M13 Part1 Tiers1 2 3 PDF

Program for North American Mobility in
Higher Education UNIVERSIDAD

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Introducing Process Integration for Environmental

Control in Engineering Curricula
MODULE 10: Capital Cost-Effectiveness
Created at:
at
North Carolina State University & Universidad de

Guanajuato; 2005.
Jose G. Zavala - John Heitmann

Ryan Sharkey Alberto F. Aguilera
Contents UNIVERSIDAD
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Tier I Module Information
Tier II Example Problem
Tier III Open Ended Problem

UNIVERSIDAD
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Capital Cost Effectiveness

Tier I: Module Information
Jose Guadalupe Zavala Oseguera

Tier I Contents UNIVERSIDAD
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I General Introduction
II Optimization prior-Design:
Extended Models
III Design and Economics

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1.1 Pinch Technology

1.1 Pinch Technology UNIVERSIDAD
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The pinch principle states that no design can achieve

optimized utility targets if there is any cross-pinch
from above the pinch to below the pinch:
Actual=XP + Target
If XP=0, then the

actual heat
requirement equal the
target.
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Base Case System
GRAND COMPOSITE
TOTAL SITE INTEGRATION
Process SUPERTARGETTING/RPA PLUS-MINUS
Integration OPTIMISE/CONSTRAINTS CHANGE PROCESS
BALANCED COMPOSITES
RECONCILE/BALANCED GRID
Design
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The minimum vertical distance between the composite

curves gives the location of the pinch
1.2 Capital Cost Targeting and Optimization UNIVERSIDAD
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Process integration makes possible to estimate an

economically optimum value for Tmin from the
composite curves shape.
The two relevant elements of capital cost are:
1. Capital cost will change in the unit operations of
the process (i. e. the distillation columns, reactors,
etc.)
2. Capital cost will changes in the heat exchanger

network which has to be designed.
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In a network as Tmin increases, demand for

utilities increases, but the overall heat
exchanger area decreases. The total annual
cost is minimized for some value of Tmin .
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Minimum area target:
(a) Temperature (b)

1
Interval I 2
A B C D E F
Enthaphy
Vertical heat transfer, U=constant

Each match exchanges heat between the corner temperatures of
the enthalpy intervals.
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The area from the vertical heat transfer in interval i is:
Ai = Hi/(U.TLM.i)
The global minimum network area is given by:
Atot=(1/U)intervalsi (H.i/.TLM.i)
If the heat transfer coefficients differ, then for a match between
stream i and stream j the global heat transfer coefficient (Uij ) is:
1/Uij=1/hi+1/hj h includes: film, wall and fouling resistance

Finally:
Atot.min=intervalsi (1/TLM.i) jstreams(qj/hj)i
This allows a Target for minimum heat exchanger area to be calculated

from the composite curves Prior to Design.
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The vertical heat transfer is not strictly correct for

minimum are when the h values are not identical:
1. Lower h values means more heat exchange area and vice

versa.
2. Lower overall area may be achieved by using more of the

available temperature differences for streams with lower h
values.
3. Lower overall area may be achieved if streams with low h

values are matched with each other.
1.3 Optimization prior-Design UNIVERSIDAD
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Area
z
Crossing Pinch:
You have used cold water to
P Q decrease the temperature of a hot
stream from above the pinch region.
R
Energy
Design Z & Design P: Z has cross pinch; design Z should to be adjusted.
Design Z & Design Q: Design Z can be improved by correcting matches near

or away from the pinch.
Design Z & Design R: The temperature differences must be increased increasing

the network energy consumption.
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Using: Annual Cost
Total Cost (Vertical Model)
1. Network Capital Cost = a Umin.MER + b Amin

2. Annual Energy Cost = QHminCH + QCminCC Opt
Energy Cost
The resulting cost profile displays Network
a minimum at some value of Tmin Capital Cost (V. M.)
Energy & Tmin
A network designed at a non-optimum value of Tmin will only reach

the global optimum after continuous evolution and continuous
optimization of the exchanger duties if the initial structure is in the
topology region containing Tmin.opt because the stream population
at the pinch can changes.
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Practical Design: Achieve the energy target allowing a small sacrifice

in area.
1. Cp Rules: The Pinch Design

Method requires Cpin Cpout
2. The Driving Force Plot:

Matches displaying vertical
heat transfer on the
composites fit the drawing
force plot exactly.
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The Remaining Problem Analysis
Composite curves for

Complete stream set
The analysis quantify

both the surplus and
deficit use of driving Minimum overall
forces improving the Area= Amin
Composite curves for
driving force plot Remaining stream set
am Ar,m
approach to the
Targets during the minimum overall area
now = am + Ar,m
design. Penalty on overall area

= am + Ar,m-Amin
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II Optimization prior-Design:
Extended Models
2.1 Non-vertical Heat transfer

II Extended Models
2.1 Non Vertical Heat Transfer UNIVERSIDAD
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When h values have significant differences,
at each stream in each interval is applied a T
contribution with the next set of equations 1
which ensures enthalpy balance remains in 2

the interval: 3
Tjhj=, j=1,,Si 4
and 5
6
Sij=1CPj(Tj-Tk)=0,
Tj*=T4 + T4 +( - ) Tj
where
S I = number of streams at enthalpy
interval edge i, The temperature at T*j at which
stream j now crosses the interval
Cpj = heat capacity flow rate of stream j, edge i is then given as follos:
k = stream which causes the enthalpy
interval i.
Tj*=Tk -Tk+Tj
The Area Target is again predicted with equation:
Atot.min=intervalsi (1/TLM.i) jstreams(qj/hj)i
II Extended Models
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Linear Programming: The minimum network area can also be calculated

dividing the composite curves into successively smaller enthalpy intervals
to generate a large number of stream segments, the final solution gives
an even lower area target.
Shifting temperatures at more intervals might steer the design to a lower area
but increased complexity.
Annual Cost
Total Cost Vertical Model
Capital Cost LP model

The optimum value of the
Optimum Tmin is hardly changed
between the two methods.
Energy
Capital Cost Vertical Model Cost
Capital cost
LP model
Energy & Tmin

II Extended Models
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SUGGESTION: compare the simple

target with one complex target if
the two predict similar areas then
design for verticality as described
before.
If a problem has particularly small
temperature differences at points
other than the pinch, the shifts can
also be applied there.
II Extended Models
2.2 Non Linear Cost Laws UNIVERSIDAD
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If a simple linear exchanger cost law for individual

exchangers is used:
CCk=a+bAk The coefficients a,b are the
corresponding installed
capital cost coefficients.
The capital cost of a network is predicted in the basis of

targets for the minimum number of units (Umin.MER) and
minimum network area (Amin):
CCnetwork = a Umin.MER + b Amin
The capital cost of a network using a non-linear cost-law is
given by:
CCnetwork= kUminMERCCk = kUmin.MER (a+b Akc)

II Extended Models
2.2 Non Linear Cost Laws UNIVERSIDAD
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Assuming that all the areas of individual units are

identical:
CCnetwork= Umin.MER [ a + b( Amin/ Umin.MER ) c ]
Exponent c usually varies between 0.7 and 1.0.
This equation in practice gives very good

estimates because some cancellation of errors
occurs.
II Extended Models
2.3 Non-countercurrent exchangers: 1-2 Des. UNIVERSIDAD
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The effective temperature difference is

reduced, this can be accounted for
with the FT factor in the exchanger
design equation:
Q = UATLMFT
The target for the number of shells accounting for design sensitivity for
the total real number of shells is based on the equation:
Nshells = iinvervalsNi(Si-1)
Ni = real (non-integer) number of shells resulting from the temperatures enthalpy interval i
Si = number of streams in enthalpy interval i.
and the equation:

N = ln[(1-RPN,2N)/(1-PN,2N)]/ln W
W = (R+1+(R2+1)-2RXP)/(R+1+(R2+1) 2XP)
II Extended Models
2.3 Non-countercurrent exchangers: 1-2 Des. UNIVERSIDAD
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The number of shell Target is

evaluated for stream sections each
side of the Pinch.
The capital cost target for an overall area (Amin,1-2), number of

units (Umin.MER), and integer number of shells (Nshells) is given by:
CCnetwork= aUmin,MER +b Nshells(Amin,1-2/Nshells)2
The cost prediction based on the number of units and the

number of shells method when compared might shown a very
different profile. The resulting Tmin.opt would be different.
II Extended Models
2.4 Stream specific cost-weighting factors. UNIVERSIDAD
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Designs based on optimized

initialization require virtually no
evolution to reduce their total cost.
Design options in the material and energy balances:

changes in the reactor design
hanges in the separation system
The screening can be performed using equipment cost for

the reaction and separation system together with targets for
costs in the heat exchanger network.
II Extended Models
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The vertical model for minimum network area :

Good enough for
Atot.min= intervals (1/TLM.i) streams(q /h )
i j j j i pre-design
where:
optimization!!
TLM.i = the logarihmic mean temperature difference of entalphy interval i
(q j )i = enthalpy change of stream j in interval I
(h j )i = heat transfer coefficient (including film, wall and fouling
contributions) of stream j in interval i.
The target for the minimum heat transfer matches is given by:
Umin.ab=Nab-1
Umin.be=Nbe-1
Nunits=Umin.ab+Umin.be
Umin: minimum number of units including heaters and coolers above and below the pinch respectively
Nunits: the minimum number of units in the network
II Extended Models
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To predict the capital cost of a network use:

Installed capital cost of exchangers = a + b Ac
When cost targeting
Where: the distribution of
a,b,c = cost law coefficients which vary according to: the targeted area
materials of construction between the
pressure rating network exchangers
type of exchanger. is unknown!!!
To account for different specifications starts with the next
expression which sums area contributions for each stream:
Each stream makes a
Amin = jstreams[ Iintervals (1 / TLmi (qj /hj )]j
contribution to the total
= jstreams Aj area defined only by its
position in the composite
curve and it h-value!!!
II Extended Models
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Contribution to Area = Contribution to Capital Cost
If only one cost law is to be used for a

network comprising mixing materials of
construction the area contribution of
streams requiring special materials
must be somehow increased.
II Extended Models
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Common Causes of Error in Capital Cost Targeting:

Total heat transfer area is assumed to be divided equally between
network exchangers.
This effects respectively give small
positive and negative errors in the
cost targets and partially cancel.
The area target is usually less than the area observed in design.
The largest errors for a network of mixed-material exchangers are

expected when the h-values of streams requiring one material all vary
significantly from the h-values of streams requiring another material.
II Extended Models
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Weight the heat transfer coefficients to reflect the stream

requirement
Cost of a single exchanger:

Installed capital cost of reference exchanger = a1+ b1 Ac1
Cost of a heat exchanger with different specifications:

Installed capital cost of reference exchanger = a2+ b2 Ac2
a2,b2,c2 = cost law coefficients for the reference exchanger
The cost of the special heat exchanger can be determined from the
reference cost law using a modified area:
A* = [(b2/b1)1/c1 A(c2/c1) 1]A
II Extended Models
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The overall heat transfer coefficient also can be related to

the actual U-value:
1/U* = [ (b2/b1)1/c1 Ac2/c1 1](1/U)
The overall heat transfer coefficient in a single exchanger

comprises resistance contributions from both streams. Each
contribution contain allowances for film, wall, and fouling
resistances.
II Extended Models
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The overall heat transfer coefficient:

Assuming
1/U = 1/hhot + 1/hcold independence of the
flow arrangement!!
The equation for the modified h-value h* in either stream of
the match: Splitting stream-
hj* = [ (b1/b2)1/c1 A1-c2/c1 ]hj wise U to obtain
this expression
A stream-specific cost-weighting factor j to apply to the h-
value of a special stream j can now be defined. This is the
radio of weighted to actual stream h-values:
j = (hj*/hj) = (b1/b2)1/c1A1-c2/c1
II Extended Models
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To cost a special heat exchanger using the reference cost

law:
Inst. cost of special exchanger =a1 + b1[(Q/TLM)[(1/hothhot)+(1/coldhcold)]]c1
Where
hot = cold The result is as accurate
as the cost laws
The error involved depends upon

whether the special requirements are
caused by differences in material of
construction, pressure rating or design
type.
II Extended Models
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The same philosophy of weighting area contributions in a single

exchanger can be extended to weighting stream area
contributions for a whole network.
The special stream cost-weighting factors is then expressed as:
j = (b1/b2)1/c1(Amin/Nunits)1-(c2/c1) At the targeting

stage, exchangers
are assumed to be
all the same size
II Extended Models
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The weighted area (A*) when applied returns an

essentially correct capital cost for a network of
exchangers involving mixed specifications.
The application of costs factors to each stream,

determined by the exchanger design it requires, allows
capital cost targets to take account of differences in
exchanger specifications and pre-design optimization.
II Extended Models
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Simplifying to:
Cost laws can often be adjusted
j = (b1/b2)1/c such that c is constant
Once the factors has been evaluated for each stream, a

weighted network area target A*min can be calculated:
An improved
A*min = jstreams[ Iintervals (1 / TLmi (qj /j hj )]j estimate of A*min
can be evaluated
by linear
programming.
II Extended Models
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Choose the reference cost law

for the heat exchangers
Calculate -factors for those

streams with different
specifications
If the weighted h-values

differ A*min value using the
more complex linear Calculate the weighted area
programming model can A*min
result in lower area.
Calculate the target capital cost

for mixed specification heat
exchanger network
II Extended Models
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Choose the reference cost law Calculate the Target Capital

for the heat exchangers Cost for the reference network
Design or Re-
Re-design (apply
Pinch principles) the network
Calculate the Capital Cost of the There is agreement between Target

reference design applying mixed
specifications
and Design for the network? No!
Yes!
Calculate the target capital cost for mixed Calculate -factors for
those streams with different
specification heat exchanger network
specifications
Calculate the weighted area A*min FINAL DESIGN!

II Extended Models
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This procedure enables mixed cost

laws to be considered in the network
capital cost targeting.
The cost of the exchangers

is somewhere between the
cost of the exchanger made
entirely in either material,
as in the target cost.
II Extended Models
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Heat exchanger networks with mixed

pressure
Shell-and-tube heat exchanger can accommodate

streams of different pressure an the problem is similar
to that of materials of construction
To minimize individual exchanger cost in the design,

the high-pressure stream might be assumed to be
placed on the tube side
II Extended Models
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Varying design types
A match between a stream requiring a reference type exchanger such

as shell-and-tube and a stream requiring a spiral exchanger, forces the
match to be spiral.
II Extended Models
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Varying design types
For mixed equipment types due to the inability to mix different

exchanger types in one unit as assumed in the targets, the cost-weighting
factors should be applied judiciously, in this sense results might not be
consistently reliable.
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3.1 Process Economics: Introduction

3.1 Process Economics: Introduction UNIVERSIDAD
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Expensed
Engineering
Trash
Capitalized
Engineering
Research
Market Analysis
Computer Simulation
Software Programming
Equipment Design
Cost Estimation
Profitability Analysis
Technical Communications
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Essential variables:
No design should
Raw materials
proceed beyond the
Waste products preliminary stage
By products without a consideration
Societal Need
Equipment of costs!!
Plant location
Costs
Time factors
Process considerations
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Summary of purchased equipment cost

Heat exchangers and
condensers
The annual profit is the
Pressure vessels
difference between the annual
Column and trays revenue and expenses
Compressors
The required fixed capital
Furnaces cost investments for the
Reactors base-case system can be
estimated from the total
Dryers
purchased-equipment cost
Pumps using equipment/cost ratio
Separators
Storage vessels
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The most profitable

flow-sheet must
consider safety, and
environmental aspects.
The economic analysis must investigate future
process viability by assessing possible future shifts
in operating costs and product price, including
foreseeable changes in legislation.
3.2 Analysis of cost estimation UNIVERSIDAD
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One of the major costs involved in any chemical

process is for equipment.
The Monthly Labor Review, published by the U.S.
Boreau of Labor Statistics gives up-to-date
information on present prices and wages for different
types of industries.
www.usfca.edu/usf/library/research/econstats.html
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The engineer
must recommend
the production
rate and
operating
schedules that
will give optimal
economic results
The point where the total product cost equals the total
income is designated as the breakeven point
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Fixed-Capital Working Total Capital

Investment (FIC) + Capital (WI) = Investment (TCI)
Direct cost (manufacturing fixed-capital

investment)
Indirect cost (non-manufacturing fixed

capital investment)
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Purchased equipment
Purchased-equipment installation
Instrumentation and controls
Piping
Direct cost (manufacturing
fixed-capital investment): Electrical systems
Building
Yard improvements
Service facilities
Land
Engineering and supervision

Construction expenses
Indirect cost (non-manufacturing
fixed capital investment): Legal expenses
Contractors fee
Contingency
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The working capital is the total

amount of money invested in:
raw materials and supplies
carried in stock, finished
products in stock and semi-
finished products in the process
of manufactured, accounts
receivable, cash necessary for
monthly payment of operating
expenses, accounts payable,
and taxes payable.
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A cost index is an index value for a given time showing the cost at
that time relative to a certain base time:
Present cost = original cost ( index value at present / index value at original time)
www.che.com
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Cost of equipment a = (Cost of equipment b)XC
The types of equipment can be divided in:

processing equipment
raw materials equipment
finished-product handling and storage equipment
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Service Facilities, utilities to

supply:
steam
water
power
compressed air
fuel
The total cost for services facilities in chemical plants generally

ranges from 30 to 80 percent of the purchased-equipment cost
with 55 percent representing an average for a normal solid-fluid
processing plant.
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Pollution prevention and

pollution minimization techniques
should be part of the design
strategy. Pollution minimization is
sometimes the driving force for
new process development,
design, and construction.
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The estimates on capital cost investments depends on the

degree of development of the project.
Detailed-item estimate: accuracy range is about 5 percent.
Unit cost estimate: 10 to 20 percent accuracy.

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The general method for estimating total capital

investment by percentage of delivered-equipment cost requires
determination of the delivered equipment cost:
Cn=(E+f1E+f2E+f3E+ + fnE)
The factors used in making an estimation of this type

should be determined on the basis of the type of process
involved, design complexity, required materials of construction,
location of the plant, past experience, and other items
depending on the particular unit under consideration
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The percentage of
delivered equipment cost methods
depend on the cost for the major
equipment items provided by the
user (the Lang Factor is included
in this methods), as determined
from the material and energy
balances and equipment operating
characteristics.
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The plant is designed for a specific rate of

production which is established after a
market study. Other sources of revenue
may include sale of by-products, recovering
of working capital, and sale of other capital
items.
The total product cost may be divided into:
1. Manufacturing cost
2. General expenses
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Manufacturing costs: all expenses directly connected

with the manufacturing operation or the physical equipment of
a process:
1. Variable production costs (might depend on the

production rate): raw materials, operating labor, supervisory labor,
utilities, maintenance, laboratory supplies, royalties.
2. Fixed charges (independent of the production rate).
3. Plant overhead costs.

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The cost of utilities such as:

steam, electricity, process and cooling
water, compressed air, natural gas, fuel
oil, refrigeration, and waste disposal for
ordinary chemical processes amount to
10 to 20 percent of the total product
cost.
Steam requirements include the amount

consumed in the manufacturing process plus that
necessary for auxiliary needs.
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1. Administrative costs. Includes all

activities related with the administrative
activities
General expenses 2. Distribution and marketing

costs.
Vary widely for different types of plants
Research and development

costs.
Includes all fees related with this kind
of work
3.3 Time value of money, taxes, and fixed charges. UNIVERSIDAD
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P quantity of money borrowed

N number of interest periods (in units of time)
Interest rate i
Simple interest is the money accumulated during N interest periods
I = PiN
Total for the amount of money returned (F): F=P+I
Compound Interest : the money invested again and again.
P(second period) = P + I = P + PiN
F ( after N periods of time) = P(1+i)N

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With the interest rate per period r/m

compounded n times per year, the amount
at the end of the year is:
F = ( 1+ r/m )m
The same amount is obtained with the

effective interest rate:
F = (1 + ieff )n
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Interest compounded continuously means that the time

interval for interest accumulation becomes infinitesimally
small.
erN is known as the continuous single payment

compound amount factor, or continuous single
payment future-worth factor. The relationship
between the effective interest rate and the continous
nominal interest rate is given by:
F = Pe rN = P(1 + ieff ) N
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Time value of money is realted specifically to

the capacity of money to earn money and has
nothing to do with inflation or deflation. The
last one refers to the change in the prices of
goods and services.
The calculation of the future worth of a present amount of

money is known as compunding. The inverse of
compunding -obtaining the present worth of a future
amount is designated as discounting.
Discrete compounding P = F (1 + i ) N
Continuous compounding rN
P = Fe
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The annual cash flow is equal to the net

(after-tax) profit plus the allowed
depreciation charges for the year and it
is necessary to convert them to
equivalent values by discounting future
cash flows or by compounding earlier
cash flows to a particular point in time.
Cash flow = Net (after tax) Profit + Allowed Depreciation Charges
[per year]
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Taxable income: the total gross profit (total revenoue minus

total product cost)
In a new investment, income tax attributable is

the gross income it is expected to generate
multiplied by the marginal income tax rate
associated with the adition of that income to
corporate income.
Methods for calculating and including taxes in

economic avaluations are often established by
corporate policy.
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Some analysts choose to add a number to the federal income

tax rate to reflect the possibility of state taxes.
Local governments usually have

juridiction over property taxes and this
type of taxes are refered as direct
since they must be paid directly by the
particular business and can vary from
one locality to another.
For ecnomic evaluation purposes, 2
percent of the fixed-capital investment
in a project is a typical property tax
rate charge.
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Fixed charges: not related to the activity level of the plant.

Depreciation: included in fixed costs.
Federal tax laws controls depreciation charged.

Taxpayers recover the costs in property for the production of
income over a period of years.
Amortization is a series of deductions for intangibles with

limited useful lives as for example patents and copyrights.
Depreciation is calculated with the equation:
A j = ( s j c0 j )(1 ) + d j
j indicates an annual value in year j, A is the annual cash
flow, s the annual sales revenue, c0 the operating cost
(except depreciation)
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The fixed-capital investment, not including land, is depreciable;

depreciation does not inflate or deflate. The period over which
depreciation is charged is the recovery period, and this is
established by tax codes
Calculating depreciation
Straight line method: The amount of depreciation in each year

of the recovery period is:
d = V/n
V -the original investment in the property
d -the annual depreciation in dollars per day
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Modified Accelerated Cost Recovery System (MACRS):

depreiciation method used for most income tax purposes and
most economic evaluations; is based upon the double-declining-
balance method allowing switch to straight-line at a point, and
using a convention for the firsth year; the tax law prescribes all
these conditions.
Half-year convention: in the first year only one-half of the

double declining-balance method is allowed and the balance
remaining after the end of the recovery period is depreciated
in the next year. This leads to the result that the MACRS
depreciation always requires an additional year over the
length of the recovery perio
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The annual cost for insurance for

ordinary industrial projects are
approximately 1 percent of the
fixed-capital investment.
It is possible to insure against

every possible incidence, but it is
necessary to consider the results
of a potential emergency and
understand the legal
responsibility for various types of
events.
3.4 Profitability, Alternative Investments, Replacements. UNIVERSIDAD
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The investment decision is

stated in the basis of
profitability for the
different options; a
profitability standard is a
measure of profit with
respect to the investment
required to generate that
profit.
profit
The cost of capital and the rate of earning on alternative

investments are expressed as a single end-of-the-year
amount after income taxes
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Methods which do not consider the time value of money: rate of

return, rate on investment, payback period, net return.
Methods which consider the time value of money: discounted cash

flow rate, net present worth.
The payback period is the length of time necessary for the total return to
equal the capital investment. Cash flow changes from year to year, the
PBP is obtained with the average cash flow -(Aj)ave being V + Ax the fixed
capital investment.
V + A
PBP = x
( A j ) ave
To be acceptable, a project payback period should be less than or equal to

a reference value based on the minimum acceptable rate of return.
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Net present worth is the total of the present worth of all cash flows
minus the present worth of all capital investments:
N N
NPW = PWFcf , j [( s j coj d j )(1 ) + rec j + d j ] PWFv , j F j
j =1 j = 1
NPW -net present worth

PWFcf,j -selected present worth factor for the cash flow s in year j
sj -sales in year j
coj -total product cost not including depreciation in year j
Fj -total investment in year j

An earning rate is incorporated into the present wort factor by the discount
rate used. The appropriate discount rate to use for discrete compounding is
the minimum acceptable rate of return mar originally selected as the
evaluation standard.
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DCFR is the return obtained from an investment in which all

investments and cash flows are discounted. It is determined by setting
the NPW given above equal to zero and solving for the discount rate
that satisfies the resulting relation.
The DCFR is only of concern when the project rates favorably

compared to the value of the minimum acceptable rate of return.
Clearly if the NPW equals zero the minimum acceptable rate of return
is equal to the discount rate; it is desirable a discount rate bigger than
the minimum acceptable rate of return.
III References
UNIVERSIDAD
DE
GUANAJUATO
Ahmad S. Heat exchanger networks: cost tradeoffs in energy and capital. Ph.D. Thesis, University of
Manchester Institute of Science and Technology, U.K. (1985).
Ahmad S.,Linnhoff B., and Smith R. Design of multipass heat exchangers: an alternative approach. J. Heat
Transfer (ASME) 110, 304-309 (1988).
Linhoff B., and Ahmad S. Cost optimum heat exchanger networks 1. Minimum energy and capital using
simple models for capital cost. Computers Chem. Engng. Vol. 14, No. 7, pp 729-750 (1990).
Linhoff B., and Ahmad S. Cost optimum heat exchanger networks-2. Target and design for detailed capital
cost models. Computers Chem. Engng.Vol. 14, No. 7, pp 751-767 (1990).
Linhoff B. Pinch technology has come of age. Chemical Engineering Progress, pp 33-40, July 1984.
Linhoff B. User guide on process integration for the efficient use of energy. Institution of Chemical
Engineers. UK (1994).
Morgan S. Use process integration to improve process design and the design process. Chemical
Engineering Progress, pp 62-68, sep. (1992).
Peters M., Timmerhaus K. West R. Plant Design and Economics for Chemical Engineers. Mc Graw Hill, Fifth
ed., USA (2003).
UNIVERSIDAD
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Tier II: Sample Problem
Ryan Warwick Sharkey

Tier II Sections UNIVERSIDAD
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I. Problem Introduction
II. Solution Technique
III. Conclusions
I Problem Introduction
UNIVERSIDAD
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You are working for a consulting firm and your boss

has asked you to complete a pinch analysis on a heat
exchanger network.
The set of data given to you is from a proposed mill
that one of your customers wants to build.
It is desired that you find the optimal operating
conditions and provide a cost analysis on your
findings.
UNIVERSIDAD
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GUANAJUATO
There are nine streams, 5 hot and 4 cold, and two

utility sources
Table 1. Stream Data
Temperature (oC) Heat Capacity h-values

Stream Supply Target Flowrate (kW oC-1) (kW m-2 oC-1)
1 120 65 50 0.50
2 80 50 300 0.25
3 135 110 290 0.30
4 220 95 20 0.18
5 135 105 260 0.25
6 65 90 150 0.27
7 75 200 140 0.25
8 30 210 100 0.15
9 60 140 50 0.45
Steam 250 - - 0.35
Cooling Water 15 - - 0.20
(S.G. Hall, S. Ahmad and R. Smith, 1989)
UNIVERSIDAD
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GUANAJUATO
It is also noted with the stream data you are given

that streams 3,4,6,7,9 are corrosive streams thus
requiring piping and heat exchangers for these
streams to be constructed out of titanium, not the
normal carbon-steel.
UNIVERSIDAD
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After performing some cost analysis and market

research the company has determined that the
following are accurate estimations of the cost of
raw materials and the cost of the final product.
Table 2. Cost Information

Annual Sales ($/yr) 6000000
Raw Materials ($/yr) 500000
II Solution Technique
UNIVERSIDAD
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Steps Of Economic Pinch Process

1. Find pinch point for pre-design Tmin
2. Calculate Amin for Tmin
3. Use cost data to find capital cost
4. Recalculate Amin and capital cost for mixed material
construction
5. Find for Topt mixed material system
6. Design system based on Topt
7. Perform profitability analysis on optimal system
2.1 Composite Curves UNIVERSIDAD
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GUANAJUATO
Develop a table with all of the hot streams broken down into
temperature intervals.
Sum all of the CP values for each of the temperature intervals and
calculate Q
Sum each of the successive Q values to find total Q for the 5 hot
streams
Table 3. Hot Composite Curve Data
Interval Temp Stream

i oC 1 2 3 4 5 CP Qi Q
0 50 - - - - - 0 0 0
1 65 - 300 - - - 300 4500 4500
2 80 50 300 - - - 350 5250 9750
3 95 50 - - - - 50 750 10500
4 105 50 - - 20 - 70 700 11200
5 110 50 - - 20 260 330 1650 12850
6 120 50 - 290 20 260 620 6200 19050
7 135 - - 290 20 260 570 8550 27600
8 220 - - - 20 - 20 1700 29300
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The graph for the hot composite curve below

was created by graphing the summated Q values
versus the corresponding temperatures.
Hot Composite Curve
250
200
Temp ( oC)
150
100
50
0
0 5000 10000 15000 20000 25000 30000
Q (kW)
Figure 1. Hot Composite Graph

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The steps to construct the Hot Composite Curve

are repeated using the cold stream data for the
Cold Composite Curve.
Table 4. Cold Composite Curve Data
Interval Temp Stream
i oC 6 7 8 9 CP Qi Q
0 30 - - - - 0 0 0
1 60 - - 100 - 100 3000 3000
2 65 - - 100 50 150 750 3750
3 75 150 - 100 50 300 3000 6750
4 90 150 140 100 50 440 6600 13350
5 140 - 140 100 50 290 14500 27850
6 200 - 140 100 - 240 14400 42250
7 210 - - 100 - 100 1000 43250

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The graph for the cold composite curve was

constructed in the same manor as the hot
composite curve.
Cold Composite Curve
250
200
Temp ( oC)
150
100
50
0
0 10000 20000 30000 40000
Q (kW)
Figure 2. Cold Composite Graph

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Graphing the two composite curves together gives

you a perspective on their relationship to one
another. This allows you to gauge how much the
curves need to be shifted to allow for a Tmin.
Composite Curves
250
200
Temp ( C)
150
o
CCC
HCC
100
50
0
0 10000 20000 30000 40000
Q (kW)
Figure 3. Balanced Composite Graph
2.2 Pinch Point Analysis UNIVERSIDAD
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The next step will be to choose a Tmin . Since it

is only a starting step it is good enough to use a
temperature within the range of the specific
industry that is being studied.
Table 5. Industry Tmin Values
Industry Tmin
We will use
Oil Refining 30-40oC
Tmin=20oC for the
initial value.
Petrochemical 10-20oC
Chemical 10-20oC
Low-temp 3-5oC
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GUANAJUATO
The next step will be to take the Tmin of 20oC

and to subtract half, 10oC, from the hot streams
temperatures and add half, 10oC, to the cold
streams temperatures.
Table 6. Shifted Temperature Data
Temp (oC) initial Temp (oC) shifted
Stream Supply Target Supply Target
1 120 65 110 55
2 80 50 70 40
3 135 110 125 100
4 220 95 210 85
5 135 105 125 95
6 65 90 75 100
7 75 200 85 210
8 30 210 40 220
9 60 140 70 150
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GUANAJUATO
This initial table takes the shifted temperature values and combines them
with all of the streams, hot and cold. For each stream CP values are put
within the streams temperature range with negative CP values used for
the hot streams and positive CP values used for cold streams. A total CP
value is then calculated for each interval.
Table 7. Pinch Point Table
CP 50 300 290 20 260 150 140 100 50
interval temp 1 2 3 4 5 6 7 8 9 CP
1 220 - - - - - - - 100 - 100
2 210 - - - -20 - - 140 100 - 220
3 150 - - - -20 - - 140 100 50 270
4 125 - - -290 -20 -260 - 140 100 50 -280
5 110 -50 - -290 -20 -260 - 140 100 50 -330
6 100 -50 - - -20 -260 150 140 100 50 110
7 95 -50 - - -20 - 150 140 100 50 370
8 85 -50 - - - - 150 - 100 50 250
9 75 -50 - - - - - - 100 50 100
10 70 -50 -300 - - - - - 100 - -250
11 55 - -300 - - - - - 100 - -200
12 40 - - - - - - - - - 0
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It is then required to calculate the Q for each interval using the CP and
the temperatures bounding the interval. A hot utility value of zero is first
placed in the column below Q then each successive Q value is subtracted
from the previous Q value. This is continued to the last interval where the
Q value represents the cold utility.
Table 8. Pinch Point Table cont.
Q
interval temp CP Qi 0
1 220 100 1000 -1000
2 210 220 13200 -14200
3 150 270 6750 -20950

4 125 -280 -4200 -16750
5 110 -330 -3300 -13450
6 100 110 550 -14000
7 95 370 3700 -17700
8 85 250 2500 -20200
9 75 100 500 -20700
10 70 -250 -3750 -16950
11 55 -200 -3000 -13950
12 40 0 0 -13950
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GUANAJUATO
From the previous table the most negative Q value is turned positive and
is used as the hot utility. The same calculations are made where each
successive Q value is subtracted from the previous Q value. The zero Q
value represents the pinch point. The utility values calculated will be used
in the next part of the solution.
Table 9. Pinch Point Table Cont.
Q
interval temp CP Qi 20950 Required Hot Utility

1 220 100 1000 19950
2 210 220 13200 6750
3 150 270 6750 0 Pinch Point (125 oC)

4 125 -280 -4200 4200
5 110 -330 -3300 7500
6 100 110 550 6950
7 95 370 3700 3250
8 85 250 2500 750
9 75 100 500 250

10 70 -250 -3750 4000
11 55 -200 -3000 7000
12 40 0 0 7000 Required Cold Utility

2.3 Balanced Composite Curves UNIVERSIDAD
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GUANAJUATO
The next step will be to build balanced composite

curves for the hot composite stream and the cold
composite stream.
This step will add sufficient utilities, calculated
during the pinch temperature analysis, to the
composite curves to provide the desired gap of
Tmin=20, thus balancing the system around the
pinch temperature.
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GUANAJUATO
A sum of the CP values from each of the hot streams combined

with the hot utility within each temperature interval is calculated
then multiplied by the T to calculate Q for each of the intervals.
A total sum of the Q values is accumulated to calculate the total
amount of energy required for the hot curve.
Table 10. BHCC

Temp CP 20950 50 300 290 20 260
oC steam 1 2 3 4 5 CP Qi Q
50 - - - - - - 0 0 0
65 - - 300 - - - 300 4500 4500
80 - 50 300 - - - 350 5250 9750
95 - 50 - - - - 50 750 10500
105 - 50 - - 20 - 70 700 11200
110 - 50 - - 20 260 330 1650 12850
120 - 50 - 290 20 260 620 6200 19050
135 - - - 290 20 260 570 8550 27600
220 - - - - 20 - 20 1700 29300
249 - - - - - - 0 0 29300
250 20950 - - - - - 20950 20950 50250

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The same steps are repeated for the balanced

cold composite curve. It should be noted that
the total amount of energy required for the cold
curve should equal to that of the hot curve.
Table 11. BCCC
Temp CP 150 140 100 50 7000
oC 6 7 8 9 cooling water CP Qi Q
15 - - - - - 0 0 0
16 - - - - 7000 7000 7000 7000
30 - - - - - 0 0 7000
60 - - 100 - - 100 3000 10000
65 - - 100 50 - 150 750 10750
75 150 - 100 50 - 300 3000 13750
90 150 140 100 50 - 440 6600 20350
140 - 140 100 50 - 290 14500 34850
200 - 140 100 - - 240 14400 49250
210 - - 100 - - 100 1000 50250
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Table 12. New Temperature Intervals
After calculating the cumulated Q Tcold Thot T
Q values for each of the 0 15.0 50.0 35.0
balanced composite curves 4500 15.6 65.0 49.4
new temperature intervals 7000 16 72.14286 56.1
need to be calculated. 7000 30.0 72.1 42.1
The first step in the process is 9750 57.5 80.0 22.5
to list the Q values from each 10000 60.0 85.0 25.0
of the BCC tables into a new 10500 63.3 95.0 31.7
table in numerical order.
10750 65.0 98.6 33.6
Now using the BCC tables, 11200 66.5 105.0 38.5
temperatures from cold
streams and then the hot 12850 72.0 110.0 38.0
streams need to be matched 13750 75.0 111.5 36.5
up with the equivalent Q 19050 87.0 120.0 33.0
value. 20350 90.0 122.3 32.3
If a Q value does not have 27600 115.0 135.0 20.0
an equivalent temperature then 29300 120.9 220.0 99.1
the temperature must be 29300 120.8621 249 128.1379

calculated using a formula 34850 140 249.2649 109.2649
found on the following page. 49250 200 249.9523 49.95227
50250 210 250 40
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Table 13. New Temperature Intervals
Q Tcold Thot T
BCCC
0 15.0 50.0 35.0
Temp 150 140 100 50 7000
4500 15.6 65.0 49.4
oC 6 7 8 9 CW CP Qi Q
7000 16 72.14286 56.1
15 - - - - - 0 0 0
7000 30.0 72.1 42.1
16 - - - - 7000 7000 7000 7000
9750 57.5 80.0 22.5
30 - - - - - 0 0 7000
10000 60.0 85.0 25.0
60 - - 100 - - 100 3000 10000
65 - - 100 50 - 150 750 10750
10500 63.3 95.0 31.7
75 150 - 100 50 - 300 3000 13750 10750 65.0 98.6 33.6
90 150 140 100 50 - 440 6600 20350 11200 66.5 105.0 38.5
140 - 140 100 50 - 290 14500 34850 12850 72.0 110.0 38.0
200 - 140 100 - - 240 14400 49250 13750 75.0 111.5 36.5
210 - - 100 - - 100 1000 50250 19050 87.0 120.0 33.0
20350 90.0 122.3 32.3
Tcold=Tci (Q Q)/ CP 27600 115.0 135.0 20.0

29300 120.9 220.0 99.1
29300 120.8621 249 128.1379
Tcold=60 (10000 9750)/ 100 34850 140 249.2649 109.2649
49250 200 249.9523 49.95227
Tcold=57.5 50250 210 250 40

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The following graph displays the shifted balance composite

curves with the Tmin of 20 occurring at 125oC.
The data from the New Temperature Intervals table is
used to create this graph.
Balanced Composite Curves
300.0
250.0
200.0
Temp ( C)
o
BCCC
150.0
BHCC
100.0
50.0
0.0
0 10000 20000 30000 40000 50000
Q (kW)
Figure 4. Balanced Composites Graph

2.4 Amin Calculations UNIVERSIDAD
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GUANAJUATO
Upon developing the balanced composite curves

it is now possible to calculate the minimum area
of the overall heat exchanger network.
The CP/h values for each of the streams within
each temperature interval, including the utilities,
will be summed.
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Table 14. HEN Minimum Area Calculation Table
CP 20950 50 300 290 20 260 150 140 100 50 7000
h 0.35 0.50 0.25 0.30 0.18 0.25 0.27 0.25 0.15 0.45 0.20
Tcold Thot Steam 1 2 3 4 5 6 7 8 9 Cooling Water
15.0 50.0 - - - - - - - - - - -
15.6 65.0 - - 1200.0 - - - - - - - 35000.0
16.0 72.1 - 100.0 1200.0 - - - - - - - 35000.0
30.0 72.1 - - - - - - - - - - -
57.5 80.0 - 100.0 1200.0 - - - - - 666.7 - -
60.0 85.0 - 100.0 - - - - - 666.7 - -
63.3 95.0 - 100.0 - - - - - - 666.7 111.1 -
65.0 98.6 - 100.0 - - 111.1 - - - 666.7 111.1 -
66.5 105.0 - 100.0 - - 111.1 - 555.6 - 666.7 111.1 -
72.0 110.0 - 100.0 - - 111.1 1040.0 555.6 - 666.7 111.1 -
75.0 111.5 - 100.0 - 966.7 111.1 1040.0 555.6 - 666.7 111.1 -
87.0 120.0 - 100.0 - 966.7 111.1 1040.0 555.6 560.0 666.7 111.1 -
90.0 122.3 - - 966.7 111.1 1040.0 555.6 560.0 666.7 111.1 -
115.0 135.0 - - - 966.7 111.1 1040.0 - 560.0 666.7 111.1 -
120.9 220.0 - - - - 111.1 - - 560.0 666.7 111.1 -
120.9 249.0 - - - - - - - - - - -
140.0 249.3 59857.1 - - - - - - 560.0 666.7 111.1 -
200.0 250.0 59857.1 - - - - - - 560.0 666.7 - -
210.0 250.0 59857.1 - - - - - - 666.7 - -
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GUANAJUATO
A Q/h value is calculated for each interval by

adding the hot and cold CPT/h values together.
This value is then divided by the T log mean
thus calculating the area for the interval
The areas from each of the intervals is summed
together to calculate the total Amin.
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Table 15. Final Area
hCP/h cCP/h Q/h Th Tc DTLM Ai
0.0 0.0 0.0 50.0 15.0 - -
1200.0 35000.0 40500.0 65.0 15.6 41.8 969.6
1300.0 35000.0 21785.7 72.1 16.0 52.7 413.6
0.0 0.0 0.0 72.1 30.0 - -
1300.0 666.7 28547.6 80.0 57.5 31.3 912.0
100.0 666.7 2166.7 85.0 60.0 23.7 91.3
100.0 777.8 3592.6 95.0 63.3 28.2 127.4
211.1 777.8 2050.3 98.6 65.0 32.6 62.9
211.1 1333.3 3357.1 105.0 66.5 36.0 93.3
1251.1 1333.3 13588.9 110.0 72.0 38.2 355.3
2217.8 1333.3 7219.4 111.5 75.0 37.2 194.0
2217.8 1893.3 41764.5 120.0 87.0 34.7 1204.5
2117.8 1893.3 10424.0 122.3 90.0 32.6 319.6
2117.8 1337.8 60381.1 135.0 115.0 25.7 2353.8
111.1 1337.8 17286.6 220.0 120.9 49.4 349.7
- - - 249.0 120.9 - -
59857.1 1337.8 41459.4 249.3 140.0 118.5 350.0
59857.1 1226.7 114742.9 250.0 200.0 75.8 1514.2
59857.1 666.7 9523.8 250.0 210.0 44.8 212.6
Amin = 9523.77
2.5 Nunits Calculation UNIVERSIDAD
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GUANAJUATO
Before calculating the cost it is important to

calculate how many heat transfer units will be
necessary for the system to work.
Above Pinch Below Pinch

Nunits=(Nhot streams +Nutilities -1) +(Ncold streams + Nutilities -1)
2.5 Nunits Calculation UNIVERSIDAD
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GUANAJUATO
For our system we can calculate the number of

units by analyzing the figure constructed below:
120o 65o
80o 50o
135o 110o
220o 95o
135o 105o
90o 65o
200o 75o
210o 30o
140o 60o
Pinch
Figure 6. System Temp. Flow Diagram 135o
Nunits= (hot streams + hot utility - 1) + (cold streams + cold utility - 1)
Nunits= (4 + 1 - 1) + (9 + 1 - 1) = 13
2.6 Capital Cost Calculations UNIVERSIDAD
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GUANAJUATO
Calculating the capital Table 16. Cost Waiting Factors
cost of a system a b c
operating at Tmin
Carbon-steel 30800 750 0.81
Stainless-steel 30800 1644 0.81
consists of using the CS/SS or SS/CS 30800 1339 0.81
following equation and Titanium 30800 4407 0.81
the cost waiting CS/TI or TI/CS 30800 3349 0.81
factors in Table 14 SS/TI or TI/SS 30800 3749 0.81
below. The cost

Plant Life = 6 yr, capital interest = 10% per anum
waiting factors vary

for each of the Amin
c
materials for used for Cost ($) = N units a + b

N units
construction.
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GUANAJUATO
If the design were to only require construction in

one material then the Amin calculated could be
plugged into the capital cost equation.
For CS construction:
Cost ($)=13 (30800 + 750*(9523.77/13)0.81
Cost ($)=2440003
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GUANAJUATO
It must be noted that this is the Capital Cost for

the life of the plant. At times a Capital Cost per
year is necessary which is called the Annualized
Capital Cost (ACC). The calculation below shows
how to calculate the ACC for CS construction.
(1 + interst )term
ACC = CC
term
( 1 +.10) 6
ACC = 2440003
6
ACC = 720436
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GUANAJUATO
By expanding the design to include multiple

materials of construction, multiple cost waiting
factors will be needed to calculate the Amin and
capital cost.
As requested in the problem statement, the
design requires the use of CS for 4 of the
streams and the use of Titanium for the
remaining five streams due to the streams
corrosive properties. The utilities will only use
CS since they do not have corrosive properties.
2.7 Multiple Materials Construction UNIVERSIDAD
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GUANAJUATO
The ratio of cost weighting factors is used to

adjust the areas of all of the streams that are
constructed from a material, Titanium, differing
from the base material, CS.
This ratio, TI, is constructed by the following
equation.
TI = (bCS/bTI) (1/cTI)
TI = (750/4407) (1/0.81)
TI = 0.1123
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GUANAJUATO
In the Amin calculations table, the CP/h values for

each stream that needs TI construction will be
divided by the TI value calculated on the
previous slide. The streams requiring CS
construction will be deleted by the CS value of 1
and left at their current values.
The calculations will then be continued out as
before for the calculation of the Area of each
temperature interval and then the total Amin of
the network.
streams CPj T

1
Temperature Interval Area=
TLM j j hj
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GUANAJUATO
Due to the use of the multiple material cost

weighting factors the Amin will increase.
The CS cost law will be used for both the CS
system construction and the CS & TI system
construction because both are based as CS
systems.
Table 17. Amin and Cost Increase

Material Amin Cost
CS 9523.768 2440003
CS & TI 23610.49 4655655

2.8 Operating Cost UNIVERSIDAD
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GUANAJUATO
Using the utility values calculated when finding

the pinch temperature and the unit cost for the
utilities it is possible to calculate the Operating
Cost.
In our case the unit cost for steam and cooling
water was given.
Table 18. Utility Cost Data

Utility Cost ($/kW)
Qc 10
Qh 120
2.8 Operating Cost UNIVERSIDAD
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GUANAJUATO
The calculation is a simple multiplication of the

utility energy value by the unit cost value. Then
add the two utility operating costs together to
get the total operating cost.
Table 19. Operating Cost

Utility Cost ($/kW) Q (kW/yr) Cost ($/yr)
Cold 10 7000 70000

Hot 120 20950 2514000
Operating Cost ($/yr) 2584000

2.9 Tmin Optimization UNIVERSIDAD
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GUANAJUATO
The initial use of Tmin=20 was to only get the

calculations set up and get an estimation of how
the system should be set up.
Upon further analysis, the Tmin value can be
changed thus changing the Total Cost of the
project.
Since the lowest Total Cost is optimal a
sensitivity analysis will be performed on the Tmin
to find the optimal value to achieve the lowest
Total Cost.
DE
GUANAJUATO
The first step in performing the Tmin

Optimization on the CS & TI construction is to
collect the data on the amount of Utilities needed
and the Amin for Tmin values every 2oC between
0oC and 28oC.
DE
GUANAJUATO
Listed below is the data collected from the series of T

calculations.
Table 20.
T Qc Qh Amin
28 9320 23270 19649.29
26 8740 22690 20433.43
24 8160 22110 21329.35
22 7580 21530 22368.7
20 7000 20950 23610.49
18 6450 20400 25082.38
16 6150 20100 26051.8
14 5700 19650 27799.36
12 5100 19050 30661.24
10 4500 18450 34461.02
9 4200 18150 36769.55
8 3900 17850 39566.3
6 3300 17250 47439.92
4 2650 16600 60598.06
2 1950 15900 91610.91
0 1250 15200 529672
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GUANAJUATO
The table below shows the data translated into cost figures using methods
previously discussed. The minimum Total Cost corresponds to the optimal Tmin.
Table 21 Tmin Optimization Cost Analysis
Qc Qh Utility Sum CC ACC Total Cost
Tmin ($/yr) ($/yr) ($/yr) ($/6yr) ($/yr) ($/yr)
28 93200 2792400 2885600 4067489 1200968 4086568
26 87400 2722800 2810200 4185583 1235836 4046036
24 81600 2653200 2734800 4319463 1275366 4010166
22 75800 2583600 2659400 4473447 1320831 3980231
20 70000 2514000 2584000 4655655 1374629 3958629
18 64500 2448000 2512500 4869284 1437706 3950206
16 61500 2412000 2473500 5008682 1478864 3952364
14 57000 2358000 2415000 5257518 1552336 3967336
12 51000 2286000 2337000 5658733 1670799 4007799
10 45000 2214000 2259000 6180645 1824898 4083898
9 42000 2178000 2220000 6492346 1916931 4136931
8 39000 2142000 2181000 6865036 2026972 4207972
6 33000 2070000 2103000 7888767 2329239 4432239
4 26500 1992000 2018500 9531058 2814142 4832642
2 19500 1908000 1927500 13161489 3886064 5813564
0 12500 1824000 1836500 53263934 15726718 17563218
DE
GUANAJUATO
The graph further displays the tradeoff between

Capital Cost and Operating Cost.
Tmin Optimization
8
7
6
Cost (*106 $/year)
5 OC
4 CC
3 TC
2
1
0
0 5 10 15 18 20 25 30
Tmin (oC)
Figure 7. T Optimization Graph

2.10 Pinch Design UNIVERSIDAD
DE
GUANAJUATO
Now it will be necessary to take the information

obtained from the previous calculations and
construct a heat exchanger network for the
system.
The rules of designing the system must be kept
in mind such as no streams shall cross the pinch.
DE
GUANAJUATO
Pinch
80o
120o 80o 80o 78o 65o
80o 69o 50o
135o 123o 110o
220o 136o 95o
135o 105o
90o 65o
200o 129o 117o 81o 75o

65o
o o o o
210 117 82 62 30o
140o 117o 62o 60o
62o
Fig 8. Minimum Pinch Design

DE
GUANAJUATO
The design from the previous page displays a

good target that can be applied to the Tmin
optimal.
The costs derived from the pinch design created
are in the table below.
Table 22. Target/Design Comparison

Energy Installed
Consumption Number Area Capital
(MW) of Units (m2) Cost ($)
Target (Tmin = 18oC) 20.4 13 25082.38 4869284
Minimum Cost Design 20.95 13 10744 4791104

2.11 Profitability Analysis UNIVERSIDAD
DE
GUANAJUATO
It is now important to find if the system will be

profitable under the minimum cost conditions
calculated thus far.
Since it was not specified within which terms the
profitability should be calculated then we will
review the following.
Payback Period
%Rate Of Return
Net Present Worth
Discounted Cash Flow Rate of Return
DE
GUANAJUATO
Before calculating the profitability it will helpful

to compile all of the cost data accumulated thus
far into a table.
It must be noted that the Working Capital, Total
Capital, and Annual Total Production Costs have
not been calculated yet.
Table 23. Cost Data
Working Capital ($) -
Fixed Capital ($) 4791104
Total Capital Investment ($) -
Utilities ($/yr) 2512500
Ann Tot Product Costs ($/yr) -
Project Life 6 years
Interest 10%
DE
GUANAJUATO
The values for Working Capital and Total Capital

can be solved for in the same series of
calculations. The following two known
equations will be used to calculate them.
WC
WC + FC =
15%
FC = 5.667WC
WC = 15%(TC )
4791104 = 5.667WC
WC + FC = TC WC = 845489
(Peters, Timmerhaus and West, 2003)
TC = 845489 + 4791104
TC = 5636593
DE
GUANAJUATO
The Annual Total Production Costs is a sum of

the Annual Utilities and Annual Raw Materials.
ATPC = Utilities +Raw Materials

ATPC= 2512500 + 500000
ATPC = 3012500
DE
GUANAJUATO
After calculating the missing variables enough

cost data is known to perform profitability
analysis.
Table 24. Cost Data

Working Capital ($) 845488
Fixed Capital ($) 4791104
Total Capital Investment ($) 5636592
Utilities ($/yr) 2512500
Ann Tot Product Costs ($/yr) 3012500
Project Life 6 years
Interest 10%
DE
GUANAJUATO
As described in Tier 1 of this module any Capital

Investments in the Fixed Capital Investment
category can be depreciated over a series of years
equating into tax breaks for the company.
The two main types of depreciation used in
industries are Straight Line and MACRS. These
methods were described in Tier 1 as well.
MACRS is preferred in industries over Straight Line
because it allows for larger tax savings early on in
the life of the project. Due to the time value of
money it is better to have more money early on to
invest than to wait for it after it has depreciated
value.
DE
GUANAJUATO
Because the project life is stated to be 6 years,

the yearly depreciation values need to be
calculated for MACRS on a 6 year basis. It must
be noted that the rate switches from DDB to
Straight Line at year 5 because Straight Line
produces a higher rate. The remainder from
MACRS falls into a 7th year.
Table 25. 6yr MACRS
Year Depreciation Rate
1 0.166667 R=2*((1/6)/2)
2 0.277778 R=2*(.8333/6)
3 0.185185 R=2*(.5555/6)
4 0.123457 R=2*(.3704/6)
5 0.098765 R=(.2469/2.5)
6 0.098765 R=(.1481/1.5)
7 0.049383 R=remainder
DE
GUANAJUATO
To perform a profitability analysis it is easiest to

work through a table. Something similar to this
is very effective.
Table 26. Time Value of Investment

Year 1 2 3 4 5 6 7
Profit ($) - - - - - - -
6 yr MACRS - - - - - - -
Depreciation ($) - - - - - - -
Gross Profit ($) - - - - - - -
Taxes (35%) - - - - - - -
NPAT ($) - - - - - - -
Net Cash Flow ($) - - - - - - -
DE
GUANAJUATO
The profit is calculated by subtracting the Annual

Total Production Costs from the Annual Sales.
This value will be considered the profit for all 7
years.

Year 1 2 3 4 5 6 7
Profit ($) 2987500 2987500 2987500 2987500 2987500 2987500 2987500
6 yr MACRS - - - - - - -
Depreciation ($) - - - - - - -
Gross Profit ($) - - - - - - -
Taxes (35%) - - - - - - -
NPAT ($) - - - - - - -
Net Cash Flow ($) - - - - - - -
DE
GUANAJUATO
The 6 yr MACRS rates have already been

calculated. The depreciation is calculated by
multiplying the Fixed Capital Investment by that
years MACRS rate.

Year 1 2 3 4 5 6 7
Profit ($) 2987500 2987500 2987500 2987500 2987500 2987500 2987500
6 yr MACRS 0.1667 0.2778 0.1852 0.1235 0.0988 0.0988 0.0494
Depreciation ($) 798517 1330862 887241 591494 473195 473195 236598
Gross Profit ($) - - - - - - -
Taxes (35%) - - - - - - -
NPAT ($) - - - - - - -
Net Cash Flow ($) - - - - - - -
DE
GUANAJUATO
The Gross Profit is calculated by subtracting the

depreciation from the profit. 35% of gross profit
will be the taxes for that year. The Net Profit
After Taxes is the Gross Profit minus the 35%
taxes.
Year 1 2 3 4 5 6 7
Profit ($) 2987500 2987500 2987500 2987500 2987500 2987500 2987500
6 yr MACRS 0.1667 0.2778 0.1852 0.1235 0.0988 0.0988 0.0494
Depreciation ($) 798517 1330862 887241 591494 473195 473195 236598
Gross Profit ($) 2188983 1656638 2100258 2396006 2514304 2514304 2750902
Taxes (35%) 766144 579823 735090 838602 880007 880007 962816
NPAT ($) 1422839 1076815 1365168 1557404 1634298 1634298 1788086
Net Cash Flow ($) - - - - - - -
DE
GUANAJUATO
The tax savings from depreciation are realized

when the Depreciation is added to the NPAT to
get the Net Cash Flow.

Year 1 2 3 4 5 6 7
Profit ($) 2987500 2987500 2987500 2987500 2987500 2987500 2987500
6 yr MACRS 0.1667 0.2778 0.1852 0.1235 0.0988 0.0988 0.0494
Depreciation ($) 798517 1330862 887241 591494 473195 473195 236598
Gross Profit ($) 2188983 1656638 2100258 2396006 2514304 2514304 2750902
Taxes (35%) 766144 579823 735090 838602 880007 880007 962816
NPAT ($) 1422839 1076815 1365168 1557404 1634298 1634298 1788086
Net Cash Flow ($) 2221356 2407677 2252409 2148898 2107493 2107493 2024684
DE
GUANAJUATO
From the data calculated thus far it is possible

to calculate a Payback Period and the % Rate
of Return after taxes.
Table 31. Payback Period
FC Avg. Net Cash Flow ($/yr) 2181430
PBP = Fixed Capital ($) 4791104

NCF PBP (years) 2.20
DE
GUANAJUATO
For the %ROR it is possible to calculate an

overall value using an average NPAT or it
is possible to calculate a yearly %ROR
value.
NPAT
Table 32. %ROR
% ROR = 100% Avg. Net Profit After Taxes ($/yr) 1496987
TC Total Capital ($) 5636592

%ROR 26.56%
Table 33. Yearly %ROR

Year 1 2 3 4 5 6 7
NPAT ($) 1422839 1076815 1365168 1557404 1634298 1634298 1788086
Total Capital 5636592 5636592 5636592 5636592 5636592 5636592 5636592
%ROR 25.24 19.10 24.22 27.63 28.99 28.99 31.72
DE
GUANAJUATO
The previous two profitability measurements do

not take into account the time value of money.
Thus to more accurately represent the
profitability in today's standards it is necessary to
discounting factor.
DF = (1 + i )
j
Where i equals the 10% interest pre-determined

and j equals the number of years away from
present time.
DE
GUANAJUATO
Continuing with the previous table the

discounting factors are calculated for each year
then multiplied by the Net Cash Flow to get a
Discounted Cash Flow.
Year 1 2 3 4 5 6 7
Profit ($) 2987500 2987500 2987500 2987500 2987500 2987500 2987500
6 yr MACRS 0.1667 0.2778 0.1852 0.1235 0.0988 0.0988 0.0494
Depreciation ($) 798517 1330862 887241 591494 473195 473195 236598
Gross Profit ($) 2188983 1656638 2100258 2396006 2514304 2514304 2750902
Taxes (35%) 766144 579823 735090 838602 880007 880007 962816
NPAT ($) 1422839 1076815 1365168 1557404 1634298 1634298 1788086
Net Cash Flow ($) 2221356 2407677 2252409 2148898 2107493 2107493 2024684
Discounting Factor 0.91 0.83 0.75 0.68 0.62 0.56 0.51
Discounted CF ($) 2019415 1989815 1692269 1467726 1308588 1189625 1038983
DE
GUANAJUATO
The first profitability measurement to look at is

the Net Present Worth equating to the total of the
present worth of all cash flows minus the present
worth of all capital investments.
N
NPW = DCF j TC
j =1
NPW = $10706421 $5646592
NPW = $5069829
DE
GUANAJUATO
A second profitability measurement that accounts

for the time value of money is the Discounted
Cash Flow Rate of Return.
This method calculates the minimum acceptable
rate of return (Mar) that the project can entail.
A series of calculations are performed to find
which value of the discounting interest rate will
bring the Net Present Worth to zero.
The interest rate or Mar is equivalent to the DCFR.
DE
GUANAJUATO
The calculations for the DCFR are made easier by using the
Solver add-in in Microsoft Excel. The table below shows the
setup with the previous data and the interest of 10%.
Using solver, target the value of Net Present Worth to zero
by changing the value of Mar.
This is possible since all of the Discounting Factors are
calculated by using the Mar as the interest value.
Table 35. DCFR Calculations
Year 1 2 3 4 5 6 7
Net Cash Flow ($) 2221356 2407677 2252410 2148898 2107493 2107493 2024684
Discounting Factor ($) (1-Mar)1 0.8264 0.7513 0.6830 0.6209 0.5645 0.5132
Discounted Cash Flow
($) 2019415 1989816 1692269 1467726 1308588 1189625 1038983
Total Present Worth ($) 10706421

Net Present Worth ($) 5069829
Mar 0.1000
DCFR (%) 10
DE
GUANAJUATO
The results from using solver are shown below.

Notice that all of the discounting factor values
decreased allowing for a Total Present Worth
value equal to that of the Total Capital
Investment.
Table 36. DCFR Calculations
Year 1 2 3 4 5 6 7
Net Cash Flow ($) 2221356 2407677 2252410 2148898 2107493 2107493 2024684
Discounting Factor ($) 0.7427 0.5516 0.4097 0.3042 0.2260 0.1678 0.1246
Discounted Cash Flow ($) 1649778 1328046 922719 653801 476215 353680 252353
Total Present Worth ($) 5636592

Mar 0.3465
DCFR (%) 34.645738
DE
GUANAJUATO
The table below shows the result from the profitability

analysis.
It must be noted again that the NPW and the DCFR are
more effective methods of describing the profitability of a
system because they include the time value of money.
It is important however to understand the variety of
methods because every company has different standards.
Table 37. Profitability Results

ROR (%) 26.56
Payback Period (yr) 2.20
DCFR (%) 34.65
III Conclusions
UNIVERSIDAD
DE
GUANAJUATO
The information determined through the pinch

analysis of the heat exchanger network is only a
step in the process of designing a plant. The
economic information gathered from the pinch
analysis will heavily influence weather or not
plant design should continue.
The company will know that the fiscal information
from the pinch analysis represents the
economically optimal operating conditions in
respect to the careful use of energy in the
system.
III References
UNIVERSIDAD
DE
GUANAJUATO
S. G. Hall, S. Ahmad and R. Smith. Capital Cost Targets For Heat Exchanger Networks Comprising Mixed
Materials of Construction, Pressure Ratings, and Exchanger Types. Computers Chemical
Engineering. Vol. 14, No. 3, pp. 319-335, Great Britain, 1990.
Peters, Timmerhaus, West. Plant Design and Economics for Chemical Engineers, pp. 226-335. New York
2003.
UNIVERSIDAD
DE
GUANAJUATO
Tier III: Open Ended Problem
Ryan Warwick Sharkey

Tier III Sections UNIVERSIDAD
DE
GUANAJUATO
I. Problem Introduction
II. Desired Results
III. Module Conclusion

UNIVERSIDAD
DE
GUANAJUATO
It is desired that you review the data given to you

and to perform the pinch analysis using the
information presented in Tiers I and II.
Further it is desired that the profitability of your
results are measured using all of the terms
discussed.
UNIVERSIDAD
DE
GUANAJUATO
The data below contains the stream data for the open-ended
problem. It must also be noted that 1,5, and 6 require carbon
steel plate and frame exchangers while the rest are sufficient
with carbon steel shell and tube exchangers.
Table 1. Stream Data

Mass Supply Target Allowable Heat Thermal Fouling
Flowrate Temp. Temp. Pressure Drop Capacity Conductivity Density Viscosity Resistance
Stream (lb/h) (oF) (oF) (psi.) (Btu/lb-oF) (Btu/h-ft-oF) (lb/ft3) (cP) (h-ft2-oF/Btu)
1 76190 176 86 7.5 0.6055 0.05778 37.4 0.12 0.0017
2 15080 248 104 7.5 0.9984 0.38713 62.4 0.8 0.0017
3 15870 284 86 7.5 0.5756 0.052 46.5 0.2 0.0017
4 15870 140 113 7.5 0.9984 0.38713 62.4 0.8 0.0017
5 20640 104 176 7.5 0.9315 0.11 59.3 0.5 0.0017
6 65870 68 131 7.5 0.9984 0.287 62.4 0.8 0.0017
7 132500 95 167 7.5 0.5517 0.069 39.3 0.2 0.0017
Haslego C., Polley G. (2002)
UNIVERSIDAD
DE
GUANAJUATO
The data in Table 2. contains the h-value necessary to

calculate the Amin.
Table 2. h-value Data
Stream Thermal
Velocity Conductivity
Stream (ft/s) (Btu/h-ft-oF)
1 6.7 245
2 3.4 297
3 4.6 189
4 5.8 348
5 1.85 277
6 1.69 373
7 2.71 250
CU - 700
HU - 500
UNIVERSIDAD
DE
GUANAJUATO
Here is the cost data that correlates to the stream data

from the previous pages.
Table 3. Cost Data

Hot Utility Cost $3/Mbtu
Cold Utility Cost $0.5/Mbtu
Hours of Operation 8000 h/yr
Plant Life 5 yr
Ann. Profit $215,000
Interest Rate 10%

II Desired Results
UNIVERSIDAD
DE
GUANAJUATO
It is desired that the student performs a pinch

analysis on the data presented.
Composite Curves
Multiple Exchanger Area Target
Topt
Perform economic profitability analysis

PBP
%ROR
NPW
DCFR
II Desired Results
UNIVERSIDAD
DE
GUANAJUATO
It will be important to format all

graphs and tables in an orderly
manner for review of your professor.
III Module Conclusion
UNIVERSIDAD
DE
GUANAJUATO
The experience obtained from working with this

module will prepare students for the application
of Process Integration in the real world.
This module can be an effective tool for

presenting economic concepts within Process
Integration.
III References
UNIVERSIDAD
DE
GUANAJUATO
Haslego, C. Polley, G. T. Compact Heat Exchangers, Part 2: Using Plate Exchangers in Heat Recovery
Networks. CEP Magazine. Vol. 98, pp. 48-51, October 2002.
UNIVERSIDAD
DE
GUANAJUATO
The End
EL FINAL
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Program for North American Mobility in

Higher Education UNIVERSIDAD

Introducing Process Integration for Environmental

North Carolina State University & Universidad de

Jose G. Zavala - John Heitmann

Tier I Module Information

Tier II Example Problem

Tier III Open Ended Problem

Capital Cost Effectiveness

Jose Guadalupe Zavala Oseguera

III Design and Economics

1.1 Pinch Technology

The pinch principle states that no design can achieve

If XP=0, then the

Base Case System

TOTAL SITE INTEGRATION

Process SUPERTARGETTING/RPA PLUS-MINUS

Integration OPTIMISE/CONSTRAINTS CHANGE PROCESS

The minimum vertical distance between the composite

Process integration makes possible to estimate an

2. Capital cost will changes in the heat exchanger

In a network as Tmin increases, demand for

Minimum area target:

(a) Temperature (b)

Vertical heat transfer, U=constant

The area from the vertical heat transfer in interval i is:

1/Uij=1/hi+1/hj h includes: film, wall and fouling resistance

Atot.min=intervalsi (1/TLM.i) jstreams(qj/hj)i

This allows a Target for minimum heat exchanger area to be calculated

The vertical heat transfer is not strictly correct for

1. Lower h values means more heat exchange area and vice

2. Lower overall area may be achieved by using more of the

3. Lower overall area may be achieved if streams with low h

Design Z & Design P: Z has cross pinch; design Z should to be adjusted.

Design Z & Design Q: Design Z can be improved by correcting matches near

Design Z & Design R: The temperature differences must be increased increasing

Using: Annual Cost

Total Cost (Vertical Model)

1. Network Capital Cost = a Umin.MER + b Amin

Energy & Tmin

A network designed at a non-optimum value of Tmin will only reach

Practical Design: Achieve the energy target allowing a small sacrifice

1. Cp Rules: The Pinch Design

2. The Driving Force Plot:

The Remaining Problem Analysis

Composite curves for

The analysis quantify

design. Penalty on overall area

2.1 Non-vertical Heat transfer

which ensures enthalpy balance remains in 2

Linear Programming: The minimum network area can also be calculated

Total Cost Vertical Model

Capital Cost LP model

Energy & Tmin

SUGGESTION: compare the simple

If a simple linear exchanger cost law for individual

The capital cost of a network is predicted in the basis of

CCnetwork= kUminMERCCk = kUmin.MER (a+b Akc)

Assuming that all the areas of individual units are

Exponent c usually varies between 0.7 and 1.0.

This equation in practice gives very good

The effective temperature difference is

and the equation: