Pinch Analysis for Economic Appraisal of Sustainable Projects

Abstract

To achieve overall sustainable development, the economic viability of energy conservation and renewable energy projects are essential. The economic viability of a project can be determined through the economic appraisal of the project. Economic pinch analysis, proposed in this paper, helps in evaluating the economic merits such as the net present value (NPV), the annual-worth (AW), and the discounted payback period (DBP) of a project. Novel representations of composite cash flows, through graphical as well as tabular calculation methods, are presented here for the temporal analysis of a project. Applicability of the proposed economic pinch analysis is explained through economic appraisal of three demonstrative examples from the field of sustainable energy systems: a solar hot water system, energy conservation projects, and a rooftop solar photovoltaic system. In the case of a solar hot water system, sensitivity analysis of different parameters, combined with the proposed economic pinch analysis, helps in understanding different policy implications. Implications of different economic metrics to select appropriate mutually exclusive projects are demonstrated via an energy conservation example. The levelized cost of electricity generation is calculated for the rooftop solar photovoltaic system by matching two composite curves. Although illustrated for sustainable energy examples, the proposed approach is generic to be applicable to determine economic appraisal of any project.

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Correspondence to Santanu Bandyopadhyay.

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Bandyopadhyay, S. Pinch Analysis for Economic Appraisal of Sustainable Projects. Process Integr Optim Sustain 4, 171–182 (2020). https://doi.org/10.1007/s41660-020-00106-x

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Keywords

  • Pinch analysis
  • Economic pinch analysis
  • Economic appraisal
  • Sustainable energy systems
  • Levelized cost of electricity