RED | the new green 1 CHP: One of the answers (but not the question) Presentation to Efficient...

RED | the new greenwww.recycled-energy.com

1

CHP: One of the answers (but not the question)

Presentation to Efficient Enterprises: Powering American Industry

Sean Casten,President & CEORecycled Energy Development, LLC

June 23, 2009US Capitol Building, Room HC-7


2

Asking the right questions


3

Things you think are true aren’t.

In other words: Unexpected, transformative changes can quickly reduce our CO2 emissions and grow our economy… so long as we don’t constrain our future with our present conventional wisdom.


4

Transformative changes in our fossil energy use are inevitable.


5

Transformative shifts in our fossil fuel use are inevitable.


6



7

Potential pace of electric sector reform: 20% of US fleet built in just 10 years!

US Installed Generation Capacity, by Fuel Type

0

50

100

150

200

250

300

350

400

450

1975 1985 1995 2005

Installed GW

Natural Gas

Nuclear

Coal

Source: US DOE, Energy Information Administration (www.doe.eia.gov)

1992 Energy Policy Act opens competitive markets

FERC Order 888 mandates non-discriminatory transmission access

Final FERC rehearing of 888


8

New England’s FCM success is even more dramatic.

Source: ISO-NE; website and personal correspondence.

• Typical NE power peak = 19,000 – 24,000 MW

• All time peak = 28,160 MW (8/6/06)

• ISO-NE’s forward capacity market closed their first capacity auction on 3/1/07; they have now completed two forward capacity auctions (FCAs)

• FCM allowed demand resources (including, but not limited to CHP and other behind-the-meter generation) to bid into markets and compete with new-build generation to meet system supply needs.

• As of their most recent auction (FCA#2), they have 2,936 MW of demand resources that have been brought forward under this program.

• Met over 10% of the system peak in under 3 years without building a single power plant.


9



10

CO2 reduction is not constrained by technology nor economics.1. Non-renewable CO2 release comes from the combustion of (previously sequestered) fossil carbon fuels.

• Uniquely among pollutants, the thing which causes the pollution costs money; ergo, reducing CO2 pollution saves money.

• If done with greater efficiency, this cost reduction need not be coupled to a reduction in standard of living.

2. Current regulations generally do not encourage energy efficiency, and in some cases discourage it.

• Clean Air Act has the right intent, but is methodologically flawed; efficiency doesn’t count as a pollution control strategy!

• Ditto for modern utility regulation, which keeps the power flowing, but does not allow utilities to use cost-control to maximize profits.

3. Most US energy capital stock is old; to the degree it was optimized, it was for yesterday’s energy prices.


11

The costs of current policy, and potential for CHP.

US Electric Industry Fuel-Conversion Efficiency

0%

10%20%

30%

40%50%

60%70%

80%

90%100%

1880 1890 1900 1910 1920 1930 1940 1950 1960 1970 1980 1990

Energy waste = Economic / Environmental

opportunity


12

RED | the new green www.recycled-energy.com

Homer Simpson’s plant wastes lots of energy.


13


So do ours.


14


Energy flows in the US electric sector.


15


Energy flows in a fueled CHP plant (“topping cycle cogen”)


16


Energy flows in an energy recycling plant (“bottoming cycle cogen”)


17

CHP’s local nature gives it an innate capital cost advantage.

US Average Capex ($/kW installed)US Average Capex ($/kW installed)

Central Central ApproachApproach

Local Local GenerationGeneration

$1,000 - $3,500

$1,200 - $4,000

$1,400

$140

1.44

1.07

GenerationGeneration T&DT&D Line Loss & Line Loss & RedundancyRedundancy

Total $ per Total $ per new kW loadnew kW load

$1,430 - $4,430

$3,460 - $7,000


18

Supporting data from FERC

Cost of new delivered electricity

-1

0

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

Nuclear plant Coal plant Large combined-cycle gas plant

Large wind farm Combined-cycleindustrial cogen

Building-scalecogen

Recovered-heatindustrial cogen

End-use efficiency

2007 US¢ per delivered kWh

Credit forrecovered andreused heat

Fuel minus heatcredit

Transmission andDistribution

Firming andintegration

Operation andMaintenance

Capital

MIT (2003)

Keystone (June 2007)

2007–08 industry estimates, Moody's estimate of $7500/kWe: 25 ¢/kWh

Courtesy Jon Wellinghoff


19

Total potential for additional US CHP is massive and transformative.


20

Achieving this level of CHP has already been done by many of our trading partners.

Percent of Total Power Generation from CHP, By Country

0

10

20

30

40

50

DenmarkFinland

Latvia Russia

Netherlands

JapanIndia

CanadaChina EU 25

USABelgium

UK

France

Source: Energy & Environmental Analysis


21

What CHP looks like: steel manufacturer in Gary, IN.

• 95 MW of power recovered from the exhaust of 268 coke ovens.• Saves host ~$40 million/year with no marginal fuel combustion or CO2 release.

• Generates more clean power in 1 year than all the world’s grid-connected solar panels (with less CO2/MWh!)

Courtesy Primary Energy


22

What CHP looks like: silicon manufacturer in Alloy, WV.

• RED will recycle hot gas to generate 45 MW of power from waste heat on 120 MW furnace

• Competitive with West Virginia (coal) power prices.


23

Ask the right questions• What regulatory barriers exist to energy efficiency (in all its flavors), and how can we remove them?

• Lesson from FERC 888 / FCM: unleashing a flood of private sector investment need not require tearing down an entire dam – we simply need to remove the critical bricks, and let the blocked resource do the rest of the work for us.

• How do we reward the goal, instead of the path?

• More incentives for CHP / solar / wind / nuclear / clean coal are not the answer; experience teaches that approach will cause massive unintended consequences.

• We have enough time to change course – barely.

RED | the new green 1 CHP: One of the answers (but not the question) Presentation to Efficient...

Documents

Transcript of RED | the new green 1 CHP: One of the answers (but not the question) Presentation to Efficient...