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1 SATIS 2001 Caribbean Solar Energy Society Conference August 29 – 31, 2001 Kingston, Jamaica Impacts of Cogeneration and Energy Efficiency on the Emergence.

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Presentation on theme: "1 SATIS 2001 Caribbean Solar Energy Society Conference August 29 – 31, 2001 Kingston, Jamaica Impacts of Cogeneration and Energy Efficiency on the Emergence."— Presentation transcript:

1 1 SATIS 2001 Caribbean Solar Energy Society Conference August 29 – 31, 2001 Kingston, Jamaica Impacts of Cogeneration and Energy Efficiency on the Emergence of Renewable Energy Technologies. R. Earl Sutherland, MS EE, MS CE, PE G. E. Mullings, M.Sc Physics

2 2 Energy and Sustainable Development As the Bruntland Commission aptly put it, sustainable development [SD] meets the needs of the current Generation, without compromising the ability of future generations to meet their own needs. Energy is vital to SD because the quality of life in a society is critically dependent on the availability of energy and on the effectiveness, efficiency and equity with which it is converted into goods and services.

3 3 However, as the UN Industrial Development Organisation (UNIDO) notes: Current patterns of production and utilization of energy cannot be sustained... sustainable development.... requires more efficient production, transmission, distribution and end-use of energy, coupled with greater reliance on environmentally sound energy systems, particularly those that use new and renewable sources. [UNIDO, ]

4 4 Global Energy Source Trends, 1971 - 2020 Source: International Energy Agency, 1998; as cited, UNDP: World Energy Assessment, p. 116

5 5 Global Electricity Generation, 1971 - 2020 IEA: World Energy Outlook 2000,

6 6 Projected Energy Use to 2020 IEA projects that fossil fuels will continue to dominate primary energy over the next 20 years: Fossil fuels account for 90% of the world primary energy mix by 2020Fossil fuels account for 90% of the world primary energy mix by 2020 Increased CO2 emissions, at 2.1% p.a. to 2020, a 60% increase over 1997.Increased CO2 emissions, at 2.1% p.a. to 2020, a 60% increase over 1997. Hydro to rise by 50% and other renewables at 2.8% p.a., but reach only 3% by 2020.Hydro to rise by 50% and other renewables at 2.8% p.a., but reach only 3% by 2020.

7 7 The Importance of Energy Efficiency In a world where fossil fuels are likely to remain dominant in energy production and use, energy efficiency becomes vital to achieving sustainability. It has been observed that such measures not only mitigate climate change, but also generate a wide array of benefits.. Reduced energy costs Increased productivity Greater market competitiveness More disposable income for other needs/services EGM, Vienna, 99

8 8 Energy Costs: A Key Issue More than enough raw renewable energy exists to meet our consumption needs Technologies are available, but the capital costs of harvesting the energy may make cost/kWh unattractive Renewables also may face higher discount rates, as they are viewed as risky investments These relatively high costs tend to blunt market penetration.

9 9 Calculating Costs Cost, $/kWh = [(fuel cost, $/BTU) x (Plants heat rate, BTU/kWh)] + other variable costs [e.g. O & M), $/kWh + [(Capital & other fixed costs as an annuity in $/kW of capacity) / (max hrs/yr)] + EXTERNAL COSTS, $/kWh External costs are important, but are subject to disputes about values and appropriate discount rates, given the underlying Welfare Economics.

10 10 Comparative Costs TechnologyCapacity Factorc/kWhGHG Biomass, Electrical25 – 80%5 - 15neutral Wind, Electrical20 – 30%5 - 13low Solar PV, Electrical8 – 20%25 - 125low Small Hydro~ 90%4 - 10low Natural Gasdispatchable3rel. low Coaldispatchable3 - 4high Cf. Table 1, paper

11 11 Implications of Cost Patterns Renewable technologies are cleaner than fossil fuel ones Especially when externalities are not counted – the usual case - renewables typically cost more than fossil ones, and/or they are intermittent Environmental concerns drive growth in renewables, but penetration tends to be limited Thus,energy efficiency may potentially have as significant an impact on GHG reductions as the growth in renewable energy

12 12 Rough Projections from JPS DSM Study 100,000 households [1/3 of JPSs residential customers] with 3 CFLs, average, could give 9.3 Mn kWh/y reduction, and up to ~ 1% fall in peak use. 10,000 h/h with Solar heaters could save 18 Mn kWh/ annum, and cut up to ~ 20 MW in demand Commercial properties could cut 20 – 30% of energy consumption, through lighting and a/c improvements [Industrial savings would be comparable.]

13 13 Barriers Encountered Lack of awareness of operating cost reductions from energy efficiency Lack of low-cost financing Economic troubles Inability of enterprises to self-finance

14 14 Cogeneration: Supply-side Energy Efficiency The waste heatfrom generation, often 55 – 75% of the energy in the fuel, may be used to drive thermal loads, raising overall efficency to up to 70 – 90%. This requires a thermal host: steam, hot water, refrigeration are typical Typical applications: Food processing plants, hotels, hospitals, institutions, commercial buildings

15 15 Case A: Jamaica Broilers 16MWe, 24 Mn BTU/hr thermal energy recovered (equivalent to 225 gallons of fuel oil/hr) 11 Mn kWh/y of electrical energy saved through a chiller that provides refrigeration for the plant Foreign exchange savings from these two factors are estimated at US$ 790,000/y and US$ 934,000/y respectively

16 16 Case B: UWI/UHWI Preliminary Engineering Study projects 3MWe, 5MW thermal, as UWI has 68% of its electrical load for air conditioning Fuel savings: up to 70% Financial: US$ 150 – 200 Mn saved across 30 years, NPV US$ 34 Mn, IRR 13 – 14%. ~ US$ 5 - 6Mn in other capital costs avoided.

17 17 UWI COGEN Plant would... Provide energy services (lighting, power machines, air- conditioning) to the UHWI/UWI at a cheaper rate versus purchasing from JPSCo To show a way for industry to be more competitive Sell power to the National grid regardless of ownership structure. Significantly insulate the UHWI/UWI from impact of oil price fluctuations on energy costs Large steam loads important resource base for cogeneration

18 18 Life Cycle Cost Analysis Total Cost US$ 18.9 Million (includes A/C conversion) NPV of saving is US$ 34 Million IRR is 13% compares favourably with alternate investments Using Base year for energy cost 1999-2000 CONTINUATION…. 1st year savings after debt service US$1.2 Million 5 th year savings increases to US $ 2.1 Million 16 th year (debt paid off savings US$ 6.6 Million Refer to Life Cycle cost and feasibility Analysis Additionally, the Project would avoid some U$5-6 Million investment in energy systems

19 19 Life Cycle Cost Analysis Since the project is a major investment with a life time of 30 years, the payback period is not relevant It ignores discounting and further returns that contribute to the net present value; does not reckon with: – Discounting for the time value of money – Greater wealth creating potential & income beyond the payback horizon CONTINUATION…. NPV is a lump sum equal to the present value of the wealth created by the investment, above and beyond that available from the next best alternative use of the funds

20 20 REVENUES TO BE EARNED BY UHWI/UWI BRIEF ANALYSIS – First Year 2001 The cost for electricity consumed (26,965,575 kWhs) in 1999-2000 is US$4,556,816 The total operation costs of running the COGEN Plant is US$2,763,414 for first year at present load The revenue from selling electricity to JPSCo is US$1,925,638 ( at rate of sales of 6 cents per kWh) The net cost is therefore US$837,777 for operating the plant. Therefore the net savings is US$3,719,040 (US$4,556,816-US$837,777) Projected savings, over the next thirty years are US$170-200 millions. The Plant is still capable of selling electricity to JPSCo, after meeting the maximum load capacity.

21 21 The Cogeneration Project would start its first year of operation meeting energy requirements for the present demands of 26.9 Million KWh/year. The plant equipment configuration is as follows, selling electricity to JPSCo: 2x 6L32 Wartsila genset, each rated at 2,100kW Petrocon HLN equipped boilers- one 23,000 lbs/hr, 600 psi/750 degrees F boiler One 400 lbs/hr, 100 psi/saturation boiler. 1 MW Back-pressure turbine-generator, exhausting at 20 psig. Air Conditioning- 3x600/750 ton Centrifugal Chillers(ice mode /CW mode) ; 1 x 1000 tons absorption Chiller (lithium-bromide) with pumps and auxiliaries Thermal Energy Storage (ice storage) for 14,000 ton-hr.

22 22 Electricity Production Analysis: Total energy output equivalent to 8MW will meet present and future demands: Present electricity peak load demand : Maximum 6, 556 KVA at 12:12 PM (1999 JPS data) Air Conditioning Electrical Load: 4,218 KVA (HVAC Survey Econergy, 1999 (3237 tons-hr) Future Expansion Load : 875 KVA Facility loads (Chiller, Pumps, Fans): 1888 KVA Total Electrical Production at Peak Load: 3521 kW

23 23 HEAT BALANCE: Steam Turbine/Generator: 4,000 volts; 357.9409 Amps; 1,432 kVA; 30 psia; 250 deg-F; 17,991 lbs/hr; 4.89 mmbtu/hr Absorption Chiller: Generator: 18.64 mmbtu/hr; Heat Exh 30.64 mmbtu/hr; Evaporator 1,000 tons, 12 mmbtu/hr Laundry: Centrifugal Chillers; Air Conditioning/CW; Ice Tank/TES; Diesel Gensets; HP Boiler Refer to HEAT BALANCE CHART:

24 24 Cleaner Emissions Produced Nox Emissions major environmental problem (95% eliminated) HFO Thermal Plants (in Jamaica) have heavy air emissions COGEN air emissions comply with USA/EPA Air Quality Standards

25 25 Barriers to Cogen Cogen requires a thermal host (heat or refrigeration) to absorb waste heat Regulatory concerns: deregulation trends Need for highly qualified technical and financial analysts, designers, developers, operators Protracted negotiations with Utilities and Government Financial institutions in the region are unfamiliar with Cogen – tend to view it as risky (but N. American ones like cogen)

26 26 IRP: Overcoming Barriers Shift in Energy investment from large-scale generation, transmission and distribution, to smaller, often demand side efficiency investments impedes investment IRP makes planners rank, by cost, the supply and end- use technologies, selecting lowest cost options GHG targets may further constrain this process Kyoto mechanisms may help in this process

27 27 Impacts on Renewable Energy Deregulation and the rise of IPPs & Cogenerators have eased some of the regulatory restrictions Competitive pressures push potential investors towards low-cost, low-risk (low-interest rate), relatively environmentally friendly technologies Efficiency technologies are relatively clean clean, but shift the locus of investment from supply to demand side Renewable technologies are the cleanest, but tend to be more costly, and/or are intermittent.

28 28 In Conclusion: Means vs. Ends Renewables are clean, but may need subsidies and/or regulatory interventions to push penetration given cost and intermittency Cogeneration and energy efficiency, though not as clean, may significantly contribute to GHG reduction, and competitiveness. ISSUE: sources and technologies (means), vs. cleaner energy services (ends)

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