Case Study 3. Claudia Meer Managing Director, Energy and Structured Finance Clark Construction Company

Transcription

1 Case Study 3 Claudia Meer Managing Director, Energy and Structured Finance Clark Construction Company

2 On-Site Power Solutions: The Benefits of Cogeneration Microgrids: What, Why, and How? Enhancing Energy Efficiency, Utilizing Clean and Secure Energy and Generating Revenue November 10, 2014

3 Agenda Clark and ESF Organization Overview Microgrids and Cogeneration Case Study For CHP: Upper Chesapeake Medical Center 70

4 Clark and ESF Organization Overview

5 Clark Construction Group 108 years of experience in building and civil construction Privately held firm, generating $4B annual revenue One of the top healthcare builders and one of the largest general contractors in the nation Delivered nearly: 27 Million sq ft of medical facilities 10,000 hospital beds $9 Billion for healthcare projects Works in partnership with: Private Healthcare Systems Academic Medical Centers Public Providers Universities Science and Technology Institutions Corporate /Office Buildings Hospitality/Multiuse Buildings 72

6 Energy & Structured Finance Development Group within Clark Develops alternative energy systems Evaluates existing systems and recommend custom-designed, clean energy solutions across multiple technologies with recommendations that: Address existing usage and growth potential at site Are technology neutral Serves as developer/designer/contractor/financier/equity/ owner/ operations & maintenance provider of system Sells power to Client via long-term Power Purchase Agreements (ESAs) with equipment turnover options mid-term 73

7 Microgrids and Cogeneration

8 CHP Can Be an Integral Part of a Microgrid CHP systems allow for a facility to maintain electrical power during a grid failure A CHP system allows islanding for a microgrid High Efficiency of 65-85% vs % for utility electricity 75

9 Overview of Combined Heat and Power (CHP) Consumes fossil fuel (e.g., natural gas) to generate electricity and useful heat Captures useful heat for many purposes: Steam Hot Water Chilled Water Typical prime mover is microturbine, reciprocating engine, or gas turbine Reduces environmental footprint (CO 2, NO x, SO x emissions) of facility Often designed to run in island mode in event of grid failure Provides back-up power and thermal energy 76

10 Comparing Distributed Energy Resources Technology Dependability/Considerations Economic Savings Sustainability Wind Turbines Wind Dependent No thermal output Free Fuel High Capital Cost Zero Emissions Solar Photovoltaic Sun Dependent Require Land Area No thermal output Fee Fuel High Capital Cost Zero Emissions Backup Diesel Generators Immediate Startup Life Safety Oil Prices High Emissions Fuel Cells Grid Dependent Poor Load Following No Island Mode /Black-Start Capability High Capital Cost Spark Spread Low Emissions Reciprocating Engine Genset Available 8760 hrs Good Load Following High Thermal Output Island Mode/Black-Start Capability Spark Spread Reuse waste heat Low Emissions 77

11 Pennsylvania One of Top States with CHP Potential Mid-Atlantic and Northeast Have Great Project Potential Commercial Potential (5-50MW) New York California Texas Michigan Pennsylvania Massachusetts Missouri Florida Maryland New Jersey Virginia Texas Ohio Pennsylvania Illinois Georgia California North Carolina Wisconsin Michigan Louisiana New York Industrial Potential (5-50MW) Source: ICF International 78

12 Case Study At Upper Chesapeake Medical Center Case Study For CHP: Upper Chesapeake Medical Center

13 Upper Chesapeake Medical Center Bel Air, Maryland Part of University of Maryland Medical System Contains a 200 bed state-of-the-art general medical, surgical hospital and medical complex including: Hospital Two medical office buildings Parking garage Klein Ambulatory Care Center Administrative offices Cancer Center 80

14 Regulatory Drivers Encourage CHP DHHS proposed rule (Federal Register Vol. 78 No. 249) would require hospitals to have alternate sources of energy to maintain temperatures to protect patient health and safety and for the safe and sanitary storage of provisions President Obama signed Executive Order 13624, setting a national goal of deploying 40 GW of new, cost effective industrial CHP in the United States by the end of 2020 New Jersey has set a CHP goal of 1,500 MW by 2020 with a grant program Maryland has incentives for up to $2.5M per project and new program for hospitals and water/wastewater treatment facilities New York City has a CHP goal of 800MW new capacity by 2030 California has set a goal of 6,500 MW by 2030 and an SGIP incentive program Connecticut has a grant program worth $200/kW 81

15 Why UCMC Chose CHP? Reliability: Provides additional source of primary and emergency generation for both electricity and heating/cooling Proven technology with thousands of global applications Backup to diesel generators if prolonged outage or diesel failure Community Service: Allows UCMC to serve as safe haven to the community during a disaster Cost Savings: Given efficiency and spark spread, it can often generate heat and power at a lower cost than traditional systems Stability: Provides less volatile lifecycle cost of energy vs. the grid Environmental: Significantly reduces environmental impact and pollution Political: Increases energy independence of U.S. from foreign oil 82

16 Hurricane Sandy: Some Hospitals Encountered Difficulties NYU Langone Medical Center Experience During Hurricane Sandy Explosion at electrical substation caused power failure Back-up generators malfunctioned Critical care services shutdown Evacuation of 300 patients Post-Sandy Implementation Planning for a CHP system was underway before Hurricane Sandy Hospital installed 10.5 MW CHP system with natural gas combustion and steam turbine generation Expected Completion: Summer

17 While Other Hospitals Rode Out the Storm Greenwich Hospital (CT) 175 Bed Hospital (2) 1.25 MW Gas Reciprocating Engines During Hurricane Sandy Area around lost power for 7 days Restarted in Island Mode within 5 Minutes Continued operation of facilities 156 Patients were provided care Danbury Hospital (CT) 371 Bed Hospital 4.5 MW Mercury 50 gas turbine During Hurricane Sandy Area lost power for several days Facility continued operation without loss of power and heat Provided continued critical care 84

18 Factors Driving UCMC s CHP Adoption Historically-low natural gas prices Favorable Federal tax programs include: Investment Tax Credit (ITC) Accelerated depreciation applied to qualifying energy costs National energy security and resilience post-hurricane Sandy and other storms U.S. Government/regulatory support and mandates 85

19 UCMC s Operational Challenges Single point of failure in backup power system design One existing 1.5MW diesel generator Limited capital available for system upgrades Capital budgets favored other revenue generating investments Previous CHP capital budget requests denied Need for additional thermal capacity and backup power Limited space available for new CHP system components Resources to oversee the design/construction/permitting and operation and maintenance of the CHP system 86

20 UCMC s Operational Challenges Do no harm keep hospital functioning during installation of CHP System Ongoing operational management responsibilities resulted in limited staff time to focus on initiative/implementation Complex integration of new system into existing operations 87

21 ESF Managing UCMC CHP Project Project Involved Multiple Disciplines and Risk Design/Engineering Operations & Maintenance Environmental Permits Incentive Applications ESF Utility Interface/ Interconnection Tax Benefits End-User Constraints Construction Management Finance 88

22 UCMC Selected Turnkey Solution Power Purchase Agreement with ESF ESF owns, operated and maintains the system and sells power to the hospital Hospital purchase balance of power needs from Grid 20 year contract yet UCMC has the opportunity to buy out the system at a Fair Market Value early in life-cycle Custom-designed CHP system provides hospital with electricity, heating, cooling and steam Serves 95% of hospital loads in island mode and 65% of campus loads 89

23 Other Benefits of Turnkey/PPA Approach Frees capital for other uses (e.g., MRIs, staff, other infrastructure) Allows staff to focus on core business Provides for transition -- facilities staff trained in operations and ready to take over system in future Transfer project delivery risk to able third party Allows public sector / non-profit organizations to access Federal and State tax incentives Can be structured to remain off credit and potentially off balance sheet 90

24 ESF Solution for UCMC 2.0 MW reciprocating engine system Absorption chiller, HRSG, cooling tower, radiators Generates electricity, steam, chilled water and hot water Parallels the utility and provides baseload power System operational June 2014 CHP is projected to save UCMC $9M+ in utility costs over 20 year contract term, net of buyout costs System should remain operational for years with regular maintenance 91

25 UCMC s CHP: A Great Microgrid Asset Efficiency: The UCMC CHP is 53% more efficient than conventional generation Energy Security: Follows load of UCMC s demand Operates in island mode in the event of grid failure, providing hospital with electricity, hot water, and cold water Allows Hospital to serve community during disasters Economic Savings: System projected to save hospital over $9 million over 20 years Sustainability: Reduces carbon footprint from recycling waste heat into useful energy 92