Technical, economic, and regulatory analysis of the implementation of micro-cogeneration technology in the Brazilian manufacturing sector

Small-scale distributed power generation offers environmental benefits through the improvement of global energy efficiency, in addition to increasing the reliability of the power supply. In this study, the technical and economic viability of the implementation of micro-cogeneration technology in the manufacturing sector was studied in light of the Brazilian regulatory situation. The thermal efficiency potential for the manufacturing sector is introduced for further exploration by decision-makers. This study also investigated the behavior of micro-cogeneration in distributed generation through the Brazilian Energy Compensation System. The technical viability was studied by simulating a Brayton cycle with the operation parameters of a 100 kW micro-turbine. This simulation allowed an estimation of the avoided cost of natural gas compared to an industrial process without cogeneration. Rate projections were performed by linear regression during the system’s depreciation period. The economic evaluation was performed using the following indicators: net present value (NPV), internal rate of return (IRR), and discounted payback. Finally, a sensitivity study was performed to project how the micro-cogeneration efficiency and the Brazilian regulations can address future variations of natural gas and electricity rates. Given the conditions of this study, the increase in energy prices favors micro-cogeneration; however, the economic viability is affected if the system operates below 70% of heat use in industrial processes, which reduces the effect of public policies toward the incentive to cogenerate.