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Economic buy-back rates for electricity from cogeneration: Case of sugar industry in Vietnam

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  • Bhattacharyya, Subhes C
  • Quoc Thang, Dang Ngoc

Abstract

Cogeneration of heat and power could be an attractive option for meeting electricity demand in Vietnam, which is facing acute shortage in generation capacity due to high demand growth spurred by rapid economic growth of the country. The sugar industry has significant potential for cogeneration. This paper focuses on the cogeneration potential of the sugar industry and estimates, based on avoided cost, the economic rate at which excess power could be sold to the utility. We found that cogeneration would be a financially viable option for medium and large size sugar plants. Time-of-day rates would be the most suitable form of buy-back rate and the IRR ranges between 12% and 15% in this case. The sensitivity analysis indicates that cogeneration plants would be vulnerable to changes in buy-back rates and investment costs. The internal rate of return is more sensitive to changes in buy-back rates than those in investment costs. Medium and large sized plants would be in a better position to withstand such changes in the business environment.

Suggested Citation

  • 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.
    • Handle: RePEc:eee:energy:v:29:y:2004:i:7:p:1039-1051
    DOI: 10.1016/j.energy.2003.04.001
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    Cited by:

    1. Compernolle, Tine & Witters, Nele & Van Passel, Steven & Thewys, Theo, 2011. "Analyzing a self-managed CHP system for greenhouse cultivation as a profitable way to reduce CO2-emissions," Energy, Elsevier, vol. 36(4), pages 1940-1947.
    2. 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.
    3. Arshad, Muhammad & Ahmed, Sibtain, 2016. "Cogeneration through bagasse: A renewable strategy to meet the future energy needs," Renewable and Sustainable Energy Reviews, Elsevier, vol. 54(C), pages 732-737.
    4. Lizarraga-Garcia, Enrique & Ghobeity, Amin & Totten, Mark & Mitsos, Alexander, 2013. "Optimal operation of a solar-thermal power plant with energy storage and electricity buy-back from grid," Energy, Elsevier, vol. 51(C), pages 61-70.
    5. Badami, M. & Camillieri, F. & Portoraro, A. & Vigliani, E., 2014. "Energetic and economic assessment of cogeneration plants: A comparative design and experimental condition study," Energy, Elsevier, vol. 71(C), pages 255-262.

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