Is a Waste Heat Recovery Project Worth Doing? Methodology for Economic Benefit Evaluation
In the field of industrial energy conservation, investment decisions for waste-heat recovery projects require a quantitative economic evaluation system. A scientific evaluation must consider not only technical feasibility but also a clear economic account—how many years to recover the investment? How much can be saved over the project's full life cycle?
I. Composition of Investment Cost
| Cost Item | Reference Share | Description |
|---|---|---|
| Heat exchanger main unit | 35%~50% | Estimated by heat transfer area; plate exchanger approx. ￥600~1200/㎡ |
| Auxiliary equipment | 15%~25% | Water pumps, fans, control systems, valves and piping |
| Civil works and installation | 15%~20% | Foundations, piping modifications, insulation, electrical |
| Design and commissioning | 5%~10% | Engineering design, control system programming, commissioning |
| Contingency | 5%~10% | Construction changes, price fluctuations, force majeure |
Quick estimation formula:
Total investment ≈ heat exchanger main unit cost × 1.8 ~ 2.2
II. Annual Benefit Calculation
The annual benefit mainly consists of energy-saving savings:
Annual benefit = Annual recovered heat × Energy unit price ÷ Boiler efficiency
where: Annual recovered heat (GJ) = Recovered power (kW) × Annual operating hours × 3.6 / 1000
Calculation example: A factory's flue gas waste-heat recovery power is 500 kW, operating 8,000 hours per year, with natural gas priced at 3.0 yuan/Nm³ (calorific value 35 MJ/Nm³) and boiler efficiency 90%:
① Annual recovered heat = 500 × 8000 × 3.6 = 14,400 GJ
② Equivalent natural gas volume = 14,400,000 MJ ÷ 35 MJ/Nm³ = 411,429 Nm³
③ Annual energy-saving benefit = 411,429 × 3.0 ÷ 0.9 ≈ RMB 1.37 million/year
III. Core Investment Decision Indicators
1. Static Payback Period
PP = Total investment ÷ Annual net benefit
If the total investment is RMB 0.8 million and the annual benefit is RMB 1.37 million, PP = 0.8 ÷ 1.37 ≈ 0.58 years. General acceptance criteria: PP < 3 years (excellent: <1 year; good: 1~2 years; acceptable: 2~3 years).
2. Internal Rate of Return (IRR)
With equipment life calculated at 10 years, annual benefit of 1.37 million, and total investment of 0.8 million, IRR ≈ 170%. The usual requirement is IRR > 15%; waste-heat recovery projects typically achieve IRR between 25% and 200%, indicating excellent economics.
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