Cost Allocation and Risk Analysis - Case study of increased heat integration within a Chemical Cluster

Abstract

The energy usage within the chemical cluster in Stenungsund was evaluated by Hackl et al. in a Chalmers report 2010. Subsequently, an improved heat integration system was proposed to optimize the fossil fuels usage and therefore lower the overall emissions by the cluster and cut energy costs. This thesis is the result of a case study and aims to evaluate the increased heat integration uncertainties and suggest a cost allocation model. Sustainability and environmental awareness is acknowledged as being fundamental in today’s society. Companies strive to remain their legitimacy on the marketplace and prevent future governmental regulations by keeping pace with technical and societal development. The study is designed as a deductive case study. Data was collected through literature studies and interviews. Uncertainties are evaluated with a SWOT-analysis where strengths, weaknesses, opportunities and threats connected with the increased heat integration are determined. The results from the SWOT-analysis were considered in order to suggest alternative cost allocation models and different scenarios for further sensitivity analysis. Summary of main findings: The results from the SWOT-analysis show that if the heat integration is implemented, according to a model suggested by Hart and Milstein (2009), the cluster’s sustainable value would increase. From the SWOT-analysis it is also evident that the heat integration system is connected with many risks. However, risks and threats could be avoided or eased with an external third party or if the heat integration is only performed between two of the companies. In those cases the risks and economic benefits would decrease but the companies would still benefit from the enhanced sustainable value but with less cost savings. The potential costs and benefits from the system show an unequal distribution amongst each company. However, using full costing calculation and an allocation base of potential energy savings, which is accepted by the representatives, levels the conditions. Further, the findings in this study indicate that the improved heat integration is seen as a relatively simple technical solution and a cost saver by Chalmers Technical University, while the companies within the cluster is more skeptical and sees it as an expensive, risky investment which will make their production processes more complicated with the proposed system. These gaps in viewpoints have, in our opinion, led to the delay of implementing the system.