Thermotechnique et thermonergtique

THERMOECONOMIC OPTIMIZATION OF ENERGETIC

SYSTEMS BASED ON THE MARGINAL COST CONCEPT
ALEXANDRU DOBROVICESCU,
1
DORIN STANCIU,
1
TUDOR PRISECARU,
1

MLINA PRISECARU,
1
CAMELIA PETRE,
1
GEORGIANA TRC-DRAGOMIRESCU
1

Key words: Exergetic analysis, Thermoeconomics, Optimization, Marginal cost.
The target of the paper is to bring an argument on behalf of the use of exergy in the
analysis of the operating and optimization of complex energetic systems. For a system
with more than one product, the proper cost assessment for each one of them requires,
besides the global economic balance, some supplementary assumptions. The exergetic
equivalence succeeds in giving the true value of utilization for different types of energy
products; the cost assessment based on exergetic analysis is close to reality. For a single
product system the optimization procedure based on the first law of thermodynamics
only, implies complicated calculus. The use of the marginal cost concept in the
optimization analysis based on Lagranges multipliers gives the direction to follow for
the optimum solution field search.
1. INTRODUCTION
The union between the thermodynamics of irreversible processes and
economics, known as exergoeconomics, currently represents the most important
instrument for analyzing and optimizing complex energy systems [1, 2]. Also, the
optimal power flow method may be used for the operating costs minimization of
exergy consumer networks [3]. Nevertheless exergoeconomics is the only method
that points out the correlation between the cost of the useful energy destruction and
the capital investment cost leading to the estimation of the minimum total cost
given by the sum between the operating and investment cost.
2. OPERATING COST ASSESSING
Fig. 1 shows a cogeneration system producing work (electricity) and heat
(thermal energy), represented by a steam turbine plant with backpressure.

1
University Politehnica of Bucharest, adobrovicescu@yahoo.com

Rev. Roum. Sci. Techn. lectrotechn. et nerg., 56, 3, p. 336346, Bucarest, 2011
2 Alexandru Dobrovicescu et al. 337



a b
Fig. 1 Cogeneration steam turbine system: a flow diagram; b T-s diagram.

The question that arises is to find out the proper cost of each one of the two
products. For simplicity only the operating cost is considered.

F W Q
C C C = +

. (1)
Equation (1) containes two variables the cost of the mechanical
power
W
C

and the cost of the heat flow

Q
C

suplied to the costumer.

To specify the numerical values of the two variables a second condition is
required.
2.1. ENERGETIC EQUIVALENCE
Taking into account only the First Law of Thermodynamics one can consider
the mechanical work (electricity) and heat as equivalent.
The unitary energy cost of each one of the two products becomes:
eur
s
MJ energy
s
F
e
C
c
Q W
(
(

=
(
+
(

eur
MJ energy
(
(

, (2)
and therefore

e
W e
C c W =


eur
s
(
(

and
e
Q e
C c Q =


eur
s
(
(

. (3)
338 Thermoeconomic optimization through marginal cost concept 3

2.2. EXERGETIC EQUIVALENCE
Keenan (1932) [4] is considered to be the first who proposed the use of
thermodynamic equivalence (based on both the First and Second Law of
Thermodynamics, called later exergetic equivalence).
Whithin the thermodynamic (exergetic) equivalence conditions the exergetic
unitary cost of each one of the two products becomes:
eur
s
MJ exergy
s
F
ex
Q
C
c
Ex W
(
(

=
(
+
(

eur
MJ exergy
(
(

. (4)
The costs of the two products are calculated as follows:
ex
W ex
C c W =

and
0
1
ex
Q ex
T
C c Q
T
| |
=
|
\ .


eur
.
s
(
(

(5)
2.3. CASE STUDY
The case of the cogeneration steam turbine system, analysed above, is
considered to evaluate the consequences of using the energetic or exergetic
equivalence. The characteristics of the system are: p
1
= 100 bar,
1
t = 500
o
C,
st
0.8 = ,
gen
0.9 = . The variation of the exergetic and energetic unitary costs
function of the the condensation temperature (pressure) are shown in Fig. 2.



Fig. 2 Variation of the energy and exergy costs function of the condensation temperature.
4 Alexandru Dobrovicescu et al. 339


Fig. 2 shows that when using the energetic equivalence the unitary cost
e
c of
the energy produced is constant and it is not influenced by the temperature level at
which heat is provided.
The equation of energy balance for the global system gives:

gen f
Q Q W = +

, (6)
and when written on economic bases
gen gen
( )
f f f f
c Q C c Q W = = +

. (7)
Equation (7) gives:

f f
e
gen
C c
c
Q W
= =
+

eur
MJ energy
(
(

. (8)
Relationship (8) shows clearly that when the costs of different products of the
same system are attributed based on the energetic equivalence (First Law of
Thermodynamics) the temperature level (quality) at which heat is supplied and the
turbine isentropic efficiency are ignored. The energetic cost accounts only for
external energy losses in this case the energetic efficiency of the steam generator.
For the cogeneration system shown in Fig. 1, relationship (4) that gives the
unitary exergetic cost becomes:
ex
0 2 3
gen
1 3
1
( ) ( )
1
( )
f
st
c
c
T h h T
T h h T
=

eur
MJ exergy
(
(

. (9)
The exergetic unitary cost depends not only on the external losses of the
steam generator
( )
gen
but also, directly, and implicitly on the temperature level
T of the heat source supplied to the customer and on the internal exergy destruction
in the turbine.
This analysis shows clearly that in the case of a system with several products,
only the exergetic equivalence manages to bring at the same denominator different
types of energy accounting not only for their quantity but also for their quality in
correlation with the intensive parametes of their physical environment [57].
The example of the steam turbine system cogenerating mechanical energy
and heat has maybe convinced us to become supporters of the exergetic analysis
applied to systems with multiple products. But things are much more complex than
they appear at first sight.
340 Thermoeconomic optimization through marginal cost concept 5

3. THERMOECONOMIC OPTIMIZATION OF A GAS TURBINE SYSTEM
3.1. THERMOECONOMIC MODEL OF GAS TURBINE SYSTEM
The case of a simple gas turbine plant (Fig. 3) whose only product is
mechanical energy is considered.
The investor specifies the effective mechanical power
e
W

(the product) and

indicates the location of the system, thus providing information about the
parameters of physical and economical environment. In these conditions the
imposed parameters of the system are:
{ } { }
1 1
, , , , ,
fix e p
x p T W R c =

.
The remaining parameters can be divided into two categories: independent
(decisional) parameters and dependent ones.
Denoting with
i
x the decisional parameters and with
k
y those of state
(dependent), they become:
{ } { }
3
, , , ,
i sc cc st
x p m = and { } { }
cb
Q T p
t
W
cp
W T p
k
y

,
3
,
4
, , ,
2
,
2
= .


Fig. 3 Gas turbine system.

The optimal solution is obtained by minimizing the objective function that
expresses the annual cost given by the sum between the amortization rate of the
investment cost and the operating (fuel) cost.
( )
Min
cp cc t f f
C Z Z Z c Q = + + +


eur
s
(
(

. (10)
The annual amortization cost
( )
, ,
;
j i j k j
Z x y

of each piece of equipment is

expressed function of the local (j) decisional and state parameters [8].
6 Alexandru Dobrovicescu et al. 341


The thermodynamic model of the system is based on energy balance
equations and relations for calculating the state parameters. For example, for the
compressor the relationships for calculating the dependent parameters are:

3
2 1 3
( , )
cc
cc
p
p g p = =

, (11)
1
2
2 1 2 1 1 2
1
1
1 1 ( , , , )
k
k
sc
sc
p
T T g T p p
p

(
| |

(
= + =
` |
(

\ .

(

)
, (12)

2 1 3 1 2
( ) ( , , )
cp p
W m c T T g T m T = =

. (13)
The economic model is given by the economic correlations for calculating
the purchase cost of each piece of equipment to which the fuel cost is added [5, 9].
3.2. THERMOECONOMIC OPTIMIZATION OF THE GAS TURBINE SYSTEM
The optimum solution from the design and operating point of view is given
by the minimization of the total (capital investment and operating) cost under
specific constraints

1 1
Min ( ,... ,... , ,... ,... )
i n k m
C x x x y y y

, (14)
in the restrictive conditions
0 ) ,...
1
,
1
,...
1
, ,... ,...
1
( =
+
=
k
y
m
y
k
y
k
y y
n
x
i
x x
k
g
k
. (15)
The Lagrange function [9] attached to the mathematical model becomes:

=
+ =
m
k
k k
C L
1

(16)
and the conditions for extreme are given by the system :
0
1
=
=


+

m
k
i
x
k
k
i
x
C
i
x
L

, (i=1, , n) (17a)
0
1
=
=


+

m
k
k
y
k
k
k
y
C
k
y
L

, (k = 1, , m) (17b)
342 Thermoeconomic optimization through marginal cost concept 7

k
y
m
x
k
y
k
y y
n
x
i
x x
k
g
k
k
L

+
= =

) ...,
, 1
,
1
,...,
1
, ,... ,...,
1
( , (k = 1,, m). (17c)
Actually solving the system is extremely difficult. The success of the
mathematical procedure depends on finding a viable initial operating and design
point, close to optimum.
To simplify the calculation procedure one observes that according to
equations of type (1113), the value of the Lagrangian L and of the objective
functionC

are the same. Under these conditions the vector of the derivatives in the
space of decision variables ( )
i
x :

m
i
k
k
i i
x x
C
x
L
1

, show the sensitivity of

the objective function C

when the decision variable changes. These derivatives are

denoted by
i
CM and play the role of marginal costs [10, 11].
i
x
L
i
CM

=

(i = 1n). (18)
The thermoeconomic optimization strategy consists in breaking down the
problem and solving successively and in the order the three groups of equations
defined by system (17).
In the first stage the initial solution for the n independent variables of
decision (vector
i
x ) is estimated and the dependent variables (the state variables)
k
y (i = 1 m) and the values of Lagranges multipliers (
k
) are determined.
Finally, the partial derivatives of the Lagrangian
i
x L are calculated with
respect to the independent decision variables. The set of values of marginal costs
indicate the sense in which the size of decision variables should be changed to
reach an optimal solution.
3.3. CASE STUDY
A simple gas turbine system whose functional scheme is shown in Fig. 5 is
considered. The characteristics of the system are
e
W

= 65 MW,
1 0
1.013 bar p p = = ,
1 0
300 T T K = = ,
5
10 bar p = ,
5
300 K T = ,
| |
6
8.4 10 eur/kJ
f
c

= . The fuel is
CH
4
.
The annual amortization cost of each piece of equipment, which includes
operating cost, maintenance and taxes was considered to be 50% higher than
purchase cost [5].
The number of annual working hours for the system is considered to be: N =
= 8 000 hours/year.
8 Alexandru Dobrovicescu et al. 343


In the optimization procedure based on the Lagranges multipliers method
and the concept of marginal cost, as starting point, the following set of decision
variables (estimated) was considered:
est
3
{ 0.8; 0.95; 0.87; 10 bar; 400 kg/s}
i sc cc st
x p m = = = = = = .
Marginal cost values and the sense they indicate in order to change the size of
a decision parameter in the search procedure for reaching the optimal solution are
presented in Table 1.
Table 1
Marginal costs for the gas turbine system for the decision variables set:
kg/s 400 ; 10 ; 87 . 0 ; 95 . 0 ; 8 . 0
3
= = = = = m p
st cc sc

) (
1 sc
CM
eur
s
(
(


) (
2 cc
CM
eur
s
(
(


) (
3 st
CM
eur
s
(
(


)
3
(
4
p CM
eur
s bar
(
(

) (
5
m CM
eur
kg
(
(


1.191
) (
sc

1.093
(
cc
)
3.54
(
st
)
0.03406 (
3
p )
0.00358
( m )
The cost of the product of the global system is: C

= 2.785 eur/s.
Negative values of the marginal costs indicate a need to increase the
corresponding decision parameters, and positive values to reduce them.
In the optimization procedure the decision parameters are modified following
indications given by the marginal cost. The results of the first iterations are given
in Table 2.
Table 2
Iteration 1 Marginal costs of the gas turbine system for the decision variables set:
kg/s 270 ; bar 8 ; 856 . 0 ; 97 . 0 ; 778 . 0
3
= = = = = m p
st cc sc

) (
1 sc
CM
eur
s
(
(


) (
2 cc
CM
eur
s
(
(


) (
3 st
CM
eur
s
(
(


)
3
(
4
p CM
eur
s bar
(
(

) (
5
m CM
eur
kg
(
(


1.943
( )
sc

0.04564
(
cc
)
2.705
(
st
)
0.02031
(
3
p )
0.000013
( m )
The cost of the product of the global system is: C

= 2.33 eur/s.
A marginal price gives the tangent at the L-x graph.
344 Thermoeconomic optimization through marginal cost concept 9

After two iterations the values of the marginal prices approach zero leading
to the conclusion that the optimum solution is practically reached for
819 . 0 =
sc
kg/s 247 ; bar 61 . 8 ; 87 . 0 ; 97 . 0 ;
3
= = = = m p
st cc
. The minimum
cost of the product of the global system is: C

= 2.281 eur/s.
4. CONCLUSIONS
For a system with several products of different energetical nature, using only
the energy balance in the procedure of finding the cost of each product can lead to
totally erroneous results.
The exergetic analysis finds the real cost to each product pointing out the
internal inefficiency of the system.
For systems with a single product, the optimal operating and design solution,
at least theoretically, can be obtained without recourse to the Second Law of
Thermodynamics and the concept of exergy. In this last case the optimization
procedure of the overall system leads to slow calculations, making use of many
simplifying analysis.
The use of the concept of marginal cost in the optimization procedure based
on the Lagranges multipliers method makes possible to indicate the sense the
decision parameters should be modified in the search for the optimum solution.

NOMENCLATURE
C cost [eur]
c unitary cost [eur/(kJ energy /
exergy)]
C

cost per time unit [eur/s]

Cc combustion chamber
Cp compressor
p
c specific heat [kJ/(kg K)]
CM marginal cost
Ex

exergy current [kJ/s]

F fuel
G steam generator
g mathematical function
(eqs. 1113)
h specific enthalpy [kJ/kg]
HE heat exchanger
k adiabatic exponent
L Lagrangian
m mass flow rate [kg/s]
p pressure [N/m
2
]
R particular gas constant
[kJ/(kg K)]
Q

heat flux [kW]

T temperature [K], turbine
x decision parameter
y state parameter
Z

capital amortization rate

[eur/s]
W

mechanical power [kW]

Indice
cc combustion chamber
cp compressor
ex exergetic
f fuel
0 ambient parameters
10 Alexandru Dobrovicescu et al. 345


Q heat
t turbine
Superscript
e energetical
est estimated
ex exergetic
Greek letters
restrictive condition
gen
energy efficiency of steam
generator
sc
isentropic compressor efficiency
st
isentropic turbine efficiency
Lagrange multiplier, unit cost
cc

3 2
p p =
N operation time (hours/year)


AKNOWLEDGEMENTS
This work was supported by CNCSIS-UEFISCU, project number PNII-IDEI-
1719/2009.
Received on 31 August 2010
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