Combined Heat & Power What, Why, & How? 5/25/16

1 2014 Energy Solutions Center Inc. All Rights Reserved Combined heat & Power What, Why, & How? 5/25/16 An overview of CHP for Commercial & Industrial Facilities Eric Burgis, Energy Solutions Center 2 Energy Solutions Center Inc. All Rights Reserved What is Combined heat & Power Terminology? CHP Market Overview Why consider CHP vs. Conventional Power Generation? How DO We Generate Power ? Economics and Incentives Presentation Outline 3 Energy Solutions Center Inc. All Rights Reserved What is CHP? Terms & Market Overview 4 Energy Solutions Center Inc. All Rights Reserved Combined heat and Power (CHP) is the sequential / simultaneous production of two different forms of useful energy from a single input energy Single primary fuel source natural gas Fully integrated system produces usable heat as well as Power (either electricity or shaft Power ) aka: Cogeneration What is CHP ?

2 5 Energy Solutions Center Inc. All Rights Reserved CHP systems consist of an integrated package Prime mover engine, turbine or fuel cell Generator heat recovery system Electrical interconnections Components of CHP 6 Energy Solutions Center Inc. All Rights Reserved Spark Spread = Cost of Electricity from the grid Cost of electricity from CHP If the spark spread is negative, then it is cheaper to buy electricity from the grid If it is positive, then it is advisable to run the CHP system CHP works really well in areas where the spark spread is 3 or greater. MN Spark spread is over 4. Spark Spread Calculation 12 Energy Solutions Center Inc. All Rights Reserved Spark Spread > 4 Spark Spread 3-4 Spark Spread 2-3 Based on 2012 retail commercial energy rates from EIA. Spark Spread Ave. retail commercial energy rates for MN per EIA ($/MMBTU): Gas = $ Electric = $ ($.)

3 0884/kwh) MN Spark Spread = 8 Energy Solutions Center Inc. All Rights Reserved Interconnection standards includes the technical requirements and the legal procedures whereby a customer-sited generator interfaces with the electric grid. Generally, the electric distribution utility must review and approve a proposed DG system within a framework established by the state s public utilities commission. MN has state policies in place related to interconnection that the electric utilties must adhere to. Interconnection 9 Energy Solutions Center Inc. All Rights Reserved Net metering is a service to an electric consumer under which electric energy generated by that electric consumer from an eligible on-site generating facility and delivered to the local distribution facilities may be used to offset electric energy provided by the electric utility to the electric consumer during the applicable billing period Net metering allows the consumer to spin the meter backwards and put Power back on the grid at times when more Power is being produced than consumed MN Allows net meeting up to 40KW which is credited to the next bill at retail rates.

4 Net Metering 10 Energy Solutions Center Inc. All Rights Reserved North American Natural Gas Production Source: #release=IEO2011&subject=0-IEO2011&table =6-IEO2011&region=0-0&cases=Reference-05 04a_1630 0510152025303540200520102015202020252030 2035 Volumes (Tcf) Mexico Canada UnitedStatesHistoric Projected The Time is Right for CHP From wide range of sources - Gas prices are stable. Plenty of gas for the future. Good Signs for success of CHP ! 11 Energy Solutions Center Inc. All Rights Reserved Average Gas vs. Electric Pricing *EIA data. Uses 1032 BTU/CF Natural Gas and 3412 BTU/KWH Electric. $- $ $ $ $ $ $ $ $/MMBTU Average Retail Energy Prices ElectricNatural Gas12 Energy Solutions Center Inc. All Rights Reserved Payback Analysis varying the price of natural gas & electricity engine sizes for electrical load General Rule of Thumb for CHP $5 $6 $7 $8 $9 $10 $11 $12 $13 $14 $ $ $ $ $ $ $ $ $ $ Electricity Price, $/kWh Natural Gas Price, $/MMBtu Greater than 5-year payback Less than 5-year payback *From GE Presentation; The Business Case for CHP, 5/3/12 13 Energy Solutions Center Inc.

5 All Rights Reserved Best Applications for CHP High coincidental thermal and electric loads Long operating hours Central heating and cooling system Minimal electric distribution connections Favorable cost of natural gas relative to cost of buying electric Power from grid (Good Spark Spread) Combined heat & Power Energy Solutions Center Inc. All Rights Reserved Why Consider CHP vs. Conventional Power Generation? Market Overview 15 15 Energy Solutions Center Inc. All Rights Reserved Commercial Buildings Need Power & heat Space Heating 27% Lighting 14% Space Cooling 11% Water Heating 7% Refrigeration 5% Electronics 3% Cooking 2% Ventilation 6% Computers 2% Other 13% Undistributed 11% Source: U. S. Department of Energy, 2011 Buildings Energy Data Book Energy Use in Commercial Buildings ( Electric, hot water, heating, & cooling be supplied through CHP ) 16 Energy Solutions Center Inc.

6 All Rights Reserved CHP An Important Resource CHP at almost 4,000 industrial and commercial facilities About 10% of Power generating capacity. Avoids 241 million metric tons of CO2 Source: ICF B. Hedman 71% Fueled by Natural Gas 17 Energy Solutions Center Inc. All Rights Reserved Combined heat & Power (CHP) Source: CHP: The State of the Market October 2011 by Bruce Hedman of ICF Current CHP Installations in the United States 18 Energy Solutions Center Inc. All Rights Reserved MN Nat Gas CHP Installations City Organization Facility Application Prime Mover Size (KW() International Falls Boise Cascade Corporation Boise Cascade Corporation Pulp and Paper B/ST 29,200 St. Paul Rock Tenn Rock Tenn St. Paul Facility Pulp and Paper B/ST 12,000 Cottage Grove Cogentrix/ LSP Cottage Grove, LP 3M Plant Chemicals CC 251,000 Ottawa Center Point Energy Center Point Energy Misc.)

7 Manufacturing CT 1,250 Minneapolis Center Point Energy Dakota Station Misc. Manufacturing MT 90 New Ulm New Ulm Public Utilities Comm New Ulm District Energy B/ST 21,000 St. Paul Schmidt Artists Lofts Schmidt Artists Lofts Office Buildings MT 65 Coon Rapids YMCA Coon Rapids YMCA Coon Rapids Amusement / Recreation MT 90 Burnsville Center Point Energy Fairview Ridges Hospital Hospitals / Healthcare ERENG 150 Rochester Mayo Clinic Mayo Clinic Hospitals / Healthcare CT 5,200 Rochester Franklin Heating Station Franklin Heating Station Hospitals / Healthcare B/ST 11,750 Minneapolis Foster Wheeler Twin Cities, Inc. University Of Minnesota Plant Upgrade Colleges / Univ. B/ST 16,200 Cloquet Fond du Lac Tribal and Community College Community College Colleges / Univ. MT 30 Maplewood Capstone Turbine Corporation Ramsey County Correctional Facility Justice / Public Order MT 90 19 Energy Solutions Center Inc.

8 All Rights Reserved CHP Potential in the Commercial Market - 200 400 600 800 1,000 1,200 1,400 1,600MW CHP Potential at Existing Commercial Facilities - 2011 Source: Combined heat and Power Policy Analysis and 2011-2030 Market Assessment - by ICF February 2012 20 Energy Solutions Center Inc. All Rights Reserved Why Combined heat & Power ? Help Stabilize the Grid Economical Efficient Quality Power Environmentally Sound Conventional Power Generation Conventional Power Generation vs. Combined heat & Power 21 Energy Solutions Center Inc. All Rights Reserved Transmission and Distribution Congestion Constraints Continue to Increase 9,000 MW > 7,000 MW < 8,000 MW Generation: (Growing) Transmission & Distribution: (?????) Load: (Growing) Reducing electric demand helps stabilize the grid and reduces the need for costly transmission and distribution upgrades 22 Energy Solutions Center Inc.

9 All Rights Reserved Source: IEEE Web Site Illustration: Emily Cooper Electric Grid Reliability Is DECLINING IEEE Data Outages > 100 MW Outages Affecting > 50,000 Customers 1991-1995 66 41 1996-2000 76 58 2000-2004 156 149 2005-2009 264 349 23 Energy Solutions Center Inc. All Rights Reserved CHP is good for business - Economical Improves overall energy efficiency and fuel utilization - thereby lowering electric and overall energy costs Offers reliability during outages less downtime Enhances Power quality Equipment to meet virtually every need size to fit your need Combined heat & Power 24 Energy Solutions Center Inc. All Rights Reserved Source to Site Efficiency Reduce Generation Losses and T&D Line Losses with CHP 2013 AGA Policy Handbook 25 Energy Solutions Center Inc. All Rights Reserved CHP is Efficient Emissions from Gas versus Coal Power Average emission intensities (in units of g/kWh) CO2 Coal Power Combined Cycle Gas Coal emits 915 g(CO2)/KWH Gas Combined Cycle emits 404 g(CO2)/KWH Note that all emission intensities for all Power production energies has dropped between 1997 and 2012 due to tighter emissions control.

10 Power from Gas Combine Cycle plants emit 44% that of what coal Power emits. 28 Energy Solutions Center Inc. All Rights Reserved Reduced Emissions of CO2, NOx and SO2 from Power Plants Due to the Switch from Coal to Natural Gas with Combined Cycle - NOAA Earth System Research Laboratory, Boulder, CO, USA 27 Energy Solutions Center Inc. All Rights Reserved Excel spreadsheet available at: EPA CHP Emissions Calculator 28 Energy Solutions Center Inc. All Rights Reserved Groups you typically run into when trying to build a new Power plant: NI M BY: Not in My Back Yard Banana: Build Absolutely Nothing Anywhere or Near Anybody Cave: Citizens Against Virtually Everything CHP is a Crowd Pleaser Compared to the Alternative Neighbors don t generally challenge a business looking to install CHP. 29 Energy Solutions Center Inc.