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April 2, 2013. Sustainable Growth Briefing. Communications & Market Committee Meeting – April 2, 2013. Rick Murphy Managing Director, Sustainable Growth. Advocacy Initiatives Supporting Efficient Natural Gas Solutions. DOE Furnace Standards

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April 2, 2013

Sustainable Growth Briefing

Communications & Market Committee Meeting – April 2, 2013

Rick Murphy

Managing Director, Sustainable Growth


Advocacy initiatives supporting efficient natural gas solutions
Advocacy InitiativesSupporting Efficient Natural Gas Solutions

  • DOE Furnace Standards

  • Federal Legislation on Fossil Fuel Reduction Mandates for Federal Buildings

  • National Dialogues on Energy Intensity/Productivity


Direct use of natural gas is the clean efficient choice
Direct Use of Natural GasIs the Clean, Efficient Choice

When it comes to appliances, the direct use of natural gas is the smarter, cleaner and more efficient choice.

  • The direct use of natural gas traveling from wellhead to burner tip in America’s homes and businesses loses only about 8% of its usable energy.

  • Converting to natural gas or any other fossil fuel into electricity to power comparable electric end-use products and appliances in the home or business results in the loss of 68% of its usable energy.

Source: Gas Technology Institute


Combined heat and power technologies assessing the market
Combined Heat and Power TechnologiesAssessing the Market

Source: AGA, ICF International


Market drivers for chp
Market Drivers for CHP

  • Growing recognition of CHP benefits by state and federal policymakers

  • Opportunities driven by environmental regulations

  • Changing natural gas outlook

Annual Capacity Additions

Over 4,500 MW announced/under construction


Existing chp
Existing CHP

  • 82 GW of installed CHP at over 4,100 industrial and commercial facilities (2012)

  • Natural gas based CHP concentrated in Northeast, Gulf Coast, Midwest and California

  • Northwest and Southeast have high concentration of sites in forest products and paper industries

71% is natural gas based, consuming an estimated 4.2 Tcf annually




Economic potential base case
Economic Potential – Base Case

Moderate Potential

Strong Potential


Impact of scenarios on gas consumption
Impact of Scenarios on Gas Consumption

  • Economic Potential includes moderate and strong potential.

  • Incremental gas use equals CHP consumption minus avoided boiler fuel.


Summary
Summary

  • Total Technical Potential 123 GW

  • Base Case Economic potential of 41.6 GW (<10 year payback):

    • 35.2 GW Moderate Potential (5 to 10 years)

    • 6.4 GW Strong Potential (<5 years)

  • Incentives for CHP will improve overall economics and increase the economic potential – 25 % reduction in capital cost increases economic potential to 54.4 GW:

    • 37.9 GW Moderate Potential (5 to 10 years)

    • 16.5 GW Strong Potential (<5 years)

  • Spark spread is a critical factor in economic competitiveness for CHP and could be positively affected by increased electricity prices – 15% increase in electric prices increases economic potential to 62.7 GW

    • 45.3 GW Moderate Potential (5 to 10 years)

    • 17.4 GW Strong Potential (<5 years)


Policy issues
Policy Issues

  • Incentives for CHP can improve overall economics and increase the economic potential and reduce perceived risks to users

  • Spark spread is a critical factor in economic competitiveness for CHP and could be positively affected by:

    • Reduction in standby charges

    • Payments for CHP grid support

    • Retirements of embedded coal capacity

    • Future increases in electric costs

  • Possible federal policies

    • Expansion of investment tax credit

    • Include CHP as a qualified resource in national clean energy standards

    • Federal procurement requirements

    • Encourage CHP participation in ancillary services markets

  • Possible state policies

    • Include CHP as a qualified resource in clean energy portfolio standards or electric utility energy efficiency resource standards

    • Standardized interconnection requirements

    • Specific incentives


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