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LPG water heating in the dairy shed

Is this an option for your shed's heating requirements?

Replacing the source of energy from the electricity grid to liquefied petroleum gas (LPG) can offer savings in energy costs and emissions. Instantaneous gas heating has no heat storage losses, and can therefore heat water to lower temperatures. Carbon emissions are lower on equivalent energy from LPG than from Victorian brown coal electricity.

The technology

The instantaneous gas heating unit connects to the existing electrical hot water service and plumbing. A constant flow unit is installed to the hot water service and the solenoid (float) will determine when to draw hot water from the rain water tank into the hot water service. The electrical hot water service acts as a back up if there are issues with gas supply.

Gas water heating Hot water system

Photo left: Hot water system (image courtesy of Solahart)

Photo right: Gas water heating (image courtesy of Vic Solar and Gas)

Factors to consider

The considerations for installing a LPG water heating system include:

Volatility of LPG prices – in recent years the price of gas has fluctuated as the benchmark for gas prices is in line with Singapore and this has brought volatility into the market. The northern hemisphere winter also influences the price. As seen by the severe and long winter in 2011-12 which kept LPG prices up for a long time.

Re-filling gas bottles - gas bottles will need to be filled monthly and access to the dairy will need to be available. An inspection by the gas supplier will ensure the dairy is suitable for LPG water heating.

Flow rate – an adequate flow rate is needed in the LPG system to ensure sufficient hot water is available during cleaning cycles.

Combining a solar hot water system with LPG system – a solar hot water system can be included in the gas hot water system to pre-heat water. The complexity of combining different systems needs to be managed.

The energy savings

Table 1: An economic analysis of the LPG water heating
	LPG water heating
Net present value ( at 7% discount rate, 3% inflation on cash flows)	$10,860
Internal rate of return (real)	37%
Years to break even (before interest and tax)	5 years

At the end of year ten the cost of heating water with LPG would be $10,860 less than heating water with the existing electrical hot water service. By the end of year five it will be better to have invested in the technology compared with business-as-usual.

The price of LPG will vary between farms based on their geographical location, having access to the property including the distance to the delivery point for re-filling bottles, and the volume of consumption. The hypothetical case study farm would need to rent two 210 kilogram cylinders from ELGAS at $230 per cylinder. This would supply the case study farm with LPG for approximately 50 days after which time they will need to be re-filled. The cylinders are located close to the delivery point and the farm has good access. This bulk supply of LPG and good access to the dairy means the LPG price was 80 c/litre ex GST as at April 2012.

Business as usual option

The maximum temperature LPG can heat water is 85^oC. The cost to heat 700 litres of water with LPG from 15oC to 85oC is $2,358 per year. This assumes 8.1 litres of LPG is required per day and LPG costs 80 c/litre ex GST. The business-as-usual cost to heat water in an electric hot water service was $3,117. Therefore heating water with LPG would be $759 cheaper. LPG price assumed to increase two percent each year.

The carbon emissions for heating water with LPG was four tonnes of CO₂-eq each year. This is a reduction of 83 percent compared with the electrical water heating in the business-as-usual option. Carbon emissions will be significantly different despite similar energy requirements between LPG and electricity.

Do they pay?

The LPG water heating appears to be profitable on the case study farm. The internal rate of return of 37 percent was the highest of all the technologies analysed.

The financial benefit of the LPG system was reliant on the LPG price. The LPG price and volatility will vary for each individual farm and the performance of this system could be quite different from the case study farm. The LPG water heating technology would not be worthwhile if the price of LPG increased by more than 11 percent each year, or the price of LPG was 123 c/litre in the first year and subsequently increased by two percent each year.