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ApplicationofWasteHeatRecoveryGeneration at GreatRiverEnergys CoalCreekStation

Applicant:CalnetixInc. PrincipalInvestigator:ShamimImani (DirectorofEngineering,Calnetix,Inc) Date:April1,2009 AmountRequested: StepOne:$80,000 StepTwo:$250,000 ______________________________________________________________________

 TableofContents 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. Abstract Projectsummary Projectdescription Standardsofsuccess Background Qualifications ValuetoNorthDakota Management Timetable Budget Matchingfunds TaxLiabilityAffidavit ConfidentialInformation

1.Abstract Improvingpowerplantefficiencythroughrecoveryofwasteheatisnotanewconcept,butrecentpolicyand regulatoryshifts(efficiencyandemissionsmandates,renewableportfoliostandards,carbontrading)and technologicalimprovementsaretrendingtoimprovetheeconomicsofrecoveringthisheat. Calnetix,Incmanufacturesa100110kWewasteheatrecoverygenerator(WHG100)thatprovidessuperior conversionofwasteheattoelectricity(16%netvs.competitorsat812%)duetoitshighspeedgeneratorandnon contactmagneticbearings.Itsmodulardesignallowsrepetitivemanufacturing,andacostthattypicallyprovides ROIoflessthanthreeyears.CalnetixintendstouseitscurrenttechnologytoscaleuptheWHG100unitto1 2MWe.Itbelievesthatdeployingthislargerunitatlignitepowerplantscouldprovideaneconomicalwayof improvingplantefficiency,therebyhelpingtokeeplignitecoaleconomicalandcompetitiveasafuelintothefuture. CalnetixiscurrentlyworkingtoobtainDepartmentofEnergy(DOE)fundingforamultiphaseprogram,locatedin NorthDakota,todevelopandcommercializethislargerunit.CalnetixseeksthesupportoftheLigniteResearch Council(LRC)fortheinitialvalidationphaseofthisprogramasfollows: Objective:Identifyusablewasteheatsourceswithinalignitepowerplant,validatetheyaresufficienttopower multiple12MWeunits,anddemonstratethetechnicalviabilityofgeneratingelectricityfromonesuchsource usingCalnetixscurrentWHG100unit. ExpectedResults:ValidationofwasteheatsourcesatGREsCoalCreekplantwhichcouldsupportmultiple1 2MWeunits,andsuccessfuldemonstrationof100kWeelectricitygenerationfromonesuchwasteheatsource. Duration:22months. Totalprojectcost:Spreadovertwosteps: Studytoidentifyandquantifyheatsources,andvalidatetheviabilityofconnectingtheCalnetixunitto thesesources.Totalcostis$161,250ofwhichCalnetixseeks$80,000(50%)fromtheLRC. InstallandruntheCalnetixWHG100demounitforproofofconcept.Totalcostisestimatedat$735,495of whichCalnetixseeksamaximumof$250,000fromtheLRC.LRCfundingofthisstepisconditionalupon StepOnevalidationbeingsuccessful,anduponfundingbeingmadeavailablefromtheDOE. Participants:Calnetix,GreatRiverEnergyandHDREngineering.
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2.ProjectSummary Overview Calnetixisseekingtodevelopandwithin36monthscommercializea12MWewasteheatrecovery generator,forapplicationtolowtemperatureheatsourcesatthermalpowerplantsandindustrial facilities. Calnetixbelievesthatawasteheatrecoverygeneratorofthispowerrangewouldhavevaluetothe ligniteindustry.Giventhelowerthermaloutputoflignitecoal,itismorechallengingforlignite powerplantstomeetincreasinglystringentemissionsrequirementsandthecostofvariouscarbon limitationorpricingmandates.Totheextentthatwasteheatrecoverycanreducetheemissionsper MWhfromlignitepowerplants,atanattractiveinstalledcapitalcost,thiswillkeeplignite competitive,economicalandmaintainitsrelevanceaspartofthenationsenergyneeds. ThislargerunitwillbebaseduponCalnetixsexistingWHG100organicrankinecycleproductionunit, andisintendedtosharethesmallerunitsmodular,standardized,andfactorymanufactured approach.Calnetixbelievesthisapproachwillallowittokeeptheinstalledcostoftheunitatan estimated$2,500/kW,lowerthanthecustombuiltsolutionsthatarecurrentlytheindustrystandard. Calnetixbelievesthislowcostapproachwillprovideincreasingvalueasthepriceforemittingcarbon dioxideandfittingnewpollutioncontrolstoplantsincrease(seefollowingillustration):
Increasingcostovertime
WasteHeat Generator CapitalCost

Breakevenpoint Value
Combined -Fuel price increases -Emissions regulations -RPS -CO2 costs

Value/Payback

CalnetixiscurrentlyworkingtoobtainDepartmentofEnergy(DOE)fundingforamultiphase program,basedinNorthDakota,todevelopandcommercializea12MWeunit.Thiswillbe approximatelya36monthprocessfrominitialdesignworktocommercialmanufacture,andbesplit intothefollowingphases: 1. 2. 3. 4. TheendgoalofthisprogramistovolumeproducethislargerwasteheatrecoveryunitinNorth Dakota.Althoughtheunitwilllikelybesoldandappliednationallyandinternationally,itisexpected thatthedemonstrationtestingandinitialcommercialinstallationswillbeintheNorthDakotaregion, includingonlignitepowerplants. CalnetixseeksthesupportoftheLigniteResearchCouncilforPhaseOneofthisoverallprogram,i.e. initialtechnicalvalidationandWHG100proofofconceptdemonstration.Thisisavitalfirstphasein theoverallfourphasecommercializationplan. Objective TheobjectivesoftheprojectforwhichCalnetixseeksLRCsupport(i.e.PhaseOneoftheoverallfour phaseDOEprogram)are: StepOne:togetherwithGreatRiverEnergyandHDREngineering,toidentifyusablelow temperaturewasteheatsourceswithinalignitepowerplant,andtheoreticallyvalidatethat TechnicalvalidationandWHG100proofofconceptdemonstration. Largeunitdevelopmentandlabtesting. Largeunitfieldtesting. Commercializationandmanufacture.

sufficientusablewasteheatexists,andcanbeeconomicallyaccessed,fromoneormoreof thesesourcestopowermultipleCalnetix12MWeunits; StepTwo:installacurrentCalnetixWHG100unitatonesuchheatsource,anddemonstratethe technicalviabilityofgeneratingelectricityfromit. StepOnewilltaketheformofaformalstudyandwrittenreportledbyHDREngineering(Lead:Dave Schmitz),withsupportfromGreatRiverEnergy(lead:CharlieBullinger)andCalnetixengineers.The anticipatedcontentsofthestudyareexplainedinfurtherdetailinSection3ofthisApplication (ProjectDescription).ThetotalcostofStepOneisestimatedat$161,250,ofwhichCalnetixis seeking$80,000(50%)fromtheLRC.CalnetixhasmadeaninitialsitevisittoGREsCoalCreekStation, andidentifiedfourlowtemperaturewasteheatstreams(sootblowerdrain,fluegas,flyashand scrubbersludge)aspotentiallyviablesourcesforelectricitygeneration.ThisStepOnestudyaimsto confirmtheseinitialfindings,determinetheamountofpotentialwasteheat,available,assessthe technicalviabilityofgeneratingpowerfromthesesourcesandmakeanestimateoftheamountof electricalpowerpotentiallyavailable. StepTwowillinvolvedetailedsiteandinstallationanalysis,engineeringandconstructionworkto installtheCalnetixwasteheatunitonsite,andongoingmonitoringandresultsanalysis.Thetotal costofthisstepisestimatedat$735,500. PartofthescopeofStepOneistounderstandthehighlevelcostsforthisinstallation,including equipmentmodifications.ThecostsofStepTwomayneedtoberevisedfollowingthecompletionof theStepOnestudy.However,Calnetixseeksamaximumof$250,000fromtheLRCforStepTwoasa nottoexceedamount,evenifthetotalcostsofthisstependupbeinghigher.

 CalnetixalsorequeststhatfundingofStepTwobemadeconditionaluponCalnetixreceivingDOE fundingforthecompletedevelopmentofthelargerunitoverthefourphasesoutlineabove. AlthoughCalnetixseekstheLRCsconditionalapprovalforfundingStepTwo,ifDOEfundingisnot received,Calnetixwillnotrequestordrawdownthesefunds. FurtherProjectBackground Calnetix(www.calnetix.com)istheworldleaderinthedevelopmentandmanufactureofhighspeed, highefficiencypermanentmagnetmotorsandgenerators,withassociatedmagneticbearingsand highfrequencypowerelectronics.Itsproductsandcapabilitiesrangefrom2kWto10MW,andithas aparticularspecialtyindistributedpowergenerationfromwasteenergy,suchaswasteheat,waste gasesandunusedkineticenergy(e.g.shipturbochargershafts). Calnetixproducesa125kWegross/100110kWenetwasteheatrecoverygenerator(WHG100)that utilizesaclosedlooporganicrankinecycle.Thisinvolvesutilizingheataslowas250Ftogasifyalow boilingpointrefrigerant,passingthegasacrossaturbinewheelattachedtoageneratortoproduce electricity,reliquefyingthegasusingacondenser,andpumpingittotheheatsourceagainto completethecycle,asshowninthefollowingdiagram:
HeatSource Min2.8 MBTU/H

Expander

Generates 125kw

Economizer

Evaporative Condenser

Evaporator Receiver

Typicalapplicationsincludeexhaustheatfromgasturbinesandinternalcombustionengines, industrialboilers,andflarestacks.CalnetixsWHG100canutilizeapproximately625700kWofheat inputtogenerate100110kWenetelectricity(outputvariesbasedonenvironmentalconditionsand wasteheatextractionschemes).Theunitisfactorybuiltandprepackagedasaplugandplay solutionrequiringonlytheinstallationofaheatexchangerandcondensingsource,andconnection totheelectricalgrid.Thisisincontrasttoothercommerciallyavailablewasteheatrecoveryunits, whicharecustomdesignedandengineeredforeachsite.Thecurrentunitispicturedbelow:

TheWHG100issuitableforsmallerindustrialanddistributedgenerationapplications,andinstalled costistypicallyinthe$2500/kWrange. However,Calnetixbelievesthatasignificantopportunityexiststorecoverlowgradewasteheatfrom largerapplicationssuchasthermalpowerplantsandlargeindustrialfacilities.Asignificantamount ofwasteheatisemittedbytheselargefacilitiesatlowertemperatureswhereitisnotfeasibleto installsteamturbines.ThesetemperaturesareideallysuitedforrefrigerantbasedOrganicRankine

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Cyclegenerators,andcouldprovidesubstantialadditionalpowerwithoutusinganyadditionalfuelor creatinganyadditionalemissions.
Estimated Annual US Industrial Heat Output (MW) by Temperature
<100 100-200 200-300 300-400 400-500 500-600 600-700 700-800 800-900 900-1000 1000-1100 1100-1200 1200-1300 1300-1400 1400-1500 1500-1600 1600-1700 1700-1800 1800-1900 0 1,000 2,000 3,000

Range for Organic Rankine Cycle

Low Grade waste heat

Range for Existing Steam Cycle

4,000 5,000 6,000 7,000

Total MW Potential

CalnetixsformersubsidiaryandsistercompanyDirectDriveSystems,InccurrentlyproducesFrame 2(12.5MWe)andFrame8(610MWe)motorsandgeneratorsusingthesamehighspeed proprietarypermanentmagnettechnologywithnoncontactmagneticbearings.Thesemotorsand generators(asshownbelow)areupto90%smallerandlighterthantraditionalsolutions,are1050% moreefficient,andcanbedirectlydrivenatvariablespeedfromaturbineshaft.

Frame2 Frame8

Calnetixhasfullownershipofthisgeneratortechnologyforwasteheatrecovery,andintendstouse theFrame2generatorasthebasistoscaleupitsWHG100unitto12MW.Itwillapplythesame technicalapproachandmodularmanufacturingphilosophy,suchthatthelargerunitcanalsooffera standardizedplugandplayapproachinordertoreducetheonsiteengineeringcostandleadtime necessaryforapplyingittothevariouswasteheatsources.ThisisincontrastwithotherORCunitsof thissizewhicharecustombuiltforeachjob. CalnetixthereforeaimstocreatesomethingthatcanberolledouttotheindustryatacostperkW comparabletoitsWHG100unit,anddeployedinscalequickly.Forthelignitepowerindustry,this couldprovideaviableapproachtoreducingitsnetemissions,improvingefficiencyinacosteffective manner.

3.ProjectDescription Whyistheprojectneeded? Calnetixbelievesthatthecombinedcostsoffuturecarbontaxes(cap&trade),pollutioncompliance costsandrenewableportfoliostandardswilleitherincreasethecostofpowergenerationusing lignite,ordecreasetherelativeattractivenessoflignitegenerationvs.otherrenewablealternatives. Acosteffectivewasteheatrecoveryoption,whichimprovestheefficiencyoflignitegenerationand hasthepotentialtogeneratecarboncreditsand/orelectricitythatqualifiesunderrenewable portfoliostandards,shouldthereforebebeneficialandattractiveforlignitepowerproducers. TherearesixLigniteCoalpowerplantsinNorthDakota1 withanetsummergenerationcapacityof 3920MWe. 2 Accordingtoa2004studypublishedbytheCommissionforEnvironmentalCooperation, theseplantsgenerateapproximately29.6mMWhofelectricityannually. 3 Assumingthefollowing: anaverageplantefficiencyof33%; oftheremaining67%ofwastedenergy,10%ofthisisintheformofrecoverablewaste heat; 4 anetheattoelectricityconversion16%(thecurrentefficiencyofCalnetixsWHG100which Calnetixbelievescanbereplicatedinthelargerunit), couldgenerateanextra915,000MWhofelectricityfromthewasteheatattheseplantswithout additionalfuelcostsoremissionspenalties. 5

1 2

TakenfromTheStoryofLignite,publishedbytheLigniteEnergyCouncil. 2006datasuppliedbytheEnergyInformationAdministration. 3 NorthAmericanPowerPlantAirEmissions,CommissionforEnvironmentalCooperation,2004. 4 DerivedbyCalnetixfollowingitstourofCoalCreekPowerPlantNovember2008. 5 Seetableatpage26belowforfurtherdetail.

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Awasteheatrecoveryunitmayalsocontributetothegoalsof2007NorthDakotalegislationH.B. 1506,whichestablishesanobjectivethat10%ofallretailelectricitysoldinthestatebeobtained fromrenewableenergyandrecycledenergy(includingwasteheat)by2015.Totheextentthatthe equipmentreducescarbondioxideemissionsperMWh,itshouldalsoprovideacostsavingto utilities(intheformoflowercarboncostsperMWh)undertherecentlyproposedObama Administrationcapandtradeprogram.Atanestimatedcostof$13.70/tonofCO2,6 utilizationof wasteheatrecoveryonlignitepowerplantsinNorthDakotacouldprovideasavingofapproximately $16m/year. 7 Objective Theobjectivesoftheprojectare: StepOne:togetherwithGreatRiverEnergyandHDREngineering,toidentifyusablelow temperaturewasteheatsourceswithinalignitepowerplant,andtheoreticallyvalidatethat sufficientusablewasteheatexists,andcanbeaccessed,fromoneormoreofthesesourcesto powermultipleCalnetixsplanned12MWeunits; StepTwo:installacurrentCalnetixWHG100atonesuchheatsource,anddemonstratethe technicalviabilityofgeneratingelectricityfromit. Methodology StepOneinvolvesidentifyingallpossibleheatsourceswithinalignitepowerplantincluding identifyingheatsourcesthatindirectlyaffecttheoperationoftheplant(e.g.,lignitedrying,

PriceestimatedbyPointCarbon(industryanalystseewww.pointcarbon,com)astheassumedcost/tonof CO2emissionsallowancesunderthebudgetsubmittedtoCongressFeb26,2009. 7 Seetablebelowatpage27.

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limestoneproduction,scrubberequipmentandprocesses).TheCoalCreekplantwillbeusedforthis purpose.ThisStepalsoinvolves: validating,usingCalnetixsassumednetheattoelectricityconversionof16%,thatthe temperatureandflowofthewasteheatattheidentifiedsourcesissufficienttopower multiple12MWeunits; identifyingifthereareanysignificanttechnicalissuesthatwouldeitherprecludeinstallation ofwasteheatrecoveryatanyofthesourcesormakeaninstallationuneconomic; studyingtheeffectsofremovingtheheatfromtheperspectiveofcomponentandoverall powerplantenergybalance/performance; identifyinganypotentialsafetyissuesthatwouldneedaddressingwithinthecontextof installingandrunningawasteheatrecoveryunitatthevarioussites. AsitespecificanalysiswillbeconductedbyconstructinganEPCbudgettoincludenecessaryitems andaccessoriesforalargeunitinstallation,suchasspecifyingtheheatexchangers,condensersand pipingthatwouldberequiredtocompleteaninstallationatthemostpromisingofthewasteheat sources. CalnetixwillcommissionHDREngineeringtoundertakemuchofthisanalysistogetherwith engineersfromCalnetixandGRE.ThespecificHDRdeliverablesunderthiscommissionareas follows: Sitevisittoobtaindata,reviewconceptsandreviewexistingplantequipmentforpotential utilization.ThiswillinvolveHDRpersonnelonsitetoreviewlocationofheatsourcesand

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PerformancemodelingoftheexistingfacilitybeforeandaftertheadditionoftheWHG installation(includingpotentialparasiticloadsrequiredtosupporttheinstallation).

Discussionswithapplicableindustryvendorstoassesstechnicalsuitabilityandcostofthe proposedplantmodifications.

Identificationofpotentialtechnicalandenvironmentalrisksandriskmitigationstrategies. Developmentofprocessflowdiagramstoidentifybalanceofsystem. Developmentofhighlevelcostestimatefortotalinstallation,includingequipment modificationsandgeneratorpricingaspredictedbyCalnetix.

Developmentofafeasibilitystudyreportdescribingthepotentialfortheproposed installationandincludingtheresultsofalloftheaboveactivities.

InStepTwo,thevalidityofCalnetixtechnologyforlignitepowerplantswillbedemonstratedby installingandrunningaCalnetixWHG100wasteheatrecoverygeneratoratGREsCoalCreekStation for12months.Thequantityofelectricitygeneratedwillbetrackedwithrespecttoruntime, maintenance,andotherfactorsinordertoestimatetheanticipatedreturnoninvestmentfromthe largerunit.ThisstepwillallowCalnetixtoassesstheperformance,costandbenefitsoftheunit relativetotheidentifiedwasteheatsources,andobtainreallifetechnicaldatawhichwillbe relevanttothedevelopmentofthelargerunit.Throughaninternetconnection,Calnetixwillalso havethecapabilitytomonitorremotelyfromitsFloridafacility. Followingcompletionofthedemonstration(i.e.after12months),CalnetixandGRE,inconsultation withtheLRC,willmakeadeterminationoftheongoinguseoftheunit.Thiscouldincludecontinued demonstrationoftheunitatCoalCreek,makingtheunitavailableforinstallationanddemonstration

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atafacilityoperatedbyanotherLRCmember,orsaleoftheunitinordertomakeapartialrefundto theLRCofgrantmonies. Anticipatedresults ItisanticipatedthatcompletionofStepOne(initialvalidation)willprovidehighlevelandconceptual confirmationoftheviabilityofinstallinglargerwasteheatgeneratorsatlignitepowerplants.Should thestudyresultsindicateotherwise,theStepTwo(demonstration)willnotbepursued,minimizing theLRCsfinancialexposure. AssumingthatStepTwoproceeds,itisanticipatedtodemonstratethetechnicalviabilityof generatingelectricityfromwasteheatsourcesatalignitepowerplant,highlightanytechnicaland practicalissueswithinstallationandrunningthatmaynothavebeenanticipatedatthefeasibility stage,andprovideareallifedemonstrationtoattracttheinterestandsupportofotherparticipants intheligniteindustry. Facilities,resources,andtechniquestobeused GreatRiverEnergyhasbeenverygenerousinallowingCalnetixtouseitsCoalCreekStationasa demonstrationsite,andtheuseandservicesofitsengineersandotherpersonnel.CharlieBullinger willactasleadcontactatGRE. CalnetixwillalsousetheservicesofHDREngineeringasengineeringconsultantsonissuesrelatingto wasteheatcapturefromtheplantandgeneralinstallationissues.DaveSchmitzwillactaslead contactatHDR.

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Calnetixwillalsouseitsowninternalengineersandbusinessdevelopmentpersonneltoworkwith GREandHDRontheproject.CalnetixpersonnelGordonFoster(BusinessDevelopmentManager), ShamimImani(DirectorofEngineering)andChuckTaylor(PresidentofApplicationEngineering)will actasleadsfromCalnetix. Environmentalandeconomicimpactsoftheprojectwhiletheprojectisunderway Anytieinswillbeoptimallyplannedtobedoneduringplannedplantshutdownssothatimpactto plantoperationswillbeminimal.Therewillbenodisruptionoftheplantoperationsduringthe feasibilitystudyanddemonstrationsteps. Ultimatetechnologicalandeconomicimpacts BasedonthepreliminaryinvestigationconductedatCoalCreek,thereisanticipatedtobeatleast 200MWofextractablewasteheatavailableforconversiontoelectricityattheCoalCreekStation. AssumingthenetheattoelectricityconversionrateofCalnetixscurrentWHG100of16%,anextra 32MWofelectricitycouldtheoreticallybegeneratedatCoalCreek.Thiswouldimprovetheoverall efficiencyoftheplantbyapproximately2.5%. Asnotedabove, 8 therearesixLigniteCoalpowerplantsinNorthDakotathatgenerate approximately29.6mMWhofelectricityannually.Calnetixbelievesthatusingitssystem,anextra 915,000MWhofelectricitycouldbegeneratedfromthewasteheatattheseplantswithout additionalfuelcostsoremissionspenalties.AwasteheatrecoveryunitmayalsocontributetoNorth DakotasRPSgoals,andcouldalsoprovidevalue(intheformoflowercarboncostsperMWh)to utilitiesundertherecentlyproposedObamaAdministrationcapandtradeprogram.

Seepage10above.

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Onanationalscale,thepotentialbenefitsoflowtemperaturewasteheatrecoveryaresignificant. AccordingtotheDOE,thereisapproximately26Quadsor8.5millionGWhofrecoverablewasteheat peryearavailableintheUnitedStatesfromthermalpowerplantsandindustrialprocesses. 9 The wasteheatfromthermalpowerplantsexceedstheenergyannuallyconsumedbytheU.S. transportationsector. 10 Assuming20%ofthiswasteheatwasaccessedatanetconversionrateof 16%wouldimplygenerationofapproximately272,000GWhofelectricityfromrecoveryofthis wasteheat,equaltoapproximately7%ofUSgridcapacity. 11

WasteHeatbySector:DOEThermallyActivatedTechnologies,TechnologyRoadmap;May2003 ProducingsufficientCalnetixunitstosupply10%ofthispotentialmarket(2501.5MWeunitsper yearfor10years)isestimatedtocreateaNorthDakotabasedbusinessgeneratingrevenuesofover $950mperannumandemployinginexcessof500workers. 12

DOEThermallyActivatedTechnologies,TechnologyRoadmap;May2003. DOEThermallyActivatedTechnologies,TechnologyRoadmap;May2003. 11 USGridcapacityequaltoapproximately4.16mGWh;EnergyInformationAdministrationElectricPower Monthly,December2008. 12 CalnetixestimatesbasedoncurrentWHG100costsandproductionstaffing.

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4.StandardsofSuccess StepOne Validatingthatthereisabasictechnicalandeconomicfeasibility/justificationforusingwasteheat fromalignitepowerplant,andsufficientquantitiesofwasteheatexist,togenerateelectricityusing multipleCalnetix12MWeorganicrankinecyclewasteheatrecoverygenerators.Sufficientevidence thatCalnetixshouldproceedwithStepTwo(sitedemonstration). StepTwo GenerationofreliableandconsistentpowerfromawasteheatsourceatGREsCoalCreekStation withnofundamentaltechnicalissues.Basiceconomicvalidationoftheapplication.Sufficient evidencethatCalnetixshouldcontinuewithdevelopmentofa12MWeunit.

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5.Background. Priorworkrelatedtotheprojectconductedbytheapplicantandotherparticipantsincludes: (a) (b) developmentoftheCalnetixWHG100wasteheatgenerator; studyandconceptualdesignofa1.5MWewasteheatgeneratorsuitableforpowerplant applications; (c) internalCalnetixstudyontheapplicationofwasteheatrecoverytolignitepowerplantsto assessmarketsizingandindustryviability;and (d) DevelopmentofCalnetixWasteHeatGenerator: CalnetixsWHG100wasteheatgeneratorwasdevelopedasanefficientmeansofconvertingwaste heataslowas200Fintoelectricity.Figure1illustratestheworkingsoftheunit(numberscorrespond tothedescriptionsbelow): 1. TheunitemploysanorganicrankinecycleclosedloopinwhichR245fa(nonflammable, biodegradablerefrigerantmanufacturedbyHoneywell)isexposedtothewasteheatsource andchangesfromliquidtosuperheatedgas. 2. Thispressurizedgasisusedtospinaturbinewheelcoupledtoahighspeedgenerator spinningbetween20,00030,000rpm,producingelectricity. 3. Afterexitingtheturbine,thegasispassedthroughaneconomizerwhereaportionofits heatisstrippedoutandusedtopreheattheliquidrefrigerantatanotherpointofthecycle (seestep5below). 4. Thegasisroutedthroughacondensertoloweritstemperatureandreturnittoitsliquid state. November2008sitevisittoGreatRiverEnergysCoalCreekStation.

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5.

Toincreasesystemefficiency,theliquidrefrigerantisroutedtoaneconomizer(exposingit tothegasifiedrefrigerantexitingtheturbine),increasingitstemperaturebeforereexposing ittothewasteheatsource,regasifyingitandrepeatingthecycle.

Figure1:CalnetixWHG100Cycle Understandardconditions,theWHG100canutilize625700kWofheatinputtogenerate100 110kWenetelectricity.Thisnetoutputtypicallyvariesinthisrangebasedonenvironmental conditionsandinstallationconfiguration. TheheartoftheCalnetixunitistheintegratedexpander/generatormodule.Themoduleis comprisedofaturboexpander,highspeedpermanentmagnetgenerator,magneticbearingsystem, andhousingwithturbonozzlecone.Figure2belowshowsacutawayofthemodule.Themoduleis designedsotherefrigerantflowsthroughtheunit(fromrighttoleftinthefigure).Therefrigerant flowsaroundtheturbonozzleconeandisexpandedovertheturbineimpeller,whichtogetherwith

Expander (2)

Generates 125kw

(1)
HeatSource Min2.8 MBTU/H

(3) (4) Evaporative Condenser

Economizer (5)

Evaporator

Receiver

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theresultingpressuredropthroughtheexpander,causestheturbineanddirectlycoupledgenerator tospinupto30,000rpm.Thegeneratorisdirectlyexposedtotheexpandedrefrigerantforcooling beforeitexitsthroughtheoutlet.Thebenefitofthisdesignisthatthegeneratordoesnotrequireits owncoolingsystemwithapumptocirculatecoolant,therebyoptimizingtheefficiencyofthesystem. Themagneticbearingsalsocontributetosystemefficiencyasthereisnocontactandthusnofriction betweentherotatingcomponentandthebearings.Atsuchhighrotationalspeed,conventional bearingswouldrequirefrequentmaintenanceandreplacementduetocontactwear.

Figure2CalnetixIntegratedExpander/GeneratorModule Calnetixutilizesasmarthighswitchingfrequencyrectifierandinvertersystemtoconverttheenergy ofthegeneratortogridvoltageandfrequency.TheCalnetixsmartrectifier/invertersystemisableto compensateforthevariedspeedofthegeneratorbasedonvaryingwasteheatloadconditions,thus alwaysenablingthesystemtorunatitsmostefficientpoint.Competitorproductscanonlyrunata

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fixedspeedandemployagearboxbetweentheturbineandgenerator,resultinginalessefficient systemduetothelackofspeedoptimizationcapabilityandthelossesofthegearbox. Figure3showstheWHG100asmanufacturedattheCalnetixproductionfacility.Theunitincludesall functionalitynecessaryoutsideoftheheatexchangerandcondenser.

Figure3CalnetixWHG100 Figure4showsastandardpackagedunit(i.e.20ftcontainerintowhichtheWHG100hasbeen fitted)inatypicalapplication.Here,methanefromawastewatertreatmentfacilityisbeing combustedandtheheatenergyisconvertedtoelectricity.Ontopofthecontaineristhecombustor alongwiththeheatexchangerthatexchangesthecombustedexhaustgaswiththerefrigerant. Behindthecontainer(totherightinthebottomphoto)istheevaporativecondenser.

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Figure4ApplicationofCalnetixWHG100wasteheatrecoverygenerator

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ThepackagedunitpicturedaboveisthesametypeofunitthatwouldbeinstalledatCoalCreekfor theStepTwodemonstration,andtheCoalCreekinstallationwouldlikelyhaveasimilarconfiguration andlayout. TheprimaryadvantageoftheWHG100,andCalnetixsdesignandmanufacturingapproach,isits modulardesignandfactorybasedproduction.Thisallowsastandardizedproductwithresultant costandqualityadvantages,aswellasprepackagedasaplugandplayunitrequiringonlythe installationofheatexchangerandcondensingsource,andconnectiontothegrid.Other commerciallyavailablewasteheatrecoveryunitsarecustomdesignedforeachinstallation,which involvesconsiderabletimeandcostsrelatedtocustomengineering. TheWHG100hasalsobeendesignedtobematchedtovaryingapplicationsincludingdifferentheat sources(liquidorgaseous),ordifferentcondensersmanufacturedbythirdparties(airorwater cooled).Combiningastandardizedproducttoexistingthirdpartcomponentsalsoallowsforoverall reductionininstallationcostsandleadtimes. StudyandConceptualDesignofaLargerUnit ThecurrentCalnetixunitcanbeinstalledinparallel(i.e.unitspackagedtogetherusingcommon pipingandcontrolsandutilizingasingleheatexchangerandcondenser)toextractheatsourcesthat areoverthecapacityofoneunit.However,duetospaceandotherfactorssuchaspressuredrop withinpiping,itisnotfeasibletoparallelmorethanaboutfiveunits.Inaddition,manyheatsources frompowerplantsandlargeindustrialfacilitieswouldsupportmultiMWinstallations. Inordertoextractlargerwasteheatsourceswithinpowerplantsandlargerindustrialapplications moreefficiently,aswellasaddresslargerindustrialandutilitywasteheatsourceswithoutparalleling

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dozensofsmallerunits,Calnetixbelievesitisoptimaltodevelopalargerunitinthe1to2MWe range. ThecurrentlowtemperatureORCsolutionsinthispowerrangeareallcustombuiltandinstalled usingfixedspeedorgearedgenerators,whichresultsinlarge,expensiveandrelativelyinefficient installations.Calnetixbelievesthatatthislargerpowerrange,thereissignificantadvantagein keepingthesamehighspeed,modular,factorybuiltplugandplaydesignphilosophyasthecurrent WHG100productionunit,inordertoreducetheengineeringcostandleadtimenecessaryforonsite applicationtothevariouswasteheatsources. Calnetixhasundertakenconceptualdesignandengineeringworkonthislargerunit,including preliminaryanalysisof: ORCcycleanalysisandrefrigerant Usabletemperatureranges Poweroutput Expanderandgeneratordesignandspecification Heatexchangerandcondenserspecifications Developmenttimeline Cost+ROI/Payback

Aschematicoftheconceptualdesignfromthisworkissetforthbelow.Thisdesignwouldbeusedas thebasisforthephysicaldevelopmentofthelargeunit,forwhichCalnetixisseekingfundingfrom theDOE.

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17ft

20ft

28ft

Figure5.ConceptualDesignof1.5MWCalnetixWasteHeatRecoveryUnit InternalCalnetixStudyOnTheApplicationOfWasteHeatRecoveryToLignitePowerPlants CalnetixestimatesthatlignitepowerplantsinNorthDakotacouldpotentiallygenerateanadditional 915GWhofemissionsfreeelectricitybyrecoveringlowgradewasteheat.Thistranslatesintoa3% improvementinoverallefficiency.Thisfigureassumesthattheaveragelignitepowerplantis33% efficientandthatoftheremaining67%wastedenergy,10%ofthisisrecoverablewasteheatwhich canbeconvertedintoelectricityat16%netefficiency.Thetablebelowliststhemajorligniteplants intheNorthDakota,alongwithestimatedoutput,efficiency,andrecoverablewasteheat.Amore detailedstudywillberequiredtorefinetheseestimates.

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Potential Waste Heat at North Dakota Lignite Coal Plants

Net Generation Assumed % (MWh) (1) Efficiency 6,317,269 3,060,200 4,576,988 5,117,272 8,559,089 523,027 28,153,845 33% 33% 33% 33% 33% 33% Waste Energy (MWh) 12,825,970 6,213,133 9,292,673 10,389,613 17,377,544 1,061,903 57,160,837 Extractable Waste Heat % of waste energy MWh 10% 10% 10% 10% 10% 10% 1,282,597 621,313 929,267 1,038,961 1,737,754 106,190 5,716,084 ORC Potential (MWh) (2) 205,216 99,410 148,683 166,234 278,041 16,990 914,573

Power Plant Antelope Valley Station Coyote Station Leland Olds Station Milton R. Young Station Coal Creek Station Heskett Station Total

(1) CEC, North American Power Plant Air Emissions, 2004 (2) Assumes 16% ORC efficiency

Theimprovementinefficiencywouldhavebotheconomicandenvironmentalbenefits.Generation ofelectricityfromwasteheat,andthenetefficiencygainsfromit,couldbeusedtogeneratethe sameamountofelectricityusinglessfuel,ormoreelectricityforthesamefuelinput.Eitherway, therewouldbeaneconomicandemissionsbenefitfromusinglessfueltogenerateagivenamount ofelectricity.Calnetixestimatesthatusingwasteheatgeneration,andmaintainingcurrentpower output,ligniteplantsinNorthDakotacouldcollectivelyreduceCO2emissionsby1,200,000tonsper yearaswellasmeaningfullyreduceemissionsofSO2,NOx,andMercury.Thetablebelowliststhe emissionsprofileofeachligniteplantandthepotentialemissionsbenefitofwasteheatrecoveryat currentpoweroutputs.

Potential Emissions Savings from Waste Heat Recovery
ORC Potential (MWh) 205,216 99,410 148,683 166,234 278,041 16,990 914,573 Emissions (lbs/MWh) (1) CO2 SO2 Nox Mercury 2,447.2 2,572.1 2,462.9 2,411.8 2,640.5 2,500.0 2,505.7 4.1 8.1 20.5 11.1 7.6 5.0 9.4 4.1 7.9 4.8 9.0 3.0 5.0 5.7 63.7 98.5 70.6 98.1 98.6 90.0 86.6 Annual Savings (tons) SO2 Nox 419 401 1,524 919 1,062 42 4,368 425 395 359 750 413 42 2,384

Power Plant Antelope Valley Station Coyote Station Leland Olds Station Milton R. Young Station Coal Creek Station Heskett Station Total

CO2 251,100 127,845 183,094 200,463 367,083 21,238 1,150,823

Mercury 6,535 4,895 5,248 8,153 13,705 765 39,300

(1) Emissions data from EPA emissions tracking system; Calnetix estimates used for Heskeet Station

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 Therearetwomaineconomicbenefits.Thefirstbenefitrelatestocostsavingsfromlowercoalusage, withsavingsestimatedat$20/MWh.Thisrepresentstheestimatedmarginalcostofpower generation(i.e.,beforedistributionandtransmissioncosts).Thesecondbenefitrelatestopotential costsavingsfromafuturecarboncredittradingsystem.TheObamaAdministrationisproposinga planthatwouldrequireUSindustriestobuyacarboncredit(equaltoonetonofCO2emitted)for everytonofemissions.PointCarbon,anindustryresearchgroup,hasestimatedthattheObamaplan wouldcover80%ofUSbusinessesandresultinapriceof$13$20pertonofCO2.13 Forpowerplant operatorsinNorthDakota,thiswouldtranslateintohundredsofmillionsofdollarsofadditionalcost. Calnetixestimatesthatthroughutilizingwasteheatrecovery,NorthDakotasligniteplantscould savecloseto$35millionperyearfromlowercoalusageandlowercarbonemissions.Thisis estimatedonfuelsavingsaloneanddoesnottakeintoaccounttheavoidedcapitalcostfrom creatingnewcoalfiredcapacityatapotentiallyhighercostperkWhthanawasteheatsolution.The analysisisshowninthetablebelow.
Potential Economic Benefit
ORC Potential (MWh) 205,216 99,410 148,683 166,234 278,041 16,990 914,573 Efficiency Gains CO2 Savings Cost/kWh Savings/yr ($) $/Carbon credit Emission (tons) 0.020 0.020 0.020 0.020 0.020 0.020 4,104,311 1,988,203 2,973,655 3,324,676 5,560,814 339,809 18,291,468 13.70 13.70 13.70 13.70 13.70 13.70 251,100 127,845 183,094 200,463 367,083 21,238 1,150,823 Total Savings ($) 7,544,385 3,739,672 5,482,038 6,071,018 10,589,858 630,771 34,057,741

Power Plant Antelope Valley Station Coyote Station Leland Olds Station Milton R. Young Station Coal Creek Station Heskett Station Total

Savings/yr ($) 3,440,074 1,751,470 2,508,383 2,746,342 5,029,043 290,962 15,766,273

13

Forabovepurposes,Calnetixhasused$13.70/ton,thepriceassumedbyPointCarbonasthecostpertonof CO2emissionsin2012undertheObamaAdministrationFebruary2009capandtradeproposal.

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 SiteVisittoGREsCoalCreekStation SetoutbelowisasummaryofthetourtakenofCoalCreekStationinUnderwood,NorthDakota,mid November2008,byrepresentativesofCalnetix.CalnetixwashostedbyCharlieBullingerfromGRE. CoalCreekwascommissionedin197980andisownedandoperatedbyGreatRiverEnergy.The planthasatotalgenerationcapacityof1,200MWandconsumesapproximately22,000tonsoflignite coalperday.Setoutbelowarethesummaryfindingsfromthevisitastheyapplytoapotential wasteheatrecoveryapplication. 1. Sootblowerdrain:Steamtocleantheliningoftheboilersystemismoreimportantto ligniteplantsversusothercoalplantsandsignificantsteamdrainisavailableatover400F withabout15,000lb/hrfor600MWplant.Thiscouldbeconvertedtoelectricpower. 2. Fluegas:Assumingpowerplantefficiencyofaround30%,30%oftheinputenergyis dissipatedthroughthechimney.Thefluegastemperatureisaround350Fwithaflowof about1.8Macfm.Thiswasteheatisbeingcooleddowninawetscrubbersystemto170F. AtCoalCreek,aCalnetixwasteheatrecoverysystemcouldpotentiallycaptureabout60MW ofelectricpowerfromthisheatsource.Acloserstudywillbeconductedtoidentifythe challengesofinstallingheatexchangerstothisheatsource. 3. Flyash:Flyashiscollectedafterthehightemperaturefiringpointintheboilerandmixed withsometypeofliquidtotransfer.Thetemperatureoftheflyashisabove300F.This couldbeagreatheatsourceforaCalnetixwasteheatgenerator.

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4.

Other:Scrubbersludgehasalsobeenidentifiedasapossiblesourceofheat.Althoughthe temperatureisaround200Forlower,thisheatcanbeutilizedasaprewarmerofthe organicfluid.

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6.Qualifications Calnetix Establishedin1998,CalnetixInc(www.calnetix.com)designs,manufactures,andmarketsinnovative powergenerationproductsthathelpcustomerssaveenergyandmoney.Calnetixisheadquartered inSouthernCaliforniawithmanufacturingfacilitiesinCaliforniaandFlorida.Calnetixhasaglobal OEMcustomerbaseincludingShell,Honeywell,BritishPetroleumandMitsubishiHeavyIndustries. Calnetixscoretechnologiesincludehighspeedpermanentmagnetmotorsandgenerators,magnetic bearings,powerelectronics,turbinesandexpandersusedtodevelopsolutionsforcustomers includingendusesolutionssuchasmicroturbinesandwasteheatrecoveryunits.Calnetixhasan experiencedmanagementteamwithover100yearsofcombinedexperiencerelevanttowasteheat andgasopportunities.Calnetixowns100%ofitskeyIP,includingtradesecrets,manufacturing processes,and12patents. ApplicantRepresentative:GordonFoster(BusinessDevelopmentManager) Gordonhasovereightyearsexperienceinbusinessdevelopmentrelatedtotheenergyand alternativeenergyindustry.HeholdsaMastersofBusinessAdministrationdegreefromthe AndersonSchoolofManagement(UCLA)andaMastersofScienceaswellasBachelorsofScience degreeinMechanicalEngineeringfromTexasTechUniversityinLubbock,Texas. PrincipalInvestigator:ShamimImani(DirectorofEngineering) Shamimhasover10yearsofexperienceintheindustrydevelopingenergyrelatedproducts.Hehas workedextensivelywithandledmanydevelopmentsincludingflywheelsystems,turbochargers (automotiveandmarine),expanders,compressorsandmicroturbines.HeholdsaMastersofScience inElectricalEngineeringfromUniversityofCalifornia,LosAngeles(UCLA)andaBachelorsofScience

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degreeinElectricalEngineeringfromCaliforniaStatePolytechnicUniversity,Pomona(CalPoly, Pomona)andhaspublishednumeroustechnicalpapers.

ChuckTaylor(PresidentofApplicationEngineering) Chuckhasover30yearsexperienceinIndustrialRefrigerationbothonthecontractingsideand ontheengineeringside.HehasaBachelorsDegreeinMechanicalEngineering,aMasters DegreeinBusinessAdministrationandislicensedasaprofessionalengineerin38states.

PriortojoiningCalnetix,ChuckfoundedandranhisownrefrigerationengineeringfirmCRT Design.PriortoCRT,hespent20yearswithTheStellarGroupinJacksonville,Florida,Under Chucksleadership,Stellarrefrigerationdoubledinsizetobecomethelargestindustrial refrigerationDesign/BuildfirmintheU.S.

GreatRiverEnergy GreatRiverEnergy(www.greatriverenergy.com)isagenerationandtransmission(G&T)cooperative thatprovideswholesaleelectricserviceto28distributioncoopsthatservemorethan620,000 members.Itownsmorethan4,500milesoftransmissionpowerlinesandownsorcoownsmore than100transmissionsubstationsinMinnesota,NorthDakotaandWisconsin.

CharlieBullinger(SeniorPrincipalEngineer) CharliehasbeenwithGreatRiverEnergysince1977,currentlyholdingthepositionofSenior PrincipalEngineerinDryFining,Marketing,andEPRIR&D.HeisaProfessionalEngineerregisteredin boththeStateofNorthDakotaaswellastheStateofMinnesota.CharlieholdsaBachelorsof SciencedegreeinMechanicalEngineeringfromtheNorthDakotaStateUniversity.

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RichardGarmin(EngineeringProjectManager) RichpossesseseighteenyearsofUtilityExperience.HeiscurrentlyEngineeringProjectMangerfor approximately$500MinprojectscenteredinCentralNorthDakota,currentlyfocusedona$150M Scrubberinstallationprojectaswellasa$150MturbinegeneratorprojectattheStantonStation. PriortoGRE,RichworkedatPacifiCorpsWyodakplantasaLeadMaintenanceEngineer.Heholdsa MastersofBusinessAdministrationandProjectManagementdegreefromtheUniversityofMary, andaBachelorsofSciencedegreeinMechanicalEngineeringfromtheSouthDakotaSchoolofMines &Technology. HDR HDR(www.hdrinc.com)isanemployeeownedarchitectural,engineeringandconsultingfirmthat helpsclientsmanagecomplexprojectsandmakesounddecisions.HDRhasmorethan900staff dedicatedtoPowerandenergyprojects.HDRhashelpeddesignandconstructefficientand economicalpowerplantsformorethan90years.Asaleaderinrenewablepowerindustry,HDRhas beeninvolvedwiththedevelopmentofmorethan16,000MWofwindenergy. RogerW.Nagel,P.E. Rogerpossessesoverseventeenyearsofexperienceinthedevelopmentanddesignofpower generationandcogenerationprojects.Hehasbeeninvolvedwiththedesignofcombinedcycleand conventionalsteamplantsfueledwithgas,gasifiedLNG,oil,coal,pondfines,landfillgasand petroleumcoke.Experienceincludesinvolvementwithfeasibilitystudies,proformaanalyses, thermalcycledesign,systemdesign,equipmentspecificationandtechnicalequipmentcontract administration.

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 DavidP.Schmitz,P.E.RegionalPowerProgramManager Davidhasover35yearsofexperiencewithBasinElectricPowerCooperativewherehisrolesincluded plantengineer,projectengineer,projectcoordinator,projectmanager,managerofengineering,and VPofengineeringandconstruction.Experienceincludesoperations,engineeringandconstructionof largeligniteandPRBfueledpowerplants,engineeringandconstructionofhighvoltagetransmission linesandsubstations,andcombustionturbineunits,planningandexpansionofmicrowaveandfiber optictelecommunicationssystemsandkeyrolesinacquisitionandsubsequentmodificationstothe GreatPlainsSynfuelsplant.Hismostrecentprojectwasworkingonthedevelopmentofanewlarge baseloadpowerplantwithprimaryemphasisonsiteandtechnologyselection(especiallyIGCCvs SCPCandcarboncapture)anddevelopmentofapermittingstrategy.

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7.ValuetoNorthDakota. Assumingtheprojectisfullyfunded,Calnetixanticipatesthattheresultsofthedemonstrationwill showtechnicalviabilityof,andmarketopportunityfor,lowtemperaturewasteheatrecoveryat lignitepowerplants.TheseresultswillbevitalinallowingCalnetixtofurtherdevelopand commercializeitslargerunit.Theycouldalsobeusedbytheligniteindustrytoshowaneconomically feasiblewayofimprovingplantefficiencyanddecreasingnetemissions. BasedonthepreliminaryinvestigationconductedatCoalCreek,Calnetixestimatesthatatleast 200MWofextractablewasteheatisavailableforconversiontoelectricityattheplant.Assumingthe samenetheattoelectricityconversionrateof16%ofCalnetixscurrent100kWeunit,whichshould beabletobereplicatedinthelargerunit,anextra32MWofelectricitycouldpotentiallybe generatedatCoalCreekbyinstallingthelargerwasteheatunits.Thiswouldimprovetheoverall efficiencyoftheplantbyapproximately2.5%. Assetoutabove,therearesixLigniteCoalpowerplantsinNorthDakota,whichCalnetixestimates couldderiveanadditional915,000MWhofelectricityfrominstallationofwasteheatunitswithout additionalfuelcostsoremissionspenalties.14 AwasteheatrecoveryunitmayalsocontributetotheNorthDakotaRPSobjectives,andprovide potentialcostsavingsundertheObamaAdministrationsrecentlyintroducedcarboncapandtrade proposal.Atanestimatedcostof$13.70/tonofCO2,utilizationofwasteheatrecoveryonlignite powerplantsinNorthDakotacouldprovideasavingofapproximately$16m/yearunderthis proposal. 15
14 15

Seepage10above. Seepage10above.

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Calnetixbelievestheaboveefficiencyandsavingsbenefitscouldassistinkeepinglignitecoal economicalandcompetitiveasafuelsourceintothefuture. CalnetixalsointendstoproducethelargerwasteheatunitinNorthDakota,andestimatesthat (subjecttofunding)initialcommercialproductionunitsshouldbecommerciallyavailablewithin36 months.Asnotedabove,Calnetixcalculatesthatapproximately272,000GWhcouldbegenerated annuallyfromwasteheatsourcesfromthermalpowerplantsandindustrialprocessesintheUS alone.16 ProducingsufficientCalnetixunitstosupply10%ofthispotentialmarket(2501.5MWeunits peryearfor10years)isestimatedtocreateaNorthDakotabasedbusinessgeneratingrevenuesof over$950mperannumandemployinginexcessof500workers. 17

16 17

Seepage16above. CalnetixestimatesbasedoncurrentWHG100costsandproductionstaffing.

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8.Management. Calnetixwillassignaprojectmanagertoensurethattasksarecarriedoutonschedule,andthatthe objectivessetforthhereinwillbemetwithinthe22monthsallotted.Thisprojectmanagerwill coordinateactivitiesbyHDREngineering,GreatRiverEnergy,aswellasthoseactivitiesinternalto Calnetix.Theprojectmanagerwillalsomonitorthebudgetfortheprogramtoensureagainst overruns. AsdetailedinSection3(ProjectDescription),StepOneentailsasixteenweekprocesstoidentifyand quantifyheatsources,andvalidatethetechnicalviabilityofconnectingtheCalnetixunittothese sources.ThisstepprimarilyinvolvestheprojectmanagercoordinatingwithHDREngineeringto ensureexecutiononthespecifictasksasoutlinedbelow. Sitevisittoobtaindata,reviewconceptsandreviewexistingplantequipmentforpotential utilization. PerformancemodelingoftheexistingfacilitybeforeandaftertheadditionoftheWHG installationassuming1to2MW. Identificationoftechnicalrisksandriskmitigationstrategies. Developmentofcostestimatefortotalinstallation,includingallequipmentmodifications andgeneratorpricingaspredictedbyCalnetix. Developmentofahighlevelconceptualonelinediagramtorepresenttherequirementsfor theelectricaltieinfornewgeneration. Developmentofafeasibilitystudyreportdescribingtheproposedinstallationandincluding theresultsofalloftheaboveactivities. WithinStepOne,therearefourevaluationpoints(monthlyreviewmeetingstotrackprogress). Thesewillbeledbytheprojectmanagerwhoshallensurethatappropriatemilestonesarebeingmet. Duringthesereviews,anynecessaryadjustmentswillbemadetothetasks,especiallyasthetasks

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identifiedmaynotoccursequentially.Itwillalsobethetaskoftheprojectmanagertoensurethe feasibilitystudyreportisissuedontimeasthereportwillbethebasisofproceedingwithStepTwo.

StepTwoinvolvesinstallingandrunningthe100kWeCalnetixdemounitforproofofconcept.This willinvolvecoordinatingtheinstallationoftheunitonsite,followedbycontinuedmonitoringofthe unitonceoperational. Regardinginstallation,theCalnetixprojectmanagerwillcoordinatewithHDR,GREandinternal Calnetixengineerstodevelopaninstallationandsiteconstructionplanandschedule.Appointment ofsubcontractorsshallbemadeinconsultationwithGREanditisanticipatedthatinstallation progresswillbemonitoredbyGREwithfrequentsitevisitsbyCalnetixpersonnelduringthisperiod. Duringthetestingphase,theunitwillbecontinuouslymonitoredinrealtimebyCalnetixfromits facilityinFlorida(theunitwillhaveitsownIPaddressandcandownloaddatainrealtimeonsite). ThisinformationwillalsobeavailabletoGREandHDR.Ifnecessary,reviewmeetingswillbecalled.

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MaintenanceontheunitduringthetestingphasewillbecarriedoutbyCalnetixoroneofits authorizeddistributorsinaccordancewiththeprescribedmaintenanceschedulesfortheWHG100. Quarterlyreportsonunitperformance,aswellasthefinalreport,willbepreparedbyCalnetixand distributedamongthepartiesincludingtheLRCaccordingtothechecklistandtimetablebelow.

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9.Timetable. Theproposedtimelinefortheprojectissetforthbelow.Theprojectisdividedintotwostepsandis basedontheassumptionthatLRCfundingwillbemadeavailablebytheendofMay2009inorderto commencetheprojectbyJune1. StepOneinvolvestheidentificationandvalidationofwasteheatsources.Thedetailsregardingthe stepscanbefoundintheProjectDescriptionsectionabove.Theprojectedtimelineis16weeks therebyplacingthecompletiondateattheendofSeptember. TwomonthsintoStepOne,areportwillbesubmittedtotracktheprogressofthestudyincludingan updateonanyforeseeablechangesinthefuturetimeline.AttheendofStepOne,aninterimreport willbesubmittedwiththestudyresultsand,shouldstudyresultssupportproceedingtothenext phase,arequesttofundStepTwo.Shouldthestudyresultsnotsupportproceedingwiththedemo, thereportsubmittedattheendofSeptemberwillbethefinalreport.

StepTwoinvolvesthedemonstrationoftheCalnetixWHG100demounit.Theunitwillberunfor12 monthscontinuouslyinordertovalidatetheconcept.Thescheduleisbasedontheassumptionthat fundsfromtheDOEwillbemadeavailablebyNovember1,allowingCalnetixtostartontheactivity. Oncefundingisavailable,equipmentwillbepurchasedwithanexpectedleadtimeoftwomonths forreceipt.Oncetheequipmentisreceived,itisanticipatedtheinstallationprocesswilltakeanother

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twomonths.Basedonthistimeline,thedemonstrationcanstartfunctioningbythebeginningof March2010.Duringthe12monthdemonstrationperiod,eachquarteraprogressreportwillbe submitted,followedbyafinalreportthatwillbegeneratedbasedonthedatagatheredthroughout thosetwelvemonths.

Followingcompletionofthedemonstration(i.e.after12months),CalnetixandGRE,inconsultation withtheLRC,willmakeadeterminationoftheongoinguseoftheunit.Thiscouldincludecontinued demonstrationoftheunitatCoalCreek,makingtheunitavailableforinstallationanddemonstration atafacilityoperatedbyanotherLRCmember,orsaleoftheunitinordertomakeapartialrefundto theLRCofgrantmonies.

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10.Budget ThebudgetforStepOneisacombinationofanottoexceedestimateof$80,000forengineering consultingservicesprovidedtoCalnetixbyHDREngineering,directcostsincurredbyCalnetixin supportingtheprojectandprovidingengineeringservicesfordesignandinstallationofapotential largeunit,andinkindcontributionsfromGREofsalariedpersonnelwhowillbespendingtimeand resourcesontheproject.Thebudgetusesastandardengineeringhourlyrateof$165/hourfor CalnetixandGREresources. AbreakdownofthesecostsinrelationtoStepOneisasfollows:

WasteHeatRecoveryforLignitePowerPlantsStepOneIdentification&Validation 2009 Kickoffmeeting Responsibility Calnetix GRE HDR Calnetix GRE HDR Calnetix GRE HDR Calnetix HDR Resource 2 2 Hours 10 10 Inkind Direct Cost $1,650 $1,650 fixed 3 2 20 20 $3,300 $3,300 fixed 2 2 20 20 $3,300 $3,300 fixed 50 $8,250 fixed 1to2mo 1dayea. 2days Duration 1day

SitevisittoCoalCreektoobtaindata

Reviewmeetings

FacilityandWHRPerformanceModeling

RiskIdentification ProcessFlowdiagrams CostEstimate

HDR HDR Calnetix HDR Calnetix HDR Calnetix Calnetix GRE HDR

50

fixed fixed $8,250 fixed $3,300 fixed $4,950 $20,000 $20,000 fixed

2weeks 1to2mo 1to2mo

ProgressReport

20

7Aug

InterimReport(towrapupStep1) Administration(includingtraveletc)

30

16Oct

Totalinkind 50 $28,250 TotalDirect(includesHDRnottoexceed$80,000) GrandTotal

$133,000 $161,250

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ThebudgetforSteptwoisacombinationofhardware/equipmentcosts,onsiteinstallationcostsand additionalengineeringfromHDRandcontributionsfromCalnetixandGRE,usingthesame assumptionsregardingCalnetixandGREhourlycostsasStepOne. AbreakdownofStepTwocostsisasfollows:

WasteHeatRecoveryforLigniteCoalFiredPlantsStepTwoDemonstration Responsibility Hours Inkind Direct Cost Duration

Step2Demonstration Install100kWunit,heatexchangersonsite Calnetix $501,195 4mo Monitor2 hoursper day Monitor2 hoursper day 4reports 29Apr

Testperiodfor12months

GRE

520

$85,800

Calnetix Interimreports FinalReport Administration Calnetix Calnetix Calnetix GRE Totalinkind TotalDirectCost GrandTotal

520 80 40 100 160

$85,800 $13,200 $6,600 $16,500 $26,400 $112,200 $623,295 $735,495

TherequestedStepOnegrantof$80,000willprimarilysupportthecostsofHDREngineering,and CalnetixandGREwillmeettheirowncosts.TherequestedStepTwograntof(nottoexceed) $250,000willpayaportionofthecapitalequipmentcostsrelatedtothedemonstrationalongside matchingfundsfromtheDepartmentofEnergy.

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ThefundingrequestedisnecessarytoachievetheprojectsobjectivesaswithoutLRCsupport,itis unlikelythatCalnetixwouldseektoundertakeperformancemodelingofitsunit,orundertake demonstrationtesting,atalignitepowerplant.Inaddition,withoutLRCsupport,Calnetixanticipates thatcommercializationofthelargerunitwouldbedelayedandmaypotentiallynotbedesignedina formsuitableforinstallationatthermalpowerplants.

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11.Matchingfunds AtStepOne,Calnetixhasobtainedanottoexceedquoteof$80,000fromHDREngineeringaspart ofanoverallestimatedcostof$161,250.Theremainingfundswillbeprovidedbythedirect resourcesofCalnetix(engineeringandadministration),andinkindresourcesofGRE(engineering, plantaccessandadministration)whoshallbeinvolvedintheprojectonadaytodaybasis.Assigning thesepersonneltothisprojectrepresentsoutofpocketandopportunitycostsforCalnetixandGRE. If,foranyreason,theoverallcostsoftheproject(includingexpensesofHDREngineering)aregreater thantheestimated$161,250setforthinthisapplication,Calnetixwillpaythedifferencedirectlyin ordertoensurethatthisstepiscompleted. AtStepTwo,matchingfundswillbeprovidedbytheDOEfundingcurrentlybeingsoughtbyCalnetix, aswellasfurtherdirectresourcesprovidedbyCalnetixandinkindcontributionsfromGRE.In addition,CalnetixshallapplymostfavorednationpricingtotheWHG100demonstrationunittobe installedonsite,suchthatiftheunitisbeingsuppliedtoanothercustomerofCalnetixatapriceless thanthatsetforthinthisapplicationsuchpriceshallalsobeappliedwhensupplyingthatunittothe project.

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12.TaxLiabilityAffidavit

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13.ConfidentialInformation. N/A

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