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Energy Conversion and Management 49 (2008) 1380–1387

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Algorithm for break even availability allocation in process

system modification using deterministic valuation model
incorporating reliability
P.V. Shouri, P.S. Sreejith *
Division of Mechanical Engineering, School of Engineering, Cochin University of Science and Technology (CUSAT), Cochin 682 022, Kerala, India

Received 30 September 2006; received in revised form 21 May 2007; accepted 6 January 2008
Available online 12 February 2008

Abstract

In the present scenario of energy demand overtaking energy supply, top priority is given for energy conservation programs and pol-
icies. As a result, most existing systems are redesigned or modified with a view for improving energy efficiency. Often these modifications
can have an impact on process system configuration, thereby affecting process system reliability. The paper presents a model for valu-
ation of process systems incorporating reliability that can be used to determine the change in process system value resulting from system
modification. The model also determines the break even system availability and presents an algorithm for allocation of component reli-
abilities of the modified system based on the break even system availability. The developed equations are applied to a steam power plant
to study the effect of various operating parameters on system value.
Ó 2008 Elsevier Ltd. All rights reserved.

Keywords: Availability; Break even availability; Reliability; Reliability allocation; System value

1. Introduction time under the specified operating conditions [3–5]. Reli-

ability of an individual component in terms of failure rate
In recent years, the reliabilities of power plants have can be expressed as
become increasingly important issues in most developed Rt
 ZðtÞdt
and developing countries. Plant availability is a critical dri- RðtÞ ¼ e 0 ð1Þ
ver for the economic performance of a plant [1]. With more
For a component with a constant failure rate, Eq. (1) re-
and more emphasis given for energy conservation pro-
duces to
grams and policies, most existing systems are being
modified or redesigned with an objective of improving RðtÞ ¼ ekt ð2Þ
energy efficiency [2]. While designing the systems, often
the focus is on immediate demands of the equipment, The constant failure rate model is widely used in the liter-
and the broader issue of how the system parameters affect ature to reduce the computational burden of the resulting
the equipment is overlooked. It is important to recognize problem [1] because the parameter MTBF, which is the
that process efficiency and reliability are equally important. average time between failures, obtained from Eq. (3) be-
Reliability can be defined as the probability that an item comes time independent in this case.
can perform a required function for a specified period of Z 1 Z 1
1
MTBF ¼ RðtÞdt ¼ ekt dt ¼ ð3Þ
0 0 k
*
Corresponding author. Tel./fax: +91 484 2607676. Similarly, MTTR, which is the average time taken to repair
E-mail address: pssreejith@cusat.ac.in (P.S. Sreejith). a failed component, can be expressed as

0196-8904/$ - see front matter Ó 2008 Elsevier Ltd. All rights reserved.
doi:10.1016/j.enconman.2008.01.001
 P.V. Shouri, P.S. Sreejith / Energy Conversion and Management 49 (2008) 1380–1387 1381

Nomenclature

ABEP break even availability of modified process sys- MTBF mean time between failure
tem MTTR mean time to repair
Ai steady state availability n expected life of process system in years
AS process system availability O operating cost for first year
b pay back period P/A present value given annual rate
C cost of process system components and equip- R hourly production rate
ments RBD reliability block diagram
Cm cost of additional equipments towards modifica- R(t) reliability expressed as function of time
tion U unit price of process output
E expected yearly savings due to modification V process system value
g expected percentage growth of operating and VC change in process system value
maintenance cost per year Z(t) failure rate expressed as function of time
H system operating hours in year Dh change in enthalpy of steam between inlet and
i interest rate outlet of turbine
m mass flow rate of steam k constant failure rate
M maintenance cost for first year l constant mean repair rate

1 ano and Valero [12] and Tsatsaronis and Winhold [13].

MTTR ¼ ð4Þ
l This was further extended to include environmental impli-
cations by Badino and Baldo [14]. Cumulative exergy cost
Availability can be defined as the probability that an item
accounting (CExC) was proposed by Szargut [15], extended
will be available when required, or as the proportion of
exergy accounting (EEA) by Sciubba [16], environomic the-
total time the item will be available for use [4]. The propor-
ory by Von Spakovsky and Frangopoulos [17] and emergy
tion of total time that the item is available is the steady
accounting by Odum [18].
state availability. Availability is determined by the reliabil-
Researchers at Lawrence Berkeley National Laboratory
ity and maintainability of an item. For a simple unit with a
have used life cycle costing in the United States Depart-
constant failure rate and a constant mean repair rate, the
ment of Energy’s rulemaking for residential central air con-
steady state availability can be expressed as
ditioners [19]. The life cycle cost consists of two main
l MTBF components: (1) the first cost of buying and installing
Ai ¼ ¼ ð5Þ
k þ l MTBF þ MTTR equipment and (2) the operating costs summed over the
Typical approaches to achieve high system reliability are: lifetime of the equipment, discounted to the present.
(1) increasing the reliability of system components and Plifetime
(2) using redundant components in various subsystems in n¼1 operating cost
Life – cycle cost ¼ installation cost þ
the system [6–8]. The modification of an existing system ð1 þ iÞn
with a view to improve energy efficiency should consider ð6Þ
these factors. The change in system configuration resulting
from system modification can adversely affect the system Recently, the United States Department of Energy initiated
reliability. a rulemaking process to consider whether to amend the
Any new proposal for improving the energy efficiency of existing energy efficiency standards for residential furnaces
the process or equipments should prove itself to be eco- and boilers. The approach involves comparing the total life
nomically feasible for gaining acceptance for implementa- cycle cost (LCC) of owning and operating a more efficient
tion. In order to determine the economic feasibility of the appliance with the LCC for a baseline design. Lutz et al.
new proposal, the general trend is to compare the benefits [20] presented the method used to conduct the LCC analy-
that can be derived over the lifetime as well as the operating sis and also presented the estimated change in LCC associ-
and maintenance costs with the investment to be made. ated with more energy efficient equipment. The LCC
Several methods have been suggested to perform analyses calculated in this analysis expresses the costs of installing
of energy conversion systems and supply information from and operating a furnace or boiler for its lifetime starting
different view points. In the area of energy investigations, in the year 2012 – the year a new standard may take effect.
especially worth mentioning are the life cycle assessment The analysis also calculated the payback period for energy
(LCA) method presented by Valero [9], its exergetic version efficiency design options. The pay back period represents
ExLCA proposed by Cornelissen et al. [10] and the thermo- the number of years of operation required to pay for the
economic theory presented by Lazzaretto et al. [11], Loz- increased efficiency features. It is the change in purchase
1382 P.V. Shouri, P.S. Sreejith / Energy Conversion and Management 49 (2008) 1380–1387

expense due to an increased efficiency standard divided by The value of the system is determined by considering the
the change in annual operating cost that results from the present worth of expected future cash flows. The cash flow
increased efficiency. The payback period equation is ex- model developed for system valuation is shown in Fig. 1.
pressed as With reference to the cash flow model, the system value
Equipment costoption  Equipment costbase can be expressed as
Paybackoption ¼  
Operation costbase  Operation costoption 1  ð1 þ gÞn ð1  iÞn
V ¼ AS RHU ðP =A; i; nÞ  C  ðM þ OÞ
ð7Þ ig
where base is the base case design and option is the design ð8Þ
option being considered. The valuation Eq. (8) can be used only for cases where
Lekov et al. [21] also presented payback period calcula- i 6¼ g, and when i = g, the equation will get modified as
tions for furnaces and boilers based on the United States
nðM þ OÞ
Department of Energy test procedure. The test procedure V ¼ AS RHU ðP =A; i; nÞ  C  ð9Þ
1þi
uses specific, prescribed values to calculate annual energy
consumption. At the time the test procedure was written, If operation and maintenance cost are assumed to remain
these values were considered to be relatively typical of con- constant, the equation for process value will get simplified as
ditions in US homes. V ¼ AS RHU ðP =A; i; nÞ  C  ðM þ OÞðP =A; i; nÞ ð10Þ
It is evident from the above discussions that the system
valuation and pay back analysis hardly take the reliability The quantity (P/A, i, n) in Eq. (10) is the uniform series
and availability aspects into consideration. That is, it hap- present worth factor [22] and can be obtained as
n
pens that, while determining the economic feasibility of the ð1 þ iÞ  1
new option, reliability aspects (or loss due to unavailabil- ðP =A; i; nÞ ¼ n ð11Þ
ið1 þ iÞ
ity) are not taken into consideration. The objective of this
paper is to present a system valuation model by incorporat- Whenever a process system is to be modified for energy
ing reliability. savings, it is important to know the expected change in sys-
tem value. In this case, the investment for modification and
2. Model development the expected annual savings due to modification, as well as
the change in system availability, have to be taken into
In this section, the development of a system valuation consideration. Change in process availability results from
model by taking into consideration system availability in change in system configuration. The change in process
addition to the other cost elements, like investment cost value can be expressed as
and maintenance as well as operating cost, is described. V C ¼ ½ðAm  AS ÞRHU þ EðP =A; i; nÞ  C m ð12Þ
The model is based on the following assumptions:
The equation for change in process value can be used to
study the impact of system modification on system value
(1) Process components are assumed to have a constant
and a positive value for VC is desirable. The equation can
failure rate as well as a constant repair rate.
also be used to study the effect of variation of operating
(2) Availability under consideration is steady state
parameters on the system value.
availability.
(3) Interest rate is constant throughout.
3. Break even availability of the modified system
(4) Depreciation of the plant is not considered.
A positive value for VC implies that the cost of modifi-
AS R H U cation can be recovered, and the equation can be used to
V =? determine the pay back period. On the other hand, a neg-
ative value for VC implies that the modification will only
result in decreasing the earnings of the system with the pas-
sage of time. In this case, the equation can be used to cal-
1 2 n-1 n
culate the break even availability of the modified system,
0 for a given pay back period. The modified system availabil-
ity should be greater than this break even availability for
Year VC to be positive. The break even availability is the value
of Am corresponding to VC = 0, at a given payback peri-
od.The break even availability of the modified system for
a given pay back period can be expressed as
h i
Cm
Operating & Maintenance Cost ðP =A;i;bÞ
E
ABEP ¼ þ AS ð13Þ
Fig. 1. Cash flow model for system valuation. RHU
 P.V. Shouri, P.S. Sreejith / Energy Conversion and Management 49 (2008) 1380–1387 1383

4. Reliability allocation in system modification ficient that any one of the two non-return valves operates
successfully. Thus, the appropriate RBD for the system will
The system valuation model can be used to develop an be as shown in Fig. 2b.
algorithm for allocation of component reliabilities of the The process by which the failure allowance for a system
modified system based on the break even system availabil- is allocated in some logical manner among its sub-systems
ity. Reliability engineers are often called upon to make and elements is termed reliability allocation [5]. The pur-
decisions as to whether to improve a certain component pose of reliability allocation is to establish a goal or objec-
or components in order to achieve the minimum required tive for the reliability of each component. The principal
system reliability. It happens that even by raising the indi- adopted for apportioning the system allowance is that the
vidual component reliability to a hypothetical value of 1, failure allowance of each component is directly propor-
the overall system reliability goal will not be met by tional to the predicted probability of failure.
improving the reliability of just one component. This The 10 step algorithm developed for reliability alloca-
requires that the reliability goal be apportioned among tion of the modified system based on break even availabil-
the system components, and an algorithm is developed ity is listed below:
for this purpose.
The inputs to the algorithm include the process system (1) Draw the RBD for the process system before and
reliability block diagram (RBD) as well as the failure and after modification. Equipments or components with
repair rate of the process components before and after short service periods and those that can be repaired
modification. The failure and repair rates of the compo- without affecting the process system are omitted from
nents can be obtained from the MTBF and MTTR, respec- the RBD.
tively. For a given process, a RBD can be derived that (2) Calculate the process system reliability and availabil-
would reflect the consequence of equipment failure(s) in ity based on the known values of failure rate and
the process system and, therefore, can be used to derive repair rate of the components before and after
the analytic expression for system reliability and availabil- modification.
ity. Different equipments present in the process system are (3) Calculate the break even availability of the modified
represented as series and parallel configurations in the system using the equation for break even availability.
RBD. It should be noted that the connectivity between (4) Compare the modified process system availability
equipments in the RBD is based on logic and may be quite with the break even system availability. If the modi-
different from the actual physical configuration of the sys- fied system availability is less than the break even sys-
tem. This is explained with the help of a simple illustrative tem availability, the component reliabilities have to
example shown in Fig. 2. be apportioned in some equitable manner.
A fluid pump supplies liquid under high pressure to a (5) Increment the system reliability in steps and after
vessel. It is essential that the liquid be permitted to flow each increment obtained the reliability allocation of
only in one direction, i.e. from the pump to the high pres- the individual components.
sure vessel. Otherwise, if the pump fails, there will be the (6) Obtain the respective failure rate of the components
danger of liquid flowing back to the pump. This can be pre- corresponding to the incremented component
vented by providing a non-return valve in the pipe system. reliabilities.
To assure greater reliability, two non-return valves are used (7) Based on the failure rate corresponding to the incre-
in series between the pump and the high pressure vessel, as mented component reliabilities and under the
shown in Fig. 2a. It can be seen from Fig. 2a that the sys- assumption that the constant component repair rate
tem will fail only if both non-return valves do not function. does not vary after modification, calculate the com-
Alternatively, for successful working of the system, it is suf- ponent availabilities.

Valve 1
Non-return valves

High Pump High

Pressure Pressure
vessel vessel

1 2 Valve 2

Pump

(a) Actual configuration (b)Reliability block diagram

Fig. 2. Illustrative example (a) actual configuration (b) reliability block diagram.
1384 P.V. Shouri, P.S. Sreejith / Energy Conversion and Management 49 (2008) 1380–1387

(8) Based on the component availabilities obtained in Table 1

step 7 and based on the modified RBD, obtain the Power plant component details
process system availability. Sl. No. Component MTBF (h) Availability
(9) Continue the iteration till the process system avail- 1 Fuel supply pump 2000 0.9940357
ability obtained in step 8 becomes equal to the break 2 Boiler 1440 0.9756097
even system availability. 3 Condensate return pump 1 3500 0.9965831
4 Condensate return pump 2 3500 0.9965831
(10) The component reliabilities corresponding to the 5 Condenser 2500 0.9952229
break even system availability is the required reliabil- 6 Turbine 7000 0.9948834
ity allocation. 7 Generator 5000 0.9952229
8 Piping 7500 0.9984025
9 Draft fan 6000 0.9980039
5. Results and discussion
that the pay back period will only be a few months. How-
We can demonstrate the implementation of this tech-
ever, a more realistic approach will be to take reliability
nique with a simple example. The power requirement of a
aspects also into consideration, and the developed valua-
company is met by a captive power plant operating on a
tion model can be used to check the economic feasibility
Rankine cycle with the following parameters:
of this modification. The valuation equation, in this case,
has to be modified and can be expressed as
Pressure limits: 0.08 bar and 20 bar
Maximum temperature: 360 °C V ¼ AS Dh:mHU ðP =A; i; nÞ  C  ðM þ OÞðP =A; i; nÞ ð14Þ
Steam flow rate 2 kg/s and the change in process system value becomes
The RBD of the power plant is shown in Fig. 3 and the V C ¼ ½ðAm  AS ÞDh:mHU þ EðP =A; i; nÞ  C m ð15Þ
failure and availability data of the components as obtained The equation for the break even availability of the modified
from the plant are presented in Table 1. Different equip- steam system can be expressed as
ments present in the system are represented as series and h i
Cm
parallel configurations in the RBD. It should be noted that ðP =A;i;bÞ
E
the connectivity between equipments in the RBD is based ABEP ¼ þ AS ð16Þ
Dh:mHU
on logic and differs from the actual physical configuration.
To achieve greater reliability for condensate pumping, two The variations of the change in process value with respect
8 kW pumps are connected in parallel and are running at to steam flow rate, market price of the power generated,
half loads. The pumping system will fail only if both pumps interest rate and system life are shown in Figs. 4–7.
fail simultaneously. Fig. 4 shows that with the increase of steam flow rate,
As a part of an energy conservation program, the com- the change in process system value becomes negative. For
pany decided to replace these two parallel pumps by a sin- VC to be positive, the steam flow rate should be very much
gle 10 kW pump that runs at nearly full load. The MTBF less than the design flow rate of 2 kg/s. Fig. 5 indicates that
of the replaced pump is 3750 h and is superior to that of the increase in the selling power price of power is inversely
the earlier used pumps. The modification resulted in an proportional to the change in process value. Fig. 6 shows a
expenditure of $600, and the projected energy saving was very high rate of return is required to make the value of VC
of the order of 2500 $/year. A simple tradeoff between favourable. Fig. 7 indicates that under the existing
the cost of modification and the projected savings will show
8

6
Fuel Supply Boiler Condenser
Pump
Change in process value

4
(Thousands of dollars)

2
Condensate 0
Ret. Pump 1
-2
Turbine
-4
Condensate Ret. -6
Pump 2
-8

-10
1 1.5 2 2.5
Generator Piping Draft Fan
Steam flow rate (kg./sec)

Fig. 4. Variation of change in process value with steam flow rate.

Fig. 3. RBD for the steam power plant. (H = 8000 h; i = 12%; N = 20 years; U = 0.07 $/kW h).
 P.V. Shouri, P.S. Sreejith / Energy Conversion and Management 49 (2008) 1380–1387 1385

8 the modified system availability should not be less than

6
0.22% of the existing system availability. However, with
the modification, the change in availability is less by
Change in process value
(Thousands of dollars)

4
0.28%. The break even availability is determined by consid-
2 ering a pay back period of 3 years. That is, if the modified
0
system availability is corresponding to the break even sys-
tem availability, the change in process system value will be
-2 positive for all values of n > b. The improvement in avail-
-4 ability of the process system can be achieved either by
-6
changing the process system configuration further or by
decreasing the failure rates of the system components.
-8 However, for small improvements, the latter method of
0.04 0.05 0.06 0.07 0.08
Market price of the power generated ($/kWhr.)
increasing the MTBF of system components is more pref-
erable. Fig. 8 indicates how the variation of process system
Fig. 5. Variation of change in process value with power price availability from the break even value affects the process
(H = 8000 h; i = 12%; m = 2 kg/s; N = 20 years).
system value.
In order to attain the break even availability for the
0 modified system, the MTBF of the condensate pumping
has to be improved by around 25%. This value is deter-
Change in process value

-1
mined by considering that the MTTR of the pumping sys-
(Thousands of dollars)

-2
tem before and after modification remains the same. This
requires an improvement in pumping reliability of the mod-
-3 ified system corresponding to the MTBF by about 20%.
However, rather than significantly improving the reliability
-4
of a single component, in this instance the condensate
-5 pump, what is more preferable is to improve the reliability
of all the components in some equitable manner. The reli-
-6
6 8 10 12 15 ability improvements needed will be very small, and the
Interest rate (%) algorithm for allocation of break even availability can be
used. Starting from the existing system reliability of the
Fig. 6. Variation of change in process value with interest rate
(H = 8000 h; m = 2 kg/s; N = 20 years; U = 0.07 $/kW h). modified system, the reliability goal is increased in steps,
and this reliability goal is apportioned to the system com-
ponents. Based on these new component failure rates and
2 under the assumption that the MTTR of the components
Before allocation
1 After allocation does not vary, the component availabilities and thereby
Change in process value
(Thousands of dollars)

the system availability is obtained. The procedure is per-

0 formed until the system availability is matched with the cal-
culated value of the break even system availability. The
-1
improvements in component reliabilities required to attain
-2
80
-3
60
Change in process value

-4
(Thousands of dollars)

0 1 3 5 10 15 20 40
Valuation period ( Years)
20
Fig. 7. Change in process value before and after reliability allocation 0
(H = 8000 h; i = 12%; m = 2 kg/s; U = 0.07 $/kW h).
-20

-40
conditions, the earnings of the company will only get de-
creased with the years of operation, when compared to -60

the state before modification. The change in process value -80

-1 -0.5 0 0.5 1
works out to be negative because the change in the modi-
fied system availability is more than the allowable varia- % Variation of system availability from the
tion. The allowable variation corresponds to the break breakeven availability

even system availability of the modified system, and for Fig. 8. Effect of variation of the process system availability from the break
the change in process value to be positive, the change in even level (H = 8000 h m = 2 kg/s; N = 20 years; U = 0.07 $/kW h).
1386 P.V. Shouri, P.S. Sreejith / Energy Conversion and Management 49 (2008) 1380–1387

Table 2 model was used to determine the change in process value

Reliability goals to achieve break even availability of the modified system and was also used to study the effect
Serial no. Component Improvement in of variations of operating parameters on the process system
reliability required (%) value. The model was also used to determine the break
1 Fuel supply pump 2.35 even availability of the modified system. An algorithm
2 Boiler 3.28 for reliability allocation in system modification was devel-
3 Condensate return pump 1.25
4 Condenser 1.88
oped and was applied to a power plant. A measure of the
5 Turbine 0.63 component reliability improvements required to achieve
6 Generator 0.94 the break even system availability was obtained using this
7 Piping 0.63 algorithm. The impact of the variation of process system
8 Draft fan 0.78 availability from the break even level on the system value
is also studied. The studies indicate that the change in sys-
tem configuration resulting from system modification plays
8000 a vital role in deciding the process value.
7000 Before allocation
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