10 th annual iof wv symposium november 9, 2006 energy recycling – a convenient truth!

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10 th Annual IOF WV Symposium November 9, 2006 Energy Recycling – A Convenient Truth! Thomas R. Casten Past Chairman & CEO Primary Energy, LLC

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10 th Annual IOF WV Symposium November 9, 2006 Energy Recycling – A Convenient Truth! Thomas R. Casten Past Chairman & CEO Primary Energy, LLC. An Inconvenient Truth. Al Gore has described global warming as an ‘Inconvenient Truth’ – a reality that we would rather not face - PowerPoint PPT Presentation

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Page 1: 10 th  Annual IOF WV Symposium  November 9, 2006 Energy Recycling – A Convenient Truth!

10th Annual IOF WV Symposium November 9, 2006

Energy Recycling – A Convenient Truth!

Thomas R. Casten

Past Chairman & CEOPrimary Energy, LLC

Page 2: 10 th  Annual IOF WV Symposium  November 9, 2006 Energy Recycling – A Convenient Truth!

An Inconvenient TruthAn Inconvenient Truth Al Gore has described global warming Al Gore has described global warming

as an ‘Inconvenient Truth’ – a reality that as an ‘Inconvenient Truth’ – a reality that we would rather not facewe would rather not face

Present and coming policy changes Present and coming policy changes mandate GHG (Greenhouse Gas) mandate GHG (Greenhouse Gas) reductionsreductions

Conventional wisdom: restrictions will Conventional wisdom: restrictions will increase energy costs and penalize increase energy costs and penalize industryindustry

Page 3: 10 th  Annual IOF WV Symposium  November 9, 2006 Energy Recycling – A Convenient Truth!

More ‘Inconvenient Truths”More ‘Inconvenient Truths” Richard McCormack: US industrial Richard McCormack: US industrial

production shrinking at alarming rateproduction shrinking at alarming rate

Grid electricity cost is certain to rise due to Grid electricity cost is certain to rise due to CAIR, rebuilding US T&D system, and CAIR, rebuilding US T&D system, and permanently higher fossil fuel pricespermanently higher fossil fuel prices

US fossil fuel addiction dictates foreign US fossil fuel addiction dictates foreign policy (and expensive wars), bloats balance policy (and expensive wars), bloats balance of payments deficits, and exacerbates of payments deficits, and exacerbates pollution control costspollution control costs

Page 4: 10 th  Annual IOF WV Symposium  November 9, 2006 Energy Recycling – A Convenient Truth!

‘‘A Convenient Truth’ A Convenient Truth’ Energy RecyclingEnergy Recycling

US industrial waste energy could produce 20% US industrial waste energy could produce 20% of US electricityof US electricity

Recycling creates significant new revenue streams Recycling creates significant new revenue streams for US manufacturers and reduces emissionsfor US manufacturers and reduces emissions

Power generation that recycles waste heat uses Power generation that recycles waste heat uses half of the fossil fuel of conventional generationhalf of the fossil fuel of conventional generation

Recycling cuts power costs, reduces emissionsRecycling cuts power costs, reduces emissions

US industries single best hope to regain US industries single best hope to regain competitiveness:competitiveness: recycle waste energy recycle waste energy

Page 5: 10 th  Annual IOF WV Symposium  November 9, 2006 Energy Recycling – A Convenient Truth!

Examining Energy TrendsExamining Energy Trends New work by Robert U. Ayres examines New work by Robert U. Ayres examines

relationship of energy, conversion to relationship of energy, conversion to useful work, and GDP (Gross domestic useful work, and GDP (Gross domestic product)product)

Raw energy use and GDP do not Raw energy use and GDP do not correlate, economists treat energy as correlate, economists treat energy as simply a 4% factor in overall economysimply a 4% factor in overall economy

Ayres finds changes in useful work Ayres finds changes in useful work explain over 50% of past century’s explain over 50% of past century’s economic growtheconomic growth

Page 6: 10 th  Annual IOF WV Symposium  November 9, 2006 Energy Recycling – A Convenient Truth!

Economic Growth Driven by Economic Growth Driven by Improving Energy EfficiencyImproving Energy Efficiency

Long trend of falling energy use per dollar Long trend of falling energy use per dollar of GDP, does not correlate with rising GDPof GDP, does not correlate with rising GDP

However, also long trend of increasing However, also long trend of increasing efficiency of converting exergy (potential efficiency of converting exergy (potential energy) to useful workenergy) to useful work

Useful work per $ of GDP has been Useful work per $ of GDP has been remarkably constant, explains over half of remarkably constant, explains over half of economic growtheconomic growth

Trends of energy efficiency have reversed, Trends of energy efficiency have reversed, largely due to electric industry stagnationlargely due to electric industry stagnation

Page 7: 10 th  Annual IOF WV Symposium  November 9, 2006 Energy Recycling – A Convenient Truth!

US Exergy and Useful Work per $ GDP

-

2

4

6

8

10

12

14

16

18

Year

kWh

/ $G

DP

watts total exergy / $GDP watts useful work / $GDP 10 year moving average

Page 8: 10 th  Annual IOF WV Symposium  November 9, 2006 Energy Recycling – A Convenient Truth!

KWh Useful Work / $GDP

0.0

0.1

0.2

0.3

0.4

0.5

0.6

0.7

0.8

0.9

1.0

Year

kWh

/ $G

DP

kWh of useful work per $GDP 10 per. Mov. Avg. (kWh of useful work per $GDP)

Page 9: 10 th  Annual IOF WV Symposium  November 9, 2006 Energy Recycling – A Convenient Truth!

Conversion Efficiency, Exergy to Useful Work

0%

2%

4%

6%

8%

10%

12%

14%

Year

Per

cent

of r

aw e

xerg

y to

use

ful w

ork

Conversion efficiency to useful work

5 per. Mov. Avg. (Conversion efficiency to useful work)

Page 10: 10 th  Annual IOF WV Symposium  November 9, 2006 Energy Recycling – A Convenient Truth!

Conversion Efficiency, Exergy to Useful Work work 1960-2005

9%

10%

11%

12%

13%

14%

Year

% e

ffic

ienc

y of

con

vers

ion

% input exergy to useful work 5 per. Mov. Avg. (% input exergy to useful work)

Page 11: 10 th  Annual IOF WV Symposium  November 9, 2006 Energy Recycling – A Convenient Truth!

Exergy Conversion to Useful work Exergy Conversion to Useful work by Sectorby Sector

Look at the % of exergy converted to useful work Look at the % of exergy converted to useful work in low temperature heat, high temperature heat, in low temperature heat, high temperature heat, lighting, and electricitylighting, and electricity

Electricity is by far the most efficient way to use Electricity is by far the most efficient way to use energy, butenergy, but

Efficiency has stagnated in electricity productionEfficiency has stagnated in electricity production Stagnant power industry efficiency is key to many US Stagnant power industry efficiency is key to many US

problems, including industrial competitiveness, problems, including industrial competitiveness, pollution, jobs, balance of payments, and global pollution, jobs, balance of payments, and global warmingwarming

Page 12: 10 th  Annual IOF WV Symposium  November 9, 2006 Energy Recycling – A Convenient Truth!

Conversion Efficiency of Low Temp Heat

0.0%

0.5%

1.0%

1.5%

2.0%

2.5%

3.0%

3.5%

4.0%

Year

Eff

icie

ncy

of C

on

vers

ion

Page 13: 10 th  Annual IOF WV Symposium  November 9, 2006 Energy Recycling – A Convenient Truth!

Conversion Efficiency of High Temp Heat

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%

35.0%

Year

Eff

icie

ncy

of C

onve

rsio

n

Page 14: 10 th  Annual IOF WV Symposium  November 9, 2006 Energy Recycling – A Convenient Truth!

Conversion Efficiency of Electricity to Light

0.0%

0.5%

1.0%

1.5%

2.0%

2.5%

3.0%

3.5%

Year

Effi

cien

cy o

f Con

vers

ion

Page 15: 10 th  Annual IOF WV Symposium  November 9, 2006 Energy Recycling – A Convenient Truth!

US Electric Efficiency,1900-2005

0%

5%

10%

15%

20%

25%

30%

35%

Year

% E

ffic

ien

cy

Primary Efficiency, Delivered Electricity

Page 16: 10 th  Annual IOF WV Symposium  November 9, 2006 Energy Recycling – A Convenient Truth!

Conversion Efficiency of All Electric Uses

46%

48%

50%

52%

54%

56%

58%

60%

2005

1995

1985

1975

1965

1955

1945

1935

1925

1915

1905

Year

Ele

c. C

on

vers

ion

to

Use

ful W

ork

Page 17: 10 th  Annual IOF WV Symposium  November 9, 2006 Energy Recycling – A Convenient Truth!

US Electric Efficiency,1900-2005

0%

5%

10%

15%

20%

25%

30%

35%

Year

% E

ffic

ien

cy

Primary Efficiency, Delivered Electricity Final Efficiency raw energy to useful work

Ten year Moving Average 10 year moving average

Page 18: 10 th  Annual IOF WV Symposium  November 9, 2006 Energy Recycling – A Convenient Truth!

Industry Has OptionsIndustry Has Options

Recycle energy to reduce cost Recycle energy to reduce cost and reduce pollutionand reduce pollution

Page 19: 10 th  Annual IOF WV Symposium  November 9, 2006 Energy Recycling – A Convenient Truth!

Conventional Central ApproachConventional Central Approach1960 Data (& 2003 Data)1960 Data (& 2003 Data)

Pollution

Fuel

100 units

Power Plant

=

67 units Waste Energy

33 units Electricity

End User

Waste HeatTransmission Line Losses

3 units (7.5%)

Page 20: 10 th  Annual IOF WV Symposium  November 9, 2006 Energy Recycling – A Convenient Truth!

Decentralized Generation Option Decentralized Generation Option Combined Heat and PowerCombined Heat and Power

Pollution

Recycle Waste Heat

CHP Plant

End User Site

33 units Waste Energy

=66 units Useful Work 33 units

Electricity

33 units Thermal Energy

Fuel

100 units

Page 21: 10 th  Annual IOF WV Symposium  November 9, 2006 Energy Recycling – A Convenient Truth!

Defining Recycled EnergyDefining Recycled Energy Recycled energy is useful energy Recycled energy is useful energy

derived from:derived from: Exhaust heat from any industrial process or Exhaust heat from any industrial process or

power generation power generation Industrial tail gas that would otherwise be Industrial tail gas that would otherwise be

flared, incinerated or vented, flared, incinerated or vented, Pressure drop in any gas Pressure drop in any gas

Page 22: 10 th  Annual IOF WV Symposium  November 9, 2006 Energy Recycling – A Convenient Truth!

Industrial Energy OptionsIndustrial Energy Options

ElectricitySteam

Hot Water

End User Site

Energy Recycling

Plant

Electricity

Process Fuel

Finished Goods

Waste Energy

SavedEnergy Input

Page 23: 10 th  Annual IOF WV Symposium  November 9, 2006 Energy Recycling – A Convenient Truth!

Primary Energy’s Approach Primary Energy’s Approach 90 MW Recycled from Coke Production90 MW Recycled from Coke Production

Page 24: 10 th  Annual IOF WV Symposium  November 9, 2006 Energy Recycling – A Convenient Truth!

Comparative Deployment of Combined Heat Comparative Deployment of Combined Heat and Power in 2004and Power in 2004

0

10

20

30

40

50

60

Denmar

k

Nether

lands

Finlan

d

Russia

Germ

any

Poland

Japa

n

China

Portugal

Canada

Mex

ico

WORLD US UK

Indon

esia

France

Brazil

India

Argentin

aDE

sh

are

as a

% o

f to

tal

po

wer

gen

erat

ion

Page 25: 10 th  Annual IOF WV Symposium  November 9, 2006 Energy Recycling – A Convenient Truth!

Future Generation Options

Existing Coal Fossil Plant - No new T&D

New Coal

New Combined Cycle Gas Turbine

Coal Gassification CCGT

Remote Wind

Coal Gas with CO2 Sequestration

Balanced CHP Recycled Industrial Energy

0

5

10

15

20

-10123

Average Fossil Heat Rate (Units of fossil fuel per unit of delivered electricity)

Cen

ts /

kWh

Renewable Energy Options

Central Generation

Options

No incremental fossil fuel line

Recycled Energy Options

Avg. Industrial Power Price 5.5¢ / kWh

(33% efficiency) (50% efficiency) (100% efficiency) (net fossil savings)

Avg. Retail Power Price 8.1¢ / kWh

Page 26: 10 th  Annual IOF WV Symposium  November 9, 2006 Energy Recycling – A Convenient Truth!

Power Cost and COPower Cost and CO22 Policy Choices Policy Choices

Cost down Cost / MWh Cost up

CO

2 dow

n

CO

2/M

Wh

C

O2 u

p

Coal gasification, CCGT,

Cost up, CO2 up

Central generation with coal, no criteria pollutant control

Cost down, CO2 up

Wind, Geothermal, CO2 sequestering, on grid solar

Cost up, CO2 down

CHP, industrial energy recycling(Requires local generation) off

grid solar, local hydro

Cost down, CO2 down

Cost and Emissions Today

Policy Goal

Page 27: 10 th  Annual IOF WV Symposium  November 9, 2006 Energy Recycling – A Convenient Truth!

How Can WVA Governance Spur How Can WVA Governance Spur Reduced Energy Costs & GHG Reduced Energy Costs & GHG

Modernize old rules that are now Modernize old rules that are now barriers to modern technologybarriers to modern technology

Enable Enable recycled energyrecycled energy projects to projects to capture more of value they createcapture more of value they create Reward local generation for avoiding T&D Reward local generation for avoiding T&D

capital and line lossescapital and line losses Pay part of health and environmental Pay part of health and environmental

savings to savings to energy recyclingenergy recycling facilities facilities

Page 28: 10 th  Annual IOF WV Symposium  November 9, 2006 Energy Recycling – A Convenient Truth!

More Specific WVA SuggestionsMore Specific WVA Suggestions Provide open standard offer for power Provide open standard offer for power

from energy recycling facilitiesfrom energy recycling facilities

Provide limited loan guarantees for Provide limited loan guarantees for industrial energy recycling plants, valid industrial energy recycling plants, valid only if waste energy supply ceases only if waste energy supply ceases

Identify specific barriers to efficiency Identify specific barriers to efficiency and enact new rules that serve the social and enact new rules that serve the social purpose but do not block efficiency.purpose but do not block efficiency.

Page 29: 10 th  Annual IOF WV Symposium  November 9, 2006 Energy Recycling – A Convenient Truth!

Convenient Truth:Convenient Truth:Energy Recycling Solves Multiple ProblemsEnergy Recycling Solves Multiple Problems WVA can ‘mine’ industrial waste energy, create WVA can ‘mine’ industrial waste energy, create

added revenue streams for industryadded revenue streams for industry Recycle presently wasted energy streams to provide Recycle presently wasted energy streams to provide

affordable, clean energyaffordable, clean energy

Requires unconventional, innovative governanceRequires unconventional, innovative governance Remove barriers to efficiencyRemove barriers to efficiency Pay part of health savings to recycled energy facilities Pay part of health savings to recycled energy facilities

that create those savingsthat create those savings Pay T&D savings to energy recycling facilitiesPay T&D savings to energy recycling facilities Permit energy recycling as pollution control device Permit energy recycling as pollution control device

Page 30: 10 th  Annual IOF WV Symposium  November 9, 2006 Energy Recycling – A Convenient Truth!

Denmark Changed in Two DecadesDenmark Changed in Two Decades

Source: Danish Energy CenterSource: Danish Energy Center

Page 31: 10 th  Annual IOF WV Symposium  November 9, 2006 Energy Recycling – A Convenient Truth!

Conclusions:Conclusions: Local pollution, global warming, and Local pollution, global warming, and

industrial competitiveness are all industrial competitiveness are all serious problems serious problems

The only ‘double dividend’ approach is The only ‘double dividend’ approach is energy recycling -- clean energy energy recycling -- clean energy solutions that reduce costs and solutions that reduce costs and emissionsemissions

Our collective future depends on how Our collective future depends on how fast governments remove barriers to fast governments remove barriers to efficiency and encourage clean energyefficiency and encourage clean energy

Page 32: 10 th  Annual IOF WV Symposium  November 9, 2006 Energy Recycling – A Convenient Truth!

Thank you for listening

Page 33: 10 th  Annual IOF WV Symposium  November 9, 2006 Energy Recycling – A Convenient Truth!
Page 34: 10 th  Annual IOF WV Symposium  November 9, 2006 Energy Recycling – A Convenient Truth!

Economies of Scale?Economies of Scale? Central versus Decentralized Generation Central versus Decentralized Generation

Transmission Transmission & Distribution& Distribution

$1380$1380

$138$138

$1,242$1,242

1000%1000%

GenerationGeneration

Central GenerationCentral Generation $890$890

Local GenerationLocal Generation $1,200$1,200

Savings (Excess) of Savings (Excess) of Central vs. Local Central vs. Local

GenerationGeneration$310$310

Central generation Central generation capital as a % of capital as a % of

local capitallocal capital 74%74%

Total / kW Total / kW of of

GenerationGeneration

$2,270$2,270

$1,338$1,338

$1,068$1,068

213%213%

KW KW required/ required/ kW LoadkW Load

1.441.44

1.071.07

0.370.37

135%135%

Total Total costs/ kW costs/ kW New LoadNew Load

$3,269$3,269

$1,432$1,432

$1,837$1,837

228%228%