HEAT RATES FOR USE IN DETERMINING CAMPUS ENERGY CONSUMPTION Overview of Issue: U.C. Davis has issued a draft report documenting energy use at its campus since 1995. The report s findings indicate that total energy use at the campus in FY2012-13 is lower than campus energy use in 1995. Total energy use at U.C. Davis includes both natural gas and electricity. To facilitate comparison of these two commodities, electricity (kwh) and natural gas (therm) usage are converted to a common energy unit, in this case MMBtu. The conversion of electricity (kwh) to MMBtu requires an appropriate heat rate. This document describes the recommended heat rates for use in converting electricity kwh to MMBtu and the rationale for the recommendation. This narrative is organized as follows: Section 1 provides the rationale. Section 2 provides potential heat rate calculation methodologies. Section 3 provides results based on U.C. Davis s historical electricity sources. Section 1: Rationale for E3 Recommendation E3 recommends use of the source energy conversion factors. The rationale for this recommendation is given in this section. The U.C. Davis campus consumes natural gas and electricity. Over time, the proportion of natural gas use has declined while electricity use has increased. Electricity use is typically billed in kilowatt hours (kwh). Natural gas use is typically billed in therms. Because the proportion of each commodity has changed over time, the campus electricity and natural gas consumption must be converted to a common unit in order to analyze overall energy use trends. U.C. Davis has selected millions of British thermal units (MMBtu) as this common unit. The conversion of electricity (kwh) to MMBtu requires a heat rate. Determination of this heat rate depends on whether site or source energy is measured. Site energy measures energy consumption at the site meter without taking into consideration the efficiency of the power plants that generated 16 October 2013
the electricity or any transmission and distribution losses. The site energy factor converting electricity kwh to MMBtu is 3,413 Btu/kWh. Source energy measures energy consumption to the source from which power is generated. Accordingly, the source electricity measurement not only considers the heat rate of the power plants generating electricity but also transmission and distribution losses incurred in transmitting electricity to the customer meter. Similarly, the source natural gas measurement incorporates transportation losses. Determining the appropriate Source energy heat rate is not trivial. To do so involves determining the system average heat rate over a given time period - an extremely complex exercise. It is understandable that the University of California Facilities Management Measurement Definitions express electricity in MMBtu via the site conversion factor of 3,413 Btu/kWh. However, presenting usage data in terms of site rather than source energy can produce irreconcilable results. For example, the site energy of a thermal generation facility would be measured in terms of its natural gas consumption. The billed natural gas consumption of such a facility is driven by the plant heat rate, roughly 7,000 Btu/kWh. However, if the same facility were located off-campus, the site energy would be measured in terms of electricity kwh at the campus meter via a heat rate of 3,413 Btu/kWh. Thus, the MMBtu energy consumption of the same facility is under-estimated if the site calculation is used. The source calculation would utilize the facility heat rate of roughly 7,000 Btu/kWh for both the on- and off-campus configurations. The off-campus source calculation would also include transmission and distribution losses. Similarly, the appropriate conversion factor for retail natural gas usage also depends on whether source or site energy is considered. Natural gas usage is typically billed in therms. The therm to MMBtu conversion factor is 10. No adjustment to this conversion factor is required for site energy calculations. For source energy calculations, a gas transportation loss factor of 9.2% should be included, yielding a conversion factor of 10.92%. In summary, E3 recommends use of source energy calculations. For natural gas, source energy includes the transportation losses incurred in delivering gas to the on-campus site. For electricity, such calculations incorporate the heat rates of the assets generating electricity as well as transmission and distribution loss factors. Using site rather than source conversion factors will under-estimate the amount of energy represented by a kwh of electricity. This under-estimation is magnified if Page 2 of 6
the proportion of U.C. Davis s electricity usage has grown over time, potentially resulting in a misrepresentation of overall campus energy use over time. Section 2: Recommended s The system average and marginal heat rates vary over time depending on factors including demand and generation technology mix. In years with ample supply of hydro generation, the marginal and system heat rates will be relatively low. Similarly, as more renewable generation is added to the system, the marginal and system heat rates will decline. E3 s recommended heat rates attempt to strike a balance between the need for simplicity while also incorporating these temporal impacts. Two potential approaches are described below, (1) High Bookend method and (2) Simplified System Average method. High Bookend Method: NP-15 Marginal The NP-15 marginal heat rate can be easily calculated from day-ahead energy prices according to the formula [energy price ($/MWh) variable O&M ($/MWh)] * 1000 / natural gas cost ($/MMBtu). While the attraction of this approach is its simplicity, it does not take into account the balance of generators with heat rates less than the marginal unit s. Hence, this approach over-estimates the fuel consumed for each kwh of electricity. If the proportion of electricity has increased over time and if this calculation method results in an overall decline in campus usage, then to be sure overall campus energy usage has declined. The NP-15 marginal heat rates are provided in Table 1 below. Heat rates for 1995-1997, when market data is not available, have been estimated as the average of 2002-2003 marginal heat rates. Table 1 heat rates have been grossed up by a 7% transmission and distribution loss factor for the source energy calculation. Note that heat rates in 2000-2001 reflect the California energy crisis and have been excluded from the overall average calculation. Page 3 of 6
Table 1: NP-15 Marginal s NP-15 MARGINAL HEAT RATES (Btu/kWh) Year HLH LLH AVERAGE 1995 9,298 6,575 8,132 1996 9,298 6,575 8,132 1997 9,298 6,575 8,132 1998 15,594 9,217 12,862 1999 15,196 8,640 12,388 2000 26,415 17,326 22,508 2001 16,408 12,757 14,845 2002 9,796 6,483 8,377 2003 9,073 6,505 7,973 2004 9,026 6,738 8,047 2005 8,369 5,970 7,342 2006 8,997 5,788 7,617 2007 9,911 6,876 8,611 2008 9,570 7,096 8,511 2009 9,352 6,531 8,143 2010 8,728 6,326 7,699 2011 8,246 4,578 6,675 2012 9,977 6,520 8,491 2013 9,157 7,336 8,375 Average 8,559 Simplified System Average Method The system average heat rate calculation requires the heat rate of each generator and its output over a given time period. This information is not readily available. E3 proposes a simplified system average method for calculating the annual system average heat rate for U.C. Davis energy usage as shown in Table 2 below. Page 4 of 6
Table 2: Simplified System Average Calculation A = B = Supply Source (kwh) C = Simplified System Average (Btu/kWh) Base Resource 0 Btu/kWh A * B WAPA Custom Product Annual NP-15 A * B average marginal heat rates (Table 1) Solar PV 0 Btu/kWh A * B PG&E retail PG&E simplified system average heat rate (4,700 Btu/kWh) A * B = Sum(column C) / Sum(Column A) The data required for these calculations are readily available. UC Davis tracks monthly kwh data by supply source. Table 1 provides the NP-15 average marginal heat rates for each year. The only remaining data point that is required for this calculation is the PG&E simplified system average heat rate, the derivation of which is provided below. To derive the PG&E simplified system average heat rate, E3 utilized PG&E data and 2008 generator data in E3 s Greenhouse Gas Model. The average portion of thermal energy supplying PG&E load is 50%. The remaining sources (nuclear, hydro, renewables) have heat rates of 0 Btu/kWh. Based on these values, E3 recommends a PG&E simplified system heat rate of 4,708 Btu/kWh, which can be rounded to 4,700 Btu/kWh. This result is summarized in Table 3 below. Table 3: PG&E Simplified System Average A = Average PG&E Percentage of Thermal Generation B = Average NP-15 Marginal Heat Rate (Btu/kWh) C = PG&E System Scalar 50% 8,560 1.10 4,708 D = A * B * C PG&E Simplified System Average (Btu/kWh) Page 5 of 6
Section 3: Results Applying the Simplified System Average methodology described in Table 2, Table 4 below shows the annual (calendar year) average heat rate results for use in converting electric kwh usage to source MMBtu for each year. These heat rates assume that cogen energy consumption is tracked separately via natural gas use. Table 4: Final heat rates for use in converting electricity kwh to source MMBtu Year (Btu/kWh) 1993 5,822 1994 5,490 1995 4,478 1996 5,370 1997 5,397 1998 7,930 1999 7,852 2000 9,428 2001 9,810 2002 5,423 2003 5,281 2004 5,994 2005 6,312 2006 5,072 2007 7,466 2008 7,427 2009 7,204 2010 6,638 2011 5,268 2012 7,068 2013 6,745 Page 6 of 6