IDEAS home Printed from https://ideas.repec.org/a/gam/jsusta/v11y2019i19p5162-d269169.html
   My bibliography  Save this article

Research on the Economic Benefit Evaluation of Combined Heat and Power (CHP) Technical Renovation Projects Based on the Improved Factor Analysis and Incremental Method in China

Author

Listed:
  • Xiaolong Yang

    (School of Economics and Management, North China Electric Power University, Beijing 102206, China
    School of Economics and Management, Northeast Electric Power University, Jilin 132012, China
    Beijing Key Laboratory of New Energy and Low-Carbon Development, Beijing 102206, China)

  • Yan Li

    (School of Economics and Management, North China Electric Power University, Beijing 102206, China
    Beijing Key Laboratory of New Energy and Low-Carbon Development, Beijing 102206, China)

  • Dongxiao Niu

    (School of Economics and Management, North China Electric Power University, Beijing 102206, China
    Beijing Key Laboratory of New Energy and Low-Carbon Development, Beijing 102206, China)

  • Lijie Sun

    (School of Economics and Management, North China Electric Power University, Beijing 102206, China
    Beijing Key Laboratory of New Energy and Low-Carbon Development, Beijing 102206, China)

Abstract

With the increasingly prominent problems of resources and environment, thermal power enterprises in China are facing more severe challenges. To improve energy efficiency, a great number of thermal power enterprises implement the technical renovation of equipment. However, current methods cannot meet the needs of scientific and effective evaluations. In this context, the internal rate of return (IRR) is used as the main index to evaluate the economic benefits of the technical renovation of combined heat and power (CHP) plants. In order to improve the accuracy of the economic benefit evaluation results, the incremental cash flow is calculated through the incremental method, which is based on the existence and non-existence method, and the improved factor analysis method is utilized to eliminate the influence of price factors from markets that have no direct and definite relationship with the technical renovation. Then, the evaluation method is validated by taking a CHP technical renovation project in B city of China as an example. By comparing with other methods, the results show that the IRRs calculated by different methods are quite different, and the difference between the maximum and the minimum can reach 69.95%. The result of the method proposed in this paper is more reasonable and reliable and can effectively evaluate the economic benefits of CHP technical renovation projects.

Suggested Citation

  • Xiaolong Yang & Yan Li & Dongxiao Niu & Lijie Sun, 2019. "Research on the Economic Benefit Evaluation of Combined Heat and Power (CHP) Technical Renovation Projects Based on the Improved Factor Analysis and Incremental Method in China," Sustainability, MDPI, vol. 11(19), pages 1-23, September.
    • Handle: RePEc:gam:jsusta:v:11:y:2019:i:19:p:5162-:d:269169
    as

    Download full text from publisher

    File URL: https://www.mdpi.com/2071-1050/11/19/5162/pdf
    Download Restriction: no
    File URL: https://www.mdpi.com/2071-1050/11/19/5162/
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Karl Magnus Maribu & Stein-Erik Fleten, 2008. "Combined Heat and Power in Commercial Buildings: Investment and Risk Analysis," The Energy Journal, International Association for Energy Economics, vol. 0(Number 2), pages 123-150.
    2. Wang, Kexin & Chen, Shang & Liu, Liuchen & Zhu, Tong & Gan, Zhongxue, 2018. "Enhancement of renewable energy penetration through energy storage technologies in a CHP-based energy system for Chongming, China," Energy, Elsevier, vol. 162(C), pages 988-1002.
    3. Kaplan, P. Ozge & Witt, Jonathan W., 2019. "What is the role of distributed energy resources under scenarios of greenhouse gas reductions? A specific focus on combined heat and power systems in the industrial and commercial sectors," Applied Energy, Elsevier, vol. 235(C), pages 83-94.
    4. Garcia-Saez, Irene & Méndez, Juan & Ortiz, Carlos & Loncar, Drazen & Becerra, José A. & Chacartegui, Ricardo, 2019. "Energy and economic assessment of solar Organic Rankine Cycle for combined heat and power generation in residential applications," Renewable Energy, Elsevier, vol. 140(C), pages 461-476.
    5. Heng Chen & Zhen Qi & Qiao Chen & Yunyun Wu & Gang Xu & Yongping Yang, 2018. "Modified High Back-Pressure Heating System Integrated with Raw Coal Pre-Drying in Combined Heat and Power Unit," Energies, MDPI, vol. 11(9), pages 1-16, September.
    6. Anand, Himanshu & Narang, Nitin & Dhillon, J.S., 2019. "Multi-objective combined heat and power unit commitment using particle swarm optimization," Energy, Elsevier, vol. 172(C), pages 794-807.
    7. Yan, Bofeng & Xue, Song & Li, Yuanfei & Duan, Jinhui & Zeng, Ming, 2016. "Gas-fired combined cooling, heating and power (CCHP) in Beijing: A techno-economic analysis," Renewable and Sustainable Energy Reviews, Elsevier, vol. 63(C), pages 118-131.
    8. Bi, Gong-Bing & Song, Wen & Zhou, P. & Liang, Liang, 2014. "Does environmental regulation affect energy efficiency in China's thermal power generation? Empirical evidence from a slacks-based DEA model," Energy Policy, Elsevier, vol. 66(C), pages 537-546.
    9. Lin, Jiang & Fridley, David & Lu, Hongyou & Price, Lynn & Zhou, Nan, 2018. "Has coal use peaked in China: Near-term trends in China's coal consumption," Energy Policy, Elsevier, vol. 123(C), pages 208-214.
    10. Sun, Wei & Xu, Yanfeng, 2016. "Financial security evaluation of the electric power industry in China based on a back propagation neural network optimized by genetic algorithm," Energy, Elsevier, vol. 101(C), pages 366-379.
    11. Wu, Qiong & Ren, Hongbo & Gao, Weijun & Ren, Jianxing, 2016. "Multi-criteria assessment of building combined heat and power systems located in different climate zones: Japan–China comparison," Energy, Elsevier, vol. 103(C), pages 502-512.
    12. Xie, Bai-Chen & Gao, Jie & Zhang, Shuang & Pang, Rui-Zhi & Zhang, ZhongXiang, 2018. "The environmental efficiency analysis of China’s power generation sector based on game cross-efficiency approach," Structural Change and Economic Dynamics, Elsevier, vol. 46(C), pages 126-135.
    13. Liang, Zhihong & Yang, Kun & Sun, Yaowei & Yuan, Jiahai & Zhang, Hongwei & Zhang, Zhizheng, 2006. "Decision support for choice optimal power generation projects: Fuzzy comprehensive evaluation model based on the electricity market," Energy Policy, Elsevier, vol. 34(17), pages 3359-3364, November.
    14. Weidong Li & Tie Li & Haixin Wang & Jian Dong & Yunlu Li & Dai Cui & Weichun Ge & Junyou Yang & Martin Onyeka Okoye, 2019. "Optimal Dispatch Model Considering Environmental Cost Based on Combined Heat and Power with Thermal Energy Storage and Demand Response," Energies, MDPI, vol. 12(5), pages 1-18, March.
    15. Bhattacharyya, Subhes C & Quoc Thang, Dang Ngoc, 2004. "Economic buy-back rates for electricity from cogeneration: Case of sugar industry in Vietnam," Energy, Elsevier, vol. 29(7), pages 1039-1051.
    16. Marco F. Torchio, 2013. "Energy-Exergy, Environmental and Economic Criteria in Combined Heat and Power (CHP) Plants: Indexes for the Evaluation of the Cogeneration Potential," Energies, MDPI, vol. 6(5), pages 1-23, May.
    17. Liao, Chunhui & Ertesvåg, Ivar S. & Zhao, Jianing, 2013. "Energetic and exergetic efficiencies of coal-fired CHP (combined heat and power) plants used in district heating systems of China," Energy, Elsevier, vol. 57(C), pages 671-681.
    18. Yagmur, Levent, 2016. "Multi-criteria evaluation and priority analysis for localization equipment in a thermal power plant using the AHP (analytic hierarchy process)," Energy, Elsevier, vol. 94(C), pages 476-482.
    19. Seifert, Stefan & Cullmann, Astrid & von Hirschhausen, Christian, 2016. "Technical efficiency and CO2 reduction potentials — An analysis of the German electricity and heat generating sector," Energy Economics, Elsevier, vol. 56(C), pages 9-19.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Yudong Tan & Guosheng Xie & Yunhao Xiao & Yi Luo & Xintao Xie & Ming Wen, 2022. "Comprehensive Benefit Evaluation of Hybrid Pumped-Storage Power Stations Based on Improved Rank Correlation-Entropy Weight Method," Energies, MDPI, vol. 15(22), pages 1-17, November.
    2. Xiaolong Yang & Dongxiao Niu & Meng Chen & Keke Wang & Qian Wang & Xiaomin Xu, 2020. "An Operation Benefit Analysis and Decision Model of Thermal Power Enterprises in China against the Background of Large-Scale New Energy Consumption," Sustainability, MDPI, vol. 12(11), pages 1-19, June.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Ma, Xuejiao & Wang, Yong & Wang, Chen, 2017. "Low-carbon development of China's thermal power industry based on an international comparison: Review, analysis and forecast," Renewable and Sustainable Energy Reviews, Elsevier, vol. 80(C), pages 942-970.
    2. Sun, Chuanwang & Liu, Xiaohong & Li, Aijun, 2018. "Measuring unified efficiency of Chinese fossil fuel power plants: Intermediate approach combined with group heterogeneity and window analysis," Energy Policy, Elsevier, vol. 123(C), pages 8-18.
    3. Ali Sulaiman Alsagri & Abdulrahman A. Alrobaian, 2022. "Optimization of Combined Heat and Power Systems by Meta-Heuristic Algorithms: An Overview," Energies, MDPI, vol. 15(16), pages 1-34, August.
    4. Geng, ZhiQiang & Qin, Lin & Han, YongMing & Zhu, QunXiong, 2017. "Energy saving and prediction modeling of petrochemical industries: A novel ELM based on FAHP," Energy, Elsevier, vol. 122(C), pages 350-362.
    5. Tao Xu & Jianxin You & Hui Li & Luning Shao, 2020. "Energy Efficiency Evaluation Based on Data Envelopment Analysis: A Literature Review," Energies, MDPI, vol. 13(14), pages 1-20, July.
    6. Østergaard, P.A. & Lund, H. & Thellufsen, J.Z. & Sorknæs, P. & Mathiesen, B.V., 2022. "Review and validation of EnergyPLAN," Renewable and Sustainable Energy Reviews, Elsevier, vol. 168(C).
    7. Bai-Chen Xie & Jie Gao & Shuang Zhang & ZhongXiang Zhang, 2017. "What Factors Affect the Competiveness of Power Generation Sector in China? An Analysis Based on Game Cross-efficiency," Working Papers 2017.12, Fondazione Eni Enrico Mattei.
    8. Shunyong Yin & Jianjun Xia & Yi Jiang, 2020. "Characteristics Analysis of the Heat-to-Power Ratio from the Supply and Demand Sides of Cities in Northern China," Energies, MDPI, vol. 13(1), pages 1-14, January.
    9. Yuanxin Liu & FengYun Li & Yi Wang & Xinhua Yu & Jiahai Yuan & Yuwei Wang, 2018. "Assessing the Environmental Impact Caused by Power Grid Projects in High Altitude Areas Based on BWM and Vague Sets Techniques," Sustainability, MDPI, vol. 10(6), pages 1-20, May.
    10. Yuliang Yang & Chaoqun Cui, 2022. "Which Provincial Regions in China Should Give Priority to the Redevelopment of Abandoned Coal Mines? A Redevelopment Potential Evaluation Based Analysis," Sustainability, MDPI, vol. 14(23), pages 1-22, November.
    11. Ding, Song & Cai, Zhijian & Qin, Xinghuan & Shen, Xingao, 2024. "Comparative assessment and policy analysis of forecasting quarterly renewable energy demand: Fresh evidence from an innovative seasonal approach with superior matching algorithms," Applied Energy, Elsevier, vol. 367(C).
    12. Francis Chinweuba Eboh & Peter Ahlström & Tobias Richards, 2017. "Exergy Analysis of Solid Fuel-Fired Heat and Power Plants: A Review," Energies, MDPI, vol. 10(2), pages 1-29, February.
    13. Rômulo de Oliveira Azevêdo & Paulo Rotela Junior & Luiz Célio Souza Rocha & Gianfranco Chicco & Giancarlo Aquila & Rogério Santana Peruchi, 2020. "Identification and Analysis of Impact Factors on the Economic Feasibility of Photovoltaic Energy Investments," Sustainability, MDPI, vol. 12(17), pages 1-40, September.
    14. Zonggui Yao & Chen Wang, 2018. "A Hybrid Model Based on A Modified Optimization Algorithm and An Artificial Intelligence Algorithm for Short-Term Wind Speed Multi-Step Ahead Forecasting," Sustainability, MDPI, vol. 10(5), pages 1-33, May.
    15. Shi Chen & Wolfgang Karl Hardle & Brenda L'opez Cabrera, 2020. "Regularization Approach for Network Modeling of German Power Derivative Market," Papers 2009.09739, arXiv.org.
    16. Wang, Qiang & Song, Xiaoxin, 2021. "How UK farewell to coal – Insight from multi-regional input-output and logarithmic mean divisia index analysis," Energy, Elsevier, vol. 229(C).
    17. Joanna Rzempała & Daniel Borkowski & Artur Piotr Rzempała, 2021. "Risk Identification in Cogeneration (Combined Heat and Power) Projects: A Polish Case Study," Energies, MDPI, vol. 15(1), pages 1-16, December.
    18. Dong, Hye-Won & Jeong, Jae-Weon, 2020. "Energy benefits of organic Rankine cycle in a liquid desiccant and evaporative cooling-assisted air conditioning system," Renewable Energy, Elsevier, vol. 147(P1), pages 2358-2373.
    19. Ke Wang & Chia-Yen Lee & Jieming Zhang & Yi-Ming Wei, 2018. "Operational performance management of the power industry: a distinguishing analysis between effectiveness and efficiency," Annals of Operations Research, Springer, vol. 268(1), pages 513-537, September.
    20. Rocha, Paula & Kaut, Michal & Siddiqui, Afzal S., 2016. "Energy-efficient building retrofits: An assessment of regulatory proposals under uncertainty," Energy, Elsevier, vol. 101(C), pages 278-287.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:gam:jsusta:v:11:y:2019:i:19:p:5162-:d:269169. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: MDPI Indexing Manager (email available below). General contact details of provider: https://www.mdpi.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.