Chattanooga Regional Manufacturers Association Energy Summit
Jennifer Kefer Alliance for Industrial Efficiency
Senior Program Manager 202-365-2194
jennifer@dgardiner.com
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What is CHP (and WHP) Benefits Case studies (TN and beyond) State of the market (and remaining potential) Barriers to deployment Overcoming barriers: Recommended policy improvements Financing options
Conventional Power Generation
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SOURCE: “Combined Heat and Power: Evaluating the benefits of greater global investment,” at 6 (Figure 3) (http://www.iea.org/papers/2008/chp_report.pdf).
Defining Combined Heat & Power (CHP)
Heat recovery steam boiler
Prime Mover &
Generator Electricity
Steam
Fuel
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“Topping Cycle”
Defining Waste Heat to Power (WHP)
Fuel
Electricity
Energy
Intensive Industrial Process
Heat produced for the industrial process
Waste heat from the industrial process
Heat Steam
Turbine
Heat recovery steam boiler
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“Bottoming Cycle”
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CHP increases productivity, lowers operating costs, and the materials themselves are manufactured in the US.
Eastman's Tennessee Operations Facility (Kingsport, Tennessee) produces a variety of chemicals, fibers, and plastics and also serves as the worldwide headquarters for Eastman Chemical Company.
Sikorsky Aircraft (Connecticut) Generates 10 MW Provides 85% of energy
needs $30.6-million installed
costs $6.5-million in annual
energy savings Excellent performance
during Hurricane Sandy
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Installed in 2011 as part of company’s larger push toward environmental responsibility. Aiming to make their facility zero net energy. Launching “project earth, wind and fire” to replicate this success at their other facilities.
Current CHP Projects
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82 GW of CHP capacity at nearly 4,000 industrial and commercial facilities Represents 8% of US generating capacity. 87% of installations are in industrial applications. CO2 reduction equivalent to eliminating 80 500 MW coal power plants SOURCE: CHP Installation Database developed by ICF for ORNL and DOE, 2012. http://www.eea-inc.com/chpdata/index.html
Current CHP Projects
CHP in Tennessee (500 MW)
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There are 24 CHP projects in TN totaling about 500 MW (about one conventional power plant) Enough to power 380,000 homes (Assuming a typical household uses 11,040 kWh/year (2009, http://www.eia.doe.gov/ask/electricity_faqs.asp) / 8,760 hours/year = 1.26 kW/ hhld). 324 MW are coal (e.g., Eastman). Remainder is wood, waste and NG (equal parts).
Tennessee CHP Potential (2,886 MW)
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CHP Potential by Application
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Remaining potential in TN 1,280 MW (44%) commercial 1,606 MW (55%) industrial 2,886 MW total Full deployment would lead to $4.3 billion in investments, 17,316 jobs, and provide enough energy to power 2.3-million homes. Methodology/ Sources Commercial and Industrial CHP Potential from ICF, Oct. 2010, "Effect of a 30 Percent Investment Tax Credit on the Economic Market Potential for Combined Heat and Power, Table 3 and Table 4, on p. 11 and p. 12 respectively, Assumed cost of $1,500 per kilowatt-hour installed cost (MW is 1,000 x kW). Jobs Multiplier: Based on four jobs created for every $1 million in capital investment (ORNL 2008). Assuming a typical household uses 11,040 kWh/year (2009, http://www.eia.doe.gov/ask/electricity_faqs.asp) / 8,760 hours/year = 1.26 kW/ hhld.
Tennessee CHP Potential
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Slightly more industrial potential (55%) than commercial (44%). Full deployment would realize $4.3 billion in investments, 17,316 jobs, and provide enough energy to power 2.3-million homes. (see previous slide for methodology)
Industrial Efficiency Opportunity
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CHP currently provides 8.6% of US electric capacity (85 GW), so DOE projects a rough doubling of CHP (240 GW). Realizing this growth would provide: 20% US electric capacity by 2030 (equal to more than 300 500 MW conventional power plants) One-million permanent jobs Lower manufacturing costs GHG reductions comparable to removing ½ the passenger vehicles from the road. SOURCE: Source: Oak Ridge National Laboratory, Dec. 1, 2008, Combined Heat and Power: Effective Energy Solutions for a Sustainable Future. At 4, 21.
Remaining Potential for CHP
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SOURCE: http://www1.eere.energy.gov/manufacturing/distributedenergy/pdfs/chp_clean_energy_solution.pdf at 13 Assumes systems are sized for on site use. Typical hospital/ university projects are 5-50MW; Office retail projects are 1-10MW Technical potential for industrial is 65-130 GW (larger number achievable if excess electricity sold off site)
CHP as Share of Generation Capacity
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Denmark
Finland
Russia
Latvia
Netherlands
Hungary
PolandCzech
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China
Germany
EU 25Ita
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Spain
Sweden
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Economics not right Competing for capital Lack of knowledge Utility barriers (interconnection, standby
rates) Permitting
Why More Businesses Do Not Invest in CHP
Understanding the Opportunity Policy Finance
Alliance for Industrial Efficiency: Overcoming Barriers
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Education: We have helped to organize these advertisements with 350+ companies signing on that call for more work to harness this wasted heat to create jobs and make our country more competitive.
Get EPA rules right (e.g., greenhouse gas standards, Industrial Boiler Rule)
Alliance for Industrial Efficiency: Policy Priorities
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ITC: Bipartisan legislation that would remove the current 50-MW size limitation Allow a larger portion of such projects to qualify (currently set to first 15 MW, extend to first 25 MW) Allow WHR projects to qualify for this Credit. Also seeking 30% ITC for WHP and highly efficient CHP projects. Markets 29 states (but not TN) have renewable portfolio standards – and 17 of them include CHP in their RPS Boiler MACT: 1.5-million boilers in the US. Less than 1% subject to emission limits. Most are area sources, but 14,000 are major-source boilers. Of these, 1,750 (coal, oil and biomass) are subject to emission limits. As boilers switch to natural gas, they create an opportunity for CHP – since 71% of CHP projects use natural gas.
Historic and Targeted CHP Capacity Additions (1950-2020)
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SOURCE: WRI 2012 (http://insights.wri.org/news/2012/08/white-houses-industrial-energy-efficiency-plan-will-boost-manufacturing-curb-emissions) On August 30, 2012, White House issued an executive order (EO 13624) to increase industrial CHP deployment by 40 GW (about 50%) Realizing this goal would: Save manufacturers more than $100 billion in energy costs over the next decade. Support $40-80 billion in capital investments in manufacturing sector (creating opportunities for SMACNA members) One project in Port Arthur, Texas used 2.5 miles of steam pipeline – good news for the steelworkers.
SOURCE: EPA, Emissions Database for Boilers and Process Heaters (2008 & 2011 update) (available online at http://www.epa.gov/ttn/atw/boiler/boilerpg.html) Map does not include limited use boilers or boilers with heat-input rates below 10 mmbtu/hr. Program regulates: Major sources that emit hazardous air pollutants (mercury, acid gases, dioxins). Major source is facility that emits 10 tpy or more of any single Hazardous Air Pollutant, or 25 tpy or more of total HAPs Emissions limits + one-time energy assessment applies to new and existing units > 10 MMBtu/hr Compliance options: Work-practice standards for smaller units (<10 MMBtu/hr); Emissions limits are harder to meet for coal- and oil-fired boilers. If boilers convert to NG, compliance is straightforward (periodic tune-ups) If convert to NG + CHP: Represents a productive investment Potential for lower steam costs due to generating own power Higher overall efficiency and reduced emissions Higher capital costs, but partially offset by required compliance costs or new gas boiler costs If all 601 coal boilers switch to NG and add CHP, we could have 16 GW of new clean and efficient power.
Oil-Fired Industrial Boiler Locations (595 total)
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SOURCE: EPA, Emissions Database for Boilers and Process Heaters (2008 & 2011 update) (available online at http://www.epa.gov/ttn/atw/boiler/boilerpg.html) Map does not include limited use boilers or boilers with heat-input rates below 10 mmbtu/hr.
CHP Potential
These boilers represent around 25 GW of potential CHP capacity—about as much capacity as provided by 50 base load power plants
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Assumes a 500 MW capacity for base load power plant. 25 GW if all 1,200 coal and oil-fired boilers installed CHP.
Boiler Potential - Tennessee
Fuel Type # Boilers Capacity (MW)
Coal 39 1181 Oil 19 96 Total 58 1,277
Financing CHP Upgrades Self-Finance
Pros Ownership Lowest cost of
capital Operational
control Cons On-balance sheet
debt Retain all project
and operational risks
Lease Financing
Pros Use of equipment
during lease Operational
control
Cons Loss of ownership Higher cost of
capital Retain many
operational risks, including fuel
3d-Party Ownership Pros Pay for electric, steam or
others service as due No balance sheet impact Cons Loss of operational
control Complex transaction
Summary
CHP makes sense for business TN has a large CHP opportunity Need to coordinate education, policy, financing,
and permitting Alliance for Industrial Efficiency can help