Continuous Power in Johannesburg
On the back of our successful biogas CHP (combined heat and power) solution at Distell in Springs, SustainPower were asked to model a natural gas CHP for a commercial client in the suburbs of Johannesburg. The city is blessed with extensive natural gas pipeline infrastructure, thanks to highly reputable gas suppliers like Egoli Gas.
SustainPower have a strategy of taking whatever scope is needed to get a gas to power project over the line. Whether it be engine procurement, containerization, installation, commissioning, or operations & maintenance of the units, our team is capable of ‘slotting in’ wherever needed. In this instance, the client sought a turnkey solution, and we provided them with a budgetary capex proposal.
The client has many locations across the country, but what was key for our team was to target sites that have existing gas pipeline connections and a reliable supply from the likes of Sasol or Egoli Gas. In this instance, the client is supplied by Egoli and receive their energy from City Power on a Large Customer LV tariff.
The site has an original site load of 233 kW and a maximum demand of 434 kVA. The demand charge was a matter of particular concern for the client, given their tariff structure. The site suffers the standard load shedding challenges of every South African location, whilst also dealing with ever-increasing costs associated with the heating of water.
The site is currently making use of an electrical boiler for their hot water, at a substantial cost. SustainPower’s CHP offsets the need for the electrical boiler, leading to extensive energy and monetary savings. This results in a further load reduction at the site, meaning their average load will now be approximately 128 kW. By installing two containerized units, SustainPower ensures that at least one is always running, resulting in a 130 kVA demand reduction, with built in redundancies.
The City Power tariff structure of the client, which is based on a tiered approach of energy consumption, suggests an effective tariff of R2.40/kWh. Comparatively, an Egoli Gas power generation gas price of R156/Gigajoule would translate to a SustainPower effective tariff of R2.13/kWh. Therefore, before we have even considered the case for offsetting heat, we show that the running cost of the gas gensets is cheaper than the Levelized Cost of Energy provided by the client’s current utility.
At this point, the business case is already a sound one, but it becomes incredibly attractive when considering the heating requirement of this client. The client consumes 2000 tonnes of water per hour, requiring an outlet temperature of 70 degrees Celsius. Data provides shows that the current use of an electrical boiler will cost the client R 2,069,239.00 in year one, whilst comparatively, the SustainPower CHP hot water cost is only R 11,315.00. Offsetting this cost is not only financially sound, but also assists with the sustainability targets of the client.
The client is required to have multiple sources of backup power in the event of load shedding or an unscheduled power outage, and they do currently have diesel generators on site. Theoretically, they could rid themselves of these generators, but it was agreed that this can remain as a ‘backup to the backup’. At the very least, the client will use significantly less diesel than in previous load shedding sessions, which not only assists them in reducing their CO2 exposure almost three-fold, it also means that the running cost during these sessions will be less than half of what it is, given a very conservative Rand/litre diesel price.
As with any business case, this solution comes down to the numbers, and they are as follows:
- Capital Outlay: R7,782,000.00
- Cumulative Savings: R26,674,167.00
- Internal Rate of Return: 35%
- Return on Investment: 36 months
- Client’s Current Annual Hot Water Costs: R2,069,239.00
- Hot Water Cost after CHP: R11,315.00
- Current City Power Levelized Cost of Energy: R2.40/kWh
- SustainPower CHP Running Cost: R2.13/kWh