What is CHP & Why do we need it in Michigan?

1. What is CHP & Why do we need it in Michigan? April 30, 2015 Jim LeidelDirector of Clean Energy SystemsOakland University

2. Outline of Discussion • What is CHP • the Opportunity of CHP: (a new look at an tried and true technology) • What does CHP look like • Project feasibility basics: the spark spread • Why CHP in Michigan? • Multiple benefits to CHP • Oakland University CHP & MicroGrid • Questions ?

3. Combined Heat and Power 30-40% 75-85% 80-90% combined efficiency is dramatically increased

4. Benefits of CHP to the Host Additional heating capacity “New” equipment replacing aging systems Backup electrical power Lower carbon footprint Diversified energy options for supply Energy independence Grid Reliability Cost savings drives the whole opportunity

5. Benefits of CHP to the Grid Replace retiring base-load coal generation Reduce transmission losses Lower carbon footprint (with natural gas) Highest efficiency possible Added Reliability

6. 8% 3% 3% 23% 23% 40%

7. Michigan Energy Flow Mich flag 2.9 Quad year

8. 0.0006 Quad year Consumers & BP Logos

9. U.S. Electric Power Energy Flow

10. What does CHP look like?

12. Gas Turbine Generator Set FUELMANIFOLD TERMINALBOX DIGITAL CONTROL PANEL AIR INLET AXIALEXHAUST ACCESSORY REDUCTIONGEARBOX CUSTOMER CONNECTION BOX GENERATOR VPIPG-00-012

13. Combined Heat and Power SystemCombustion Gas Turbine EXHAUST SILENCER EXHAUST BYPASS SILENCER DIVERTER VALVE AIR INLET FILTER HEAT RECOVERY STEAM GENERATOR (HRSG) GENERATOR PROCESS STEAM GAS TURBINE SUPPLE- MENTARY BURNER 118-073

14. Gas Turbine Cogeneration Facility 118-035

15. Industrial CHP Pharmaceutical Food Processing Pulp and Paper Manufacturing VPIPG-00-015

16. Industrial CHP Refinery / Oil Hospitals Universities Utilities VPIPG-00-016

17. University of Michigan 45.2 MW CHP Application

18. Lorin Industries 3.2 MW CHP Application

19. Eastern Michigan University 3.5 MW CHP Application Taurus 60

21. JHP Pharmaceuticals 4.6 MW Gas Turbine CHP

24. Ferris State University 1.0 MW CHP Kawasaki Turbine

26. Is CHP Applicable? Spark Spread

28. Unit Cost of Natural Gas

32. Why do we need CHP?

33. COAL RETIREMENTS: BEGINNING OF THE END The US coal fleet is entering an unprecedented period of retirements, as the industry faces a three-pronged assault from low gas prices, an aging fleet, and stringent environmental compliance. • Old age: numerous units are today approaching 50+ years of operation. • Cheap gas: sub-$4/MMBtu Henry Hub gas will hit coal units twice – first, by reducing wholesale power prices; and second, by bringing combine-cycle gas turbines (CCGTs) into the base-load power mix, encroaching on sales of coal-fired electricity. • Environmental regulations: standards laid out by the US Environmental Protection Agency (EPA) will force generators to decide whether to invest in expensive environmental controls.

34. Nuclear Plants source: US DOE, Energy Information Administration, www.eia.gov/state

35. Hydro-electric sites source: US DOE, Energy Information Administration, www.eia.gov/state

36. Biomass: wood chip & landfill gas source: US DOE, Energy Information Administration, www.eia.gov/state

37. Storage: Pumped hydro Note: this is storage using night time grid power source: US DOE, Energy Information Administration, www.eia.gov/state

38. Nat. Gas Plants also showing major gas pipelines source: US DOE, Energy Information Administration, www.eia.gov/state

39. Coal Plants Also showing ≥ 345 kV transmission source: US DOE, Energy Information Administration, www.eia.gov/state

40. Upper Peninsula Power Plant Map (all fuels) Also showing natural gas pipelines (blue) source: US DOE, Energy Information Administration, www.eia.gov/state

41. U.S. Electric Power Fuel Source Mix natural gas petroleum coal renewables large hydro nuclear source: Bloomberg New Energy Finance, “Medium-term outlook for US power: 2015 = deepest de-carbonization ever”, 8 April 8 2015

42. U.S. New Capacity Build & Retirements natural gas renewables coal petroleum source: Bloomberg New Energy Finance, “Medium-term outlook for US power: 2015 = deepest de-carbonization ever”, 8 April 8 2015

43. Regional Grid Operators (ISO’s) Midwest is MISO & PJM

44. (2016) MISO + PJM = 8 GW (2015) MISO + PJM = 11 GW U.S. Coal Plant Retirements by Region GW source: Bloomberg New Energy Finance, “Medium-term outlook for US power: 2015 = deepest de-carbonization ever”, 8 April 8 2015

45. Utility Scale Generating Units Planned to Retire from Feb 2015 to Jan 2016 (as reported to the DOE) source: US DOE, EIA, Form EIA-860, “Annual Electric Generator Report” and Form EIA-860M, “Monthly Update to the Annual Electric Generator Report”.

46. CHP Share of Total National Power Generation, by Country source: “Combined Heat & Power: Effective Energy Solutions for a Sustainable Future”, Oak Ridge National Laboratory (2008), ORNL/TM-2008/224, (US DOE, EIA, 2008 data)

47. Source: US DOE Report, “The Market and Technical Potential for Combined Heat and Power in the Commercial / Institutional Sector”, prepared by ONSITE SYCOM Energy Corp., (Jan 2000)

48. CHP Share of Total Power Generation, United States source: “Combined Heat & Power: Effective Energy Solutions for a Sustainable Future”, Oak Ridge National Laboratory (2008), ORNL/TM-2008/224, (US DOE, EIA data)

49. source: “Combined Heat & Power: Effective Energy Solutions for a Sustainable Future”, Oak Ridge National Laboratory, ORNL/TM-2008/224, McKinsey & Company data, (2008)

50. Oakland University Projects 4.6MW 400kW