## Analysis of Energy Cost Savings by Substituting HFO with Biomass for a Pozzolana Dryer A Case Study of Bamburi Cement, Athi River

##### Abstract

Pozzolana drying increases the energy per tonne of cement produced. This is due to the energy
required to reduce the moisture content to about two to three percent. This energy is obtained from
heavy fuel oil. High and fluctuating cost of heavy fuel oil calls for a solution which has been sought
through substitution of heavy fuel oil with biomass. This project investigates how much savings
are gained by the substitution and what percentage substitution is economically viable. This
research was guided by three objectives, namely: studying the existing system and establishing the
energy situation of the existing dryer and the auxiliary system to handle biomass, comparing a
projected substitution scenario with actual substitution and carrying out the economic analysis of
the new system in order decide on the viability of the project. From the research findings of the
projected substitution cost, the total energy cost was reducing with increase in percentage AF
substitution and HFO cost was also was reducing with an increase in percentage AF substitution.
Again AF cost was increasing with increase in percentage AF substitution and cost savings were
increasing with increase in percentage AF substitution. The coefficient of correlation (R2) of total
energy cost, cost of HFO, and cost of AF and savings with a percentage of AF substitution was 1.
These graphs were straight line graphs because the forecast was ideal. However, from real
substitution carried out, the total energy cost and HFO cost were reducing with an increase in
percentage AF substitution. Again AF cost and savings were increasing with increase in percentage
AF substitution. The coefficient of correlation (R2) of total energy cost, HFO cost, AF cost and
savings with the percentage AF substitution were 0.5422, 0.7096, 0.9645 and 0.6288 respectively.
These graphs were not smooth graphs because the forecast was real and affected by clogging of
the drier by rice husks. From the economic analysis the cost benefit analysis a positive net present
value of 67,409,040.84 was realized which was an indicator that the substitution was worthwhile.
The IRR was calculated to be 4.10 %. Again the simple payback period was 12 days and return on
investment was 29.72%. Using these four techniques of capital budgeting, i.e. NPV, IRR, the
simple payback period and ROI the investment was worthwhile to undertake. Further on economic
analysis substitution effect and substitution equilibria was carried out., On the substitution effect,
there was gradual cost drop of the energy used to dry pozzolana from 357491491.33 Kenya
shillings with increasing percentage AF substituted to 106,269975.03 Kenya shillings when HFO
is completely substituted by AF. Again two points of equilibrium were discovered. Equilibrium 1
was the point where the total energy cost was equal to AF cost. This was realized at 100% where
the total energy was derived from the AF. Equilibrium 2 was the point where the HFO cost was
equal to AF cost. This was at 77%. The savings curve also cuts the curve of HFO cost and total
cost at 58% and 70% respectively. This is because of the low cost AF used. Although the cost of
energy and total cost of HFO reduced with an increase in percentage substitution while savings
increase with increase in percentage substitution further research is required to investigate other
economic dynamics that may affect the substitution such as, AF fuel availability and efficiency of
the system.

#####
**Publisher**

University of Nairobi