Update on Combined Heat and Power (CHP) Regional Perspective

Transcription

1 Update on Combined Heat and Power (CHP) Regional Perspective Presentation to: 2013 Fall Meeting of ASERTTI October 2 nd, 2013 Presentation by: John Cuttica Energy Resources Center University of Illinois at Chicago & Isaac Panzarella,- North Carolina Solar Center North Carolina State University

2 Presentation Outline o Combined Heat & Power (CHP) What is it & Why should I be interested o Recent Activities CHP and Portfolio Standards CHP and Critical Infrastructure CHP and Emission Compliance Strategies Industrial Boiler MACT & Utility GHG Emission Rules Utility Participation in CHP Markets Standby rates, a Key Barrier

3 Combined Heat & Power What is it & Why should I be Interested

4 Defining Combined Heat & Power (CHP) The on-site simultaneous generation of two forms of energy (heat and electricity) from a single fuel/energy source Conventional CHP (also referred to as Topping Cycle CHP or Direct Fired CHP) Separate Energy Delivery: Electric generation 33% Thermal generation - 80% Combined efficiency 45% to 55% CHP Energy Efficiency (combined heat and power) 70% to 85%

5 Defining Combined Heat & Power (CHP) The on-site simultaneous generation of two forms of energy (heat and electricity) from a single fuel/energy source Conventional CHP (also referred to as Topping Cycle CHP or Direct Fired CHP) Simultaneous generation of heat and electricity Fuel is combusted/burned for the purpose of generating heat and electricity Normally sized for thermal load to max. efficiency 70% to >85% Minimum efficiency of 60% normally required Normally non export of electricity Low emissions natural gas

6 Defining Combined Heat & Power (CHP) The on-site simultaneous generation of two forms of energy (heat and electricity) from a single fuel/energy source Waste Heat to Power CHP (also referred to as Bottoming Cycle CHP or Indirect Fired CHP) Steam Turbine Electricity Heat Fuel first applied to produce useful thermal energy for the process Waste heat is utilized to produce electricity and possibly additional thermal energy for the process Fuel Heat recovery steam boiler Energy Intensive Industrial Process Waste heat from the industrial process Heat produced for the industrial process Simultaneous generation of heat and electricity No additional fossil fuel combustion (no incremental emissions) Normally produces larger amounts electric generation (often exports electricity to the grid; base load electric power) Required high temperature (> 800 F) (low hanging fruit in industrial plants)

7 CHP: Already an Important U.S. Energy Resource 82 GW of installed CHP at 4,100 industrial and commercial facilities 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

8 Existing CHP Natural gas based CHP concentrated in Northeast, Gulf Coast, Midwest and California Northwest and Southeast have high concentration of sites in forest products and paper industries

9 Capacity (MW) CHP Annual Additions 7,000 6,000 5,000 4,000 3,000 2,000 1,000 0 Annual Capacity Additions by Size Sites >100 MW Sites <100 MW Source: ICF CHP Installation Database

10 Capacity (MW) CHP Annual Additions 7,000 6,000 5,000 4,000 3,000 2,000 1,000 0 Annual Capacity Additions by Size Sites >100 MW Sites <100 MW Source: ICF CHP Installation Database

11 CHP Additions (3,442 MW) Other States 945 MW CHP Additions by State Washington 123 MW Louisiana 129 MW Florida 147 MW Ohio 160 MW California 198 MW Chemicals 591 MW CHP Additions by Application Refining 451 MW Other Ind. 413 MW Other Com. 503 MW Iowa 200 MW Food 323 MW Texas 915 MW Conn. 246 MW College/Univ 380 MW Penn. 115 MW New York 264 MW Hospitals 143 MW Utilities 196 MW Paper 442 MW

12 Recent Market Conditions o Most activity in states with favorable regulatory treatment and/or specific incentives o Natural gas CHP in areas with supportable spark spread (Northeast, Texas, California) o Biomass and opportunity fuels in Southeast, Midwest and Mountain o Hot applications: universities, hospitals, waste water treatment, other institutional applications o Growing interest in waste heat to power applications o Project inquiries increasing

13 Capacity (MW) Emerging Drivers Benefits recognized by policymakers many states promoting CHP Favorable outlook for natural gas supply in North America enhances economics Opportunities created by environmental pressures on the power sector and industrial/institutional users Growing interest in power reliability and critical infrastructure support 7,000 6,000 5,000 4,000 3,000 2,000 1,000 0 Over 4,500 MW announced/under construction

14 Federal Support for CHP Executive Order: Coordinate and strongly encourage efforts to achieve a national goal of deploying 40 gigawatts of new, cost effective industrial CHP in the United States by the end of 2020 DOE focuses technology deployment support for CHP - Regional Technical Assistance Partnerships and SEE Action Regional meetings planned in support of Executive Order SEEAction Guide of CHP Policy Best Practices EPA recognizes CHP as an efficiency measure under developing greenhouse gas emission standards and promoting output-based options that recognize CHP benefits (ICI Boiler MACT and Utility MACT (MATS)) FERC Notice of Interest for recognizing ancillary services from small generators

15 CHP Value Proposition Category 10 MW CHP 10 MW PV 10 MW Wind Combined Cycle (10 MW Portion) Annual Capacity Factor 85% 25% 34% 67% Annual Electricity 74,446 MWh 21,900 MWh 29,784 MWh 58,692 MWh Annual Useful Heat 103,417 MWh t None None None Footprint Required 6,000 ft 2 1,740,000 ft 2 76,000 ft 2 N/A Capital Cost $24 million $60.5 million $24.4 million $10 million Annual Energy Savings 343,747 MMBtu 225,640 MMBtu 306,871 MMBtu 156,708 MMBtu Annual CO 2 Savings 44,114 Tons 20,254 Tons 27,546 Tons 27,023 Tons Annual NOx Savings 86.9 Tons 26.8 Tons 36.4 Tons 59.2 Tons Based on: 10 MW Gas Turbine CHP - 30% electric efficiency, 70% total efficiency, 15 PPM NOx Electricity displaces National All Fossil Average Generation (egrid 2010 ) - 9,720 Btu/kWh, 1,745 lbs CO 2 /MWh, lbs NOx/MWH, 6% T&D losses Thermal displaces 80% efficient on-site natural gas boiler with 0.1 lb/mmbtu NOx emissions

16 CHP and Portfolio Standards

17 CHP and State Portfolio Standards o Many states have developed portfolio standards to increase the adoption of renewable, energy generation, energy efficiency, and alternative energy technologies. o 40 states & DC have some form of RPS or AES with 21 specifically specifying CHP and/or WHP as eligible technologies o 16 states specifically specify CHP and/or WHP as eligible technologies under their EERS. o Not all have binding targets that apply to CHP/WHP

18 State EEPS Programs o State EEPS Program (administered by the investor owned utilities) usually the single largest opportunity within a state for increased large customer EE o EEPS annual efficiency targets becoming much more difficult to meet within budget caps o Greater industrial, large commercial, institutional sector participation is one of the keys to the future success of state EEPS programs o How can we increase large customer participation in EEPS? Can CHP be a Contributor

19 Some Thoughts for Including CHP in EEPS: o Projects must pass cost effectiveness test (TRC). o Should incentives be on electric side, gas side, or shared? o How do you calculate allowable energy savings? o Should incentives be tied to measured performance? o Can CHP significantly assist in meeting targets? o How do you control size of CHP incentives? o What have other states done?

20 A Few Examples o Massachusetts CHP a critical part of Advanced Energy Portfolio Standard and Utility Energy Efficiency Programs o Maryland CHP pilot program as part of EmPOWER Maryland energy efficiency program o Ohio includes CHP in EERS and WHP in both RPS & EERS. The whole EERS program under attack by First Energy and some legislators o Illinois CHP included in Public Sector 3 year filing. If approved an incentive program (modeled after Maryland) will be issued in Spring Incentive and savings shared on both electric and gas side.

21 CHP and Critical Infrastructure

22 CHP and Critical Infrastructure Critical infrastructure refers to those assets, systems, and networks that, if incapacitated, would have a substantial negative impact on national security, national economic security, or national public health and safety. Patriot Act of 2001 Section 1016 (e) Applications: o Hospitals and healthcare centers o Water / wastewater treatment plants o Police, fire, and public safety o Centers of refuge (often schools or universities) o Military/National Security o Food distribution facilities o Telecom and data centers

23 Infrastructure Resiliency o A key principle of disaster preparedness o Ability to maintain operation despite a devastating event o CHP (if properly configured): Offers the opportunity to improve CI resiliency Can continue to operate, providing uninterrupted supply of electricity and heating/cooling to the host facility

24 CHP versus Backup Generation System Performance Fuel Supply Transition from Grid Power Energy Supply Backup Generator Only used during emergencies Limited by on-site storage Lag time may impact critical system performance Electricity CHP Emissions Commonly burn diesel fuel

25 CHP versus Backup Generation System Performance Fuel Supply Transition from Grid Power Energy Supply Emissions Backup Generator Only used during emergencies Limited by on-site storage Lag time may impact critical system performance Electricity Commonly burn diesel fuel CHP Designed and maintained to run continuously Improved performance reliability Natural gas infrastructure typically not impacted by severe weather May be configured for flickerfree transfer from grid connection to island mode Electricity Thermal (heating, cooling, hot/chilled water) Typically natural gas fueled Achieve greater system efficiencies (80%) Lower emissions

26 Uninterrupted Operation Requirements o Black start capability o allows the system to start up independently from the grid o Generators capable of grid-independent operation o the system must be able to operate without the grid power signal o Ample carrying capacity o system size must match critical loads o Parallel utility interconnection and switchgear controls o the system must be able to disconnect from the grid, support critical loads, and reconnect after an event

27 Power Outage Cost Estimates Superstorm Sandy o Nearly $20 billion in losses from suspended business activity o Total losses estimated between $30 to $50 billion o Two-day shutdown of the NY Stock Exchange, costing an estimated $7 billion from halted trading o Rutgers estimates economic losses of $11.7 billion for New Jersey GDP SOURCE: esilient_energy_infrastructure.pdf One estimate states that over $150 billion per year is lost by U.S. industries due to electric network reliability problems Source: pdf

28 CHP Operates Through Super Storm Sandy o o o o o o o o o o o o South Oaks Hospital - Amityville, NY, 1.25 MW reciprocating engine Greenwich Hospital - Greenwich, CT, 2.5 MW reciprocating engine Christian Health Care Center - Wyckoff, NJ, 260 kw microturbine Princeton University - Princeton, NJ, 15 MW gas turbine The College of New Jersey - Ewing, NJ, 5.2 MW gas turbine Salem Community College - Carney s Point, NJ, 300 kw microturbine Public Interest Data Center - New York, NY, 65 kw microturbine Co-op City - The Bronx, NY, 40 MW combined cycle Nassau Energy Corporation Garden City, NY, 57 MW combined cycle Bergen County Utilities Wastewater Plant Little Ferry, NJ, 2.8 MW reciprocating engine New York University New York, NY, 14.4 MW gas turbine Sikorsky Aircraft Corporation Stratford, CT, 10.7 MW gas turbine For more information:

29 CHP and Critical Infrastructure Smart Grid and Micro-Grids

30 CHP and Micro-grids Micro-grid generally considered to be self-contained grid systems equipped with on-site power generation (like CHP). A group of interconnected loads and distributed energy resources (DER) with clearly defined electrical boundaries that acts as a single controllable entity with respect to the grid [and can] connect and disconnect from the grid to enable it to operate in both gridconnected or island mode. (DOE Microgrid Working Group Definition) o CHP systems act as the backbone of microgrids by providing base load reliably o Microgrids must be capable of island mode in anticipation of or in event of grid power failure

31 Microgrid Example: Gainesville Regional Utilities / Shands Hospital Advantages utility private partnership critical power no-low capital 50 yr life Savings 4.3 MW GT CCHP chilled water: 4,200 tons steam: 14,500 pph 100% island / blackstart capability Category 4 Hurricane 36.2% cost $1.68 M/year 68% less CO2 99% less SOX 98% less NOX

32 Microgrid Example: MCAGCC Twentynine Palms Advantages 7.2 MW GT CHP 9.2 MW GT CHP 4.8 MW Solar PV 70+ miles of district energy piping 100% island capability (60) SCADA switches / communications (2) Natural gas feeds 200,000 gal. LP storage 7 day critical infrastructure reserves 90% self generation

33 Campus Microgrid Daily Load Profile Source: UC San Diego, John Dilliot, Manager, Energy & Utilities

34 Campus Microgrid Daily Load Profile Source: UC San Diego, John Dilliot, Manager, Energy & Utilities

35 CHP and Microgrids Recent State / Local Policy Measures o DOE/State of New Jersey/ NJ Transit/New Jersey Board of Public Utilities announces micro-grid to power the transit system among Newark, Jersey City, and Hoboken. o Connecticut first state to launch an micro-grid program: $18M awarded to 9 micro-grid projects in July 2013 Gov Malloy to commit additional $30M over the next 2 years.

36 CHP and Micro-grid (cont d) o New York City Mayor (Michael Bloomberg) calls for public/private partnerships to scale up DG systems and micro-grids in NYC with a goal of 800MW of installed capacity by o Navigant Research (recent report) North America will lead the micro-grid market through 2020 with nearly 6 GW of capacity -- the equivalent of six large nuclear plants.

37 CHP and Emission Compliance Strategies Industrial Boiler MACT Electric Utility GHG Emission Standard

38 EPA s Boiler MACT Rule (CHP Role) ICI Boiler MACT - Standards for hazardous air pollutants from major sources: industrial, commercial and institutional boilers and process heaters Final rule December 2012 Compliance by January 31, 2016 Compliance with MACT limits will be expensive for many coal and oil users (standard compliance measures) May consider converting to natural gas Conversion for some oil units, replacements for coal units? May consider moving to natural gas fueled CHP (trade off of benefits versus additional costs) 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

39 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 ,525 18, Heavy Liquid ,296 4, Light Liquid ,133 2, Total 611* 1, ,954 25, The data on this chart is still being refined *Some facilities are listed in multiple categories due to multiple fuel types; there are 567 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

40 GHG Pollution Sources

41 President s Plan to Cut Carbon Pollution (partial)

42 Proposed Carbon Pollution Standard for New Power Plants o Issued Proposed New Power Plant Standards on September 20, 2013 o Utility Boilers fired with Coal and IGCC Units 1,100 lb CO2/MWh gross over a 12-operating month period, or 1,000-1,050 lb CO2/MWh gross over an 84-operating month (7-year) period o Stationary Gas Combustion Units SC/CC 1,000 lb CO2/MWh gross for larger units (> 850 mmbtu/hr) 1,100 lb CO2/MWh gross for smaller units ( 850 mmbtu/hr)

43 Timeline for Carbon Pollution Standard for New Power Plants o 1 st half 2014 expect Standard for Existing Power Plants o June 1, 2014 EPA to release proposed rule o June 15, 2015 EPA to finalize rule o June 30, 2016 States to submit proposed State Implementation Plans and supporting regulations for review o ~ October 2016 State plans reviewed and accepted

44 Emissions (lb CO2/MWh) Relative Carbon Emissions from Power Generation 2,500 2,000 1,500 1, Average Coal Average Oil Average NG NG CHP 0? Solar, Hydro, Nuclear Biomass Based on US EPA Egrid Averages for United States

45 Conventional Power Emissions vs CHP 97,060 tons CO2 TOTAL 51,152 tons CO2 TOTAL 74,031 tons CO2 Grid Electric 1,779 lbs CO2/MWh 28,123 tons CO2 CHP Electric 676 lbs CO2/MWh 83,220 MWh/yr 10MW CHP System 23,029 tons CO2 Industrial Plant, Institutional Campus, etc. 23,029 tons CO2 savings On-site Boiler 315,730 MWh/yr Results from EPA CHP Emissions Calculator

46 What does this mean for CHP? o States may consider flexible approaches to meeting carbon pollution standards, including support for CHP to mitigate other emissions. o Emissions savings from CHP could be captured in a number of ways: Through utility ownership Efficiency programs Credit trading

47 Utility Participation in CHP Markets

48 Two Prominent Barriers to CHP o Large Capital Investment which most companies are reluctant to make Long payback periods by their standards Not directly related to their main area of business o Discouraged by many electric utilities Utility regulatory framework often does not encourage CHP Utilities encouraged to invest in central station power and upgrading the present grid structure (larger rates of return on their investments) Requires state policy changes

49 Utility CHP Benefits o Competitive cost with traditional centralized power o Speed of deployment o Avoids significant line losses o Defer significant grid upgrades (reduces conjestion) o Reduce emission compliance costs o Ability to function as a capacity resource o Ability to balance system power fluctuations o Ability to supplement and support greater renewable energy deployment

50 Example CHP Installations w/ Utilities o We Energies (Domtar Paper Mill), Rothschild, WI, 50 MW boiler/steam turbine (2013) 1 o Lansing Board of Water & Light (REO Town Cogeneration Plant), Lansing, MI, 100 MW boiler / steam turbine (2013) 2 o City of Macon (Northeast Missouri Grain, LLC), Macon, MO, 10 MW combustion turbine (2003) 3 o City of Russell (U.S. Energy Partners, LLC), Russell, Kansas, 15 MW combustion turbine (2002) 4 o Detroit Thermal Energy (Cristal Global), Ashtabula, OH, 28 MW combustion turbine (2001) 5 o Muscatine Power & Water (Grain Processing Corp.), Muscatine, IA, 18 MW boiler / steam turbine (2000) 6 o Southern Co. approx 700MW CHP across its service area

51 State Energy Efficiency Action Network: Guide to the Successful Implementation of State Combined Heat and Power Policies Discusses five policy categories and highlights successful state CHP implementation approaches within each category: Design of standby rates Interconnection standards for CHP with no electricity export Excess power sales Clean energy portfolio standards (CEPS) Emerging market opportunities CHP in critical infrastructure and utility participation in CHP markets. State and Local Energy Efficiency Action Network Guide to the Successful Implementation of State Combined Heat and Power Policies. Prepared by B. Hedman, A. Hampson, J. Rackley, E. Wong, ICF International; L. Schwartz and D. Lamont, Regulatory Assistance Project; T. Woolf, Synapse Energy Economics; J. Selecky, Brubaker & Associates. guide.pdf

52 Standby Rates for CHP Utility tariffs for standby rates or partial requirements service the set of retail electric products for customers with on-site, non-emergency generation can reduce the cost savings for CHP to a uneconomical point. The tariffs are meant to recover the utility costs of providing backup power, but cover other services: o o o o o Backup power during an unplanned generator outage Maintenance power during scheduled generator service for routine maintenance and repair Supplemental power for customers whose on-site generation under normal operation does not meet all of their energy needs, typically provided under the full requirements tariff for the customer s rate class Economic replacement power when it costs less than on-site generation Delivery associated with these energy services. Typically, standby rates are ratcheted to customer s peak demand for an entire year, and charges do not reflect actual costs, especially for CHP customers with low forced outage rates. State and Local Energy Efficiency Action Network Guide to the Successful Implementation of State Combined Heat and Power Policies.

53 Standby Rate Barrier Example: Iowa o The Midwest CEAC published a 2011 study, Iowa On-site Generation Tariff Barrier Overview o Avoided rates for self-generation customers as a percentage of retail rates under tariffs for four utilities ranged from 71.9% to 80.5%. o Modeling for CHP on Mid-American Eastern 1.6 MW CHP generating 81% of required kwh onsite avoids 74.7% of average retail service rate resulting in a savings of only 61% for CHP 41% of charges attributable to standby service

54 Standby Rate Barrier Example: Iowa o Mid American o Modeling for site with 1.6 MW of CHP generating 81% of required kwh onsite, avoids 74.7% of average retail service rate, resulting in a savings of only 61% with CHP.

55 Improved Standby Rate Design for CHP Utility standby tariffs incorporating the following features could encourage CHP self-generators to use electric service most efficiently and more accurately charge them for actual costs of standby service: o Offer daily or monthly as-used demand charges for backup power and shared transmission and distribution (T&D) facilities o Reflect load diversity of CHP customers in charges for shared delivery facilities o Provide an opportunity to purchase economic replacement power o Allow customer-generators the option to buy all of their backup power at market prices o Allow the customer to provide the utility with a load reduction plan o Offer a self-supply option for reserves. State and Local Energy Efficiency Action Network Guide to the Successful Implementation of State Combined Heat and Power Policies.

56 Regional DOE CHP Technical Assistance Partnerships

57 US DOE Technical Assistance Partnerships (TAPS) o As of October 1 st, the DOE Regional Clean Energy Application Centers have been replaced with: Northwest CHP TAP Mid-Atlantic CHP TAP Southeast CHP TAP Mid-West CHP TAP Southwest CHP TAP Pacific CHP TAP Northwest CHP TAP

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