Current Market Conditions. Massachusetts Energy Efficiency Partnership

Transcription

1 Current Market Conditions 298

2 Background >Gas industry previous focus was on cogeneration (CHP) >New realities Large growth in back-up generator sales Price decreases in natural gas Continuing (slow) progress in electric deregulation Industrial and large customers deregulating in otherwise regulated areas Emphasis on RTP pricing or electric contracting Opens up a larger set of on-site generation opportunities 299

3 Why is There an Opportunity? >Aging electric transmission / distribution system >Difficult to site new lines NIMBY not in my back yard Capacity constrained Costly to maintain >Worst in major urban areas 300 Picture Courtesy of DOE

4 Electric Power in North America >U.S. currently has a highly aging power generation fleet The majority of our 108 operating nuclear plants are between years old newest are 20 Coal-fired generation capacity is years old Gas Fired Generation is Being added but not as rapidly as in the period Pressure to Meet CO2 Reduction Goals >Electric power needs continue to grow but at a slow pace: ~1% AGR before the recession 301

5 The Overall History 302 Picture Source: Grist.com

6 Post Gas Craz Gas Prices Wholesale Henry Hub 303 Picture Courtesy of DOE

7 The Effect of These Changes Prices Spurred Gas Fracking & Dropped Prices 304 Picture Courtesy of World Nuclear Association

8 Trends 305

9 Trends 306

10 Electric Prices Average Price Picture Courtesy of DOE - EIA

11 Global Warming Poses Potential Changes to Power Generation 308 Picture Courtesy of the Wall Street Journal

12 309 Picture Courtesy of Bloomberg.com

13 The System 310 Picture Courtesy of NERC Long-Term Reliability Assessment 2008

14 Where the Power Comes From Electric Production by Fuel Source 2007 Hydroelectric 6% Other Renewable 2% Electric Production 2007 Peak Year Nuclear 20% Coal 49% Natural Gas 22% Oil 1% 311 Original Chart Data Courtesy of Energy Information Administration website, accessed 2010

15 Where the Power Comes From Electric Production by Fuel Source Courtesy of EIA

16 Transmission / Distribution Adds Even More to the Capital Cost >Capital requirements for electric power Generation 30% Other 10% T&D 60% 313 Picture Courtesy of Caterpillar

17 Growing Reliance on Demand Response Capacity Demand Response for summer peak 29,000 MW in the summer of ,500 MW in the summer of Picture Courtesy of NERC Long-Term Reliability Assessment 2008

18 Countering Black-Outs >Transmission lines are at 99.9% uptime >Quality power needs to be up to % uptime Source: Caterpillar > Power Failure/surges 43% > Storm and Weather 10% > Fire Related 8% > Hardware/Software 8% > Flood/Water Related 7% > Earth Movement Related 6% > Network Outage 5% > Human Error 3% >HVAC Related 3% >Other 7% 315 Picture Courtesy of Caterpillar

19 Power Distribution >In the past, distribution system designed to move energy from one point to another, not back and forth Linear vs. radial grid structure >Today, deregulation has caused more need to move energy back and forth across the grid 316

20 The Emergency Generator Market 317

21 Major Growth in Back-Up Engine Systems >All sizes >New applications Digital phone operations Computer centers Office buildings Suburban banks Food storage 318

22 Growth in Back-Up Systems >Convenience applications (non-life-safety) Not required by code Fuel choice is up to the customer gas OK Tight locations Behind bushes, off the parking lot, etc. Customer does not want an oil tank Ugly, large, fire hazard >Customer motivation less faith in grid >Business damage by power outage 319

23 Customer: Profiting on a Generator >Motive for the customer >Electric supply arrangement that capitalizes on the generator to reduce overall utility cost 320

24 Economic Background > Most generators will be gas engines > Typical maintenance allocation - $0.011/kWh > Typical cost for back-up generators in the (1-2 MW) 321

25 Economic Background >Most generators will be gas engines >Typical maintenance allocation - $0.011/kWh >Typical first cost for back-up gas engine generators in the MW range - $500 kw Life of 20,000 hrs. (50% of a continuous duty engine) >Amounts to $0.02/kWh for gen set replacement 322

26 Basic Generation Economics Cost of Generated Electricity: Fuel and Maintenance 323

27 Total Cost of Generated Electricity NO Heat Recovery Including Capital Recovery 324

28 Using Total Cost 325

29 Total Cost >For $8.00 gas >Have now found the total cost of electricity on the emergency generator to be $0.12/kWh 326

30 Customer Decision Criteria >For a customer who has or needs a back-up generator >Decision when should they economically choose to operate the generator? Not really a payback type of project Rather an economic decision factor issue 327

31 Customer Strategies >Today - wide range of schemes Peak shaving Implied sell back Real time pricing Custom contracting Net metering CHP industry standard 328

32 Peak Shaving >Using the generator on a daily basis to avoid onpeak rates Period set by existing utility tariffs Generator operation can be planned Generally requires hour per week operation large number of hours of operation Economic Requirement: Electric generation price must be below on-peak energy and demand price Traditionally discouraged by long operating hours 329

33 Implied Sell Back Contracts Demand Management Programs >Agreement with the ELECTRIC utility to run the generator at the ELECTRIC utility s request Takes peak demand off of the grid during overloads Electric utility pays, usually by the Kwh for the power generated, usually a high price Few hours of operation: year Economic Requirement: Electric utility in need of peak generation, transmission or distribution capacity 330

34 Implied Sell Back Contracts >For our example >If the utility will pay over $0.12/kWh, arrangement makes sense 331

35 Real Time Pricing >Larger customer electric supply contract for electricity at spot prices Generally 24 hour ahead pricing notice Large savings in low priced periods Customer brings on generator during periods of high price (or reduces load) Economic Requirement: Customer tracks gas price to determine generated electricity price, switches on generator when electric price hits threshold 332

36 What is RTP (Real Time Pricing)? > Sales rates based on open market rates > Overall lower prices over the year > Punctuated extremely high prices 333

37 Real Time Pricing (RTP) >For our example generator should be switched on whenever the real time price exceeds $0.12 >Equipment is available that receives RTP prices in real time and automatically switches over when price threshold setting is met 334

38 $/MWh RTP Vs. Polar Vortex 2014!! The Gas Industry s First Priority is the Heating Customer $300 $250 $200 PJM Hourly Prices 2014 H1 H2 H3 H4 H5 H6 H7 H8 H9 H10 $150 H11 H12 H13 H14 $100 H15 H16 H17 $50 H18 H19 H20 $ Day of the Year H21 H22 H23 H Data Source: PJM

39 Custom Contracting >Custom contract with deregulated electric suppliers Block rates Low cost electric purchase agreement based on fixed maximum demand with penalties Demand reduction (DRP) Supplier or local distribution free to dictate periods for reducing demand for compensation Interruptible electric contract Spot price sell-back Supplier will buy back contract at spot price during high price periods (no actual export) 336

40 Custom Contracting Take or Pay Block Pricing New type of contractual block rates Customer buys a block of power at VERY low rates Generally an on-peak block >Example: buy 5 MW block for all on-peak hours At 3 cents/kwh If customer s demand exceeds 5 MW all remaining hours are bought at RTP spot prices Buy at spot prices when system loads are high!! If customers demand is < 5MW Must pay for the unused electricity anyway Motivates load leveling 337

41 Net Metering >Usually a commission regulation forcing electric utilities to allow customers to put power back into the grid Spins the meter backward Usually limited to PV or wind generating customers Usually small generating capacity Generator must shutdown in power outage >Generally NOT a useful arrangement for emergency generators 338

42 CHP >A complete energy project >Up front payback analysis is appropriate >Heat recovery plays a major element in the economics 339

43 Basic Components 340 Picture Courtesy of DOE

44 CHP Economics Can Be Complex >Simplified technique take the all the savings against the electricity Use the waste heat to DISPLACE fuel use in an otherwise operating boiler This gas avoided in the boiler displaces some of the gas used by the CHP system to generate electricity Reduced NET fuel use to generate electricity reduces the cost of generating electricity >Allows us to reduce complex CHP economics to one chart 341

45 Simplified CHP Economics >Cost of electricity now depends on how much heat can be PRODUCTIVELY used 342

46 Economics DEPEND on Using Heat $0.20 Typical Engine Generator (<2 MW) Cost of Electricity ($/kwh) $0.16 $0.12 $0.08 $0.04 No Heat Recovery Low Pressure Steam Space Heating Hot Water Heating $0.00 $0.00 $2.00 $4.00 $6.00 $8.00 $10.00 $12.00 Cost of Gas ($/MMBtu) 343

47 How Might the Future Work with Distributed Generation? 344

48 What is DG or DER? Distributed Generation or Distributed Energy Resource > Definition: Decentralized power generation that can be sited at or near the load it serves 345

49 Will Small Gen Work with the Grid? The Present - One Way Model Power Heat Gen Office Gen Residential Power from the GRID Gen Retail 346

50 Will Small Gen Work with the Grid? The Future - A 2 Way Model No Gen User Power Heat Gen Office Distant Power Plant Open Access Transmission Power Distributor Gen Residential Gen Retail 347

51 Distributed Energy Benefits >Consumer-Side Benefits Lower cost electricity Price risk management Reliability and power quality Energy and load management CHP capabilities 348 Picture Courtesy of NREL

52 Distributed Energy Benefits >Grid-Side Benefits Reduced electric line loss Reduced upstream congestion Grid investment deferment Improved grid asset utilization Improved grid reliability Ancillary services, e.g., voltage support, VARs, contingency reserves, and black start capability Reduced Carbon Output Ideally, the owner of the distributed energy asset would realize the value of both the consumer- and grid-side benefits. Source: NREL 349

53 But There are Barriers >Uniform interconnection standards >Output-based emissions standards >Streamlined siting and permitting processes 350

54 Existing and Emerging DG Technologies 351

55 Distributed Generation Technologies Gas Turbines Reciprocating Engines Photovoltaics Wind Microturbines Thermally Activated Technologies Fuel Cells 352 Picture Courtesy of DOE

56 Prime Mover Ranges Microturbines Small Engines 353 Picture Courtesy of DOE

57 Smaller Packaged Engine Generation 354 Picture Courtesy of Tecogen

58 Tecogen Installations 355 Picture Courtesy of Tecogen

59 Microturbines >A prime mover consisting of a compressor, combustor, and turbine: Less than ~200 kw (300 hp) in total power output Continuous combustion at elevated pressure Rotating, not reciprocating, motion Capstone MicroTurbine Shown 356 Picture Courtesy of Capstone Turbine

60 - Summary Generation / Cogeneration Options 357

61 Summary >The current market conditions >The emergency generator market >What is distributed generation/cogeneration? >Cogeneration >Emerging distributed generation equipment Microturbines Fuel Cells 358

62 Summary >Technical challenges remain to make: Microturbines more affordable Innovation to make integration with recovered heat acceptable to the market >Major marketing challenge - How to make this sophisticated technology acceptable in the commercial buildings market 359

63 References > Distributed Resources -- New Paths for Power, William Parks, Office of Power Technologies, Office of Energy Efficiency and Renewable Energy, DOE, EESAT 2000, Orlando, Florida, Sept. 18, 2000 > Distributed Energy Resources and Power Parks: Reliability Economic Development and Energy Market Transformation, William Parks, Office of Power Technologies, DOE, May 17,2000 > > Gas-Fired Distributed Energy Resource Technology Characterizations was prepared through a collaboration of the National Renewable Energy Laboratory (NREL), the Department of Energy (DOE) Office of Energy Efficiency and Renewable Energy (EERE) and the Gas Research Institute (GRI). > Regulatory Requirements for small generators 360

64 Appendix Microturbines 361 Picture Courtesy of Capstone Turbine

65 Microturbines >Low NOx (< 9 ppm) and other emissions >High reliability due to few moving parts >Low maintenance No oil changes No spark plug changes No valves >Competitive efficiency (>25%) when recuperated 362 Picture Courtesy of Capstone Turbine

66 Microturbine Generators > 363 Picture Courtesy of Capstone Turbine

67 Microturbines >Quiet, compact, and lightweight >Competitive cost (< $1000/kW) when built in quantity >No liquid (e.g., jacket) cooling required >High temperature exhaust for heat recovery 364 Picture Courtesy of FlexEnergy

68 Available Today >Capstone Turbine Corp. 30-kW, 60-kW, 200 kw Modules. Packages to 1,000 KW. >Flexenergy (Formerly Ingersoll-Rand) 225-kW and 330 kw >Turbec Europe Only 365 Picture Courtesy of Turbec

69 Microturbines 366 Picture Courtesy of FlexEnergy

70 Capstone 367 Picture Courtesy of Capstone Turbine

71 Market Leader Capstone Status >More than 10,000 in the field >Thus far used as: Straight generation Combined heat and power 368 Picture Courtesy of Capstone Turbine

72 Capstone with Integral Heat Recovery Hot Water Boiler > Diverted control allows boiler to be by-passed when hot water is not required 369 Picture Courtesy of Capstone Turbine

73 Capstone Packages 30 kw, 60 kw, 200 kw Shown 370 Picture Courtesy of Capstone Turbine

74 Capstone Micro-turbines Waste Treatment Plant Application 371 Picture Courtesy of Capstone Turbine

75 Capstone Micro-turbines Gas Production Well Site Jonah Field, WY 372 Picture Courtesy of Capstone Turbine

76 Micro-Turbines on Pipeline Gas Gas Transmission - Kenai, Alaska. 373 Picture Courtesy of Capstone Turbine

77 Capstone Larger Packages 374 Picture Courtesy of Capstone Turbine

78 Capstone C1000 CHP 375 Picture Courtesy of Capstone Turbine

79 Capstone CHP on Digester Gas 376 Picture Courtesy of Capstone Turbine

80 Flexenergy MT Market Targeting Toward Petro-Production 377 Picture Courtesy of Flexenergy

81 Flexenergy MT Compressor Station Application 378 Picture Courtesy of Flexenergy

82 Flexenergy MT Compressor Station Application 379 Picture Courtesy of Flexenergy

83 Flexenergy MT Flare Reduction and Stranded Gas 380 Picture Courtesy of Flexenergy

84 Flexenergy MT Flare Reduction and Stranded Gas 381 Picture Courtesy of Flexenergy

85 Flexenergy MT Artificial Lift Application 382 Picture Courtesy of Flexenergy

86 Appendix: Fuel Cells 383

87 Fuel Cells >Still largely in development >Markets of serious interest Residential Automotive Commercial BCHP Wholesale power production 384 Picture Courtesy of Plug Power

88 Fuel Cell System Operation HEAT AND WATER Natural Gas CLEAN EXHAUST Fuel Reformer Hydrogen Rich Fuel Power Section DC Power Power Conditioner AC Power Air Standard power: 480 Volts, 3 phase, 3 wire, 60Hertz 385 Picture Courtesy of DOE

89 Fuel Cells >Electrochemical process >Hydrogen from a hydrogen-rich fuel is reacted with oxygen from air >Produces: electricity, heat and water >Clean, efficient and quiet 386 Picture Courtesy of DOE

90 Fuel Cell Stack >Internal fuel cell stack (similar in most systems) >Individual fuel cells comprise a fuel cell stack 387 Picture Courtesy of DOE

91 Fuel Cell Benefits >Reliability >Low operating cost >Constant power production >Computer grade power >Clean emissions Low NOx >Quiet operations >High efficiency 388

92 Fuel Cell Air Emissions 389 Picture Courtesy of DOE

93 Fuel Cell Technologies >Phosphoric acid >PEM >Solid oxide and molten carbonate 390

94 Phosphoric Acid > First commercialized in early 1990s > Still expensive technology > Fuel cell in 200kW modules (ONSI) > Moderate temperature > Installation shown is in Central Park in New York 391 Picture Courtesy of Keyspan

95 PEM >Low temperature, focus of residential and automotive interest May make recovering heat a challenge >Requires very clean hydrogen Fuel processor is major challenge 392 Picture Courtesy of Plug Power

96 Solid Oxide and Molten Carbonate >High temperature, high efficiency cells >Targeted for bulk power Cell is main technical challenge >Fuel need not be highly pure hydrogen >Using natural gas directly may be possible 393 Picture Courtesy of DOE

97 Automotive Applications >More than half of all U.S. air pollution is generated by "mobile sources >Fuel cells could replace today's combustion engines >Aggressive development of PEM fuel cells for transportation >Cost Problems 394

98 Automotive and Fleet Vehicles 395 Picture Courtesy of DOE

99 Ballard Power-PEM DaimlerChrysler's NECAR 4 Ford Motor TH!NK FC5 DaimlerChrysler's Jeep Commander 396 Picture Courtesy of DOE

100 Fuel Cells for Homes 1. On-site source of electrical power to supplement the utility network 2. Provide power where it is unavailable 3. Independent or in parallel with the utility grid 4. Product heat from the fuel cell is suitable for domestic hot water or space heating or swimming pool heating 397 Picture Courtesy of Plug Power

101 Fuel Cells for Portable Devices >No moving parts >High energy density >Portable >Multiple uses >Battery alternative 398 Picture Courtesy of DOE

102 Commercial Installations 399 Picture Courtesy of DOE

103 Fuel Cell Power Plant ONSI PC25 Energy Research Corporation (ERC) direct fuel system 200 kw stationary ONSI unit 2 MW Santa Clara Demonstration Project 400 Picture Courtesy of DOE

104 International Fuel Cells-PEM and PAFC 401 Picture Courtesy of DOE

105 International Fuel Cells-PEM and PAFC 402 Picture Courtesy of DOE

106 Another GT Approach for Power Generation 403