei CHP Systems in Iranian Industry and Its Comparison with CHP Application in Europe: A Case Study

2. CHP is on-site generation of electricity and the utilization of the heat that is a by-product of the electricity generation. 0

3. Separate Heat and Power (SHP) generation problems are: Each one has a low efficiency Electrical power transmission and distribution losses are high Heat transfer is expensive and difficult High environmental pollution High fuel consumption 1

4. Combined Heat and Power (CHP) generation benefits are: Considerable fuel consumption saving Lower emission Increasing the total efficiency of power generation units Increasing flexibility of system Offering thermal energy for consumers 2

5.  The European Commission had set a target of 18% to participate in CHP technology by 2010 in its 1997 strategy.  According to the latest statistics, the portion of the co- generation in the electricity production in Europe was about 11.2% in 2011.  Latvia, Denmark, Lithuania and Finland have the highest percent of CHP based generated power respected to their total power generation. 3

6. This figure shows the share of the CHP power generation in European countries in 2011 4

7.  The contribution of the CHP systems in German power generation system in 2005 was 12.6%.  In 2011, it was 13.1% (90TWh ).  Today, Germany CHP market is the biggest one in Europe (more than 20% of the cogenerated electricity of EU)  In 2050, the target is 25%. 5

8. 2020 2050 Reduction in contaminants emissions compared to 1990 levels At least 80% Total Energy Supply 18% 60% The Gross Electricity Consumption 35% 80% 40% Reduction in Primary Energy Consumption 35% 80% By using CHP 6

9. Low efficiency Growth on demand High electrical losses Increasing environmental pollution Therefore, CHP Technologies are necessary in Iran Our problems, as a result, motivations are: 7

10. But,our barriers are:  Lack of knowledge about CHP benefits and savings  lack of enough space for installing CHP systems  CHP project implementation procedure is not clear for some industries.  Lack of integrated urban heating/cooling supply system. 8

11.  High energy subsidies  High capital cost of smaller CHP units for small scale applications  Sanctions on Iran  Lack of a coordinated and long term strategy and policy for the heat generation sector. 9

12. FCs and Micro-Turbines FCs and Micro-Turbines Reciprocating Engines Gas Turbine High-Tech Not Popular Suitable Choice Prim-movers can be as follows: 10

13. Incentives in Iran are:  The government provides 60-80 percent of the capital cost of DGs as long term loans.  Buying electric power of CHP systems is also warranted by government for up to five years.  The gas needed for electric and heat power generation, has a subsidy. 11

14.  Evaluating growth potentials in Iran for energy markets.  Determination of the best practice policies.  Development of an international CHP network, to share experiences and ideas. 12

15. 13

16.  prime-mover  storage tank  back-up boiler The CHP System components, shown in this figure, are: 14

17. Hourly electric and thermal loads of this factory have been shown in these figures: Electrical load Thermal load 15

18. In this study, we want :  to meet the electrical and thermal demands with minimum running cost,  determine optimal capacity of the CHP generator and  compare the results with European cases. 16

19. The following cost function of the CHP system has been minimized by PSO algorithm: 17

20. Item Natural gas Heat rate (kWh/m 3 )12.8 Boiler Efficiency (%)80 Capital cost ($/kW)90.91 Lifetime (year)20 CHP plant Efficiency (%)34.8 Heat/electricity ratio1.5 Capital cost ($/kW)1760 Lifetime (year)20 Others Real interest rate (%)15 Important system data has been listed in this table and 18

21. Gas price ($/kWh) Electricity price ($/kWh) peak load hours medium load hours low load hours Iran case with subsidies 0.0010.0320.0160.008 Iran case with redirected subsidies 0.00550.160.080.04 France 0.0840.19 Germany 0.090.35 the energy prices have been given here: 19

22. Results In Iran with subsidies In Iran with redirected subsidies In France In Germany Cost of SHP ($) 614751.72603981.17569605.39602991.9 Operating cost of CHP($) 404254.92218237.16299537.038092366.4 Capital cost of CHP($) 1219001.21727934.21849159.91933040.6 Total cost of CHP($) 1623256.13946171.38148696.910025406.9 Profitability (in first year) ($) -1008504.3-1342190.2-579091.71-422415.1 Optimal capacity of CHP(kW) 1010148916051687 20

23. IRR after year No. Iran case with subsidies Iran case with redirected subsidies FranceGermany 1-83%-78%-46%-38% 3-27%-18%29%39% 5-5%4%46%55% 1011%18%54%61% 1515%21%54%62% 2016%22%54%62% The internal rate of return (IRR) analysis has been given here: 21

24.  The optimal sizing of the CHP is essential for economic investment.  The utilization of the CHP system can reduce the total energy consumption.  The energy price policies have an important role in increasing the economical benefits of CHP systems.  Due to higher energy prices in European countries, such as France and Germany, the installation of the CHP system is more economic than Iran case. 22

25.  Redirecting subsidies is necessary for Iranian power system.  The profitability of the CHP system under unsubsidized energy prices is considerable.  Increasing the energy prices results in the application of CHPs with higher capacities.  In Iran, the installation of the CHP system will be profitable in 6-th and 5-th year with and without considering subsidies, respectively 23