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CHP Presentation toLegislators

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Chp

COMBINED

HEAT AND

POWER

CHALLENGE

CHP Presentation to

Legislators

Prepared by the

Northeast-Midwest Institute

on behalf of the

U.S. Department of Energy

1


Chp

Overview

COMBINED

HEAT AND

POWER

CHALLENGE

I.

II.

III.

IV.

V.

Why I should care about CHP

Brief background on CHP

Why CHP now?

What’s the problem?

What happens next?

2


Chp

What is CHP?

COMBINED

HEAT AND

POWER

CHALLENGE

Combined heat and power

involves the sequential

production of electricity

and thermal/mechanical energy

CHP is Cogeneration

3


Chp

CHP is...

COMBINED

HEAT AND

POWER

CHALLENGE

• A proven, highly

efficient way to

make low cost

power

• A way to stabilize

costs for you and

your constituents

• A way to foster

economic

development

4


Chp

COMBINED

HEAT AND

POWER

CHALLENGE

Schematic of a CHP System

Schematic of a CHP System

Combustion Turbine

FUEL

EXHAUST

GAS

AIR

INLET

PROCESS

HEAT

COMBUSTOR

ELECTRIC

POWER

HEAT

EXCHANGER

Electric

Generator

COMPRESSOR

TURBINE

5


Chp

COMBINED

HEAT AND

POWER

CHALLENGE

I.

Why I should care

about CHP

6


Chp

What CHP can do for You

COMBINED

HEAT AND

POWER

CHALLENGE

Cut Energy Costs

Address Reliability

Open Doors to

Retail Power

Reduce Emissions

7


Chp

Public Benefits

COMBINED

HEAT AND

POWER

CHALLENGE

• Increases energy efficiency

• Reduces emissions and pollution

• Promotes sustainable growth

• Helps address transmission and

generation constraints

• Increases grid reliability

• Increases local tax base

• Improves national security

8


Chp

More Benefits

COMBINED

HEAT AND

POWER

CHALLENGE

• Displacement of emissions from grid-

supplied generation

• Avoidance of T&D line losses

• Allows development in non-attainment

areas

• Utilization of byproduct fuels

• Reduces reliance on fluctuating

foreign energy supplies

9


Chp

The Need For CHP

The Need For CHP

COMBINED

HEAT AND

POWER

CHALLENGE

Stagnant Efficiency of U.S. Electric System

34%

30%

Generation Efficiency

26%

22%

18%

1940

1950

1960

1970

1980

1990

2000

Fossil Electric Generation Efficiency (at plant, W/O T&D)

Source: EIA, Annual Energy Review 1996

10


Chp

CHP Uses Less Energy

CHP Uses Less Energy

COMBINED

HEAT AND

POWER

CHALLENGE

86

Separate Heat

and Power

(Losses)

Combined Heat and Power

GRID

Power

station fuel

(121)

35

Electricity

Electricity

CHP

100

180

CHP

system

fuel (100)

Boiler

fuel

(59)

50

BOILER

Heat

Heat

15 (Losses)

9 (Losses)

Source: Kaarsberg 1998

11


Chp

Energy Movement Costs

at Delivered Cost of Power

COMBINED

HEAT AND

POWER

CHALLENGE

Cost of pipeline [$.30/MMBtu]

@ 98% pipeline efficiency

Energy Movement Cost:

.17¢/kWh

300 mi. 24” Gas Pipeline

57% efficient

Gas Generation

2 Compressors @ 7200 hp

Power plant output

@ 7% line loss

Energy Movement Cost:

.51¢/kWh

300 mi. 345 kV Line

57% efficient

Gas Generation

12

Source: Alderfer, Competitive Utility Structures, LLC 1999.


Chp

COMBINED

HEAT AND

POWER

CHALLENGE

II. Brief Background

on CHP

13


Chp

Historical regulatory approach

has led to Electric Inefficiency

COMBINED

HEAT AND

POWER

CHALLENGE

• 90 years of monopoly regulation

– no rewards or incentives for efficiency

– state law prevents competition

• Central generation paradigm has led to:

– Government enacted barriers to efficiency

– Customer inertia

– Vendor focus on electric only technology

– Aging capital stock of generation

Source: Alderfer, Competitive Utility Structures, LLC 1999.

14


Chp

CHP is Most Common

Onsite

COMBINED

HEAT AND

POWER

CHALLENGE

• Power generation on site is far more

efficient for the end user than having

the power generated off site when

transmission and distribution losses

are included

• It saves manufacturers $$

• It helps the environment

15


Chp

Plant

Plant

Plant

Plant Energy Efficiency Levels

Energy Efficiency Levels

Energy Efficiency Levels

Energy Efficiency Levels

Utility Power Plant

35% - 40%

COMBINED

HEAT AND

POWER

CHALLENGE

Industrial Cogeneration

75% - 82%

16


Chp

The Case for CHP

COMBINED

HEAT AND

POWER

CHALLENGE

• Most power plants throw out 2/3 of the

energy consumed through combustion

• Power generation at sites where waste

heat can be used can capture another

1/3 of the lost power

• Capturing the wasted heat will reduce

the demand for additional energy/fuel

supplies

17


Chp

III. Why CHP now?

COMBINED

HEAT AND

POWER

CHALLENGE

• Power reliability

• Power quality

• Many advances in technology make it

more cost effective

• Big impact on CO2 emissions

To take full advantage of distributed

generation, we should capture the

waste heat through CHP

18


Chp

More Reasons for CHP

COMBINED

HEAT AND

POWER

CHALLENGE

• Restructuring can offer opportunities to rethink

current rules and regulations

• Rationale for big power plants (i.e. economy

of scale) no longer exists

• Aging power plant portfolio is substandard

– Clean Air Act of 1970

• Grandfathered power plants

• Many plants are now 30 years old

• Have limited reporting and NOx limits

19


Chp

State Restructuring Status

COMBINED

HEAT AND

POWER

CHALLENGE

20

Source: Energy Information Administration, October 2000.


Chp

Aging Energy Infrastructure

40%

COMBINED

HEAT AND

POWER

CHALLENGE

% Electric

% Boilers

35%

30%

25%

20%

15%

10%

5%

0%

1950 -1960

1970 -1980

1990+

1950<

1960 -1970

1980 -1990

U.S. Electric Plant and Boiler Vintage

21

Sources: Energy Information Administration, Gas Research Institute


Chp

Sea Change in Optimum

Electric Plants’ Size

COMBINED

HEAT AND

POWER

CHALLENGE

$/kW Average Installed Cost

5000

1930s

Size Trend

4000

1950s

3000

1970s

2000

1980s

1990s

1000

0

0

200

400

600

800

1000

1200

Plant Power Capacity (MW)

22

Source: Bayless, 1994


Chp

CHP in Use in the U.S.

COMBINED

HEAT AND

POWER

CHALLENGE

Total Electric Generating Capacity

in 1995: 750,859 MW

Utility

89%

Combined

Heat & Power

7%

Non-Utility

Generation

4%

Source: EEA, 1998

23


Chp

Typical Emissions Rates for

Electricity Generation using

Various Fuels

COMBINED

HEAT AND

POWER

CHALLENGE

Carbon/Energy

(MtC/Q)

Nox

SO2

PM

Fuel Type

(lb/MWh)

(lb/MWh)

(lb/MWh)

Coal

25

5.5

8.8

4.4

Natural Gas

15

3.3

.66

0.4

Nuclear

.01

.07

.13

.18

Hydro

0

0

0

0

Petroleum

20

4.4

20

1.5

Biomass

0

0

0

2.2

Source: Northeast-Midwest Institute, Kaarsberg 1999.

24


Chp

Electric Generation and

Emissions Percentages by

Fuel Type

COMBINED

HEAT AND

POWER

CHALLENGE

Fuel Type

% of

% of CO2

% of NOx

% of SO2

Generation

Coal

52

74

80

92

Natural Gas

14

13

4

0

Nuclear

18

0

0

0

Hydro

10

0

0

0

Petroleum

4

6

3

6

Biomass

1

7

2

2

25

Source: Northeast-Midwest Institute, Kaarsberg 1999.


Chp

6

Pounds per

MWh of NOx for

Coal and Gas

with and without

Heat Recovery

5

Coal (U.S. Avg)

Gas (U.S. Avg.)

4

3

COMBINED

HEAT AND

POWER

CHALLENGE

2

1

0

Pounds/Mwhe

Electric only

Pounds/Mwh(e+t)

CHP

Electric

Only

With

CHP

100%

Power Technologies’

Efficiency with and

without CHP

80%

60%

40%

Source: Northeast-Midwest

Institute, Kaarsberg 1999.

20%

0%

26

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MTPEMFCPV

gridCCGT

CT

GE


Chp

COMBINED

HEAT AND

POWER

CHALLENGE

IV. What’s the Problem?

27


Chp

Barriers to CHP

COMBINED

HEAT AND

POWER

CHALLENGE

• Lack of awareness of CHP

• Complex, time-consuming and costly

siting and permitting

• Inadequate regulatory credit for off-

site emissions reductions

• Unfair utility practices

– costly stranded cost recovery fees

– complex, costly interconnection

– costly back up power rates

28


Chp

The Policy Issues

COMBINED

HEAT AND

POWER

CHALLENGE

29

Source: Arthur D. Little 1999.


Chp

Policy Issues

continued

COMBINED

HEAT AND

POWER

CHALLENGE

30

Source: Arthur D. Little 1999.


Chp

Current Implementation of the

Clean Air Act does NotRecognize

the Total Benefits of CHP

COMBINED

HEAT AND

POWER

CHALLENGE

• Environmental permitting of systems is

complex, costly, time-consuming and

uncertain

• Regulators do not give credit for displaced

utility emissions

• Regulators inappropriately compare small

commercial DG to state-of-the art utility sized

technologies, not the GRID

31


Chp

COMBINED

HEAT AND

POWER

CHALLENGE

V. What happens next?

32


Chp

Window of Opportunity

COMBINED

HEAT AND

POWER

CHALLENGE

• Need to Replace Energy

Infrastructure

• Clean Air Act Implementation

• Next Generation of Better, Lower

Cost Technologies

• Communication/Services Revolution

• Electronics and Software Advances

33


Chp

States Can Play a

Critical Role

COMBINED

HEAT AND

POWER

CHALLENGE

• Publicize CHP technologies

• Streamline permitting

• Ease Interconnection

• Competitive electric and

gas markets

34


Chp

Conclusion

COMBINED

HEAT AND

POWER

CHALLENGE

You can be proactive in how and

when more CHP finds its way

into the marketplace, or

you can let other states take the

lead and your companies.

35


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