Feb-2024

Adding CHP to refinery power infrastructures

CI scores and delivered economic impact at downstream facilities improve when adding CHP units to increase electrical and thermal efficiency.

Rene Gonzalez
Editor, PTQ

Article Summary

Implementing combined heat and power (CHP) plants fuelled by natural gas (NG), renewable natural gas (RNG), or hydrogen can reduce refinery operating costs during normal run lengths or extended downtime for a unit revamp. The end game is a huge reduction in the process gas emissions footprint. Financially, this means that with proper equipment selection and layout design, the return on investment (ROI) of the CHP cogeneration power plant in the refining and petrochemical industry could be less than a year.

Cogeneration facilities have been a mainstay in commercial and industrial facilities worldwide, with capacities approaching 100 MW in various applications. In addition, CHP cogeneration units under 20 MW are used throughout the oil and gas industry, including the refining and petrochemical sectors, particularly during a major revamp or turnaround, as well as during normal operations.

Although the demand for CHP units has remained relatively flat until recently, that market is projected to expand as these portable systems are part of the broader effort towards transitioning to more sustainable energy sources, reducing GHG emissions, and promoting circular economy practices by reusing waste materials, such as in the production of RNG. For example, combining CHP units powered by fuels such as RNG or hydrogen benefits project carbon intensity (CI) scores in the long term.

Energy efficiency
Downstream processing facilities have significant energy requirements, both for electricity (compressors, pumps) and thermal energy (heat and steam), making CHP systems an efficient and cost-effective solution for the following applications:

Steam and power generation: Refineries use steam for various processes, including distillation, desalting, and heating. CHP systems can simultaneously generate electricity and steam, optimising energy use and reducing overall energy costs.

Waste heat recovery: Refineries produce a substantial amount of waste heat as a byproduct of their operations. CHP systems can capture and use this waste heat to generate electricity or provide supplementary process heating, improving energy efficiency.

Process heating: High-temperature heat is often required for specific processes. CHP systems can provide this heat, reducing the need for separate heating systems and improving overall energy efficiency.

Energy cost reduction: By generating electricity on-site, refineries can reduce their reliance on external power sources, potentially leading to cost savings, particularly when energy prices are high.

Environmental benefits: CHP systems can help reduce greenhouse gas emissions (GHG) and other pollutants, as they are more energy efficient compared to traditional power generation methods.

Energy security and reliability: CHP systems enhance the reliability of power supply in refineries, offering a back-up power source during grid outages or other disruptions.

Specific configurations of CHP systems in a refinery or petrochemical unit will depend on the plant’s energy needs, available energy sources, and operational processes. The choice of technology, such as gas turbines, steam turbines, reciprocating engines, will also be based on the refinery’s specific requirements, such as the volatile process of upgrading refinery-grade propylene to higher margins polypropylene via thermocompression benefits from an integrated CHP and chiller design to balance cooling water requirements.

In some cases, refineries and chemical plants with CHP systems can contribute excess electricity back to the grid, potentially earning revenue through power sales. CHP technology can be deployed quickly, cost-effectively, and with few geographic limitations.

Natural gas-powered CHP has quietly provided highly efficient electricity and process heat to some facilities.

Improve CI scores
To date, NG-powered CHP operations provide the leverage to decouple from grid electricity affected by high GHG emissions and unreliable grid connectivity. In the future, combining RNG and NG, or pure RNG, improves a facility’s CI scores, but other factors also influence whether a refinery or chemical plant benefits from CHP. For example:
• Would there be substantial business, safety, or health impacts if the electricity supply were interrupted, such as during a major turnaround or weather-related outage?
• Is there interest in reducing a facility’s impact on the environment?
• Are there concerns about the impact of current or future energy costs on the business?
• Does the facility operate at high utilisation rates?
• Are there plans to replace, upgrade, or retrofit central plant equipment (such as generators, boilers, and chillers) within the next three to five years?

Overall, integrating CHP into a facility demonstrates a commitment to sustainable practices and environmental stewardship, enhancing the facility’s reputation and appeal to environmentally conscious consumers and stakeholders. CHP systems are one of the most direct pathways towards reducing carbon intensity and increasing RNG’s value.

Opportunities
For these bespoke circumstances, CHP has proven its ability to offer a variety of benefits, including avoided capital costs, revenue stream protection while reducing exposure to electricity rate increases from the grid. Against this backdrop, NG or RNG-powered CHP will positively impact carbon scores vs the grid’s supply mix.

By using waste heat recovery technology to capture wasted heat associated with electricity production, CHP systems can typically achieve total system efficiencies of 60-80%, compared to 50% for conventional technologies (such as purchased utility electricity and an on-site boiler).

In fact, the Waste Heat & Carbon Emissions Reduction Act encourages the development of small CHP projects of less than 20 MW. This includes CHP/NG/RNG/microgrid applications at facilities without temporary or permanent grid access. Basically, they need less fuel, including tail gas, for a given unit of energy output. Operating costs are further reduced because the CHP output reduces electricity purchases.

Through on-site generation and improved reliability, CHP can allow facilities to continue operating in the event of a disaster or grid interruption, thus protecting revenue streams from the increasing drop in grid reliability, such as the hurricane-prone US Gulf Coast refining region. Unfortunately, the drop in grid reliability is co-occurring with electricity rate increases. Because less electricity is purchased from the grid using CHP, facilities have less exposure to rate increases.