Control Engineering

Peter Welander

The social cost of inefficiency
September 24, 2007

If you scroll back to my posting from September 17 (EGUE day 5) I related a conversation on the plane coming back from the Emerson Global Users Exchange with another participant from the event. At one point in the conversation we came to a discussion of why it is so many companies seem to ignore evidence that says making investments in plant efficiency generally pays off so decisively. A press release I received this morning makes the point again in a new way, and puts the discussion in a different light.

The release says that Alstom has contracted with International Power Technologies to design and build a demonstration project at their Hazelwood Power Station in Austrialia to reduce CO2 output. Projects to reduce CO2 output usually involve some type of alternative fuel (coal to natural gas for example), sequestering the CO2 (by pumping it into the ground for example), or simply improving efficiency and reducing CO2 output by producing more power with less fuel. This project falls into the last category.

This plant burns lignite, a type of brown coal that has high moisture content, averaging 60% in this case. Alstom’s equipment and boiler modifications will pre-heat the fuel and drive the moisture down to about 12%. That will result in a 10% increase in electrical production with a 20% reduction in CO2 emissions. Moreover, it will extend the life of the plant to 2030.

The Hazelwood 2030 project has received extensive public support with a $50 million grant awarded by the Australian Federal Government under the Low Emissions Technology Development Fund (LETDF) and an additional $30 million grant by the Victorian State Government as part of their Energy Technology Innovation Strategy (ETIS).

“Increasing the efficiency of the installed base with proven and commercially viable technology is a fundamental aspect in dealing with climate change” said Chris Raine, Alstom’s Managing Director in Australia. “At Alstom, we continue to further advance existing technologies while focusing our R&D efforts on new technologies for the plants of tomorrow that will also provide retrofittable solutions for the plants of today”

The bottom line in this case is that there is a social cost component in addition to the efficiency gains. I really don’t know enough about this case to determine how much it has to be subsidized beyond the efficiency gain paying for the new equipment. It’s a 1600 MW plant, so it’s big enough that a 10% increase is some real money. In any case, the social benefit of reducing CO2 emissions is considerable.

When examining the case for making an improvement at your plant and trying to convince the higher-ups that it’s worth it, this is something you should always keep in mind. When there is a social side to a project (assuming it’s beneficial) it should be included in the equation.

Posted by Peter Welander on September 24, 2007 | Comments (0)