Annual and Compounded Life Cycle Cost Analysis of A Steam Boiler
Annual and Compounded Life Cycle Cost Analysis of A Steam Boiler
Annual and Compounded Life Cycle Cost Analysis of A Steam Boiler
a
Mechanical Engineering Department, University of Ilorin,
P. M. B. 1515, Ilorin, Nigeria.
b
Mechanical Engineering Department,
University of Agriculture, Abeokuta, Nigeria.
c
Agricultural Engineering Department,
Ladoke Akintola University of Technology, Ogbomoso, Nigeria.
*
Corresponding Author. Tel: 07030092411
E-mail: [email protected], [email protected] (I. O. Ohijeagbon)
ABSTRACT
The generic total economic cost of an industrial steam boiler over the service life of the boiler in relation to initial
cost and discounted future expenditures was investigated. The present value method of life cycle cost analysis
(LCCA) was used to analyse the yearly and compounded cycle cost; annually and compounded future fuel cost of
an industrial steam boiler from the initial investment cost, generating cost per annum and disposal cost. For a
steam boiler utilizing 754 kg/hr of low pour fuel oil (LPFO) in an estimated operating period of 4,186 hr/yr, the
generating and operating costs per annum were obtained as 13,019,355.00 /yr (85,344.84 S/ / yr ) and
15,623.226.00 /yr (102,413.81 S/ / yr ) respectively. Inflation rate of fuel cost was responsible for the break-even
period in the life cycle cost of steam boiler operation.
The LCCA methodology presented in this study is a veritable tool for economic and managerial planning and
implementation for sustainable use of industrial boilers.
Keywords: life cycle, cost analysis, steam boiler, fuel cost, break-even, inflation rate.
will be unusually profitable or unprofitable early in CF/E = fuel cost in naira per energy value, /kJ
their life. Suggested that the simple payback period hs = enthalpy of steam, kJ/kg
should not be used as the primary indicator to hw = enthalpy of boiler feed water, kJ/kg
evaluate a project, it is useful as a secondary measure ηB = overall boiler efficiency, fractional
to indicate the level of risk of an investment – a CNaira/litre = cost of fuel in naira/litre, /litre
quicker payback period is usually an indicator of less dfuel = relative density of fuel
risk (ATHENA Institute, 2007). LHV = Calorific value of fuel, kJ/kg
The present study investigates the Qf = Fuel use, kg/hr
relationships in the yearly and compounded cycle It was assumed that extra steam generated, X = 20%
costs; and the yearly and future fuel cost of an In principle, one should calculate the
industrial steam boiler over the service life of the individual cost components for the site-specific
boiler. conditions. In practice, it is usually sufficient to use
an approximation:
2 Method CG = C F (1 + 0.3) (6)
The first step, which has several components
to calculate the cost of generating steam from a The number 0.3 represents a typical value for the sum
boiler, comprises of the fuel cost (CF); raw water of all the cost components that may be incurred in
oil- and gas-fired facilities.
supply cost (CW); boiler feed water treatment cost-
The operating cost per annum is given by:
including clarification, softening, demineralization
(CBFW); feed water pumping power cost (CP); CO / annim = (1 + X ) × Q f × CG × Op Hrs (7)
combustion air fan power cost (CA); sewer charges The generating cost per annum is given by:
for boiler blowdown cost (CB); ash disposal cost CO / annum
(CD); environmental emissions control cost (CE) and CG / annum = = CG × Q f × OpHrs (8)
(1 + X )
maintenance materials and labour cost (CM) (U.S.
DOE, 2003). It can be deduced from equation (6) that the cost of
The total variable cost of raising steam, CG, fuel per annum is given by:
is the sum of all these individual contributions, C
C F / annum = G / annum (9)
expressed as naira per kilogram ( /Kg) of steam (1 + 0.3)
generated: Life cycle cost analysis (LCCA) is a process
CG = C F + CW + CBFW + CP + C A + CB + C D + C E + CM (1) for evaluating the total economic cost of an asset by
If the operating cost of a boiler is CO per analyzing initial costs and discounted future
hour and the process requires Qf kg/hr of steam. To expenditures, such as maintenance, repair and
deliver this quantity of steam, it is necessary to renewal costs, and user and social costs over the
actually generate (1+X) Qf kg/hr of steam, where X is service life of the asset (Rahman and Vanier, 2004).
a factor typically ranging from 5 to 20%. Hence, two The LCCA of a facility can be represented
distinct equations to determine the cost of steam are by the following expression (Jekayinfa et al., 2005):
as follows: LCC = Cic + Ce + Co + C m + Cd (10)
CO (2) where,
Generating cost, C ( N / kg ) =
G
(1 + X ) × Q f LCC = life cycle cost
CO
Cic = initial investment cost
Consumptio n cost, C C ( N / kg ) = (3)
Ce = energy cost
Qf
Co = operational (labour) cost
Equation (2) is used when we are interested in Cm = maintenance and repair cost
making the generation system more efficient. Cd = disposal cost
Equation (3) is used when we are interested in A comparison of equation (1) and (10)
determining the true cost of process operation and shows that energy (Ce) cost, operational (labour) cost
when we are evaluating energy conservation projects. (Co) and maintenance and repair cost (Cm) in the life
Fuel cost is usually the dominant cycle cost (LCC) are included in the cost of raising
component, accounting for as much as 90% of the steam (CG). Hence, equation (10) of the LCC may be
total. It is given by: re-written as;
C F = C F / E × ( hs − hw ) × η B (4) C L = C I + CG / a + C D (11)
1 1 (5) where,
C F / E = C Naira / litre × ×
d fuel LHV CL = CLCC
where, CI = Cic = initial investment cost
CF = fuel cost, /kg CG/a = CG/annum = generating cost per annum
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n
Cf /F = C F / annum × ∑ (1 + i f ) t (18) Table 1: Yearly and compounded cycle costs at
t =0 specific intervals
Yearly cycle cost Compounded LCC
where, Year
USD NGN USD NGN
Cf/F = future value of fuel 1 111,503.86 17,009,913.36 226,848.70 34,605,768.70
if = inflation rate = 1%, and 3% 5 97,377.08 14,854,874.12 636,949.35 97,166,622.58
10 82,208.24 12,540,867.20 1,077,301.30 164,342,312.98
15 69,402.31 10,587,322.97 1,449,057.75 221,053,760.38
4 Results and discussions 20 58,591.22 8,938,090.65 1,762,904.13 268,931,024.42
The yearly and compounded cycle and 25 49,464.22 7,545,766.25 2,027,861.31 309,350,243.41
30 41,758.97 6,370,330.15 2,251,544.99 343,473,188.75
future fuel costs of an LPFO utilized steam boiler at
specific time intervals of 5 years are presented in
Figure 1 shows the yearly and compounded cycle
Table 1and Table 2 respectively. The detail-yearly
costs of LPFO utilized steam boiler in Nigerian naira
values of the yearly and compounded cycle and
(NGN), the equivalent values in US dollars (USD)
future fuel costs throughout the entire life of the
are presented in Table 1. From Table 1 and Figure 1,
steam boiler are shown in Figure 1, while the
the yearly cycle cost decreased steadily from about
graphical representations of the yearly and
17 million to 6.37 million ($ 111,503.86 to $
compounded cycle and future fuel costs at specific
41,758.97) in the first year to its expiration time of 30
time intervals are shown in Figure 2 and Figure 3
years. This accounted for a decrease of 62.53% at a
respectively.
depreciation rate of 3.33% throughout the lifespan of
the boiler.
The compounded life cycle cost (LCC) increased compounded LCC was 89.93% at a depreciation rate
from 34.6 million 343.47 million ($ of 3.33% from the first year throughout the lifespan
226,848.70 to $ 2.25 million). The increase in the of the boiler.
The yearly future fuel cost and compounded 1% inflation rate at the 18th and 27th year as shown in
future fuel cost respectively investigated at 1% and Figure 1 and Figure 3 respectively.
3% inflation rate are shown in Table 2, Figure 2 and Since the average life expectancy of a fire
Figure 3. The yearly future fuel cost at 1% and 3% tube boiler is 30 years (CleaverBrooks, 2010; Bryan
intersects the yearly cycle cost at about the 13th and Boilers, 2008; VHA Directive, 2008; ETSAP, 2010),
9th year as shown in Figure 1 and Figure 2 it would make for good economic and technical
respectively. That is, the yearly future fuel cost will judgement to replace the boiler once the future fuel
quickly attain and surpass the yearly cycle cost at 3% cost exceeds the compounded LCC of the boiler due
inflation rate compared with the yearly future fuel to reduced boiler performance with age.
cost of 1% inflation rate. Similarly, the compounded
future fuel cost will attain and surpass the
compounded LCC faster at 3% inflation rate
compared with the compounded future fuel cost of
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The LCCA of an LPFO operated steam Nigeria, Journal of Quality in Maintenance
boiler reveals that the yearly cycle cost decreased engineering, Vol. 11 (2), pp152-168.
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