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