What is CHP & Why do we need it in Michigan?

Jim LeidelDirector of Clean Energy SystemsOakland University

April 30, 2015

• What is CHP• the Opportunity of CHP:

(a new look at an tried and true technology)• What does CHP look like• Project feasibility basics: the spark spread• Why CHP in Michigan?• Multiple benefits to CHP• Oakland University CHP & MicroGrid• Questions ?

Outline of Discussion

Combined Heat and Power

75-85%

30-40%

80-90%

combined efficiency is dramatically increased

Benefits of CHP to the Host• Additional heating capacity

– “New” equipment replacing aging systems

• Backup electrical power• Lower carbon footprint• Diversified energy options for supply• Energy independence• Grid Reliability• Cost savings drives the whole opportunity

Benefits of CHP to the Grid

• Replace retiring base-load coal generation

• Reduce transmission losses

• Lower carbon footprint (with natural gas)

• Highest efficiency possible

• Added Reliability

40%

23%

23%

8%

3%

3%

Michigan Energy Flow Mich flag2.9 Quad year

Consumers & BP Logos

0.0006 Quad year

U.S. Electric Power Energy Flow

What does CHP look like?

Gas Turbine Generator Set

AIRINLET

FUELMANIFOLD

GENERATOR

DIGITALCONTROLPANEL

AXIALEXHAUST

TERMINALBOX

ACCESSORYREDUCTIONGEARBOX

CUSTOMERCONNECTIONBOX

VPIPG-00-012

Combined Heat and Power SystemCombustion Gas Turbine

AIR INLETFILTER

DIVERTERVALVE

GASTURBINE

GENERATOR

EXHAUSTBYPASSSILENCER

SUPPLE-MENTARYBURNER

HEATRECOVERYSTEAMGENERATOR(HRSG)

EXHAUSTSILENCER

PROCESSSTEAM

118-073

Gas Turbine Cogeneration Facility

118-035

Industrial CHP

Food ProcessingFood Processing PharmaceuticalPharmaceutical

Pulp and PaperPulp and Paper ManufacturingManufacturingVPIPG-00-015

Industrial CHP

Refinery / OilRefinery / Oil HospitalsHospitals

UniversitiesUniversities UtilitiesUtilities

VPIPG-00-016

University of Michigan45.2 MW CHP Application

Lorin Industries3.2 MW CHP Application

Eastern Michigan University3.5 MW CHP ApplicationTaurus 60

JHP Pharmaceuticals4.6 MW Gas Turbine CHP

Ferris State University1.0 MW CHP Kawasaki Turbine

Is CHP Applicable?

Spark Spread

Unit Cost of Electricity

$0.040

$0.045

$0.050

$0.055

$0.060

$0.065

$0.070

$0.075

$0.080

$0.085

$0.090

$0.095

$0.100

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

Dollarsper kWhr

Monthly Electric Cost per kWhr

Linear Trend Line

FORECAST

Two YearElectric Choice Contract

Approximately 2.8% escalation / year

$-

$2.00

$4.00

$6.00

$8.00

$10.00

$12.00

$14.00

$16.00

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

Dollars per MMBtu

Cost / MMBtu / Month

Trendline (Moving Average)

FORECAST

Unit Cost of Natural Gas

Unit Cost of Electricity

$0.000

$0.010

$0.020

$0.030

$0.040

$0.050

$0.060

$0.070

$0.080

$0.090

$0.100

$0.110

$0.12020

00

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

Dollarsper kWhr

Monthly Electric Unit Cost

Monthly Electric Cost from Gas-Fired CHP (9,000 BTU/kWhr)

Electric Utility Unit Cost (Moving Average Trendline)

Electric Cost from CHP (Moving Averager Trendline)

Unit Cost of Electricity

$0.000

$0.010

$0.020

$0.030

$0.040

$0.050

$0.060

$0.070

$0.080

$0.090

$0.100

$0.110

$0.12020

00

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

Dollarsper kWhr

Monthly Electric Unit Cost

Monthly Electric Cost from Gas-Fired CHP (9,000 BTU/kWhr)

Electric Utility Unit Cost (Moving Average Trendline)

Electric Cost from CHP (Moving Averager Trendline)

actual OU electric cost

NaturalGas

Price

9,000 Heat Rate

ElectricCost to Produce

Unit Cost of Electricity

$0.000

$0.010

$0.020

$0.030

$0.040

$0.050

$0.060

$0.070

$0.080

$0.090

$0.100

$0.110

$0.120

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

Dollarsper kWhr

Monthly Electric Unit Cost

Monthly Electric Cost from Gas-Fired CHP (9,000 BTU/kWhr)

Electric Utility Unit Cost (Moving Average Trendline)

Electric Cost from CHP (Moving Averager Trendline)

Spark Spread(fuel only cost)

actual OU electric cost

NaturalGas

Price

9,000 Heat Rate

ElectricCost to Produce

Why do we need CHP?

COAL RETIREMENTS: BEGINNING OF THE END

The US coal fleet is entering an unprecedented period of retirements, as the industry faces a three-pronged assault from low gas prices, an aging fleet, and stringent environmental compliance.

• Old age: numerous units are today approaching 50+ years of operation. • Cheap gas: sub-$4/MMBtu Henry Hub gas will hit coal units twice – first, by reducing wholesale power prices; and second, by bringing combine-cycle gas turbines (CCGTs) into the base-load power mix, encroaching on sales of coal-fired electricity. • Environmental regulations: standards laid out by the US Environmental Protection Agency (EPA) will force generators to decide whether to invest in expensive environmental controls.

source: US DOE, Energy Information Administration, www.eia.gov/state

NuclearPlants

source: US DOE, Energy Information Administration, www.eia.gov/state

Hydro-electric

sites

source: US DOE, Energy Information Administration, www.eia.gov/state

Biomass: wood chip & landfill gas

source: US DOE, Energy Information Administration, www.eia.gov/state

Storage:Pumped

hydro

Note: this is storage using night time grid

power

source: US DOE, Energy Information Administration, www.eia.gov/state

Nat. GasPlants

also showing major gas pipelines

source: US DOE, Energy Information Administration, www.eia.gov/state

CoalPlants

Also showing ≥ 345 kV

transmission

Upper Peninsula Power Plant Map (all fuels)

Also showing natural gas pipelines (blue)

source: US DOE, Energy Information Administration, www.eia.gov/state

U.S. Electric Power Fuel Source Mix

natural gas

petroleumcoal

renewablesrenewables

nuclear

large hydro

source: Bloomberg New Energy Finance, “ Medium-term outlook for US power: 2015 = deepest de-carbonization ever”, 8 April 8 2015

natural gas

coal

renewablesrenewables

source: Bloomberg New Energy Finance, “ Medium-term outlook for US power: 2015 = deepest de-carbonization ever”, 8 April 8 2015

U.S. New Capacity Build & Retirements

petroleum

Regional Grid Operators (ISO’s)

Midwest is MISO &

PJM

source: Bloomberg New Energy Finance, “ Medium-term outlook for US power: 2015 = deepest de-carbonization ever”, 8 April 8 2015

U.S. Coal Plant Retirements by RegionGW

(2015) MISO + PJM = 11 GW

(2016) MISO + PJM = 8 GW

source: US DOE, EIA, Form EIA-860, “Annual Electric Generator Report” and Form EIA-860M, “Monthly Update to the Annual Electric Generator Report”.

Utility Scale Generating Units Planned to Retire from Feb 2015 to Jan 2016 (as reported to the DOE)

source: “Combined Heat & Power: Effective Energy Solutions for a Sustainable Future”, Oak Ridge National Laboratory (2008), ORNL/TM-2008/224, (US DOE, EIA, 2008 data)

CHP Share of Total National Power Generation, by Country

Source: US DOE Report, “The Market and Technical Potential for Combined Heat and Power in the Commercial / Institutional Sector”, prepared by ONSITE SYCOM Energy Corp., (Jan 2000)

source: “Combined Heat & Power: Effective Energy Solutions for a Sustainable Future”, Oak Ridge National Laboratory (2008), ORNL/TM-2008/224, (US DOE, EIA data)

CHP Share of Total Power Generation, United States

source: “Combined Heat & Power: Effective Energy Solutions for a Sustainable Future”, Oak Ridge National Laboratory, ORNL/TM-2008/224, McKinsey & Company data, (2008)

Oakland University Projects

4.6MW

400kW

Overview of an Integrated, Clean Energy Supply Infrastructure

Existing Central Heating Plant

Overview of an Integrated, Clean Energy Supply Infrastructure

Four large absorbsion chillers make chilled water from the hot water in summer

Existing

Overview of an Integrated, Clean Energy Supply Infrastructure

Proposed new CHP unit

Overview of an Integrated, Clean Energy Supply Infrastructure

Existing electrical with new CHP

Overview of an Integrated, Clean Energy Supply Infrastructure

Existing diesel backup generators can black start the heating plant on a power failure.

Overview of an Integrated, Clean Energy Supply Infrastructure

with third party financing, sells power to OU for a cost savings. No cost to OU.

“Proposed” wind turbine,

“Proposed“ Detroit Edison owned and operated solar PV array at OU

Vision of an OU Clean EnergyMicro-GridMultiple solar PV & CHP installations are installed or funded

Vision of an OU Clean EnergyMicro-Grid

With data monitoring & academic curricula

Jim Leidel, Director of Clean Energy Systems, leidel@oakland.edu

Impediments to CHP• Utility backup / stand-by charges• Time to complete utility interconnections• Emissions regulations & permitting time• Knowledge• Capital Costs / Finance• Competition (alternatives)

– Conservation– Electric choice– Relatively cheap electricity

Solutions to Help CHP

• Review and revise utility stand-by charges• Create time limits for utility study &

interconnection process• Create time limits for project permitting• Promote CHP• State-wide study of CHP opportunity• Create low interest loan fund?

Thank you

Questions?

Jim LeidelDirector of Clean Energy SystemsOakland Universityleidel@oakland.eduwww.oakland.edu/CERCClean Energy Research Center & OU INC