Economic Feasibility of Retrofitting an Ageing Ship to Improve the Environmental Footprint

Abstract

Natural gas is cheaper than fuel on an energy basis, making it an alternative ship fuel which leads to a reduced operating cost and clean gas environmental conditions. The current study analyses the retrofit of an ageing multi-purpose ship to use liquefied natural gas as a primary ship fuel in the context of a short-ship sea operation. The objective is to transform an existing commercial ageing ship propulsion system into a green energy propulsion one and to analyse the economic feasibility considering the high volatility and increased LNG price. Four scenarios were analysed based on the net present value representing Denying, Disinterested, Good and Acceptable financial cash outflow. It was concluded that in the present economic instability and price of LNG fuel and CO2 taxes, the ship owner needs to rely on the long-term contract of buying LNG fuel to implement measures to reduce greenhouse gas emissions and keep good benefits in shipping.