A Customer Guide to Distributed Generation - ONE Gas

A CUSTOMER GUIDE TO DISTRIBUTED GENERATION

BROUGHT TO YOU BY

AND ITS DIVISIONS

TABLE OF CONTENTS Introduction

01

Backup Generation

04

Combined Heat and Power

08

Microgrids

28

Available Resources

32

This guide is intended to provide an overview of distributed generation systems, benefits associated with such systems as well as market opportunities.

ONE Gas: • Makes no warranty or representation, express or implied, with respect

to the accuracy, completeness or usefulness of the information contained within, and • Assumes no liability, including but not limited to liability for damages, arising

or resulting from the use of any information contained in this guide.

The background and understanding of the applications for distributed generation is a good starting point to take the next steps and get involved in more detail about the facets of the market, specifically the technology, drivers, economics, environmental benefits and future potential of distributed generation.

01

INTRODUCTION TO DISTRIBUTED GENERATION For every business, resiliency is paramount. Whether it be a natural disaster, electrical grid disruption or other unforeseen situation, it is important that your business has strategically positioned itself as much as possible to continue operating normally. The natural gas infrastructure system can provide you with that peace of mind.

The United States has the most extensive natural gas delivery network in the world with: • More than 300,000 miles of natural gas transmission pipelines • More than 2.2 million miles of natural gas distribution pipelines

As a natural gas utility, ONE Gas can provide you access to that infrastructure and offer you solutions which can be tailored to your business needs. These solutions can lower energy cost, increase efficiency, improve reliability and reduce the environmental footprint of your business.

The following are some examples of the solutions ONE Gas can help you implement:

Natural Gas Backup Generation Onsite natural gas generators can provide the power reliability your business needs. With this solution you can avoid some of the pitfalls of diesel generation.

The units have lower emissions and operate at much quieter levels. There is also no need for onsite storage, refilling or the odor associated with diesel.

02

A Customer Guide to Distributed Generation

Combined Heat and Power System (CHP) A CHP system uses natural gas to generate electricity onsite while capturing the heat generated during that process to then also use in your operations.

Those uses could be to heat the building, cool the building or as part of your manufacturing process. The use of this heat significantly increases the energy efficiency of your business and reduces not only costs, but environmental impacts as well.

Microgrid A microgrid system will include one of the above solutions as well as a mix of renewable energy such as solar, wind and energy storage technologies.

By having a natural gas backbone, the microgrid can avoid the downside of intermittent solar and wind energy while providing a resilient, environmentally friendly solution.

Consider the following questions when reviewing goals for your business.

Do you have: • Need for high reliability and resiliency of operations?

• Concern over current or future electricity prices?

• Interest in reducing environmental impact?

• Planned facility expansion?

• Equipment replacement or new construction?

If your answer is “YES” to one or more of the questions above, ONE Gas can help you navigate the solution that is best for your business. We have established relationships with leading firms in the industry and will work with you to determine which one will help you reach the goals for your organization.

03

BACKUP GENERATION What is it?

The installation of a natural gas generator to back up critical business infrastructure or the entire customer site during a loss of power.

How does it benefit the customer?

• Provides business continuity during an electrical outage • Prevents lost revenue, inventory loss and shutdown/startup costs due

to an outage • Can be used as part of a Demand Response Program to reduce electric

demand charges

˚

Demand Response Program - A voluntary program that provides end-use customers with the ability to manage their electricity use in response to conditions in the market. They can reduce their electricity consumption when prices are high, or the reliability of the grid is threatened, achieving economic benefits for the reductions they make.

EFFECTS OF DEMAND SIDE MANAGEMENT (DSM) MW

Hours in a Day

04

A Customer Guide to Distributed Generation

Who needs backup generation?

• 24-hour operations • Manufacturing facilities • Products that could go bad during a loss of power (refrigeration) • Older diesel generators • Any customer who has an interest in resiliency

NATURAL GAS VERSUS DIESEL Diesel • Standby generation is dominated by diesel • Primarily runs when there is a grid outage • Limited run time outside of a grid outage • Higher emissions • Onsite fuel storage and fuel maintenance • Hard to run Demand Response or Energy Management Programs due to

emissions requirement • Needs to be Tier 4 diesel engine • Cost 50% more than comparable natural gas engine

Natural Gas • Favorable for Demand Response or Energy Management Programs • Fewer emissions • No onsite fuel storage or fuel maintenance • Lower fuel costs • Resilient delivery infrastructure

05

TOP MANUFACTURERS OF BACKUP GENERATORS* Caterpillar www.cat.com/en_US/products/new/power-systems/electric-powergeneration/gas-generator-sets.html

Cummins www.cummins.com/generators

*ONE Gas does not endorse any particular product, manufacturer or distributor, and encourages customers to check contractor references and do independent research before moving forward with any project.

06

A Customer Guide to Distributed Generation

Generac www.generac.com/all-products/generators/commercial-generators#?cat=317

Kohler www.kohlerpower.com/en/generators/industrial/products/Gaseous+Generators

07

COMBINED HEAT AND POWER Combined Heat and Power (CHP) is the generation of two forms of energy from one common source of fuel also known as Cogeneration.

FUEL

Waste Heat Recovered

HEAT & HOT WATER

Prime Mover & Generator

ELECTRICITY

Conventional Heating & Electric The CHP system is typically located at or near your building and generates

CHP System

power Power Plantwith the added benefit of 35 recovering the waste 110 electricity or mechanical ELECTRICITY ELECTRICITY FUEL % steam or warm air to meet thermal needs. This 32 water, Efficient Units Units heat in the form of hot high quality and reliable power system provides a secure energy source along CHP 80% Efficiency with the ability to provide hot water, heating, cooling or de-humidification of 56 your facility.

FUEL Units

Furnace/Boiler 80% Efficient

HEAT

The key to an efficient and economical CHP system is having the need for simultaneous use of both electricity and heat.

Heat to users Recuperator

xhaust 08

A Customer Guide to Distributed Generation

45 Units

HEAT

CHP is not a single technology, but an integrated energy system that can be modified depending upon the needs of the energy end user. These systems simply capture and utilize excess heat generated during the production of electric power. CHP systems offer economic, environmental and reliabilityrelated advantages compared to power generation facilities that produce only electricity. Distributed power generation systems, which are frequently located near thermal loads, are particularly well-suited for CHP applications.

The total CHP system efficiency is the combination of electrical efficiency and the efficiency of capturing the usable waste heat. By capturing and using the waste heat, CHP systems consume approximately 40% less energy than grid power and heating with a boiler.

Because greenhouse gas emissions are related to energy consumption, CO2 emissions are generally lower with CHP than using conventional grid power and Waste Heat Recovered

a boiler.

FUEL

HEAT & HOT WATER

Prime Mover & Generator

High Temp Heat

ELECTRICITY

CONVENTIONAL HEATING & ELECTRIC

CHP SYSTEM

Conventional Heating & Electric 110 Units

FUEL

Power Plant 32% Efficient

CHP System

ELECTRICITY

35 Units

ELECTRICITY CHP 80% Efficiency

56 Units

FUEL

Furnace/Boiler 80% Efficient

SYSTEM EFFICIENCY ˜48%

HEAT

45 Units

FUEL

100 FUEL Units

HEAT

SYSTEM EFFICIENCY ˜80%

93% CH4 GAS Heat to users Exhaust

Fuel Process

Recuperator

09

21% 79%

PRIME MOVERS There are five types of prime movers for CHP systems: • Reciprocating Engines • Combustion Turbines • Microturbines • Steam Turbines • Fuel Cells

10

A Customer Guide to Distributed Generation

92

EFFECIENT

About 8% lost in generation and delivery Exhaust CO2 & N2

+

93% CH4 GAS

Heating Loop

HYDROGEN Fuel Processor

Heat to users

Hot Water Outlet

Exhaust

Fuel Cell Stack

Co

Water Inlet

AIR

Combustor

FUEL

ol

Co

Buffer Tank

Generator

Excess Power to Grid

21% O2 79% N2

Potential waste heat recovery

Heat Exchanger Engine

AIR

in g

Compressor

Electricity to plant or utility grid

Turbine

Generator

Residential Commercial Industrial

Generator

Energy Demand

Monitor Control Balance

Electric Vehicles

•

High fuel efficiency

•

30 – 200 ekW sizes available

•

Lower initial costs vs. larger turbines

•

Lightweight and small footprint

•

Best for variable load applications

•

Multi-fuel capability

•

More tolerant to high ambient % conditions and high elevations 32

• Air-cooled

EFFECIENT

Waste Heat Recovered

HEAT & HOT WATER

Prime Mover & Generator

ELECTRICITY

Lower fuel pressure requirement

About 68% lost in generation and delivery

Conventional Heating & Electric

•

Accepts low BTU fuels

•

% Online in less than 30 seconds

•

Offers “black start” capability

92

110 Units

FUEL

Power Plant 32% Efficient

ELECTRICITY

35 Units

56 Units

FUEL

Furnace/Boiler 80% Efficient

HEAT

45 Units

•

Ultra low emissions

•

High reliability

•

Minimal scheduled maintenance

High Temp Heat

Low Temp Heat

Generating Bank

Economizer

CHP System

ELECTRICITY

•

CHP 80% Efficiency

HEAT

FUEL

100 FUEL Units

Accept various fuel sources

Shell & Tube Heat Exchanger

About 8% lost in generation and delivery Exhaust CO2 & N2

93% CH4 GAS Heat to users

Heating Loop

Exhaust

+ HYDROGEN Fuel Processor

Fuel Cell Stack

Co

Buffer Tank Generator

Water Inlet

21% O2 79% N2 Combustor

FUEL

Electricity to Building

Compressor

AIR

in g

i n g Loop

HEAT

L o op Heat Exchanger

Electricity to plant or utility grid

AIR

COMBUSTION TURBINES

ol

Co

Potential waste heat recovery

Heat Exchanger

Excess Power to Grid

AC

Customer Load

ol

WATER

Engine

Inverter

DC

_

Recuperator

Turbine

FUEL CELLS Generator

Residential Commercial Industrial

Energy Demand

Utility Grid

Generator

Monitor Control Balance

Electric Vehicles

Renewables

Storage

•

Grid-independent operation

•

Electric load following

High exhaust temperatures: 480 C / 900 F

•

Multi-megawatt capacity

•

Require low pressure natural gas

Low weight and minimal space requirement

•

Low noise and vibration

•

Ultra-low emissions

•

Very simple design

•

~10-year cell stack life

•

Lower emissions capabilities

•

Ideal for 24/7 operation

•

Accept high or low BTU fuels

•

Require high pressure natural gas

• • •

Well-suited for CHP w/ large heat to ekW ratio

Renewa

Storage

EFFECIENT

Hot Water Outlet

L o op

MICROTURBINES

Electricity to Building

FUEL

i n g Loop

Heat Exchanger

Utility Grid

•

AC

Customer Load ol

WATER

RECIPROCATING ENGINE

Inverter

DC

_

Recuperator

11

RECIPROCATING ENGINES Reciprocating engines are the most common and technically mature of all CHP technologies. They are available from small (e.g., 1 kW for residential generation) to large generators (e.g., 7 MW). Typically, any power generation system smaller than 50 kW is considered micro-CHP. Current available natural gas engines offer low first-cost, fast start-up, proven reliability when properly maintained, excellent load-following characteristics and significant heat recovery potential.

Electric efficiencies of natural gas engines range from 28% lower heating value (LHV) for small engines (<100 kW) to over 40% LHV for very large lean burn engines (> 3 MW). Waste heat can be recovered from an engine exhaust, jacket water and oil cooling systems to produce either hot water or low pressure steam for CHP applications. Overall CHP system efficiencies (electricity and useful thermal energy) of 70% to 80% are routinely achieved with natural gas engine systems.

Reciprocating engine technology has improved dramatically over the past three decades, driven by economic and environmental pressures for power density improvements (more output per unit of engine displacement), increased fuel efficiency and reduced emissions. Computer systems have greatly advanced reciprocating engine design and control, accelerating advanced engine designs and making possible more precise control and diagnostic monitoring of the engine process. Engine manufacturers and worldwide engine R&D firms continue to drive advanced engine technology, including accelerating the diffusion of technology and concepts from the automotive and marine markets to the stationary market.

12

A Customer Guide to Distributed Generation

92

EFFECIENT Electric Vehicles

Storage

About 8% lost in generation and delivery

COMBUSTION TURBINES

Heat to users

Hot Water Outlet

Heating Loop

Exhaust

Potential waste heat recovery

Heat Exchanger Buffer Tank

Engine Generator

Excess Power to Grid

R

Water Inlet

AIR

Compressor

Electricity to Building

Conventional combustion turbine (CT) generators are a very mature technology. They typically range in size from about 500 kW to over 100 MW for central power generation.

They are fueled by natural gas, oil or a combination of fuels (dual fuel). Modern single-cycle combustion turbine units typically have efficiencies in the range of 20% to 45% at full load. Efficiency is somewhat lower at less than full load.

Gas turbine CHP systems burn fuel to generate electricity and then use a heat recovery unit to capture heat from the combustion systemâ&#x20AC;&#x2122;s exhaust stream.

This heat is converted into useful thermal energy, usually in the form of steam, hot water or heated air. Gas turbines are ideally suited for large commercial or industrial CHP applications requiring ample amounts of electricity and heat.

Gas turbines can be used in a simple cycle combined heat and power operation, or combined cycle operation in which high pressure steam is generated from recovered exhaust heat and used to create additional power using a steam turbine. Some combined cycles extract steam at an intermediate pressure for use in industrial processes as well.

Gas turbines produce high-quality exhaust heat that can be used in CHP configurations to reach overall system efficiencies of 70% to 80%. The efficiency and reliability of smaller gas turbines (1 to 40 MW) are an attractive choice for industrial and large commercial users for CHP applications.

13

CHP 80% Efficiency 56 Units

92

%

Furnace/Boiler 80% Efficient

FUEL

45 Units

HEAT

FUEL

100 FUEL Units

HEAT

S

EFFECIENT

About 8% lost in generation and delivery

MICROTURBINES

93% CH4 GAS

HYDROGEN Fuel Processor

Heat to users

Hot Water Outlet

Heating Loop

Exhaust

Recuperator

WATER

Buffer Tank

Engine

Water Inlet

Generator

Excess Power to Grid

21% O2 79% N2

Potential waste heat recovery

Heat Exchanger

Combustor

FUEL

AIR

Compressor

Electricity to Building

AIR

Electricity to plant or utility grid

Turbine

Generator

Res Com Ind

Microturbines are small combustion turbines that produce between 30 kW and 200 kW of power. Microturbines were Utility Grid

derived from turbocharger technologies found in large trucks or the turbines in aircraft auxiliary power units

El Ve

(APUs). Most microturbines are single-stage, radial flow devices with high rotating speeds of 90,000 to 120,000 revolutions per minute.

Waste Heat HEAT & HOT WATER

Recovered

A few manufacturers have developed alternative systems with multiple stages Prime Mover & FUEL

ELECTRICITY

and/or lower rotation Generator speeds.

High Temp Heat

Gen

Microturbine generators can be divided in two general classes: Conventional Heating & Electric

CHP System

Recuperated microturbines , which recover heat from the exhaust gas to Power Plant 35 110

•

FUEL

ELECTRICITY

ELECTRICITY

32 Efficient Units boost the temperature of combustionUnits and increase the efficiency %

CHP

FUEL

100 FUEL

Efficiency Units Unrecuperated microturbines , which have lower 80% efficiencies but also lower Furnace/Boiler 56 45

•

FUEL

Units capital costs

80% Efficient

HEAT

Units

HEAT

Sh

While most early product introductions featured unrecuperated designs, today’s products are focused on recuperated systems. The recuperator recovers heat from the exhaust gas and boosts the temperature of the air stream supplied to the combustor. Further, the exhaust heat recovery can be used in a CHP configuration. The figure below illustrates a recuperated microturbine system.

93% CH4 GAS Heat to users Exhaust

HYDROGEN Fuel Processor

Recuperator

WATER

Potential waste heat recovery

21% O2 79% N2 Combustor

FUEL

Electricity to plant or utility grid

AIR

Compressor

AIR

Turbine

Generator

Resid Comm Indu

14

A Customer Guide to Distributed Generation

STEAM TURBINES Steam turbines are one of the oldest prime mover technologies that are still used to drive a generator or mechanical machinery.

Power generation using steam turbines has been in use for over 100 years, when they replaced steam engines due to their higher efficiencies and lower costs. Most of the electricity produced in the United States today is generated by conventional steam turbine power plants. The capacity of steam turbines can range from 50 kW to 1,500 MW for large utility power plants. Steam turbines are widely used for CHP applications in the U.S. and Europe.

Unlike gas turbine and reciprocating engine CHP systems where heat is a byproduct of power generation, steam turbines normally generate electricity from heat (steam). A steam turbine is captive to a separate heat source and does not directly convert fuel to electric energy. The energy is transferred from the boiler to the turbine through high pressure steam that in turn powers the turbine and generator. This separation of functions enables steam turbines to operate with a wide variety of fuels. In CHP applications, steam at lower pressure is extracted from the steam turbine and used directly in a process or for district heating, or it can be converted to other forms of thermal energy, including hot or chilled water.

Steam turbines offer a wide array of designs and complexity to match the desired application and/or performance specifications. Steam turbines for utility service may have several pressure casings and elaborate design features, all designed to maximize the efficiency of the power plant. For industrial applications, steam turbines are generally of simpler single-casing design and less complicated for reliability and cost reasons. CHP can be adapted to both utility and industrial steam turbine designs.

15

High FUEL CELLS Temp Heat

Generating Bank

than traditional prime mover technologies. Fuel cell stacks available and under development are silent, produce no pollutants, have few moving parts and have FUEL

100

FUEL Units relatively high fuel efficiencies.

Shell & Tube Heat Exchanger

Fuel cell systems with their ancillary pumps, blowers and reformers maintain most of these advantages. A schematic of a fuel cell-based CHP system is shown below.

Exhaust CO2 & N2

93% CH4 GAS

+ HYDROGEN Fuel Processor

Fuel Cell Stack

Inverter

DC

AC

_ Customer Load

Co

ol

WATER 21% O2 79% N2

ol

Co

city t or grid

Economizer

Fuel cells offer an entirely different approach to the production of electricity

m

ncy

Low Temp Heat

AIR

in g

i n g Loop

HEAT

L o op

Heat Exchanger

Fuel cells produce power electrochemically from hydrogen delivered to the negative pole (anode) of the cell and oxygen delivered to the positive pole (cathode). The hydrogen can come from a variety of sources, but the most economic method is by Residential reforming of natural gas. There are several different Generator

Commercial

Industrial liquid and solid media that support these electrochemical reactions â&#x20AC;&#x201D;

phosphoric acid (PAFC), molten carbonate (MCFC), solid oxide (SOFC) and proton exchange membrane (PEM) are the most common systems. Each of these media comprises a distinct fuel cell technology with its own performance.

Fuel cell efficiencies range from 35-40% for the PAFC to upwards of 60% for the SOFC Utilitysystems.

Grid

16

Energy Demand

Monitor Control Balance

A Customer Guide toElectric Distributed Generation Vehicles

Renewables

Storage

32

%

MICRO-CHP

EFFECIENT

About 68% lost in generation and delivery

Micro-CHP systems in small commercial buildings are generally designed to be controlled by heat-demand, delivering electricity as the byproduct. Although similar to large CHP systems, these small systems generate heat that is pumped

92

through a heat exchanger and used for water heating or heating loads. The

%

generator provides power for onsite consumption and may exceed actual facility

EFFECIENT

use. In this case, there may be an option to sell power back to the local electric utility lowering the total operating cost.

About 8% lost in generation and delivery

Hot Water Outlet

Heating Loop

Heat Exchanger Buffer Tank

Engine Generator

Excess Power to Grid

Water Inlet

Electricity to Building

There are several prime movers that can be used for micro-CHP applications.

Micro-CHP Size For the purpose of this guide, micro-CHP appliances are cogeneration systems less than or equal to 50kW in size.

17

DIFFERENCE BETWEEN MICRO-CHP AND LARGE CHP Many large commercial and industrial CHP applications are electricity-led where electricity is the main output and heat is a byproduct. These systems are typically sited in “campus” type environments such as office complexes, hospitals and college buildings where the heat can be efficiently utilized for space heating or cooling applications.

Micro-CHP systems in residences or smaller commercial applications are more often heat-led. Heat is the main output and electricity is the byproduct.

Depending on application, the CHP system can be either electric-led or heat-led.

DRIVERS AND ADVANTAGES OF MICRO-CHP Micro-CHP product development started in the 1990’s in Europe and Japan and was spurred on by increasing energy prices as well as a concern for air quality/ emissions issues in those regions. Energy awareness is the main driver for the changes coming in the micro-CHP field.

Interest in micro-CHP is growing due to: • High electric costs versus natural gas costs (spark spread) • Increased number of power outages and duration • Interest in renewable energy and energy efficiency,

both from a consumer and utility standpoint • System costs are decreasing as the market grows • More new products are entering the market • Government policies and utility awareness have led to

changes to incorporate new technologies

18

A Customer Guide to Distributed Generation

WASTE HEAT RECOVERY A waste heat recovery unit is a heat exchanger that recovers heat from exhaust streams with potential high energy content, such as exhaust gases or from cooling water from a CHP system.

Numerous options exist for the use of waste heat including: • Steam (low pressure and high pressure) • Hot water • Chilled water

There are many commercially available heat recovery systems and technologies.

• Heat recovery steam generator (HRSG) • Shell and tube, plate and frame heat exchangers • Absorption chillers

Typical system exhaust temperatures are: • Combustion Turbine: 900 – 1,000°F • Recuperated Micro-Turbine: 500 – 600°F • Reciprocating Engine: 900 – 1,000°F • Fuel Cell: 600 – 700°F

A HRSG is a steam boiler that uses hot exhaust gases from the gas turbines or reciprocating engine to heat up water and generate steam. The steam, in turn, drives a steam turbine or is used in commercial applications that require heat. Sometimes a duct burner may be incorporated into the exhaust stream to increase temperatures to provide higher quality steam from the HRSG. Heat exchangers are available in several configurations that offer very economical heat recovery options.

19

Plate and frame heat exchangers are composed of multiple thin, slightly separated plates that have very large surface areas and fluid flow passages for heat transfer.

Shell and tube heat exchangers consist of a series of tubes. These tubes contain the fluid that will be either heated or cooled. The second fluid is in the shell and is pumped around the tubes to transfer the heat to the initial loop.

Waste heat recovery process systems have many benefits for CHP applications.

The recovery process adds to the efficiency of the CHP system, decreasing the fuel and energy consumption needed for other applications at the facility (i.e. water or space conditioning). Other benefits can include the reduction in equipment sizes. As fuel consumption is reduced (due to the recovered heat), the size of the heating or water heating equipment normally used for that application can be downsized.

High Temp Heat

Low Temp Heat Generating Bank

Economizer

00 nits

% CH4 GAS

Shell & Tube Heat Exchanger

Exhaust CO2 & N2

+ HYDROGEN Fuel

Fuel Cell

DC

Inverter

Stack 20Processor A Customer Guide to Distributed Generation

AC

_

Customer Load

C

SITE VS. SOURCE Today, energy efficiency and environmental impacts are on everyone’s mind.

Understanding the real costs of the energy we consume in our buildings is also very important. Statements about electricity being 100% efficient can be misleading. That analysis simply focuses on the efficiency at the end-use device — an energy-using piece of equipment — and doesn’t take into account the entire energy delivery process from generation-to-end use. A significant amount of energy is wasted just to produce the electrical power that is ultimately delivered to your facility. Natural gas comes directly from the well to your facility.

More natural gas energy potential is delivered to your equipment onsite, making natural gas a far more efficient energy choice overall. Industry analysis shows that the production, transmission and delivery of electricity to the market has an overall efficiency of just 32%. This compares to natural gas efficiency at 92%.

These numbers reflect the total energy expended during the productionthrough-delivery process compared to the net energy delivered for use.

FUEL

Co 110 Units

FUEL

56 Units

FUEL

Exhaust

AIR

21

ENVIRONMENTAL BENEFITS CHP plays an important role in meeting energy needs as well as in reducing the environmental impact of power generation. Because less fuel is burned to produce each unit of energy output, CHP reduces air pollution and greenhouse gas emissions.

Natural gas CHP is the best choice for lowering carbon-based emissions. Below is an example of a 1,000 kW CHP system compared to purchasing grid power.

CO2 EMISSIONS FOR U.S. AVERAGE MARGINAL POWER MIX FROM 1,000 KW RUNNING 8,500 HOURS PER YEAR 8,000

6,000

4,000

2,000

0

U.S. Marginal Grid Power Mix

IC Engine

Combustion Turbine

Micro Turbine

Fuel Cell

According to the U.S. Energy Information Administration, gas-fired CHP equipment offers the lowest carbon emissions versus alternate fueled technologies. Further, additional exhaust treatments, including Selective Catalytic Reduction (SCRs), are available that can further improve the total exhaust emissions.

22

A Customer Guide to Distributed Generation

Fuel cell systems have inherently low emissions profiles because the primary power generation process does not involve combustion. The fuel processing subsystem does not require any emissions control devices to meet current or projected regulations.

While not considered a pollutant in the ordinary sense of directly affecting health, CO2 emissions do result from the use of fossil fuel-based CHP technologies. The amount of CO2 emitted in any of the CHP technologies discussed depends on the fuel carbon content and the system efficiency. Only 117 pounds of CO2 are produced for every MMBTU of natural gas burned versus 161 pounds per MMBTU for fuel oil and 205 pounds per MMBTU for coal.

The use of natural gas is emerging as the preferred fuel choice for CHP. This is due to natural gas being widely available and competitively priced versus other fuel sources. Further, public policy and the local â&#x20AC;&#x153;green marketâ&#x20AC;? are causing businesses and institutions to rethink and consider gas-fired CHP. In addition to cost-savings, CHP technologies offer significantly lower emissions rates compared to separate heat and power systems. The example below compares a 1,000 kW engine-driven CHP system to emissions from grid power for the U.S. marginal power mix.

SO2 AND NOX EMISSIONS FROM THE GRID VS. 1,000 KW IC ENGINE RUNNING 8.500 HOURS PER YEAR 14,000 10,500

GRID POWER 7,000

IC ENGINE CHP

3,500 0 SO2

NOX

23

ECONOMICS Cost is an important factor when considering the purchase of any product, including CHP. However, determining the cost of CHP technology can be difficult. In addition to equipment or capital costs, there are other expenses related to installing the equipment. Once the system is installed and operational, there are energy costs and ongoing maintenance costs.

Substantial energy savings should be expected as well. The system should generate power at a cost below purchasing electricity from the grid­â&#x20AC;&#x201D; also known as Spark Spread, and the use of the waste heat generated from the CHP system reduces use of thermal energy.

Equipment costs for CHP technologies are often quoted in terms of their cost per kilowatt of electricity produced, or $/kW. The larger the CHP system, the lower the installed cost per kW. Purchasing a system that matches your thermal need will offer the best economics with payback estimated to be 3-5 years.

A Life Cycle Cost analysis should be conducted, which considers all costs of operating the system over the expected life of the equipment. This type of analysis is useful when comparing different system options to that of continuing with business as usual purchasing electric from the grid.

24

A Customer Guide to Distributed Generation

Residential Commercial Industrial

Generator

A typical CHP system life expectancy is 20 years. A CHP life cycle cost analysis will consider 3 things over the 20-year life: Utility Grid

Energy Demand

Monitor Control Balance

Renewables

110 Units

• All capital costs amortized over 20 years at current loan interest rate.

• Expected energy costs for the 20 years. The cost in year one uses current

56 Units

energy rates and each subsequent year should increase slightly as we Electric Vehicles

Storage

assume energy will cost more in 20 years than it does today. A typical annual energy escalation clause is 1%-2%.

• Maintenance costs for each of the 20 years.

˚

The assumption is that the CHP system will require more maintenance in later years of operating. Some manufacturers offer maintenance plans that include costs for minor updates as well as major overhauls of the system.

A CHP analysis tool that calculates simple payback, IRR, Life Cycle Costs and CO2 emissions is available at: https://understandingchp.com/resources/payback-tool/ This tool compares four prime movers to the ‘do-nothing’ scenario.

25

SPARK SPREAD

A 3 or higher is a good spark spread.

26

A Customer Guide to Distributed Generation

Spark spread is the relative difference between the price of fuel and the price of power. Spark spread is highly dependent on the efficiency of conversion. For a CHP system, spark spread is the difference between the cost of fuel for the CHP system to produce power and heat onsite and the offset cost of purchased grid power.

AVERAGE RETAIL U.S. COMMERCIAL ENERGY PRICES INCLUDING SHORT TERM ENERGY INFORMATION ADMINISTRATION (EIA) OUTLOOK ($/MMBTU)

27

High Temp Heat

P System

CHP Efficiency

Low Temp Heat

MICROGRIDS FUEL

Generating Bank

Economizer

100 FUEL Units

• A microgrid is a hardware/software solution to a critical, localized need for Shell & Tube Heat Exchanger

continuous electricity regardless of power or climate conditions

˚

Software solution manages the generation equipment based on a predetermined set of goals to reduce cost, emissions, etc.

Exhaust CO2 & N2

• Resiliency is provided by multiple pieces of generation equipment, which

could include: 93% CH GAS 4

+

HYDROGEN

Fuel Processor

Fuel Cell Stack

WATER

Electricity to plant or utility grid

ol

Co

21% O2 79% N2

AIR

Inverter

DC

AC

_ Customer Load

Co

˚ Natural gas engines ˚ Combined Heat and Power system ˚ Solar ˚ Wind ˚ Battery storage

ol

in g

i n g Loop

HEAT

L o op Heat Exchanger

• Can disconnect from the grid and operate autonomously

Residential Commercial Industrial

Utility Grid

Energy Demand

Generator

Monitor Control Balance

Electric Vehicles

28

A Customer Guide to Distributed Generation

Renewables

Storage

BENEFITS OF A MICROGRID • Provides resiliency and business continuity • Improves electric reliability • Lowers energy costs for customers • Lowers emissions • Strengthens the central grid

Community Microgrid Benefits A community microgrid brings communities four benefits not provided by today’s centralized energy system: 1. Lower costs and increased economic investment 2. Improved overall performance 3. Resilience and security 4. Replicable, scalable model

29

Considerations • Electric provider is key to project success:

˚

Need ability to power back, disconnect and reconnect to

˚

Electric companies see it as a load loss

the grid

• New concept and industry

Who can benefit from a Microgrid?

Settings where buildings are close together and/or critical services are provided are perfect for microgrids.:

Examples include • Hospital complexes • Universities • Data centers • Military facilities • Businesses or industrial parks • Residential communities • Cities looking to add resiliency to their critical municipal services, such as

police departments, fire departments, water treatment plants, shelters and transportation services

30

A Customer Guide to Distributed Generation

Microgrid Articles and White Papers for Additional Information https://microgridknowledge.com/white-paper/guide-to-community-microgrids/ https://microgridknowledge.com/white-paper/reciprocating-engine-generatorsand-microgrids/ https://microgridknowledge.com/white-paper/chp-microgrid/ https://microgridknowledge.com/white-paper/rise-clean-energy-microgrids/ https://microgridknowledge.com/white-paper/microgrids-resiliency/ https://microgridknowledge.com/white-paper/guide-gas-turbine-microgrid/

31

AVAILABLE RESOURCES www.understandingCHP.com www.GasAirConditioning.com

U.S. Department of Energy and Federal Energy Management Program www.energy.gov/eere/amo/combined-heat-and-power-basics www.energy.gov/eere/femp/federal-energy-management-program https://chp.ecatalog.lbl.gov

CHP Installation Database https://doe.icfwebservices.com/chpdb/

U.S. Environmental Protection Agency (EPA) www.epa.gov/chp

Policies & Incentives Database www.epa.gov/chp/dchpp-chp-policies-and-incentives-database

32

A Customer Guide to Distributed Generation

FOR QUESTIONS OR MORE INFORMATION, PLEASE CONTACT YOUR ONE GAS REPRESENTATIVE.

33

Revised 01/20