tenth annual midwest energy conference march 7, 2007 how best satisfy midwest electric load growth?...
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Tenth Annual Midwest Energy ConferenceMarch 7, 2007
How Best Satisfy Midwest Electric Load Growth?
Thomas R. CastenChairman
Recycled Energy Development
Four Questions Four Questions
Where are electricity prices headed Where are electricity prices headed over next five to ten years?over next five to ten years?
What is optimal new generation?What is optimal new generation?
What blocks optimal generation What blocks optimal generation choices?choices?
What changes would induce better What changes would induce better choices?choices?
Electricity Prices Likely to Double in Electricity Prices Likely to Double in Five to Ten YearsFive to Ten Years
Emission rules force coal plants to invest $300- Emission rules force coal plants to invest $300- $800/kW and lower efficiency, or to retire plants$800/kW and lower efficiency, or to retire plants
Long-term fuel contracts below spot marketLong-term fuel contracts below spot market
Massive investment in T&D will raise ratesMassive investment in T&D will raise rates
Carbon credits inevitable, $20/ton adds 2 Carbon credits inevitable, $20/ton adds 2 cents/kWh to Midwest delivered power costscents/kWh to Midwest delivered power costs
New coal plants require 10 to 12 cents per New coal plants require 10 to 12 cents per delivered kWh, plus carbon permit costsdelivered kWh, plus carbon permit costs
These factors will add 6 to 8 cents/kWh to These factors will add 6 to 8 cents/kWh to average retail rates.average retail rates.
Midwestern Plant Closing RiskMidwestern Plant Closing Risk
Operational Operational MW of MW of GenerationGeneration
MW over 40 MW over 40 years oldyears old
Percent Percent over 40 over 40 years oldyears old
Great LakesGreat Lakes 178,887178,887 36,23736,237 20.3%20.3%
MidwestMidwest 72,75372,753 12,71812,718 17.5%17.5%
Total Total RegionRegion
251,565251,565 48,95548,955 19.5%19.5%
How Best Satisfy Electric Load How Best Satisfy Electric Load Growth and Plant Retirement?Growth and Plant Retirement?
Lowest delivered cost per kilowatt-hour?Lowest delivered cost per kilowatt-hour?
Least criteria pollutant emissions?Least criteria pollutant emissions?
Least greenhouse gas (GHG) emissions?Least greenhouse gas (GHG) emissions?
Least requirement for system redundancy?Least requirement for system redundancy?
Lowest line losses?Lowest line losses?
Best power quality?Best power quality?
Least grid vulnerability? Least grid vulnerability?
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
Costs per Delivered MWh
($20)
$0
$20
$40
$60
$80
$100
$120
$140
Conv. C
oal
ICGGT c
oal
CCGT gas
CCGT CHP
BP Turb
.
Heat R
ec.
$ p
er
de
liv
ere
d M
WH
Fuel Emissions Other Ops Amortization
Lowest Cost Central Option
Local Options that Recycle Energy
Central Gen Options
Conventional Central GenerationConventional Central Generation
Fuel
100%
33% delivered electricityPower Plant
T&D and Transformers
Pollution
67% Total Waste
Line Losses 9%
Generation:$1200-$2500/kW
Transmission:$1,400/kW
End user: .91 kW:$2,900-$4,100/peak kW
Combined Heat and Power Combined Heat and Power (CHP)(CHP)
Fuel
100%Steam
Electricity
Chilled Water
90%
10% Waste Heat, no T&D loss
Pollution
(At or near thermal users)
CHP Plants
Generation:$1,200 -$1,600/kW DG vs. CG:
Transmission $140/kW (10% CG)
End users: .98 kW$1,400 -$1,800/kW Saves $1,100-$1,700/kW
Recycled Energy Recycled Energy ((At user sites)
Waste Energy
100%
10% Waste Heat
Steam Generator
70%
Steam
25% Electricity
BP Turbine Generator
No Added Pollution
Capital costs similar to other CHP or DG plants
Potential to Recycle EnergyPotential to Recycle Energy
Convert industrial waste energy into heat and power with Convert industrial waste energy into heat and power with on-site energy recycling plantson-site energy recycling plants
95,000 megawatts potential , 9,900 MW in service95,000 megawatts potential , 9,900 MW in service
Build Combined Heat and Power (CHP) near thermal Build Combined Heat and Power (CHP) near thermal users to recycle waste thermal energyusers to recycle waste thermal energy
Potential for up to ½ of all US generated power with CHP plantsPotential for up to ½ of all US generated power with CHP plants
Best New Generation: Recycle Industrial Best New Generation: Recycle Industrial EnergyEnergy
Wasted energy streams in nineteen industries could Wasted energy streams in nineteen industries could generate 19% of US electricitygenerate 19% of US electricity
Source:USEPA 2004 Study
Recycled Energy in the US
Identified Opportunities
95,000 MW95,000 MWRecycled Energy
in Service
9,900 MW9,900 MW
US Industrial Recycled Energy US Industrial Recycled Energy Potential Potential
..
Gas compressor stations: 16,200 GWhGas compressor stations: 16,200 GWh
Flare & stack gas: 148,000 GWhFlare & stack gas: 148,000 GWh
Steam pressure drop: 78,000 GWhSteam pressure drop: 78,000 GWh
Estimated exhaust heat: 300Estimated exhaust heat: 300,000 G,000 GWhWh
Total Potential: 492,000 GWhTotal Potential: 492,000 GWh
Est. Recycled Energy Cap. 95,000 MWEst. Recycled Energy Cap. 95,000 MW
For all remaining thermal load, install CHP plants, For all remaining thermal load, install CHP plants, fueled with gas, coal, and biomassfueled with gas, coal, and biomass
CO2 Emissions Per Delivered MWHBy Generation Type
0
0.2
0.4
0.6
0.8
1
1.2
1.4
Conv. Coal IGCC Coal CCGT gas CCGT CHP BP Turbine Recycled Energy
Power Generation Approach
To
ns
CO
2 p
er
De
liv
ere
d M
Wh
Tons CO2 per delivered MWH
Central Generation Options Local Generation Options
$0
$20
$40
$60
$80
$100
$120
$140
Conv. Coal IGCC Coal CCGT gas CCGT CHP BP Turbine RecycledEnergy
0.0
0.2
0.4
0.6
0.8
1.0
1.2
1.4
Delivered Cost per MWh Tons CO2 per delivered MWH
Cost and CO2 per Delivered MWh
Local Plants that Recycle Energy
Central Plants
Unique Midwest Option for Unique Midwest Option for Load GrowthLoad Growth
Induce CHP at every ethanol plantInduce CHP at every ethanol plant
50 MW each plant, 90% efficient, avoids 50 MW each plant, 90% efficient, avoids transmission investments, less GHG,transmission investments, less GHG,
ANDAND
Slashes cost of ethanolSlashes cost of ethanol
Ethanol Hosted CHPEthanol Hosted CHP
Local Boiler, Local Boiler, Central Central ICGCCICGCC
50 MW Gas 50 MW Gas CHP local CHP local generationgeneration
Local Local savings savings versus CGversus CG
Fossil Fossil MMBTU/hrMMBTU/hr
645645 412412 36%36%
Tons CO2 per Tons CO2 per yearyear
467,000467,000 213,000213,000 54%54%
Fossil BTUs/ Fossil BTUs/ Gallon EthanolGallon Ethanol
34,60034,600 200200 98%98%
Cost/delivered Cost/delivered kWhkWh
$0.11$0.11 $0.07$0.07 36%36%
CO2/Year from 55 Million Gallon CO2/Year from 55 Million Gallon Ethanol Plant & 50 MW Electricity/hrEthanol Plant & 50 MW Electricity/hr
050
100150200250300350400450500
Boiler, central ICGCC CCGT Gas Turbine CHP
M Tons CO2/year
What Blocks Optimal Local What Blocks Optimal Local Generation?Generation?
Conventional wisdom is biased to CGConventional wisdom is biased to CG CG easier to plan and controlCG easier to plan and control
Decisions based on cost at generation plant, Decisions based on cost at generation plant, instead of on cost of delivered kWhinstead of on cost of delivered kWh
Monopoly protection creates barriers to local genMonopoly protection creates barriers to local gen
Local gen not paid for values it creates, including Local gen not paid for values it creates, including T&D capital savings, line loss avoidance, CO2 T&D capital savings, line loss avoidance, CO2 reduction, and health savingsreduction, and health savings
Central gen and associated T&D guaranteed by Central gen and associated T&D guaranteed by rate payers, local gen not guaranteedrate payers, local gen not guaranteed
What Would Induce Optimal What Would Induce Optimal Generation Choices?Generation Choices?
Long-term contracts for best delivered kWhLong-term contracts for best delivered kWh
Pay local generation plants for grid supportPay local generation plants for grid support
Factor in health and environmental costs in Factor in health and environmental costs in generation decisionsgeneration decisions
Insure new industrial energy recycling Insure new industrial energy recycling plants against risk of host ceasing to plants against risk of host ceasing to supply waste heatsupply waste heat
Monetize carbon emissionsMonetize carbon emissions
SummarySummary
Power prices will likely double in 5-10 yearsPower prices will likely double in 5-10 years Best option for new generation is local Best option for new generation is local
generation that recycles waste energy.generation that recycles waste energy. CHP at ethanol plants saves 36% to 54% CHP at ethanol plants saves 36% to 54%
versus new central coal plant generation, versus new central coal plant generation, and makes ethanol competitiveand makes ethanol competitive
Barriers and denial of benefits blocks good Barriers and denial of benefits blocks good generation choicesgeneration choices
Regulators can fix the bias and induce best Regulators can fix the bias and induce best new generation.new generation.