To Ministry of Economy, Trade and Industry, Japan

Feasibility study of JCM project for energy saving

technologies for iron and steel industry in
Thailand

Abstract

March 2015

Deloitte Tohmatsu Consulting Co., Ltd.

Nippon Steel & Sumikin Research Institute Corporation

Table of contents
1

Overview of F/S ................................................................................................................................... 1

Overview results of the study............................................................................................................ 3

2.1

Selection of candidate technologies ......................................................................................... 3

2.2

EAF Shell Revamping for Energy Saving Type ........................................................................ 4

2.3

Regenerative Burner for Ladle Preheater ................................................................................. 6

2.4

Upgraded Recuperator for Reheating Furnace ........................................................................ 8

2.5

Absorption Type Chiller Using Waste Heat ............................................................................ 10

2.6

MRV methodologies for each technology............................................................................... 12

2.7

Estimation of CO2 emission reductions using MRV methodology ...................................... 24

2.8

Feasibility of technologies introduction ................................................................................. 24

2.9

Issues for establishment of JCM ............................................................................................. 25

2.10

Step forward ............................................................................................................................... 25

F/S result report to stakeholders in Thailand ................................................................................ 27

Overview of F/S
(Objective of the study)
In order to effectively address the issue of climate change, Government of Japan
intends to achieve low-carbon growth all around the world by fully mobilizing
technology, markets and finance which leads to mitigation of Greenhouse Gas (GHG)
emission. Government of Japan addresses the utility of advanced low-carbon
technologies and products in various fields as well as a scheme of Joint Crediting
Mechanism (JCM) to candidate countries to build partnership under the scheme and
promotes to increase the number of partner counties.
On the other hand, Thailand, which is a target country of this feasibility study
(F/S), has been participating actively to worldwide activities to mitigate GHG
emissions since it signed to United Nations Framework Convention on Climate
Change (UNFCCC) in June 1992. Government of Thailand has not yet signed on
bilateral agreement for JCM, but they recently have shown proactive attitude for the
cooperation, and further progress is expected. It is also assumed that steel
consumption would be increasing in a mid to long term in Thailand, and mitigation
actions toward iron and steel industry, which is generally recognized as energy
consuming industry, would play a major role for the country to achieve their target
on GHG emission reductions.
Considering current status and future prospect of these governments, the plan for
actual introduction of specific energy saving technologies has been developed in the
field of iron and steel industry whose energy saving potential is said to be high. The
study was conducted in order to assess feasibility of introduction of the technologies
under the JCM scheme and to come up with recommendations for the future JCM
projects between Thailand and Japan.

(Overview of the study)

The focus has been given to iron and steel industry in this F/S, where it is said
that energy saving potential is particularly high. Detailed contents of this F/S are
shown below;
Table 1: Overview of the study
1. Project Title
2. Country
3. Field
4. Project
member
5.Project period
6. Contents of
the study

7. Technology

Feasibility study of JCM project for energy saving technologies for iron and
steel industry in Thailand
Thailand
Energy Saving Technology for Iron and Steel Industry
Deloitte Tohmatsu Consulting Co., Ltd. (DTC)
Nippon Steel & Sumikin Research Institute Corporation (NSRI)
This F/S was conducted from September 2014 to March 2015.
a. Proposal of energy saving technology introduction plan
Business plan under the JCM was proposed to the target steel plant as the
result of F/S;
Selection of energy saving technologies by conducting steel plant
diagnosis
Examination of detailed technologies specs
Estimation of energy saving effects and CO2 reduction effects
Rough estimation of initial and maintenance cost and payback period
Drafting of JCM Monitoring, Report and Verification (MRV)
methodology
b. Recommendations for the future JCM scheme for government of Thailand
Issues were identified, and recommendations for the solution were reported
to public stakeholders of Thailand;
Estimated effects of energy saving and CO2 reductions at national level
Drafting of MRV methodology which is adoptable after signing of
bilateral agreement
Examination of regulatory issues when executing business plan under
the JCM framework
Design of business execution plan for energy saving technology
introductions into a target steel plant under the JCM framework
Feasibility study was conducted for four candidate technologies as below;
1. EAF Shell Revamping for Energy Saving Type
2. Regenerative Burner for Ladle Preheater
3. Upgraded Recuperator for Reheating Furnace
4. Absorption Type Chiller Using Waste Heat

Overview results of the study

2
2.1

Selection of candidate technologies

Issues below were recognized at a target steel plant with results of the diagnosis

in this F/S.

(Electric Arc Furnace)

High electricity intensity comparing to similar type in the industry (600 kWh)
Gap between rid and EAF
Inefficient tapping
Inefficient scrap charging
Too high tapping temperature (approx. 1,700 deg C)
Inefficient use of logged data
High electrode consumption intensity (4.5 kg/ton-steel)
(Reheating Furnace)
Low temperature of preheated air (approx. 300 deg C)
Inefficient coordination of air ratio
High temperature of flue gas from exit side of recuperator (approx. 560 deg C)

Discussing possible energy saving technologies to be introduced with the plant,

following four technologies were selected as candidate technologies.

1.
2.
3.
4.

EAF Shell Revamping for Energy Saving Type

Regenerative Burner for Ladle Preheater
Upgraded Recuperator for Reheating Furnace
Absorption Type Chiller Using Waste Heat

2.2

EAF Shell Revamping for Energy Saving Type

2.2.1 Overview of technology

Revamping electric arc furnace to have a tapping hole at the bottom of the furnace,
it enables to tap molten steel from a bottom of the furnace, called eccentric bottom
tapping (EBT). EBT leads to slag-free tapping as well as shorter tap-to-tap times. It
also reduces refractory and electrode consumption, and improves efficiency to melt
scrap with hot heel, which is a remained molten steel inside the furnace. In addition
to EBT, sealing rid of the furnace prevents infiltration and brings about efficiency of
scrap heating. Moreover, deepening the furnace captures the amount of hot heel, and
it leads to efficiency of scrap melting.
2.2.2 Effects of technology introduction
Generally, energy saving effects by EAF revamping are complex so that it is
impossible to calculate its effect separately for each modification. Therefore, its
integral effect was estimated as 16 % reduction of electricity (100 kWh/t reduction
from current status of electricity intensity of 600 kWh/t) based on comments and
experiences of experts who conducted the diagnosis and equipment manufacturer.
Annual energy saving effect and economic effect were also calculated as follows.
Annual energy saving effect = Reduced electricity intensity by revamping *
Annual crude steel production
100 kWh/t * 200,000 t/y = 20,000,000 kWh/y
Annual economic effect = Annual energy saving effect * Price of electricity from
grid * Exchange rate
20,000,000 kWh/y * 3.42 THB/kWh
= 68,400,000 THB/y * 3.62 JPY/THB
= 248,000,000 JPY/y
2.2.3 Proposed introduction plan and profitability
EAF revamping would take 10 months for engineering, procurement and
transportation and 4 months for construction after making a contract with
equipment manufacturer. Operation of each furnace might be shut down for 4
months of construction period. However, it is difficult to conclude since engineering
scope is not sure. Assumed initial cost to revamp is 545,000,000 (JPY) based on
estimation by the manufacturer and adjusted construction costs in Thailand.

Simple payback period of the initial cost was calculated as follows. See Annex.1
Calculation of payback period for formula.
Simple payback period = Total initial cost / Annual economic effect
= 545,000,000 JPY / 247,608,000 JPY = 2.2 years

Table 2: Analysis on payback period for EAF Revamping for Energy Saving Type

EAF Revamping for Energy Saving Type

Equipment Manufacturer
Item

Nikko Industry
Unit

Value

Initial cost

JPY

545,000,000

Annual electricity saving

kWh

20,000,000

Annual economic effect

JPY

247,608,000

tCO2

10,226

JPY

10,226,000

Simple payback period

Year

2.2

Discounted payback period

Year

2.5

Year

2.6

Year

2.6

Annual GHG emission reductions

Annual economic effect from
credits (assumed)

(@7.5%)
Discounted payback period
(@8.75%)
Discounted payback period (@10%)

2.3

Regenerative Burner for Ladle Preheater

2.3.1 Overview of the technology

Regenerative burner is a burner system which has two individual burners absorb
exhaust gas heat to reservoir and preheat combustion air by regenerator to improve
energy efficiency. Two burners switch roles as absorber and preheater mutually.
Preheated air is designated to be heated up through reservoir, and it leads to
efficient air preheating. The burner is introduced to ladle preheater in order to save
fuel consumption with efficient air preheating in this F/S.
2.3.2 Effects of technology introduction
Energy saving effects of regenerative burner for ladle preheater varies along with
a number of charging melted steel to ladle. In concrete, energy saving effect of the
burner slightly drops from the second time of charging to ladle comparing to the first
time. It is presumed that ladle is replaced after 20th charge in this study, and
assumed a ratio of energy saving effect between the first charge (a new ladle) and
charges from the second to 20th (circulated ladle) is 1 : 19, and calculated weighted
energy saving effect as follows.
Energy saving effect of regenerative burner for ladle preheater
0.44 * (1/20) + 0.42 * (19/20) = 0.421 = 42.1 %
Annual energy saving effect and economic effect were also calculated as follows.
Annual energy saving effect = Fuel intensity of existing ladle preheater * Energy
saving effect * Annual crude steel production

5.93 L/t * 42.1 % * 200,000 t/y = 499,306 L/y

Annual economic effect = Annual energy saving effect * Price of diesel * Exchange
rate

499,306 L/y * 15.45 THB/L

7,714,278 THB/y * 3.62 JPY/THB
27,925,685 JPY/y

2.3.3 Proposed introduction plan and profitability

Introduction of regenerative burner to ladle preheater would take 7 months for
engineering, procurement and transportation and 1.5 months for construction and
testing after making a contract with equipment manufacturer. It is possible to keep

50 % of production capacity if the construction is conducted to ladle preheater one by

one. Assumed initial cost of the introduction is 127,320,000 (JPY) based on
estimation by the manufacturer and adjusted construction costs in Thailand.
Simple payback period of the initial cost was calculated as follows. See Annex.1
Calculation of payback period for formula.
Simple payback period = Total initial cost / Annual economic effect
= 127,320,000 JPY / 27,925,685 JPY = 4.6 years

Table 3: Analysis on payback period for Regenerative burner for ladle preheater
Regenerative burner for ladle preheater
Equipment Manufacturer
Item

Chugai Ro
Unit

Initial cost

Value

JPY

127,320,000

499,306

JPY

27,925,685

tCO2

1,320

JPY

1,320,000

Simple payback period

Year

4.6

Discounted payback period

Year

5.8

Year

6.1

Year

6.4

Annual fuel saving

Annual economic effect
Annual GHG emission reductions
Annual economic effect from
credits (assumed)

(@7.5%)
Discounted payback period
(@8.75%)
Discounted payback period (@10%)

2.4

Upgraded Recuperator for Reheating Furnace

2.4.1 Overview of the technology

A recuperator is a heat exchanger which absorbs heat from waste gas from
reheating furnace to reservoir and preheats combustion air to improve heating
efficiency of the furnace. It is possible to save fuel consumption at reheating furnace
with a rise of temperature of combustion air from current 400 deg C to 500 deg C
using upgraded recuperator. In concrete, energy efficiency is realized with broadened
heating area with size enlargement and changes horizontal type 2 passes from
concurrent to countercurrent.
2.4.2 Effect of technology introduction
With upgraded recuperator, temperature at exit side of recuperator would be
increased from 380 deg C to 480, which leads to efficient heating of reheating furnace
and fuel saving of 4.6 % reduction.
Annual energy saving effect and economic effect were also calculated as follows.
Annual energy saving effect = Fuel intensity of existing reheating furnace *
Energy saving effect * Annual steel production

35 L/t * 4.6 % * 104,167 t/y = 167,709 L/y

Annual economic effect = Annual energy saving effect * Price of banker oil *
Exchange rate

167,709 L/y * 17.15 THB/L

2,876,209 THB/y * 3.62 JPY/THB
10,411,878 JPY/y

2.4.3 Proposed introduction plan and profitability

Shut down period with previous construction of recuperator to reheating furnace
at the plant was 7 days (7 am to 12 am) in 2011 so that construction period of 10 days
is presumed for proposed introduction plan. Assumed initial cost of the introduction
is 60,000,000 (JPY) based on estimation by the manufacturer and adjusted
construction costs in Thailand.
Simple payback period of the initial cost was calculated as follows. See Annex.1
Calculation of payback period for formula.
Simple payback period = Total initial cost / Annual economic effect

= 60,000,000 JPY / 10,411,878 JPY = 5.8 years

Table 4: Analysis on payback period for Upgraded recuperator for reheating furnace
Upgraded recuperator for reheating furnace
Equipment Manufacturer
Item

Chugai Ro
Unit

Initial cost

Value

JPY

60,000,000

167,709

JPY

10,411,878

tCO2

656

JPY

656,000

Simple payback period

Year

5.8

Discounted payback period

Year

8.0

Year

8.6

Year

9.3

Annual fuel saving

Annual economic effect
Annual GHG emission reductions
Annual economic effect from
credits (assumed)

(@7.5%)
Discounted payback period
(@8.75%)
Discounted payback period (@10%)

2.5

Absorption Type Chiller Using Waste Heat

2.5.1 Overview of the technology

Absorption type chiller has a 2-stage evaporation and absorption cycle with agent
in order to attain chilled air. The chiller proposed in this F/S utilized waste heat
recovered from a furnace and replace recovered energy with necessary energy at air
conditioning system which leads to high efficiency. Flue gas temperature at exit side
of existing recuperator remains high as 530 deg C unless being updated so that the
chiller could recover energy from the gas. However, there is no enough space and flue
gas temperature to introduce upgraded recuperator and the chiller at once, so it is
necessary to select either technology between two.
2.5.2 Effect of technology introduction
It is necessary to subtract electricity consumption of heat recovery blower from
energy recovered from waste heat in order to calculate annual energy saving effect at
air conditioning system. Electricity consumption of heat recovery blower is assumed
as 66kW, and annual energy saving effect at air conditioning system (per hour) is
calculated as follows.
Annual energy saving effect at air conditioning system
300 kWh 66 kWh = 234 kWh
Annual energy saving effect and economic effect were also calculated as follows.
Annual energy saving effect = (Energy recovered from waste heat Electricity
consumption of heat recovery blower) * Annual operating hour of air conditioning
system

(300 kWh - 66 kWh) * 6,300 h = 1,474,200 kWh/y

Annual economic effect = Annual energy saving effect * Price of grid electricity *
Exchange rate

1,474,200 kWh/y * 3.42 THB/kWh

5,041,764 THB/y * 3.62 JPY/THB
18,251,186 JPY/y

2.5.3 Proposed introduction plan and profitability

Operation shut down is not necessary for the introduction since construction of
chiller does not influence steel making process. Construction period of 10 days is

10

presumed for introduction of waste heat recovery blower based on previous

construction of recuperator in the plant. Assumed initial cost of the introduction is
98,125,000 (JPY) based on estimation by the manufacturer and adjusted
construction costs in Thailand.
Simple payback period of the initial cost was calculated as follows. See Annex.1
Calculation of payback period for formula.
Simple payback period = Total initial cost / Annual economic effect
98,125,000 JPY / 18,251,186 JPY = 5.4 years

Table 5: Analysis on payback period for Absorption type chiller using waste heat
Absorption type chiller using waste heat
Equipment Manufacturer
Item

Unit

Value

Initial cost

JPY

98,125,000

Annual electricity saving

kWh

1,474,200

Annual economic effect

JPY

18,251,186

tCO2

754

JPY

754,000

Simple payback period

Year

5.4

Discounted payback period

Year

7.1

Year

7.6

Year

8.1

Annual GHG emission reductions

Annual economic effect from
credits (assumed)

(@7.5%)
Discounted payback period
(@8.75%)
Discounted payback period (@10%)

11

2.6

MRV methodologies for each technology

2.6.1 EAF Shell Revamping for Energy Saving Type

A. Title of the methodology
Introduction of EAF Shell Revamping for Energy Saving Type to steel plant with
scrap melting
B. Terms and definitions
Terms

Definitions

Eccentric Bottom

Eccentric bottom tapping leads to slag-free tapping,

Tapping: EBT

shorter tap-to-tap times. It also reduces refractory and

electrode consumption, and improves ladle life

C. Summary of the methodology

Items

Summary

GHG emission

Revamping electric arc furnace for energy efficiency type,

reduction measures

electricity consumption to melt scrap is reduced, which

leads to the reduction of GHG emissions.

Calculation of reference

Reference emissions are calculated based on the estimated

emissions

electricity consumption of current EAF without the

proposed project.

Calculation of project

Project emissions are calculated based on the electricity

emissions

consumption of revamped EAF with the proposed project.

Monitoring parameters

Electricity consumption of electric arc furnace (Project)

[MWh]
Crude steel production (Project) [t]

D. Eligibility Criteria
This methodology is applicable to projects that satisfy all of the following criteria.
Criterion 1

Electric arc furnace is utilized for steel production with scrap

Criterion 2

Conducting rid sealing, and/or installing EBT and/or deepening to

utilize hot heal into existing electric arc furnace

Criterion 3

Purchase electricity from grid for both reference and project scenario

12

E. Emission Source and GHG types

Items

Emission sources

GHG types

Reference emissions

Consumption of grid electricity

CO2

Project emissions

Consumption of grid electricity

CO2

F. Establishment and calculation of reference emissions

F1. Establishment of reference emissions
Establish reference emissions when the furnace is not revamped, and continues
utilizing existing electric arc furnace
F2. Calculation of reference emissions
RE = RECI * EFe * PM (1)
Where,
RE

Reference CO2 emissions [tCO2]

RECI

Electricity consumption intensity of electric arc furnace

(Reference) [MWh / t]

EFe

CO2 emission factor of grid electricity [tCO2 / MWh]

PM

Crude steel production (Project) [t]

G. Calculation of project emissions

PE = (PEC/PM) * EFe * PM (2)
Where,
PE

Project CO2 emissions [tCO2]

PEC

Electricity consumption of electric arc furnace (Project) [MWh]

EFe

CO2 emission factor of grid electricity [tCO2 / MWh]

PM

Crude steel production [t]

H. Calculation of emission reductions

Emission reductions are calculated as the difference between the reference
emissions and project emissions, as follows:
ER = RE PE (3)

13

Where,
ER

CO2 Emission reductions [tCO2]

RE

Reference CO2 emissions [tCO2]

PE

Project CO2 emissions [tCO2]

I. Data and parameters fixed ex ante

Parameter
RECI

Description of data

Source

Electricity consumption intensity of

Measurement at site

electric arc furnace (Reference) [MWh / t]

EFe

CO2 emission factor of grid electricity

Default value from

[tCO2 / MWh]

IPCC

2.6.2 Regenerative Burner to Ladle Preheater

A.

Title of the methodology

Introduction of Regenerative Burner to Ladle Preheater

B.

Terms and definitions

Terms

Regenerative burner

Definitions
Burner system which has two individual burners which
absorb exhaust gas heat to reservoir and preheat
combustion air by regenerator to improve energy efficiency.
Two burners switch roles as absorber and preheater
mutually

C. Summary of the methodology

Items

Summary

GHG emission

Introducing a regenerative burner instead of conventional

reduction measures

burner to ladle preheater, fossil fuel consumption is

reduced, which leads to the reduction of GHG emissions.

Calculation of reference

Reference emissions are calculated based on the estimated

emissions

consumption of fossil fuel in the facility without the

proposed project.

Calculation of project

Project emissions are calculated based on the consumption

emissions

of fossil fuel in the facility after implementing the proposed

project.

Monitoring parameters

Fossil fuel consumption of ladle preheater (Project) [liter]

Crude steel production (Project) [t]

14

D. Eligibility Criteria
This methodology is applicable to projects that satisfy all of the following criteria.
Criterion 1

Regenerative burner is introduced to ladle preheater

Criterion 2

Project type is either greenfield, or expansion or replacement of

regenerative burner into existing ladle preheater

E.

Emission Source and GHG types

Items
Reference emissions

Emission sources
Combustion of fossil fuel in ladle

GHG types
CO2

preheating
Project emissions

Combustion of fossil fuel in ladle

CO2

preheating

F.

Establishment and calculation of reference emissions

F1. Establishment of reference emissions

Establish reference emissions when regenerative burner is not introduced to ladle
preheater, and continues utilizing existing ladle preheater
F2. Calculation of reference emissions
Calculation methodology on reference emissions is developed for each project type.
<Greenfield project>
RE = RFCIg * EF * PM (1)
Where,
RE

Reference CO2 emissions [tCO2]

RFCIg

(Greenfield) Fossil Fuel consumption intensity of ladle

preheater (Reference) [GJ / t]

EF

CO2 emission factor of fossil fuel [tCO2 / GJ]

PM

Crude steel production (Project) [t]

<Expansion or replacement project>

RE = RFCIex,re * EF * PM (2)

15

Where,
RE

Reference CO2 emissions [tCO2]

RFCIex,re

(Expansion or replacement) Fossil Fuel consumption

intensity of ladle preheater (Reference) [GJ / t]

EF

CO2 emission factor of fossil fuel [tCO2 / GJ]

PM

Crude steel production (Project) [t]

G. Calculation of project emissions

PE = (PFC/PM) * NCV * EF * PM (3)
Where,
PE

Project CO2 emissions [tCO2]

PFC

Fossil Fuel consumption of ladle preheater (Project) [liter]

NCV

Net heating value of fossil fuel [GJ / liter]

EF

CO2 emission factor of fossil fuel [tCO2 / GJ]

PM

Crude steel production (Project) [t]

H. Calculation of emission reductions

Emission reductions are calculated as the difference between the reference
emissions and project emissions, as follows:
ER = RE PE (4)
Where,
ER

CO2 Emission reductions [tCO2]

RE

Reference CO2 emissions [tCO2]

PE

Project CO2 emissions [tCO2]

16

I.

Data and parameters fixed ex ante

Parameter

Description of data

Source

NCV

Net heating value of fossil fuel [GJ / liter]

Default value from IPCC

EF

CO2 emission factor of fossil fuel [tCO2 /

Default value from IPCC

GJ]
RFCIg

(Greenfield) Fossil Fuel consumption

Measurement at site

intensity of ladle preheater (Reference) [GJ

/ t]
RFCIex,re

(Expansion or replacement) Fossil Fuel

Measurement at site

consumption intensity of ladle preheater

(Reference) [GJ / t]

2.6.3 High Temperature Recuperator to Reheating Furnace

A.

Title of the methodology

Introduction of High Temperature Recuperator to Reheating Furnace

B.

Terms and definitions

Terms

Recuperator

Definitions
A heat exchanger which absorbs heat from waste gas to
reservoir and preheats combustion air to improve energy
efficiency of the furnace.

C. Summary of the methodology

Items

Summary

GHG emission

Introducing the recuperator to reheating furnace, fossil

reduction measures

fuel consumption is reduced, which leads to the reduction

of GHG emissions.

Calculation of reference

Reference emissions are calculated based on the estimated

emissions

consumption of fossil fuel in the facility without the

proposed project.

Calculation of project

Project emissions are calculated based on the consumption

emissions

of fossil fuel in the facility after implementing the proposed

project.

Monitoring parameters

Fossil fuel consumption of reheating furnace (Project)

[liter]
Steel production (Project) [t]

17

D. Eligibility Criteria
This methodology is applicable to projects that satisfy all of the following criteria.
Criterion 1

Recuperator is introduced to existing reheating furnace

Criterion 2

Project type is either green field, or expansion or replacement of

recuperator

E.

Emission Source and GHG types

Items
Reference emissions

Emission sources
Combustion of fossil fuel at

GHG types
CO2

reheating furnace
Project emissions

Combustion of fossil fuel at

CO2

reheating furnace

F.

Establishment and calculation of reference emissions

F1. Establishment of reference emissions

Establish reference emissions when the recuperator is not introduced to reheating
furnace, and continues utilizing existing furnace
F2. Calculation of reference emissions
Calculation methodology on reference emissions is developed for each project type
of introduction of recuperator.
<Greenfield project>
RE = RFCIg * EF * PM (1)
Where,
RE

Reference CO2 emissions [tCO2]

RFCIg

(Greenfield) Fossil fuel consumption intensity of reheating

furnace (Reference) [GJ / t]

EF

CO2 emission factor of fossil fuel [tCO2 / GJ]

PM

Steel production (Project) [t]

<Expansion or replacement project>

RE = RFCIex,re * EF * PM (2)

18

Where,
RE

Reference CO2 emissions [tCO2]

RFCIex,re

(Expansion or replacement) Fossil fuel consumption intensity

of reheating furnace (Reference) [GJ / t]

EF

CO2 emission factor of fossil fuel [tCO2 / GJ]

PM

Steel production (Project) [t]

G. Calculation of project emissions

PE = (PFC/PM) * NCV * EF * PM (3)
Where,
PE

Project CO2 emissions [tCO2]

PFC

Fossil Fuel consumption of reheating furnace (Project) [liter]

NCV

Net heating value of fossil fuel [GJ / liter]

EF

CO2 emission factor of fossil fuel [tCO2 / GJ]

PM

Steel production (Project) [t]

H. Calculation of emission reductions

Emission reductions are calculated as the difference between the reference
emissions and project emissions, as follows:
ER = RE PE (4)
Where,
ER

CO2 Emission reductions [tCO2]

RE

Reference CO2 emissions [tCO2]

PE

Project CO2 emissions [tCO2]

19

I.

Data and parameters fixed ex ante

Parameter
NCV

Description of data

Source

Net heating value of fossil fuel [GJ / liter]

Default value from

IPCC

EF

CO2 emission factor of fossil fuel [tCO2 / GJ]

Default value from

IPCC

RFCIg

(Greenfield) Fossil fuel consumption

Measurement at site

intensity of reheating furnace (Reference)

[GJ / t]
RFCIex,re

(Expansion or replacement) Fossil fuel

Measurement at site

consumption intensity of reheating furnace

(Reference) [GJ / t]

2.6.4 Absorption Type Chiller Using Waste Heat

A.

Title of the methodology

Introduction of Absorption Type Chiller Using Waste Heat to Reheating Furnace

B.

Terms and definitions

Terms

Absorption type chiller

Definitions
A chiller which has a 2-stage evaporation and absorption
cycle with agent, which leads to high efficiency

20

C. Summary of the methodology

Items

Summary

GHG emission

Introducing the absorption type chiller using waste heat to

reduction measures

reheating furnace, electricity consumption of existing air

conditioning system is reduced, which leads to the
reduction of GHG emissions.

Calculation of reference

Reference emissions are calculated based on electricity

emissions

consumption from grid which would be consumed at

existing air conditioning system unless the proposed
project is implemented

Calculation of project

CO2 emissions are to be calculated based on electricity

emissions

consumption in the facility after implementing the

proposed project.

Monitoring parameters

Energy recovered from waste heat collected by absorption

type chiller [kWh]
Operating hours of heat recovery blower [hour]

D. Eligibility Criteria
This methodology is applicable to projects that satisfy all of the following criteria.
Criterion 1

Absorption type chiller uses waste heat from furnace

Criterion 2

Absorption type chiller collects energy from waste heat of furnace and
utilizes all of its energy but for heat recovery blower for chilling

Criterion 3

E.

Purchase electricity from grid for both reference and project scenario

Emission Source and GHG types

Items
Reference

Emission sources

GHG types

Consumption of grid electricity

CO2

N/A

N/A

emissions
Project emissions

F.

Establishment and calculation of reference emissions

F1. Establishment of reference emissions

The chiller is not introduced, and continues utilizing existing air conditioning
system (existing system)

21

F2. Calculation of reference emissions

RE = EG * EFe (1)
Where,
RE

Reference CO2 emissions [tCO2]

EG

Replacement of energy for chilling at existing air

conditioning system with energy recovered from waste
heat collected by the chiller [kWh]

EFe

CO2 emission factor of grid electricity [kgCO2 / kWh]

< Determination of EG>

EG = EGsup ECaux
Where,
EG

Replacement of energy for chilling at existing air

conditioning system with energy recovered from waste
heat collected by the chiller [kWh]

EGsup

Energy recovered from waste heat collected by absorption

type chiller [kWh]

ECaux

Electricity consumption of heat recovery blower [kWh]

< Determination of EGaux>

ECaux = ECcap * OH
Where,
ECaux

Electricity consumption of heat recovery blower [kWh]

ECcap

Rated power of heat recovery blower [kW]

OH

Operating hours of heat recovery blower [hours]

G. Calculation of project emissions

Project emissions are not assumed in the methodology as the waste heat recovery
system utilizes only waste heat and does not utilize fossil fuels as heat source to
generate cool water, which is prescribed in the eligibility criterion 2.

22

PE = 0 (2)
H. Calculation of emission reductions
Emission reductions are calculated as the difference between the reference
emissions and project emissions, as follows:
ER = RE PE (3)
Where,

I.

ER

CO2 emission reductions [tCO2]

RE

Reference CO2 emissions [tCO2]

PE

Project CO2 emissions [tCO2]

Data and parameters fixed ex ante

Parameter
EFe
ECcap

Description of data

Source

CO2 emission factor of grid electricity

Default value from

[kgCO2 / kWh]

IPCC

Rated power of heat recovery blower [kW]

Measurement at site

23

2.7

Estimation of CO2 emission reductions using MRV methodology

CO2 emission reductions were calculated using MRV methodology as follows.

Table 6 Estimation of CO2 emission reductions using MRV methodology

EAF Revamping for Regenerative Burner
Energy Saving Type for Ladle Preheater
Production
Reference
Emissions
(RE)
Project
Emissions
(PE)
Emission
Reductions
(RE-PE)
Values for
Estimation
(Ref)
Bold
Monitoring
parameter
*Estimated

Crude steel 200,000t

61,356 [tCO2]
= 0.6 * 0.5113 *
200,000
51,130[tCO2]
= 100,000 / 200,000 *
0.5113 * 200,000

Crude steel 200,000t

3,136 [tCO2]
= 0.216 * 0.0726 *
200,000
1,816 [tCO2]
= 686,694 / 200,000 *
0.03642 * 0.0726 *
200,000
10,226 [tCO2]
1,320 [tCO2]
(RE - PE)
(RE - PE)
= 61,356 51,130
= 3,136 1,816
Electricity intensity Net heating value of
of EAF (Site)*1:
fuel (DEDE):
0.6 [MWh/t]
0.03642 [GJ/liter]
CO2 emission factor CO2 emission factor
of grid (TGO)*2:
of fuel (IPCC):
0.5113 [tCO2/MWh] 0.0726 [tCO2/GJ]
Electricity
Fuel intensity of LF
consumption of EAF: preheater (Site) *1:
100,000 [MWh]
0.216 [GJ/t]
Crude steel
Fuel consumption:
production:
686,694 [liter]
200,000 [t]
Crude steel
production:
200,000 [t]

Upgraded
Recuperator for
Reheating Furnace
Steel 104,167t
10,932 [tCO2]
= 1.39 * 0.0755 *
104,167
10,444 [tCO2]
= 3,478,136 / 104,167
* 0.03977 * 0.0755 *
104,167
488 [tCO2]
(RE - PE)
= 14,692 14,036
Net heating value of
fuel (DEDE):
0.03977 [GJ/liter]
CO2 of emission
factor of fuel (IPCC):
0.0755 [tCO2/GJ]
Fuel intensity of
RHF (Site) *1:
1.39 [GJ/t]
Fuel consumption:
3,478,136 [liter]
Steel production:
104,167 [t]

Absorption Type
Chiller Using Waste
Heat
(Steel 104,167t)
754 [tCO2]
= (1,890,000
415,800) * 0.5113
0 [tCO2]

754 [tCO2]
(RE - PE)
= 754 - 0
Electricity
consumption of heat
recovery blower
(Manuf.):
415,800 [kWh]
CO2 emission factor
of grid (TGO)*2:
0. 5113 [kgCO2/kWh]
Energy recovered
from waste heat:
1,890,000 [kWh]

*1 Actual value measured at a target plant was utilized as reference value for estimation in order to make sure the
methodology is applicable to the plant
*2 Average value of build margin factor (0.4231) and operating factor (0.5996) is adopted as CO 2 emission factor of
grid in Thailand

2.8

Feasibility of technologies introduction

At the end of this F/S, it was concluded that, based on discussion with the steel

plant, introduction of absorption type chiller using waste heat into the steel plant
was difficult to realize due to operating situation of the steel plant and lack of
necessary space for placement. While it was concluded that EAF shell revamping for
energy saving type is highly feasible to be introduced into the steel plant considering
its high energy saving performance and high economic value brought by the
introduction, and payback period with two years. The other two technologies namely
regenerative burner for ladle preheating and upgraded recuperator are difficult to be
introduced because of their expensive initial cost and small economic value, and so as
to its payback period within two years although there are no technical issues for
introduction of both technologies.

24

2.9

Issues for establishment of JCM

As a result of interviews with the steel plant, ISIT and government agencies in

Thailand, it has been found that (1) Expansion of public finance support/incentives
by the government and (2) Storage and management of information required for
operation of JCM are especially important issues in order to promote JCM projects in
Thailand.
2.9.1 Financial supporting mechanism for initial investment
Regarding the issue of (1), it is identified that economic value brought by
technology introduction cannot pay back its initial cost within two years without use
of subsidy. In Thailand, funding schemes have been stopped due to regime change,
namely Energy Efficiency Revolving Fund, ESCO Revolving Fund and 20% subsidy
program provided by DEDE. In addition, budget proposal for those funding scheme is
being prepared at this moment. Considering acceleration of introduction of energy
saving technologies for various fields in the future, study for expansion of funding
scheme in Thailand would be necessary. At the same time, participants of the F/S
from Thailand expect Japanese financing support for introduction of energy saving
technologies. As mentioned earlier, it is concluded that only financial support from
Thailand cannot cover expensive initial cost of energy saving technologies
introduction, and therefore it is crucial to consider possibilities to apply existing
Japanese financial supporting scheme such as NEDOs JCM demonstration project,
MoEs JCM model project, financial support of JBIC and so on, toward energy saving
technologies introduction projects in Thailand.
2.9.2 Financial supporting mechanism for initial investment
Regarding issue of (2), it is found to be difficult to validate reference value which
is necessary to calculate reference emission objectively. Therefore, it is important to
prepare system and scheme to store and manage reference value for possible JCM
subject technologies and to make it available to possible participants in JCM in order
to establish MRV methodology for iron and steel technologies in the future. For
example, ISIT could be an administrator of such information and lead preparation.
2.10 Step forward
In case bilateral document would be signed in the future, the first tasks will be
launch of Joint Committee (JC) and creation of rules and guidelines spearheaded by
JC. Detailed roadmap will be clearly defined after signage to the bilateral document

25

by both governments. More detailed examination would be necessary for the project
scheme and MRV methodology to operate JCM correctly, and therefore it is expected
to make the most of opportunities of F/S, JCM demonstration project and JCM model
project provided by government.
Further, it is required to accelerate concrete and detailed planning and
demonstration of JCM scheme paying due regard to progress of governments
consultation considering provided information that Government of Thailand agreed
to cooperate with Government of Japan to realize JCM in January 2015.

26

F/S result report to stakeholders in Thailand

At the end of this F/S, results of F/S have been shared with the steel plants, iron
and steel industry sector and government agencies in Thailand in JCM F/S
Workshop held in Bangkok. In this workshop, F/S project team member participated
from Japan and the target steel plant, DEDE, TGO, ISIT and other steel plants
member participated from Thailand. In the workshop, overview of the F/S project,
result of the feasibility study of technologies introduction, technologies introduction
plan, designed MRV methodologies and issues and policy proposal for realization of
JCM were introduced by the project team. Also, GHG reduction measures and
activities in Thailand and current status of consideration of JCM within Government
of Thailand were presented by an officer of TGO which is a responsible agency for
JCM in Thailand. Questions regarding existing Japanese financial supporting
scheme for energy saving technologies, scheme of Joint Committee, policy of credit
distribution mechanism and factors used in MRV methodologies were made in the
workshop, and opinions were lively exchanged among the participants.

27

Annex.1 Concept of payback period

Simple Payback Period (SPP) = Initial investment cost / Annual economic effects
brought by technologies introduction

Discount Payback Period (DPP)

DPP==
CF :

CF
log CF I
I c
log 1 + c

Annual economic value brought by technologies introduction

I:

Initial investment cost

c:

Discount rate

In this F/S, following three patterns of discount rate are considered in calculation
for DPP
Discount rate (c) 7.5 % : Loan interest in Thailand
Discount rate (c) 8.75 % : Weighted average of loan interest and market risk
premium in Thailand
Discount rate (c) 10.0 % : Market risk premium in Thailand

28