CHP: One of the answers (but not the question)

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Information about CHP: One of the answers (but not the question)
Technology

Published on July 14, 2009

Author: AllianceToSaveEnergy

Source: slideshare.net

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Sean Casten, President & CEO Recycled Energy Development, LLC
June 23, 2009
US Capitol Building, Room HC-7

Presentation to Efficient Enterprises: Powering American Industry

CHP: One of the answers (but not the question) Presentation to Efficient Enterprises: Powering American Industry Sean Casten, President & CEO Recycled Energy Development LLC Development, June 23, 2009 US Capitol Building, Room HC-7 1 RED | the new green www.recycled-energy.com

Asking the right questions • Technology-specific questions have minimal policy merit merit. • How could we deploy more CHP, how much CHP could we deploy, how does CHP work are not especially enlightening. • Much more constructive to ask questions about how to better realize our goals • How can we quickly and cost-effectively lower CO2 emissions? • How can we enhance the competitive position of the US economy? • How can we induce rapid, large scale private sector investment in the nation’s aging (and increasingly, unacceptably dirty) energy infrastructure? • Understanding the potential for CHP is key to answering these questions – but it is not the question. 2 RED | the new green www.recycled-energy.com

Things you think are true aren’t. 1. 1 The past is a good predictor of the future 2. 2 The US energy sector is too big too capital intensive and big, capital-intensive too politically powerful to accommodate rapid, transformative change. 3. Significant reductions in CO2 emissions will require increased energy costs and/or technological breakthrough In other words: Unexpected, transformative changes can quickly reduce our CO2 emissions and grow our economy… so long as we don’t constrain economy don t our future with our present conventional wisdom. 3 RED | the new green www.recycled-energy.com

Transformative changes in our fossil energy use are inevitable. • Current fossil fuel extraction rates are unsustainable • 50% of all the coal we have ever burned has been burned since 1970. • 50% of all the oil we have ever burned has been burned since 1986. • 50% of all the natural gas we have ever burned has been burned since 1990. • Our choice is one of adaptation: • Proactively, by increasing our energy efficiency? • Reactively, forced to act by resource constraints? • “If you choose not to decide, you still have made a choice” h t t d id till h d h i ” (Neal Peart) 4 RED | the new green www.recycled-energy.com

Transformative shifts in our fossil fuel use are inevitable. 5 RED | the new green www.recycled-energy.com

Things you think are true aren’t. 1. 1 The past is a good predictor of the future 2. 2 The US energy sector is too big too capital intensive and big, capital-intensive too politically powerful to accommodate rapid, transformative change. 3. Significant reductions in CO2 emissions will require increased energy costs and/or technological breakthrough 6 RED | the new green www.recycled-energy.com

Potential pace of electric sector p reform: 20% of US fleet built in just 10 years! US Installed Generation Capacity, by Fuel Type 450 Natural Gas 400 Nuclear 350 Coal Installe d GW 300 250 200 Final FERC rehearing of 888 150 100 FERC O d 888 mandates Order d t 50 1992 Energy Policy Act opens non-discriminatory competitive markets transmission access 0 1975 1985 1995 2005 Source: US DOE, Energy Information Administration (www.doe.eia.gov) 7 RED | the new green www.recycled-energy.com

New England’s FCM success is even more dramatic. • Typical NE power peak = 19 000 – 24 000 MW 19,000 24,000 • All time peak = 28,160 MW (8/6/06) • ISO NE s ISO-NE’s forward capacity market closed their first capacity auction on 3/1/07; they have now completed two forward capacity auctions (FCAs) • FCM allowed demand resources (including, but not limited to CHP and other behind-the-meter generation) to bid into markets and compete with new-build generation to meet system supply needs. • As of their most recent auction (FCA#2), they have 2,936 MW of demand resources that have been brought forward under this program. • Met over 10% of the system peak in under 3 years without building a single power plant plant. Source: ISO-NE; website and personal correspondence. 8 RED | the new green www.recycled-energy.com

Things you think are true aren’t. 1. 1 The past is a good predictor of the future 2. 2 The US energy sector is too big too capital intensive and big, capital-intensive too politically powerful to accommodate rapid, transformative change. 3. Significant reductions in CO2 emissions will require increased energy costs and/or technological breakthrough 9 RED | the new green www.recycled-energy.com

CO2 reduction is not constrained by technology nor economics. 1. 1 Non-renewable CO2 release comes from the combustion of (previously sequestered) fossil carbon fuels. • Uniquely among pollutants, the thing which causes the pollution costs money; ergo, reducing CO2 pollution saves money. • If done with greater efficiency, this cost reduction need not be coupled to a reduction in standard of living. 2. 2 Current regulations generally do not encourage energy efficiency, and in some cases discourage it. • Clean Air Act has the right intent, but is methodologically flawed; efficiency doesn’t count as a pollution control strategy! • Ditto for modern utility regulation, which keeps the power flowing, but does not allow utilities to use cost-control to maximize profits. 3. 3 Most US energy capital stock is old; to the degree it was optimized, it was for yesterday’s energy prices. 10 RED | the new green www.recycled-energy.com

The costs of current policy, and potential for CHP. US Electric Industry Fuel-Conversion Efficiency 100% 90% 80% Energy waste = Economic 70% / Environmental 60% opportunity 50% 40% 30% 20% 10% 0% 1880 1890 1900 1910 1920 1930 1940 1950 1960 1970 1980 1990 11 RED | the new green www.recycled-energy.com

Homer Simpson’s plant wastes Simpson s lots of energy. 12 RED | the new green www.recycled-energy.com

So do ours. 13 RED | the new green www.recycled-energy.com

Energy flows in the US electric sector. 14 RED | the new green www.recycled-energy.com

Energy flows in a fueled CHP plant (“topping cycle cogen”) 15 RED | the new green www.recycled-energy.com

Energy flows in an energy recycling plant (“bottoming cycle ( bottoming cogen”) 16 RED | the new green www.recycled-energy.com

CHP’s local nature gives it an innate capital cost advantage. i l d US Average Capex ($/kW installed) Line Loss & Total $ per Generation T&D Redundancy new kW load Central $1,000 - $3,500 $1,400 1.44 $3,460 - $7,000 Approach Local $1,200 - $140 1.07 $1,430 - $4,430 Generation $4,000 17 RED | the new green www.recycled-energy.com

Supporting data from FERC Cost of new delivered electricity 15 2007–08 industry estimates, Moody's estimate of $7500/kWe: 25 ¢/kWh 14 Credit for 13 recovered and Keystone (June 2007) reused heat 12 Fuel minus heat MIT (2003) credit 11 10 Transmission and 2007 US¢ per delivered kWh Distribution 9 Firming and 8 integration 7 Operation and p Maintenance 6 5 Capital 4 3 2 1 0 -1 Nuclear plant Coal plant Large combined- Large wind farm Combined-cycle Building-scale Recovered-heat End-use efficiency cycle gas plant l l t industrial i d t i l cogen cogen industrial i d t i l cogen Courtesy Jon Wellinghoff 18 RED | the new green www.recycled-energy.com

Total potential for additional US CHP is massive and transformative. • DOE estimate: 135+ GW of opportunity for fueled-CHP • EPA estimate: 65+ GW of opportunity for power generation from currently wasted energy (including, but not limited to waste heat). • In total, represents 20% of entire US generation fleet • Taking capacity factor into account, represents approximately 40% of total US power consumption. • If fully deployed, would reduce total US CO2 emissions by deployed 20% AND would lower our cost of energy. 19 RED | the new green www.recycled-energy.com

Achieving this level of CHP has already been done by many of our trading partners. Percent of Total Power Generation from CHP, By Country 50 40 30 20 10 0 Latviia Netherland s India USA A UK K rk Belgium m Finland d Russia a Japa n a Canada China a EU 25 5 France e Denmar Source: Energy & Environmental Analysis 20 RED | the new green www.recycled-energy.com

What CHP looks like: steel manufacturer in Gary, IN. • 95 MW of power recovered from the exhaust of 268 coke ovens. • Saves host ~$40 million/year with no marginal fuel combustion or CO2 release. • Generates more clean power in 1 year than all the world s grid- world’s grid connected solar panels (with less CO2/MWh!) Courtesy Primary Energy 21 RED | the new green www.recycled-energy.com

What CHP looks like: silicon manufacturer in Alloy, WV. • RED will recycle hot gas to generate 45 MW of power from waste heat on 120 MW furnace • Competitive with West Virginia (coal) power prices. prices 22 RED | the new green www.recycled-energy.com

Ask the right questions • What regulatory barriers exist to energy efficiency (in all its flavors), and how can we remove them? • Lesson from FERC 888 / FCM: unleashing a flood of private sector investment need not require tearing down an entire dam – we simply need to remove the critical bricks, and let the blocked resource do the rest of the work for us. • How do we reward the goal, instead of the path? g , p • More incentives for CHP / solar / wind / nuclear / clean coal are not the answer; experience teaches that approach will cause massive unintended consequences. • We have enough time to change course – barely. 23 RED | the new green www.recycled-energy.com

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