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Update on Combined Heat and Power
(CHP) – Regional Perspective Presentation to:
2013 Fall Meeting of ASERTTI
October 2nd, 2013
Presentation by:
John Cuttica – Energy Resources Center
University of Illinois at Chicago
&
Isaac Panzarella,- North Carolina Solar Center
North Carolina State University
o Combined Heat & Power (CHP) – What is it &
Why should I be interested
o Recent Activities
– CHP and Portfolio Standards
– CHP and Critical Infrastructure
– CHP and Emission Compliance Strategies
• Industrial Boiler MACT & Utility GHG Emission Rules
– Utility Participation in CHP Markets
• Standby rates, a Key Barrier
Presentation Outline
Combined Heat & Power
What is it & Why should I be
Interested
Defining Combined Heat & Power (CHP) The on-site simultaneous generation of two forms of energy
(heat and electricity) from a single fuel/energy source
Conventional CHP (also referred to as Topping Cycle CHP or Direct Fired CHP)
Separate Energy Delivery:
• Electric generation – 33%
• Thermal generation - 80%
• Combined efficiency – 45% to 55%
CHP Energy Efficiency (combined heat and power)
70% to 85%
Defining Combined Heat & Power (CHP) The on-site simultaneous generation of two forms of energy
(heat and electricity) from a single fuel/energy source
Conventional CHP (also referred to as Topping Cycle CHP or Direct Fired CHP)
Simultaneous generation of heat
and electricity
Fuel is combusted/burned for
the purpose of generating heat
and electricity
Normally sized for thermal load
to max. efficiency – 70% to
>85%
Minimum efficiency of 60%
normally required
Normally non export of electricity
Low emissions – natural gas
Defining Combined Heat & Power (CHP) The on-site simultaneous generation of two forms of energy
(heat and electricity) from a single fuel/energy source
Waste Heat to Power CHP (also referred to as Bottoming Cycle CHP or Indirect Fired CHP)
Fuel first applied to produce useful
thermal energy for the process
Waste heat is utilized to produce
electricity and possibly additional
thermal energy for the process
Simultaneous generation of heat and
electricity
No additional fossil fuel combustion
(no incremental emissions)
Normally produces larger amounts
electric generation (often exports
electricity to the grid; base load
electric power)
Required high temperature (> 800°F)
(low hanging fruit in industrial plants)
Fuel
Electricity
Energy
Intensive
Industrial
Process
Heat produced for the
industrial process
Waste heat from the
industrial process
Heat
Heat recovery
steam boiler
Steam
Turbine
CHP: Already an Important U.S. Energy Resource
Source: ICF CHP Installation Database
• 82 GW of installed CHP at 4,100 industrial and commercial facilities
• 87% of capacity in industrial applications
• 71% of capacity is natural gas fired
• Avoids more than 1.8 quadrillion Btus of fuel consumption annually
• Avoids 241 million metric tons of CO2 compared to separate production
Existing CHP
• 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
CHP Annual Additions
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
Cap
acit
y (M
W)
Sites >100 MW
Sites <100 MW
Annual Capacity Additions by Size
Source: ICF CHP Installation Database
CHP Annual Additions
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
Cap
acit
y (M
W)
Sites >100 MW
Sites <100 MW
Annual Capacity Additions by Size
Source: ICF CHP Installation Database
CHP Additions 2006-2011 (3,442 MW)
CHP Additions by State CHP Additions by Application
Other Ind. 413 MW
Other Com. 503 MW
Food 323 MW
Paper 442 MW
Utilities 196 MW
Hospitals 143 MW
College/Univ 380 MW
Chemicals 591 MW
Refining 451 MW Other States
945 MW
Washington 123 MW Louisiana
129 MW Florida
147 MW
Ohio 160 MW
California 198 MW
Iowa 200 MW
Conn. 246 MW
New York 264 MW Penn. 115 MW
Texas 915 MW
Recent Market Conditions
o Most activity in states with favorable regulatory treatment and/or specific incentives
o Natural gas CHP in areas with supportable spark spread (Northeast, Texas, California)
o Biomass and opportunity fuels in Southeast, Midwest and Mountain
o “Hot” applications: universities, hospitals, waste water treatment, other institutional applications
o Growing interest in waste heat to power applications
o Project inquiries increasing
Emerging Drivers
Over 4,500 MW announced/under construction
Benefits recognized by policymakers – many states promoting CHP
Favorable outlook for natural gas supply in North America enhances economics
Opportunities created by environmental pressures on the power sector and industrial/institutional users
Growing interest in power reliability and critical infrastructure support
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
Cap
acit
y (M
W)
Federal Support for CHP
• Executive Order: “Coordinate and strongly encourage efforts to achieve a national goal of deploying 40 gigawatts of new, cost effective industrial CHP in the United States by the end of 2020”
• DOE focuses technology deployment support for CHP - Regional Technical Assistance Partnerships and SEE Action – Regional meetings planned in support of Executive Order
⁻ SEEAction Guide of CHP Policy Best Practices
• EPA recognizes CHP as an efficiency measure under developing greenhouse gas emission standards and promoting output-based options that recognize CHP benefits (ICI Boiler MACT and Utility MACT (MATS))
• FERC Notice of Interest for recognizing ancillary services from small generators
CHP Value Proposition
Based on: 10 MW Gas Turbine CHP - 30% electric efficiency, 70% total efficiency, 15 PPM NOx
Electricity displaces National All Fossil Average Generation (eGRID 2010 ) -
9,720 Btu/kWh, 1,745 lbs CO2/MWh, 2.3078 lbs NOx/MWH, 6% T&D losses
Thermal displaces 80% efficient on-site natural gas boiler with 0.1 lb/MMBtu NOx emissions
Category 10 MW
CHP 10 MW
PV 10 MW
Wind
Combined
Cycle
(10 MW
Portion)
Annual Capacity Factor 85% 25% 34% 67%
Annual Electricity 74,446 MWh 21,900 MWh 29,784 MWh 58,692 MWh
Annual Useful Heat 103,417 MWht None None None
Footprint Required 6,000 ft2 1,740,000 ft2 76,000 ft2 N/A
Capital Cost $24 million $60.5 million $24.4 million $10 million
Annual Energy Savings 343,747 MMBtu 225,640 MMBtu 306,871 MMBtu 156,708 MMBtu
Annual CO2 Savings 44,114 Tons 20,254 Tons 27,546 Tons 27,023 Tons
Annual NOx Savings 86.9 Tons 26.8 Tons 36.4 Tons 59.2 Tons
CHP and Portfolio Standards
o Many states have developed portfolio standards to
increase the adoption of renewable, energy
generation, energy efficiency, and alternative energy
technologies.
o 40 states & DC have some form of RPS or AES with
21 specifically specifying CHP and/or WHP as
eligible technologies
o 16 states specifically specify CHP and/or WHP as
eligible technologies under their EERS.
o Not all have binding targets that apply to CHP/WHP
CHP and State Portfolio Standards
o State EEPS Program (administered by the investor
owned utilities) usually the single largest opportunity
within a state for increased large customer EE
o EEPS annual efficiency targets becoming much more
difficult to meet within budget caps
o Greater industrial, large commercial, institutional sector
participation is one of the keys to the future success of
state EEPS programs
o How can we increase large customer participation in
EEPS?
Can CHP be a Contributor
State EEPS Programs
o Projects must pass cost effectiveness test (TRC).
o Should incentives be on electric side, gas side, or
shared?
o How do you calculate allowable energy savings?
o Should incentives be tied to measured performance?
o Can CHP significantly assist in meeting targets?
o How do you control size of CHP incentives?
o What have other states done?
Some Thoughts for Including CHP in EEPS:
o Massachusetts – CHP a critical part of Advanced Energy Portfolio Standard and Utility Energy Efficiency Programs
o Maryland – CHP pilot program as part of EmPOWER Maryland energy efficiency program
o Ohio – includes CHP in EERS and WHP in both RPS & EERS. The whole EERS program under attack by First Energy and some legislators
o Illinois – CHP included in Public Sector 3 year filing. If approved an incentive program (modeled after Maryland) will be issued in Spring 2014. Incentive and savings shared on both electric and gas side.
A Few Examples
CHP and Critical Infrastructure
CHP and Critical Infrastructure
“Critical infrastructure” refers to those assets, systems, and networks that, if incapacitated, would have a substantial negative impact on national security, national economic security, or national public health and safety.”
Patriot Act of 2001 Section 1016 (e)
Applications: o Hospitals and healthcare
centers
o Water / wastewater treatment plants
o Police, fire, and public safety
o Centers of refuge (often schools or universities)
o Military/National Security
o Food distribution facilities
o Telecom and data centers
Infrastructure Resiliency
o A key principle of disaster preparedness
o Ability to maintain operation despite a
devastating event
o CHP (if properly configured):
– Offers the opportunity to improve CI resiliency
– Can continue to operate, providing
uninterrupted supply of electricity and
heating/cooling to the host facility
CHP versus Backup
Generation Backup Generator CHP
System
Performance
• Only used during emergencies
Fuel Supply • Limited by on-site storage
Transition from
Grid Power
• Lag time may impact critical
system performance
Energy Supply • Electricity
Emissions
• Commonly burn diesel fuel
CHP versus Backup
Generation Backup Generator CHP
System
Performance
• Only used during emergencies
• Designed and maintained to run
continuously
• Improved performance reliability
Fuel Supply
• Limited by on-site storage
• Natural gas infrastructure
typically not impacted by severe
weather
Transition from
Grid Power
• Lag time may impact critical
system performance
• May be configured for “flicker-
free” transfer from grid
connection to “island mode”
Energy Supply
• Electricity • Electricity
• Thermal (heating, cooling,
hot/chilled water)
Emissions
• Commonly burn diesel fuel • Typically natural gas fueled
• Achieve greater system
efficiencies (80%)
• Lower emissions
Uninterrupted Operation Requirements
o Black start capability
o allows the system to start up independently from the grid
o Generators capable of grid-independent operation
o the system must be able to operate without the grid power signal
o Ample carrying capacity
o system size must match critical loads
o Parallel utility interconnection and switchgear controls
o the system must be able to disconnect from the grid, support critical loads, and reconnect after an event
Superstorm Sandy
o Nearly $20 billion in losses from suspended business activity
o Total losses estimated between $30 to $50 billion
o Two-day shutdown of the NY Stock Exchange, costing an estimated $7 billion from halted trading
o Rutgers estimates economic losses of $11.7 billion for New Jersey GDP
SOURCE: http://www1.eere.energy.gov/manufacturing/distributedenergy/pdfs/chp_enabling_resilient_energy_infrastructure.pdf
One estimate states that over $150 billion per year is lost by U.S. industries due to electric network reliability problems
Source: https://www1.eere.energy.gov/manufacturing/distributedenergy/pdfs/chp_critical_facilities.pdf
Power Outage Cost Estimates
o South Oaks Hospital - Amityville, NY, 1.25 MW reciprocating engine
o Greenwich Hospital - Greenwich, CT, 2.5 MW reciprocating engine
o Christian Health Care Center - Wyckoff, NJ, 260 kW microturbine
o Princeton University - Princeton, NJ, 15 MW gas turbine
o The College of New Jersey - Ewing, NJ, 5.2 MW gas turbine
o Salem Community College - Carney’s Point, NJ, 300 kW microturbine
o Public Interest Data Center - New York, NY, 65 kW microturbine
o Co-op City - The Bronx, NY, 40 MW combined cycle
o Nassau Energy Corporation – Garden City, NY, 57 MW combined cycle
o Bergen County Utilities Wastewater Plant – Little Ferry, NJ, 2.8 MW
reciprocating engine
o New York University – New York, NY, 14.4 MW gas turbine
o Sikorsky Aircraft Corporation – Stratford, CT, 10.7 MW gas turbine
CHP Operates Through Super Storm Sandy
For more information:
https://www1.eere.energy.gov/manufacturing/distributedenergy/pdfs/chp_critical_facilities.pdf.
CHP and Critical Infrastructure
Smart Grid and Micro-Grids
Micro-grid generally considered to be self-contained
grid systems equipped with on-site power generation
(like CHP).
“A group of interconnected loads and distributed energy resources
(DER) with clearly defined electrical boundaries that acts as a single
controllable entity with respect to the grid [and can] connect and
disconnect from the grid to enable it to operate in both gridconnected or
island mode.” (DOE Microgrid Working Group Definition)
o CHP systems act as the backbone of microgrids by
providing base load reliably
o Microgrids must be capable of “island” mode in
anticipation of or in event of grid power failure
CHP and Micro-grids
Microgrid Example:
Gainesville Regional Utilities /
Shands Hospital
•4.3 MW GT CCHP
•chilled water: 4,200 tons
•steam: 14,500 pph
•100% island / blackstart
capability
•Category 4 Hurricane
Advantages
•utility–private partnership
•critical power •no-low capital •50 yr life
Savings
• 36.2% cost • $1.68 M/year • 68% less CO2 • 99% less SOX • 98% less NOX
Microgrid Example:
MCAGCC
Twentynine Palms
•7.2 MW GT CHP
•9.2 MW GT CHP
•4.8 MW Solar PV
•70+ miles of district
energy piping
•100% island capability
• (60) SCADA switches /
communications
• (2) Natural gas feeds
•200,000 gal. LP storage
Advantages
•7 day critical infrastructure reserves
•90% self generation
Campus Microgrid Daily Load Profile
Source: UC San Diego, John Dilliot, Manager, Energy & Utilities
Campus Microgrid Daily Load Profile
Source: UC San Diego, John Dilliot, Manager, Energy & Utilities
Recent State / Local Policy Measures
o DOE/State of New Jersey/ NJ Transit/New
Jersey Board of Public Utilities – announces
micro-grid to power the transit system among
Newark, Jersey City, and Hoboken.
o Connecticut – first state to launch an micro-grid
program: $18M awarded to 9 micro-grid projects
in July 2013 – Gov Malloy to commit additional
$30M over the next 2 years.
CHP and Microgrids
o New York City Mayor (Michael Bloomberg) calls
for public/private partnerships to scale up DG
systems and micro-grids in NYC with a goal of
800MW of installed capacity by 2030.
o Navigant Research (recent report) – North
America will lead the micro-grid market through
2020 with nearly 6 GW of capacity -- the
equivalent of six large nuclear plants.
CHP and Micro-grid (cont’d)
CHP and Emission Compliance
Strategies
• Industrial Boiler MACT
• Electric Utility GHG Emission Standard
EPA’s Boiler MACT Rule (CHP Role)
• ICI Boiler MACT - Standards for hazardous air pollutants from major sources: industrial, commercial and institutional boilers and process heaters
Final rule December 2012 – Compliance by January 31, 2016
• Compliance with MACT limits will be expensive for many coal and oil users (standard compliance measures)
• May consider converting to natural gas Conversion for some oil units, replacements for coal units?
• May consider moving to natural gas fueled CHP (trade off of benefits versus additional costs) – 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
ICI Boiler MACT - Potential CHP Capacity
Fuel Type Number
of Facilities
Number of Affected
Units
Boiler Capacity
(MMBtu/hr)
CHP Potential
(MW)
CO2 Emissions
Savings (MMT)
Coal 332 751 180,525 18,055 114.2
Heavy Liquid 170 367 48,296 4,830 22.9
Light Liquid 109 241 22,133 2,214 10.5
Total 611* 1,359 250,954 25,099 147.6
*Some facilities are listed in multiple categories due to multiple fuel types; there are 567 ICI affected facilities
•CHP potential based on average efficiency of affected boilers of 75%; Average annual load factor of 65%, and simple cycle gas turbine CHP performance (power to heat ratio = 0.7) • GHG emissions savings based on 8000 operating hours for coal and 6000 hours for oil, with a CHP electric efficiency of 32%, and displacing average fossil fuel central station generation
The data on this chart is still being refined
GHG Pollution Sources…
President’s Plan to Cut Carbon Pollution (partial)
o Issued Proposed New Power Plant Standards on
September 20, 2013
o Utility Boilers fired with Coal and IGCC Units
– 1,100 lb CO2/MWh gross over a 12-operating month
period, or
– 1,000-1,050 lb CO2/MWh gross over an 84-operating
month (7-year) period
o Stationary Gas Combustion Units SC/CC
– 1,000 lb CO2/MWh gross for larger units (> 850
mmBtu/hr)
– 1,100 lb CO2/MWh gross for smaller units (≤ 850
mmBtu/hr)
Proposed Carbon Pollution Standard
for New Power Plants
o 1st half 2014 – expect Standard for Existing
Power Plants
o June 1, 2014 – EPA to release proposed rule
o June 15, 2015 – EPA to finalize rule
o June 30, 2016 – States to submit proposed
State Implementation Plans and supporting
regulations for review
o ~ October 2016 – State plans reviewed and
accepted
Timeline for Carbon Pollution
Standard for New Power Plants
0
500
1,000
1,500
2,000
2,500
AverageCoal
AverageOil
AverageNG
NG CHP Solar,Hydro,Nuclear
Biomass
Em
issio
ns (
lb C
O2/M
Wh)
0 ?
Relative Carbon Emissions from Power
Generation
Based on US EPA Egrid Averages for United States
Industrial Plant,
Institutional
Campus, etc.
Conventional Power Emissions vs CHP
10MW
CHP System
On-site
Boiler
83,220 MWh/yr
315,730 MWh/yr
51,152 tons CO2
TOTAL
23,029 tons CO2
97,060 tons CO2
TOTAL
23,029 tons CO2
savings
28,123 tons CO2
CHP Electric
676 lbs CO2/MWh
74,031 tons CO2
Grid Electric
1,779 lbs CO2/MWh
Results from EPA CHP Emissions Calculator
o States may consider flexible approaches to
meeting carbon pollution standards, including
support for CHP to mitigate other emissions.
o Emissions savings from CHP could be captured
in a number of ways:
– Through utility ownership
– Efficiency programs
– Credit trading
What does this mean for CHP?
Utility Participation in CHP
Markets
o Large Capital Investment which most companies
are reluctant to make
– Long payback periods by their standards
– Not directly related to their main area of business
o Discouraged by many electric utilities
– Utility regulatory framework often does not encourage
CHP
– Utilities encouraged to invest in central station power and
upgrading the present grid structure (larger rates of
return on their investments)
– Requires state policy changes
Two Prominent Barriers to CHP
o Competitive cost with traditional centralized power
o Speed of deployment
o Avoids significant line losses
o Defer significant grid upgrades (reduces conjestion)
o Reduce emission compliance costs
o Ability to function as a capacity resource
o Ability to balance system power fluctuations
o Ability to supplement and support greater
renewable energy deployment
Utility CHP Benefits
Example CHP Installations w/ Utilities o We Energies (Domtar Paper Mill), Rothschild, WI, 50 MW
boiler/steam turbine (2013)1
o Lansing Board of Water & Light (REO Town Cogeneration Plant), Lansing, MI, 100 MW boiler / steam turbine (2013)2
o City of Macon (Northeast Missouri Grain, LLC), Macon, MO, 10 MW combustion turbine (2003)3
o City of Russell (U.S. Energy Partners, LLC), Russell, Kansas, 15 MW combustion turbine (2002)4
o Detroit Thermal Energy (Cristal Global), Ashtabula, OH, 28 MW combustion turbine (2001)5
o Muscatine Power & Water (Grain Processing Corp.), Muscatine, IA, 18 MW boiler / steam turbine (2000)6
o Southern Co. approx 700MW CHP across its service area
1 - http://www.jsonline.com/business/power-plant-to-run-on-wisconsin-biomass-b9985790z1-221960911.html
2 - http://www.lansingstatejournal.com/article/20130630/BUSINESS/306300016/BWL-s-REO-Town-plant-fuels-next-generation-power?nclick_check=1
3 - http://www.midwestcleanenergy.org/profiles/ProjectProfiles/NortheastMissouriGrain.pdf
4 - http://www.midwestcleanenergy.org/profiles/ProjectProfiles/USEnergyPartners.pdf
5 - http://www.eea-inc.com/chpdata/States/OH.html
6 - http://www.eea-inc.com/chpdata/States/IA.html
State Energy Efficiency Action Network:
Guide to the Successful Implementation of
State Combined Heat and Power Policies
State and Local Energy Efficiency Action Network. 2013. Guide to the
Successful Implementation of State Combined Heat and Power Policies.
Prepared by B. Hedman, A. Hampson, J. Rackley, E. Wong, ICF
International; L. Schwartz and D. Lamont, Regulatory Assistance Project;
T. Woolf, Synapse Energy Economics; J. Selecky, Brubaker & Associates.
http://www1.eere.energy.gov/seeaction/pdfs/see_action_chp_policies_
guide.pdf
Discusses five policy categories and highlights successful state CHP implementation approaches within each category:
• Design of standby rates • Interconnection standards for CHP with no
electricity export • Excess power sales • Clean energy portfolio standards (CEPS) • Emerging market opportunities—CHP in
critical infrastructure and utility participation in CHP markets.
Standby Rates for CHP Utility tariffs for “standby rates” or “partial requirements service”—the set
of retail electric products for customers with on-site, non-emergency
generation can reduce the cost savings for CHP to a uneconomical point.
The tariffs are meant to recover the utility costs of providing backup
power, but cover other services:
o Backup power during an unplanned generator outage
o Maintenance power during scheduled generator service for routine
maintenance and repair
o Supplemental power for customers whose on-site generation under normal
operation does not meet all of their energy needs, typically provided under the
full requirements tariff for the customer’s rate class
o Economic replacement power when it costs less than on-site generation
o Delivery associated with these energy services.
Typically, standby rates are “ratcheted” to customer’s peak demand for an
entire year, and charges do not reflect actual costs, especially for CHP
customers with low forced outage rates. State and Local Energy Efficiency Action Network. 2013. Guide to the
Successful Implementation of State Combined Heat and Power Policies.
http://www1.eere.energy.gov/seeaction/pdfs/see_action_chp_policies_
guide.pdf
Standby Rate Barrier Example: Iowa
o The Midwest CEAC published a 2011 study, “Iowa On-site Generation Tariff Barrier Overview”
o Avoided rates for self-generation customers as a percentage of retail rates under tariffs for four utilities ranged from 71.9% to 80.5%.
o Modeling for CHP on Mid-American Eastern
– 1.6 MW CHP generating 81% of required kWh onsite
– avoids 74.7% of average retail service rate
– resulting in a savings of only 61% for CHP
– 41% of charges attributable to standby service
Standby Rate Barrier Example: Iowa
o Mid American
o Modeling for site with 1.6 MW of CHP
generating 81% of required kWh onsite,
avoids 74.7% of average retail service
rate, resulting in a savings of only 61%
with CHP.
Improved Standby Rate Design for CHP
Utility standby tariffs incorporating the following features
could encourage CHP self-generators to use electric service
most efficiently and more accurately charge them for actual
costs of standby service:
o Offer daily or monthly as-used demand charges for backup
power and shared transmission and distribution (T&D) facilities
o Reflect load diversity of CHP customers in charges for shared
delivery facilities
o Provide an opportunity to purchase economic replacement
power
o Allow customer-generators the option to buy all of their backup
power at market prices
o Allow the customer to provide the utility with a load reduction
plan
o Offer a self-supply option for reserves.
State and Local Energy Efficiency Action Network. 2013. Guide to the Successful
Implementation of State Combined Heat and Power Policies.
http://www1.eere.energy.gov/seeaction/pdfs/see_action_chp_policies_guide.pdf
Regional DOE CHP
Technical Assistance
Partnerships
o As of October 1st, the DOE Regional Clean Energy
Application Centers have been replaced with:
– Northwest CHP TAP
– Mid-Atlantic CHP TAP
– Southeast CHP TAP
– Mid-West CHP TAP
– Southwest CHP TAP
– Pacific CHP TAP
– Northwest CHP TAP
US DOE Technical Assistance
Partnerships (TAPS)