CHP and WHP Growth Trends and Opportunity Identification

Transcription

1 CHP and WHP Growth Trends and Opportunity Identification Joel Bluestein ICF International October 8, 2013

2 CHP and WHP CHP is an integrated energy system that generates electrical and/or mechanical power and thermal energy for: Space heating or cooling Water heating Industrial processes WHP is an energy system that recovers energy from a process or prime mover to generate electricity. Both can utilize a variety of technologies and fuels/energy sources. Both have similar benefits and challenges. 2

3 What Are the Benefits of CHP and WHP? More efficient than separate generation of electricity and thermal energy Higher efficiency translates to lower operating cost Higher efficiency reduces emissions of all pollutants, including CO 2, NO X and SO 2 Can increase power reliability and enhance power quality On site electric generation can help reduce grid congestion 3

4 U.S. CHP Capacity Today 82.4 GW of installed CHP over 4,200 industrial and commercial facilities (as of July 2013) 87% of capacity in industrial applications 71% of capacity is natural gas fired Avoids more than 1.8 quadrillion Btus of fuel consumption annually Source: ICF CHP Installation Database Avoids 241 million metric tons of CO 2 compared to separate production 4

5 CHP Is Widely Used Source: ICF CHP Installation Database 5

6 CHP Annual Additions since ,000 Annual Capacity Additions by Size Capacity (MW) 6,000 5,000 4,000 3,000 2,000 1,000 0 Sites >100 MW Sites <100 MW Source: ICF CHP Installation Database 6

7 CHP Additions (1,407 MW) By State By Application California, 206 MW Other Com., 198 MW Paper, 193 MW Other States, 482 MW Louisiana, 96 MW Colleges/ Univ., 127 MW New Jersey, 88 MW New York, 68 MW South Carolina, 70 MW District Energy, 51 MW Solid Waste, 67 MW Wastewater, 67 MW Chemicals, 388 MW Texas, 397 MW Other Ind., 232 MW Refining, 86 MW Source: ICF CHP Installation Database 7

8 CHP Additions (320 Sites) CHP Additions by State CHP Additions by Application Other States, 121 California, 56 Conn., 21 Other Com., 108 Agriculture, 31 Food, 15 Other Ind., 48 Mass., 27 New Jersey, 16 Wastewater, 32 Penn., 18 New York, 61 Colleges/Univ., 34 Hospitals, 21 Multi Family, 31 Source: ICF CHP Installation Database 8

9 Emerging Drivers for CHP Benefits of CHP recognized by Federal and State policymakers White House Executive Order: 40 GW by 2020 Increasing state interest (Ohio, Maryland, New Jersey, etc.) Focus on energy reliability and resiliency Game changing outlook for natural gas supply and price in North America Returning industries (new chemical plant announcements) Opportunities created by environmental drivers ICI Boiler MACT Pressures on utility coal and oil capacity NSPS 9

10 Gas Prices Remain Relatively Low in the Near Term, but Increase as the Market Grows $10 $9 $8 $7 $6 $5 $4 $3 $2 $1 Perfect Storm Leads to Unsustainably Low Gas Prices Annual Average Henry Hub Price (2010$/MMBtu) Supply Rationalization Demand Surge Stable Prices Market Growth and Supply Growth in Lockstep Nuclear Retirements $ Historical ICF Projected 10

11 HAP Standards for Boilers and Incinerators On December 20, 2012, EPA finalized a specific set of adjustments to March 2011 hazardous air pollutant standards for boilers and certain solid waste incinerators Area Source Boiler Rule Major Source Boiler Rule (ICI Boiler MACT) Commercial and Industrial Solid Waste Incinerators MACT Address public health impacts of toxic air pollution, including mercury and other HAPs 11

12 CHP as a MACT Compliance Strategy Compliance with limits will be expensive for many coal and oil users May consider converting to natural gas Conversion for most oil units? Boiler replacements for coal units? May consider moving to natural gas CHP Represents a productive investment Potential for lower steam costs due to generating own power Higher overall efficiency and reduced emissions Higher capital costs, but partially offset by required compliance costs or new gas boiler costs State / local / utility incentives can help 12

13 MACT Affected Coal/Oil Boilers by Region CEAC Region # Coal Boilers Coal Capacity (MMBtu/hr) # Oil Boilers Oil Capacity (MMBtu/hr) Total Affected Boilers Total Capacity (MMBtu/hr) Gulf Coast 16 4, , ,466.4 Intermountain 29 12, ,494.5 Mid Atlantic , , ,623.0 Midwest , , ,508.4 Northeast 19 4, , ,003.5 Northwest 23 3, , ,304.7 Pacific , ,139.2 Southeast , , ,691.5 Total , , , ,231.1 Data Source: DOE 13

14 ICI Boiler MACT - Potential CHP Capacity Fuel Type Number of Facilities Number of Affected Units Boiler Capacity (MMBtu/hr) CHP Potential (MW) CO 2 Emissions Savings (MMT) Coal ,619 18, Heavy Liquid ,821 4, Light Liquid ,791 2, Total 717* 1, ,231 24, *Some facilities are listed in multiple categories due to multiple fuel types; there are 556 ICI affected facilities CHP potential based on average efficiency of affected boilers of 75%; Average annual load factor of 65%, and simple cycle gas turbine CHP performance (power to heat ratio = 0.7) GHG emissions savings based on 8000 operating hours for coal and 6000 hours for oil, with a CHP electric efficiency of 32%, and displacing average fossil fuel central station generation Data Source: DOE 14

15 CHP Market Activity 7,000 6,000 5,000 Capacity (MW) 4,000 3,000 2,000 1,000 0 Source: ICF CHP Installation Database 15

16 CHP in Development or Under Construction (4,400 MW) CHP by State CHP by Application Other States, 1,495 MW California, 127 MW Louisiana, 377 MW Michigan, 168 MW Oregon, 454 MW Other Com., 1,409 MW Coal Mining, 400 MW Paper, 300 MW Chemicals, 351 MW Wyoming, 400 MW Washington, 255 MW Texas, 1,125 MW Colleges/Univ., 196 MW District Energy, 635 MW Other Ind., 307 MW Refining, 768 MW Source: ICF CHP Installation Database 16

17 CHP in Development or Under Construction <100 MW sites (386 sites, 2,622 MW) Capacity (MW) # Sites Capacity (MW) Number of Sites *86 sites on Watch List with no capacity data 17

18 CHP Technical Potential Based on improvements in ICF potential site data and energy load estimates Additional applications (military, natural gas processing) Inclusion of weather factors on commercial sites Application MW kw (MW) MW (MW) (MW) 5 20 MW (MW) >20 MW (MW) Total MW Industrial Onsite Use 6,211 4,431 14,748 14,118 21,082 60,590 Commercial Onsite Use 20,293 17,290 18,820 7,052 2,665 66,119 Total Onsite Use 26,504 21,721 33,567 21,170 23, ,709 Incremental Export Industrial Only 0 0 1,113 9,810 97, ,248 Total Onsite and Export 26,504 21,721 34,680 30, , ,957 Source: ICF internal estimates 18

19 Where is the Remaining Potential for CHP? 50 Existing CHP vs. Technical Potential Capacity (GW) CHP Technical Potential Existing CHP Capacity Source: ICF internal estimates 19

20 The Potential for Additional CHP Is Nationwide Source: ICF Internal Estimates 20

21 Characterization of WHP is Less Complete Reasonably good data on existing systems. Less information on trends and drivers. Less information on potential Efforts underway to address these deficiencies 21

22 Existing U.S. WHP (MW) Total = 709 MW 22

23 U.S. WHP by State (MW) Total = 709 MW 23

24 WHP Market Potential An ICF study in 2012 estimated 5,800 MW of technical WHP potential in industry and 6,300 MW of technical potential in other applications (gas compressor stations, landfills, oil and gas flares, and energy recovery in steam pressure reduction). ICF is now undertaking a new potential study for the U.S. DOE. It will address the same applications but in more detail. Report expected by end of

25 CHPower Model Process CHPower is a model that forecasts the commercial and industrial facilities most likely to install combined heat and power (CHP) systems over time. 25

26 CHP Market Model CHP Market Model Inputs Technical potential CHP cost and performance characteristics Current and projected energy prices CHP Model Calculations CHP payback analysis by technology, size, and application Market acceptance determined as a function of payback Market penetration over time as a function of market segment CHP Project Acceptance Market Penetration Curves Share of Market Accepting Payback 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Payback (years) Share of Year Zzero Economic Market 180% 160% 140% 120% 100% 80% 60% 40% 20% 0% Market Growth Rate 3% 2% 1% o% 26

27 Results Individual Sites Individual site specific results allow users to determine the most likely sites in a region to install CHP based on preliminary system economics, allowing users to: Identify potential CHP sites that could provide local support for T&D deferral Evaluate the grid impacts of CHP installations Identify sites with good CHP economics for utility outreach programs or to support procurement targets Develop prospect lists for partnering with sites on CHP projects. 27

28 Individual Site Results Example Site by site results show facilities that are the most likely to invest in CHP due to technical fit and economic viability Example results: Over 500 sites in Southern California with CHP payback under 5 years CHPower Individual Site Results Sample Company Name Primary City CHP Potential (MW) Onsite Onsite Payback Propensity to Invest in CHP Pharr Palomar, Inc. Buena Park % The Boeing Company Palmdale % S & S Foods LLC Azusa % Pacific Continental Textiles Compton % Whittier Fertilizer Company Pico Rivera % National Raisin Company Fowler % Applied Silicone Corporation Santa Paula % Eagle Mountain Casino Porterville % Coast Community College Huntington Beach % Edward Thomas Hospitality Santa Monica % 28 28

29 Results Cumulative Market Cumulative market results allow for the evaluation of CHP market penetration based on selected state/utility incentives or policy activities, allowing users to: Assess the effectiveness of various incentive levels Understand how specific policies (interconnection, net metering, etc.) are helping or hurting CHP adoption Understand the market impacts of alternative tariff structures, cap & trade rules, or RPS prices Evaluate the potential impact of alternative revenue streams to CHP projects 29

30 Cumulative Market Results Example CHP Scenario Results - Onsite Market Penetration Capacity (MW) 1, All In Pay for Perf. $15/ton CO2 Credit $350/kW for 5 years Innovative Financing Base Case *Taken from 2010 CHP analysis for NYC for the Northeast Clean Energy Application Center 30

31 Impact of Electricity Prices on Economic Potential for CHP Base Case State Technical Potential by Payback Range, MW Total Technical Minimal Potential, Moderate Potential, Strong Potential, Potential Payback >10 yrs Payback 5 10 yrs Payback <5yrs California 2,807 8, ,826 Georgia 3, ,811 Massachusetts 282 2, ,826 New Jersey 1,159 2, ,801 Texas 5,716 1, ,935 U.S. Total 81,691 35,257 6, ,303 15% Electric Price Increase State Technical Potential by Payback Range, MW Total Technical Minimal Potential, Moderate Potential, Strong Potential, Potential Payback >10 yrs Payback 5 10 yrs Payback <5yrs California 0 7,882 3,944 11,826 Georgia 1,731 1, ,811 Massachusetts 0 1,481 1,345 2,826 New Jersey 0 2,801 1,000 3,801 Texas 3,258 4, ,935 U.S. Total 60,606 45,278 17, ,303 Source: ICF analysis for the American Gas Association, The Opportunity for CHP in the United States 31

32 Conclusions CHP and WHP are commercially available technologies with demonstrated economic and environmental benefits. They are widespread and growing, driven by: New industrial growth Stable natural gas supply and prices Increasing value of energy reliability Federal and State policy support. ICF CHPower model provides insights on new CHP growth to all participants in the market. 32

33 Questions? Joel Bluestein