8The
Role of Natural Gas Fired Reciprocating Engines in the Distributed Energy Market – Market Forces and Opportunities
Presented by: Ted Bronson, Associate Director Distributed Energy GTI April 23rd, 2002
Overview
Introduction – Why Recips? Reciprocating Engine DE Markets Reciprocating Engines in Power Generation Costs Regulatory Issues and Initiatives Power Generation Emissions Conclusions and Recommended Actions
Introduction GTI – Leading efforts to develop emerging DE technologies Microturbines Fuel Cells – PEM, Solid Oxide, Molten Carbonate Gas-Renewable Hybrid Systems Packaged DE Systems
Introduction
Why Recips? Untapped potential of Building IES market Proven and Improving One of few industries large enough to force change to a competitive market Today’s presentation Focus on Characteristics of Market and its Forces Discuss approaches with Regulators to open DE market
Reciprocating Engine DE Markets
Reciprocating Engines Dominate Distributed Energy Market below 7.5 MWs
Figure 1: Recip Engine and Gas Turbine Orders 6/00-5/01
1,000
Number of Units
750
5,371 8,071
Engines- diesel and gas Gas Turbines
500
250
0 2-3.5 3.5-5 5-7.5 7.5-10 10-15 15-20 20-30 30-60 60-120 120-180 180+ 1-2
Diesel & Gas Turbine Worlwide
Size of Units (MW)
Reciprocating Engine DE Markets
Why do recips dominate at smaller sizes?
Lower installed costs Several established competitors with numerous products Excellent load-following characteristics Versatility in operation Fuel versatility Fast start-up to full load operation Relatively low exhaust gas emissions levels Excellent operational performance at variable loads and high ambient temperatures Proven Reliability at these sizes Significant heat recovery potential Operator familiarity and ease of maintenance Well established sales and service infrastructure
Reciprocating Engine DE Markets
Reciprocating Engine Operating Strategies
Figure 2: Breakdown of Engine Orders by Role 2001
3096 Standby Peaking Continuous 733 6966
Diesel & Gas Turbine Worlwide
*Due to trend to reduce grid peak load demand, expect onpeak DER to be a more economic option in the future.
Reciprocating Engine DE Markets
DE Market beginning to grow Stationary reciprocating engine orders up 68% from May ’00 to June ’01 Natural gas fired reciprocating engine orders up 95% Consumers excercising choice to better control the reliability and availability of their power High costs of power outages and peak power key PUCs beginning to increase peak power rates (IL, TX) to lower peak on grid Expect emerging rates to make on-peak DE more economically attractive in the future
Reciprocating Engine DE Markets
Emerging Power Generation Applications Industrial CHP Efficiency and environmental benefits Integrated Energy Systems (BCHP) “Plug and Play” applications DOE’s Packaged System Program Energy Security “A more independent and decentralized energy system, less reliant on central power plants (e.g. potential targets) and excessive T&D networks is safer and less vulnerable to disruption” – Union of Concerned Scientists Metropolitan Energy Planning Improved / High 9s Reliability
Supply 30% of Projected Growth
5000 4500 4000
Renewable EE
DSM CHP
Electric System Demand Reduction with Aggressive DE Program
CCCT
3500
Current Grid Level
3000 1999 2010 2020
AEO 2001
Chicago Goal 6000 Million kWh
1500
Renewable =Projected Growth over next 10 Years
1680
Energy Management
CHP
Clean DG
1320 1500
Reciprocating Engine DE Markets: High 9s Reliability
Industry Costs of Grid Failures Industry Cellular Communications Telephone Ticket Salesa Airline Reservations Credit Card Operations Brokerage Operations Average Cost of Downtime $41,000 per hour $72,000 per hour $90,000 per hour $2,580,000 per hour $6,480,000 per hour
Reciprocating Engines Impact on Power Generation – Costs
Project Total Installed Cost Economics Higher for smaller units (500-1500 kws, vs >5 MWs) Challenge for IES / Building Program Drive to packaged systems and lower unit costs Factors impacting Payback Operating Cost Local Utility Rate structures Heat Recovery Cost is major factor of Reciprocating Engine dominance of < 7.5 MW market (Still not competive in some applications)
Reciprocating Engines Impact on Power Generation – Costs
Reciprocating Engines Impact on Power Generation – Costs
Pricing
Cost of Gas Driven Electricity Generation
12 10 8 ¢/kWh 6 4 2 0 0.1 5 4 3 2 1 0.2 0.3 0.4 0.5 CHP 0.6
Gas Cost, $/mmBTU Simple, 3-5¢ CCCT, 1.5-3¢
Efficiency of Electricity Generator
GTI Calculation
Regulatory Issues and Initiatives
Myths concerning DE and Reciprocating Engines: DE results in increased power costs for captive grid customers Message: DE only represents portion of planned growth, and will serve to increase grid utilization and moderate electicity prices Too much DE may cause instability to the grid Message: Recent GE study identified virtually no impact to 20%; Holland and Denmark utilizing over 40 and 50% DE. DE and Recips are “dirty” technologies Message: It depends on use, location and application (more later)
Regulatory Issues and Initiatives
Existing institutional and market barriers (see DOE report Making Connections) Standby Rates Renegotiated Rates Impact of Deregulation Tariff Issues Other utility issues DE Emissions Standards (CA, TX, RAP)
Power Generation Emissions
National Anthropogenic Mercury Emissions by Principal Combustion Source
National NOx Emissions Industrial 22% Power Generation 25% Transportation 53%
Industrial 67%
Power Generation 33%
U.S. CO2 Emissions by Sector Other 34% Power Generation 36%
National SOx Emissions Other 33%
Transportation 30%
Power Generation 67%
EPA
Power Generation Emissions
Emissions by Generation Type (lbs/MWh)
Generator Type Natural Gas CCGT Oil (2.2 % sulfur) fueled steam electric plant Oil (0.3 % sulfur) fueled combustion turbine Coal- Steam Electric Diesel Engine Natural Gas Engine NOx 0.09-3.8 3.0-3.7 3.7-6.8 6.1-9.4 17.0 3.2 CO2 770 1,770 2,190 1,960-2,310 1,700 970
i
SOx
~0 25.4 4.4 46.6 5.0 0.01
Engine Source: 2002 projections by Distributed Utility Associates for the California Air Resources Board. Other Generating Technology Source: Power Scorecard Methodology by Pace Law School Energy Project. September 22, 2000.
i
Power Generation Emissions
What does DE offset? Location: Type and location of plants by region Time of Use: On Peak vs. Off Peak Emissions
Pricing
Generation – Marginal Price
10
Cents/kWh
8 6 4 2 Night Time MWe
Day Time
Peaker – Simple Cycle, Oil Intermediate – Simple Cycle, Gas
Intermediate – CCCT Base Load – Nuclear and Coal Cumulative Capacity Dispatched Time of Day Peter Fox-Penner
Emissions
DE Improves Power Gen Emissions
NOx (lb/MWh)
ATS & CCCT CCCT, SCR & DLN Lg Simple Microturbine Sm Simple Lean Burn Engine, Catalyst Avg Coal Avg Gas
2.5 0.6 5.6 0.1 0.6 0.4 1.0 2.2 0.3
DE
0
1
2
3
4
5
6
* Modified by GTI
RAP Report
Emissions
Illinois Generation
18000 16000 14000 12000 10000 8000 6000 4000 2000 0
Hydro Coal Oil Nuc Gas
DE
GWh
CCCT
Ja n99 A pr -9 Ju 9 l-9 O 9 ct -9 Ja 9 n00 A pr -0 Ju 0 l-0 O 0 ct -0 Ja 0 n01 A pr -0 1
DOE EIA
Emissions
New York Generation
• 7,000 – 1MW DE Plant to displace Gas & Oil > 2.5 lbs/MWh
14000 12000 10000
Hydro Coal Oil Nuclear Gas
DE
GWh
8000 6000 4000 2000 0
CCCT
Ja n99 A pr -9 Ju 9 l-9 O 9 ct -9 Ja 9 n00 A pr -0 Ju 0 l-0 O 0 ct -0 Ja 0 n01 A pr -0 1
DOE EIA
Emissions
DE Emissions Impact Summary
DE can have a positive impact on emissions in most States (not Texas and CA) CCCT Represent a small portion of the electricity generation sector CCCT will be selected before simple cycle gas and oil DE will reduce the need for increases in simple cycle gas boilers/turbines and coal fired electricity CCCT does not appear to be a player in markets dominated by coal and nuclear (such as the Midwest)
Conclusions and Recommended Actions
Reciprocating Engines can serve as a bridge, or enabling technology to new DE technologies Capital and infrastructure necessary to reduce barriers and drive down installed costs Unnecessary, overly stringent standards may eliminate reciprocating engines as a choice in some markets, resulting in several limits to the overall DE market Reciprocating Engine Manufacturers and DOE can work together to: Further improve engines (lower costs, improved emissions) Develop integrated products for specifed, emerging markets that reduce overall costs. Reciprocating Engine Manufactures should work to drive national and regional industry groups working to remove barriers and open up the DE market
References
References
1996 Cost of Downtime Study” by Contingency Planning Research. “Annual Energy Outlook – 2002”, Energy Information Administration, December 2001 “Chicago’s Energy Plan” by City of Chicago Department of Environment, 2001. “DG Power Quality, Protection and Reliability Case Studies Report”. GE Corporate Research and Development, September 2001 “Distributed Energy: The Power Paradigm for the New Millennium” by Ann-Marie Borbely and Jan Kreider, 2001 “Energy Security - Solutions to Protect America’s Power Supply and Reduce Oil Dependence”, Union of Concerned Scientists, January 2002 Natural Gas Monthly, DOE/EIA-0130, November 2000 Draft Natural Gas Petroleum Council Report, December 15, 1999 Electric Utility Restructuring: A Guide to the Competitive Era, Peter Fox-Penner, 1998 May 2001, and “Profits and Progress Through Distributed Resources” – February 2000, David Moskovitz EPA, Report – “National Air Pollutant Emissions Trends” – March 2000 “Making Connections: Case Studies of Interconnection Barriers and their Impact on Distributed Power Projects” by United States Department Of Energy Distributed Power Program, Revised July 2000. “National CHP Roadmap” by United States Combined Heat and Power Association, March 2001. “Power to Choose” Distributed Energy Series by the Gas Technology Institute, February 2002. Cooling, Heating, and Power for Buildings. http://www.bchp.org Diesel & Gas Turbine Worldwide Environmental Benefits of Distributed Generation; Joel Bluestein, Energy and Environmental Analysis, Inc., December 18, 2000. United States Environmental Protection Agency, Egrid Database, 1998.