Standardized Baseline Methods

COP 8 - New Delhi

Duane Kexel, Vice-President, PSE

Jari Vayrynen, Prototype Carbon Fund

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Background

• Czech Umbrella Project– Aggregate Small Projects From CEA/SEF– Target A Few Lines of Business– Transactions Costs Too High For Individual

Project Analyses– Need Methods That CEA/SEF Can Apply

Quickly To Screen Projects– Need Basis For Pre-Validation

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Limits On Conventional Analyses

• Too Costly For Small Projects

• Too Lengthy For Numerous Projects

• Require More Data Than Is Easily Available

• Energy Audits Are Available But Full Feasibility Studies Are Not

• Not Familiar Approaches For Local Staff

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Standardized Baseline (SBL) Concept

• Trade-off Effort and Precision• Proponent May Choose Standard or Detailed

Approach • SBL May Yield Somewhat Smaller ERUS For

Much Smaller Effort• Intentional Conservative Bias In SBL

• Validator Must Confirm That SBL Results Are Sound Over A Set of Eligible Projects

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Czech Experience To Date

• Standard Baseline Methodologies Proposed:

– “Small” Municipal District Heating Projects

– Hospital or Campus Energy Efficiency Projects

• Illustrative SBL Case Studies For Each

– Rozmital Coal To Gas DH Integration

– Thomayer Hospital EE

• Full BLS and MP Prepared For Each

• DNV Now Validating Both SBL and BLS

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Eligibility Criteria-StandardDH Baseline

• Why? - Limit Exposure From Simplified Methods• Total Space & Water Heat Load < 100 TJ/a• Uses Existing Network-Expansion < 10%• At least 90% of load residential and small comml • Individual Load Data For Loads > 2,500 GJ/a• Heat Only Boilers - No CHPs• Fuels - Lignite, Coal, LFO, Gas, Biomass

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DH Standard Method Summary

• Determine Services Offered, Service Area And Heat Loads

• Assume End User Demands Remain Fixed If They Comply With Czech Standards - Otherwise Assume Compliance Within Ten Years

• Determine Time Horizon For Operation of Existing System - Default = Five Years

• Default Existing System Efficiencies Equal Czech Stds Unless Lower Efficiencies Are Documented

• Existing System Losses Default - 15%

• Replacement Is With Least-Cost Greenfield System

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DH Standard Method Summary 2

• First Step Is Survey To Solicit Needed Data

• For First Five Years, Loads = Current; Efficiencies Are Based on Standards

• Graphic Methods Used To Identify Optimum Replacement System

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DH SBL Data Requirements

• Sponsor Data

– Decision Criteria

– Alternatives Considered

– Expected First Year Heat Price

• Existing System Data

– Age and Expected Retirement Date

– Heat Production and Fuel Consumption

– Fuel Costs and Calorific Values

– Distribution Losses

– Loads (Max MW, Min MW, MWh, HPY, SH, WH)

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DH SBL Data Requirements - 2

• Future System– Expected New Loads– Expected Load Reduction Due To Efficiency– Loads vs Czech Standards– Replacement System Costs by Component– Total Efficiencies

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Replacement System Optimization

• Determine Least Cost Operating Hours For Gas and Coal Boilers (~1,000 Hours for Peakers)

• Find Mwh/a From Coal and From Gas (Areas Under Load Curve ~95% Coal)

• Apply Emission Factors To Fuel Consumption To Get SBL CO2 Emissions

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SBL vs Rozmital BLS Results

Item Units Standard Rozmital BLSAnnual Heat Production MWh 4,904 4,844

From Coal MWh 4,679 4,620 From Gas MWh 225 224

EfficienciesCoal Percent 70.0% 80.0%Gas Percent 84.3% 86.0%

Fuel Input MWh 6,951 6,035 Coal MWh 6,684 5,775 Gas MWh 267 260

CO2 Emission FactorsCoal t/MWh 0.39 0.39Gas t/MWh 0.20 0.20

CO2 Emissions t/a 2,660 2,304 Coal t/a 2,607 2,252 Gas t/a 53 52

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SBL vs Rozmital BLS Results

• Replacement Immediate For Both SBL, BLS Due To Condition of Boilers

• SBL Uses Integrated System, BLS Uses Distributed Supply System

• Loads 1.0% Higher for SBL

• Efficiencies Lower for SBL

• CO2 Emissions 13% Lower for BLS

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DH SBL Additionality

• Continued Operation of Exisitng System Assumed To Be Least Cost for 5 Years

• Replacement System Is Optimized To Assure Least Cost Operation

• Baseline Is Least Cost, Environmentally Compliant System

• Proposed System Must Then Be Higher Cost Without Carbon Credits

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Eligibility Criteria Std Energy Efficiency Baseline (SEEB)

• Intended For “Campus-Like” Facilities• Schools, Universities, Hospitals, Etc.• No Firm Size Limit But Typically < 5,000 tpy CO2

Reduction• Detailed Energy Audit With Investment and

Savings For Each Building• Financing Must Be ESCO and Host• ESCO and Hospital Terms and Hurdle Rates Are

Known

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SEEB Method Summary

• Energy Audit Provides Load Reductions at Each End User and Related Investment

• Total Efficiency = MWh to End User/MWh Fuel Input

• Default Total Efficiencies (TE) Provided For Current and Replacement Systems

• Load Reductions * TE = Fuel Reductions

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SEEB Method Summary 2

• Fuel Reductions * Fuel Prices = Fuel Cost Savings (FCS)

• Non-fuel Cost Savings = k * FCS• Cash Flows Yield IRRs for Each Building

Investment and for Each Year of Project• Investments Which Meet ESCO and Hospital

Hurdle Rates Are In Baseline

• All Other Investments Are Out of Baseline

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Illustrative SEEB Terms

• Investments - 75% ESCO, 25% Hospital

• Savings To ESCO - 100% For As Many Years As Required to Provide ROI = 15%

• Savings to Hospital, 100% After ESCO Has Earned 15%

• Hospital Hurdle ROI - 10%

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SEEB Data Requirements

• Savings and Investments by Building or Supply System Component

• Existing Supply and Delivery System Total Efficiencies by Hot Water and Steam Networks by Boiler Fuel

• Retirement Date For Existing System and Total Efficiencies and Fuel For Replacement System

• Fuel Price Projections

• Non-fuel Operating Costs as Percent of Fuel Cost

• Defaults Provided For Missing Data

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SEEB vs Thomayer BLS ERUs

Common SEEB 0.2 BLS 0.2HW Saved Steam Saved Gas Saved CO2 Redn Gas Saved CO2 Redn

Year GJ/y @ EU GJ/y @ EU MWh/y tpy MWh/y tpy2002 10,179 181 3,875 775 3,877 775

2003 8,787 1,149 3,766 753 3,833 767

2004 3,768 351 1,557 311 1,592 318

2005 7,972 347 3,118 624 3,157 631

30,706 2,028 12,316 2,463 12,459 2,492

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SEEB vs Thomayer BLS Results

• Both Show No EE Investments in The Baseline Because of Inadequate ROIs

• All of The Proposed Investments Are Then Additional

• Minor Differences in CO2 Reductions - Variance Due to Changes in Efficiencies

• Expect Greater Variance In Projects With Existing System To Be Replaced

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Standard Baselines Conclusions

• Expect Wide Application

• Expect Significant Reductions in Transactions Costs

• Will Need Improved Databases To Support

• May Need Refinements Based on Experience

• Suggestions Welcome