Comparing the Carbon Emission Reductions from Various Clean Energy Projects

Transcription

1 Comparing the Carbon Emission Reductions from Various Clean Energy Projects NYS Green Building Conference April 15, 2016 Hugh Henderson CDH Energy Corp., Cazenovia, NY

2 Learning Objectives Understand how to value and compare different energy projects from an environmental point of view See the value of carbon reductions per unit cost to gauge impacts Appreciate importance of economic assumptions on valuing environmental benefits April 15,

3 Outline Carbon emissions reductions are a good metric for green-ness Renewable only adds confusion A kwh saved is a kwh produced Production and efficiency have equivalent impacts Should we go all the way? Not really: each incremental decision starts with current circumstances. Let s do the easy stuff first Which projects are best for the planet? Compare carbon emissions per investment April 15,

4 What is Renewable?.everybody wants to be it Produces energy with no fuel input (or environmental impacts) Examples of Renewable Technologies Solar (thermal and PV electric) Wind Biogas / Biomass (local emissions?) Fuel Cells (but consumes natural gas?) Geothermal heat pumps (air-source heat pumps?) April 15,

5 Renewable is a Poor Metric and Label The label renewable is widely used but not very meaningful Does not indicate how good a technology is for us Goodness should consider: Reduction in energy use Reduction in local and global emissions The cost to get there (costs, incentives, embodied energy, etc) April 15,

6 A Better Comparison Metric: Carbon Emissions Also: Greenhouse Gas (GHG) emissions Single best measure of societal benefits Can be determined for a wide range of energy improvements or projects : More efficient light bulbs More insulation in your home Solar PV Farm biogas Industrial process efficiency April 15,

7 Benefits vs. Costs: from a societal perspective GHG emissions provide a consistent way to measure benefits to society Many technologies are incentivized by society (i.e., government) through: Tax credits or deductions Installation incentives to customers, owners Society (gov., rate payers) should provide financial incentives to obtain the biggest benefit April 15,

8 Spend Wisely to Save the Planet! Society (us) only has so much capital available for any given purpose: Should direct it where it has the most benefit Should do the easy stuff first improvements have different lifetimes so should do a cost-benefit analysis Even if you only care about the environment, you need economics to get the best outcome April 15,

9 Economics of Saving the Planet Need to determine: sum of all benefits (environmental and financial) sum of all costs Find present value (normalize to today s costs) Can be determined from various point s of view: Customer / owner (normal approach) Utility perspective Society (public good), rate payer April 15,

10 Renewable Energy (or Energy Savings) Displaces Fuel Use Energy produced (or saved) Electricity displaces fuel use at the power plant Natural gas displaces purchased therms Fuel oil displaces purchased gallons Displaced fuel purchases reduce GHG emissions Different fuels have different carbon emissions or lb of CO 2 equivalent April 15,

11 A kwh Produced = A kwh Saved 4 kw Solar PV Install solar array on roof Array produces 4,400 kwh/yr Utility bill is reduced by 4,400 kwh/yr GHG emissions reduced by 5,700 lb/yr Lighting Retrofit Change out lighting fixtures New fixtures save 4,400 kwh/yr Utility bill is reduced by 4,400 kwh/yr GHG emissions reduced by 5,700 lb/yr April 15,

12 But we can t save our way out of this mess.we need new energy sources Yes, but we should do projects with the most impact first (most GHG savings per $ invested) Savings from efficiency can eliminate at least half of current energy use Doing efficiency first allows time for cost of new energy sources to come down later April 15,

13 But don t we need to eliminate fossil fuel use? Start (now) Project 1 Efficiency Project 2 Efficiency Project 3 Solar Goal (future) Lower cost More benefit sooner Start (now) Project Solar Goal (future) Much higher Cost Yes, but do high impact efficiency projects first April 15,

14 How Carbon Emissions are Determined: Electric Grid Power Plant emissions vary by fuel The local electric grid has power from a mix of fuels: coal, gas, oil, hydro, solar Coal plants emit 2.1 lb per kwh Hydro: zero, Nat. gas: 1.2 lb/kwh Fuel oil 1.6 lb/kwh EPA provides egrid data for various parts of the country, updated frequently: Upstate NY Grid = 1.3 lb/kwh (non-baseload) April 15,

15 Carbon Emissions: Fossil Fuels Natural gas in boilers and furnaces: 11.7 lb per therm Not a function of technology Fuel oil boilers and furnaces 22.5 lb per gallon April 15,

16 The devil is in the details let s do calculations for some examples April 15,

17 Example 1: Solar PV A 10 kw array on the roof, 20 yr life Saves 13,000 kwh per year $1,560/yr Costs: $4/Watt $40,000 Incentives: $1/Watt $10,000 Fed tax credit 30% after incentive $9,000 NY tax credits $5,000 Net Cost: $16,000 Lifetime GHG reductions: 338,000 lbs April 15,

18 Example 1: Solar PV Customer Simple Payback: 10.3 yrs Lifetime GHG reductions per total investment: 8.5 lb per $ investment Lifetime GHG reductions per incentive and tax credits: 14.1 lb per $ from society April 15,

19 Ex 2: Commercial Lighting Retrofit Replace lighting fixtures in 200,000 sq ft building, reduce lighting power by 40 kw, lights operate 6,500 hrs/yr, 15 yr life Saves 260,000 kwh/yr $31,200 Installed cost: $124,800 Incentive: $0.10 per kwh $26,000 Net Cost: $98,800 Lifetime GHG reduction: 5.1 million lb April 15,

20 Ex 2: Commercial Lighting Retrofit Customer Simple Payback: 3.2 yrs Lifetime GHG reductions per total investment: 40.6 lb per $ investment Lifetime GHG reductions per incentive and tax credits: 195 lb per $ from society April 15,

21 Comparing Many Technologies Technical Performance Installation Costs Annual Cost Savings GHG Reductions PV Small Wind Solar Thermal Commercial Lighing Project High Performance Residential Nominal Size 10 kw 50 kw 80 gal 200k sq ft 2000 sq ft Nominal Performance 1300 FLH 25% CF 60% of load 40 kw saved 30% htg of csts Expected Life (yrs) Energy Savings (kwh/yr) 13, ,500 2, ,000 Energy Savings (therms/yr) 400 Installation Costs $ 40,000 $ 250,000 $ 9,000 $ 124,800 $ 16,000 Normalized Installed Costs $4/Watt $5000/kW $8 per sq ft Incentives or grants $ 24,000 $ 134,500 $ 6,570 26,000 $ 5,000 Net Installed Costs $ 16,000 $ 115,500 $ 2,430 $ 98,800 $ 16,000 Avoided Electric Costs ($/kwh) Avoided Gas Costs ($/therm) 1 Annual Cost Savings $ 1,560 $ 10,950 $ 288 $ 31,200 $ 400 GHG Reductions (lbs/yr) 16, ,350 3, ,000 4,680 Lifetime GHG Reductions (lb) 338,000 2,847,000 62,400 5,070, ,400 Economic Factors Simple Payback (yrs) Life GHG per Invest (lb/$) GHG Metrics Life GHG per Incentive (lb/$) April 15,

22 Comparing Technologies (cont) Technical Performance Installation Costs Annual Cost Savings GHG Reductions CHP Fuel Cell Commercial Boiler Replace Anaerobic Digester Gas Nominal Size 100 kw 200 kw 300 MBH 300 kw Nominal Performance 65% CHP 35% Elect 95% eff 25% eff Expected Life (yrs) Energy Savings (kwh/yr) 772,632 1,545,264 2,317,896 Energy Savings (therms/yr) (49,962) (82,794) 711 Installation Costs $ 400,000 $ 1,200,000 $ 8,000 $ 3,000,000 Normalized Installed Costs $4000/kW $6000/kW Incentives or grants $ 100,000 $ 869,053 $ 2,000 $ 709,560 Net Installed Costs $ 300,000 $ 330,947 $ 6,000 $ 2,290,440 Avoided Electric Costs ($/kwh) Avoided Gas Costs ($/therm) Annual Cost Savings $ 25,808 $ 48,323 $ 639 $ 184,486 GHG Reductions (lbs/yr) 419,866 2,008,843 8,313 19,868,494 Lifetime GHG Reductions (lb) 8,397,330 30,132, , ,369,873 Economic Factors Simple Payback (yrs) Life GHG per Invest (lb/$) GHG Metrics Life GHG per Incentive (lb/$) April 15,

23 Lifetime GHG per Dollar Spent (lb/$) GHG Reductions per $ Spent (from project and societal POV) GHG per Investment GHG per Incentive April 15,

24 Simple Payback (yrs) Customer Economics (aka likeliness of adoption) April 15,

25 Surprising Winners: Combined Heat and Power On site power generation provides both heat and power to the building Large power plants are more efficient, but throw away the waste heat CHP systems use fuel to drive engine on site, but net GHG emissions are lower April 15,

26 CHP Concept April 15,

27 Examples of CHP Technologies Large Systems (5 MW gas turbines) Small Systems (100 kw engines) April 15,

28 CHP Environmental Benefits GHG Reductions per $ are 10X greater! from CHP: A Clean Energy Solution, DOE/EPA August 2012

29 Another Winner: Farm Anaerobic Digesters Produce biogas from farm waste, then generate power (power from waste) Also can take credit for methane destruction April 15,

30 Farm Anaerobic Digester Site 300 kw Engine Plug Flow Digester April 15,

31 You can argue with my assumptions Technical performance assumptions can be refined, though: New technologies often get the benefit of the doubt about performance Older technologies are burdened with actual performance experience Incentives can change GHG factors may change as the grid changes April 15,

32 But you shouldn t argue with the approach All technologies should be compared on a consistent basis All technologies should use consistent economic assumptions: Discount rate, equipment life Energy costs & escalation rates Other metrics obscure comparisons: e.g., levelized cost of energy April 15,

33 Summary Thoughts Don t ask: Is it renewable? Instead ask: What are the carbon reductions per unit cost? Renewable production same value as energy efficiency First do projects with biggest benefit per unit cost get the most benefit as soon as possible April 15,

34 Be a Smart Environmental Steward Put your dollars where they do the most good Encourage policies that direct public dollars to have the biggest impact Renewables are certainly part of the solution just not the first step Always measure and re-adjust April 15,