WADE
CHP for Industrial Applications APGA Gas Equipment and Application Conference Atlanta, Georgia September 15, 2015
David M. Sweet Executive Director World Alliance for Decentralized Energy
1
WADE Mission WADE Research activities Reports, market surveys and studies WADE Economic Model WADE Advocacy activities Policy advise for governments Participation in legislative and regulatory proceedings Cooperation with International Organisations, Institutions and NGOs WADE Promotion activities WADE Conferences and events WADE Newsletters
7
Natural Gas Roundtable •
Non-profit organization started over 40 years ago to educate government officials, media and industry about natural gas issues
•
US natural gas industry is highly segmented
•
The Natural Gas Roundtable serves as an umbrella organization bringing together all industry segments from the wellhead to the burnertip
Decentricity
• CHP Turnkey Project Developer. • Provide full CHP projects from 500kWe to 50MWe requiring no client investment or money down. • Provide 100% no cost stage one analysis for Energy Tolling Agreement (ETA) model where client buys fuel, Decentricity builds, owns and operates CHP asset and delivers metered “efficiency gains” to client for equipment lifetime (typically 10-15 years). • Flexible model using packaged systems allows for changing site conditions and modifications, island mode and critical power back up options, relocation of assets within existing site or around the world if negotiated up front to adjust to site expansions and global market and energy conditions.
Decentralized Energy Basics
13
What is Decentralized Energy (DE)?
Electricity production at or near the point of use, irrespective of size, fuel or technology – on-grid or off-grid:
• High efficiency cogeneration (CHP) • On-site renewable energy • Industrial energy recycling and On-site power • Otherwise known as: • CCHP (Combined Cooling Heat and Power), Distributed Generation, Captive Power, Embedded Generation, Microgeneration, CHP, Trigeneration, Recycling Energy, etc. 14
Combined Heat and Power (CHP) (AKA-Cogeneration) • “Cogeneration” :The Generation of two usable forms of energy from one single source of fuel. • “Trigeneration”: The Generation of three usable forms of energy from one single source of fuel.
Wasted energy is a huge opportunity Energy Flows in the Global Electricity System
2/3 of the fuel we use to produce power is wasted CHP can more than double this efficiency
Sources: IEA/OECD, 2008
16
Why is DE better?
Benefits of DE compared to centralised generation DE is more efficient DE is delivers less expensive power DE is cleaner DE is more reliable DE is more secure DE provides access to electricity in remote areas DE can be sited quicker and with less opposition DE can help support intermittent renewables
17
Decentralized Energy – Fossil-fuel Technologies
Gas Turbines Reciprocating Engines Large & small
Stirling Engines
Microturbines Steam Turbines 22
Decentralized Energy – Renewable Technologies
Fuel Cells Biomass On-site wind
Municipal Waste 23
Rooftop PV
The Move to Decentralized Technology Computing
24
The Move to Decentralized Technology Telecom
25
Cutting the Cord • About one-third of US households do not have a land line compared with 96% 15 years ago • Cellphone ownership is at 89% • About two-thirds of households led by people ages 15 to 29 relied only on cellphones in 2011, compared with 28% for the broader population.
Policies can Drive the Market
62
WADE model INPUT OUTPUT MODEL
I N P U T
Capacity & Generation
METHODOLOGY USED Data collection
- Existing capacity & generation - Load factor
Data input into WADE’s economic model Pollution level
- Pollution level (NOx, SOx, PM10, CO2) - Heat rate
Scenario development Cost
Sensitivity analysis
-Investment cost - O&M cost - Fuel cost
Model run Growth Properties
- System growth properties - Capacity retirement - Future generation
Comparison & analysis OUTPUT :
Total capital cost Retail cost Fuel used Emission level
Recommendations 63
DE Benefits – WADE Economic Model – Selected Past Results Estimated Total Savings (%) by Increasing Proportion of DE in New Power Sector Investments
Estimated Total Savings (%) by Increasing Proportion of DE in New Power Sector Investments
100 75 50 25 0 -25
World
China
Sri Lanka
Iran
EU
Ireland
UK
Scotland
Brazil
-50 -75
Capital Costs
Delivered Energy Costs
CO2 Emissions
Fossil Fuel Consumption
-100 (Source: WADE various) Note: Proportion of total investment that is DE varies from region to region and from scenario to scenario-( ie in some cases savings are resultant from all new capacity being DE compared to baseline and in other cases only 25% of new capacity is DE compared to baseline)
64
USA
Calgary
Ontario
August 30, 2012
Executive Order Accelerating Investment in Industrial Energy Efficiency WASHINGTON, DC -- President Obama signs an Executive Order calling for the deployment of 40 gigawatts of new, cost-effective industrial combined heat and power (CHP) capacity in the United States by 2020. Policy: To formalize and support the close interagency coordination that is required to accelerate greater investment in industrial energy efficiency and CHP, this order directs certain executive departments and agencies to convene national and regional stakeholders to identify, develop, and encourage the adoption of investment models and State best practice policies for industrial energy efficiency and CHP; provide technical assistance to States and manufacturers to encourage investment in industrial energy efficiency and CHP; provide public information on the benefits of investment in industrial energy efficiency and CHP; and use existing Federal authorities, programs, and policies to support investment in industrial energy efficiency and CHP.
Encouraging Investment in Industrial Efficiency: The Departments of Energy, Commerce, and Agriculture, and the Environmental Protection Agency, in coordination with the National Economic Council, the Domestic Policy Council, the Council on Environmental Quality, and the Office of Science and Technology Policy, shall coordinate policies to encourage investment in industrial efficiency in order to reduce costs for industrial users, improve U.S. competitiveness, create jobs, and reduce harmful air pollution. 66
FEED-IN-TARIFFS Feed–In Tariffs encourage the development of renewable energy by obligating electric utilities to pay pre–established above-market rates for renewable power fed onto the grid. These tariffs, provide renewable generators with a set stream of income from their projects. Feed-in tariff regulations have been introduced in 45 countries on national level and 4 on states/provincial level and among them are most of EU member countries, Japan, South Korea, Thailand, South Africa, Uganda and others. Example:
Germany is the most innovative and world's first major renewable energy economy. The German EEG (Renewable Energy Act) is a comprehensive energy policy that is known mostly for its flagship component: the feed-in tariff.
Impact:
An estimated 214,000 people work with renewables in Germany, (up from 157,000 in 2004, an increase of 36 percent.) About two-thirds of these jobs are attributed to the Renewable Energy Sources Act. Renewable energy in Germany has increased from 6.3 percent of the national total in 2000 to over 20 percent in the first half of 2011. Despite rumours that Germany was abandoning its systems of Advanced Renewable Tariffs, the revisions to its pioneering Renewable Energy Sources Act was approved on July 8, 2011. The new version came into effect Jan. 1, 2012.
67
Renewable Portfolio Standard
A Renewable Portfolio Standard (RPS) regulation requires increased production of energy from renewable energy sources. (Termed as Renewable Electricity Standard (RES) at the United States federal level and Renewables Obligation in the UK.) RPS-type mechanisms have been adopted in several countries, including Britain, Italy, Poland, Sweden, Belgium and Chile, as well as in 30 of 50 U.S. states, including the District of Columbia. Regulations vary from state to state, and there is no federal policy.
Example: Existing Renewable Portfolio Standards in China Renewable electricity - 500 GW by 2020 (300 from hydro, 150 from wind, 30 from biomass, and 20 from solar PV); Renewable energy - 15% by 2020 Impact: China leads in a no. of sectors in renewable market. It reached a total renewals capacity of 227 GW which includes 37 GW of renewable power capacity.
68
Capital subsidies, grants, rebates
Capital subsidies, grants, subsidized loans and rebates are one of the most frequently used instruments for increasing energy efficiency in buildings. They are used to finance better insulation such as roof insulation in the UK, more efficient equipment such as refrigerators in Germany, CFLs or energy audits as in France. Subsidized loans are used for example in Austria to support ESCOs.
69
Net Metering Net metering enables customers to use their own generation from on-site renewable energy systems to offset their consumption over a billing period by allowing their electric meters to turn backwards when they generate electricity in excess of their demand, enabling customers to receive retail prices for the excess electricity they generate. Best practices for net-metering include:
Eligibility for all distributed generation technologies, including CHP Eligibility for all customer classes System size limits that exceeds 2 MW No limit on aggregate capacity of net-metered systems as a percentage of utility peak demand Indefinite net excess generation carryover at the utility's retail rate Prohibition of special fees for net metering Third-party ownership and meter aggregation
70
Industrial energy efficiency in the U.S. The Problem
The Solution
Finance is needed to help energy users cover capital costs.
Change the Investment Tax Credit so as to ensure efficient power generating technologies like combined heat and power (CHP) and waste heat to power (WHP) have parity with other clean and efficient technologies in the available energy tax incentives.
The available tax credit makes it difficult for projects to qualify.
Changes would make the tax credit more accessible Current Policy
Proposed Policy
10% ITC for combined heat and power
Expand ITC to 30%
Does not include waste heat to power
Include waste heat to power
Applies to the first 15MW of projects which are smaller than 50 MW
Apply to first 25MW, eliminate project size cap
Ends Dec. 2016
Ends Dec. 2018
Senate bills in the 114th Congress S. 1516 The Power Efficiency and Resiliency (POWER) Act Senators Susan Collins(R-ME) and Bob Casey(D-PA) introduced in June 2015 Expands investment tax credit to 30% Adds waste heat to power as a qualifying technology Applies to first 25MW, eliminate project size cap Extends ITC to December 2018 Cosponsors: Sen. Harry Reid (D-NV)
S. 913 Waste heat to power bill Senators Dean Heller (R-NV) and Tom Carper (D-DE) introduced in February 2015: • Included in Senate Finance Committee markup of tax bills •
Passed out of committee and is awaiting floor consideration Would make WHP eligible for the existing investment tax credit (10% credit for systems up to 50 MW in size) Changes to the credit would take effect on the date of enactment and would expire with the rest of the ITC – December 2016.
House bills in the 114th Congress H.R. 2657, The Power Efficiency and Resiliency (POWER) Act Congressmen Tom Reed(R-NY) and Earl Blumenauer(D-OR) introduced in June 2015 Expands investment tax credit to 30% Adds waste heat to power as a qualifying technology Applies to first 25MW, eliminate project size cap Extends ITC to December 2018 Rep. Thomas Reed (R-NY) Rep. Mark E. Amodei (R-NV) Rep. Chris Collins (R-NY) Rep. Rodney Davis (R-IL) Rep. Christopher P. Gibson (R-NY) Rep. Joseph J. Heck (R-NV) Rep. Tom MacArthur (R-NJ) Rep. Tom Marino (R-PA) Rep. David McKinley (R-WV) Rep. Steve Stivers (R-OH)
Rep. Earl Blumenauer (D-OR) Rep. Kathy Castor (D-FL) Rep. Ron Kind (D-WI) Rep. Bill Pascrell (D-NJ) Rep. Tim Ryan (D-OH) Rep. Dina Titus (D-NV) Rep. Peter Welch (D-VT)
Comparison of bills to proposed policy Current Law
10% ITC for combined heat and power
Does not include waste heat to power
Applies to the first 15MW of projects which are smaller than 50 MW Expire Dec. 2016
Proposed Policy
Expand ITC to 30%, on par with other technologies such as solar Include waste heat to power as qualifying technology for 30% credit Apply to first 25MW, eliminate project size cap Extension of 4 years
The POWER Act (S. 1516, H.R. 2657)
Senate WHP 2015 Bill
Include waste heat to power as qualifying technology for 10% credit
Applies to projects which are smaller than 50 MW
Expire Dec. 2018
Expire Dec. 2016
The impact of tax code technical fixes Makes manufacturers more globally competitive
Saves energy Reduces pollution Enhances resiliency
Pathway to Industrial CHP Project Implementation 82
What Defines a Good CHP Market? Availability of Fuel – States with a well developed Nat Gas Network or clients ability to procure natural gas via delivery or storage.
The Spark Spread – The difference between the cost of a unit of fuel and the value of a unit of electricity. Proper economics can typically be achieved where a ratio wider than 3 to 1 exists. (e.g. Electricity 15c/kWh, Gas $14 / Decatherm or 4.8c/kWh). Regulatory Support and incentives. Practical emissions legislation. Constrained Electric Grid and supply capacity (Inevitable upward price pressure) Evidence that CHP is being successfully applied. Strong corporate desire to be “green” with few technology options available outside of CHP. Need for power reliability or quality for business or safety purposes.
Q: How do you select a Prime Mover? A: “Lowest Total Cost of Ownership” • Required Output vs. Available Size (Power and Thermal) • Heat Balance and Temperature Profiles • Generating Efficiency • Price (First Cost and Parts) • Reputation/Reliability • Availability and Quality of Info • Scheduled Downtime CHP Prime Mover Database
Process for determining: “Do I have an application for CHP?” Project Development Elements for CHP Projects 1. Qualification (Spark Spread, Operation, Location) 2. Level 1 Feasibility (Commercial Analysis) 3. Level 2 Feasibility (PE Analysis, Review) 4. Procurement (Design, Manufacture, Factory Compliance Test) 5. Commission, Monitoring and O&M.
Stick (site) built or Pre-Packaged? Pro’s and Con’s
•
Multiple contractors and companies.
•
Proven, reliable, less logistics and coordinating.
•
No single source responsibility.
•
Single source responsibility.
•
Questionable outcome and performance.
•
EPA-CHP and industry preferred.
•
Finger pointing and difficult to identify problems.
•
90% hard-costs, removable able to relocate, transport.
•
Costly and 50% soft-costs.
•
Factory tested, guaranteed.
•
Less intrusive to site.
Site Electric Load Duration Studied 8,760 hrs. per year
Maximum size electrical generator for full load employment and 100% site utilization, no export. 250kWe = 1.35 MMBTU/hr heating = 76 USRT cooling
Site Thermal Load Studied
Level 1 Feasibility Analysis Quick…Safe…Reliable 1. Requires customer provided information. 2. Model based on packaged systems. 3. Typical accuracy is a conservative 80% historically.
Standards for Interconnection & Permitting
Indoor or Outdoor Location
2009 Northeast Energy Efficiency Partnerships (NEEP) Northeast Business Leader Recognition Program Nominee National Grid. First Factory tested Solar Assisted Trigeneration System in the United States.
Integrated & Remote Monitoring Integrated with Sites BMS and Remote Monitoring for Measurement and Verification/Economics.
Recap-CHP Rules of the Road 1. Size your system for 100% total energy utilization, no significant heat dumping, simultaneous thermal and power usage. 2. Size your system to 100% full employment, 99.5% availability of 8760 hours per year. 3. Choose “lowest cost of ownership” 15 year design life or better, parts, fuel, maintenance, site conditions. 4. Proper Design and Application , Proper CHP System, LongTerm Maintenance and Fuel. (The Three Legged Stool for Success). 5. Size to base load thermal first, confirm available base load electric, hard to lose with an undersized, economic system, easy to lose with an oversized system. 6. Understand your purpose of ownership, economics, environmental, plant reliability boost or science project?
Financing and Project Development Do you have a budget and resource for in-house development, operation and ownership? • Sizing and Design Responsibilities. • Equipment Selection Responsibilities. • Site Selection and Engineering Responsibilities. • Contractor Selection Responsibilities. • Procurement and Construction Management Responsibilities. • Commissioning and Scheduling Responsibilities. • Operation and Monitoring Responsibilities. • Maintenance and Repair Responsibilities. • Fuel Procurement and Contracting Responsibilities. • Long Term Commitment Required. • 100% ownership of project, equipment, savings and problems.
Financing and Project Development Is third Party Finance and Build Own Operate Maintain (BOOM) right for you? • No Budget Required. • No Resource Allocation Except Site Access and Data Requests. • 100% Ownership of Environmental Benefits. • Shared Financial Savings with Third Party Owner. • Site Contracted and Managed Fuel Supply and Costs. • 100% Ownership of Increased Power Reliability and Quality to Site. • O&M Included in ETA (form of PPA). • Fastest Route to CHP Benefits. • Long Term Commitment Required.
HOW TO IMPLEMENT CHP IN A FACILITY CHP can be implemented in a variety of ways: Energy Tolling Agreement (ETA) The customer pays a tariff per kWh of energy supplied and procures the fuel directly from a third-party supplier. No capital expense required.
Power Purchase Agreement (PPA) The customer pays an all-in tariff per kWh of energy supplied. No capital expense required. Fuel price with contingency and markups is included in the PPA tariff.
Equipment Lease The equipment capital is provided by a financial institution. The customer is responsible for the project’s development, fuel and O&M for the lease period. Downtime cost is absorbed by the customer. Requires internal know-how for O&M.
Capital Project The customer provides the capital and resources required for the development and O&M of the project. Downtime cost is absorbed by the customer. Requires Confidential internal know-how for development and O&M. © 2015 • Page 102
WHAT IS AN ETA With an ETA, the client gets a full turn-key operating CCHP system and in exchange, pays two separate components: An “energy toll” (in dollars per kWh), at a discount from current prices. The cost of the fuel, paid directly to a third party supplier such as GNF.
Confidential © 2015 • Page 103
BENEFITS OF AN ETA An Energy Tolling Agreement (ETA) allows our customers to take advantage of the benefits and savings of cogeneration without any of the hurdles. The entire turn-key project cost, including engineering, permitting, construction and maintenance is financed through Decentricity. Decentricity builds, owns, operates, and maintains the project (BOOM) at no capital expense. • No internal know-how or resources are required for the development and operation of the plant. • Decentricity brings the knowledge and experience in the development of CHP not currently present in Puerto Rico. Fuel cost is purchased directly by the customer • No hedging costs or markups on the fuel • Potential ‘Ley 73’ (Law 73) tax incentives on fuel used for CHP. Downtime is minimized due to contractual obligations from both parties.
Confidential © 2015 • Page 104
Conclusions
116
Why the U.S. Power Grid’s Days are Numbered -BusinessWeek There are 3,200 utilities that make up the U.S. electrical grid, the largest machine in the world. These power companies sell $400 billion worth of electricity a year, mostly derived from burning fossil fuels in centralized stations and distributed over 2.7 million miles of power lines. Regulators set rates; utilities get guaranteed returns; investors get sure-thing dividends. It’s a model that hasn’t changed much since Thomas Edison invented the light bulb. And it’s doomed to obsolescence. That’s the opinion of David Crane, chief executive officer of NRG Energy, a wholesale power company based in Princeton, N.J. What’s afoot is a confluence of green energy and computer technology, deregulation, cheap natural gas, and political pressure that, as Crane starkly frames it, poses “a mortal threat to the existing utility system.”
117
Conclusions The trend to decentralization is growing in many different areas, including energy The world is undergoing massive changes in the way it uses and produces energy DE is a win-win as it can reduce CO2 emissions and the overall costs of supplying power The barriers to greater deployment of DE can be removed through better policies The utility business model will face growing pressure from distributed resources Organizations like WADE can help bridge the gap between the traditional utility business model and the utility of the future with a mix of central and distributed generation options
121
WADE Caribbean Energy Conference Opportunities in Puerto Rico and the Caribbean Basin May 14-16, 2014 Sheraton Puerto Rico Hotel & Casino, San Juan, Puerto Rico, USA Registration Includes a Tour of the Bacardi Distillery and On-Site Energy Facilities
Featured Speakers
Local Power is a Global Solution! Thank you! www. localpower.org [email protected]
+1 (202) 667-5600
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David M. Sweet Executive Director World Alliance for Decentralized Energy
1
WADE Mission WADE Research activities Reports, market surveys and studies WADE Economic Model WADE Advocacy activities Policy advise for governments Participation in legislative and regulatory proceedings Cooperation with International Organisations, Institutions and NGOs WADE Promotion activities WADE Conferences and events WADE Newsletters
7
Natural Gas Roundtable •
Non-profit organization started over 40 years ago to educate government officials, media and industry about natural gas issues
•
US natural gas industry is highly segmented
•
The Natural Gas Roundtable serves as an umbrella organization bringing together all industry segments from the wellhead to the burnertip
Decentricity
• CHP Turnkey Project Developer. • Provide full CHP projects from 500kWe to 50MWe requiring no client investment or money down. • Provide 100% no cost stage one analysis for Energy Tolling Agreement (ETA) model where client buys fuel, Decentricity builds, owns and operates CHP asset and delivers metered “efficiency gains” to client for equipment lifetime (typically 10-15 years). • Flexible model using packaged systems allows for changing site conditions and modifications, island mode and critical power back up options, relocation of assets within existing site or around the world if negotiated up front to adjust to site expansions and global market and energy conditions.
Decentralized Energy Basics
13
What is Decentralized Energy (DE)?
Electricity production at or near the point of use, irrespective of size, fuel or technology – on-grid or off-grid:
• High efficiency cogeneration (CHP) • On-site renewable energy • Industrial energy recycling and On-site power • Otherwise known as: • CCHP (Combined Cooling Heat and Power), Distributed Generation, Captive Power, Embedded Generation, Microgeneration, CHP, Trigeneration, Recycling Energy, etc. 14
Combined Heat and Power (CHP) (AKA-Cogeneration) • “Cogeneration” :The Generation of two usable forms of energy from one single source of fuel. • “Trigeneration”: The Generation of three usable forms of energy from one single source of fuel.
Wasted energy is a huge opportunity Energy Flows in the Global Electricity System
2/3 of the fuel we use to produce power is wasted CHP can more than double this efficiency
Sources: IEA/OECD, 2008
16
Why is DE better?
Benefits of DE compared to centralised generation DE is more efficient DE is delivers less expensive power DE is cleaner DE is more reliable DE is more secure DE provides access to electricity in remote areas DE can be sited quicker and with less opposition DE can help support intermittent renewables
17
Decentralized Energy – Fossil-fuel Technologies
Gas Turbines Reciprocating Engines Large & small
Stirling Engines
Microturbines Steam Turbines 22
Decentralized Energy – Renewable Technologies
Fuel Cells Biomass On-site wind
Municipal Waste 23
Rooftop PV
The Move to Decentralized Technology Computing
24
The Move to Decentralized Technology Telecom
25
Cutting the Cord • About one-third of US households do not have a land line compared with 96% 15 years ago • Cellphone ownership is at 89% • About two-thirds of households led by people ages 15 to 29 relied only on cellphones in 2011, compared with 28% for the broader population.
Policies can Drive the Market
62
WADE model INPUT OUTPUT MODEL
I N P U T
Capacity & Generation
METHODOLOGY USED Data collection
- Existing capacity & generation - Load factor
Data input into WADE’s economic model Pollution level
- Pollution level (NOx, SOx, PM10, CO2) - Heat rate
Scenario development Cost
Sensitivity analysis
-Investment cost - O&M cost - Fuel cost
Model run Growth Properties
- System growth properties - Capacity retirement - Future generation
Comparison & analysis OUTPUT :
Total capital cost Retail cost Fuel used Emission level
Recommendations 63
DE Benefits – WADE Economic Model – Selected Past Results Estimated Total Savings (%) by Increasing Proportion of DE in New Power Sector Investments
Estimated Total Savings (%) by Increasing Proportion of DE in New Power Sector Investments
100 75 50 25 0 -25
World
China
Sri Lanka
Iran
EU
Ireland
UK
Scotland
Brazil
-50 -75
Capital Costs
Delivered Energy Costs
CO2 Emissions
Fossil Fuel Consumption
-100 (Source: WADE various) Note: Proportion of total investment that is DE varies from region to region and from scenario to scenario-( ie in some cases savings are resultant from all new capacity being DE compared to baseline and in other cases only 25% of new capacity is DE compared to baseline)
64
USA
Calgary
Ontario
August 30, 2012
Executive Order Accelerating Investment in Industrial Energy Efficiency WASHINGTON, DC -- President Obama signs an Executive Order calling for the deployment of 40 gigawatts of new, cost-effective industrial combined heat and power (CHP) capacity in the United States by 2020. Policy: To formalize and support the close interagency coordination that is required to accelerate greater investment in industrial energy efficiency and CHP, this order directs certain executive departments and agencies to convene national and regional stakeholders to identify, develop, and encourage the adoption of investment models and State best practice policies for industrial energy efficiency and CHP; provide technical assistance to States and manufacturers to encourage investment in industrial energy efficiency and CHP; provide public information on the benefits of investment in industrial energy efficiency and CHP; and use existing Federal authorities, programs, and policies to support investment in industrial energy efficiency and CHP.
Encouraging Investment in Industrial Efficiency: The Departments of Energy, Commerce, and Agriculture, and the Environmental Protection Agency, in coordination with the National Economic Council, the Domestic Policy Council, the Council on Environmental Quality, and the Office of Science and Technology Policy, shall coordinate policies to encourage investment in industrial efficiency in order to reduce costs for industrial users, improve U.S. competitiveness, create jobs, and reduce harmful air pollution. 66
FEED-IN-TARIFFS Feed–In Tariffs encourage the development of renewable energy by obligating electric utilities to pay pre–established above-market rates for renewable power fed onto the grid. These tariffs, provide renewable generators with a set stream of income from their projects. Feed-in tariff regulations have been introduced in 45 countries on national level and 4 on states/provincial level and among them are most of EU member countries, Japan, South Korea, Thailand, South Africa, Uganda and others. Example:
Germany is the most innovative and world's first major renewable energy economy. The German EEG (Renewable Energy Act) is a comprehensive energy policy that is known mostly for its flagship component: the feed-in tariff.
Impact:
An estimated 214,000 people work with renewables in Germany, (up from 157,000 in 2004, an increase of 36 percent.) About two-thirds of these jobs are attributed to the Renewable Energy Sources Act. Renewable energy in Germany has increased from 6.3 percent of the national total in 2000 to over 20 percent in the first half of 2011. Despite rumours that Germany was abandoning its systems of Advanced Renewable Tariffs, the revisions to its pioneering Renewable Energy Sources Act was approved on July 8, 2011. The new version came into effect Jan. 1, 2012.
67
Renewable Portfolio Standard
A Renewable Portfolio Standard (RPS) regulation requires increased production of energy from renewable energy sources. (Termed as Renewable Electricity Standard (RES) at the United States federal level and Renewables Obligation in the UK.) RPS-type mechanisms have been adopted in several countries, including Britain, Italy, Poland, Sweden, Belgium and Chile, as well as in 30 of 50 U.S. states, including the District of Columbia. Regulations vary from state to state, and there is no federal policy.
Example: Existing Renewable Portfolio Standards in China Renewable electricity - 500 GW by 2020 (300 from hydro, 150 from wind, 30 from biomass, and 20 from solar PV); Renewable energy - 15% by 2020 Impact: China leads in a no. of sectors in renewable market. It reached a total renewals capacity of 227 GW which includes 37 GW of renewable power capacity.
68
Capital subsidies, grants, rebates
Capital subsidies, grants, subsidized loans and rebates are one of the most frequently used instruments for increasing energy efficiency in buildings. They are used to finance better insulation such as roof insulation in the UK, more efficient equipment such as refrigerators in Germany, CFLs or energy audits as in France. Subsidized loans are used for example in Austria to support ESCOs.
69
Net Metering Net metering enables customers to use their own generation from on-site renewable energy systems to offset their consumption over a billing period by allowing their electric meters to turn backwards when they generate electricity in excess of their demand, enabling customers to receive retail prices for the excess electricity they generate. Best practices for net-metering include:
Eligibility for all distributed generation technologies, including CHP Eligibility for all customer classes System size limits that exceeds 2 MW No limit on aggregate capacity of net-metered systems as a percentage of utility peak demand Indefinite net excess generation carryover at the utility's retail rate Prohibition of special fees for net metering Third-party ownership and meter aggregation
70
Industrial energy efficiency in the U.S. The Problem
The Solution
Finance is needed to help energy users cover capital costs.
Change the Investment Tax Credit so as to ensure efficient power generating technologies like combined heat and power (CHP) and waste heat to power (WHP) have parity with other clean and efficient technologies in the available energy tax incentives.
The available tax credit makes it difficult for projects to qualify.
Changes would make the tax credit more accessible Current Policy
Proposed Policy
10% ITC for combined heat and power
Expand ITC to 30%
Does not include waste heat to power
Include waste heat to power
Applies to the first 15MW of projects which are smaller than 50 MW
Apply to first 25MW, eliminate project size cap
Ends Dec. 2016
Ends Dec. 2018
Senate bills in the 114th Congress S. 1516 The Power Efficiency and Resiliency (POWER) Act Senators Susan Collins(R-ME) and Bob Casey(D-PA) introduced in June 2015 Expands investment tax credit to 30% Adds waste heat to power as a qualifying technology Applies to first 25MW, eliminate project size cap Extends ITC to December 2018 Cosponsors: Sen. Harry Reid (D-NV)
S. 913 Waste heat to power bill Senators Dean Heller (R-NV) and Tom Carper (D-DE) introduced in February 2015: • Included in Senate Finance Committee markup of tax bills •
Passed out of committee and is awaiting floor consideration Would make WHP eligible for the existing investment tax credit (10% credit for systems up to 50 MW in size) Changes to the credit would take effect on the date of enactment and would expire with the rest of the ITC – December 2016.
House bills in the 114th Congress H.R. 2657, The Power Efficiency and Resiliency (POWER) Act Congressmen Tom Reed(R-NY) and Earl Blumenauer(D-OR) introduced in June 2015 Expands investment tax credit to 30% Adds waste heat to power as a qualifying technology Applies to first 25MW, eliminate project size cap Extends ITC to December 2018 Rep. Thomas Reed (R-NY) Rep. Mark E. Amodei (R-NV) Rep. Chris Collins (R-NY) Rep. Rodney Davis (R-IL) Rep. Christopher P. Gibson (R-NY) Rep. Joseph J. Heck (R-NV) Rep. Tom MacArthur (R-NJ) Rep. Tom Marino (R-PA) Rep. David McKinley (R-WV) Rep. Steve Stivers (R-OH)
Rep. Earl Blumenauer (D-OR) Rep. Kathy Castor (D-FL) Rep. Ron Kind (D-WI) Rep. Bill Pascrell (D-NJ) Rep. Tim Ryan (D-OH) Rep. Dina Titus (D-NV) Rep. Peter Welch (D-VT)
Comparison of bills to proposed policy Current Law
10% ITC for combined heat and power
Does not include waste heat to power
Applies to the first 15MW of projects which are smaller than 50 MW Expire Dec. 2016
Proposed Policy
Expand ITC to 30%, on par with other technologies such as solar Include waste heat to power as qualifying technology for 30% credit Apply to first 25MW, eliminate project size cap Extension of 4 years
The POWER Act (S. 1516, H.R. 2657)
Senate WHP 2015 Bill
Include waste heat to power as qualifying technology for 10% credit
Applies to projects which are smaller than 50 MW
Expire Dec. 2018
Expire Dec. 2016
The impact of tax code technical fixes Makes manufacturers more globally competitive
Saves energy Reduces pollution Enhances resiliency
Pathway to Industrial CHP Project Implementation 82
What Defines a Good CHP Market? Availability of Fuel – States with a well developed Nat Gas Network or clients ability to procure natural gas via delivery or storage.
The Spark Spread – The difference between the cost of a unit of fuel and the value of a unit of electricity. Proper economics can typically be achieved where a ratio wider than 3 to 1 exists. (e.g. Electricity 15c/kWh, Gas $14 / Decatherm or 4.8c/kWh). Regulatory Support and incentives. Practical emissions legislation. Constrained Electric Grid and supply capacity (Inevitable upward price pressure) Evidence that CHP is being successfully applied. Strong corporate desire to be “green” with few technology options available outside of CHP. Need for power reliability or quality for business or safety purposes.
Q: How do you select a Prime Mover? A: “Lowest Total Cost of Ownership” • Required Output vs. Available Size (Power and Thermal) • Heat Balance and Temperature Profiles • Generating Efficiency • Price (First Cost and Parts) • Reputation/Reliability • Availability and Quality of Info • Scheduled Downtime CHP Prime Mover Database
Process for determining: “Do I have an application for CHP?” Project Development Elements for CHP Projects 1. Qualification (Spark Spread, Operation, Location) 2. Level 1 Feasibility (Commercial Analysis) 3. Level 2 Feasibility (PE Analysis, Review) 4. Procurement (Design, Manufacture, Factory Compliance Test) 5. Commission, Monitoring and O&M.
Stick (site) built or Pre-Packaged? Pro’s and Con’s
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Multiple contractors and companies.
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Proven, reliable, less logistics and coordinating.
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No single source responsibility.
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Single source responsibility.
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Questionable outcome and performance.
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EPA-CHP and industry preferred.
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Finger pointing and difficult to identify problems.
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90% hard-costs, removable able to relocate, transport.
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Costly and 50% soft-costs.
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Factory tested, guaranteed.
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Less intrusive to site.
Site Electric Load Duration Studied 8,760 hrs. per year
Maximum size electrical generator for full load employment and 100% site utilization, no export. 250kWe = 1.35 MMBTU/hr heating = 76 USRT cooling
Site Thermal Load Studied
Level 1 Feasibility Analysis Quick…Safe…Reliable 1. Requires customer provided information. 2. Model based on packaged systems. 3. Typical accuracy is a conservative 80% historically.
Standards for Interconnection & Permitting
Indoor or Outdoor Location
2009 Northeast Energy Efficiency Partnerships (NEEP) Northeast Business Leader Recognition Program Nominee National Grid. First Factory tested Solar Assisted Trigeneration System in the United States.
Integrated & Remote Monitoring Integrated with Sites BMS and Remote Monitoring for Measurement and Verification/Economics.
Recap-CHP Rules of the Road 1. Size your system for 100% total energy utilization, no significant heat dumping, simultaneous thermal and power usage. 2. Size your system to 100% full employment, 99.5% availability of 8760 hours per year. 3. Choose “lowest cost of ownership” 15 year design life or better, parts, fuel, maintenance, site conditions. 4. Proper Design and Application , Proper CHP System, LongTerm Maintenance and Fuel. (The Three Legged Stool for Success). 5. Size to base load thermal first, confirm available base load electric, hard to lose with an undersized, economic system, easy to lose with an oversized system. 6. Understand your purpose of ownership, economics, environmental, plant reliability boost or science project?
Financing and Project Development Do you have a budget and resource for in-house development, operation and ownership? • Sizing and Design Responsibilities. • Equipment Selection Responsibilities. • Site Selection and Engineering Responsibilities. • Contractor Selection Responsibilities. • Procurement and Construction Management Responsibilities. • Commissioning and Scheduling Responsibilities. • Operation and Monitoring Responsibilities. • Maintenance and Repair Responsibilities. • Fuel Procurement and Contracting Responsibilities. • Long Term Commitment Required. • 100% ownership of project, equipment, savings and problems.
Financing and Project Development Is third Party Finance and Build Own Operate Maintain (BOOM) right for you? • No Budget Required. • No Resource Allocation Except Site Access and Data Requests. • 100% Ownership of Environmental Benefits. • Shared Financial Savings with Third Party Owner. • Site Contracted and Managed Fuel Supply and Costs. • 100% Ownership of Increased Power Reliability and Quality to Site. • O&M Included in ETA (form of PPA). • Fastest Route to CHP Benefits. • Long Term Commitment Required.
HOW TO IMPLEMENT CHP IN A FACILITY CHP can be implemented in a variety of ways: Energy Tolling Agreement (ETA) The customer pays a tariff per kWh of energy supplied and procures the fuel directly from a third-party supplier. No capital expense required.
Power Purchase Agreement (PPA) The customer pays an all-in tariff per kWh of energy supplied. No capital expense required. Fuel price with contingency and markups is included in the PPA tariff.
Equipment Lease The equipment capital is provided by a financial institution. The customer is responsible for the project’s development, fuel and O&M for the lease period. Downtime cost is absorbed by the customer. Requires internal know-how for O&M.
Capital Project The customer provides the capital and resources required for the development and O&M of the project. Downtime cost is absorbed by the customer. Requires Confidential internal know-how for development and O&M. © 2015 • Page 102
WHAT IS AN ETA With an ETA, the client gets a full turn-key operating CCHP system and in exchange, pays two separate components: An “energy toll” (in dollars per kWh), at a discount from current prices. The cost of the fuel, paid directly to a third party supplier such as GNF.
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BENEFITS OF AN ETA An Energy Tolling Agreement (ETA) allows our customers to take advantage of the benefits and savings of cogeneration without any of the hurdles. The entire turn-key project cost, including engineering, permitting, construction and maintenance is financed through Decentricity. Decentricity builds, owns, operates, and maintains the project (BOOM) at no capital expense. • No internal know-how or resources are required for the development and operation of the plant. • Decentricity brings the knowledge and experience in the development of CHP not currently present in Puerto Rico. Fuel cost is purchased directly by the customer • No hedging costs or markups on the fuel • Potential ‘Ley 73’ (Law 73) tax incentives on fuel used for CHP. Downtime is minimized due to contractual obligations from both parties.
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Why the U.S. Power Grid’s Days are Numbered -BusinessWeek There are 3,200 utilities that make up the U.S. electrical grid, the largest machine in the world. These power companies sell $400 billion worth of electricity a year, mostly derived from burning fossil fuels in centralized stations and distributed over 2.7 million miles of power lines. Regulators set rates; utilities get guaranteed returns; investors get sure-thing dividends. It’s a model that hasn’t changed much since Thomas Edison invented the light bulb. And it’s doomed to obsolescence. That’s the opinion of David Crane, chief executive officer of NRG Energy, a wholesale power company based in Princeton, N.J. What’s afoot is a confluence of green energy and computer technology, deregulation, cheap natural gas, and political pressure that, as Crane starkly frames it, poses “a mortal threat to the existing utility system.”
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Conclusions The trend to decentralization is growing in many different areas, including energy The world is undergoing massive changes in the way it uses and produces energy DE is a win-win as it can reduce CO2 emissions and the overall costs of supplying power The barriers to greater deployment of DE can be removed through better policies The utility business model will face growing pressure from distributed resources Organizations like WADE can help bridge the gap between the traditional utility business model and the utility of the future with a mix of central and distributed generation options
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WADE Caribbean Energy Conference Opportunities in Puerto Rico and the Caribbean Basin May 14-16, 2014 Sheraton Puerto Rico Hotel & Casino, San Juan, Puerto Rico, USA Registration Includes a Tour of the Bacardi Distillery and On-Site Energy Facilities
Featured Speakers
Local Power is a Global Solution! Thank you! www. localpower.org [email protected]
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