World Business Year - Investment Opportunities in Small Scale Power Generation

Technical and economic benefits of distributed generation for the Ministry of Energy of Iran are obvious. Therefore, in order to decentralization of power generating units, improve network reliability and increase efficiency, "Development of distributed generation project" is planned. The policy of the project to increase power generation in distribution network is incentives facilities offering to private sector. In this paper, the Ministry of Energy incentive policies are followed.
Among the various technologies of distributed generation, due to higher generation and reduce gas consumption, combined heat and power (CHP) have more appropriate economic indicators and the willingness of the private sector to invest in this project is more.
Therefore, we present an overview of the investment opportunities, government incentives and expressing examples of combined heat and power(CHP) projects, to inform investors and to achieve purposes mentioned in this plan.

Description of investment and government incentive policies
Investment overview:
Installation Combined heat and power generation (internal combustion engines, generators and heat recovery facilities).

         Components of investment cost
   installation initial cost
   maintenance costs
   Personnel / oil filter / lost revenue due to generation interruption

Government incentive policies

The advantage of investment and economic indicators
Most important advantages of investing in energy generation are Government support in providing free gas and guaranteed power purchase. The following components of income and investment cost of CHP generators have been described.
Incomes:
Sale of electricity to the grid (or sale to domestic consumption)
Depending on the efficiency between 2.57 to 3.14 cent/kWh, Electric power generators purchased and the guaranteed purchase contract will be signed to 5 years. The invoice paid by Ministry of energy in less than 15 days.
Gross income for 1 MW generator: 20,000 US$/month.

Use of generator heat in production or in reduction fuel consumption:
The use of generator heat utilizes based on potential region. Usually the heat generators used in the following processes:
   Production of carbon dioxide from the generator smoke (200 kg/hour for 1 MW generator-price 114.28 US$/ton)
   Production of distilled water
   Cold production in absorption chiller and injection into the fridge (300 ton of refrigeration per 1 MW generator)
   Heat and carbon dioxide production and injected into greenhouses to accelerate growth.
   Hot water production for swimming pools and domestic consumption (70 cubic meters/hour per 1 MW generator)

Sale Emission Right:
According to the efficiency cogeneration generator, yearly 3000 tons of greenhouse gas emissions can be avoided per 1 MW installed capacity. According to Kyoto Protocol, the project as a friendly environment project registered, and based on Emission Right price in the global market (average price was 2 US$ in 2014, and Predicted be 5 to 10 US$ in 2015),is profitable up to 10 years.

Costs:
Initial costs:
   Generator and grid connection equipment: 600,000 US$/MW (Stock generator: 314,000 US$/MW and Used generator with guarantee: 200,000 $/MW)
+The costs of heat recovery equipment+ Recovery of costs of land acquisition/ lease +the project registration fee as environmentally-friendly.
Monthly costs:
   Fuel cost: 5,000 US$/MW (This cost is monthly statement and paid by TAVANIR, See the attached documentation)
   Oil and filter cost: 1,400 US$/MW
   Personnel costs (for the whole site): 3,000 US$ (This is not a separate cost for industrial sites)
Estimation of costs and revenues of the CHP system for each project according to characteristics and potential of the site is a free service of Distribution Generation Development Center.

Silencer units (reduction of noise up to 60 dB – equivalent to a car)

Summary table of costs and benefits of 1 MW generator installation:

Initial costs   Revenues
New generator   Stock generator   Used generator with 6-month guarantee   Power generation   Using of heat
600,000 US$   314,000 US$   200,000 US$   20,000 US$/month   Depending on the application of unit is variable
   Electric power generation revenue can be increased 50% by selling energy to commercial customers.
   With the increase in electricity tariffs in 1394, revenue will increase.

   period of return on investment (Month)
   With using heat of Generator   Without using heat of Generator
Using the new equipment   20   32
Using the Stock equipment   10   15
Using the Used equipment   6   10

For a Used 1 MW generator:

Investment Process

Conclusion and call for consultation
Niroo Research Institute to facilitate investment in the development of CHP generators provides all services to small-scale plants investors with the aim of increasing penetration of combined heat and power generators, increasing efficiency and peak shaving of the Network.
   Issuance Agreement, construction and operation permit, obtaining permits and certificates, contract of guaranteed electric power purchasing.
   Coordinate the activity of attract participation units in regional electric companies and electrical distribution companies.
   Condition assessment tests, performance testing and Maintenance Planning.
Free consultation services to investors in great Tehran:
   Feasibility consultation, technical-economic evaluation of projects, investment consulting.
   Finding the optimal place for generator installation and heat recovery.
   Introduction of qualified consultants and contractors to design and implementation of CHP units.