mchp Current Status & Future Opportunities 9/20/18 Eric Burgis Energy Solutions Center

Transcription

1 mchp Current Status & Future Opportunities 9/20/18 Eric Burgis Energy Solutions Center Energy Solutions Center Inc. All Rights Reserved

2 Presentation Outline What is mchp Why mchp? Best Locations for mchp CHP Technologies Current and Future mchp Products Federal tax Incentive & Bonus Depreciation Case Studies 2

3 What is mchp? Combined Heat and Power (CHP) by definition is the generation of two forms of energy from one common source of fuel also known as Cogeneration. Fuel Waste Heat Recovered Prime Mover & Generator Heat & Hot Water Electricity Micro-CHP (mchp) appliances are cogeneration systems less than or equal to 50kW in size, larger systems are CHP. The difference between CHP and mchp is that most large commercial & industrial CHP applications are Electricityled where electricity is the main output and heat is a byproduct. Micro-CHP systems in residences or smaller commercial applications are more often Heat-led. Heat is the main output and electricity is the byproduct 3

4 How it works Micro Combined Heat & Power systems provide power independence with around 80% overall system efficiency 4

5 mchp Driving Forces Varies by region but may include one or more of the following: Economics saving money Greenhouse Gas Emissions Reductions Improve Grid Stability Reducing congestion and constraints Dispactable power to help meet peak demands 5

6 Why Micro CHP? Average Retail U.S. Residential and Commercial Energy Prices including Short Term EIA Outlook ($/MMBTU) $45.00 $40.00 $35.00 $30.00 $25.00 $20.00 $15.00 $10.00 $5.00 Electricity Natural Gas 2018 Retail Forecast ($/MMBTU) Residential Electric = $38.63 Commercial Electric = $31.18 Electric costs more than 3 X the cost of Natural Gas in the U.S Residential Gas = $10.75 Commercial Gas = $8.05 $ Residential Natural Gas Residential Electric Commercial Electric Commercial Natural Gas 6 *EIA data. Uses 1032 BTU/CF Natural Gas and 3412 BTU/KWH Electric. (2017 & 2018 are from EIA STEO)

7 Source to Site Efficiency AGA Policy Handbook Reduce Generation Losses and T&D Line Losses with CHP 7

8 mchp is Efficient 125 units 56 units Fuel Fuel Conventional Heating & Electric Power Plant 32% Efficient Furnace/Boiler 80% Efficient System Efficiency ~47% 40 units Electricity Heat 45 units Micro-CHP System mchp 85% Efficiency System Efficiency ~85% Fuel 100 units Compared to purchasing electric from the grid and producing heat with a furnace or boiler for the home or business, mchp is much more efficient. 8

9 Volumes (Tcf) The Time is Right for mchp? North American Natural Gas Production Historic Projected Mexico From wide range of sources - Gas prices are stable. Plenty of gas for the future. Good Signs for success of CHP! Canada United States Source:

10 Conventional Power Generation vs. Combined Heat & Power Why Combined Heat & Power? Help Stabilize the Grid Economical Efficient Quality Power Environmentally Sound PA s Act

11 CHP is good for business - Economical Improves overall energy efficiency and fuel utilization - thereby lowering electric and overall energy costs Offers reliability during outages less downtime Enhances power quality Combined Heat & Power Equipment to meet virtually every need size to fit your need 11

12 Best Locations for CHP The leading criteria to evaluate the best location for micro-chp are: 1. Spark spread 2. Interconnection standards 3. Net metering 4. Special gas rates 5. Local Incentives 12

13 Best Locations for CHP The Best locations for CHP have at least 3 of the following attributes: KEY Spark Spread > 3 Interconnection Policies Net Metering for all CHP CHP Tariff Rate State or Local Incentives DC VT NH RI CT Pennsylvania: PA Spark Spread = 3 Philly ~ 4.5 Interconnection policies up to 5MW Net metering: <50 kw Residential, <3 MW for Nonresidential CHP Tariff from PGW Local Incentives PGW offers CHP Incentives PECO offers a CHP tiered capacity up to 50% of project cost, $2M max 13

14 mchp Technologies Prime Movers: Engine Drives, Internal Combustion (IC) Microturbines Fuel Cells 14

15 Engine Driven mchp 15

16 Engine Drives Facts Reciprocating engines are available for power generation applications in sizes ranging from a ~1 kw to several MW All current mchp IC Engines are spark ignition engines Low first cost Fast start-up Proven reliability when properly maintained Excellent load-following characteristics Significant heat recovery potential 16

17 Engine Heat Steam / Hot Water Exhaust Gas Heat Exchanger Exhaust Jacket Water Heat Exchanger Lube Oil Heat Exchanger Cold Water Air Natural Gas Exhaust Valve Turbocharger Crankshaft Intake Valve Ignition Source Piston AC Electricity Generator 17

18 Black Start Capability Black-Start (not available on all units) The use of a permanent magnet generator and inverter together can provide the CHP unit with added black-start capability to come on line when the utility grid is down Generator units without black-start capability can only operate when the electric utility is on line. Provides the facility with supplemental/stand-by generation during utility outages 18

19 Microturbines Microturbines 30 kw (available) Run at high speeds Used in power-only generation or in combined heat and power (CHP) systems Able to operate on a variety of fuels, including natural gas, sour gases (high sulfur, low Btu content), and liquid fuels such as gasoline, kerosene, and diesel fuel/distillate heating oil 19

20 Schematic of Microturbine System Heat to User Recuperator (most units) Fuel Compressor (if necessary) Natural Gas Exhaust Low Temperature Water / Air Combustor AC Electricity Inverter Rectifier Compressor Turbine Air inlet Generator 20 20

21 Fuel Cells Fuel cell systems are composed of three primary subsystems: Fuel cell stack that generates direct current electricity Many include a Fuel processor that converts the natural gas into a hydrogen rich feed stream The power conditioner that processes the electric energy into alternating current or regulated direct current Fuel cells produce power electrochemically from hydrogen delivered to the negative pole (anode) of the cell and oxygen delivered to the positive pole (cathode) 21

22 Schematic of Fuel Cell System 93% CH 4 Exhaust CO 2 & N 2 + AC Gas Fuel Processor DC - Inverter Hydrogen Fuel Cell Stack Customer Load Water Heat Exchanger H E A T Air Cooling Loop 22

23 Current and Future mchp Products 50 kw IC Engine, 23.5 kw IC Engine 4.4 kw IC Engine Tedom 35 kw IC Engine 1.5 kw IC Engine 5& 10 kw IC Engine, plus cooling 30 kw Micro turbine 5, 10, & 35 kw IC Engine 23

24 mchp Working on Commercialization 1KW Rankine Steam cycle 1 kw Stirling Engine KW steamturbine 2-4 kw Thermal Acoustic 1.5 kw Solid Oxide Fuel Cell kw IC Engine 24

25 Future mchp Products Coming Soon MTT - 3 kw Micro Turbine 1 kw Fuel Cell (U.S.) Working on residential product Micro CHP Combi Boiler (1kW Stirling - evita) 1-8 kw Engine (U.S.) Opposing Piston Engine 6 kw Engine(Canada) 25 kw Fuel Cell 25

26 Help with funding CHP This Photo by Unknown Author is licensed under CC BY-ND

27 Construction begins after CHP Tax Credit Construction begins before Investment tax Credit (ITC) 12/31/2008 1/1/ % A 10% investment tax credit for CHP property, applicable to only the first 15MW of CHP property & systems must be less than 50MW. CHP system must be 60 percent efficient (on a lower heating value basis), producing at least 20% of its useful energy as electricity and at least another 20% as useful thermal energy. Construction must begin by 1/1/2022 Bipartisan Budget Act of 2018 (Page ): 27

28 Micro-Turbine Tax Credit Construction begins after Construction begins before Investment tax Credit (ITC) 12/31/2008 1/1/ % Credits are for 10% of the cost, up to $200 per kw of power that can be produced. To qualify, systems must have an efficiency of at least 26% and must have a capacity of less than 2,000 kw. Bipartisan Budget Act of 2018 (Page ): 28

29 Construction begins after Fuel Cell Tax Credit Construction begins before Investment tax Credit (ITC) 12/31/2008 1/1/ % 12/31/19 1/1/ % 12/31/20 1/1/ % Credits are for 30% of the cost, up to $3,000 per kw of power that can be produced (Legislation states $1,500 max per.5kw) To qualify systems must have an efficiency of at least 30% and must have a capacity of at least 0.5 kw. Must be placed in service before 1/1/2024 or 0% incentive Bipartisan Budget Act of 2018 (Page ): 29

30 Bonus Depreciation Section 178 of the Tax code allows for 100% depreciation in the 1 st year of capital expenses. Most businesses pay around 21% federal tax. Assuming the business earns more than the cost of the CHP system, the entire cost of the system can be written off against income the first year and the net effect is you get 21% of the cost back. Add to that the 10% ITC for CHP the business gets 31% of the cost returned in the first year. 30

31 Bonus Depreciation Example CHP System costs $200K installed. Assume 21% tax rate. Under a 20 year depreciation, the business writes off $200K/20 years = $10K/Year which is worth $2,100 per year. Under Section 179 rules of the tax code, the business writes off $200K in year 1, and at 21% tax rate, this is $42K. This assumes the business earns more than the $200K CHP system cost. Add to either scenario a 10% Tax Credit for CHP which is worth $20K and the business receives $62K of the $200K expense back the first year. Total returned from bonus depreciation & ITC = 31% of the installed cost of the CHP system. 31

32 ESC s CHP Consortium 32

33 Case Studies 33

34 Micro-CHP in Greenwich, Conn Large residence 13,000 sq ft. Goal - reduce the electric bill, heat the pool/tub, and provide backup power. 10 kw mchp provides 85% of the power for the residence as well as the hot water for domestic use. The swimming pool (8 months/year) and hot tub (all year) are heated by the mchp. Average operation time per month is 694 hours. Average power usage: 6.9 kw/mo. Annual energy savings: $14,000 and offering a 3 year payback. 34

35 Micro-CHP in Greenwich, Conn 9,000 sq.ft. Full in-floor radiant heating system in the house. Sept to May. 28,000 gallon 85 F (Grandkids) May - Sept Geothermal system as backup. In 20 months of mchp usage -- generated 40 Mwh of $0.23/Kw savings of $9,000 35

36 SportSchloss Velen Hotel (Velen, Germany) Fuel Type: Natural Gas CHP Application: Pool Heating and hot water Size: 50 Kw -102 Rooms and Suites, 19 event rooms, and 2 restaurants -Estimated Savings of $4,000 per month 36

37 Newspaper Printer (Essen, Germany) Fuel Type: Natural Gas CHP Application: Hot water Size: 50 Kw -Prints varies newspapers daily 37

38 Soccer Stadium (Apeldoorn, The Netherlands) Fuel Type: Natural Gas CHP Application: Hot water Size: 50 Kw -Hot water is used for turf heating (when needed) and domestic hot water 38

39 Questions Eric Burgis Energy Solutions Center