THE CHP PARADOX. Will Regulations Encourage or Discourage a Leading Emissions Reduction Measure? Industry Council on the Environment.

Transcription

1 THE CHP PARADOX Will Regulations Encourage or Discourage a Leading Emissions Reduction Measure? Industry Council on the Environment June 20, 2013 Tommy John tjohn@indian-creek.net

2 THE CHP PARADOX Will Regulations Encourage or Discourage a Leading Emissions Reduction Measure? CHP in Texas Benefits of CHP to all Texans Environmental Water Economic Additional CHP in Texas CHP and Environmental Regulation 2

3 Combined Heat & Power (CHP) Two outputs (heat and electricity) in any sequence Topping cycle most common Bottoming cycle converts waste heat to power Can use many fuels Minimizes heat rejection to atmosphere Also called Cogeneration 3

4 CHP Benefits Energy Conservation Reduces emissions Saves water Reduces costs (economic stability) Improves reliability (energy security) Land use 4

5 State Percent of Total CHP Capacity State Percent of Total CHP Capacity in the USA (States with > 1000 MW CHP) 25% 20% 15% 10% 5% 0% TX CA LA NY MI NJ FL PA AL IN VA GA MA OR NC IL ME 5

6 Chemical and refining industries dominate CHP capacity CHP now meets 15% of Texas summer peak capacity needs 6

7 Texas CHP Technology 7

8 Air Products Hydrogen Cogeneration Plant Port Arthur, TX 8

9 % Capacity CHP By Location 60% 50% 40% 30% 20% 10% 0% Houston - Galveston Beaumont - Port Arthur Corpus Christi Central Coast Other Texas 9

10 125 CHP Facilities Throughout Texas 10

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12 QF Rules Texas CHP Capacity Additions, MW Full Market Deregulation 2000 Wheeling Wholesale Market Deregulation

13 Build it and they will come. Calpine Deer Park Energy Center Shell Refinery 13

14 Energy Conservation Steps COGENERATION UTILITIES CONTROLS INTEGRATION EQUIPMENT PROCESS 14

15 Cogeneration Energy Savings Aggressive energy conservation program can save 10 to 40%. Adding cogeneration can save 3 times as much energy at off site power plants Very capital intensive Project financing reduces capital outlay, but also reduces benefits. 15

16 Cogeneration Paradigms Reduce thermal energy use and temperature Size system to match reduced thermal load Maximize heat recovery Maximize efficient power output Design for flexibility Maximize unit size Utilize available fuel 16

17 North American Interconnected Grids ERCOT connections to other grids are limited to direct current (DC) ties, which allow control over flow of electricity The ERCOT grid: Covers 75% of Texas land Serves 85% of Texas load 38,000 miles of transmission lines >550 generation units Physical assets are owned by transmission providers and generators, including municipal utilities and cooperatives 62,429 Megawatts peak demand (set 8/17/06) 17

18 Existing Asynchronous Ties in ERCOT SPP (SPS) Actual and Scheduled flows on ties posted at: SPP (PSO) DC-N 220 MW DC-E 600 MW SPP (SWEPCO) WSCC (EPEC) ERCOT SERC (ENTERGY) CFE (Eagle Pass) DC-EGPS 36 MW CFE (Laredo) VFT-LAR 100 MW CFE (Sharyland) DC-ROAD 150 MW 18

19 Gulf Coast Refining & CHP Capacity 19

20 Fuel Chargeable To Power (FCP) BTU/KWH Gas Turbine Back Pressure Steam Turbine Absorption Cooling Heat Fuel- FCP= Eff Power FCP=3412/Blr Eff/Gen Eff FCP=Fuel/(Power+Cooling/COP) 20

21 Natural Gas Heat Rate BTU/KWH (HHV) Steam Plants & Peakers 9,500 15,000 GE LMS 100 Simple Cycle 8,500 Combined Cycle (F-Class) 6,900 Combined Cycle (H-Class) 6,300 Gas Turbine CHP (FCP) 4,300 Gas Engine Jacket Water CHP (FCP) 3,900 Absorption Cooling Heat Recovery 7,600-11,700 21

22 Representative Baseload Power Costs (Not including incentives or emissions) TYPICAL BASELOAD POWER COSTS,$/MWH Coal CC Gas Large CHP Small CHP Nuclear Wind (1) 22

23 More than just Natural Gas Savings! 23 Water Evaporated for Power Generation (Gallons/MWhr) 1,400 1,200 1, Biomass Coal Nuclear Solar Thermal Natual Gas Combined Cycle CHP Nuclear Plant Cooling Tower Water Evaporated, Gallons per MWhr CHP Significantly Reduces Water Consumption!

24 Biomass Steam Turbine CHP Process Steam Electricity Turbine Solid Fuel Air Gasifier SynGas Air High Pressure Steam Boiler Condenser Ash 24

25 CASE STUDY BIOMASS STEAM POWER PLANT Biomass Fuel Consumption 100,000 tpy (dry) Capacity Factor 85% Biomass Heating Value (LHV) 7,866 Btu/lb Biomass Fuel Consumption 100,000 tpy (dry) Capacity Factor 85% Biomass Heating Value (LHV) 7,866 Btu/lb Steam Conditions Steam Conditions 850 psig, o F psig,800 o F Steam Generation 116,000 pph Steam Generation Boiler Efficiency 73% 116,000 pph Boiler Efficiency Biomass $2.9/MMBtu Natural Gas 73% Cost $5/MMBtu Biomass $2.9/MMBtu Combined cycle heat rate 6,750 Btu/kwh Natural Gas Boiler efficiency 83% Renewble Energy Credit (REC) $10/MWH Cost Power Credit $66/MWH $5/MMBtu Combined cycle heat rate 6,750 Btu/kwh Boiler efficiency 83% Renewble Energy Credit (REC) $10/MWH Power Credit $66/MWH 25

26 CASE STUDY BIOMASS POWER PLANT POWER ONLY CHP Net Power, KW 10,370 4,358 Exh Pressure, psia Heat Rate/FCP, Btu/kwh 20,302 4,817 Thermal Energy, MMBtu/Hr Water Use, mmgpy Nat Gas Saved, mmcf/yr Nat Gas Saved, $mm/yr Rec Value, $mm/yr Power Revenue, $mm/yr Thermal Revenue, $mm/yr EBITDA, $mm/yr Payout, Years

27 And there is potential for more: PUC study estimates additional 13,400 MW by ,000 Industrial CHP Technical and Economic Potential in ,000 6,000 Technical 5,000 Economic 4,000 1,500 1,000 Commercial CHP Technical and Economic Potential in 2023 Technical Economic 3,000 2,000 1, <1 MW 1-10 MW >10 MW 0 <1 MW 1-10 MW >10 MW Source: Summit Blue Consulting 9 27

28 The Future for CHP Encouraged by energy costs and policies Smaller systems designed to match thermal load Platform to manage distributed resources Remote dispatching of smaller systems Increasing efficiency and reliability 28

29 CHP: What s holding it back? CHP plants are usually much smaller than other Higher unit costs Inability to sell or buy power at a fair price resources Availability of Capital CHP is more complex to develop Inconsistent environmental regulations Energy supply is secondary to core business activities 29

30 450 Estimated Annual NG Savings Trillion Btu CHP WIND NUCLEAR 30

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32 CHP & ENVIRONMENTAL REGULATION 32 New Source Permitting Requires a Federal PSD Permit for Major Sources Significance Levels based on on-site emissions only Requires BACT Analysis o Emission increases o Economics of options o No Credit for Offsite Emissions Discriminates against CHP o CHP Increases on site emissions o No Recognition of Decrease of Global Emissions Large Impact in Texas o Major Process industries with a large thermal demand o Market Access for Power EPA is regulating GHG based on PSD and BACT

33 EPA Regulation of GHG 33 GHG Guidance: PSD Applicability (New Sources) Permits issued on or after July 1, 2011 PSD applies to GHGs, if: The source is otherwise subject to PSD (for another regulated NSR pollutant); and The source has a GHG PTE equal to or greater than 75,000TPY CO2e OR The source has a GHG PTE equal to or greater than 100,000TPY CO2e

34 EPA Regulation of GHG 34 GHG Guidance: PSD Applicability (Modified Sources) Permits issued on or after July 1, 2011 PSD applies to GHGs, if: Modification is subject to PSD for another regulated NSR pollutant, and has a GHG net emissions increase: Equal to or greater than 75,000TPY CO2e OR BOTH: The existing source has a PTE: Equal to or greater than 100,000TPY CO2e Modification has a GHG emissions increase and net emissions increase: Equal to or greater than 75,000TPY CO2e OR BOTH: The source is an existing minor source for PSD, and Modification alone has actual or potential GHG emissions: Equal to or greater than 100,000TPY CO2e

35 PSD and Title V Permitting Guidance For Greenhouse Gases Rev. March, Example: BACT Analysis for a 250 MMBtu/hr Natural Gas Boiler Options Considered: 1. Boiler Annual Tune-up 2. Boiler Oxygen Trim Control 3. Economizer 4. Boiler Blowdown Heat Recovery 5. Condensate Recovery 6. Air Preheater 7. Combined Heat & Power- Option Rejected Because It Would Redefine Source

36 PSD and Title V Permitting Guidance For Greenhouse Gases Rev. March, Example: BACT Analysis for a Municipal Solid Waste Landfill Options Considered for Disposal of Landfill Gas: 1. Flare 2. Gas Engine Generator for Power Export 3. Gas Turbine Generator for Power Export 4. Gas Treatment for Delivery to Natural Gas Pipeline All Options are Equally Effective in Reducing On-site Emissions. Gas Turbine and Gas Treatment rejected because of higher cost. Engine Generator is selected as BACT because the permitting authority found that the (offsite) environmental benefits arising from the engines-based system outweighed the flare s cost effectiveness and environmental benefits of lower NOX emissions.

37 PSD and Title V Permitting Guidance For Greenhouse Gases Rev. March, Example: BACT Analysis for a Petroleum Refinery Hydrogen Plant Options Considered for Steam Methane Reformer: 1. Furnace Air/Fuel Control 2. Waste Heat Recovery 3. CO2 Capture and Storage CO2 Capture and Storage is too expensive, so items 1 & 2 selected as BACT. CHP was not considered as an option despite the following from the EPA Whitepaper for Reducing GHG for Petroleum Refineries: Cogeneration of hydrogen and electricity can be a major enhancement of energy utilization and can be applied with SMR. Hot exhaust from a gas turbine is transferred to the reformer furnace. This hot exhaust at ~540 C still contains ~13- percent oxygen and can serve as combustion air to the reformer. Since this stream is hot, fuel consumption in the furnace is reduced. The reformer convection section is also used as a HRSG in a cogeneration design. Steam raised in the convection section can be put through either a topping or condensing turbine for additional power generation. This technology is owned by Air Products and Technip, and has been applied at six hydrogen/cogeneration facilities for refineries.

38 HYPERION ENERGY CENTER, SOUTH DAKOTA DRAFT PSD PERMIT ,000 BPD Grassroots Refinery 450 to 530 MW Integrated Gasification Combined Cycle Output Based Standard IGCC; 23.9 tons CO 2 Per KBBL of Crude Feed No Consideration of Reduced Offsite Power Plant Emissions Special Provision: No Export of Power, Steam, or Hydrogen

39 CHP EXAMPLE Base Load Process Industry 39 Replace Existing Boiler Plant Steam Output 260,000 pph of 450 psi superheated steam 14 MW Gas Turbine with Full Supplemental Firing CARBON DIOXIDE EMISSIONS, TONS/YR CHP Plant 200,000 Boiler Plant 175,000 Onsite Increase 25,000 (Net out of PSD) Credit for Power 73,000 (ERCOT Average lb/mwh) Global Reduction 48,000 Alternative: 60 MW Gas Turbine without Supplemental Firing CHP Plant 325,000 Onsite Increase 150,000 (Requires PSD Permit) Credit for Power 310,000 (ERCOT Average lb/mwh) Global Reduction 160,000

40 Recent Texas Legislation 40 TCEQ Standard Permit for Electric Generating Unit Output Based Standard 0.14 lb NOx/MWH for natural gas except < 10 MW in West Texas Smaller CHP Plants can t economically meet the standard which is based on large natural gas combined cycle units Full Permit is burdensome TXCHPI Advocated HB 3268 which passed in 2011 Requires TCEQ to develop a Standard Permit or Permit By Rule for permitting natural gas CHP

41 TCEQ PBR Natural Gas-Fired Combined Heat and Power Units 41 Natural Gas fired Combustion Turbine and Engine CHP up to 15 MW 20% of total heat output is thermal energy Output Base Standard- Credit for both electrical and thermal output Systems <8 MW Emission Limits are 1.0 lb NOx/MWH and 9.0 lb CO/MWH Systems > 8 MW Emission Limits are 0.7 lb NOx/MWH and 9.0 lb CO/MWH and an Oxidation Catalyst required for 70% reduction of VOC Compliance Testing for units > 375 Startup and every 16,000 hours for NOx, CO, and VOC reduction.

42 TCEQ PBR Natural Gas-Fired Combined Heat and Power Units 42 Limitations Supplemental Firing (Duct Burners) not allowed o o o o Major issue for industrial projects Reduces flexibility in meeting thermal energy requirements Reduces overall efficiency supplemental firing is more efficient because it uses oxygen in the turbine exhaust gas Reduces ability to dispatch power output Oxidation Catalyst o o o o Reduce local impact of PM2.5 (primarily gaseous organic compounds) based on modeling and NAAQS Emissions are of low concentration and unpredictable Significant capital cost Challenges in compliance testing because of low concentration and configuration of combustion turbine exhaust

43 Conclusions CHP significantly reduces fossil fuel use and emissions including GHG Well proven technology CHP facilities improves power reliability & economic development Barriers to full implementation of CHP include inconsistent environmental policy 43

44 CHP Resources Texas Combined Heat & Power Initiative Gulf Coast Regional Application Center Houston Advanced Research Center, Woodlands) DOE Sponsored US EPA Combined Heat & Power Partnership Success for CHP in Texas Cogeneration &Onsite Power Production,Nov/Dec,