WHITE PAPER December The Role of Distributed Baseload Generation in Carbon Emissions Displacement

Transcription

1 WHITE PAPER December 2018 The Role of Distributed Baseload Generation in Carbon Emissions Displacement 1

2 Contents 1 Introduction The Centralized Grid Weighing Distributed Energy Generation Options Influence of Distributed Technology on the Grid Standards in Emissions Calculations Calculating Emissions Displacement for Fuel Cell and Solar Projects Conclusion

3 1 Introduction The United States is at a crossroads in determining an energy strategy that addresses both increasing demand on the grid and environmental concerns. Greenhouse gas (GHG) emissions have continued to rise with an escalating energy demand, further exacerbating the risks associated with climate change. During the second half of the 20th century, the population of the United States increased by 86% 1 while electricity usage grew nearly tenfold and average per-capita use more than quintupled. Despite pressure to reduce GHG emissions from the electricity sector, studies have demonstrated that carbon dioxide, a leading GHG contributor to climate change, is projected to increase by 2.5% in the United States in Global leaders in governments, corporations and organizations are faced with the challenge of determining how to provide energy security in the face of increasing demand while simultaneously reducing their environmental footprint. This paper first reviews the evolving energy sector and the increase in efficient and distributed power technologies. The discussion then moves to an overview of distributed energy solutions and their relative influence on the grid and larger energy mix. The relationship between intermittent and baseload energy providers is explored as a pathway towards achieving greenhouse gas emissions reductions. The paper concludes with an example of efficient distributed baseload technologies that use natural gas to achieve greater emissions displacement than intermittent technologies on a per unit power basis. This provides guidance for those considering distributed energy solutions for their business or organization and the practical implications to our shared energy mix. 2 The Centralized Grid The energy supply in the United States primarily stems from a centralized grid erected throughout the past century, traditionally reliant on fossil fuel resources that have generated undesirable environmental consequences. By burning fuel for steam that rotates turbines, which in turn run generators that send electricity through power lines to distant users, a conventional power plant consumes 3 to 4 units of fuel per unit of electricity delivered. As demand grows, this type of inefficiency is both unsustainable and impractical. The existing grid fails to meet sustainability goals that are critical for a reliable and sustainable energy future: air quality, water and land pollution, greenhouse gases, land and water resources, inefficiency and waste. As leaders seek alternative means for power generation, the impact of technology options should be weighed by effectiveness in displacing emissions compared to existing grid energy providers. 1 U.S. Census Bureau, Global Energy Growth is Outpacing Decarbonization; Global Carbon Project

4 Today, 8% of the grid is supplied by solar and wind energy 3, and there is increasing support to expand these technologies towards a 100% renewable energy future. Despite the zero carbon emission capabilities of solar and wind, such technologies are, by nature, intermittent energy sources that are only productive when the sun shines or the wind blows. Practical challenges occur when these solutions are applied as a primary source of power to meet the demands of high energy use customers. As the paper discusses further, a diverse portfolio of baseload and intermittent energy sources is important to ensure stability and security and reduce overall volatility of electricity supply. 3 Weighing Distributed Energy Generation Options Over half of the energy usage in the United States stems from commercial and industrial (C&I) sectors 4. With more energy supply choices available today, leaders in these sectors have an increasing ability to choose a generation technology to meet specific needs. C&I demand for high quality, sustainable solutions can influence the centralized grid system to retire dirtier, aging plants and invest in higher efficiency plants or renewable projects. Alternatively, deciding to move generation on-site offers users, whether large corporations, nonprofits, education campuses, or manufacturing facilities, the ability to rely less on the vulnerabilities of a centralized energy generation design. Distributed and onsite generation can provide more choice, increased flexibility and higher power quality to consumers and organizations. An aging grid infrastructure is failing to meet the transition into a digital economy, and energy consumers who require a high degree of energy security demand better options. Ultimately, an energy portfolio of distributed baseload and intermittent renewable technologies can add a diverse amount of energy to the grid. Deploying only renewables such as solar would be, by many estimates, exorbitantly expensive, land use intensive and would require the additional use of storage technologies. More recently, microgrids have gained popularity as a push to bring grid independence to distributed generation. As a local primary power provider, microgrids offer users an opportunity to disconnect from the traditional grid, protection from prolonged grid outages and mitigation of the rising risk of cyber-attacks against the grid. As communities and organizations look to mitigate the risk of grid power outages, there is growing interest in microgrids because of their ability to combine distributed power generation and storage into a network that can be isolated from the larger grid and power outage risk. As the commercial and industrial sectors adopt more distributed and microgrid energy options, the choices of energy technologies enable leaders to optimize energy performance, stability, and 3 U.S. Energy Information Administration 4 U.S. Energy Information Administration 4

5 emissions. The following sections dive into the choices between intermittent and baseload technologies and their impact on emissions reductions. 4 Influence of Distributed Technology on the Grid Installation of a new energy technology that operates at greater efficiency than the existing supply can displace grid emissions by reducing the need for power from higher emitting generation sources. Almost all energy efficiency projects displace some fraction of electricity and emissions, however there is a greater impact when the delta between lower-carbon emitting resources is placed in higher-carbon emitting areas. There is potential for two impacts: a) improving operating margin, by displacing the power dispatched from higher-carbon emitting units and b) changing build margin, or capacity additions with the swapping of new resources for old and retiring plants. When a new, efficient distributed energy source is brought online, it reduces the amount of power required on the margin. This eliminates the last units of energy needed from the mix. To displace CO2, these marginal power sources must be CO2 emitters, which is the case for a majority of the U.S. Energy providers on the margin are typically the least efficient energy generation units, expressing the highest heat rate and associated emissions. The average coal power plant has an emission rate of 2,280 lbs of CO2/MWh, natural gas turbines emit at 1,508 lbs CO2/MWh and more efficient baseload technologies, such as fuel cells, have an emission rate of 756 lbs CO2/MWh 5. As electricity demand increases, the most flexible units, typically the least cost effective and efficient, are brought online. Hydroelectric, nuclear and coal are traditionally baseload resources and cannot be easily start up or shut down, as shown in the figure below. When marginal power sources are displaced by more efficient or cost effective solutions, it is done so in a reverse merit-order basis (oil, natural gas and coal are the first resources requested to be shut off). 5 Bloom Energy ES5 Data Sheet 5

6 6 New energy generation technologies influence grid sources on the margin at different times and capacities, due to the varying temporal output of individual technologies. For example, solar power output peaks mid-day while wind, on average, displaces centralized energy sources when it peaks during the evening and nighttime hours. This behavior can be complementary between technologies, although unpredictable. Baseload energy generation technologies provide consistent power across all times, as demonstrated in the figure below. 7 The question persists as to how to incorporate various technologies with unique temporal energy output to match the demands of the grid. Guidelines to determine how and to what extent a new technology will displace an existing marginal emission technology are discussed in the next section. 5 Standards in Emissions Calculations Organizations looking to calculate potential emissions reductions and displacement of marginal emitters can use recommended guidelines from the World Resource Institute (WRI) Greenhouse Gas protocol, which is the most widely used GHG accounting methodology and the foundation for nearly every GHG standard and program. The GHG Protocol utilizes project level emissions 6 Mccarthy, Ryan & Yang, Christopher. (2010). Determining marginal electricity for near-term plug-in and fuel cell vehicle demands in California: Impacts on vehicle greenhouse gas emissions. Journal of Power Sources /j.jpowsour Fisher, J., De Young, R., and Santeen, N.R. (2015) Assessing the Emission Benefits of Renewable Energy and Energy Efficiency using EPA s Avoided Emissions and generation Tool (AVERT). Presented at the 2015 U.S. EPA International Emission Inventory Conference Air Quality Challenges: Tackling the Changing Face of Emissions. San Diego, CA 6

7 accounting and also includes sector-specific guidance for on-site electric generation projects. The guidelines are applicable to project activities that reduce consumption of grid electricity: These types of project activities reduce the need for grid-based electricity by generating electricity onsite so that supply from the grid is unnecessary. More information can be found in WRI s Guidelines for Grid-Connected Electricity Projects 8 and in the Appendix. There are a number of factors incorporated in calculating emissions displacement from distributed energy projects including project size, CO2 emissions, region, and capacity factor, which are discussed below. The emissions of the marginal generation unit to be displaced by the distributed asset must be determined. The US Environmental Protection Agency (EPA) publishes the Emissions & Generation Resource Integrated Database (egrid). egrid includes marginal (non-baseload) emission rates which are recommended to estimate emission reductions from renewable energy or energy efficiency projects that reduce consumption of grid supplied electricity. Furthermore, egrid publishes both state emissions rates and the recommended subregional emissions rates. As energy supply crosses state lines, states figures alone are not an accurate determinant when calculating emissions rate. The map below displays the various subregions defined by the EPA. The last important determinant in calculating total emissions is system capacity factor, defined as the ratio of the actual electrical energy output over a period of time to the maximum possible electrical energy output in the same period. The maximum possible output is equivalent to full 8 Guidelines for Quantifying GHG Reductions from Grid Connected Electricity Projects, World Resources Institute. 7

8 nameplate capacity if the system is in continuous operation. Intermittent technologies have a lower capacity factor. For example, U.S. solar photovoltaic (PV) capacity factors range from 10% to 25% depending on elevation, location, direction, and other physical obstructions. U.S. wind capacity factor is higher, in the 30% to 40% range. Baseload technologies serve the majority of the load, through a high capacity factor of 90% or greater. In the next section, the importance of capacity factor is highlighted. Emissions displacement can be calculated from the inputs: recommended marginal emission rate for comparison, project size, distributed technology emissions and capacity factor. The next section walks through an example of how to properly calculate emissions displacement when quantifying the impact of distributed generation. 6 Calculating Emissions Displacement for Fuel Cell and Solar Projects This section provides an example of emissions displacement calculated for a distributed baseload technology and an intermittent renewable installation. The baseload energy solution is a Bloom Energy fuel cell installation utilizing natural gas. The renewable intermittent solution is a solar PV project. A Bloom Energy Server 9 converts standard low-pressure natural gas or biogas into electricity through an electrochemical process without combustion, resulting in significantly higher conversion efficiencies and lower harmful emissions than conventional fossil fuel generation. In the table below, a 1000kW (1MW) Bloom Energy baseload on-site installation in New York is compared to a 1000kW (1MW) distributed solar project in New York. Emissions Displacement Summary, New York Bloom Energy Solar Project Size (kw) Capacity Factor (%) 95% % 11 Annual Energy Production (MWh) 8,322 1,174 Project CO2 Emissions (lbs/mwh) Grid Marginal CO2 Emissions (lbs/mwh) CO2 Reduction (lbs/mwh) ,112.8 Annual CO2 Reduction in New York (lbs) 2,694,634 1,306,239 Equations: 9 For more information about Bloom Energy Server, go to 10 Bloom Energy ES5 Data Sheet 11 NYSERDA RPS-CST Solar PV and On-Site Wind Programs; the Cadmus Group, Inc. 12 EPA egrid

9 CO 2 Reduction per MWh 13 = egrid Marginal CO 2 Emissions Project CO 2 Emissions Annual CO 2 Reduction = Project Size in MW x Capacity Factor x Annual Hours x Project CO 2 Reduction per MWh As a zero emission technology, solar PV has significantly lower CO2 emissions than a Bloom Energy Server on a per MWh basis. However, as solar is an intermittent energy generation technology with a corresponding lower capacity factor, the resulting reduction in CO2 emissions is ultimately half that of a Bloom Server over the course of a year. Therefore, in the case of a 1MW Bloom Energy installation in this New York exercise, a project seeking maximum emissions displacement leans towards the Bloom Energy Servers with natural gas input. Emissions displacement varies based on the egrid region used in the calculation due to the regional and local power mix and corresponding marginal CO2 emission rate. Displacement is greater in regions primarily reliant on higher emitting fuel sources such as coal. In states such as California where there is a greater mix of utility solar in the grid generation portfolio, emissions displacement is lower simply because the marginal CO2 emissions is less. While there are many factors an organization will consider in determining an ideal energy solution, a proper calculation of CO2 emissions displacement may indicate that a highly efficient, clean, always-on baseload generator like Bloom Energy Servers can be more effective in achieving sustainability goals. 7 Conclusion Distributed baseload generation fits within an overall power strategy, complementing intermittent renewables with power-dense solutions and providing the capability to displace significant carbon emissions from the grid while achieving sustainability goals. For organizations evaluating a multitude of distributed energy solutions, an important consideration is the total emissions displacement as part of a long-term energy decision. Reliable, on-site baseload generation can provide additional benefits, such as optionality for independence from the grid, power reliability and even cost savings. A strong, diverse mix of energy including new efficient baseload has the potential to further bolster energy security and quality while reducing emissions in the United States and beyond. 13 Here, we follow WRI protocol and calculate reduction compared to marginal emissions. The Appendix contains other accounting methodologies 9

10 Appendix Project vs Inventory Level Reporting In this white paper, the accounting methodology prescribed is project level reporting, as recommended by the World Resources Institute. Project level reporting measures emissions reductions associated with a project in comparison to the marginal power plants that the U.S. electric grid ramps down in response to reduction in grid demand. It is deemed to be the most accurate in capturing the actual change in carbon dioxide emissions. Sometimes, corporate accounting of sustainability initiatives uses inventory level reporting. This type of accounting includes all gross emissions from distributed (on-site) generation sources ( Scope 1 ), purchased electricity ( Scope 2 ), and supplier value chain components ( Scope 3 ). Scope 2 methodology does not consider the impact of distributed generation projects in displacing marginal generation grid sources. Instead, this approach calculates emissions offsets using average grid emissions for simplicity. Therefore, if the grid average emissions is much lower than the marginal emissions, using Scope 2 may lead to a misperception of a project s inflated GHG benefits. In summary, distribution generation projects that displace dirtier marginal generation grid sources will reduce greenhouse gas emissions but may appear to increase Scope 2 emissions. 10