View
1
Download
0
Category
Preview:
Citation preview
April 11, 2012
Paul Baer, Marilyn Brown,
and Gyungwon Kim
Combined Heat & Power: A Generator of Green Energy and Green Jobs
IPST Members Meeting
Presentation Overview
• Study background
• Methods
• CHP Policies
• Construction Bill of Goods
• Results
• Discussion
Study Background
• High salience of “green jobs”
• Politicized studies by different analysts
• Interest in developing robust methodology
• CHP selected as case study
Numerous Market Failures and Barriers Inhibit the Growth of Industrial CHP
• Regulatory barriers
– Input-based emissions standards
– The Sarbanes-Oxley Act of 2002
– Utility monopoly power & grid access difficulties
• Financial barriers
– Access to credit and project competition within firm
– Purchase power agreements
• Information and workforce barriers
– Workforce engineering know-how
CHP
Power Plant
Boiler
ELECTRICITY
HEAT
Traditional System
CHP System
45- 49%
75- 80%
Efficiency Efficiency
Policy options are available to tackle these barriers.
Regional Distribution of Industrial CHP Facilities in Pulp and Paper Plants
(Data source: Combined Heat and Power Installation Database, 1900-2010)
Capacity of CHP Facilities
Legend
Capacity of CHP in pulp and paper industry Capacity of CHP in other industries
We Have Shown that Two CHP Policy Options Could Have Numerous Benefits
http://www.ornl.gov /sci/eere/publications.shtml
Output-Based Emissions Standards (OBES):
This policy would provide financial incentives and technical assistance to states to spur adoption of OBES – as authorized by the EPA – to reduce energy consumption, emissions of criteria air pollutants and GHG, and regulatory burdens.
A Federal Energy Portfolio Standard (EPS)with CHP and a 30% Investment Tax Credit:
This policy would mandate electric distributors to meet an EPS with CHP as an eligible resource and to extend and expand the current investment tax credits for CHP. This policy would concurrently establish measurement and verification methods for qualifying CHP resources.
The Two CHP Policies Appear to be Highly Cost-Effective
Box and Whisker Plot from Monte Carlo Simulation of Net Private Benefit (7% discount rate)
• Spurring the adoption of output-based emissions standards is particularly cost-effective, but so is the energy portfolio standard
• They are cost-effective under a range of assumptions
0
50
100
150
200
250
Net
Pri
vate
Be
nef
it (
Bill
ion
$2
00
9)
OBES
EPS
OBES = Output Based Emissions Standards EPS = Energy Portfolio Standards with an ITC for CHP
How would more widespread use of CHP impact employment?
Methodology for Addressing This Question:
Hybrid NEMS-Input/Output Model • Goal: Examine expected employment impacts from clean
energy investments
• Clean energy policies and investments are first modeled in Georgia Tech’s National Energy Modeling System (GT-NEMS)
• Using NEMS 2011, we compare two scenarios:
1) The reference case with CHP assumptions of 2010 NEMS
2) Case of higher efficiency and lower installation costs, per 2011 NEMS.
• NEMS outputs (capacity changes, supply changes, energy bill changes) then drive input-output multipliers to estimate employment impacts
Input-output Model: Circular Flow Of The Economy
Households
$ consumption spending
Manufacturers and Businesses
Businesses
$ wages & salaries
Goods & Services
Labor
$ wages & salaries
First Order Impacts
• Direct, indirect and induced jobs from
– Construction of new CHP facilities
– Operation of CHP facilities
– Purchase of fuel for CHP facilities
– Decrease in purchase of electricity
• Requires
– Cost and bill of goods for construction and operation
– Quantity and price for change in fuel and electricity purchase
Second Order Impacts
• Changes in energy supply and demand lead to additional savings or costs
• CHP operators have new (lower) cost structure – Energy savings (and grid sales) are recycled through
lowered prices, increased profits/dividends
• Other sectors are impacted by price changes – Electricity prices fall
– Natural gas prices rise
– Demand changes with price changes
– Savings (or increased costs) are recycled
CHP Installation Cost Assumption
System
Total Installed Costs ($ 2005 / kW)
2010 EIA Reference
2011: Lower Costs
2010 2020 2030 2010 2020 2030
1. Internal Combustion Engine—1,000KW
1277 1149 989 1440 1129 785
2. Internal Combustion Engine—3,000KW
1058 1005 929 1260 949 605
3. Gas Turbine—3,000KW 1451 1377 1265 1719 1646 1557
4. Gas Turbine—5,000KW 1096 1030 979 1152 1101 1049
5. Gas Turbine—10,000KW 1060 1010 959 982 929 869
6. Gas Turbine—25,000KW * 892 851 813 987 898 823
7. Gas Turbine—40,000KW 782 762 743 876 856 830
8. Combined Cycle**—100,000KW
831 806 787 723 1099 684
* Applied system for this research, ** Two 40 MW Gas Turbine & 20 MW Steam
• The CHP installation costs can vary by information sources.
• EPA (2008) provided higher average of installation costs as:
- Steam Turbine: 430-1,100 - Recip. Engine: 1,100-2,200 - Gas Turbine (5-40MW)
: 970-1,300
• Sentech (2010) - Steam Turbine: 475 (3MW),
429 (15MW) - Recip. Engine: 1,400 (2MW),
1,600 (1MW) - Gas Turbine (3.5-40MW): 972-
1,910 - Combined Cycle: 723
NEMS Cost Assumptions in 2010 and 2011
CHP Efficiency Assumption
System
Overall Energy Efficiency
2010 EIA Reference
2011: Higher Efficiency
2010 2020 2030 2010 2020 2030
1. Internal Combustion Engine—1,000KW
0.71 0.73 0.74 0.81 0.84 0.87
2. Internal Combustion Engine—3,000KW
0.72 0.74 0.75 0.83 0.87 0.89
3. Gas Turbine—3,000KW 0.69 0.70 0.71 0.76 0.77 0.78
4. Gas Turbine—5,000KW 0.71 0.72 0.72 0.77 0.78 0.78
5. Gas Turbine—10,000KW 0.71 0.71 0.72 0.77 0.77 0.78
6. Gas Turbine—25,000KW * 0.71 0.71 0.73 0.71 0.71 0.72
7. Gas Turbine—40,000KW 0.72 0.73 0.73 0.72 0.73 0.74
8. Combined Cycle**—100,000KW
0.70 0.72 0.73 0.70 0.72 0.73
* Applied system for this research, ** Two 40 MW Gas Turbine & 20 MW Steam
• EPA (2008)’s overall efficiency (HHV):
- Steam Turbine: 80% - Recip. Engine: 70-80% - Gas Turbine: 70-75%
• Sentech (2010) - Steam Turbine: 80% - Recip. Engine: 80% (1MW),
83% (2MW) - Gas Turbine (3.5-40MW): 64-77% - Combined Cycle: 70%
NEMS Efficiency Assumptions in 2010 and 2011
Induced Impact
Categories of “Accounts”
• 1. CHP Installation
– Productive investment from private sectors
– Program and administration costs
– Public financial incentives to stimulate overall productive investment
• 2. Operation and Management: Non-fuel
• 3. Operation and Management: Fuel
– Change in natural gas demand
– Change in coal and petroleum demand
• 4. Changes in Electricity demand and supply
– Change in industrial electricity demand purchased from utility
– Sales to the grid
• 5. Induced impacts from changed energy bills (passed to households)
– Change in energy bill in residential and commercial sectors
– Changes in industrial energy bills (increased gas purchases, reduced electricity bills and increased grid sales)
Installation
Operation
Energy Production
• Methodology – Based on the literature, we preliminarily estimated the division of
construction costs between different sectors (matching IMPLAN’s sectors)
– Sectoral detail was combined into ten categories
– Experts survey is used to confirm the bill of goods by asking the fraction of expenses for installing a CHP system (focusing on a medium sized (10MW) gas turbine fueled by biomass in pulp and paper industry)
Construction Bill of Goods
CATEGORY
Respondents Results from
Experts
Elicitation
Our Estimates International Paper (NG-based)
RED (NG-based)
AMEC (biomass-based)
GE Energy (biomass-based)
Primary Generation (Turbine and Power Boiler) 56% 39% 37% 36% 39% 25%
Construction 11% 20% 22% 25% 20% 20%
Electrical Equipment 11% 6% 4% 6% 7% 10%
Machinery and Fabricated Metal 6% 5% 11% 7% 9% 15%
Electronic Components (Controls) 3% 1% 3% 3% 4% 10%
Environmental Equipment 3% 10% 5% 5% 6% 7%
Other Materials 0% 2% 8% 3% 3% 3%
Scientific and Technical Services 11% 9% 7% 7% 8% 5%
Finance and Insurance 0% 8% 2% 8% 4% 5%
Other 0% 0% 1% 0% 0% 0% Total 100% 100% 100% 100% 100% 100%
Bills of Goods for CHP • When constructing a CHP
system, how are financial resources spent?
Answer = 14.5 jobs per $1 million investment.
IMPLAN Code and Industrial Sector weights (
%)
Jobs per
Million
dollars
(2010
IMPLAN)
Installation 100% 14.48
1. Primary generation 39.0% 12.58
222 Turbine and turbine generator set units manufacturing 11.34
188 Power boiler and heat exchanger manufacturing 13.42
2. Construction 20.0% 18.04
35 Construction of new nonresidential manufacturing structures 18.04
3. Electrical Equipment 7.0% 11.56
266 Power, distribution, and specialty transformer manufacturing 11.23
267 Motor and generator manufacturing 11.23
268 Switchgear and switchboard apparatus manufacturing 10.76
269 Relay and industrial control manufacturing 11.50
272 Communication and energy wire and cable manufacturing 10.02
275 All other miscellaneous electrical equipment and component manufacturing 14.62
4. Machinery and Fabricated Metal 9.0% 13.74
171 Steel product manufacturing from purchased steel 12.74
174 Aluminum product manufacturing from purchased aluminum 10.37
186 Plate work and fabricated structural product manufacturing 14.98
193 Hardware manufacturing 13.34
194 Spring and wire product manufacturing 14.19
195 Machine shops 18.94
196 Turned product and screw, nut, and bolt manufacturing 15.09
198 Valve and fittings other than plumbing 12.52
201 Fabricated pipe and pipe fitting manufacturing 13.71
202 Other fabricated metal manufacturing 14.79
207 Other industrial machinery manufacturing 15.82
226 Pump and pumping equipment manufacturing 12.71
5. Electronic Components 4.0% 11.09
234 Electronic computer manufacturing 8.57
235 Computer storage device manufacturing 11.26
236 Computer terminals and other computer peripheral equipment manufacturing 13.37
244 Electronic capacitor, resistor, coil, transformer, and other inductor manufacturing 16.39
6. Environmental Equipment 6.0% 13.05
214 Air purification and ventilation equipment manufacturing 14.68
216 Air conditioning, refrigeration, and warm air heating equipment manufacturing 12.45
250 Automatic environmental control manufacturing 14.57
7. Other Materials 3.0% 11.27
127 Plastics material and resin manufacturing 9.59
136 Paint and coating manufacturing 11.44
144 Plastics pipe and pipe fitting manufacturing 11.40
151 Rubber and plastics hoses and belting manufacturing 13.36
160 Cement manufacturing 11.78
8. Scientific and Technical Services 8.0% 22.08
369 Architectural, engineering, and related services 22.17
374 Management, scientific, and technical consulting services 20.75
375 Environmental and other technical consulting services 23.15
9. Financial and Insurance Service 4.0% 14.80
357 Insurance carriers 11.33
358 Insurance agencies, brokerages, and related activities 20.31
359 Funds, trusts, and other financial vehicles 15.50
CHP Plant Natural Gas
IMPLAN (Input-Output) Jobs Coefficients
14.5
19.8
5.7 6.6
7.4
17.4
-
5.0
10.0
15.0
20.0
25.0
Construction and Equipment
Operation & Maintenance-Non
Fuel
Electricity Natural Gas Coal & Petroleum Other - Energy Bill Savings, res and
com
Induced Impact
Installation
Operation
Energy Production
• CHP operations and maintenance are also labor-intensive, as are the goods and services purchased by the energy bill savings.
• Compare these coefficients with those for energy production.
800
850
900
950
1000
1050
20
08
20
09
20
10
20
11
20
12
20
13
20
14
20
15
20
16
20
17
20
18
20
19
20
20
20
21
20
22
20
23
20
24
20
25
20
26
20
27
20
28
20
29
20
30
20
31
20
32
20
33
20
34
20
35
Pu
rch
ase
d E
lec.
Co
nsu
mp
tio
n (
Bill
kW
h)
20
30
40
50
60
70
80
20
08
20
09
20
10
20
11
20
12
20
13
20
14
20
15
20
16
20
17
20
18
20
19
20
20
20
21
20
22
20
23
20
24
20
25
20
26
20
27
20
28
20
29
20
30
20
31
20
32
20
33
20
34
20
35
CH
P C
apac
ity
(GW
)
2010 Reference
2011 High Efficiency/Lower Costs
First-Order Impacts
Industrial Purchased Electricity Consumption
Industrial Natural Gas Consumption Total Industrial CHP Capacity
15% 8%
5%
0
20
40
60
80
100
120
140
160
20
08
20
09
20
10
20
11
20
12
20
13
20
14
20
15
20
16
20
17
20
18
20
19
20
20
20
21
20
22
20
23
20
24
20
25
20
26
20
27
20
28
20
29
20
30
20
31
20
32
20
33
20
34
20
35
Sale
s to
th
e G
rid
(B
ill k
Wh
)
Industrial Sales to the Grid
12%
1200
1300
1400
1500
1600
1700
1800
1900
20
08
20
09
20
10
20
11
20
12
20
13
20
14
20
15
20
16
20
17
20
18
20
19
20
20
20
21
20
22
20
23
20
24
20
25
20
26
20
27
20
28
20
29
20
30
20
31
20
32
20
33
20
34
20
35
NG
Co
nsu
mp
tio
n (
Bill
kW
h)
$4,660 million (in 2009$) Savings $840 million (in 2009$) gains
Capacity: 64.7->74.2 GW Elec. Price: 7.23->7.10 cents/kWh
Capacity: 39.7->43.3 GW Elec. Price: 6.290 ->6.287cents/kWh
9%
2%
9%
3%
$3,198 million (in 2009$) costs
20
30
40
50
60
70
80
20
08
20
09
20
10
20
11
20
12
20
13
20
14
20
15
20
16
20
17
20
18
20
19
20
20
20
21
20
22
20
23
20
24
20
25
20
26
20
27
20
28
20
29
20
30
20
31
20
32
20
33
20
34
20
35
CH
P C
apac
ity
(GW
)
2010 Reference
2011 High Efficiency/Lower Costs
CHP Capacity by Industry (NEMS) Pulp and Paper CHP Capacity
Bulk Chemicals CHP Generation Food Industry CHP Generation
6
7
8
9
10
11
12
13
20
08
2
00
9
20
10
2
01
1
20
12
2
01
3
20
14
2
01
5
20
16
2
01
7
20
18
2
01
9
20
20
2
02
1
20
22
2
02
3
20
24
2
02
5
20
26
2
02
7
20
28
2
02
9
20
30
2
03
1
20
32
2
03
3
20
34
2
03
5
Tota
l CH
P C
apac
ity
(GW
)
8
9
10
11
12
13
14
15
16
20
08
20
09
20
10
20
11
20
12
20
13
20
14
20
15
20
16
20
17
20
18
20
19
20
20
20
21
20
22
20
23
20
24
20
25
20
26
20
27
20
28
20
29
20
30
20
31
20
32
20
33
20
34
20
35
Tota
l CH
P C
apac
ity
(GW
)
0
0.5
1
1.5
2
2.5
3
3.5
4
4.5
20
08
20
10
20
12
20
14
20
16
20
18
20
20
20
22
20
24
20
26
20
28
20
30
20
32
20
34
Tota
l CH
P C
apac
ity
(GW
)
Total Industrial CHP Capacity
15%
5%
53% 18%
26
27
28
29
30
31
32
20
12
20
13
20
14
20
15
20
16
20
17
20
18
20
19
20
20
20
21
20
22
20
23
20
24
20
25
20
26
20
27
20
28
20
29
20
30
20
31
20
32
20
33
20
34
20
35
20
09
$/m
ill B
tu
Second-Order Impacts
Residential Electricity Prices Commercial Electricity Prices
2%
- $2.4 billion Energy Bill Savings
30
31
32
33
34
35
36
20
12
20
13
20
14
20
15
20
16
20
17
20
18
20
19
20
20
20
21
20
22
20
23
20
24
20
25
20
26
20
27
20
28
20
29
20
30
20
31
20
32
20
33
20
34
20
35
20
09
$/m
ill B
tu
2010 Reference
2011 Higher Efficiency/Lower Costs 1%
- $1.6 billion Energy Bill Savings
Estimated Employment Impacts
8,800 1,400
19,900
37,000
62,200
-40000
-20000
0
20000
40000
60000
80000
100000
2015 2020 2025 2030 2035
Nu
mb
er
of
Job
s
Construction and CHP Equipment Operation & Maintenance -Non Fuel
Electricity purchases Natural Gas
Coal & Petroleum Other- Program expenses
Other- Energy Bill Savings, Res and Com Other - reduced Industry costs/increased profits
Aggregating All Jobs: The Bottom Line
Combining one time construction/installation jobs and the “annual” jobs from operation, utility-purchase changes and energy savings, yields total job-years/GW that rise from ~70,000 to ~130,000 between 2010 and 2035. Therefore, about 100,000 job-years per installed GW over 20 years or 5,000 equivalent full time jobs in a year.
0
20
40
60
80
100
120
140
160
2009 2011 2013 2015 2017 2019 2021 2023 2025 2027 2029 2031 2033 2035
Job
s/G
W (
tho
u)
Total job-years over 20 years, by year of installation
Total annual non-construction job-years over 20-year life
One-time CHP construction jobs per GW
The case of a typical 25 MW CHP plant (based on a natural gas-fired turbine)
For a plant installed in 2020
Expected full-time-equivalent jobs, economy-wide
125
CHP Installation capital cost
$22.45M @ $898/kW
Value of electricity produced annually (.80 capacity factor)
$11 million @ 6.3 cents/kWh
Value of electricity used on site
$8.7 million
Annual electricity sales to the grid
$2.2 million
Annual additional natural gas costs*
$4.3 million @ $5.1/MMBtu
* Natural gas price from the EIA projection, which is more than double the current market price
• Policies and technology improvements can expand the role of
CHP in the U.S. energy economy.
• Employment is generated by plant construction, O&M, and
the expenditures from energy savings.
• Second-order job impacts far exceed construction
employment impacts.
• Lean manufacturing with CHP has triple dividends for jobs:
– maintaining domestic manufacturing = retained jobs
– direct, indirect, and induced jobs from CHP investments
– more competitive manufacturing of green products.
24
Conclusions
Contact Information ***************************************** Dr. Paul Baer Assistant Professor, School of Public Policy Email: Paul.baer@pubpolicy.gatech.edu Dr. Marilyn A. Brown Professor, School of Public Policy Email: Marilyn.Brown@pubpolicy.gatech.edu Gyungwon Kim Ph.D. Student, School of Public Policy Email: joykim@gatech.edu www.cepl.gatech.edu *****************************************
Recommended