FOCUS FINANCE & ECONOMY
By Peter Jorsal, Product and Academy Manager, LOGSTOR A/S
It ought to be a matter of course to include a Total Cost of Ownership (TCO) analysis when investing in a pre-insulated district heating network, whether it is to expand in new areas or replace old systems, and then choose the system with the lowest costs during the service life. However, this is not always the case. We still see many examples of people investing in the cheapest possible system or continuing to build their district heating network on the same principles as always, regardless of whether it actually results in higher Total Cost of Ownership.
COSTS TO INCLUDE IN A TOTAL COST OF OWNERSHIP ANALYSIS
The following elements are natural to assess in a Total Cost of Ownership analysis of establishing a pre-insulated district heating network: • Investment in the pre-insulated materials • Investment in the welding work, installation of casing joints, and handling of pipes and components • Investment in excavation/backfilling, asphalt, and other pavements • Control and inspection • Heat loss costs during the period, which is analyzed • Maintenance and repair costs during the period, which is assessed • Pipe dimensions and derived pumping costs The duration of the period the analysis is based on must be determined. Normally, the period of a Total Cost of Ownership analysis is 30 years, but more and more energy companies calculate with a 50 years’ period. On the other hand, there are also many examples of investments, which are assessed over a much shorter period. The analysis will give an overview of the Total Cost of Ownership as shown in below diagram, based on an analysis of 4 different pipe systems in a case-project. The costs of the single elements of an actual project are stated in 1,000 Euro.
In the following, the essential elements in the Total Cost of Ownership analysis are outlined.
PIPE DIMENSIONS AND DERIVED PUMPING COSTS The hydraulic dimensioning of the district heating network shall ensure that there is capacity for future expansions and connections to the district heating network. At the same time, it must be ensured that the pipes are not overdimensioned, as this will only result in too large investment costs, subsequently higher heat loss costs, and too large temperature drops in the network. In relation to the Total Cost of Ownership, the investment in pumps and the resulting annual operation costs for pumps (power consumption) are naturally important. The hydraulic dimensioning of a district heating network and the consequent pumping costs is a complicated matter, which should be carried out by consulting engineers, specialized in this field. In the following considerations on the Total Cost of Ownership in connection with different choices of pre-insulated district heating systems, it is a pre-condition that the hydraulic dimensioning is optimized and has been determined. That is, the service pipe dimension will be the same in all comparable systems.
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