Inducing Private Investment in Waste Energy Recycling

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1 Inducing Private Investment in Waste Energy Recycling Investment & Finance for Clean Energy - The Cancun Call Business Council for Sustainable Energy Thomas R. Casten, Chairman Recycled Energy Development, LLC December 9, 2010 RED the new green

2 U.S. electricity generation efficiency is low and stagnant 100% 50% Wasted Energy Inflates costs Increases pollution Stagnation reflects technical limits of power only generation U.S. Delivered Electric Efficiency 0% Source: U.S. Energy Information Agency RED the new green

3 Electricity generation plant Craig, CO Two-thirds of the fuel s energy cannot be converted to power, so is released into the atmosphere RED the new green

4 Example # 1: Recycling coke oven exhaust energy Cokenergy Mittal Steel, Northern Indiana Produces clean energy equivalent to 1,020 megawatts of solar capacity or 600 megawatts of wind capacity RED the new green

5 Example #2 silicon metal production in Alloy, West Virginia RED the new green 5

6 Silicon waste energy recycling plant 360 MW Energy Input Project adds 65 MW Clean Energy RED the new green

7 Silicon facility metrics Avoids 500,000 tons carbon dioxide per year Reduces cost per ton of silicon by 6%, securing plant future Provides acceptable return on $300 million total investment Frees 130 megawatts of transmission capacity at system peak Reduces cost of power to purchasing utility versus best alternative new genertion RED the new green

8 Recycled energy proof: 260 projects, 1.6 GW electric capacity, all double efficiency 100% Industrial waste heat recovery 14 Projects Steam pressure recovery 190 Projects 50% Fueled CHP 56 Projects Lost opportunity for profitable CO2 reduction U.S. delivered electric efficiency 0% RED the new green

9 Little known benefits of local CHP 1. Grid controlled power factor can slash line losses, avoiding CO 2 and freeing wires to carry more wind and solar power 2. New gas turbines can operate efficiently in CHP mode at 40% to 50% electric output, then provide spinning reserve and peak shaving with heat rates below today s combined cycle plants 3. There are diseconomies of scale: new CHP installed cost is less than new central generation and associated T&D capital cost RED the new green

10 Local generation slashes line losses, frees transmission for wind and solar Average Peak Hour System Line loss 6.5% 22% to 25% Power lost per 100 MWh load (7 MWh) (33 MWh) Install 10 MW local generation (10% of load) Line losses with local generation Freed transmission (3 to 4.5 MWh) (8 to 13 MWh) 13 to 14 MW 20 to 25 MW Carnegie Mellon studies show that with grid operator control of power factor, 1 MWh of local generation can reduce average line losses by 450 kwh on average, and avoid 2 to 2.5 MWh of peak generation per 1 MWh of local generation RED the new green

11 Supplying wind s need for spinning reserve with excess CHP capacity Typical part load operation for spinning reserve Thermal Match Marginal Heat Rate 6,100 Btu RED the new green

12 CHP-spinning reserve slashes CO 2 and cost to back up wind Thermally matched generation 50 MW to grid Boiler 130 Mlb/hr steam to customer 5,600 Btu/kWh economic heat rate CHP and peaking generation 100 MW to grid Hotter exhaust Boiler 130 Mlb/hr steam to customer 6,100 Btu/kWh incremental heat rate RED the new green

13 The goal should be cleaner and cheaper energy But restricting choices to only renewable energy creates cost and stability problems RED the new green

14 Solar resources predominately in the western U.S. RED the new green

15 Wind resources predominately in the western U.S. RED the new green

16 Joint Coordinated System Plan % wind energy adds 15,000 miles of transmission line at cost of $80 billion RED the new green

17 2000 to 2009: Installed 682 miles of new electric transmission lines (68 miles/year) RED the new Sources: green FERC

18 Recyclable waste energy mainly east, balances U.S., frees transmission RED the new green

19 Governance to induce investment in local generation that recycles waste energy 1. Every country mandate a growing percentage of clean energy, including conventional renewables, recycled waste energy and good CHP 2. Pay local generation most of the benefit of line loss savings, avoidance of peak generation capacity and transmission to induce investment Pay local generation 85% of the value of ancillary benefits to induce private investment, Give 3/4ths of savings to public as lower rates Give 1/4th of savings to distribution utility to gain their enthusiastic support of more efficient generation RED the new green

20 Thank you RED the new green