Combined Heat and Power (CHP)

www.antaresgroupinc.com

Combined Heat and Power (CHP)

ENERGY 2014Orlando, Florida

July 23, 2014

Christopher [email protected](301) 731-1900 ext. 216


Presentation Outline• How to Start Off Right• Feasibility Study (go/no go)

– Case Study Information

• Development Tips• You Probably Already Know

– Something about CHP technologies

– Why CHP is important


Start Right – Energy Measurements• Measure Your Energy Use!

– Investment Grade Audit by an INDEPENDENT third party

• Why is this critical?– Project sizing driven by your energy loads– Engineering estimates can be problematic– Oversizing equals underused capital

and lower operating efficiency – Under sizing equals operational issues

and reduced savings.


Start Right – Energy Measurements

• Know your thermal energy loads in as muchdetail as you can afford– You will NEVER regret good information about your loads– If your meters or submeters don’t work – fix them– If you don’t have meters – consider data logging for a

limited time – budget for it!– If you have distribution/condensate system problems –

know what is fixable and what is not– Understand existing steam/hot water boiler performance

as best as possible– Make a list of thermal energy savings measures that might

be good to implement before CHP project


Start Right – Energy Measurements• Know your electrical loads

– Try to collect some detailed information on big loads (like chillers). When did they run, how much energy being used, etc.

– Ask your utility about interval data– Consider sub-meters or smart meters where

it makes sense– Collect data from Building

Management Systems– Make a list of electrical energy savings

measures needed before CHP project will be implemented


Start Right – Energy Measurements• Cross Check Data

– Develop facility performance metrics and cross check results with utility bills, correct for weather

– That includes:• Electric• Gas• Fuel Oil• and Water!

– Good time to cross check bill against interval data too

Hopefully it won’t be as hard as this

guy thinks it is


Start Right – Energy Measurements• But isn’t this the ESCO’s problem?• Don’t you believe it!

– Energy Service Agreements may have minimum take requirements, protections against energy cost changes or other clauses that place risk back onto host

– When major things go wrong ESCO may or may not be on the hook to fix them (contract).

• Load/operational changes

• Facility side equipment failures

– What about ESCO bankruptcy / financial trouble?


Warning

Litigation: A machine which you go into as a pig and come out

of as a sausage.

– Ambrose Bierce


Step 1 – Feasibility Study• Key Elements

– Define Objectives/Standards– Review Energy Loads– Preliminary Techno/Economic Screening– Selection of Technologies for Analysis– Detailed Performance Estimate– Life Cycle Cost Analysis– Technology Selection (Go/No Go)


Renewable Energy Targets - Sample


Thermal Load Analysis


Electric Load Analysis


Screening Analysis/Selection


Detailed Performance Estimate• Detailed bin or 8760 hourly analysis• Back-up energy supply requirements• Detailed review of tariff impacts

– Special attention to change in tariff and demand charge changes

• Detailed review of environmental/regulatory changes– DEC, Historic Preservation, habitat


Small CT Example


GHG Analysis

Net GHG Emissions Change (MT CO2e)

Scope 1 Scope 2

Option 1 2,876 -5,053Option 2 2,146 -2,481Option 3 3,219 -4,444Option 4 3,917 -7,856


Life Cycle Cost Analysis• More than ENERGY SAVINGS!• For Federal Facilities

– Typically use BLCC guidance which dictates• Discount rates• Inflation rates• Escalation rates for electricity and natural gas

• Includes Status Quo• Alternative Financing Option Review

– UESC, EUL, ESCO, Direct Fund


This is not an LCCA


Final Selection• MUST PRIORITIZE WHAT’S IMPORTANT

– Economics (usually, but not always)?– Meeting Agency/Facility energy intensity, GHG,

sustainability goals?– Improved operations?– Showcase?

• WARNING – if Economics – be sure to review the economic assumptions carefully!


EIA Gas/Electricity Prices

Annual escalation ~ 2% per year@ 3%, 2040 would equal 31 cents/kWh

In some states, actual escalation over past 20 years was less


So You Think You Have a Project…• Ideally Feasibility Study will be used to

generate bid specification documents• Start RFP process• Selecting a Contractor• Negotiating Contract• Construction, Start-up• YEAR 1 Operation


Development Tips• Use and Independent Engineer even if

planning a Turnkey-EPC type project– Feasibility Study– Design (maybe)– Commissioning– Monitoring and Verification– Arbitration/Litigation

• Get input from your O&M staff and make them stakeholders in the entire process


Development Tips• Understand ALL of the possible project

development options– Third party ESA has lots of advantages-but there

are other options – Design/Build, Build Own Operate Transfer?

• Understand project risks and your tolerance– How different is the new project from what you

your O&M staff are used to dealing with – Is this a bleeding edge technology (plasma-arc

waste gasification with a recip engine?)


Contract, Contract, Contract• IF YOU ARE GOING TO OWN IT - write

an Owner’s Requirement Document that provides cover

• Understand your contract leverage, how it changes over time--be stingy

• Change Orders should be limited to cosmetic, minor things YOU change your mind on

• Understand minimum takes, price risk pass through, warranty claim limitations, contractor liability.

• SPEND SOME MONEY HERE!

Owner Contractor

Early in Project

Owner Contractor

Late in Project

PAID OUT


Contract, Contract, Contract• If you are not going to own it…

– Think like a banker!– Imagine the unimaginable (both sides of fence)

• Strikes, natural disasters, Contractor financial trouble• Not everything you think of will be reasonable to

protect against, but not everything you do won’t

– Protect yourself for performance failures• Ensure you can walk away or control your fate• Be prepared for ligation

– What is your back-up plan if Contractor pulls the plug or “new” system fails?


What about Biomass CHP?• Can accommodate a baseload• Geographically diverse resource• Can be cost competitive• Well established options/technologies• RENEWABLE Energy Mandates


Biomass CHP in the US-for now• District heating – displace higher cost fuels such as

#2 oil with woody biomass• For C&I applications (< 5 MW, i.e. hospital, college /

university, manufacturing facility)- Close coupled gasifiers with medium pressure steam driving back pressure steam turbine

• For larger C&I applications (> 5 MW, i.e. pulp mill, large district heating system) – Fixed bed / fluidized bed gasifiers with higher pressure steam


What Biomass Fuel Are You Using?

• Runaway if someone tells you that their technology works equally well with any fuel!

As Received BasisSample Type Btu/lb* MCW^ Carbon Hydrogen Nitrogen Sulfur Ash OxygenSawdust (Green) 4,150 52.63 24.17 2.75 0.22 0.02 1.96 18.25 Poultry Litter 4,637 27.40 27.22 3.72 2.69 0.33 15.70 23.10 Whole Tree Chip 5,229 38.68 32.35 3.68 0.28 0.02 0.71 24.28 Willow Energy Crop 6,044 29.13 35.61 3.60 0.33 0.02 1.33 29.98 Corn Stover 6,385 22.00 36.27 4.53 0.44 0.09 5.77 30.94 Stumpage 6,647 9.82 40.77 4.39 0.57 0.06 14.99 29.40 Ground Pallets 6,814 19.18 42.13 4.95 0.34 0.03 0.80 32.57 C&D Debris 6,939 18.77 42.91 5.11 0.36 0.06 0.88 31.91 Switchgrass 7,370 7.88 44.70 5.57 0.29 0.05 4.53 36.98 Sawdust (Dry) 7,379 11.40 45.18 5.34 0.40 0.07 2.51 35.10 RTA Wood 7,864 7.04 46.19 4.98 3.27 0.08 0.97 37.47 Wax Cardboard 10,065 14.08 42.92 7.98 0.18 0.20 1.56 33.08

* Higher Heating Value

^ Moisture Content Wet Basis


Conclusions• CHP projects can be a viable opportunity• Usually

– Require high electricity prices, lowish gas prices to make work (spark spread)

– Best projects in the presence of good information about loads (current, planned)

– Lots of options to choose from – pick one that is appropriate to your operation

– The more level your steam load – the better– Get outside help if you can


Conclusions• Biomass is a special case

– Need the space– Higher O&M– Works best displacing fuel

oil or high priced gas– Longer development time

• Make sure to include the “hassle factor”

• Brace yourself for Year 1

hassle



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Combined Heat and Power (CHP)