Estimating the value of energy saving in industry by different cost allocation methods

Abstract

In complicated systems, such as a highly integrated industrial plant with its own energy production, estimating the value of energy conservation is not so straightforward. Often, heat is priced using different kinds of methods for allocating the fuel cost to heat and electricity. However, there is no consistent way to valuate the process steam in industry, and not just one useful method for allocating costs to heat and power. In this paper, the energy method, exergy method, benefit distribution method and market-based method are evaluated and compared from different decision-making perspectives. The results of this study indicate that the allocation methods may overestimate by up to 200-300% the benefits from the mill perspective compared to the benefits from the mill site perspective. So, the most suitable method may vary, depending on the selected system boundary, i.e. the decision-making perspective, the type of CHP plant and energy prices. Based on the results of this study, the exergy method fits well with the CCGT plant with a condensing unit and constant fuel input. On the other hand, the market-based method is the most correct way to estimate the value of heat when heat conservation reduces the production of CHP electricity.

Success factors of energy management in energy-intensive industries: Development priority of energy performance measurement

“…These include the need for value judgements, the definition of energy quality, the definition of system boundaries and the joint production of different products [52]. Different cost allocation methods can be used to determine the financial value of energy in energy systems [54]. Energy performance measurement is further limited by physical systems, such as the need for retrofits.…”

Cost-Effectiveness of Carbon Emission Abatement Strategies for a Local Multi-Energy System—A Case Study of Chalmers University of Technology Campus

“…The emission factors are primarily based on the energy allocation method which may differ from current practice among district heating operators in Sweden. More details on the calculation of the emissions factors can be found in Supplementary Materials based on the following references [35][36][37][38][39]. The hourly marginal unit data are taken from a district heating operator in Sweden.…”

State of the Art on Allocation in LCA and Proposals for Changes in ISO 14044

“…Dlatego wszystkie te czynniki, które wpływają na subiektywny wybór klucza alokacji, powinny być uwzględnione w interpretacji wyników i w jasny i przejrzysty sposób opisane w raporcie z analizy cyklu życia. Jest to ważny problem, ponieważ wybór metody alokacji może prowadzić do dużych rozbieżności wyników LCA, co pokazuje analiza licznych studiów przypadku [3,33,[39][40][41][42][43][44]. Można wymienić następujące kryteria wyboru procedur alokacji [45]:…”