April 20, 2016 | 1

Duct Fired Combined Heat & Power (DF-CHP): profitably produce steam

Resourcing the world

www.veolia.com

Suresh Jambunathan,

Director of Business Development,

Veolia North America

Cell: 630-335-4544

E-mail: Suresh.Jambunathan@veolia.com

April 20th, 2016

Location: Ernst Morial Convention Center

New Orleans, LA

April 20, 2016 | 2

Learning Outcomes

Efficiency & flexibility hedges against price & load volatility; being green is not a conflict between your wallet and your conscience.

Plan carefully for utilities when contemplating process plant expansion or new build

Duct Fired Gas Turbine Combined Heat & Power (DF-CHP) is a financially attractive, technically feasible and sustainable alternative to

package boilers to an industrial site’s power & steam needs.

A Duct Fired Combined Heat & Power (DF-CHP) system is a steam boiler that can profitably generate power

April 20, 2016 | 3

Veolia: Resourcing the world www.veolia.com

• Celebrating 160+ years and today we operate on

every continent except Antarctica

• Revenue:$30

• Employees: 175,000

• 3-core businesses

• Energy Services

• Water Management

• Waste Management

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Veolia: the leader in North America www.veolianorthamerica.com

April 20, 2016 | 5

Selected headlines: US manufacturing may be rebounding.

April 20, 2016 | 6

“Trendy” processes hog headlines, but “dowdy” utilities are essential

UTILITIES: the flip side of a process

• Power

• Thermal Energy delivered as

steam

hot water

thermal oil

refrigerant

• Compressed air

• Lighting

• Insulation

• Water – surface & sub-surface

• Wastewater treatment: anaerobic & aerobic

ACME Chemical Co:

Boss: We’re investing $$$$$$$ to build process XYZ

Assistant: What about utilities?

Boss: Utilities?......... Just get it done

Assistant to Plant Manager: Get it done

Plant Manager:

Picks a package boiler from the “Bigger & Better Boiler” company

Pays ungodly $$ to electric utility to upgrade electrical substation

Rule of Thumb:

$$$Utilities = 10% to 40% of $$$Process

April 20, 2016 | 7

Combined Heat & Power (CHP) at University of

Massachusetts, Amherst, MA.

Efficiency >80%

Traditional central power generation.

Efficiency ~35%.... burning money up the stack

Uscommunityenergyguidehi.pdf community energy: planning, development and delivery, IDFA pub.

Michael king 2012

Energy efficiency vs. waste… the energy recycling advantage

April 20, 2016 | 8

Key utilities (power & steam): Two choices… one is arguably better

Package boiler

Nameplate rating:

125 Kpph

150 psig

ή ~83% LHV

FSF~ 1,360 Btu/lb

Natural gas

136 MMBtu/Hr

Steam @ 100 psig

Process

steam

load

Gas Turbine

HR: 12.2

MMBtu/MWh

Steam

700 psig / 700F

Nat. Gas to GT

50 MMBtu/Hr

HRSG*

Nameplate

125 Kpph

750 psig

750 F

STG rating

4 MW100 psig, 100 Kpph

Process

steam

load

ST power, 3.7 MW

GT power 4.0 MW

stack gas

Nat. gas to Duct Fire

98 MMBtu/Hr

stack gas

Deaerator

60% condensate @ 180F

40% makeup @ 60F

BFW @ 5 psig / 225F

100 Kpph

Blow-down.

Deaerator

Blow-down.

60% condensate @ 180F

40% makeup @ 60F

Package boiler system:

Safe ……… but unimaginative

Steam: from boiler

Power: from grid

Duct Fired Combined Heat & Power (DF-CHP):

Safe & imaginative plus profitable

Steam: from CHP

Power: from CHP (grid provides back-up)

STG: Steam Turbine Generator; HRSG: Heat Recovery Steam Generator; FSF: Fuel to Steam Factor

A Duct Fired Combined Heat & Power (DF-CHP) system is

a steam boiler that can profitably generate power

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Key utilities (power & steam): Ultra-efficient DF-CHP gains over plain boiler

Design point results

(100 Kpph / 100 psig)

Package

boiler system

Duct fired

CHP systemDifference

Fuel required

MMBtu/Hr, LHV136 148 12

Net onsite power,

MWn/a 7.7 7.7

Fuel-to-Steam Factor

(FSF), MMBtu/Klb1.36 1.46 0.10

CHP Heat Rate, LHV

MMBtu/MWhn/a 4.5 4.5

*Net operational cost

of steam, $/Klb$7.3 $4.9 ($2.4)

Fuel cost of power,

$/MWhn/a $22.3 $22.3

*DF-CHP: ultra-efficient power for just 1.5 MMBtu/MWh

Package boiler

Nameplate rating:

125 Kpph

150 psig

ή ~83% LHV

FSF~ 1,360 Btu/lb

Natural gas

136 MMBtu/Hr

Steam @ 100 psig

Process

steam

load

Gas Turbine

HR: 12.2

MMBtu/MWh

Steam

700 psig / 700F

Nat. Gas to GT

50 MMBtu/Hr

HRSG*

Nameplate

125 Kpph

750 psig

750 F

STG rating

4 MW100 psig, 100 Kpph

Process

steam

load

ST power, 3.7 MW

GT power 4.0 MW

stack gas

Nat. gas to Duct Fire

98 MMBtu/Hr

stack gas

Deaerator

60% condensate @ 180F

40% makeup @ 60F

BFW @ 5 psig / 225F

100 Kpph

Blow-down.

Deaerator

Blow-down.

60% condensate @ 180F

40% makeup @ 60F

* Net OpEx cost of steam reflects fuel cost, credit from onsite power and O&M costs of both systems

*Compared to DF-CHP, fuel-to-power efficiency (MMBtu/MWh) of

Combined Cycle system ~ 7.0

Simple Cycle power system ~ 10.0

April 20, 2016 | 10

Package boiler efficiency varies with load; sizing & optimal design point?

40% load

Efficiency: 73%

100% load

Efficiency: 83%

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DF-CHP is a better alternative: Duct fire to efficiently & rapidly follow load

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0.0

2.0

4.0

6.0

8.0

10.0

12.0

14.0

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

40 50 60 70 80 90 100

GT

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ow

er

Fact

or,

SP

F (

Klb

/MW

)

Effi

cie

ncy

, %

Process steam load, Kpph

High duct firing CHP efficiency consistently exceeds boiler efficiency, %

Boiler efficiency, % GT CHP efficiency, % GT-CHP Steam:Power Factor, SPF (Klb/MW)

ήDF-CHP > ήboiler across the load curve. CHP Steam-to-Power Factor tracks load

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Higher marginal efficiency of duct firing converges fuel burned per lb steam

60

70

80

90

100

110

120

130

140

150

1.3

1.4

1.5

1.6

1.7

1.8

1.9

40 50 60 70 80 90 100

Tota

l F

ue

l b

urn

ed

, M

MB

tu/H

r, L

HV

Fu

el-

to-S

tea

m F

act

or,

FS

F, M

MB

tu/K

lb

Process steam load, Kpph

High duct firing converges Fuel-to-Steam factor (MMBtu/Klb) for boiler and DF-CHP systems

Boiler FSF MMBtu/Klb GT CHP FSF, MMBtu/Klb Boiler Fuel, MMBtu/hr GT-CHP fuel, MMBtu/Hr

April 20, 2016 | 14

What about economics? simplified assumptions

Process operations: 8,322 hrs/year

Process steam load: 40 to 100 Kpph @ 100 psig

Delivered natural gas: $3/MMBtu, HHV

Delivered grid power: 6.5 ¢/KWh ($65/MWh)

Full load package boiler efficiency : 83% LHV

Gas Turbine heat rate (4.2 MW Centaur 50): 12,200 Btu/KWh, LHV

Feedwater to DeAerator 100F

Operations & Maintenance costs:

GT: $10/MWh

Package boiler: 35 to 40 ¢/Klb

HRSG: 35 to 40 ¢/Klb

April 20, 2016 | 15

Significant and consistent savings with DF-CHP

$0

$500

$1,000

$1,500

$2,000

$2,500

$3,000

$0.0

$1.0

$2.0

$3.0

$4.0

$5.0

$6.0

40 50 60 70 80 90 100

Ne

t Sa

vin

gs,

$K

/yr

Ne

t O

pe

rati

on

al

Co

st o

f st

ea

m,

$/K

lb

Process steam load, Kpph

Net savings: DF-CHP power credit lowers cost of process steam

Boiler: Net Cost of steam GT-CHP: net cost of steam SAVINGS: GT-CHP vs. Boiler

Boiler vs. DF-CHP difference reflects :

1. Efficiency of both systems

2. O&M expense of both systems

3. Value of onsite power

April 20, 2016 | 16

$0

$10

$20

$30

$40

$50

$60

$70

$80

$3.0 $4.0 $5.0 $6.0 $7.0 $8.0 $9.0

Dis

pla

ced

Gri

d p

ow

er,

$/M

Wh

Delivered cost of gas, $/MMBtu, HHV

Operational NET ZERO for low (40 Kpph) & high (100 Kpph) steam load

100 Kpph 40 Kpph

Package boiler operationally

profitable below the line

DF-CHP operationally profitable

above the line

Operational NET ZERO: What is your grid power and gas price?

April 20, 2016 | 17

0.0

1.0

2.0

3.0

4.0

5.0

6.0

7.0

8.0

9.0

10.0

$3.0 $3.5 $4.0 $4.5 $5.0 $5.5 $6.0 $6.5 $7.0

Incr

em

en

tal

pa

yb

ack

, y

ea

rs

Incremental investment, $MM

Incremental Investment & Payback: "steaming savings"

100 Kpph 40 Kpph

Short payback on incremental investment over package boiler systems

April 20, 2016 | 18

Other DF-CHP benefits compared to standard package boilers

Benefit to Grid

Local grid stability including power factor support and reduced I2R line loss

Balance variable power from wind and solar, thus speed renewable energy deployment

Defer or avoid investment in

Remote central generation plants

Transmission & Distribution infrastructure

Benefit to the thermal host

Reduced cost of steam and increased steam supply reliability

More reliable power supply

Benefit to society

Reduced pollution and lower greenhouse gas emissions

Efficiency equals “free fuel”

http://www.greentechmedia.com/articles/read/3-ways-

superstorm-sandy-could-change-utilities-forever

The CHP advantage: Lower Manhattan

after super-storm Sandy

April 20, 2016 | 19

Tailwinds and…. headwinds facing natural gas duct fired CHP

TAILWINDS HEADWINDS

Tried & true technology

CHP increasingly recognized as a proven technology

Inertia and unfamiliarity

Compared to CHP, boilers viewed as “tried and true”

10% Investment Tax Credit (ITC)

Reduces Project Capex; improves Return on Investment (ROI)

Energy Policy Act, 2005

Hurts ability of regulated utilities to secure certain cost recovery for

long-term Power Purchase Agreements (PPA) with CHP plants. Makes

CHP plant financing difficult

Accelerated depreciation

Juices Return on Equity (ROE)

Air permit

MACT pollution control regulations allow retaining current air permit.

CHP reduces pollution, yet requires a new permit

Increasing recognition of redundancy, resiliency & reliability Standby & exit charges

Imposed by some utilities before allowing CHP systems to interconnect

with the grid.

Upfront investment

Greater upfront CapEx required.

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Project development: common sense and diligence

1. Set objectives & gather data

2. Conceptualize alternate configurations: Technical & economic appraisal

3. Project development

Technical: Configuration, engineering, procurement, construction

Legal: Structure of contracting entities (LLC, S or C Corp etc…)

Commercial: Contracts for fuel, power, O&M, grants & incentives

Environmental: Permits

Financial: Financial models, equity & debt

Risks & Mitigants: Project Execution Plan (PEP)

Veolia can optimize your process operations & investment decisions by optimizing utilities management from

concept (FEL1) to completion (FEL5).

April 20, 2016 | 21

Questions?

Suresh Jambunathan,

Director of Business Development,

Veolia North America

Cell: 630-335-4544

E-mail: Suresh.Jambunathan@veolia.com

April 20th, 2016

Location: Ernst Morial Convention Center

New Orleans, LA

April 20, 2016 | 22