Question B.1 A food processing plant is planning to reduce it energy consumption by installing a...

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Question B.1 A food processing plant is planning to reduce it energy consumption by installing a Combined Heat and Power (CHP) system. The plant consumes an average of 40 MWh of electrical and 90 MWh of thermal energy operating over 2760 hrs per year. The CHP system is to be powered with biogas produced by the plant's anaerobic digestion system which was installed to reduce waste. Table B.11 summarises: the annual energy inputs/output, to/from the CHP system, the cost of supplying the biogas, and the current retail price of electricity and natural gas. Table B.11 Energy input/output of CHP system, and current energy prices CHP energy input/output Biogas (input) MWh Prices /MWh 158.7 Biogas 10 Electricity energy (output) 44.16 Retail price of electricity 148 Thermal energy (output) 96.6 Retail price of natural gas 49 Table Q B.12 shows a summary of the financial cash flow for the project over a 5-year payback period. The summary assumes constant annual cashflows and discount rate of 3% i.e., 4.58 x Year 1 values. Table B.12 Cash flow summary Sum of Year 0 years 1-5 Purchase and installation -37,000 -1,012 -7,268 O&M Fuel biogas Electricity (saved) Natural gas for heating (saved) Cashflow NPV (Discount rate 3%) 27,114 20,197 -37,000 39,031 2,031 a) Using the Five Case Model as a framework, discuss the factors should be considered in preparing the technical and economic case for an outline business proposal for the project. Question B.1 is continued on the next page... [10 marks] Question B.1 A food processing plant is planning to reduce it energy consumption by installing a Combined Heat and Power (CHP) system. The plant consumes an average of 40 MWh of electrical and 90 MWh of thermal energy operating over 2760 hrs per year. The CHP system is to be powered with biogas produced by the plant's anaerobic digestion system which was installed to reduce waste. Table B.11 summarises: the annual energy inputs/output, to/from the CHP system, the cost of supplying the biogas, and the current retail price of electricity and natural gas. Table B.11 Energy input/output of CHP system, and current energy prices CHP energy input/output Biogas (input) MWh Prices /MWh 158.7 Biogas 10 Electricity energy (output) 44.16 Retail price of electricity 148 Thermal energy (output) 96.6 Retail price of natural gas 49 Table Q B.12 shows a summary of the financial cash flow for the project over a 5-year payback period. The summary assumes constant annual cashflows and discount rate of 3% i.e., 4.58 x Year 1 values. Table B.12 Cash flow summary Sum of Year 0 years 1-5 Purchase and installation -37,000 -1,012 -7,268 O&M Fuel biogas Electricity (saved) Natural gas for heating (saved) Cashflow NPV (Discount rate 3%) 27,114 20,197 -37,000 39,031 2,031 a) Using the Five Case Model as a framework, discuss the factors should be considered in preparing the technical and economic case for an outline business proposal for the project. Question B.1 is continued on the next page... [10 marks]