An assessment of the financial efficiency of a heat recovery system from graywater in a hotel

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1 An assessmen of he financial efficiency of a hea recovery sysem from graywaer in a hoel Aleksandra Mazur 1,* 1 Rzeszów Universiy of Technology, Faculy of Civil and Environmenal Engineering and Archiecure, Deparmen of Infrasrucure and Susainable Developmen, al. Powsańców Warszawy 12, Rzeszów, Poland Absrac. The purpose of he aricle is o deermine he profiabiliy of invesing in a graywaer hea recovery sysem in a hoel faciliy locaed in souh-easern Poland whichis dependen on hree hea sources for he domesic ho waer preparaion sysem, i.e. gas boiler, biomass boiler and elecric heaer. There were also various opions for accommodaion use: 25%, 50%, 75% and 100% occupancy of he hoel. The research was focused on he mos frequenly used mehods for he absolue assessmen of he effeciveness of invesmen projecs enabling he creaion of an objecive crierion. Thus, boh he simple mehod - Simple Pay Back Period SPBP and dynamic mehods based on he discoun accoun were used in calculaions: Ne Presen Value NPV, Inernal Rae of Reurn IRR, Profiabiliy Index PI, Discouned Pay Back Period DPBP. The analysis also includes he annual increase in he purchase price of energy carriers. The conduced research has shown ha in mos cases he insallaion of he DWHR (Drain Waer Hea Recovery) sysem is beneficial and profiable o he invesor. 1 Inroducion One of he curren objecives of modern energy policy is he raional managemen of he naural resources of he Earh, including fossil fuels sill available, wih a focus on raionalizaion of heir consumpion [1]. Due o he high operaional energy consumpion of consrucion faciliies, i seems imporan o increase he energy efficiency of heaing and heaing insallaions, including sysems for supplying he building wih ho waer, which is one of he prioriies of he European Union's energy economy [2]. Hence he aciviies in he field of replacing low-efficien heaing boilers wih modern energy-saving devices, and he modernizaion of he insallaion allowing for he maximizaion of work efficiency or he inegraion of various insallaion sysems [3-5]. Anoher way o reduce he energy consumpion in a building can also be an invesmen in renewable energy sources [6, 7], including he insallaion of DWHR (Drain Waer Hea Recovery) enabling he recovery of wase hea from sewage sysems [8-10]. The sysem of hea recovery from graywaer is herefore especially more profiable he higher he consumpion of ho waer in he building [11]. I seems ha in service faciliies such as laundries, hoels, swimming pools, which are examples of buildings wih a high * Corresponding auhor: a.mazur@prz.edu.pl The Auhors, published by EDP Sciences. This is an open access aricle disribued under he erms of he Creaive Commons Aribuion License 4.0 (hp://creaivecommons.org/licenses/by/4.0/).

2 energy demand for ho waer purposes, an invesmen involving he assembly of he DWHR sysem may prove paricularly beneficial. An invesmen in renewable energy sources, including he Drain Waer Hea Recovery sysem canno only be beneficial because of is posiive environmenal effec, bu above all, i should be profiable for he poenial invesor as only hen can here be a prospec for he wider applicaion of such sysems in many consrucion objecs. The purpose of he aricle is o deermine he economic efficiency of he hea recovery sysem from graywaer in a hree-sar hoel, implemened by equipping he sewage sysem o discharge used waer from shower cabins ino horizonal hea exchangers depending on he hea source of he building's supply of ho waer and a differen percenage of accommodaion. 2 Case sudy As a research objec, a 3-sar hoel wih a usable area of 1,448 m 2 and a volume of 10,000 m 3 locaed in Rzeszów in souh-easern Poland was adoped. I is a ground floor building wih a parially developed floor facing he fron, wihou a basemen. The hoel has 44 rooms, and alogeher has 100 beds. A summary of he deailed rooms is shown in Table 1. Table 1. Lis of hoel rooms. Type of room Number of rooms Single room 4 Double room 28 Triple room 8 Quadruple room 4 Each room has a bahroom wih a shower. Due o he fac ha he bahrooms in he wo adjacen rooms are adjacen o each oher, one horizonal DWHR hea exchanger is insalled a he ouflow of graywaer ino he wo showers. The invesmen concerns, herefore, he insallaion of a oal of 22 horizonal hea exchangers. The horizonal hea exchanger model A1000 EcoDrain [12] was adoped for he analysis. The principle of operaion of such devices is based on he counercurren flow of cold waer and graywaer. The ho waer consumed during a shower bah afer enering he sewage sysem is graviaionally direced o he horizonal hea exchanger. A he same ime, he cold waer fed o he exchanger under pressure is heaed up by he DWHR. The hea deposied in graywaer is aken over by cold waer. The preheaed waer is hen direced o he shower mixer a he place connecing he cold waer insead and he cooled sewage flows o he saniary sewage sysem. In order o deermine he profiabiliy of he invesmen, hree differen varians of hea sources supplying he building's supply of ho waer were adoped: - Varian A: gas condensing boiler, - Varian B: biomass boiler, - Varian C: elecric heaer. Due o he varying degree of occupancy of ouris faciliies a differen periods of ime, four opions for using accommodaion in he analyzed hoel faciliy were assumed: - 25% of used beds, - 50 % of used beds, - 75% of used beds, - 100% of used beds. I was assumed ha in each opion he rooms are equally occupied. 2

3 3 Mehodology The following indicaors of he economic effeciveness of invesmen projecs were used in he aricle: Ne Presen Value NPV, Inernal Rae of Reurn IRR, Profiabiliy Index PI, Simple Pay Back Period SPBP, Discouned Pay Back Period DPBP, wherein only one ou of he above-menioned indicaors belonged o he group of simple mehods for he profabiliy assessmen of an invesmen, and i is he Simple Pay Back Period. The oher analyzed raios are classified as dynamic mehods which, by using he discoun accoun, are a more effecive and more precise ool for assessing he profiabiliy of he underaking [13]. Ne Presen Value (NPV) is calculaed as he sum of all cash flows (NCF) resuling from he implemenaion of invesmens, discouned separaely for each year hroughou he period covered by he financial analysis, assuming a fixed discoun rae. The NPV value can be expressed by he formula (1)[13]: NCF NPV ) (1) k) = n ( = 0 (1 + where: NCF ne cash flows in consecuive periods = 0 o n invesmen life cycle, k discoun rae, = 0 o n subsequen years of he life cycle of he invesmen. The venure is deermined as cos-effecive when he value of he NPV indicaor is greaer han zero. When i equals zero, he invesmen can be realized, bu i will no bring clear financial benefis for he invesor (he venure is neural). The discoun rae value for which he Ne Presen Value is zero (NPV = 0) is referred o as he Inernal Rae of Reurn and marked IRR. Is approximae value can be deermined by he formula (2)[14]: IRR PV (r r ) = r (2) 1 PV + NV where: PV ne presen value of invesmens, designaed for r 1, NV ne presen value of invesmens, designaed for r 2, r 1 discoun rae for which NPV > 0, r 2 discoun rae for which NPV < 0. The venure is profiable when he IRR is higher han he assumed discoun rae. The nex analyzed parameer is Profiabiliy Index (PI), which is expressed by he formula (3)[13]: PI = n = 1 NCF " + " ( 1 + k ) PVI (3) where: NCF + posiive ne cash flows in subsequen periods = 1 o n invesmen life cycle, PVI curren value of capial expendiures. An invesmen ask may be inended for implemenaion when he profiabiliy raio is greaer han or equal o 1. In he laer case, he underaking is clearly profiable. As one of he decision-making crieria, he Simple Pay Back Period (SPBP) was also used o assess he cos-effeciveness of he invesmen. This mehod esimaes he lengh of he period (OZ), which is necessary so ha he invesmen oulays incurred are offse by he ne 3

4 benefis (KN ), generaed in subsequen years by he venure [13]. In order o calculae he indicaor, he following algorihm was adoped (4): m I = OZ = 0 = m + 1 KN (4) where: = 0 o m subsequen years of he calculaion period in which invesmen expenses are incurred, = m + 1 subsequen years of he calculaion period in which ne benefis are obained. The final analyzed financial effeciveness indicaor is he Discouned Pay Back Period (DPBP), which deermines he lengh of he period (OZ), required o balance invesmen "+" oulays by discouned posiive ne benefis (NCF ) generaed by he underaking. The equaion for deermining he DPBP value is as follows (5)[13]: PVI = OZ = m + 1 NCF " + " ( 1 + k ) (5) The shorer he payback period, he more profiable he invesmen is. The daa consiuing he basis for esimaing he indicaors of economic effeciveness assessmen of he invesmen projec being analyzed is summarized in Table 2. Table 2. Daa used for financial analysis. Parameer Parameer value The cos of purchasing gas in he year 0 0,595 /m 3 The cos of purchasing of wood pelle in he year 0 The cos of purchasing elecriciy in he year 0 Analysis period 200,357 / 0,136 /kwh 30 years The discoun rae 5% The cos of purchasing DWHR, insallaion coss included 630 The annual increase in gas prices 2% The annual increase in wood pelle prices 2,5% The annual increase in elecriciy prices 1,5% In order o be able o analyze he financial effeciveness of he invesmen in he insallaion of DWHR exchangers in a hoel, i is necessary o deermine he operaing coss of he faciliy resuling from he use of a ho waer preparaion sysem for each hea source, boh before he projec implemenaion and afer he insallaion of hea recovery from graywaer. The calculaion of he difference beween hese wo values allows deermining he savings resuling from he use of he DWHR sysem. Seasonal demand for ho waer Q W,nd for acceped varians on he basis of which final energy Q k,w is deermined, i.e. he amoun of energy o be delivered o he faciliy o prepare ho waer in a given quaniy and for specific parameers calculaed according o he mehodology presened in he Regulaion [15] using he ArCaDiA-TERMO compuer program 6.6. based on he daa compiled in Table 3. Calculaions regarding he uilizaion of wase hea from sewage sysems in he scope of esimaing he emperaure increase of preheaed waer flowing from he EcoDrain hea exchanger, as well as deermining he daily and annual energy saved as a resul of he gray hea recovery sysem in he hoel building was carried ou using he calculaion mehodology presened in publicaion [16]. 4

5 Table 3. Daa used for calculaions. Parameer Daily ho waer consumpion for 1 bed Shower lengh Parameer value 55 dm 3 /person/day 8 min/person/day Ho waer emperaure 55 C Cold waer emperaure 9 C The emperaure of he mixed waer flowing ou of he showerhead 39 C Mixed waer flow from he showerhead Coefficien of ho waer loss in he cabin and pipes leading o he DWHR device, x 9,5 L/min 0,96 Performance of DWHR hea exchanger 37,5% The basis for iniiaing he economic analysis of he projec was o deermine he invesmen oulays and receips from he implemenaion of he invesmen as savings resuling from he use of he DWHR sysem. The cos of purchasing and assembling 22 EcoDrain hea exchangers has been esimaed a Calculaion resuls and analysis The invesmen profiabiliy analysis was carried ou according o he Ne Presen Value NPV crierion, which is based on discouned cash flows, hence Figure 1 shows he disribuion of cumulaed discouned cash flows (ΣPV-NCF) for hea source gas opion A - condensing gas boiler, Figure 2 for varian B - biomass boiler, and in Figure 3 for varian C - elecric heaer. I is assumed ha he invesmen is profiable hen, when he profis generaed by he projec, afer aking ino accoun he discoun accoun, will offse he capial expendiures. Fig. 1. Cumulaive discouned cash flows for varian A of he hea source in he building. 5

6 Fig. 2. Cumulaive discouned cash flows for varian B of he hea source in he building. Fig. 3. Cumulaive discouned cash flows for varian C of he hea source in he building. 6

7 As is idenified in Figure 1, Figure 2 and Figure 3 a significan impac on he amoun of cash flow when recognizing his invesmen as profiable, is he number of users of his hea recovery sysem. In a siuaion where he percenage of accommodaion used is 75% and 100%, i urns ou ha he projec can be considered beneficial o he invesor, regardless of he adoped source of hea. The insallaion of a DWHR sysem in a configuraion wih an elecric heaer seems o be he mos cos-effecive, as i generaes he highes profis in each of he cases analyzed, regardless of he occupancy rae of he hoel. This may be due o he fac ha he price of elecriciy as a hea carrier is relaively high compared o he purchase price of naural gas or biomass in he form of wood pelles. The smalles cash flows are observed in he case of varian B, hence he lowes values of ΣPV-NCF were obained in he end, and his varian is he leas favorable for he invesor. The exac value of he NPV indicaor, as well as he resuls of he calculaion of he oher crieria aken ino accoun in assessing he financial effeciveness of invesmens such as: Inernal Rae of Reurn IRR, Profiabiliy Index PI, Simple Pay Back Period SPBP and Discouned Pay Back Period DPBP are summarized in Table 6. Table 6. The resuls of calculaions of invesmen financial performance indicaors. Varian Opion NPV [ ] IRR [%] PI [-] SPBP [yrs] DPBP [yrs] 25% -7046,42 0,17% 0,49 29,34 - A 50% -242,94 4,86% 0,98 16,78 37,43 75% 6565,69 8,38% 1,47 11,78 18,23 100% 13374,22 11,43% 1,96 9,08 12,41 25% -8977,59-1,58% 0,35 36,47 - B 50% -4095,23 2,51% 0,70 22,21-75% 787,19 5,43% 1,06 16,07 33,34 100% 5669,56 7,86% 1,41 12,61 20,39 25% 646,39 5,37% 1,05 15,59 31,01 C 50% 15152,79 12,45% 2,09 8,25 10,90 75% 29659,18 18,55% 3,14 5,61 6,75 100% 44165,58 24,40% 4,19 4,25 4,90 The value of he Ne Presen Value parameer resuls direcly from he graphs shown in Figure 1, Figure 2 and Figure 3, so he conclusions are analogous. In analyzing he IRR indicaor, he invesmen is profiable for varians A and B wih opions from 75% of he use of beds, and for opion C for all opions analyzed. When he hoel is fully occupied, he IRR value is 24,4%, almos five imes he assumed discoun rae. The same conclusions come o mind when analyzing he PI index values. The C opion is definiely he mos advanageous, and for he remaining hea sources and only wih he 75% and 100% occupancy, wih a view o higher profis in opion A han B. The SPBP parameer was also esimaed, i.e. he payback period of he invesmen funds involved, which for he analyzed cases ranged from 4,25 for he mos profiable venure: opion C, opion 100% o 36,47 years for he leas profiable underaking: opion B, opion 25%. Apar from he leas favorable case, for all ohers he ime needed o recover expendiure is accepable and does no exceed he 30-year period aken for his analysis. A more accurae indicaor is DPBP, which is he payback period aking ino accoun he discoun accoun, bu afer implemenaion in he calculaion of he change in he ime value of money, he number of years needed o recover he expendiure spen on he invesmen has been significanly exended, and in some cases was so large ha he esimaion values have become impossible. 7

8 Taking ino accoun he DPBP parameer, he profiabiliy of he projec afer he opion C seems o be small. 5 Summary The conduced research has shown ha he cos-effeciveness of he DWHR sysem in a hoel is unambiguous when he hea carrier for he ho waer supply sysem is elecric energy and brings considerable financial benefis o he invesor. In oher cases, he profiabiliy of he projec depends on he occupancy rae of he hoel. If a large number of guess use he accommodaion, he invesmen is always profiable, regardless of he hea source. The insallaion of a hea recovery sysem from graywaer does no require significan invesmen means compared o oher insallaions in a hoel faciliy, and i has many advanages, such as no need o operae or provide elecriciy (he insallaion works always and auomaically), ye he bigges advanage is he posiive effec on he exernal environmen, because every kilowa-hour of saved energy ranslaes ino a lower emission of polluans ino he amosphere, herefore equiping every hoel wih such a sysem should be considered o, especially in larger faciliies where boh waer consumpion and he amoun of energy recovered are high. References 1. Direcive 2002/91/EC of he European Parliamen and of he Council of 16 December 2002 on he energy performance of buildings 2. COM(2015) 80 final communicaion on A Framework Sraegy for a Resilien Energy Union wih a Forward-Looking Climae Change Policy (European Commission, Brussels, 2015) 3. SWD(2016) 24 final communicaion on EU Sraegy for Heaing and Cooling (European Commission, Brussels, 2016) 4. K. Pochwa, E3S Web Conf. 17, (2017) 5. M. Sarzec, J. Dziopak, Underground Infrasrucure of Urban Areas 4, (2018) 6. A. Sec, A.Mazur, D. Słyś, E3S Web Conf. 22, (2017) 7. Q. Zhang, Z. Yang, N. Li, R. Feng, YD. Gao, Energ. Buildings 167, (2018) 8. S. Kordana, D. Słyś, J. Dziopak, J. Clean. Prod. 82, (2014) 9. A. Sec, S. Kordana, D. Słyś, J. Clean. Prod. 151, (2017) 10. R. Manouchehri, M.R. Collins, Energ. Buildings 130, 1-7 (2016) 11. D. Słyś, S. Kordana, Energ. Buildings 71, 1-11 (2014) 12. Ecodrain Brochures, hps://ecodrain.com/en/ (accessed February 2018) 13. W. Rogowski, Rachunek efekywności inwesycji, (Wolers Kluwer Poland, Warsaw, 2013) 14. M. Sierpińska, T. Jachna, Ocena przedsiębiorswa według sandardów świaowych, (Polish Scienific Publishers PWN, Warsaw, 2004) 15. Journal of Laws of 2015, iem 376, Regulaion of he Miniser of Infrasrucure and Developmen of 18 February 2015 on he mehodology for deermining he energy performance of a building or par of a building and energy performance cerificaes 16. S. Fidewicz, Biblioeka Źródłowa Energeyki Prosumenckiej, Available: hp://ilabepro.polsl.pl/spep/rapory/energeyka-odpadowa/fidewicz%20sz. %20Ciep%C5%82o%20odpadowe%20w%20domu..pdf (accessed February 2018) 8