Combined Heat and Power: Introduction to the Technology and its Uses

Glenn Mauney Southern Alliance for Clean Energy

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About SACE
Southern Alliance for Clean Energy is celebrating 25 years as a leading advocate for clean, responsible energy choices. Looking to the future, SACE is even more committed to the preservation, restoration and protection of our environment.
For more information, please visit

www.cleanenergy.org

Why Combined Heat and Power?

CHP technology can reach 90% efficiency in combined electricity and thermal generation Emissions Reductions: Its the unsung pollution control technology As compared to separate generation, CHP can reduce CO2 over half, and significantly reduce SOx and NOx emissions

Why Combined Heat and Power?

Doubling CHP use nationwide by 2030, a very achievable goal, would add 1 million new jobs Energy Independence and Security

What is SACE doing?

Collaborating with environmental, state, industry & utility allies: Regulatory concept for gas & electric energy efficiency programs Advancing CHP in the Tennessee Valley and the Carolinas NC CHP Initiative

CHP: Using energy twice to reduce cost and emissions

Presentation to Southern Alliance for Clean Energy webinar on CHP

Thomas R. Casten,
Chairman Recycled Energy Development, LLC

September 28, 2011

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Presentation Summary
Relationship of standard of living, environmental impact of energy production and value of efficiency Electricity generation is 33% efficient, has not improved for 50 years, while good CHP is 80% efficient Deploying optimal CHP would stimulate $500 million of investment, cut U.S. fuel and CO2 by 20% and produce 20% plus return on investment Regulations are changing to encourage CHP

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The CHP Story Conclusions

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Energys Impact on Standard of living and Environment

Standard of living is a function of access to useful energy services: Useful energy services include comfortable and lighted spaces, energy embodied in goods and services, refrigeration, and moving goods and services. Environmental damage is a function of how much fossil fuel is burned The U.S. burns 8 units of fuel per unit of useful energy services, wasting 7 units, or 12.5% efficiency Some countries burn 5 units of fuel/unit of useful energy Replacing obsolete central generation with optimal CHP would cut U.S. emissions and fuel costs by 20% and significantly boost manufacturing competitiveness.

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Fuel to useful energy services since 1900 (Courtesy of Dr. Robert U. Ayres)

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Fuel to useful energy services since 1960

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Electricity generation is the largest source of CO2 and growing

50%

% of US CO2 Emissions

40%

30%

20%

CO2 Emissions by the U.S. Electric Power Sector

10%

0%
1950 1960 1970 1980 1990 2000

Source:

RED calculations based on data from Emissions of Greenhouse Gases in the United States 2007; State Energy Data Report; and Annual Energy Review. -7www.recycled-energy.com

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Inefficient heat and power generation responsible for two-thirds of CO2

Emissions of U.S. CO2 from Fossil Fuels Heat & power account for 69% of fossil fuel emissions Efficiency has been flat for 50 years

Source:

RED calculations based on data from the U.S. Energy Information Agency and the U.S. Department of Transport -8www.recycled-energy.com

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US electricity generation is inefficient and has not improved in 5 decades

System wastes energy Wasted energy Inflates costs Increases pollution

Why stagnant for 50 years?

U.S. Delivered Electric Efficiency

Source: U.S. Energy Information Agency RED | the new green -9www.recycled-energy.com

Generation inefficiency the elephant in the room

Im right there in the room and no one even acknowledges me

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The Energy/Carbon Story

Conclusions

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Combined Heat and Power Defined

1978 Public Utility Policy Regulatory Policies Act (PURPA) defined Cogeneration (AKA CHP) as, The simultaneous production of electricity or mechanical energy and useful thermal energy Topping Cycle: Produce electricity/mechanical energy, then recycle exhaust into useful thermal energy Examples: engine and turbine generation with exhaust heat recovery, high pressure steam through backpressure turbine generator and then process Bottoming Cycle: Produce process thermal energy first, then recycle waste energy stream into electricity Examples: hot exhaust from glass, lime, cement, metals, chemical manufacturing or gas compressor stations to boil water and drive steam turbines, burning flare gas from Blast furnaces, refineries to boil water and drive steam turbines

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CHP advantages over central electricity-only generation

CHP does two jobs with one fire, increasing delivered efficiency from grid average of 33% to 80% or higher CHP eliminates line losses on power it produces and, by lowering current flow reduces line losses on remaining central generation CHP eliminates much of water use; instead of condensing steam, low pressure steam is sent to host for process use.

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Whats wrong with electricity only generation?

The best electricity-only generation wastes 50% of input energy The average U.S. central plant wastes 65% of input energy Good CHP cuts net fuel per kilowatt-hour in half, using all but 10% to 20% of fuels energy. Remote generation causes line losses and requires expensive T&D: 2010 U.S. 6.5% line losses cost $26 billion and were responsible for 185 million tons of CO2. Peak line losses up to 25%, so at peak, system: Generates 1.3 MWh for every 1 MWh to users Requires 1.3 MW of T&D for every MW of peak load CHP could cut line losses by 50% to 60%, eliminate need for 100 gigawatts of peaking capacity

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Why does power industry build electricity-only plants?

Simplifies transaction, one large central plant versus many small CHP plants, no need to negotiate multiple contracts to sell thermal energy or to purchase waste energy streams Regulatory system does not reward efficiency History favored remote central electricity generation: Local coal plants were bad neighbors, easier to build remote generation, even though this killed waste energy recycling Coal without mandatory pollution control was least cost fuel No natural gas or gas turbines were available Local generation cut utility sales and profits and weakened the logic for continued monopoly protection of generation Building new transmission used to be easy, and the capital went into rate base and increased utility profits.

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Homer Simpsons power plant Springfield, ?

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Electricity generation plant Craig, CO

Two-thirds of the energy generated is released into the atmosphere

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Conventional electricity generation 1960 (& 2009)

Fuel 100% Waste Heat 65% Line Losses 2% Useful Power 33% Pollution

Fuel
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Generation
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Transmission

Consumption
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CHP, using energy twice

Local generation producing heat and power
Fuel 100%
Waste Heat

20%

Pollution
Useful Thermal Energy 47% Useful Power 33%

Reduces Line Losses

80% Efficient

Recycle Waste Heat

Fuel
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Combined Heat and Power Plant

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Recycling industrial waste energy: Cost effective clean energy

Saved Energy Input

Electricity

Energy Recycling Plant

Finished Goods

Process Fuel

Waste Energy

Electricity Steam Hot Water

End User Site

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We have proven this thesis:

275 projects, 11,000 MW, with double conventional efficiency

Industrial Waste Heat Recovery 14 Projects

Steam Pressure Recovery 190 Projects Combined Heat & Power 56 Projects

U.S. Delivered Electric Efficiency

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Silicon Furnace Alloy WV

This $250 million project will recover 65 MW, equivalent to 325 MW solar that would cost $1.6 billion

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Glass plant waste energy

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Using energy twice Recycled CHP

Use waste heat to make steam, drive a turbine generator, and supply thermal energy to dairy across the road.

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Recycling industrial waste energy

Cokenergy Mittal Steel, Northern Indiana

Produces as much clean energy each year as all grid-connected photo-voltaic solar generation produced in 2004

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CHP/WER is least cost new generation

Average 2009 Retail Cost

CHP using energy twice

All-in Cost of Clean Energy Generation* US$ per delivered MWh

* Includes T&D, line losses, backup generation and subsidies RED | the new green - 26 www.recycled-energy.com

Only CHP CO2 reduction is currently profitable to society

CHP using energy twice

Cost of reducing CO2 vs. old Coal US$ per ton

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CHP can balance wind variability and free up transmission

Grid managers must match generation to load every second there is no cost-effective way to store electricity at grid levels Wind generation is fuel and CO2 free, but varies dramatically, creating balancing problems for grid managers Oversized CHP can ramp up quickly and provide spinning reserves for wind without fuel penalties Wind growth blocked by lack of transmission capacity Two major studies say U.S. needs 10,000 to 15,000 miles of new transmission lines, but past ten years average build was 62 miles per year. CHP can provide voltage support to reduce line losses, and by generating load near users, free existing wires to carry more wind power.

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CHP/spinning reserves versus conventional approaches

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CHP/spinning reserve savings versus conventional wind backup

To back up a 120 megawatt wind farm with spinning reserves: Using part-loaded electricity-only plant burns an incremental $4.3 million of natural gas per year Using the same turbine in CHP mode, with the part load waste heat displacing host boiler fuel saves $7.7 million per year, a difference of $12 million per year CHP/spinning reserve support of wind farm saves society up to $34 per MWh of wind generation

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U.S. CHP potential

U.S. EPA study identified 64,000 MW potential to recycle waste energy in 16 industries U.S. DOE study identified 150,000 MW potential for fueled CHP that replaces thermal generation with waste heat from new electricity generation The World Alliance for Decentralized Energy (WADE) said CHP could reduce U.S. CO2 by 20% and save $80 to $100 billion/year Replacing obsolete (and old) central generation with good CHP would substitute $350 to $500 billion of capital to save $80 to $100 billion per year, or a 4.2 to 5 year payback ~ 20% to 22% unlevered return on investment to society.

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Is there something wrong with the CHP thesis?

If CHP truly has all these advantages, then why havent we already replaced all of the more expensive generation? Something must be wrong with this thesis Something is wrong, but not with the CHP thesis. Obsolete policies have long kept CHP from monetizing the values it provides to society Until recently, no tax credits, no renewable energy credits, no payment for reducing T&D capital or line losses, and then clean CHP had to compete with old dirty coal Each policy barrier is under attack, with much progress, making CHP cost effective across the U.S. Policy makers are increasingly asking why electric efficiency has been stagnant for 50 years. CHPs day is coming.

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The Energy/Carbon Story The CHP Story Conclusions

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Conclusions

Optimal CHP deployment would require $500 billion of investment, save $80 to $100 billion per year, produce above market ROE of 20% to 35% and cut U.S. CO2 by 20% Changing regulations allow CHP to help manufacturers and commercial complexes save money, reduce their environmental footprint, and improve their competitive position. Governance is being improved, though efforts by SACE and others, and new rules increasingly make efficiency the fuel of the future.

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For more information, see my 1998 book, Turning Off the Heat, Prometheus Press

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Thank you
For more information: www.recycled-energy.com, or Email Tom Casten tcasten@recycled-energy.com, or Call 630-590-6030

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