The Potential for CHP in California

Transcription

1 The Potential for CHP in California Eric Wong ICF International IECA, San Francisco, CA June 21, 2011

2 Introduction Public company on NASDAQ with symbol ICFI In its 42 nd year founded in 1969 End to end management, technology, and policy services advise, implement, improve Diverse client base 81% federal, state, and local agencies; 14% commercial; and 5% international governments. Energy & Climate work 50% commercial/international and 50% government 2010 revenue of $765 million More than 3,700 employees (500 energy and climate change professionals and 600 environment and infrastructure professionals) Global presence with 50 offices with headquarters in the Washington, D.C. area 20 states plus D.C. Beijing Brussels London Moscow New Delhi Rio de Janeiro Ottawa Toronto 2

3 Agenda What are the benefits of CHP? How is CHP currently used nationally and in California? What is the potential for additional CHP in California? What are the critical market hurdles? What impacts can policies make? 3

4 Acknowledgements Based on work supported by: DOE s Industrial Technology Program EPA s Combined Heat and Power Partnership

5 What Are the Benefits of CHP? CHP is 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 CHP can increase power reliability and enhance power quality On site electric generation reduces grid congestion and avoids distribution costs 5

6 Over Two Thirds of the Fuel Used to Generate Power in the United States Is Lost as Heat

7 CHP Saves Energy 7

8 CHP Produces Less GHG Emissions 8

9 CHP Supports Critical Infrastructure Baptist Hospital, Jackson, MS 624 bed urban hospital, 3000 employees 3.2 MW gas turbine CHP system installed 1994 Steam used for hot water, sterilization and absorption chillers Grid down for 52 hours starting August 29, 2005 due to Hurricane Katrina CHP system ran islanded and provided power, hot water and air conditioning

10 CHP Represents a Cost Effective Electricity Resource in California Cost of Delivered Electricity - California Thermal Credit T&D Fuel O&M Capital Cost to Generate Power (cents/kwh delivered) Small CHP Medium CHP Large CHP Wholesale Power High Load Factor Retail Low Load Factor Retail Delivered Energy Efficiency PV Wind Pulverized Coal Natural Gas Combined Cycle SSource: ICF 6 State Scenario Analysis, Oct Updated

11 CHP Is a Cost effective CO 2 Reduction Option 11

12 CHP Value Proposition in California Category 1 MW CHP 1 MW PV Annual Capacity Factor 85% 18% Annual Electricity 7,446 MWh 1,577 MWh Annual Useful Heat 8,273 MWh t None Footprint Required 1,500 sq ft 100,000 sq ft Capital Cost $2.4 million $4.6 million Annual Energy Savings 31,748 MMBtu 15,074 MMBtu Annual CO 2 Saving 2,640 tons 1,047 tons Based on: 1 MW Recip Engine CHP, 34% electric efficiency, 72% total efficiency Displaces CAMX-WECC California All Fossil Average Generation (egrid 2007) 9019 Btu/kWh, 1253 lbs CO 2 /MWh, 6% T&D losses

13 CHP Is Already an Important Resource Nationally 85 GW of installed CHP at over 3,600 industrial and commercial facilities (2009) 1.9 Quads annual energy savings 248 million metric tons of annual CO2 savings Equivalent to 45 million cars removed from the road 13

14 Existing CHP in California Market Class # of Sites MW Industrial 193 4,365 Commercial/Institutional 666 1,442 Other (EOR, mining, agriculture, etc) 112 2,778 Total 971 8,585 Commercial/ Institutional 17% Enhanced Oil 24% Other Industrial 14% Metals 14% Refining 14% Food 17% Source: ICF 6 State Scenario Analysis, Oct 2010

15 Remaining Technical Market Potential California Technical Potential - No Export Technical Potential for CHP Capacity at Existing Facilities (MW) Capacity at New Facilities (MW) Total (MW) Industrial 4, ,593 Commercial/Institutional 7,769 1,682 9,451 Total 11,924 2,120 14,044 Technical Potential - With Export Technical Potential for CHP Capacity at Existing Facilities (MW) Capacity at New Facilities (MW) Total (MW) Industrial 8, ,612 Commercial/Institutional 7,769 1,682 9,451 Total 16,536 2,528 19,064

16 California CHP Potential Existing CHP: 9,000 MW Additional CHP Technical Potential 14,000 MW no export (all electricity used on-site) 19,000 MW with export (CHP sized to on-site thermal needs, excess power sold to grid) Additional CHP Market Penetration through Base Case (reflects current market conditions no incentives) 2,300 MW no export 4,400 MW with export Evaluated Impact of key policy proposals on market penetration

17 The Technical Potential for CHP in California EOR 13% Other Industrial 13% Chemicals 26% Multifamily 4% Other 17% Colleges 24% Hospitals 6% Refining Food 16% Lodging 16% 7% Government Office 18% Paper Buildings 16% 17% Industrial 9,600 MW (with export) Commercial 9,400 MW 17

18 Hurdles to Increased Use of CHP Financial uncertainty CHP cost and performance uncertainty Regulatory uncertainty Utility uncertainty 18

19 CHP Sensitivity Analysis Evaluate sensitivity of CHP market penetration to state incentives or policy activities Two ways to increase market penetration Improve project economics (financial incentives) Improve customer response rates to a given economic signal (education and outreach activities) Multiple sensitivity cases were analyzed with the ICF CHP Market Model to demonstrate effectiveness of CHP enabling mechanisms Streamlined permitting Investment and/or production incentives 19

20 CHP with Export Represents a Significant Resource in California Base Case CHP Market Penetration 5,000 4,500 4,000 Export No Export Capacity (MW) 3,500 3,000 2,500 2,000 1,500 1, Export - CHP sized to on-site thermal needs, excess power sold to grid SSource: ICF 6 State Scenario Analysis, Oct 2010

21 Scenario Results No Export *Multiple Measures case includes the prorated SGIP, $5/MWh thermal incentive, innovative financing, and $100/kW capital incentive. SSource: ICF 6 State Scenario Analysis, Oct 2010

22 Scenario Results with Export CHP Scenario Results - Export Market Penetration 6,000 Export - CHP sized to on-site thermal needs, excess power sold to grid 5,000 Capacity (MW) 4,000 3,000 2,000 1,000 Multiple Measures SGIP Prorated 15% disc $5/MWh Thermal Incentive $100/kW Capital Cost Reduction Innovative Financing 0 Base Case *Multiple Measures case includes the prorated SGIP, $5/MWh thermal incentive, innovative financing, and $100/kW capital incentive. SSource: ICF 6 State Scenario Analysis, Oct 2010

23 Conclusions CHP represents a significant resource for California Policy initiatives can accelerate market acceptance and increase benefits CO 2 annual reductions, No Export = 3.4 million metric tons (MMT). Year 2030 All in scenario, no export = 4.5 MMT All in scenario, with export = 9.8 MMT State Policy (CEC s IEPR). CHP key to: Firm intermittent resources Replacement of retired coastal power plants Anchor in microgrids and ACES (Advanced Community Energy Systems) 23

24 Thank You! Eric Wong ICF International 630 K Street, Suite 400 Sacramento, CA ewong@icfi.com 24